Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 American Business Products 14 77K
2: EX-99.1 Excerpts From the Company`S Proxy Statement 25 124K
7: EX-99.10 Severance Agreement (Richard G. Smith) 10 45K
8: EX-99.11 Severance Agreement (Geoffrey L. Greulich) 11 47K
9: EX-99.12 Letter Agreement 2 14K
10: EX-99.13 Letter Agreement 2 14K
11: EX-99.14 Letter Agreement 2 13K
12: EX-99.15 Letter Agreement 3 18K
13: EX-99.16 Employment Agreement (Larry L. Gellerstedt, Iii) 18 65K
14: EX-99.17 Separation Agreement (Larry L. Gellerstedt, Iii) 8 32K
15: EX-99.18 Offer to Purchase (Profit Sharing Retirement Plan) 4 21K
16: EX-99.19 Offer to Purchase (Employee Savings Plan) 4 21K
3: EX-99.5 Shareholder Letter 2± 11K
4: EX-99.7 Confidentiality Agreement 4 18K
5: EX-99.8 Severance Agreement (Raymond J. Wilson) 10 46K
6: EX-99.9 Severance Agreement (John H. Karr) 10 46K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
AMERICAN BUSINESS PRODUCTS, INC.
(Name of Subject Company)
AMERICAN BUSINESS PRODUCTS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $2.00 PER SHARE
(Title of Class of Securities)
024763 10 4
(CUSIP Number of Class of Securities)
HAROLD R. SMETHILLS
CHIEF EXECUTIVE OFFICER
AMERICAN BUSINESS PRODUCTS, INC.
2100 RIVEREDGE PARKWAY, SUITE 1200
ATLANTA, GEORGIA 30328
(770) 953-8300
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
COPY TO:
LEONARD A. SILVERSTEIN, ESQ.
LONG ALDRIDGE & NORMAN LLP
303 PEACHTREE STREET, N.E.
SUITE 5300
ATLANTA, GEORGIA 30308-3201
(404) 527-4000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is American Business
Products, Inc., a Georgia corporation (the "Company"). The principal executive
offices of the Company are located at 2100 RiverEdge Parkway, Suite 1200,
Atlanta, Georgia 30328. The class of equity securities to which this statement
relates is the Common Stock, par value $2.00 per share (the "Shares"). The
Shares are traded on the New York Stock Exchange under the symbol "ABP."
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to a tender offer by Sherman Acquisition
Corporation, a Georgia corporation ("Purchaser") and wholly-owned indirect
subsidiary of Mail-Well, Inc., a Colorado corporation ("Mail-Well"), to purchase
all of the outstanding Shares. The offer is being made at a price of $20.00 per
Share, net to the seller in cash (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated January 21, 2000
(the "Offer to Purchase"), and the related Letter of Transmittal (which
together, with any amendments or supplements thereto, constitute the "Offer").
Purchaser and Mail-Well filed a Tender Offer Statement on Schedule 14D-1 on
January 21, 2000. Purchaser is making the Offer for the purpose of acquiring
that number of Shares (the "Minimum Number") which would constitute at least a
majority of the outstanding Shares on a fully diluted basis. The consummation of
the Offer is conditioned on, among other things, at least the Minimum Number of
Shares being validly tendered and not withdrawn in the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 13, 2000 (the "Merger Agreement"), among the Company, Mail-Well
and Purchaser. The Merger Agreement provides, among other things, that, upon the
terms and subject to the conditions set forth in the Merger Agreement, following
the purchase of Shares pursuant to the Offer, Purchaser will be merged with and
into the Company (the "Merger"). Following consummation of the Merger, Purchaser
will cease to exist and the Company will continue as the surviving corporation
(the "Surviving Corporation") and a wholly-owned indirect subsidiary of
Mail-Well.
At the effective time of the Merger (the "Effective Time"), each Share
outstanding immediately prior to the Effective Time (other than Shares held by
the Company, Mail-Well, or any of their respective subsidiaries or Shares as to
which dissenters' rights have been exercised under the Georgia Business
Corporation Code) will be converted automatically into the right to receive
$20.00 in cash, without interest.
The Merger Agreement is summarized in the Offer to Purchase in Section 13
under the caption "The Merger Agreement and the Tender Agreement" and the Merger
Agreement is also filed as Exhibit 4 to this Schedule 14D-9 and is incorporated
herein by reference.
The address of the principal executive offices of Purchaser and Mail-Well,
as set forth in the Offer to Purchase, is 23 Inverness Way East, Suite 160,
Englewood, Colorado 80112.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Schedule 14D-9, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements or understandings between
the Company and its executive officers, directors or affiliates are described in
the sections entitled "Director Compensation," "Executive Compensation,"
"Compensation and Nominating Committee Report on Executive Compensation," and
"Proposal 2 -- Approval and Adoption of the American Business Products, Inc.
