Tender-Offer Statement — Third-Party Tender Offer — Schedule 14D-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D1 Borden Acquisition Corp. 6 48K
2: EX-11.(A)(1) Statement re: Computation of Earnings Per Share 133 731K
3: EX-11.(A)(2) Statement re: Computation of Earnings Per Share 14 69K
4: EX-11.(A)(3) Statement re: Computation of Earnings Per Share 2 20K
5: EX-11.(A)(4) Statement re: Computation of Earnings Per Share 3 24K
6: EX-11.(A)(5) Statement re: Computation of Earnings Per Share 3 23K
7: EX-11.(A)(6) Statement re: Computation of Earnings Per Share 5± 22K
8: EX-11.(A)(7) Statement re: Computation of Earnings Per Share 5 35K
9: EX-11.(A)(8) Statement re: Computation of Earnings Per Share 2 16K
10: EX-11.(C)(1) Statement re: Computation of Earnings Per Share 124 273K
11: EX-11.(C)(2) Statement re: Computation of Earnings Per Share 18 70K
12: EX-11.(C)(3) Statement re: Computation of Earnings Per Share 2 17K
13: EX-11.(C)(4) Statement re: Computation of Earnings Per Share 34 71K
14: EX-11.(G)(1) Statement re: Computation of Earnings Per Share 10 32K
23: EX-11.(G)(10) Statement re: Computation of Earnings Per Share 4 23K
24: EX-11.(G)(11) Statement re: Computation of Earnings Per Share 13 35K
25: EX-11.(G)(12) Statement re: Computation of Earnings Per Share 13 33K
26: EX-11.(G)(13) Statement re: Computation of Earnings Per Share 18 47K
27: EX-11.(G)(14) Statement re: Computation of Earnings Per Share 12 35K
28: EX-11.(G)(15) Statement re: Computation of Earnings Per Share 18 49K
29: EX-11.(G)(16) Statement re: Computation of Earnings Per Share 12 36K
30: EX-11.(G)(17) Statement re: Computation of Earnings Per Share 12 32K
31: EX-11.(G)(18) Statement re: Computation of Earnings Per Share 11 30K
32: EX-11.(G)(19) Statement re: Computation of Earnings Per Share 12 32K
15: EX-11.(G)(2) Statement re: Computation of Earnings Per Share 10 32K
33: EX-11.(G)(20) Statement re: Computation of Earnings Per Share 18 49K
34: EX-11.(G)(21) Statement re: Computation of Earnings Per Share 9 27K
35: EX-11.(G)(22) Statement re: Computation of Earnings Per Share 9 32K
16: EX-11.(G)(3) Statement re: Computation of Earnings Per Share 10 32K
17: EX-11.(G)(4) Statement re: Computation of Earnings Per Share 10 32K
18: EX-11.(G)(5) Statement re: Computation of Earnings Per Share 10 32K
19: EX-11.(G)(6) Statement re: Computation of Earnings Per Share 10 32K
20: EX-11.(G)(7) Statement re: Computation of Earnings Per Share 10 32K
21: EX-11.(G)(8) Statement re: Computation of Earnings Per Share 11 32K
22: EX-11.(G)(9) Statement re: Computation of Earnings Per Share 9 31K
EX-11.(G)(14) — Statement re: Computation of Earnings Per Share
Exhibit Table of Contents
EXHIBIT 11(g)(14)
GOLDSTEIN TILL & LITE
744 Broad Street, Suite 800
Newark, New Jersey 07102
(201) 623-3000
Attorneys for Plaintiff
___________________________________
X SUPERIOR COURT OF NEW JERSEY
BERNARD STEPAK, on behalf of : CHANCERY DIVISION
himself and all others similarly : MERCER COUNTY
situated, : DOCKET NO.
