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)(13) — Statement re: Computation of Earnings Per Share
EX-11.(G)(13) | 1st Page of 18 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
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EXHIBIT 11(g)(13)
GOLDSTEIN TILL & LITE
Allyn Z. Lite, Esq.
744 Broad Street, Suite 800
Newark, New Jersey 07102
(201) 623-3000
Attorneys for Plaintiffs
------------------------------- )
NORMAN WEISS, STELLA COHORSKY, ) SUPERIOR COURT OF NEW JERSEY
ABRAHAM JOSEPH and ROBERT WARING) MERCER COUNTY
on behalf of themselves and all ) CHANCERY DIVISION
others similarly situated, )
)
Plaintiffs, ) Civil Action
)
-against- ) CLASS ACTION COMPLAINT
) ----------------------
BORDEN INC., KOHLBERG KRAVIS )
ROBERTS & CO., ERVIN R. SHAMES, )
FRANK J. TASCO, H. BARCLAY )
MORLEY, JOHN E. SEXTON, )
FREDERICK E. HENNING, WILBERT )
J. LEMELLE, ROBERT P. LUCIANO, )
and PATRICIA CARRY STEWART, )
)
Defendants. )
_______________________________ )
Plaintiffs, Norman Weiss who resides at 941 East 28th Street, Brooklyn, New
York 11210, Stella Cohorsky who resides at 25 Kirk Street, Avenell, New Jersey
07001, Abraham Joseph who resides at 85 Taylor Street, Apartment 15D, Brooklyn,
New York 11211; and Robert Waring who resides at 26 Wooley Lane, Great Neck, New
York 11023, by their attorneys, allege upon information and belief, based, in
part, upon an investigation conducted by
1
and through the undersigned counsel, except with respect to their ownership of
Borden Inc. common stock and their suitability to serve as class
representatives, which are alleged upon personal knowledge as follows:
THE PARTIES
-----------
1. Plaintiffs Norman Weiss, Stella Cohorsky, Abraham Joseph and Robert
Waring are and have been at all relevant times owners of shares of the common
stock of Borden Inc. ("Borden" or the "Company").
2. Defendant Borden is a corporation organized and existing under the
laws of the State of New Jersey with its principal executive offices located at
180 East Broad Street, Columbus, Ohio, 43215. Borden is an international food
company, with a diversified line of products among snack foods, dairy products,
household items and special market foods, including cheese, yogurt, glue, pasta,
frozen desserts, arts and crafts supplies, caulking and industrial coatings.
Borden had, as of December 31, 1993, approximately 141,358,035 shares of common
stock issued and outstanding, which shares are held by at least hundreds of
shareholders of record and are traded on the New York Stock Exchange.
3. Defendant Kohlberg Kravis Roberts & Co. ("KKR") is a corporate buyout
firm located in New York, New York. KKR is named as a defendant herein because,
as a party to the proposed merger, it is a necessary party to be joined in this
action in order to obtain the relief sought.
2
4. (a) Defendant Ervin R. Shames ("Shames") is and has been at all
relevant times the Company's President and Chief Executive Officer and a
director;
(b) Defendant Frank J. Tasco ("Tasco") is and has been at all
relevant times the Company's Chairman of the Board of Directors;
(c) Defendant H. Barclay Morley ("Morley") is and has been at all
relevant times a director of Borden;
(d) Defendant John E. Sexton ("Sexton") is and has been at all
relevant times a director of Borden;
(e) Defendant Frederick E. Henning ("Henning") is and has been at all
relevant times a director of Borden;
(f) Defendant Wilbert J. Lemelle ("Lemelle") is and has been at all
relevant times a director of Borden;
(g) Defendant Robert P. Luciano ("Luciano") is and has been at all
relevant times a director of Borden; and
(h) Defendant Patricia Carry Stewart ("Stewart") is and has been at
all relevant times a director of Borden.
The defendants described in paragraphs 4(a) - (h) above are hereinafter
sometimes collectively referred to as the "individual defendants" or the
"director defendants."