1999 Incentive Compensation Plan" in the Company's Proxy Statement for the
Annual Meeting of Shareholders held on May 5, 1999 (the "Proxy Statement"). A
copy of the relevant portions of the Proxy Statement is filed as Exhibit 1
hereto and the portions of the Proxy Statement referred to above are
incorporated herein by reference.
COMMERCIAL ARRANGEMENTS BETWEEN MAIL-WELL AND THE COMPANY
The information contained in Section 11 under the caption "Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company" of the
Offer to Purchase is incorporated herein by reference.
MASTER SUPPLY AND COOPERATION AGREEMENT BETWEEN THE COMPANY AND MAIL-WELL
DATED SEPTEMBER 30, 1999
The Company and its subsidiaries purchase products from and supply products
to Mail-Well and its subsidiaries under the terms of a Master Supply and
Cooperation Agreement (the "Master Agreement"). The Master Agreement was entered
into on September 30, 1999. The Master Agreement has an initial term of five
years, after which it is renewable for additional one year periods and
terminable by either party upon 60 days notice prior to expiration of the
initial term or any renewal term. In addition, any party can terminate the
Master Agreement upon 180 days notice in the event of a material breach by the
other party which has not been resolved, upon a "change of control" (as defined
in the Master Agreement) of the other party, or after September 30, 2002.
Pursuant to the Master Agreement, Curtis 1000, Inc., a subsidiary of the
Company, is committed to purchase stock/specialty envelopes from Quality Park
Products, a Mail-Well subsidiary, and medium/long run forms from Poser Business
Forms, Inc., also a Mail-Well subsidiary. In exchange for this commitment,
Mail-Well has committed to purchase Tyvek(R) envelopes from International
Envelope Company, a subsidiary of the Company.
The Master Agreement governs the terms of the following supply agreements
between the parties and their subsidiaries: the Business Edge Supply Agreement
between Curtis 1000 and Quality Park Products dated September 30, 1999; the
Business Edge Supply Agreement between Curtis 1000 and Poser Business Forms
dated September 30, 1999; and the Business Edge Supply Agreement between
International Envelope and Mail-Well Envelope, dated September 30, 1999. Each of
the foregoing supply agreements has an initial term of five years and is
terminable only upon termination of the Master Agreement. The Company believes
the above-described supply agreements facilitate the efficiency of the Company's
operations in the ordinary course of business. The Company does not believe that
these agreements are material. Moreover, the Company believes that, if these
agreements are terminated, the Company could purchase from and sell to third
parties the identified products at substantially similar prices.
CONFIDENTIALITY AGREEMENT
On November 4, 1999, Mail-Well and the Company entered into a
Confidentiality Agreement (the "Confidentiality Agreement") under which the
Company agreed to provide certain confidential information relating to its
business to Mail-Well for the purpose of evaluating a possible transaction with
the Company (the "Evaluation Material"). Pursuant to the Confidentiality
Agreement, Mail-Well agreed that it and its representatives would use the
Evaluation Material received from the Company only for the purpose of evaluating
a possible transaction with the Company and would keep the Evaluation Material
confidential; provided, however, that permissible disclosure of any such
information may be made to Mail-Well's directors, officers, employees and
representatives who need to know such information for the purpose of evaluating
the transaction. The term Evaluation Material does not include information that
(1) was already in the possession of Mail-Well prior to the date of the
Confidentiality Agreement, provided such information was not subject to another
confidentiality agreement with or other obligation of secrecy to the Company or
another party; (2) becomes generally available to the public other than as a
result of disclosure by Mail-Well or its representatives; or (3) becomes
available to Mail-Well on a non-confidential basis from a source other than the
Company or its advisors, provided such source is not known by Mail-Well to be
bound by a confidentiality agreement with or other obligation of secrecy to the
Company or another party.
The foregoing description of the Confidentiality Agreement does not purport
to be complete and is qualified in its entirety by reference to the
Confidentiality Agreement, which is filed as Exhibit 7 hereto and incorporated
herein by reference.
2
AGREEMENTS AND ARRANGEMENTS WITH EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
SEVERANCE AGREEMENTS WITH RAYMOND J. WILSON, JOHN H. KARR, RICHARD G. SMITH
AND L. GEOFFREY GREULICH
The Company amended the Employment Agreements of Raymond J. Wilson, John H.
