Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Giant Cement Holding, Inc. SC 14D9 25 121K
2: EX-99.1 Exhibit 3 2± 8K
3: EX-99.2 Exhibit 7 2 9K
4: EX-99.3 Exhibit 9 3 12K
________________________________________________________________________________
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
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GIANT CEMENT HOLDING, INC.
(NAME OF SUBJECT COMPANY)
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GIANT CEMENT HOLDING, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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374450104
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
TERRY L. KINDER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
GIANT CEMENT HOLDING, INC.
320-D MIDLAND PARKWAY
SUMMERVILLE, SC 29485
(803) 851-9898
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING)
------------------------
COPY TO:
STEVEN L. KIRSHENBAUM, ESQ.
PROSKAUER ROSE LLP
NEW YORK, NEW YORK 10036
(212) 969-3000
* This Solicitation/Recommendation Statement on Schedule 14D-9 relates to an
offer for 100% of the outstanding shares of common stock of Giant Cement
Holding, Inc. by a subsidiary of Cementos Portland, S.A.
________________________________________________________________________________
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Giant Cement Holding, Inc., a Delaware
corporation ('Giant Cement' or the 'Company'). The address of the principal
executive offices of the Company is 320-D Midland Parkway, Summerville, South
Carolina 29485. The title of the class of equity securities to which this
Statement relates is the common stock, par value $0.01 per share of the Company
(the 'Shares').
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer by Cementos Portland, S.A., a
corporation organized under the laws of the Kingdom of Spain ('Parent'), and CP
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ('Purchaser'), disclosed in a Tender Offer Statement on Schedule 14D-1
filed with the Securities and Exchange Commission (the 'Commission') on
November 10, 1999 (as the same may be amended from time to time, the 'Schedule
14D-1'), to purchase for cash (i) all of the outstanding Shares at a price of
$31.00 per Share (the 'Share Price'), net to the seller in cash (subject to
applicable withholding of taxes) upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated November 10, 1999 (the 'Offer to
Purchase'), and the related Letter of Transmittal (which, together with any
amendments and supplements thereto, collectively constitute the 'Offer')
included in the Schedule 14D-1.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 4, 1999, among Parent, Purchaser and the Company (the 'Merger
Agreement'). The Offer is subject to the conditions set forth in the Merger
Agreement, including the condition that the number of Shares validly tendered
and not withdrawn prior to the expiration date of the Offer shall be at least a
majority of the Shares then outstanding, calculated on a fully diluted basis
(the 'Minimum Condition').
Pursuant to the Merger Agreement, following the consummation of the Offer
and subject to the satisfaction or waiver of certain conditions, Purchaser will
merge with and into the Company (the 'Merger') and the Company will continue as
the surviving corporation (the 'Surviving Corporation') and a wholly owned
subsidiary of Parent. Upon effectiveness of the Merger, each Share (other than
Shares purchased in the Offer or otherwise owned by the Purchaser or by the
Company or any of its subsidiaries and dissenting Shares) will be converted into
the right to receive $31.00 per Share in cash (the 'Merger Consideration'). The
terms of the Merger Agreement, a copy of which is filed as an Exhibit hereto and
is incorporated herein by reference, are summarized below under Item 3(b) of
this Schedule 14D-9.
All information contained in this Schedule 14D-9 or incorporated herein by
reference concerning Parent, Purchaser or their affiliates, or actions or events
with respect to any of them, was provided by Parent, and the Company takes no
responsibility for the accuracy or completeness of such information or for any
failure by such entities to disclose events or circumstances that may have
occurred and may affect the significance, completeness or accuracy of any such
information.
According to the Schedule 14D-1, the address of the principal executive
offices of Parent and Purchaser is Jose Abascal, 59, 28003, Madrid, Spain.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above, which information is
incorporated herein by reference.
(b) Certain material contracts, agreements, arrangements and understandings
between the Company and its executive officers, directors and affiliates are
described in the Company's Information Statement attached hereto as Annex A and
is incorporated herein by reference.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in
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its entirety by reference to the Merger Agreement filed as an Exhibit to this
Schedule 14D-9 and incorporated herein by reference. Capitalized terms not
otherwise defined below shall have the meanings set forth in the Merger
Agreement.
General. The Merger Agreement provides for the commencement of the Offer,
upon the terms and subject to the conditions contained therein, and further
provides for the consummation of the Merger following the satisfaction or
waiver, if permitted by applicable law, of the conditions contained in the
Merger Agreement.
In the Merger Agreement, the Company consented to the Offer and represented
that its Board of Directors has unanimously (i) 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 stockholders,
(ii) approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, in accordance with the Delaware General
Corporation Law (the 'DGCL'), and (iii) resolved (subject to the provision
described in the second paragraph of 'Other Proposals' below) to recommend that
the Company's stockholders accept the Offer and tender their Shares pursuant to
the Offer. The Company also represented that its Board of Directors had received
the written opinion of the Company's Financial Advisor, dated the date of the
Merger Agreement, that as of the date thereof the cash consideration to be
received by the Company's stockholders pursuant to the Offer and Merger is fair
from a financial point of view to the Company's stockholders other than
Purchaser and its affiliates.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL,
Purchaser will be merged with the Company at the Effective Time. Following the
Merger, the separate corporate existences of Purchaser and the Company will
cease and the Surviving Corporation will succeed to and assume all the rights
and obligations of Purchaser and the Company in accordance with the DGCL.
At the Effective Time, each Share outstanding immediately prior to the
Effective Time (other than those held by the Company as treasury stock or owned
by Parent or any of its subsidiaries immediately prior to the Effective Time,
all of which will be canceled, and dissenting Shares, if any) will, by virtue of
the Merger, be converted into the right to receive the Merger Consideration,
payable to the holder thereof upon surrender of the certificates representing
such Shares.
