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American Standard Sells B&K Business To Private Investment Firm

By Kelly Faloon
August 1, 2007
$1.76 billion price more than expected; remnant company to be known as Trane.

American Standard Cos. Inc. (Piscataway, N.J.) sold its bath and kitchen products business July 23 to global private investment firm Bain Capital Partners LLC for $1.76 billion. Boston-based Bain Capital, founded by Republican presidential candidate Mitt Romney, was also part of a three-firm group that bought Home Depot’s HD Supply last month. (Romney left the firm in 2001 to head up the Salt Lake City Winter Olympics.)

Reuters reported that analysts had predicted earlier in the year that American Standard’s bath unit could sell for as low as $1.2 billion. The sale “was faster than expected,” J.P. Morgan analyst Stephen Tusa noted.

American Standard shares rose 15 cents on the New York Stock Exchange to $59.40 on the day the sale was announced.

The sale is expected to close in the fourth quarter, pending normal regulatory approvals and closing conditions. Shareholder approval is not required. The company said it will use the sale proceeds to repurchase common stock and reduce debt to keep the company at investment-grade standards.

The company announced its reorganization plans this past February - sell the bath and kitchen segment (American Standard brands) and spin off the vehicle control systems business (now named WABCO). The remaining company, the air-conditioning systems and services portion, would be re-named Trane, after its flagship air-conditioning brand.

The spinoff of WABCO was already scheduled for July 31, making the sale to Bain Capital the last step to complete the company’s plan.

In March, the company sold United Kingdom-based Venesta Washroom Systems, part of the bath and kitchen business, for $165 million to RS Building Products; this makes the total proceeds for the segment $1.92 billion.

As part of its initiatives to rebuild the segment’s profitability, American Standard Cos. announced last month that it would close ceramics manufacturing operations in Brazil and the United Kingdom, eliminating about 350 jobs and saving the company $17 million.

In early June, The Associated Press reported that Standard & Poor’s Ratings Services would consider lowering its “BBB” corporate credit rating for American Standard Cos. Inc. to “BBB-” if the company were to go through with its plan to break up into three separate companies. The reason: The new company “would have a weaker business risk profile and its proposed capital structure would be more in line with the ‘BBB-’ rating.”

The bath and kitchen segment (which has 26,000 employees worldwide) reported sales for the first six months of 2007 as $1.32 billion; 2006 sales were $2.4 billion. The segment includes products under brand names American Standard®, Ideal Standard®, Porcher®, Jado®, Armitage Shanks®, Ceramica Dolomite® and Vidima®. These products are made in 54 production facilities in 23 countries.

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Kelly Faloon was a former editor of Plumbing & Mechanical as well as the BNP Media Plumbing Group’s Integrated Content Development Specialist. She also was a former editor of the Radiant Comfort Guide the Radiant & Hydronics Report — both official publications of the Radiant Professionals Alliance — and twice-monthly Radiant & Hydronics eNews, an enewsletter for anyone interested in the world of heating with hot water.

Her editorial specialties included women in plumbing, recruiting for the trades, green construction techniques, water conservation, water treatment, hydronic heating, radiant heating and cooling, snow melt, solar thermal and geothermal.

After a 3½-year stint at sister publication Supply House Times, Faloon joined the PM staff in December 2001 as senior editor. She was named PM’s managing editor in 2006 and editor in 2013.

Previously, she spent nearly 10 years at CCH, a publishing firm specializing in business and tax law, where she wore many hats — proofreader, writer/editor for a daily tax publication, and Internal Revenue Code editor.

 A native of Michigan’s northern Lower Peninsula, Faloon is a 1986 journalism graduate of Michigan State University. 

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