Investor Group Snaps up Johns Manville
By Matt Paolucci

Denver, Colo. based Johns Manville Corp. (JM) agreed Friday to be acquired by an investor group led by affiliates of venture firm Hicks, Muse, Tate & Furst and investment underwriter Bear Stearns & Co. (BSC) for roughly $2.4 billion in cash and stock, plus debt.

For Hicks, Muse, Tate and Furst, it's just another day at the office. Formed in 1989, the Texas-based buyout firm has completed or currently has pending more than 325 transactions with a total capital value in excess of $43 billion, including invested equity of more than $3 billion in the media and telecommunications sectors.

Hicks, Muse, Tate & Furst Inc. CEO Tom Hicks said: "It's a company we have been pursuing for about three years, and our largest acquisition ever. We are enhancing our return by enabling this $2.2 billion revenue old-economy company to adopt a 'bricks-to-clicks' strategy that will allow it to become Internet-enabled."

Manville shareholders will receive $13.625 in cash and a 13 percent preferred stock with a liquidation preference of $2 for each of their shares. The company has the option to pay the 13 percent dividend in additional preferred stock or cash for the first seven years, and then cash thereafter.

The 142-year-old building products maker booked 1999 sales of $2.2 billion. About 75 percent of its sales come from the commercial and industrial sectors.

For the 9,700 employees of the company, the deal is bittersweet. The building products maker was nearly destroyed in the 1980s by asbestos litigation.

"With this transaction, we have moved on. If we could have written a script to do this, it couldn't have been done better. We are working with two outfits that are stars. Together, we have an aligned strategy to build the company. This is very good for our shareholders and for the future of the company," Manville CEO Jerry Henry said.

The transaction value is based on approximately 155 million fully diluted shares.

In addition to the cash and stock, the investor group also has committed to providing $565 million in equity capital, and has received commitments for senior and subordinated debt financing totaling $2.35 billion through affiliates of Bear Stearns.

The Company's Manville Trust, set up for the purpose of paying claimants, will retain an 8.5 percent equity stake in the company after the deal is completed. The trust, which holds about 76 percent of the company's common stock, has agreed to vote its shares in favor of the merger. In addition, Johns Manville has agreed to pay the trust $90 million in settlement of obligation for future income taxes of the trust.

The transaction is expected to close before the end of the year, subject to customary regulatory approvals.

"This is good for the company. It has above-average profitability, and its market share is strong now -- they are very strong in the commercial roofing sector, No. 1 in commercial insulation, and No. 2 in residential insulation, behind Owens-Corning (OWC)," said First Union Securities analyst Robert Marshall.

Shares of Johns Manville were up $0.88 at 13.19 in late- afternoon trading on the New York Stock Exchange. The stock's 52-week high and low are $15.00 and $7.44, respectively.