Subject to the terms and conditions in the Merger Agreement, (a) if
approval of the stockholders of the Company is required under the DGCL, a
Certificate of Merger shall be duly filed with the Secretary of State of the
State of Delaware as soon as practicable after obtaining such stockholder
approval, or (b) if such stockholder approval is not required to be obtained in
order to consummate the Merger, a Certificate of Ownership and Merger shall be
duly filed with the Secretary of State of the State of Delaware as soon as
practicable after the expiration of the Offer. If a stockholder vote is required
in connection with the Merger, Parent has agreed to cause all Shares owned by
Parent, Purchaser and their affiliates to be voted in favor of the Merger. If
Purchaser and/or Parent and its affiliates are the owners of at least 90% of the
outstanding shares of each class of stock following the Offer or otherwise, the
Merger will be consummated without a meeting or vote of stockholders in
accordance with the 'short-form' merger provisions of Section 253 of the DGCL.
Stock Option Plans. The Merger Agreement provides that at, or immediately
prior to the Effective Time, each option to purchase Shares outstanding under
the Option Plans, whether or not vested or exercisable, will be canceled, and
the Company shall pay each holder of any such option, an amount in cash equal to
(i) the product of (A) the excess, if any, of the Share Price over the
applicable exercise price of such option and (B) the number of Shares each
holder could have purchased (assuming full vesting of all options) had such
holder exercised such option in full immediately prior to the Effective Time
(which amount shall be subject to any applicable withholding tax).
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Prior to the first purchase of Shares pursuant to the Offer, the Company
has agreed to take any actions necessary under the Option Plans, to effect the
transactions contemplated by the Merger Agreement.
Employee Benefits. Following the consummation of the Offer, Parent will,
and will cause the Surviving Corporation to honor, fulfill and discharge in
accordance with their terms (i) all existing employment, severance, consulting,
change of control and indemnification agreements and other bonus and
compensation arrangements between the Company or any of its subsidiaries and any
current or former officer, director or employee thereof as disclosed to Parent
in writing in the Merger Agreement and (ii) with respect to all employees,
officers and directors of the Company, all legal and contractual obligations for
benefits or other amounts earned or accrued through the Effective Time under
employee benefit plans, programs, policies and arrangements of the Company and
its subsidiaries disclosed in writing in the Merger Agreement. From the
Effective Time through December 31, 2000, Parent has also agreed to provide, or
cause the Surviving Corporation to provide, to current and former employees of
the Company compensation and benefits which are at least comparable, in the
aggregate to the compensation and Benefit Plans currently in place for such
employees excluding any equity plans; provided, however, that with respect to
employees who are subject to collective bargaining, all compensation and
benefits shall be provided in accordance with applicable collective bargaining
agreements. The Merger Agreement does not restrict Parent from exercising the
right to terminate the employment of any employee at any time or, subject to
certain exceptions, to modify any other terms or conditions of such employee's
employment.
Board Representation; Amendments and Waivers. The Merger Agreement provides
that upon Purchaser's acceptance for payment pursuant to the Offer of a number
of Shares that satisfies the Minimum Condition, Parent shall be entitled,
subject to Section 14(f) of the Exchange Act, to designate the number of
directors, rounded up to the nearest whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors and (ii) the percentage that the number of Shares
beneficially owned by Parent bears to the total number of Shares outstanding on
a fully diluted basis, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time, the
Company will also use its best efforts to cause individuals designated by Parent
to constitute the number of members, rounded up to the nearest whole number, on
(i) each committee of the Board of Directors of the Company and (ii) each board
of directors of each subsidiary of the Company (and each committee thereof) that
represents the same percentage as such individuals represent on the Board of
Directors of the Company. Notwithstanding the foregoing, Parent and the Company
will use their best efforts to ensure that at least two members of the Company's
Board of Directors as of the date of the Merger Agreement who are not officers
or affiliates of the Company ('Independent Directors') will remain members of
the Company's Board of Directors until the Effective Time.
Any provision of the Merger Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and
signed, in the case of any amendment, by the Company, Purchaser and Parent or,
in the case of a waiver, by the party against whom the waiver is to be
effective. However, if stockholder approval of the Merger Agreement and the
Merger is required following consummation of the Offer, following such approval,
no amendment will be made that by law requires the further approval of the
stockholders without such stockholder approval. In addition, from and after the
time Parent's designees constitute a majority the Company's Board of Directors
until the Effective Time, the approval of a majority of the Independent
Directors shall be required to authorize any amendment of the Merger Agreement,
any termination of the Merger Agreement by the Company, any extension of time
for performance of any obligation or action under the Merger Agreement by Parent
or Purchaser and any waiver of any conditions contained in the Merger Agreement
for the Company's benefit (including, with respect to the Offer, any waiver of
the Minimum Condition, any change in the form of or decrease in the
consideration per Share, any decrease in the number of Shares sought or the
imposition of any additional conditions) or any of the Company's rights under
the Merger Agreement.
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Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties to the Merger Agreement,
including, without limitation, (i) representations and warranties by the Company
as to corporate existence and power, authority relative to the Merger Agreement
and the transactions contemplated thereby, governmental consents and approvals,
non-contravention, capitalization, public filings, financial statements,
information supplied, absence of certain changes or undisclosed material
liabilities, litigation, taxes, employee benefit and labor matters, compliance
with applicable laws, finders' fees, environmental matters, antitakeover
statutes, intellectual property, the Year 2000 issue, properties and defaults
under contracts, and (ii) representations and warranties by Parent (with respect
to itself and Purchaser) as to corporate existence and power, authority relative
to the Merger Agreement and the transactions contemplated thereby, governmental
consents and approvals, non-contravention, information supplied, finders' fees
and financing arrangements.
