Mueller Water Products to be acquired by Walter Industries in $1.9 bln deal

The transaction will complement Walter Industries' existing U.S. Pipe operations, creating a major water infrastructure and piping systems company with leading business positions, significant scale, and excellent prospects for growth...

DECATUR, IL, June 20, 2005 (PRNewswire) -- Mueller Water Products Inc. yesterday announced that its board of directors and the board of directors of Walter Industries, Inc. unanimously approved, and the companies have executed, a definitive agreement whereby Walter Industries will acquire the company. The aggregate purchase price is about $1.91 billion, consisting of about $860 million in cash and the assumption of about $1.05 billion in debt, based on the Mueller's balance sheet as of April 2, subject to adjustments as provided in the agreement. The transaction will complement Walter Industries' existing U.S. Pipe operations, creating a major water infrastructure and piping systems company with leading business positions, significant scale, and excellent prospects for growth.

Under agreement terms, the Mueller's shareholders will receive, upon closing, cash for each share of its common stock they own. Upon closing, the company will become a public reporting subsidiary of Walter Industries, and U.S. Pipe will, as a legal matter, become part of the company, resulting in a subsidiary that will have about $1.6 billion in annual revenues.

The acquisition is expected to be completed in the third quarter of 2005, subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and the funding of Walter Industries' committed financing. The requisite stockholders of Mueller, DLJ Merchant Banking Partners II, L.P. and its affiliated investment funds and members of the company's senior management, have agreed to approve the transaction agreement.

"The combination of Mueller Water Products and Walter Industries will result in strategic benefits for the combined company going forward," said Dale B. Smith, Chief Executive Officer of Mueller Water Products, Inc. "Mueller Water Products' customers, suppliers and employees have an attractive opportunity to participate in the exciting potential created by the combination of these two businesses."

Thompson Dean, chairman of Mueller and managing partner of DLJ Merchant Banking said, "We are extremely pleased at this outcome for the DLJ Merchant Banking funds as well as the opportunities that this transaction creates for Walter Industries and Mueller Water Products going forward."

Mueller (www.muellercompany.com) is a leading North American manufacturer of a broad range of flow control products for use in water distribution, water and wastewater treatment facilities, gas distribution systems and piping systems and maintains a large installed base of products, including about three million fire hydrants and eight million iron gate valves in the United States. It operates through two business units: its water infrastructure products segment, a leading manufacturer of hydrants, valves and other products for use in water and gas distribution systems; and its piping systems products segment, a leading manufacturer of fittings, pipe hangers and other products for use in piping systems applications. The company's products are sold to a wide variety of end-users, including municipalities, publicly and privately owned water and wastewater utilities, gas utilities and construction contractors.

Walter Industries Inc. (www.walterind.com) is a diversified company with revenues of $1.5 billion (excluding Mueller Water Products). Walter Industries is a leader in affordable homebuilding, related financing and water transmission products, and is a significant producer of high-quality metallurgical coal for worldwide markets. Based in Tampa, Fla., the Company employs about 5,100 people. Additional information about Walter Industries is available on Walter Industries' Web Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC and on the company's website.

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