5. By virtue of the individual defendants' positions as officers and/or
directors of Borden, said individual defendants are in a fiduciary relationship
with the plaintiffs and other public shareholders of Borden and owe plaintiffs
and other
3
members of the Class the highest obligation of good faith, fair dealing, loyalty
and due care.
CLASS ACTION ALLEGATIONS
------------------------
6. Plaintiffs bring this action individually and, pursuant to R. 4:32 of
the New Jersey Court Rules as a class action on behalf of all shareholders of
Borden, and their successors in interest who are or will be threatened with
injury arising from defendants' actions as more fully described below (the
"Class"). Excluded from the Class are defendants herein and any person, firm,
trust, corporation or other entity related to or affiliated with any of the
defendants.
7. This action is properly maintainable as a class action under the laws
of the State of New Jersey for the following reasons:
(a) The Class, which includes at least hundreds of shareholders of
record scattered throughout the United States and foreign countries, is so
numerous that joinder of all members is impracticable.
(b) There are questions of law and fact common to members of the
Class which predominate over any questions affecting only individual members,
including, inter alia, the following:
----- ----
(i) whether one or more of the defendants has engaged in a plan
and scheme to enrich themselves at the expense of Borden's public shareholders;
4
(ii) whether the defendants have breached their fiduciary duties
owed by them to plaintiffs 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 Borden's assets and earning power, as well as the future financial
benefits they expect to derive, through the merger with KKR;
(iv) whether the defendants 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 acquire the valuable assets of Borden for KKR at
an unfair and inadequate price;
(v) whether plaintiffs and the other members of the Class will
be irreparably damaged by the transactions complained of herein;
(vi) whether defendants have breached, and/or aided and abetted
one another in the breach of, the fiduciary and other common law duties owed by
them to plaintiffs and the other members of the Class; and
(vii) whether defendants are pursuing a scheme and course of
business designed to eliminate the public shareholders of Borden in violation of
the laws of the State of New Jersey.
(c) The claims of plaintiffs are typical of the claims of the other
members of the Class, and plaintiffs have no
5
interests that are adverse or antagonistic to the interests of the Class.
(d) Plaintiffs are committed to the vigorous prosecution of this
action and have retained competent counsel experienced in litigation of this
nature. Accordingly, plaintiffs are adequate representatives of the Class and
will fairly and adequately protect the interests of the Class.
(e) Plaintiffs anticipate that there will not be any difficulty in
the management of this litigation as a class action.
8. 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 AND SUBSTANTIVE ALLEGATIONS
----------------------------------------------
9. On or about December 22, 1993, Borden announced to the financial news
wire services that it was not engaged in any negotiations for a sale or merger
of the Company. Borden announced that instead they would restructure and that
details would be announced in early January, 1994.
10. On January 5, 1994, Borden announced the details of its restructuring
and refocusing plan. The restructuring included $650 million in charges to
fourth-quarter 1993 earnings and the sale of the Company's North American
snacks, seafood and other units. The units put up for sale represented about
$1.25 billion, or 20 percent, of Borden's projected sales of $6.75
6
billion for 1993. According to defendant Tasco: "The goal of the program is to
build shareholder value by focusing on and revitalizing our best businesses.
Defendant Shames stated that other key elements of the restructuring plan
included the introduction of new consumer-oriented marketing programs to
strengthen Borden's core food businesses of pasta, niche grocery and
international foods. The restructuring plans also called for a turnaround of
Borden's domestic dairy business, largely through volume recovery and cost
reduction and retention of nearly all of the non-food businesses as important
contributors to current cash flow and earnings.
11. Borden said the plans also called for cost reductions phasing in over
two years and reaching an annualized savings rate of $100 million to $125
million by the end of 1995. Savings would be achieved through a combination of
divestments and gains in efficiency and productivity.