Conduct of Business Until the Merger. The Merger Agreement provides that,
the Company will, and will cause its subsidiaries to, carry on their respective
business in the ordinary course consistent with past practices and use all
reasonable best efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
current officers and employees. The Merger Agreement further provides that,
without limiting the generality of the foregoing, the Company will not do, and
will not permit any of its subsidiaries to do, any of the following:
(i) increase the compensation (or benefits) payable to or to become
payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with
past practice; (ii) grant any severance or termination pay (other than
pursuant to the severance policy or practice of the Company or its
subsidiaries disclosed to Parent in the Merger Agreement) to, or enter into
or amend in any material respect any employment or severance agreement
with, any employee; (iii) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or any benefit plan;
or (iv) take any action to accelerate any rights or benefits, or make any
determinations under any collective bargaining agreement or benefit plan;
declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property),
outstanding shares of capital stock, except for dividends by a wholly owned
subsidiary of the Company to the Company or another wholly owned subsidiary
of the Company;
redeem, purchase or otherwise acquire, or offer or propose to redeem,
purchase or otherwise acquire, any outstanding shares of capital stock of,
or other equity interests in, or any securities that are convertible into
or exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights or any kind to
acquire any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries (other than (i) any such acquisition by
the Company or any of its wholly owned subsidiaries directly from and
wholly owned subsidiary of the Company in exchange for capital
contributions or loans to such subsidiary, or (ii) any purchase, forfeiture
or retirement of Shares or Options occurring pursuant to the terms (as in
effect on the date of the Merger Agreement) of any existing benefit plan of
the Company or any of its subsidiaries, in a manner otherwise consistent
with the terms of the Merger Agreement);
effect any reorganization or recapitalization; or split, combine or
reclassify any of the capital stock of, or other equity interests in, the
Company or any of its subsidiaries or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of such capital stock or such equity interests);
offer, sell, issue or grant, or authorize or propose the offering,
sale, issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other
equity interests in, or any voting Company
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debt or other voting securities of, the Company or any of its subsidiaries,
or any 'phantom' stock, 'phantom' stock rights, SARs or stock-based
performance units;
acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any
assets of any other person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
past practice);
sell, lease, exchange or otherwise dispose of, or grant any lien with
respect to any of the properties or assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for dispositions of
excess or obsolete assets and sales of inventories in the ordinary course
of business and consistent with past practice;
propose or adopt any amendments to its certificate of incorporation
or bylaws or other organizational documents;
effect any change in any accounting methods, principles or practices
in effect as of December 31, 1998 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may
required by a change in generally accepted accounting principles;
issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its subsidiaries,
guarantee any such indebtedness or debt securities of another person, enter
into any 'keep well' or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, or make any loans, advances or
capital contributions to, or investments in, any person, other than to or
in the Company or any direct or indirect wholly owned subsidiary of the
Company; provided, however, that the Company's right to borrow pursuant to
its revolving credit agreement in the ordinary course of business shall not
be limited by these provisions;
pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against
in the most recent consolidated financial statements (or the notes thereto)
of the Company included in the Company's documents filed with the
Commission or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice;
make any tax election except in a manner consistent with past
practice, change any method of accounting for tax purposes, or settle or
compromise any material tax liability;
make or agree to make any new capital expenditures which individually
are in excess of $500,000 or which in the aggregate are in excess of
$2,000,000; or
agree in writing or otherwise to take any of the foregoing actions.
Other Proposals. The Merger Agreement provides that, until the Effective
Time or the termination of the Merger Agreement in accordance with its terms,
the Company and its subsidiaries will not, and the Company shall direct their
respective officers, directors and representatives not to, directly or
indirectly initiate, solicit, or knowingly encourage (including by way of
furnishing non-public information or assistance) or take any other action to
facilitate any inquiries or the making or submission of any Acquisition Proposal
(as defined below) or enter into or maintain or continue discussions or
negotiate with any person or group in furtherance of such inquiries or to obtain
or induce any person or group to make or submit an Acquisition Proposal or agree
to or endorse any Acquisition Proposal or assist or participate in, facilitate
or knowingly encourage; any effort or attempt by any other person or group to do
or seek any of the foregoing or authorize any of its officers, directors or
representatives to take any such action; provided, however, that nothing
prohibits the Board of Directors of the Company from furnishing information to,
or entering into discussions or negotiations with, any person or entity that has
made an unsolicited written Acquisition Proposal if, and only to the extent that
(A) the
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acceptance for payment of Shares pursuant to the Offer shall not have occurred,
(B) the Board of Directors of the Company, based on advice of independent legal
counsel (who may be the Company's regularly engaged independent legal counsel),
determines in good faith that failure to take such action would result in a
breach of the fiduciary duty under applicable law, and (C) prior to taking such
action, the Company (x) provides reasonable notice to Parent to the effect that
it intends to take such action and (y) receives from such person an executed
confidentiality agreement in reasonably customary form and in any event
containing terms at least as stringent as those contained in the confidentiality
agreement between Parent and the Company. Prior to providing any information to
or entering into discussions or negotiations with any person in connection with
an Acquisition Proposal or any inquiry that could lead to an Acquisition
Proposal by such Person, the Company shall promptly advise Parent of any request
for information or the submission or receipt of any Acquisition Proposal, or any
inquiry with respect to or which could lead to any Acquisition Proposal, the
material terms and conditions of such request, Acquisition Proposal or inquiry,
and the identity of the person making any such request, Acquisition Proposal or
inquiry and its response or responses thereto. The Company must keep Parent
fully informed of the status and details (including amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry and must
promptly give Parent a copy of any information delivered to such person which
has not previously been delivered by the Company to Parent or Purchaser. The
Merger Agreement further provides that the Company will, and will cause its
subsidiaries and the officers, directors, employees and other agents and
advisors of the Company and its subsidiaries to, immediately cease and cause to
be terminated any discussions or negotiations, that have taken place prior to
the date of the Merger Agreement with any parties with respect to any of the
foregoing. For purposes of the Merger Agreement, 'Acquisition Proposal' means
any inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by the Merger Agreement) involving the Company;
(i) any merger, consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 20% or more
of the consolidated assets of the Company and its subsidiaries, taken as a
whole; (iii) any tender offer (including a self tender offer) or exchange offer
that, if consummated, would result in any person or group beneficially owning
more than 20% of the outstanding shares of any class of equity securities of the
Company or its subsidiaries or the filing of a registration statement under the
Securities Act of 1933, as amended (the 'Securities Act') in connection
therewith; (iv) any acquisition of 20% of more of the outstanding shares of
capital stock of the Company or the filing of a registration statement under the
Securities Act, in connection therewith or any other acquisition or disposition
the consummation of which would prevent or materially diminish the benefits to
Parent of the Merger; or (v) any public announcement by the Company or any third
party of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
The Merger Agreement also provides that neither the Board of Directors of
the Company nor any committee thereof may (i) withdraw or modify, or fail to
make, or propose to withdraw or modify, in each case in a manner adverse to
Parent, its approval or recommendation of the Merger Agreement, the Offer or the
Merger (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal, or (iii) cause the Company to accept such Acquisition
Proposal and/or enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal; provided, however, that prior to the earlier to occur of acceptance
for payment of Shares pursuant to the Offer or adoption of the Merger Agreement
by the requisite vote of the Company's stockholders, the Board of Directors of
the Company may terminate the Merger Agreement if, and only to the extent that
(A) such Acquisition Proposal is a Superior Proposal, (B) the Board of Directors
of the Company, based on the advice of independent legal counsel (who may be the
Company's regularly engaged independent counsel), determines in good faith that
the failure to do so would result in a breach of the fiduciary duty of the Board
of Directors of the Company to the stockholders of the Company under applicable
law; (C) the Company complies with its obligations described under 'Fees and
Expenses' below, (D) the Company is not in breach of its obligations described
in this
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and the preceding paragraph, and (E) the Company shall have afforded Parent an
opportunity to match the Superior Proposal within three business days after
receipt of notice from the Company.
