Auto Parts Maker SPX to Acquire General Signal

SPX Corp. said Monday it will buy General Signal Corp., a struggling industrial company twice its size, in a cash and stock deal valued at $2 billion, or $45 a share.

The acquisition of General Signal will move SPX, which makes car parts, specialty tools and vehicle-emissions test equipment, into the general industrial arena. Based in Stamford, Conn., General Signal’s product line includes motors for yard and exercise equipment, specialty refrigerators and lighting and wiring products.

SPX of Muskegon, Mich., has been hunting for an acquisition since a hostile takeover of rival Echlin Inc. failed this year.

The deal is the latest bold move by SPX Chief Executive John Blystone, a former General Electric Co. executive who has been widely credited for an aggressive turnaround program at SPX since he joined the company in 1996. However, the company’s share price has recently been pressured by views that it would not be able to extract continued improved results without an acquisition.

News of the deal sent General Signal shares sharply higher. The stock gained $3.50 to close at $41.13 on the New York Stock Exchange.

But shares of SPX fell sharply on concerns that Blystone will have his hands full for a while. SPX closed down $5.31 at $59.31, also on the NYSE.

Shareholders of General Signal will be able to choose payment in cash, stock or a mixture of 60% stock and 40% cash, the sources said. The pact calls for SPX to assume about $335 million of General Signal debt.

SPX expects the acquisition to boost earnings in 1999 and to significantly increase cash flow. General Signal had sales of nearly $2 billion last year; SPX had $922 million. Both boards approved the deal Sunday.