Belden Inc. (www.belden.com) and Cable Design Technologies (CDT--www.cdtc.com) announced on Feb. 5 that the boards of directors of the two companies have unanimously approved and entered into a definitive agreement providing for a merger of equals.
The combined company will be called Belden CDT Inc. and will be headquartered in St. Louis, MO. With estimated annual sales of approximately $1.3 billion, Belden CDT will be among the largest U.S.-based manufacturers of high-speed electronic copper cable, the two companies said. Belden CDT will focus on products for the specialty electronics and data-networking markets, including connectivity.
Dee Johnson, director of investor relations for Belden Inc., says that the companies have no intentions of eliminating any competing or duplicate product lines at the moment. But Belden representatives are investigating the situation.
"We plan to continue all of the brands, although there may be opportunities we have not defined where we want to do something different in terms or cross-selling or leveraging the brands that we have," says Johnson. "There are tremendous opportunities out there, but we haven't give our people time to explore that yet."
Johnson also says that Belden hopes to find synergies with the different CDTs - including Mohawk/CDT based in Leominster, MA, and NORDX/CDT, based in Pointe Claire, Quebec. She describes CDT as having strength in the robotics, aerospace and OEM markets. Belden, meanwhile, is a powerful player in the broadcast and entertainment market.
"These two companies have a high-value segment of the market when it comes to technical content and engineering," says Johnson. "There is some differentiation, but there are many nitches where one of us is and the other is not. We are extending our range by combining."
Johnson also says the newly-merged companies may be able to reduce costs through shared purchasing, logistics, capital spending and investments. They will also be in a better position to form a powerful presence in Europe. Johnson says both companies had only a comparatively small presence in Europe.
"Neither of us is a big player in Europe, but together we can have a nice platform," says Johnson.
The transaction is expected to be completed during the second quarter of 2004.
"The merger ... creates a preeminent supplier of electronic and specialty products," says C. Baker Cunningham, currently chairman, president, and CEO of Belden who will become president and CEO of the combined company. "The combination of well-known specialty brands means that we have a more-comprehensive array of products and a broader range of preferred cabling and connectivity solutions. Expected synergies of approximately $25 million through the implementation of best practices and elimination of duplicate costs will make us more competitive in providing value to our customers."
Under the terms of the agreement, each Belden share will be exchanged for two shares of CDT. Also upon completion of the merger:
* The combined company will change its name to Belden CDT Inc.
* The company will execute a one-for-two reverse stock split, reducing the number of shares.
* The combined company is expected to have approximately 46 million shares outstanding, after the reverse split.
* The combined company will expect to continue Belden's dividend policy of $0.05 per share quarterly.
* The former CDT shareholders will own approximately 45% of the combined company and the former Belden shareholders will own approximately 55% of the combined company.
* The combined company expects to be listed on the New York Stock Exchange under a new ticker symbol.
Following the merger's completion, CDT chairman of the board Bryan C. Cressey will serve as chairman of the board of the combined company; Cunningham, as stated earlier, will serve as president and CEO of the combined company. Ferdinand Kuznik, currently CDT's CEO, and George Graeber, currently CDT's president and COO, will join the office of the CEO of Belden CDT Inc. to advise and assist in the integration of the two businesses, and will focus on realizing expected synergies. Richard K. Reece, vice president of finance and CFO of Belden, will have the same role in the combined company. Other key operating management roles include: Roberty Canny, special products; David harden, West Penn Wire; Robert Matz, communications products; Larrie Rose, Europe; Peter Sheehan, networking; and eter Wickman, electronics products.
The combined company's board will consist of 10 directors, five designated by each of the companies from their current boards, including Cressey, Cuningham, and Kuznik.
"The merger of Belden and CDT with its synergies is expected to be accretive to all shareholders," Cressey says. "It provides the opportunity to increase shareholder value by reducing costs, broadening the product portfolio, and diversifying core markets, and combining a deep and experienced management team. These benefits and the strength of the combined balance sheet will provide financial flexibility and set us apart from others in our industry."
The merger agreement is subject to certain closing conditions, including approval by the stockholders of both Belden and CDT and approval under the U.S. and certain other countries' antitrust laws.