Karr and Richard G. Smith on June 30, 1999 and entered into a Severance
Agreement with L. Geoffrey Greulich on October 15, 1999 to provide protection to
these executives in the event of a termination of employment following a change
in control. These agreements define a "qualifying termination" to include the
termination of the executive's employment by the Company without cause or the
executive's termination of his employment for good reason. In the event of a
qualifying termination, accrued pay and benefits, severance pay, welfare
benefits, bonuses and stock rights, retirement benefits, and outplacement
benefits will all be granted to the individuals. These agreements contain
typical nonsolicitation and confidentiality provisions. For Mr. Wilson, Mr. Karr
and Mr. Greulich, the severance pay consists of a lump sum cash payment equal to
the executive's annual rate of base salary and bonus in effect upon the date of
the qualifying termination, if such qualifying termination occurs before the
change in control, and two times his base salary and bonus if such qualifying
termination occurs following a change in control of the Company. For Mr. Smith,
the severance pay consists of a lump sum payment of $330,000 and bonus if the
qualifying termination occurs before the change in control, and two times his
base salary and bonus if it occurs following a change in control. The agreements
with Messrs. Wilson, Karr and Smith provide for a gross-up payment for excise
taxes.
Mr. Wilson's and Mr. Karr's agreements both continue in effect until July
1, 2001 and Mr. Greulich's agreement continues in effect until June 30, 2001.
These agreements extend automatically for one additional year at the end of the
initial term, and then for successive one-year periods. However, either party
may terminate by giving the other party written notice of intent not to renew,
delivered at least 60 calendar days prior to the end of any term. In the event
that a change in control occurs, the term of the agreement becomes a term ending
on the first anniversary of the effective date of the change in control. Mr.
Smith's agreement continues in effect until July 1, 2003. Mr. Smith's agreement
may be extended for additional one-year periods upon written agreement by the
parties. In the event that a change in control occurs during the initial term of
the agreement, the term of the agreement shall automatically continue through
the end of the initial term; provided, that if the remainder of the initial term
is less than one year, the term of the agreement shall be for a term ending on
the first anniversary of the effective date of the change in control. In the
event that a change in control occurs during any successive period, the term of
this agreement shall become a term ending on the first anniversary of the
effective date of the change in control.
The foregoing descriptions of the Severance Agreements with Raymond J.
Wilson, John H. Karr, Richard G. Smith and L. Geoffrey Greulich do not purport
to be complete and are qualified in their entirety by reference to the Severance
Agreements with Raymond J. Wilson, John H. Karr, Richard G. Smith and L.
Geoffrey Greulich, which are filed as Exhibits 8, 9, 10 and 11 hereto,
respectively, and incorporated herein by reference.
LETTER AGREEMENT WITH DANIEL W. MCGLAUGHLIN, AS AMENDED
On October 15, 1999, the Company's Board of Directors entered into a letter
agreement with Mr. McGlaughlin, pursuant to which he would serve as Acting Chief
Executive Officer and President of the Company. Mr. McGlaughlin received $30,000
per month for his services. On December 31, 1999, the parties terminated the
letter agreement, based upon the Board's hiring of Harold Smethills to assume
the position of Chief Executive Officer and President. Mr. McGlaughlin agreed to
act as a consultant through January 31, 2000, in order to effect a smooth
transition. The compensation of $30,000 per month will remain in effect until
that time.
The foregoing description of the Letter Agreement with Daniel W.
McGlaughlin, as amended, does not purport to be complete and is qualified in its
entirety by reference to the Letter Agreement with Daniel W. McGlaughlin, as
amended, filed as Exhibit 12 hereto and incorporated herein by reference.
3
LETTER AGREEMENT WITH G. HAROLD NORTHROP, AS AMENDED
On October 15, 1999, the Company's Board of Directors entered into a letter
agreement with Mr. Northrop, pursuant to which he would serve as Acting Chairman
of the Board until such time as his successor had been elected by the Board. His
compensation as Acting Chairman was $30,000 per month. On December 31, 1999, the
parties amended that letter agreement to extend Mr. Northrop's services as
Acting Chairman of the Board through June 30, 2000. Mr. Northrop will be
compensated $30,000 a month through February 29, 2000; thereafter, he will
receive compensation in the amount of $5,000 per month for his services as
Acting Chairman through June 30, 2000. The Company's Board of Directors has
recommended a performance bonus to be paid to Mr. Northrop upon closing of a
change in control of the Company in an amount to be determined by the Executive
Committee of the Board of Directors. Mail-Well has consented to the Payment of
this bonus in the amount of $100,000 as required by the Merger Agreement.
