SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report: October 23, 1998
Date of earliest event reported: October 21, 1998
ESSEX INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-10211 13-3496934
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(Commission File No.) (IRS Employer Identification No.)
1601 Wall Street, Fort Wayne, IN 46802
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(Address of principal executive offices and zip code)
(219) 461-4000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
Essex International Inc. (the "Company") and Superior TeleCom Inc.
("Superior") jointly announced on October 22, 1998 that they have entered
into a definitive merger agreement whereby Superior, through a wholly owned
acquisition subsidiary, will purchase up to 22,562,135 shares of common stock
of the Company (approximately 81% of outstanding Company common stock) in a
cash tender offer, and subsequently acquire the remaining shares of common
stock of the Company in a second step merger. In a separate arrangement,
Bessemer Holdings L.P. ("Bessemer"), Essex' largest stockholder, and certain
of Bessemer's affiliates have agreed with Superior to tender their shares of
Company common stock into the tender offer and otherwise to support the
transaction with Superior. Bessemer and its affiliates own approximately 48%
of the outstanding Company common stock.
Pursuant to the Merger Agreement, Superior will, as soon as
practicable, commence a tender offer for up to 22,562,135 shares of Company
common stock for $32.00 per share in cash. The offer is conditioned on the
tender of a majority of the outstanding shares of Company common stock, on a
fully diluted basis, receipt of financing, expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and certain other conditions. Upon a successful completion of
the tender offer, the Merger Agreement requires Superior to consummate a
merger between its acquisition subsidiary and the Company in which the
remaining shares of Company common stock (other than dissenting shares) will
be acquired in exchange for preferred stock of Superior, and in certain
circumstances, an additional cash payment. The merger is subject to the
approval of the Company's stockholders, and certain other conditions.
Superior, through its wholly owned subsidiary, Superior
Telecommunications Inc., is a leading manufacturer and supplier of
telecommunications cable and wire products to telephone companies,
distributors and system integrators. It also develops and manufactures voice
and data multiplexers and other electronics and signal processing components
and systems.
The Company, through its wholly owned subsidiary, Essex Group, Inc., is
a leading developer, manufacturer and marketer of diversified electrical
wire, cable and insulation products.
Item 7. Financial Statements and Exhibits.
a. None.
b. None.
c. Exhibits
99.1 Press release dated October 22, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Essex International Inc.
Dated: October 23, 1998 By: /s/ David A. Owen
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David A. Owen
Chief Financial Officer
Exhibit 99.1
[Letterhead of Superior TeleCom, Inc.]
Financial Communications Contact: Company Contact:
John G. Nesbett Suzanne D. Fernandez
LIPPERT/HEILSHORN & ASSOCIATES, INC. CorporateCommunications
212-838-3777, ext. 121 212-757-3333
SUPERIOR TELECOM TO ACQUIRE ESSEX INTERNATIONAL INC.
FOR $32 PER SHARE IN A $1.4 BILLION TRANSACTION
NEW YORK, NY, October 22, 1998 -- Superior TeleCom Inc. (NYSE: SUT) and
Essex International Inc. (NYSE: SXC) today announced that they have entered
into, and their respective Boards of Directors have approved, a definitive
merger agreement pursuant to which Superior will acquire all of the
outstanding shares and options of Essex for an aggregate consideration of
$936 million, consisting of $769 million in cash and $167 million in
liquidation value of new 8-1/2% convertible exchangeable preferred stock of
Superior plus assumed debt of Essex of $419 million. Under the terms of the
merger agreement, Superior will make a first-step cash tender offer at $32
per share for up to a maximum of 22,562,135, or approximately 81%, of the
outstanding Essex common shares. The tender is expected to commence next
week. The offer is subject to the tender of at least a majority of Essex's
shares, to completion of financing, which has been committed to by Bankers
Trust Company, and to customary conditions, including required governmental
approvals. Following completion of the offer, the remaining shares of Essex
are expected to be converted into the right to receive 0.64 of a share of new
series Superior convertible exchangeable preferred stock with a per share
liquidation value of $50. This preferred stock is convertible into Superior
common stock at $56 per share. If fewer than the maximum number of shares are
purchased through the tender offer, the remaining Essex shareholders will
receive both preferred stock and cash for their shares so that the aggregate
cash and stock consideration paid in the merger is the same as if the offer
had been fully subscribed. The merger is expected to be closed in the first
calendar quarter of 1999.
