SPX To Acquire General Signal

SPX Corp. said Monday it will buy General Signal Corp. for about $2 billion in cash and stock, in a deal that gives auto-parts specialist SPX a new arm that makes electrical products and network technology.

Under the deal, General Signal stockholders will receive cash and SPX shares valued at $45 per General Signal shares, representing a 20 percent premium based SPX's closing price Friday. SPX will also assume about $335 million in General Signal debt.

GS shareholders can choose either all cash, all stock or a 60-40 stock-and-cash combination, subject to a prorated basis.

On the news, shares of Stamford, Conn.-based General Signal jumped 4 1/8 to 41 3/4 while SPX's stock tumbled 4 1/8 to 60 3/8.

Chase Manhattan Bank will provide a $1.7 billion loan to finance the cash portion of the acquisition and to refinance existing debt. The transaction, already approved by both boards of directors, is expected to close early in the fourth quarter of 1998, the companies said.

Stamford, Conn.-based General Signal has agreed not to pay a third quarter dividend.

SPX, an auto supply and parts company based in Muskegon, Mich., expects the acquisition to add to earnings in 1999 and to boost cash flow. SPX said it also expects to register annual cost savings of $55 million to $60 million, starting in the first year.

SPX said it plans to "rationalize" General Signal's 15 businesses, which could include the restructuring or sale of some of those units. "We believe most of these businesses are excellent ones with strong prospects for growth," SPX Chairman John B. Blystone said during a conference call. Blystone will head the combined company.