12. On January 26, 1994, Borden announced that it expects its
restructuring, along with increased marketing and cost reductions, to improve
its performance in 1994. Defendant Shames stated: "I believe the new
restructuring plan that we are implementing will improve Borden's performance
and build shareholder value." Shames also stated that Borden projects 1994
earnings at the upper end of the $0.75 to $1.00 per share range of estimates by
security analysts who follow Borden closely. The press release also stated that
quarterly earnings are expected to
7
strengthen after a marginally profitable first quarter as momentum and cost
savings build during the year.
13. On April 25, 1994, Borden released its 1994 first quarter earnings.
Defendant Shames stated in the press release disseminated to the investing
public that: "The fundamentals of our businesses have improved. Although there
is much to be done throughout the North American Foods businesses, Borden is
making significant gains in many areas in rebuilding volume and market
share....we are making significant progress in our cost saving programs and
running above our projection for increased cash flow."
14. On May 16, 1994, Borden announced that it had sold its Borden
Foodservice Group to H.J. Heinz Co. for an undisclosed amount. The division had
sales of $270 million in 1993 but has been unprofitable in recent years. Borden
stated that: "We are moving ahead on schedule with our divestment of
businesses."
15. On May 20, 1994, Borden announced the sale of three additional
businesses as part of its restructuring program. Shames stated that "[o]ur
divestiture program is on track."
16. On July 11, Borden announced that it had sold its Bama Food business
to Welch's. Terms of the transaction were not disclosed. Shames stated: "We
are also making progress in our efforts to sell our salty snacks business."
17. On August 25, 1994, Borden announced that it has finalized an
agreement to sell its Jays Foods, Inc. snack
8
business to Special Foods Company. Terms of the agreement were not disclosed.
18. On September 12, 1994, Borden and KKR shocked the market by announcing
that KKR had agreed to acquire Borden in a transaction valued at approximately
$2 billion.
19. Under the terms of the agreement, Borden shareholders will receive RJR
Nabisco Holdings Corp. ("RJR") stock owned by KKR worth approximately $14.25 per
Borden share. The press release announcing the deal stated inter alia:
----- ----
It is contemplated that a definitive merger agreement will be executed
within two weeks. The agreement will provide for an exchange offer by
KKR in which holders of Borden common stock would have the right to
exchange their shares for RJR Nabisco common stock. The exact number
of RJR Nabisco shares to be exchanged for each Borden share will be
determined by dividing $14.25 by the average of the high and low
prices of RJR Nabisco stock for a 10-day trading period to be
established in the offer, provided that in no event will Borden
stockholders receive greater than 2.375 RJR Nabisco shares, nor less
than 1.78125 RJR Nabisco shares for each Borden share. The transaction
will be taxable to Borden shareholders.
20. The press release also stated:
KKR also announced that in connection with its agreement with Borden,
RJR Nabisco Holdings Corp. has agreed in principle that upon KKR's
successful acquisition of 100% of Borden and subject to certain other
conditions, RJR Nabisco will issue approximately $500 million in newly
issued RJR Nabisco common shares for newly issued Borden shares priced
at $14.25 each, representing a 20 percent pro forma interest in
Borden. RJR Nabisco also will receive a warrant to purchase an
additional 10 percent interest in Borden as part of its investment.
"We believe that, after a full consideration of all the risks and
opportunities confronting Borden today, this transaction is the best
outcome for Borden shareholders, said Frank J. Tasco, Chairman of
Borden. The restructuring pursued since January has resulted in
volume and share gains in many of Borden's businesses.
9
Moreover, the earnings trend is also improving, but it is clear that
additional investment in our brands and in capital are needed in order to
capture the Company's potential...."
21. Also as part of the deal, Borden has agreed that at the time a
definitive merger agreement is entered into, Borden will grant KKR an option to
purchase from Borden up to 19.9% of the outstanding Borden common stock for $11
per share payable in RJR Nabisco common 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. KKR has also agreed that if a
merger agreement is not entered into by September 23, 1994, KKR will, subject
only to necessary regulatory approvals, purchase 19.9% of the outstanding shares
of Borden common stock for $11 per share.
