JELD-WEN Holding, Inc. (NYSE:JELD) (the “Company”) announced
today that the United States District Court for the Eastern
District of Virginia, Richmond Division (“District Court”), has
issued a final judgment in the Company’s ongoing antitrust and
trade secrets litigation with Steves & Sons, Inc. (“Steves”).
JELD-WEN believes that the District Court’s ruling is in numerous
respects both unprecedented and fundamentally incorrect as a matter
of law, and results from a flawed trial process that improperly
limited the Company’s defenses.
“JELD-WEN firmly maintains that it has not violated any
antitrust laws and that it has not damaged Steves,” stated Gary S.
Michel, President and Chief Executive Officer. “Rather than
resolving a simple contractual dispute between two parties, the
District Court has now delivered an erroneous ruling that
improperly interferes with our company and the broader commercial
marketplace.”
Consistent with the preliminary ruling previously announced on
October 6, 2018, the final judgment orders the Company to divest
its facility in Towanda, Pennsylvania, the primary asset acquired
in JELD-WEN’s 2012 acquisition of CraftMaster, Inc. (“CMI”) and one
of the Company’s four domestic doorskin manufacturing facilities.
The ruling requires JELD-WEN to divest the Towanda facility to a
third party, and gives JELD-WEN and Steves the option, but not the
obligation, to purchase doorskins from the acquiring company. The
judgment anticipates that the divestiture will not be required
until some time after the appeal process is complete. The initial
appeal process is expected to take approximately 9 to 18 months.
Should an appeal to the United States Supreme Court be necessary,
the appeal process would be extended by an additional 6 to 18
months. The District Court’s judgment also denied Steves’ request
for an injunction to extend the existing supply agreement between
JELD-WEN and Steves, which is scheduled to terminate in September
2021. As a result, should the appeal process extend beyond
September 2021, JELD-WEN will no longer be contractually obligated
to supply doorskins to Steves.
As noted by a number of legal experts following the case, the
District Court’s ruling, if it is allowed to stand, fundamentally
undermines the future of M&A activity in the United States, by
allowing a court, years after an acquisition is completed, to usurp
the power vested in the Antitrust Division of the Department of
Justice (“DOJ”) in its pre-merger clearance program. The DOJ
conducted two separate reviews of JELD-WEN’s acquisition of CMI –
one at the time of the 2012 acquisition and another at Steves’
request in 2015. JELD-WEN followed all requirements to lawfully
acquire CMI, and the acquisition cleared DOJ review on both
occasions. Steves did not raise any concerns with the DOJ at the
time of the acquisition in 2012, despite its own failed attempt to
acquire ownership of CMI.
The District Court’s judgment also contravenes fundamental legal
principles by enforcing an equitable remedy (divestiture) where it
acknowledges that monetary relief is already available. In the
event the divestiture order is overturned on appeal, the judgment
requires JELD-WEN to pay approximately $176 million in past and
future antitrust damages to Steves, which JELD-WEN also plans to
appeal. Alternatively, if the monetary antitrust judgment is
overturned, the judgment requires JELD-WEN to pay approximately $10
million in breach of contract damages.
Finally, the District Court entered judgment against Steves in
the amount of $1.2 million in accordance with the previously
announced order in JELD-WEN’s favor, finding that Steves
misappropriated JELD-WEN’s trade secrets.
Mr. Michel also stated, “While today’s ruling is disappointing,
it will not alter our focus as we will continue to provide
industry-leading products and services to our customers during the
appeal process. Additionally, we will continue to support the
growth and development of our dedicated employees at the Towanda
facility.”
The Company continues to believe that requiring a divestiture of
the Towanda facility is both unprecedented and fundamentally
incorrect as a matter of law and intends to appeal the judgment. No
United States court has ever permitted divestiture as a remedy in
private litigation for a merger that has already closed, such as
JELD-WEN’s acquisition of CMI. Not only is there no precedent for a
remedy of divestiture, the District Court’s ruling disregards the
significant passage of time since the CMI acquisition, which was
completed more than six years ago. Furthermore, the judgment is
contrary to established legal and equitable principles due to
Steves’ own misconduct in misappropriating JELD-WEN’s trade secrets
and the District Court’s acknowledgement of the availability of
monetary remedies.
