American Standard Cos. Inc. has approved a plan to separate its three businesses this year.
“The board has concluded that separating American Standard into three focused, better-understood companies will create greater share-owner value than the current structure,” said Fred Poses, chairman and CEO. “The businesses have the size, global reach, industry leadership and organizational talent to succeed as separate companies.”
Upon completion of the plan, American Standard will focus on Trane, its global air-conditioning systems and services business. The company plans to spin off its global vehicle control systems business, to be known as Wabco. It plans to implement the spinoff through a tax-free stock dividend of all Wabco common stock to American Standard shareowners. They will receive one share of Wabco common stock for every three shares of American Standard common stock currently owned.
In addition, American Standard plans to sell its bath and kitchen business. The company expects to complete both the spinoff of Wabco and the sale of the bath and kitchen business by early fall of this year.
“We’ve come a long way since the company went public in 1995,” said Poses. “Over the past 12 years, we’ve generated average annual total shareowner returns of about 18 percent. Over the past seven years, we reduced our debt by more than $1 billion, achieved investment-grade ratings, and established our quarterly dividend and subsequently increased it. At the same time, we invested in our businesses to strengthen their overall capabilities.
“Looking to the future, our board concluded that the separation plan we are announcing today is the best way to enhance shareowner value,” Poses continued. “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.”
American Standard to separate business divisions
May 1, 2007