:
Plaintiff, :
:
:
: CLASS ACTION COMPLAINT
BORDEN INC., FRANK J. TASCO, ERVIN : ----------------------
R. SHAMES, FREDERICK E. HENNIG, :
WILBERT J. LEMELLE, ROBERT P. :
LUCIANO, H. BARCLAY MORLEY, JOHN :
E. SEXTON, PATRICIA CARRY STEWART :
and KOHLBERG KRAVIS ROBERTS & CO., :
:
Defendants. :
___________________________________X
Plaintiff, by his attorneys, alleges upon information and belief (said
information and belief being based, in part, upon the investigation conducted by
and through his undersigned counsel), except with respect to his ownership of
Borden, Inc. ("Borden" or the "Company") common stock, and his suitability to
serve as a class representative which are alleged upon personal knowledge, as
follows:
PARTIES
-------
1. Plaintiff, who resides at 76 W. 33rd Street, Bayonne, New Jersey,
is the owner of shares of defendant Borden.
2. Defendant Borden is a corporation organized and existing under
the laws of the State of New Jersey. Borden maintains its principal offices at
180 East Broad Street, Columbus, Ohio 43215. Borden is a producer and
distributor of a variety of consumer food products, consumer adhesive and
industrial adhesives.
3. Defendant Kohlberg Kravis & Roberts Co. ("KKR") is a corporation
organized and existing under the laws of the State of Delaware with its
principal offices located in New York, New York. KKR is a "buy-out firm" that
owns a substantial interest in, among others, RJR Nabisco Holdings
Corp. ("RJR").
4. Defendant Frank J. Tasco is Chairman of the Board of Directors of
Borden.
5. Defendant Ervin S. Shames is President, Chief Executive Officer
and a Director of Borden.
6. Defendant Frederick E. Hennig is a Director of Borden.
7. Defendant Wilbert J. Lemelle is a Director of Borden.
8. Defendant Robert P. Luciano is a Director of Borden.
9. Defendant H. Barclay Morley is a Director of Borden.
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10. Defendant John E. Sexton is a Director of Borden.
11. Defendant Patricia Carry Stewart is a Director of Borden.
12. The foregoing individual directors of Borden (collectively the
"Director Defendants") owe fiduciary duties to Borden and its shareholders.
CLASS ACTION ALLEGATIONS
------------------------
13. Plaintiff brings this action upon Rule 4:32 of the New Jersey
Court Rules on his own behalf and as a class action on behalf of all
shareholders of defendant Borden (except defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants) or their successors in interest, who have been or will be adversely
affected by the conduct of defendants alleged herein.
14. This action is properly maintainable as a class action for the
following reasons:
(a) The class of shareholders for whose benefit this action is
brought is so numerous that joinder of all class members is impracticable. As
of April 22, 1994, there were over 141 million shares of defendant Borden's
common stock outstanding owned by tens of thousands of shareholders of record.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over any questions affecting any
individual members. The common questions include, inter alia, the following:
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i. Whether one or more of the defendants has engaged in a plan
and scheme to enrich themselves at the expense of defendant Borden's public
stockholders;
ii. Whether the Defendant Directors have breached their
fiduciary duties owed by them to plaintiff and members of the Class, and/or have
aided and abetted in such breach, by virtue of their participation and/or
acquiescence and by their other conduct complained of herein;
iii. Whether defendants have failed to fully disclose the true
value of defendant Borden's assets and earning power and the future financial
benefits which they expect to derive from Borden's purchase by KKR;
iv. Whether the Defendant Directors have wrongfully failed and
refused to seek a purchaser of Borden at the highest possible price and,
instead, have sought to chill potential offers and allow the valuable assets of
defendant Borden to be acquired by defendant KKR at an unfair and inadequate
price;
v. Whether defendant KKR has induced or aided and abetted
breaches of fiduciary duty by members of Borden's Board of Directors;
vi. Whether plaintiff and the other members of the Class will be
irreparably damaged by the transactions complained of herein; and
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vii. Whether defendants have breached or aided and abetted the
breaches of the fiduciary and other common law duties owed by them to plaintiff
and the other members of the Class.
15. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The claims
of plaintiff are typical of the claims of the other members of the Class and
plaintiff has the same interest as the other members of the Class. Accordingly,
plaintiff is an adequate representative of the Class and will fairly and
adequately protect the interests of the Class.
16. Plaintiff anticipates that there will not be any difficulty in
the management of this litigation.