For purposes of the Merger Agreement 'Superior Proposal' means any proposal
made by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction, for at least 75% of the then outstanding Shares, or all or
substantially all of the consolidated assets of the Company, which the Board of
Directors of the Company determines in good faith (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders (taking into account relevant legal, financial and
regulatory considerations and other aspects of such proposal and the third party
making such proposal and the conditions and prospects for completion of such
proposal) than the Offer and the Merger.
Conditions of the Merger. The obligations of the Company, Parent and
Purchaser to consummate the Merger are subject to the satisfaction (or waiver by
the party for whose benefit the applicable condition exists) of the following
conditions: (a) if required by the DGCL, the Merger Agreement shall have been
approved and adopted by the affirmative vote of the stockholders of the Company
by the requisite vote in accordance with such law; (b) no temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used its reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal, subject to the other terms of
the Merger Agreement as promptly as possible any injunction or other order that
may be entered; and (c) Purchaser shall have purchased Shares pursuant to the
Offer.
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of the
Merger Agreement by the stockholders of the Company:
By mutual consent of the parties;
By either party if any court of competent jurisdiction or other
governmental entity shall have issued a final, non-appealable order, decree
or ruling or taken any other final non-appealable action restraining,
enjoining or otherwise prohibiting the consummation of the Offer or the
Merger;
By Parent if Purchaser terminates the Offer without purchasing any
Shares, or has not accepted Shares in the Offer prior to January 31, 2000,
in each case because any of the conditions to the Offer have not been met;
By the Company, if the Company is not in a material breach of the
Merger Agreement and Purchaser either terminates the Offer without
purchasing any Shares or has not accepted Shares in the Offer prior to
January 31, 2000;
By the Company if prior to Purchaser's acceptance of Shares in the
Offer, the Company notifies Parent that it intends to enter into an
agreement with respect to a Superior Proposal and Parent does not match the
Superior Proposal within three business days;
By Parent if prior to Purchaser's purchase of Shares in the tender
offer, the Company has materially breached its representations and
warranties and the condition giving rise to the breach, individually or in
the aggregate, is reasonably likely to have a material adverse effect on
the Company or on the consummation of the Offer or the Company has failed
to perform its covenants under the Merger Agreement and the failure is
reasonably likely to have a material adverse effect on the Company or on
consummation of the Offer (and the breach is not cured within the cure
period provided);
By Parent if prior to Purchaser's purchase of Shares in the Offer,
the Company's Board of Directors either (x) withdraws or modifies its
recommendation of the Offer and the Merger in a manner adverse to Parent or
Purchaser or (y) approves, or recommends that the stockholders of the
Company accept, another acquisition proposal; or
By the Company if prior to Purchaser's purchase of Shares in the
Offer, Parent has materially breached its representations or warranties or
failed to comply with its material
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covenants and the effect of the breach is to materially adversely affect or
delay consummation of the Offer (and the breach is not cured within the
cure period provided).
In the event the Merger Agreement is terminated by either the Company or
Parent, the Merger Agreement will become void and have no effect, and there will
be no liability or obligation on the part of Parent, Purchaser or the Company
except with respect to certain specified provisions (including the provisions
described below under 'Fees and Expenses' and in the Confidentiality Agreement
described below) and except to the extent that such termination results from the
willful breach by a party to the Merger Agreement.
(e) Notwithstanding the foregoing, the Merger Agreement does not prohibit
the Company nor the Board of Directors of the Company from taking and disclosing
to the stockholders a position contemplated by Rule 14e-2(a) promulgated under
the Exchange Act or from making any disclosure to the stockholders if the Board
of Directors of the Company, based on the advice of independent legal counsel
(who may be the Company's regularly engaged independent counsel), determines in
good faith that the failure to take such action would result in a breach of the
fiduciary duty of the Board of Directors to the stockholders under applicable
law; provided that neither the Board of Directors of the Company nor any
committee thereof shall withdraw or modify, or shall propose to withdraw or
modify, the approval or recommendation of the Board of Directors of the Company
of the Offer or the Merger or shall approve or recommend, or shall publicly
propose to approve or recommend, an Acquisition Proposal unless the Company and
the Board of Directors of the Company have complied in all material respects
with all the provisions described above.
Fees and Expenses. The Company has agreed to pay to Parent a termination
fee equal to $10 million (inclusive of expenses) if:
either party terminates the Merger Agreement (i) because the Minimum
Condition to the Offer was not achieved, (ii) Parent and Purchaser are not
in a material breach of the Merger Agreement and (iii) prior to termination
of the Merger Agreement, a third party has acquired beneficial ownership of
at least a majority of the Shares or of the assets of the Company;
either party terminates the Merger Agreement (i) because the Minimum
Condition to the Offer was not achieved, (ii) Parent and Purchaser are not
in a material breach of the Merger Agreement, (iii) prior to the
termination of the Merger Agreement, a third party announces an intention
to acquire at least a majority of the Shares or of the assets of the
Company and (iv) within 12 months of the termination of the Merger
Agreement, either that particular Acquisition Proposal or any other
Acquisition Proposal, which is also for at least a majority of the Shares
or of the assets of the Company, is consummated at a price per Share higher
than the price per Share that was offered by Purchaser or for aggregate
consideration (including the retention of any equity by the Company's
stockholders) that exceeds the aggregate consideration of the Offer and the
Merger;
Parent terminates the Merger Agreement because the Company's Board of
Directors either (i) withdrew or modified its recommendation of the Offer
and the Merger in a manner adverse to Parent or Purchaser or
(ii) approved, or recommended that the stockholders of the Company accept,
another acquisition proposal; or
the Company terminates the Merger Agreement in order to enter into
another agreement with respect to a Superior Proposal after complying with
all the procedures required therefor under the Merger Agreement (including
affording Parent an opportunity to match the Superior Proposal within three
business days after receipt of notice from the Company).