The Company also believes that the findings of violations of the
antitrust laws and resulting damages award are legally and
factually incorrect and the result of significant flawed rulings
during the trial process. These rulings improperly limited the
Company’s defenses in the trial by excluding key evidence and other
relevant matters from the jury’s consideration. Evidence that the
Company was prevented from presenting to the jury included the
favorable results of the two previous DOJ antitrust enforcement
reviews, the significant profitability growth and expansion of
Steves’ own business since the 2012 acquisition, and other benefits
to the market resulting from the combination of JELD-WEN and CMI.
JELD-WEN also believes that the District Court improperly
bifurcated the trial involving Steves’ contract claims from the
trial involving JELD-WEN’s claims regarding Steves’
misappropriation of trade secrets, allowing Steves to present
contradictory evidence in the two different trials.
The Company is unable to estimate the ultimate timing of,
transaction terms, or estimated potential proceeds from any
divestiture of the Towanda facility. Regardless of the outcome of
the appeal process, the Company expects to meet its internal
requirements for doorskins currently supplied by the Towanda
facility through other existing internal sources of supply or from
a supply agreement with the acquiring company.
For the fiscal year ended 2017, the Towanda facility generated
external revenues of approximately $120 million from Steves and
other third-party customers related to doorskins and other building
products. The majority of Towanda’s doorskin manufacturing capacity
is used by the Company in its own door assembly operations.
About JELD-WEN
JELD-WEN, founded in 1960, is one of the world’s largest door
and window manufacturers, operating manufacturing facilities in 20
countries located primarily in North America, Europe and Australia.
Headquartered in Charlotte, N.C., JELD-WEN designs, produces and
distributes an extensive range of interior and exterior doors,
wood, vinyl and aluminum windows and related products for use in
the new construction and repair and remodeling of residential homes
and non-residential buildings. JELD-WEN is a recognized leader in
manufacturing energy-efficient products and has been an ENERGY
STAR® Partner since 1998. Our products are marketed globally under
the JELD-WEN® brand, along with several market-leading regional
brands such as Swedoor® and DANA® in Europe and Corinthian®,
Stegbar®, and Trend® in Australia. For more information visit
www.jeld-wen.com.
Forward-Looking Statements
This press release contains certain “forward-looking statements”
regarding the potential outcome and impact of litigation (including
but not limited to the probability and impact of any divestiture
resulting from the Steves litigation and the success of our appeals
in that matter), and our expectations, beliefs, plans, objectives,
prospects, assumptions, or other future events. Forward-looking
statements are generally identified by our use of forward-looking
terminology such as “anticipate”, “believe”, “continue”, “could”,
“estimate”, “expect”, “intend”, “may”, “might”, “plan”,
“potential”, “predict”, “seek”, or “should”, or the negative
thereof or other variations thereon or comparable terminology.
Where, in any forward-looking statement, we express an expectation
or belief as to future results or events, such expectation or
belief is based on the current plans, expectations, assumptions,
estimates, and projections of our management. Although we believe
that these statements are based on reasonable expectations,
assumptions, estimates and projections, they are only predictions
and involve known and unknown risks, many of which are beyond our
control that could cause actual outcomes and results to be
materially different from those indicated in such statements.
Our actual results could differ materially from the results
contemplated by these forward-looking statements due to a number of
factors, including the factors discussed in our Annual Reports on
Form 10-K, and our Quarterly Reports on Form 10-Q, both filed with
the Securities and Exchange Commission.
The forward-looking statements included in this release are made
as of the date hereof, and except as required by law, we undertake
no obligation to update, amend or clarify any forward-looking
statements to reflect events, new information or circumstances
occurring
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181215005036/en/
Investor Relations:Chris Teachout,
+1.704.378.7007investors@jeldwen.com
Media Relations:Chris Benware,
+1.503.488.4402JELD-WEN@cmdagency.com
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