17. For the reasons stated herein, a class action is superior to
other available methods for the fair and efficient adjudication of this action.
FACTUAL BACKGROUND
------------------
18. On September 12, 1994, KKR and Borden announced that they had
agreed in principle to the acquisition of all of the outstanding common stock of
Borden by a KKR partnership in exchange for RJR stock owned by that partnership,
valued at $14.25 per Borden share, or a total of approximately $2 billion. The
transaction is scheduled to close by September 23, 1994 (the "Transaction").
The Transaction has already been approved by the Director Defendants.
19. On Friday, September 9, 1994, Borden stock closed at $11.625 per
share.
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20. Although the purchase represents a small premium over the most
recent closing price of Borden stock, the Company's stock price recently
averaged between $15 and $20 per share. In addition to the fact that the price
offered is unfair and inadequate, the Transaction also provides that at the time
a definitive merger agreement is entered into, Borden will grant KKR a "lock up"
option to purchase from Borden up to 19.9% of the outstanding Borden common
stock for $11 a share payable in RJR Nabisco stock. If the option is exercised,
KKR must purchase at least 41% of the outstanding Borden common stock in the
exchange offer if it acquires any shares in the exchange offer. If KKR acquires
at least 41%, but less than 51% of Borden common stock in the exchange offer,
the option must be exercised by KKR, to the extent necessary for KKR to own at
least 51% of the outstanding Borden common stock. In the event any competing
transaction is consummated, KKR would be paid certain amounts under the merger
agreement. In addition, Defendants have agreed that if a merger agreement with
Borden is not entered into by September 23, 1994, KKR will purchase 19.9% of the
outstanding common shares of Borden at only $11 a share.
21. Further, RJR also announced on September 12, 1994 that it has
reached an agreement in principle with KKR to acquire a minority interest in
Borden upon KKR's successful acquisition of 100 percent of Borden. RJR will
issue to Borden approximately $500 million of newly issued RJR common shares for
newly issued
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Borden shares priced at $14.25 each, representing a 20 percent pro forma
interest in Borden.
22. The Director Defendants and KKR have agreed that, if the merger
is consummated, senior management will remain in place and that their
compensation structure will be altered to provide greater incentive compensation
awards. Also, a majority of the current directors will remain on the Board.
23. The proposed Transaction is wrongful, unfair and harmful to
Borden's public stockholders, the Class members, and represents an attempt by
defendants to aggrandize the personal and financial positions and interests of
board members at the expense of and to the detriment of the stockholders of the
Company. The proposed transaction will deny plaintiff and other Class members
their rights to share appropriately in the true value of the Company's assets
and future growth in profits and earnings, while usurping the same for the
benefit of defendant KKR (and for RJR, of which KKR will continue to own a
substantial interest) at an unfair and inadequate price.
CLAIM AGAINST ALL DEFENDANTS
----------------------------
24. Defendants other than KKR, acting in concert, have violated their
fiduciary duties owed to the public shareholders of Borden and put their own
personal interests and the interests of defendant KKR ahead of the interests of
the Borden public shareholders and have used their control positions as officers
and directors of Borden for the purpose of reaping personal gain for board
members at the expense of Borden's public shareholders.
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25. The Defendant Directors failed to (1) undertake an adequate
evaluation of Borden's worth as a potential merger/acquisition candidate; (2)
take adequate steps to enhance Borden's value and/or attractiveness as a
merger/acquisition candidate; (3) effectively expose Borden to the marketplace
in an effort to create an active and open auction for Borden; or (4) act
independently so that the interest of the Company's public shareholders would be
protected. Instead, defendants have set a price for the shares of stock that
does not reflect the true value of Borden and without an appropriate premium.
26. While the Defendant Directors of Borden should seek out other
possible purchasers of the assets of Borden or its stock in a manner designed to
obtain the highest possible price for Borden's shareholders, to seek to enhance
the value of Borden for all its current shareholders, they have instead resolved
to wrongfully allow KKR to obtain the valuable assets of Borden at a bargain
price, which under the circumstances here, disproportionately benefits KKR.