The foregoing description of the Letter Agreement with G. Harold Northrop,
as amended, does not purport to be complete and is qualified in its entirety by
reference to the Letter Agreement with G. Harold Northrop, as amended, filed as
Exhibit 13 hereto and incorporated herein by reference.
LETTER AGREEMENT WITH W. STELL HUIE, AS AMENDED
On October 15, 1999, the Company's Board of Directors entered into a letter
agreement with Mr. Huie, pursuant to which he acts as a consultant to the acting
management of the Company with regard to certain executive compensation and
employment issues. Mr. Huie receives compensation in the amount of $400 per hour
for his services in this consultant capacity. On December 31, 1999, the parties
amended the letter agreement to extend his services as consultant through
February 29, 2000.
The foregoing description of the Letter Agreement with W. Stell Huie, as
amended, does not purport to be complete and is qualified in its entirety by
reference to the Letter Agreement with W. Stell Huie, as amended, filed as
Exhibit 14 hereto and incorporated herein by reference.
LETTER AGREEMENT WITH HAROLD R. SMETHILLS
Mr. Smethills began employment as Chief Executive Officer and President of
the Company effective as of December 6, 1999. The initial term of his employment
pursuant to a Letter Agreement dated December 1, 1999 is three months, during
which time the Compensation Committee of the Company's Board of Directors was
directed to negotiate an agreement with Mr. Smethills to extend the term of his
employment and include appropriate cash and equity incentives. Mr. Smethills
will be paid a base salary of $40,000 per month. The Company reimburses Mr.
Smethills for travel and living expenses. In the event of a change in control of
the Company during the term of this agreement, the Company will pay Mr.
Smethills a cash bonus in the amount of $200,000, which may be increased at the
discretion of the Company, payable on the date of closing of the change in
control transaction. A payment in the same amount will be made if the Company
has either executed a definitive agreement or has engaged in substantive and
substantial negotiations with a prospective purchaser at the time of the end of
this agreement, if those actions result in the Company's execution of a
definitive agreement within 90 days following the end of this agreement. During
the three-month term of this agreement, the Company may not terminate Mr.
Smethills' employment for any reason except for cause. The Company's Board of
Directors has recommended a performance bonus to be paid to Mr. Smethills upon
closing of a change in control of the Company in an amount to be determined by
the Chairman of the Board of Directors. The Chairman of the Board of Directors
has determined that the amount of this bonus will be $50,000, and Mail-Well has
consented to the payment of this bonus as required by the Merger Agreement.
The foregoing description of the Letter Agreement with Harold R. Smethills
does not purport to be complete and is qualified in its entirety by reference to
the Letter Agreement with Harold R. Smethills filed as Exhibit 15 hereto and
incorporated herein by reference.
4
EMPLOYMENT AGREEMENT WITH LARRY L. GELLERSTEDT, III
The Company entered into an employment agreement dated May 11, 1999 with
Larry L. Gellerstedt, III as its President and Chief Executive Officer. Pursuant
to the agreement, the Company agreed to pay Mr. Gellerstedt a base salary of
$450,000 per year, along with annual incentive compensation, long-term
incentives, coverage under employee benefit plans, an automobile allowance,
vacation time, business expense reimbursement, and payment of club dues. The
agreement contains typical restrictive covenants.
The foregoing description of the Employment Agreement with Larry L.
Gellerstedt, III does not purport to be complete and is qualified in its
entirety by reference to the Employment Agreement with Larry L. Gellerstedt, III
filed as Exhibit 16 hereto and incorporated herein by reference.
SEPARATION AGREEMENT WITH LARRY L. GELLERSTEDT, III
The Company entered into a Separation Agreement dated January 19, 2000 with
Larry L. Gellerstedt, III pursuant to which his employment with the Company
formally terminated as of the close of business on December 31, 1999. As of
September 16, 1999, Mr. Gellerstedt tendered his resignation as President and
Chief Executive Officer of the Company, as a member of the Board of Directors of
the Company, and as an officer and director of each of the Company's
subsidiaries. The Company agreed to continue the salary of Mr. Gellerstedt at a
monthly base rate of $37,500, payable for the period beginning on January 1,
2000 through June 30, 2000. He will not be eligible for consideration for any
awards under any annual or long-term incentive compensation or bonus plan for
1999 or any year thereafter. All stock options held by Mr. Gellerstedt became
immediately exercisable as of his resignation date and shall remain exercisable
for a period of two years. In addition, 29,256 shares of the restricted stock
grant of 131,000 shares of the Company's Common Stock awarded to Mr. Gellerstedt
on February 25, 1999 were immediately vested and nonforfeitable effective as of
the resignation date. The remaining shares were forfeited as of that date. The
agreement contains covenants not to disclose the Company's proprietary
information and other typical provisions.