Such termination fee must be paid concurrently with the termination of the
Merger Agreement except in the circumstances described in the second bullet
paragraph above, in which event the fee must be paid concurrently with the
consummation of the Acquisition Proposal. The Company has agreed to reimburse
Parent for its actual reasonable documented expenses up to $1 million if Parent
terminates the Merger Agreement because (i) one or more representations or
warranties of the Company are not true, (ii) such breach is not willful,
(iii) the condition giving
9
rise to the breach, individually or in the aggregate, is reasonably likely to
have a material adverse effect on the Company and (iv) the breach is not cured
prior to the earlier of 15 days following notice of such breach and two business
days prior to the date on which the Offer expires. Except as described above,
the Merger Agreement provides that each party will pay its own fees and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby.
Indemnification and Insurance. In the Merger Agreement, Purchaser agreed
that all rights to indemnification for acts or omissions occurring at or prior
to the Effective Time existing as of November 4, 1999 in favor of the current or
former directors or officers, employees and agents of the Company and its
subsidiaries as provided in their respective certificates of incorporation,
bylaws or agreements disclosed in the Company's reports filed with the
Commission or filed as exhibits thereto as in effect on November 4, 1999 will
survive the Merger and continue in full force and effect in accordance with
their terms for a period of six years from the Effective Time.
The Merger Agreement also provides that Parent will cause to be maintained
for a period of six years from the Effective Time the Company's current
directors' and officers' insurance and indemnification policy and fiduciary
liability policy (although Parent may substitute therefor policies or financial
guarantees with the same carriers or other reputable and financially sounds
carriers of at least the same coverage amounts containing terms and conditions
no less advantageous than the terms of such existing insurance coverage) with
respect to facts or circumstances occurring at or prior to the Effective Time;
provided, however, that in no event will Parent be required to expend in any one
year an amount in excess of 300% of the annual premiums paid by the Company as
of November 4, 1999 for such insurance; and provided further that, if the annual
premiums of such insurance coverage exceed such amount, Parent will be obligated
to use reasonable best efforts to obtain a substantially similar policy for a
cost not exceeding such amount.
CONFIDENTIALITY AGREEMENT
Parent and the Company entered into a confidentiality agreement on
August 23, 1999 (the 'Confidentiality Agreement'), a copy of which is filed as
Exhibit 6 hereto and incorporated herein by reference. Pursuant to the
Confidentiality Agreement, Parent agreed to provide, among other things, for the
confidential treatment of discussions with the Company regarding a possible
transaction and the exchange of certain confidential information concerning the
Company. Parent further agreed that for a period of one year from the date the
Confidentiality Agreement was entered into by Parent, Parent would not, without
the prior written approval of the Company's Board of Directors, (a) acquire,
offer to acquire or agree to acquire, directly or indirectly, any voting
securities or assets of the Company, (b) make or participate, directly or
indirectly, in any solicitation of proxies to vote, or seek to advise or
influence any person with respect to the voting of any voting securities of the
Company, (c) make any public announcement with respect to, or submit a proposal
for, or offer of, any extraordinary transaction involving the Company or any of
its securities or assets, (d) form, join or in any way participate in a 'group'
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the 'Exchange Act')) in connection with the foregoing, (e) seek or
propose to control or influence the management or policies of the Company, or
(f) request the Company or its representatives to amend or waive any of the
foregoing.
EMPLOYMENT AGREEMENTS
Messrs. Pechota, Kinder and Familia are employed by the Company pursuant to
employment agreements (the 'Employment Agreements'), which commenced on
July 30, 1997, except Mr. Familia's agreement which commenced on October 30,
1997, and expire December 31, 2000. Each Employment Agreement is automatically
renewed for additional one year terms subject to earlier termination by either
the Company or the respective employee. Mr. Pechota, Mr. Kinder and Mr. Familia
are compensated at an annual base salary of $275,000, $165,000 and $118,000,
respectively, during the term of their Employment Agreements, subject to annual
increases and/or bonuses as determined by the Compensation and Stock Option
Committee. For the year ended December 31, 1998, the annual base salary of Mr.
Pechota, Mr. Kinder and Mr. Familia was $286,000, $171,600
10
and $137,000, respectively. Each of them has agreed not to compete with the
Company for a period of one year following the termination of his Employment
Agreement other than by the Company without cause or by the employee for Good
Reason (as defined in the Employment Agreements) or as otherwise provided.
CHANGE IN CONTROL AGREEMENTS
The Company has entered into (i) change of control agreements dated as of
July 30, 1997 with each of Messrs. Pechota and Kinder and (ii) a change of
control agreement dated October 30, 1997 with Mr. Familia (collectively, the
'COC Agreements'). The consummation of the Offer will constitute a 'change of
control' under the COC Agreements. Pursuant to the COC Agreements, in the event
a change of control occurs and the employment of any of the above named
executives is terminated (i) by the Company without cause, (ii) by the executive
for Good Reason (as defined in the COC Agreements and which includes, among
other things, a material decrease in his duties and responsibilities or a
decrease in his salary within 24 months of the date of the change of control),
or (iii) by the executive for any reason within 30 days following the first
anniversary of the change of control, the executive would be entitled to
severance pay equal to up to three times the amount of his base salary and
annual bonus. The executive would also be entitled to three years' worth of
payments under any incentive pay plans, supplemental executive retirement plans,
profit sharing plans and other arrangements with the Company in which the
executive participated prior to the termination of his employment. In addition,
the Company is required to provide the executive with health insurance, life
insurance, and other benefits and to continue payments under the executive's
defined benefit pension plan for up three years from the date of his employment
termination.
