Federal-Mogul to Buy Cooper Auto Unit

Auto parts maker Federal-Mogul Corp., continuing its acquisition spree, said it will buy Cooper Industries Inc.’s automotive unit for $1.9 billion in cash. The purchase would push Federal-Mogul’s annual sales to $7 billion from $5 billion and make it a leading player in the braking segment of the auto industry. Federal-Mogul said it could take an estimated $55 million in pretax reserves for severance and exit costs at the closing of the deal, expected in the fourth quarter. The company expects the purchase to be “modestly accretive” to earnings in 1998 and to boost earnings by 35 cents a share in 1999 and 80 cents in 2000. It expects the acquisition to generate pretax savings of about $94 million in 1999, $154 million in 2000 and $161 million in 2001. This would be Southfield, Mich.-based Federal-Mogul’s third major acquisition in almost a year. Investors reacted quickly, driving its share price up $7.63 to close at $63.13 on the New York Stock Exchange. Houston-based Cooper Industries rose $1.63 to close at $48.19, also on the NYSE.