The foregoing description of the Separation Agreement with Larry L.
Gellerstedt, III does not purport to be complete and is qualified in its
entirety by reference to the Separation Agreement with Larry L. Gellerstedt, III
filed as Exhibit 17 hereto and incorporated herein by reference.
STOCK OPTIONS
Since January 1, 1999, the Company's Board of Directors has granted stock
options to executive officers and directors of the Company under the Company's
1999 Incentive Compensation Plan as follows:
[Enlarge/Download Table]
NAME GRANT DATE NUMBER OF SHARES EXERCISE PRICE
---- ----------------- ---------------- --------------
Larry L. Gellerstedt, III............... February 25, 1999 232,000 $18.000
Henry Curtis VII........................ May 5, 1999 4,000 15.125
Hollis L. Harris........................ May 5, 1999 4,000 15.125
W. Stell Huie........................... May 5, 1999 4,000 15.125
Thomas F. Keller........................ May 5, 1999 4,000 15.125
James F. McDonald....................... May 5, 1999 4,000 15.125
Daniel W. McGlaughlin................... May 5, 1999 4,000 15.125
C. Douglas Miller....................... May 5, 1999 4,000 15.125
G. Harold Northrop...................... May 5, 1999 4,000 15.125
Joe W. Rogers........................... May 5, 1999 4,000 15.125
William B. Stokely III.................. May 5, 1999 4,000 15.125
5
RESTRICTED STOCK AWARDS
Since January 1, 1999, the Company's Board of Directors has granted shares
of restricted stock to executive officers and directors of the Company under the
Company's 1999 Incentive Compensation Plan as follows:
[Enlarge/Download Table]
NAME GRANT DATE NUMBER OF SHARES
---- ------------- ----------------
Larry L. Gellerstedt, III.............................. June 21, 1999 131,000
Hollis L. Harris....................................... May 5, 1999 100
W. Stell Huie.......................................... May 5, 1999 100
Thomas F. Keller....................................... May 5, 1999 100
James F. McDonald...................................... May 5, 1999 100
Daniel W. McGlaughlin.................................. May 5, 1999 100
C. Douglas Miller...................................... May 5, 1999 100
G. Harold Northrop..................................... May 5, 1999 100
Joe W. Rogers.......................................... May 5, 1999 100
William B. Stokely, III................................ July 19, 1999 100
Henry Curtis VII....................................... May 5, 1999 100
Richard B. Curtis...................................... May 5, 1999 100
Additionally, the Company's Board of Directors issued 200 shares of
restricted stock to Joe W. Rogers on January 25, 1999 under the Company's 1993
Directors' Stock Incentive Plan and 5,000 shares of restricted stock to Larry L.
Gellerstedt, III on February 11, 1999 under the Company's 1991 Stock Incentive
Plan.
OTHER ARRANGEMENTS
In addition to the foregoing, the Board of Directors of the Company has
approved consideration of performance bonuses to be paid to Messrs. Huie and Mr.
McGlaughlin upon closing of a change in control of the Company in an aggregate
amount of up to $60,000, subject to consent by Mail-Well.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
AT A MEETING OF THE BOARD OF DIRECTORS ON JANUARY 12, 2000, THE BOARD OF
DIRECTORS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
The Offer is scheduled to expire at 12:00 midnight, New York City time, on
February 18, 2000, unless Purchaser extends the period of time for which the
Offer is open. A copy of a letter to the Company's shareholders communicating
the Board's recommendation has been filed as Exhibit 5 hereto and is
incorporated herein by reference.
(b) Background; Reasons for the Recommendation of the Board of Directors.
As part of its ongoing efforts to enhance shareholder value, the Company's
Board of Directors has from time to time considered various strategic
alternatives. To assist the Board of Directors in the process of exploring
strategic alternatives, on August 25, 1999, the Company retained Goldman Sachs &
Co. to serve as its exclusive financial advisor. The Board of Directors of the
Company engaged Alston & Bird LLP as its special legal counsel with respect to
its consideration of strategic alternatives.
Some of the strategic alternatives explored by the Board of Directors
included:
- continuing to operate the Company's business as currently operated,
coupled with ongoing efforts to further improve operating performance;
6
- a shift in the business direction of the Company from an emphasis on
packaging to an increased emphasis on office products, including
e-commerce based marketing and customer inventory management systems;
- a sale of certain or substantially all of the Company's assets; and
- merging with a strategic buyer having significant resources to bring to
the combination.