AMENDMENT TO EMPLOYMENT AGREEMENTS AND COC AGREEMENTS
On November 4, 1999, each of Messrs. Pechota, Kinder and Familia entered
into an amendment of the COC Agreements and the Employment Agreements (a form of
which is filed as Exhibit 9 hereto and is incorporated herein by reference),
pursuant to which they agreed that, in the event of the consummation of the
Merger, the following will not by itself constitute Good Reason: (a) any change
in the executive's status as an officer of a publicly traded corporation to an
officer of a privately-held corporation and/or (b) the failure to provide the
executive with participation in any stock option or other equity based
compensation plans. The executive and the Company agree that as soon as
practicable following the Merger, the Company will institute a cash incentive
bonus arrangement based on defined performance standards to be mutually agreed
upon by the Company and the executive for the benefit of the executive which
will be comparable in value and consistent with the past practice of the
Compensation Committee of the Company in granting stock options for the benefit
of the executive prior to the Merger.
SPECIAL RETIREMENT AGREEMENTS
Commencing with fiscal year 1996, the Company's Board approved Special
Retirement Agreements ('SRA's') for certain employees participating in the
Company's Profit Sharing Plans and salaried Retirement Plans. Pursuant to the
Internal Revenue Code, the IRS sets limit (currently $160,000) on the amount of
annual compensation which Plans or the employees benefit under the Retirement
Plans. The SRA's establish balances for each participant in an amount equal to
that required to provide the actuarial equivalent benefit, as the IRS
limitations do not apply.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors.
At a meeting of the Board of Directors of the Company (the 'Board') held on
November 4, 1999, the Board, based on and subject to the terms and conditions
set forth in the Merger Agreement, unanimously has 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 stockholders, has
approved the Merger Agreement and the transactions
11
contemplated thereby, including the Offer and the Merger, and has recommended
that stockholders accept the Offer and tender their Shares pursuant to the
Offer.
To the best of the Company's knowledge, all of the Company's executive
officers and directors who own Shares currently intend to tender all of their
Shares pursuant to the Offer.
A letter to the Company's stockholders communicating the Board's
recommendation and a press release announcing the Offer, the Merger and the
Merger Agreement are filed as Exhibit 3 and Exhibit 7, respectively, and are
incorporated herein by reference.
(b)(1) Background Reasons for the Board's Recommendation.
Based upon past and anticipated industry conditions, from time to time the
Company has considered making acquisitions, forming strategic alliances and
entering into business combinations with companies engaged in a similar or
related business.
In early 1999, prior to its retention by the Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ('Merrill Lynch') made a presentation to
Parent regarding the U.S. cement industry and identified the Company as a
potential acquisition candidate. Parent was not interested in pursuing an
acquisition of the Company at that time.
In April 1999, the Company received an unsolicited inquiry from a bidder
other than Parent (the 'Other Bidder') advising of the Other Bidder's interest
in effecting a business combination with the Company. The Company advised the
Other Bidder that it was not in a position at such time to respond to the
inquiry.
On May 11, 1999, at a regular meeting of the Board, the Board authorized
management of the Company to engage an investment banking firm to assist the
Company in responding to the unsolicited inquiry.
On June 10, 1999, the Company retained Merrill Lynch on an exclusive basis
to provide (i) a framework for a financial valuation of the Company, and (ii)
advice and assistance to management in evaluating strategic alternatives and in
the event the Company determined to initiate a possible sale, to assist the
Company in effecting such sale.
On July 12, 1999, at a regular meeting of the Board, Merrill Lynch reviewed
with the Board, Merrill Lynch's preliminary valuation analysis of the Company,
potential strategic alternatives and an overview of potential transaction
partners. The Board authorized management to approach the Other Bidder and
Parent, who were the two entities which it viewed as the most likely transaction
partners.
On July 15, 1999, management of the Company met with management of the
Other Bidder to discuss a potential business combination.
During the week of July 26, Merrill Lynch requested the Other Bidder to
provide the Company with a preliminary indication of value. Merrill Lynch also
communicated to Parent that the Company was interested in exploring
opportunities for a business combination at a premium to the then current market
price of the Shares.
In August, 1999, Merrill Lynch orally provided summary projected financial
information to Parent's Financial Advisor and requested an initial indication of
interest from Parent and the Other Bidder.
On or about August 2, 1999, Parent's financial advisor, Schroders & Co.
Inc. ('Parent's Financial Advisor') telephoned Merrill Lynch to indicate that
Parent had an interest in exploring a possible business combination with the
Company but that it could not proceed until early September.
On August 2, 1999, the Company received a letter from the Other Bidder
indicating that the Other Bidder had an interest in pursuing a business
combination with the Company at a price of at least $28.00 per Share.
During the week of August 9, 1999, management of the Company and Merrill
Lynch discussed with the Other Bidder's financial advisor the Other Bidder's
preliminary indication of value and the due diligence process.
12
On September 8, 1999, Parent's Financial Advisor on behalf of Parent orally
submitted an initial indication of interest to the Company. Parent's Financial
Advisor did not convey a price but acknowledged that the Company was seeking a
substantial premium to the then current market price of the Shares. The Other
Bidder submitted an initial indication of interest to the Company which would
value the transaction at a value of $30.00 per Share.
On September 16, 1999, Merrill Lynch discussed with the Other Bidder's
financial advisor the timetable for a due diligence review of the Company and
the terms of a confidentiality agreement. Valuation levels were also discussed
and the Other Bidder's financial advisor indicated repeatedly to Merrill Lynch
that the Other Bidder would never be able to reach an offer level above $30.00
per Share no matter what the outcome of the due diligence review of the Company.
On September 21, 1999, the Company and Parent entered into a
confidentiality agreement.
On September 22, 1999, management of the Company and management of the
Other Bidder met and discussed (i) the timetable for a due diligence evaluation
of the Company in connection with a proposed business combination with the
Company and (ii) the terms of a confidentiality agreement. Thereafter, the
Company and the Other Bidder entered into a confidentiality agreement. In
connection with the execution of the confidentiality agreement, the Company
provided the Other Bidder with certain financial information regarding the
Company and its business.
On October 1, 1999, management of the Company made a presentation to
Parent.
On October 6, 1999, management of the Company made a presentation to the
Other Bidder.
