From AFX News Limited
PISCATAWAY, NJ — American Standard Companies Inc., which makes air conditioning systems, plumbing products and automotive braking systems, said Thursday it will split the company into three businesses this year, and focus its efforts on the air conditioning segment.
American Standard said it will focus on its air conditioning systems business, which brought in $6.8 billion in sales in 2006. It will rename the company Trane, while retaining the right to use the American Standard brand name for heating, ventilation and air conditioning products.
The company will spin off its global vehicle control systems business, which had $2 billion in revenue in 2006, as a publicly traded company to be called WABCO. American Standard said it plans to offer its shareholders one share of WABCO stock for every three American Standard shares currently held.
American Standard also plans to sell its bath and kitchen business, which brought in $2.4 billion in sales in 2006. The sales process is expected to begin this month. Proceeds will be used to reduce liabilities of the remaining company, Trane, and to buy back Trane’s common stock.
The entire plan is set to be completed by early fall.
"Operating separately, the businesses will benefit from greater strategic focus, increased market recognition, improved capital flexibility and an increased ability to attract, retain and motivate employees," said Fred Poses, American Standard’s chairman and chief executive officer.
Poses will retain his positions through 2007, as planned, and the company is searching for a successor.
Jacques Esculier, president of American Standard’s vehicle control systems segment, will become CEO of WABCO. Jim Hardymon, currently a director on American Standard’s board, will serve as WABCO’s non-executive chairman. Dale Elliott, president of American Standard’s global bath and kitchen segment, will continue in his role.
The company retained Lazard as a financial adviser for the deals.
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