On September 16, 1999, the Company's Board of Directors instructed Goldman
Sachs to initiate a process to explore the sale of the entire equity interest in
the Company through an auction process (the "Auction Process"). After evaluating
with the Board of Directors the likely interest of various strategic and
financial buyers in engaging in the Auction Process and the perceived ability of
each party to consummate a transaction with the Company, Goldman Sachs contacted
approximately 50 parties regarding the possibility of such parties submitting an
indication of interest in potentially purchasing the Company.
Thereafter, interested parties were asked to enter into a confidentiality
agreement with the Company. After execution of a confidentiality agreement, 28
interested parties, including Mail-Well, were sent information concerning the
Company to seek preliminary indications of interest. During the months of
November and December 1999, certain of these parties who had indicated a high
level of interest in a proposed transaction at a range of values attractive to
the Board of Directors were given additional information regarding the Company,
including (a) a presentation by the management of the Company and its operating
subsidiaries, (b) a proposed form of agreement on which they were asked to
indicate their proposed revisions, and (c) access to financial and other
information of the Company, including tours of certain of the Company's
operating facilities and interviews with certain of the Company's and its
operating subsidiaries' employees.
On December 20, 1999, Goldman Sachs invited Mail-Well to submit by January
6, 2000 a definitive proposal to acquire the Company. On January 6, 2000,
Mail-Well submitted a written offer to acquire the Company at a price of $19.25
per share. The Company's Board of Directors met to consider Mail-Well's offer on
January 10, 2000 and directed the Company's management to negotiate with
Mail-Well for a higher acquisition price.
Commencing on the afternoon of January 10, 2000, discussions were held
among the Company, Goldman Sachs and Mail-Well which culminated in Mail-Well
submitting a revised written offer on January 11, 2000 to acquire the Company at
a price of $20.00 per share, subject to the approval of its Board of Directors.
On January 12, 2000, Mail-Well advised the Company that its $20.00 per share
offer had been approved and authorized by its Board of Directors. On January 12,
2000, the Company's Board of Directors met to consider Mail-Well's revised
written offer. At the meeting on January 12, 2000, Goldman Sachs informed the
Company's Board of Directors that Goldman Sachs would be able to issue an
opinion, based upon and subject to certain matters set forth therein, with
respect to the fairness, from a financial point of view, of the proposed
consideration to the Company's shareholders. The Company's Board of Directors
then approved Mail-Well's offer of $20.00 per share subject to the negotiation,
execution and delivery of a definitive agreement substantially in the form
previously presented to the Company by Mail-Well and the receipt of an executed
commitment letter from a nationally recognized financial institution, in form
and content satisfactory to the Executive Committee of the Board of Directors,
agreeing to finance the transaction proposed by Mail-Well. The Board of
Directors at that meeting expressly delegated to the Executive Committee of the
Board of Directors authority to negotiate the terms of a definitive agreement
and to determine whether such commitment letter is satisfactory, and authorized
and directed the officers of the Company to execute and deliver a definitive
agreement in form and content acceptable to the Executive Committee.
The Company and Mail-Well began negotiating a definitive agreement on
January 12, 2000. The transaction was publicly announced on January 14, 2000 at
6:05 a.m. Eastern standard time. A commitment letter from Mail-Well's lenders
was furnished to the Executive Committee on January 13, 2000 and was determined
by the Executive Committee, after consulting with its financial and legal
advisors, to be satisfactory. The Executive Committee approved the form and
content of a written definitive agreement on January 13, 2000 and the definitive
agreement was executed and delivered by the parties on that date.
7
In reaching its conclusions with respect to the Offer and Merger Agreement,
the Board of Directors considered a number of factors, including the following:
(1) the terms and conditions of the Merger Agreement and related
agreements and transactions;
(2) the opinion of Goldman Sachs to the effect that, as of the date of
such opinion, and based upon and subject to the matters set forth therein,
the $20.00 per Share in cash to be offered to the shareholders of the
Company pursuant to the Offer and the Merger is fair from a financial point
of view to such shareholders. A copy of such opinion setting forth the
assumptions made, procedures followed, matters considered, and limits on
the review undertaken is attached as Annex A to this Schedule 14D-9 and
shareholders are urged to read such opinion in its entirety;
(3) that the $20.00 per Share in cash to be paid in the Offer and the
Merger would represent a significant premium over recent market prices (the
closing price of the Shares as reported by the New York Stock Exchange on
January 13, 2000, the last full trading day prior to the announcement of
the execution of the Merger Agreement, was $12.00 per share);
(4) the Company's current business and future prospects, including
difficulties in achieving desired economies of scale;
(5) that the Merger Agreement provides for a first-step cash tender
offer for all outstanding Shares thereby enabling shareholders who tender
their shares to receive promptly $20.00 per Share in cash, and that
shareholders who do not tender their Shares will receive the same cash
price in the subsequent Merger;
(6) a review of possible alternatives to the Offer and the Merger, the
range of possible benefits and risks to the shareholders of such
alternatives, and the timing and likelihood of accomplishing any such
alternatives; and
(7) the likelihood that the Offer and Merger will be consummated.