22. The proposed merger transaction is wrongful, unfair and harmful to
Borden's shareholders, including plaintiffs and the other Class members, because
just as Borden's restructuring efforts, whose cost was borne by Borden
shareholders, were bearing fruit and its earnings potential was on an upswing,
Borden and KKR are attempting to usurp form Borden's shareholders the benefits
of the restructuring.
10
23. The proposed merger transaction is further wrongful, unfair and
harmful to Borden's shareholders, including plaintiffs and the other Class
members, and represents an attempt by the director defendants to aggrandize
their personal financial positions and interests and to enrich themselves at the
expense of and to the detriment of the Company's shareholders. The proposed
transaction denies to plaintiffs and other Class members their right to share
proportionately in the true value of the Company's assets and future growth in
profits and earnings while usurping the same for the benefit of KKR at an unfair
and inadequate price.
FIRST COUNT
-----------
24. Defendants, acting in concert and aiding and abetting one another,
have violated their fiduciary duties owed to the public shareholders of Borden
and put their own personal interests and the interests of KKR ahead of the
interests of Borden's public shareholders, including plaintiffs and the Class
members, and have used their control positions as officers and directors of
Borden, all as alleged herein, for the purpose of reaping high personal profits
at the expense of the Company's public shareholders.
25. In negotiating the proposed merger/acquisition of Borden by KKR,
defendants did not exercise good faith, fair dealing, loyalty and due care by
failing, among other things, to:
11
(a) evaluate adequately the Company's worth as a potential
merger/acquisition candidate;
(b) take sufficient steps to enhance Borden's value and/or
attractiveness as a merger/acquisition candidate;
(c) expose the Company effectively in the marketplace to create an
active and open auction for the Company and its assets; and
(d) act independently so that the interests of Borden's public
shareholders would be protected throughout the merger/acquisition process.
26. Furthermore, in granting a lock-up option to KKR for 19.9% of Borden's
outstanding shares at a price of only $11, rather than the $14.25 to be paid to
Borden's shareholders, the defendants failed to achieve an appropriate premium
or recognition of the added value of the Company that will result from it being
wholly-owned by KKR.
27. In contemplating and implementing a plan to obtain immediate financial
rewards for themselves, the director defendants have failed to act in the best
interests of Borden's public shareholders by failing, among other things, to:
(a) undertake an adequate evaluation of the Company's worth as a
potential merger/acquisition candidate;
(b) ensure than no conflicts of interest existed; and
(c) act independently to ensure that the interests of Borden's public
shareholders would be protected.
12
28. The director defendants have agreed among themselves that they will
not solicit any other proposal or initiate discussions with any other persons or
entities regarding any offer or proposal for the acquisition of the business of
Borden through merger, asset sale, stock sale or otherwise while Borden is still
a publicly held company. Thus, the director defendants have resolved to
wrongfully obtain the valuable assets of Borden for KKR at a bargain price,
which under these circumstances, disproportionately benefits them. By secretly
negotiating and implementing the merger/acquisition plan while ignoring other
options, the director defendants have violated their fiduciary duties to
plaintiffs and other public shareholders of Borden.
29. The strategy and tactics pursued by the defendants are and will
continue to be wrongful, unfair and harmful to Borden's public shareholders,
serve no legitimate business purpose of Borden and are essentially designed to
aggrandize the personal positions, interests and finances of the director
defendants at the expense of and to the detriment of the Company's public
shareholders. The defendants' course of action will deny plaintiffs and other
Class members their right to share in the true value of Borden's valuable
assets, future earnings and profitable businesses to the same extent that they
would as Borden shareholders.
30. In contemplating, devising and executing the aforementioned course of
conduct and in pursuing and structuring the proposed merger/acquisition
transaction, the director defendants
13
have not acted in good faith toward plaintiffs and other members of the Class
and have breached, and are continuing to breach, their fiduciary duties to
plaintiffs and the Class.
31. Since the director defendants, and those acting under their direction
and control, 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 defendants' course of action and the
contemplated transaction inherently unfair to Borden's public shareholders. The
proposed transaction will ensure that the director defendants will
disproportionately benefit from the value of Borden's assets and its future
financial prospects in contravention of the director defendants' fiduciary
duties to maximize the value of Borden's shares.