27. These tactics pursued by the defendants are, and will continue to
be, wrongful, unfair and harmful to Borden's public shareholders, and are an
attempt by certain defendants to aggrandize their personal positions, interests
and finances at the expense of and to the detriment of the Borden public
stockholders. These maneuvers by the defendants will deny members of the Class
their right to share appropriately in the true value of Borden's valuable
assets, future earnings and
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profitable businesses to the same extent as they would as Borden's shareholders.
28. In contemplating, planning and/or effecting the foregoing
specified acts and in pursuing and structuring the Transaction, defendants are
not acting in good faith toward plaintiff and the Class, and have breached, and
are breaching, their fiduciary duties to plaintiff and the Class.
29. Because the Defendant Directors (and those acting in concert with
them) dominate and control the business and corporate affairs of Borden and
because they are in possession of private corporate information concerning
Borden's businesses and future prospects, there exists an imbalance and
disparity of knowledge and economic power between the defendants and the public
shareholders of Borden which makes it inherently unfair to Borden's public
shareholders.
30. Defendant KKR has acted and is acting with knowledge or with
reckless disregard that the other defendants are in breach of their fiduciary
duties to Borden's public shareholders and have participated in such breaches of
fiduciary duties by the directors of Borden and thus are liable as aiders and
abettors.
31. By reason of the foregoing acts, practices and course of conduct,
the Defendant Directors have failed to use the required care and diligence in
the exercise of their fiduciary obligations owed to Borden and its public
shareholders.
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32. As a result of the actions of the defendants, plaintiff and the
Class have been and will be damaged in that they will not receive the fair value
of Borden's assets and business in exchange for their RJR shares, and have been
and will be prevented from obtaining a fair price for their shares of Borden
common stock.
33. Unless enjoined by the Court, the Defendant Directors will
continue to breach their fiduciary duties owed to plaintiff and the Class, all
to the irreparable harm of the Class. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring that this action may be maintained as a class action;
(b) Declaring that proposed Transaction is unfair, unjust and
inequitable to plaintiff and the other members of the Class;
(c) Enjoining preliminarily and permanently the defendants from
taking any steps necessary to accomplish or implement the proposed merger of
defendant Borden with defendant KKR at a price that is not fair and equitable;
(d) Requiring defendants to compensate plaintiff and the members of
the Class for all losses and damages suffered and to be suffered by them as a
result of the acts and transactions complained of herein, together with
prejudgment and post-judgment interest;
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(e) Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys', accountants', and experts', fees; and
(f) Granting such other and further relief as may be just and proper.
Dated: September 16, 1994
GOLDSTEIN TILL & LITE
By: /s/ Allyn Z. Lite
___________________________
Allyn Z. Lite
744 Broad Street
Newark, New Jersey 07102
(201) 623-3000
OF COUNSEL:
MICHAEL J. BONI
SETH I. GROSSMAN
HAROLD E. KOHN
JOSEPH C. KOHN
KOHN, NAST & GRAF, P.C.
1101 Market Street
Suite 2400
Philadelphia, Pennsylvania 19107
(215) 238-1700
Attorney for Plaintiffs
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CERTIFICATION PURSUANT TO R. 4:5-1
-----------------------------------
Pursuant to R. 4:5-1, it is hereby stated that the matter in controversy
is not the subject of any other action pending in any other court or pending in
any arbitration proceeding to the best of my knowledge and belief, except for
the matters entitled, Barbara Lubin, et al. v. Borden Inc., et al., filed in
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this Court on September 13, 1994; Norman Weiss, et al v. Borden, Inc., et al.,
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filed in this Court on September 13, 1994 and Jerry Krim, et al. v. Borden Inc.,
----------------------------------
et al., filed in this Court on September 14, 1994. Also to the best of my
------
belief, no other action or arbitration proceeding is contemplated. Further,
other than the parties set forth in this pleading, at the present time I know of
no other party that should be joined in the within action.
GOLDSTEIN TILL & LITE
By: /s/ Allyn Z. Lite
___________________________________
Allyn Z. Lite
Dated: September 16, 1994
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Dates Referenced Herein and Documents Incorporated by Reference
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