The foregoing discussion of the information and factors considered and
given weight by the Board of Directors is not intended to be exhaustive. In view
of the variety of factors considered in connection with its evaluation of the
Offer and the Merger Agreement, the Board of Directors did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination. In addition,
individual members of the Board of Directors may have given different weights to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to an agreement dated August 25, 1999 (the "Goldman Sachs
Agreement"), the Company retained Goldman Sachs as the Company's exclusive
financial advisor to assist the Company in its analysis and consideration of
various financial alternatives. Pursuant to the Goldman Sachs Agreement, the
Company paid Goldman Sachs a $250,000 initial advisory fee, and has agreed to
pay Goldman Sachs a transaction fee of 1.33% of the aggregate consideration paid
in connection with the Offer and the Merger (including amounts paid to holders
of options, warrants and convertible securities), plus the principal amount of
all indebtedness for borrowed money of the Company outstanding as set forth in
the most recent consolidated balance sheet of the Company prior to consummation
of the Offer, against which the initial advisory fee will be credited.
The Company also agreed to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses, including attorneys' fees and disbursements, and to
indemnify Goldman Sachs and related persons against certain liabilities,
including liabilities under the federal securities laws.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, no transactions in Shares have
been effected during the past 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company other than routine
transactions pursuant to employee benefit plans available to all employees.
8
(b) Henry Curtis VII, Richard B. Curtis, Jr., Hollis L. Harris, W. Stell
Huie, Thomas F. Keller, James F. McDonald, Daniel W. McGlaughlin, C. Douglas
Miller, G. Harold Northrop, Joe W. Rogers and William B. Stokely, III, each of
whom is a director of the Company, entered into a Shareholders' Stock Tender
Agreement with Purchaser and Mail-Well, dated as of January 13, 2000 (the
"Shareholders' Agreement"), pursuant to which they have agreed to tender a total
of 415,306 Shares beneficially owned by them pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in Item 4 above, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i) an
extraordinary transaction such as a merger or reorganization involving the
Company; (ii) a purchase, sale or transfer of a material amount of assets by the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 4 above, there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Reference is hereby made to the Offer to Purchase and the related Letter of
Transmittal, filed as Exhibits 2 and 3 hereto, respectively, and which are
incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
[Download Table]
Exhibit 1 -- Excerpts from the Company's Proxy Statement for the Annual
Meeting of Shareholders held on May 5, 1999.
Exhibit 2 -- Offer to Purchase dated January 21, 2000.+
Exhibit 3 -- Letter of Transmittal.+
Exhibit 4 -- Agreement and Plan of Merger, dated as of January 13, 2000,
among American Business Products, Inc., Mail-Well, Inc. and
Sherman Acquisition Corporation.+
Exhibit 5 -- Letter to Shareholders of the Company, dated January 21,
2000.*
Exhibit 6 -- Shareholders' Stock Tender Agreement, dated as of January
13, 2000, by and among Mail-Well, Inc., Sherman Acquisition
Corporation, and each of Henry Curtis VII, Richard B.
Curtis, Jr., Hollis L. Harris, W. Stell Huie, Thomas F.
Keller, James F. McDonald, Daniel W. McGlaughlin, C. Douglas
Miller, G. Harold Northrop, Joe W. Rogers and William B.
Stokely, III.+
Exhibit 7 -- Confidentiality Agreement between Mail-Well and the Company
dated November 4, 1999.
Exhibit 8 -- Severance Agreement between the Company and Raymond J.
Wilson dated June 30, 1999.
Exhibit 9 -- Severance Agreement between the Company and John H. Karr
dated June 30, 1999.
Exhibit 10 -- Severance Agreement between the Company and Richard G. Smith
dated June 30, 1999.
Exhibit 11 -- Severance Agreement between the Company and L. Geoffrey
Greulich dated October 15, 1999.
Exhibit 12 -- Letter Agreement between the Company and Daniel W.
McGlaughlin dated October 15, 1999, as amended on December
31, 1999.
Exhibit 13 -- Letter Agreement between the Company and G. Harold Northrop
dated October 15, 1999, as amended on December 31, 1999.
Exhibit 14 -- Letter Agreement between the Company and W. Stell Huie dated
October 15, 1999, as amended on December 31, 1999.
