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)(16) — Statement re: Computation of Earnings Per Share
Exhibit Table of Contents
EXHIBIT 11(g)(16)
GOLDSTEIN, TILL & LITE
Allyn Z. Lite, Esq.
Amy M. Riel, Esq.
744 Broad Street, Suite 800
Newark, New Jersey 07102
(201) 623-3000
Attorneys for Plaintiff
----------------------------------x
JERRY KRIM, on behalf of himself : SUPERIOR COURT OF NEW JERSEY
and all others similarly situated,: CHANCERY DIVISION
: MERCER COUNTY
Plaintiff, : DOCKET NO.
:
v. :
:
BORDEN INC., FRANK J. TASCO, ERVIN: CLASS ACTION COMPLAINT
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. :
:
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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, Jerry Krim, who resides at 4623 North Carlin Spring Road,
Arlington, Virginia 22203, is the owner of shares of defendant Borden and has
been the owner continuously of such shares since prior to the wrongs complained
of herein. He is a resident of the State of Virginia.
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 distributer of
a variety of consumer food products, consumer adhesives 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 "buyout 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 and at all relevant times hereto has been
President, Chief Executive Officer and a Director of Borden.
6. Defendant Frederick E. Hennig is and at all relevant times hereto has
been a Director of Borden.
7. Defendant Wilbert J. Lemelle is and at all relevant times hereto has
been a Director of Borden.
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8. Defendant Robert P. Luciano is and at all relevant times hereto has
been a Director of Borden.
9. Defendant H. Barclay Morley is and at all relevant times hereto has
been a Director of Borden.
10. Defendant John E. Saxton is and at all relevant times hereto has been
a Director of Borden.
11. Defendant Patricia Carry Stewart is and at all relevant times hereto
has been a Director of Borden.
12. The foregoing individual directors of Borden (collectively the
"Director Defendants") owe the fiduciary duties of good faith, fair dealing,
loyalty and full, candid and adequate disclosure to Borden and its shareholders.
CLASS ACTION ALLEGATIONS
------------------------
13. Plaintiff brings this action 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
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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:
----- ----
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;
4
vi. Whether plaintiff and the other members of the Class will be
irreparably damaged by the transactions complained
of herein; and
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
5
"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.
20. Although the purchase price 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
6
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 issues 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 that 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
7
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.
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, or 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
8
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 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
9
required care and diligence in the exercise of their fiduciary obligations owed
to Borden and its public shareholders.
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 the 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
10
complained of herein, together with prejudgment and post-judgment interest;
(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 13, 1994
GOLDSTEIN, TILL & LITE
By: /s/ Allyn Z. Lite
___________________
Allyn Z. Lite
744 Broad Street
Newark, New Jersey 07102
(201) 623-3000
OF COUNSEL:
HARVEY GREENFIELD
LAW FIRM OF HARVEY GREENFIELD
300 Park Avenue
19th Floor
New York, New York 10022
(212) 832-8880
Attorney for Plaintiffs
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CERTIFICATION PURSUANT TO R. 4:5-1
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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 this Court on September
--------------------------------------------
13, 1994 and Norman Weiss, et al. v. Borden, Inc., et. al., filed in this Court
---------------------------------------------
on September 13, 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/ AMY M. RIEL
__________________________
AMY M. RIEL
Dated: September 14, 1994
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Dates Referenced Herein and Documents Incorporated by Reference
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