Bessemer Holdings LP and certain of its affiliates, holding
approximately 48% of the outstanding Essex common stock, have agreed to
tender their shares in the transaction and have granted a purchase option to
Superior under certain circumstances.
The closing prices of Superior and Essex common stock on October 21,
1998, the last trading day prior to execution of the merger agreement were
$46.00 and $23.19, respectively.
Steven S. Elbaum, Chairman and Chief Executive Officer of Superior,
stated that ``the acquisition of Essex International by Superior TeleCom is a
strategically sound transaction that merges two world class wire and cable
businesses known for quality, customer service and delivering value to
customers, shareholders and employees. The combination will greatly benefit
our customers and will significantly expand Superior's operations and
establish Superior as the premier producer of wire and cable in North America
and fourth largest in the world.
"Assuming the consummation of the acquisition in the first calendar
quarter of 1999, we expect Superior's calendar 1999 revenues to be
approximately $2.4 billion, of which approximately $850 million or 35% of
projected 1999 revenues will be communications cable products spanning
copper, fiber and composite cable based products for voice and data
communications in residential and commercial networks and other
communications markets. We believe that Superior will be the world's largest
producer of copper cable for telephone networks. Given the complementary
product lines of Superior and Essex and little overlap in our customer base,
the combined company will have a broader product line and service capability
to more customers than either company would have alone. In addition, customer
service and deliveries will be enhanced by the additional flexibility and
capacity of our combined North American and Israeli manufacturing operations.
"Approximately $850 million or 35% of anticipated calendar 1999
revenues is expected to be generated from the sale of magnet wire, primary
wire and electrical insulation materials for use in motors, transformers,
electrical controls and automotive applications produced by the world's
leading manufacturers of these end products and the sale of high, low and
medium voltage power cables to utilities and others. Essex is the largest
producer of magnet wire products in North America and has been serving this
market for over fifty years. Essex's operations in the magnet wire and
electrical insulation business are based on a model of long-term
understandings and relationships with leading original equipment
manufacturers and significant earnings and cash flow visibility, which
parallels Superior's operations in its communications cable business.
"Essex's electrical and specialty wire and cable segment (building and
industrial cable), with approximately $750 million in anticipated 1999
revenues, is highly profitable and has grown significantly over the last five
years. This segment is one of the top three participants in the U.S. market
and sells its products through large retailers, buying co-ops and electrical
distributors for resale into the commercial, industrial and residential
markets. Approximately 60% of this unit's net sales are attributable to
remodeling and repair activity and the balance to new construction and other
markets.
"Following the acquisition, we believe that Superior will become the
best and strongest wire and cable company in North America. The Company will
derive approximately 35% of revenues and 50% of earnings and cash flow from
its communications cable business, approximately 35% of revenues and 25% of
earnings and cash flow from its magnet wire business and approximately 30% of
revenues and 25% of earnings and cash flow from its electrical and specialty
wire and cable business.
"Operationally, all of Superior's cable businesses will draw upon and
benefit from shared manufacturing practices, materials and processing know-
how, productivity improvements, scrap reclamation and other improvements, all
of which will be leveraged upon Superior's larger base of operations. As an
example, Superior's purchases of copper will rise from approximately 150
million to approximately 1 billion pounds annually, creating opportunities
for achievement of cost, freight and processing improvements. Incremental
material procurement, which would span all cable segments, will provide
similar opportunities to work effectively with our supply chain in a mutually
beneficial manner.