Exhibit 15 -- Letter Agreement between the Company and Harold R. Smethills
dated December 1, 1999.
9
[Download Table]
Exhibit 16 -- Employment Agreement between the Company and Larry L.
Gellerstedt, III dated May 11, 1999.
Exhibit 17 -- Separation Agreement between the Company and Larry L.
Gellerstedt, III dated January 19, 2000.
Exhibit 18 -- Notice to Participants in the Company's Profit Sharing
Retirement Plan dated January 21, 2000.++
Exhibit 19 -- Notice to Participants in the Company's Employee Savings
Plan dated January 21, 2000.++++
Exhibit 20 -- Press Release issued by Mail-Well and the Company on January
14, 2000.+
Exhibit 21 -- Press Release issued by Mail-Well on January 14, 2000.+
Exhibit 22 -- Press Release issued by Mail-Well and the Company on January
21, 2000.+
---------------
* Included with Schedule 14D-9 mailed to shareholders of the Company.
+ Filed as an exhibit to Sherman Acquisition Corporation's Tender Offer
Statement on Schedule 14D-1 dated January 21, 2000 and incorporated herein
by reference.
++ Included with Schedule 14D-9 mailed to participants in the Company's Profit
Sharing Retirement Plan.
++++ Included with Schedule 14D-9 mailed to participants in the Company's
Employee Savings Plan.
This document and the exhibits attached hereto may contain certain
statements that are not strictly historical and are considered forward-looking
statements. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be realized. Forward-looking statements
involve known and unknown risks which may cause the Company's actual results and
corporate developments to differ materially from those expected. Factors that
could cause results and developments to differ materially from the Company's
expectations include, without limitation, the risks described from time to time
in the Company's reports filed with the Securities and Exchange Commission
including quarterly reports on Form 10-Q, annual reports on Form10-K and reports
on Form 8-K. The safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 with respect to forward-looking statements are not available
to statements made in connection with a tender offer.
10
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICAN BUSINESS PRODUCTS, INC.
By: /s/ HAROLD R. SMETHILLS
------------------------------------
Name: Harold R. Smethills
Title: Chief Executive Officer
Dated: January 21, 2000
11
ANNEX A
PERSONAL AND CONFIDENTIAL
January 14, 2000
Board of Directors
American Business Products
2100 RiverEdge Parkway
Suite 1200
Atlanta, Georgia 30328
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $2.00
per share (the "Shares"), of American Business Products, Inc. (the "Company") of
the $20.00 per Share in cash to be received by such holders in the Tender Offer
and the Merger (as defined below) pursuant to the Agreement and Plan of Merger,
dated as of January 13, 2000, among Mail-Well, Inc. ("Parent"), Sherman
Acquisition Corp., a wholly-owned subsidiary of Parent ("Merger Sub"), and the
Company (the "Agreement"). Subject to the terms of the Agreement, Parent will
cause Merger Sub to commence a tender offer for all the Shares (the "Tender
Offer") at a price equal to $20.00 per Share in cash for each Share accepted.
The Agreement further provides that following purchase of the Shares pursuant to
the Tender Offer, Merger Sub shall be merged with and into the Company (the
"Merger") and each outstanding Share will be converted into the right to receive
$20.00 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having provided certain investment banking services to
the Company from time to time, including having acted as agent on the Company's
share repurchase program, and having acted as its financial advisor in
connection with, and having participated in certain of the negotiations leading
to, the Agreement. In addition, Goldman, Sachs & Co. provides a full range of
financial advisory and securities services and, in the course of normal trading
activities, may from time to time effect transactions and hold securities,
including derivative securities, of the Company or Parent for its own account
and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the five years ended December 31, 1998; certain interim reports to
Stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding their assessment of its past and current business operations,
financial condition and future prospects. In addition, we have reviewed the
reported price and trading activity for the Shares, compared certain financial
and stock market information for the Company with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the office
products industry specifically and in other industries generally and performed
such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. In addition,
we have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or any of its subsidiaries and we have not been
furnished with any such evaluation or appraisal. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transaction contemplated by the Agreement and such opinion does not constitute a
recommendation as to whether or not
Board of Directors
American Business Products
January 14, 2000
Page Two
any holder of Shares should tender such Shares in connection with, or how any
holder of Shares should vote with respect to, such transaction.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the $20.00
per Share in cash to be received by the holders of Shares in the Tender Offer
and the Merger is fair from a financial point of view to such holders.
Very truly yours,
/s/ GOLDMAN SACHS & CO.
(GOLDMAN, SACHS & CO.)
Dates Referenced Herein and Documents Incorporated by Reference
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