During the period from October 1 through October 21, 1999, Parent and the
Other Bidder were given access to a data-room containing public and non-public
information regarding the Company to conduct their due diligence as to the
Company and its financial condition. Parent and the Other Bidder also had
discussions with representatives of management of the Company and were given
tours of the Company's plants.
On October 12, 1999, a special meeting of the Board of the Company was held
to discuss, among other things, the status of the negotiations with the parties
who expressed an interest in acquiring Company, bid procedures and timing.
On October 15, 1999, management of the Company and the Other Bidder
discussed the results of the Other Bidder's due diligence evaluation of the
Company. At the meeting, the Other Bidder indicated that they were lowering the
valuation of the transaction to $29.00 per Share.
On October 21, 1999, the Other Bidder submitted to the Company an initial
non-binding proposal to acquire the Company at a price of $29.00 per Share
payable in cash and their mark-up of the Company's proposed form of merger. The
Other Bidder's proposal included financing commitments and the proposed
acquisition had been approved by its board of directors.
On October 21, 1999, Parent submitted to the Company an initial non-binding
proposal to acquire the Company at a price of $33.00 per Share, which Parent
indicated was based on the information it had received to date and subject to
the following conditions: negotiation of a satisfactory merger agreement,
satisfactory completion of financing arrangements, satisfactory completion of
due diligence (including discussions with the Company's senior management about
revising their employment agreements) and the approval of Parent's board of
directors, which was expected to meet within approximately the next week.
Merrill Lynch indicated Parent's proposal was value-competitive, but conveyed
the Company's concern with the conditions to the proposal, including the fact
that Parent had not completed its financial arrangements.
On October 22, 1999, Parent's counsel, on behalf of Parent delivered to the
Company and its representatives, a mark-up of the Company's form of merger
agreement.
On October 22, 1999, a special meeting of the Board was held at which the
proposals were reviewed and the Board authorized management of the Company to
continue discussions with Parent and the Other Bidder with a view to achieving
more favorable terms.
During the period from October 25, 1999 through November 3, 1999, the
Company and the Company's counsel, Proskauer Rose LLP and Parent and Parent's
counsel, Weil, Gotshal &
13
Manges LLP and Mastermen, Culbert & Tully LLP, negotiated the specific terms and
conditions of the Merger Agreement other than price.
On October 25, 1999, Merrill Lynch expressed to the Other Bidder's
financial advisor that although their proposal was more firm it was
significantly lower than the other proposal it had received.
On October 25, 1999, a special meeting of the Board was held to discuss the
status of the negotiations. The Board authorized the Company to continue
negotiations with both parties.
On October 26 , 1999, the Other Bidder's financial advisor expressed to
Merrill Lynch that it was not willing to raise its proposal and would never be
able to get to valuations approximately $32.00 per Share, and in fact would have
trouble even reaching an offer of $30.00 per Share.
During the period from October 27, 1999 through November 3, 1999, the
Company and the Company's counsel, Proskauer Rose LLP and the Other Bidder and
its counsel negotiated the specific terms and conditions of a merger agreement,
other than price, but they did not reach final agreement.
On October 27, 1999, a representative of Parent had a conversation with a
representative of the Company regarding Parent's desire for management
continuity and the fact that, based on informal discussions with members of
Parent's board, it appeared unlikely that Parent's board would approve an offer
at $33.00 per Share although it might approve an offer for $32.00 or $31.00 per
Share or less. The representatives of the Company and Parent also discussed the
status of the Parent's financing commitments and the timing of Parent's board
meeting.
On October 27, 1999, a special meeting of the Board was held to discuss the
status of negotiations. Management stated that the Other Bidder indicated that
it would not offer more than $29.00 per Share. Management stated that Parent's
management indicated that members of its board of directors were questioning the
$33.00 per Share price and that Parent's proposal could go down significantly.
On October 29, 1999, management of the Company and management of the Other
Bidder discussed the Other Bidder's $29.00 per Share proposal. Management of the
Company indicated that if it raised its proposal to $30.00 per Share, in view of
the firmness of the proposal, management of the Company would recommend the new
offer to its Board. Management of the Other Bidder indicated that it did not
believe it could raise its proposal.
On October 29, 1999, a special meeting of the Board was held to discuss the
status of negotiations. Management stated that no firm price had been received
from Parent and the Other Bidder's price appeared firm at $29.00 per Share, and
that the Company had received a letter from one of Parent's lending institutions
reiterating its interest in providing financing for Parent's acquisition of the
Company on terms to be negotiated.
On October 30 and 31, 1999, Merrill Lynch conveyed to the financial
advisors of Parent and the Other Bidder the Company's preliminary third quarter
results, which the Company indicated had been adversely affected by the recent
hurricane and tropical storms.
On November 1, 1999, representatives of Parent and the Company met to
discuss various aspects of the transaction. Parent's representatives emphasized
Parent's desire to ensure management continuity and requested that Company's
senior management clarify that they would not consider the change of control of
the Company resulting from Parent's acquisition of the Shares, by itself, to
constitute 'Good Reason' to terminate their employment and change in control
agreements with the Company. (Under their employment and change in control
agreements, these executives may not terminate their employment and change in
control agreements and receive severance and other benefits as a result of a
change of control without 'Good Reason' prior to the first anniversary of the
change in control). Also in this discussion, Parent's representatives indicated
that they believed that Parent would be willing to pay $28.00 to 29.00 per
Share. Representatives of the Company responded that they believed the Company's
Board would not accept an offer unless it was more than $30 per Share and
indicated that the Company had received a proposal from another bidder that was
competitive in value and did not have any timing or financing conditions.
14
On November 1, 1999, management of the Company and management of the Other
Bidder discussed the Other Bidder's proposal, and management of the Other Bidder
raised its proposal to $29.50 per Share and stated that it was the most that it
would offer. Management of the Company indicated that, in view of the firmness
and unconditional nature of the offer, it would recommend to its Board
proceeding with the Other Bidder with the goal of finalizing a contract within
two days.
On November 1, 1999, a special meeting of the Board was held to discuss the
status of negotiations, values indicated, and remaining contract issues. At the
conclusion of the meeting, the Board authorized management to continue
negotiations with the Other Bidder with a view to finalizing the transaction
within two days and the Board authorized management to continue negotiations
with Parent regarding price and timing.