"Financially, we believe this acquisition will create the basis for
substantial growth in earnings, cash flow and Superior shareholder value. Our
financing structure for the purchase is based entirely on long-term bank debt
and approximately $167 million in Superior 8-1/2% convertible exchangeable
preferred stock to be issued to Essex shareholders, convertible into Superior
common stock at $56 per share. The purchase is expected to be highly
accretive to Superior in calendar 1999 with accretion of 15-25% (before one-
time charges) in excess of Superior's expected calendar 1999 earnings growth
of 15-20%. "Our accretion expectations are based upon the realization of very
conservative synergies, although we anticipate significant synergies and
savings through the substantial increase in Superior's purchasing power,
savings in freight and logistical expenses, cross selling opportunities and
elimination of duplicative public company expenses. We expect these savings
and synergies to be further additive to earnings and shareholder value in
2000 and beyond.
"Approximately 50% of our revenues and more than half of earnings will
be generated by long-term contracts or seasoned relationships with
financially strong market leaders whose products and services depend on our
products and service.
"In addition to the earnings accretion, the significant cash flow
generated by the combined company's operations should result in more than 50%
accretion to Superior's cash flow per share beginning in calendar 1999, which
should allow for a rapid deleveraging of the balance sheet. EBITDA to
interest coverage should approximate 3.0x in calendar 1999, and will quickly
improve in future years through our focused effort on cash flow growth,
working capital management and debt reductions.
"We enthusiastically welcome Steven R. Abbott, President and Chief
Executive Officer of Essex, who will be named President and Chief Operating
Officer of Superior. We look forward to a smooth and seamless change in the
ownership of Essex and a continuation of Essex and its strong brand and quality
reputation as part of Superior's ongoing operations. Justin Deedy, Senior Vice
President of Superior and President of Superior Telecommunications, Inc., will
be named President of Superior's Communications Cable Group. Charles McGregor,
currently Executive Vice President of Essex, will be named President of the OEM
Group and Dennis Kuss, currently Vice President-General Manager of the Building
Wire Unit at Essex will be named President of the Electrical Group.''
Steven R. Abbott stated ``when merged, the company will have one of the
broadest communications product lines in the industry. Combined with the
strong Essex position in OEM products and electrical and specialty wire
products, this new company will be a truly full line supplier to all its
customers, especially those in distribution. I am truly excited for the
prospects for the combined company, both to build on our respective strengths
and to create new opportunities for our customers, business partners and
employees.''
Bankers Trust Corporation has committed to fully underwrite credit
facilities totaling $1.45 billion to finance the cash portion of the purchase
price for the outstanding Essex common stock and options, to refinance
certain existing indebtedness at Superior and Essex and to meet working
capital and other corporate needs of the combined company. BT Alex. Brown,
the securities affiliate of Bankers Trust, will act as the sole arranger for
the credit facilities. BT Wolfensohn, the mergers and acquisitions group of
BT Alex. Brown, acted as financial advisor to Superior TeleCom Inc. Superior
in connection with the acquisition. Superior has had a long-standing
relationship with Bankers Trust and its affiliates extending over a number of
prior transactions. Essex International was advised jointly by Chase
Securities Inc. and Goldman, Sachs & Co.Superior TeleCom Inc. is a leading
manufacturer and supplier of telecommunications cable and wire products to
telephone companies, distributors and system integrators. It also develops
and manufactures voice and data multiplexers and other electronics and signal
processing components and systems.
Except for the historical information herein, the matters discussed in
this news release include forward-looking statements that may involve a
number of risks and uncertainties. Actual results may vary significantly
based on a number of factors, including, but not limited to, risks relating
to the acquisition and the ability to integrate Essex into Superior's
operations, risks in product and technology development, market acceptance of
new products and continuing product demand, the impact of competitive
products and pricing, changing economic conditions, including changes in
short term interest rates, foreign currency fluctuation and other risk
factors detailed in Superior's and Essex International Inc.'s most recent
annual report and other filings with the Securities and Exchange Commission.