32. Defendants have acted and are acting with knowledge that the
individual defendants, and each of them, have breached and are breaching their
fiduciary duties to Borden's public shareholders and have, nevertheless,
intentionally, recklessly or negligently induced, and/or aided and abetted one
another, in such breaches of fiduciary duties by the directors of Borden.
33. By virtue of the foregoing acts, practices and course of action, the
director defendants have failed to exercise due care and diligence in compliance
with their fiduciary obligations toward Borden and its public shareholders.
14
34. The acts and course of conduct complained of hereinabove were willful,
malicious and oppressive in that the defendants, and each of them, knew that
their actions, as enumerated herein, involve improper and illegal practices,
violations of law and other acts completely foreign to the duties of officers
and directors to carry out corporate affairs in a fair, just, honest and
equitable manner. By reason of the foregoing, plaintiffs and the Class are
entitled to punitive damages.
35. By virtue of the foregoing actions of the defendants, plaintiffs and
the Class have been, are and will be damaged in that they will not receive the
fair value of Borden's assets and business in exchange for their Borden stock
and have been, are and will be prevented from obtaining a fair price for their
shares of the Company's stock.
36. Unless enjoined by this Court, the defendants will continue in their
harmful course of conduct and the director defendants will continue to breach
their fiduciary duties owed by them to plaintiffs and to the Class and will
exclude plaintiffs and the Class from receiving fair value for their
proportionate share of Borden's valuable assets and business, all to the
irreparable harm of plaintiffs and the Class.
37. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs, on behalf of themselves and the members of the
Class, demands judgment as follows:
15
A. Declaring that this lawsuit is properly maintainable as a class action
and certifying plaintiffs as representatives of the Class.
B. Declaring that the defendants have committed a gross abuse of trust
and have breached (or aided and abetted such breach of) their fiduciary and
other duties owed to plaintiffs and the members of the Class;
C. Declaring that the proposed transaction of merger/acquisition of
Borden by KKR is a legal nullity;
D. Preliminarily and permanently enjoining the defendants and their
counsel, agents, employees and all persons acting under, in concert with or for
them from taking any steps necessary to accomplish or implement the proposed
merger of Borden with KKR at a price that is not fair and equitable;
E. In the event that the transaction is consummated, rescinding it and
setting it aside;
F. Imposing a voting trust upon the shares of Borden owned or controlled
by defendants to restrain their ability to use their voting control of the
Company to effect the transaction;
G. Awarding to plaintiffs and the Class compensatory and punitive damages
against the director defendants, jointly and severally, in an amount to be
determined at trial, together with prejudgment interest, at the maximum rate
allowable by law, from the date of the wrongs to the date of judgment herein;
16
H. Awarding plaintiffs the costs and disbursements of this action,
including reasonable attorneys', accountants' and experts' fees; and
I. Granting such other and further relief as the Court may deem just and
proper.
DATED: September 12, 1994
GOLDSTEIN, TILL & LITE
By:/s/ Allyn Z. Lite
_____________________________
Allyn Z. Lite
744 Broad Street, Suite 800
Newark, New Jersey 07102
(201) 623-3000
STULL, STULL & BRODY
6 East 45th Street
New York, New York 10017
(212) 687-7230
LAW OFFICES OF JOSEPH H. WEISS
319 Fifth Avenue
New York, New York 10016
(212) 532-4171
MILBERG, WEISS BERSHAD
HYNES & LERACH
One Pennsylvania Plaza
New York, New York 10119
(212) 594-5300
ROBERT D. ALLISON & ASSOCIATES
Robert D. Allison, Esq.
122 S. Michigan Avenue
Chicago, Illinois 60603
(312) 427-4500
Attorneys 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 a
matter entitled, Barbara Lubin, et. al. v. Borden Inc., et. al., filed in this
----------------------------------------------
court on this date. 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 13, 1994
18
Dates Referenced Herein and Documents Incorporated by Reference
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