Household Finance Parent Firm to Trim Non-Service Units
Household International Inc., the diversified financial services company that owns Household Finance, today announced a restructuring that will eliminate its manufacturing holdings through spinoffs and asset sales.
Household’s shares surged $4.675 to $61.75 on the New York Stock Exchange in reaction to the plan.
Under the proposal, Household’s stockholders will receive shares in three new companies to be created from operations that make up most of its Household Manufacturing subsidiary. Six units will be sold.
The effect of the transactions will be to reduce debt and sharpen the company’s focus on financial services.
The manufacturing unit’s 1988 sales amounted to more than $1 billion and represented more than 20% of the total sales and profits for the company, based in Prospect Heights, Ill. Its businesses ranged from Thermos Inc., maker of insulated consumer products, to Scotsman ice makers and GC-Thorsen tools.
“These actions are intended to create more focused entities and should increase the value of Household shareholders’ investment,” Chairman Donald Clark said in a statement.
Household shareholders will receive shares of Eljer Industries Inc., a building products company; Schwitzer Inc., which makes turbochargers, engine cooling systems and vibration dampers, and Scotsman Industries Inc., which makes commercial ice makers and drink dispensing equipment.
The distribution, at a ratio of one new share of each of the three spun off units for every five shares of Household International, is planned for April 15. It is subject to various approvals, the company said.
The company’s investment banking adviser, J. P. Morgan & Co., said the shares of the manufacturing division will trade “at higher market valuations than these businesses are now accorded as part of Household International.”
Among the six units of Household that will be sold are Albion Industries, which makes heavy duty casters for material handling; King-Seeley, a supplier of cooking appliance controls and timers; Omni Products International, a supplier of leisure furniture, and WaterTest Corp., which provides water testing services.