On November 2, 1999, management of the Company and its representatives had
several discussions regarding price and timing with Parent. Parent raised its
proposal to $31.00 per Share. Parent indicated that it would execute a
definitive agreement on November 4, 1999, subject to final board approvals,
completion of negotiations regarding contract terms and the execution by the
senior management of the Company of clarifying amendments to their respective
employment and change in control agreements.
On November 2, 1999 Merrill Lynch had a conversation with one of Parent's
lending institutions to confirm the availability of Parent's financing.
On November 3, 1999, the Company and the Company's counsel completed
negotiating the terms and conditions of the Merger Agreement and the clarifying
amendments to senior management's employment and change in control agreements
with the Company with Parent and Parent's counsel.
On November 3, 1999, a special meeting of the Board was held. At the
meeting, the Board reviewed with certain of its executive officers, legal
counsel and Merrill Lynch the offers, discussions and negotiations between the
Company and the Parent and the Company and the Other Bidder. Following such
discussions, the Board heard presentations by its legal counsel on the terms and
conditions contained in the proposed Merger Agreement with Parent. The
termination provisions, as modified through negotiations, were described to the
Board and matters related to the effects of the termination provisions were
discussed with the Board. Merrill Lynch then presented its analysis of the
proposed transaction with Parent. At the conclusion of its presentation, Merrill
Lynch delivered its oral opinion to the Board that, as of such date, the cash
consideration to be received by the holders of the Shares pursuant to the Offer
and the Merger is fair from a financial point of view to the holders of the
Shares, other than Purchaser and its affiliates. The Board then adjourned the
meeting until November 4, 1999.
On November 4, 1999, the senior management of the Company and the Company
executed clarifying amendments to the senior management's employment and change
in control agreements.
On November 4, 1999, the boards of directors of Parent and Purchaser
approved and adopted the Offer, the Merger and the Merger Agreement.
On November 4, 1999, a special meeting of the Board was held. At the
meeting, the Board discussed the Offer and the Merger Agreement. Following such
discussions, Merrill Lynch delivered its written opinion to the Board that, as
of such date, the cash consideration to be received by the Company's
stockholders pursuant to the Offer and the Merger is fair from a financial point
of view to the Company's stockholders, other than Purchaser and its affiliates.
Thereafter, the Board unanimously determined that the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, were fair
to and in the best interests of, the Company's stockholders, approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and recommended that the stockholders of the Company accept the Offer
and tender their Shares pursuant to the Offer.
The Merger Agreement was executed and the transaction was announced prior
to the opening of trading on the Nasdaq National Market on November 4, 1999.
15
(b)(2) Reasons for the Recommendation; Factors Considered by the Board.
In approving the Merger Agreement, the Merger and the Offer and
recommending that the stockholders accept the Offer and adopt the Merger
Agreement and the transactions contemplated thereby, the Board considered a
number of factors, the material ones being the following:
(i) The familiarity of the Board with the financial condition, results
of operations, competitive position, business and prospects of the Company,
current economic and market conditions and the nature of the industry in
which the Company operates;
(ii) The historical market prices of, and recent trading activity in,
the Shares, particularly the fact that the $31.00 per Share in cash to be
paid in the Offer represents a premium of approximately 51% over the
closing price of the Shares on November 3, 1999, the last trading day prior
to the public announcement on November 4, 1999 of the Merger Agreement, and
a premium of approximately 51% over the average closing prices for the 30
trading days ending on November 3, 1999;
(iii) The presentation of Merrill Lynch, the Company's financial
advisor, at the November 3, 1999 meeting of the Board of Directors and the
written opinion of Merrill Lynch, dated November 4, 1999, to the effect
that, as of such date and based upon and subject to certain matters in such
opinion, the cash consideration to be received by the holders of the Shares
pursuant to the Offer and the Merger is fair from a financial point of view
to the holders of such Shares, other than Purchaser and its affiliates. The
full text of the written opinion of Merrill Lynch, which sets forth the
assumptions made, matters considered and limitations on the review
undertaken in connection with such opinion, is filed as Annex B and filed
as an Exhibit hereto and is incorporated herein by reference. Stockholders
are urged to read such opinion carefully in its entirety. The opinion of
Merrill Lynch was presented for the benefit of the Board in connection with
its consideration of the Merger Agreement and is directed only to the
fairness of the cash consideration to be received by the holders of the
Shares pursuant to the Offer and the Merger. The opinion does not
constitute a recommendation to any stockholder as to whether to tender
Shares in the Offer;
(iv) The possible alternatives to the Offer and the Merger, including,
without limitation, continuing to operate the Company as an independent
entity and the risks associated therewith;
(v) The fact that the Board authorized the Company and Merrill Lynch
to solicit a limited number of third party indications of interest for the
acquisition of all or any part of the Company and that the Company pursued
a business combination with two parties;
(vi) The fact that the Merger Agreement, which prohibits the Company,
its subsidiaries and their respective officers, directors, employees,
representatives, agents or affiliates from initiating, soliciting or
knowingly encouraging any potential Acquisition Proposal (as defined in the
Merger Agreement) permits the Company to furnish non-public information to,
or to enter into discussions and negotiations with, any person or entity
that makes an unsolicited Acquisition Proposal after the date of the Merger
Agreement, if the Board, based on the advice of independent legal counsel,
determines in good faith that the failure to do so would result in a breach
of the fiduciary duty of the Board to the stockholders of the Company;
(vii) The fact that in the event that the Board decided to accept a
Superior Proposal (as defined in the Merger Agreement), the Board may
terminate the Merger Agreement and pay Parent a termination fee of $10
million. The Board after considering, among other things, the advice of
Merrill Lynch, did not believe that such termination provision would be a
significant deterrent to a higher offer by a third party interested in
acquiring the Company;
(viii) The fact that the terms of the Merger Agreement should not
unduly discourage other third parties from making bona fide proposals
subsequent to the execution of the Merger Agreement;
(ix) The strategic fit between the companies, and the expected
favorable impact on the Company's employees; and
(x) The likelihood that the Offer and the Merger will be consummated,
including a consideration of all the conditions to the Offer.
16
The foregoing discussion of factors considered by the Board is not meant to
be exhaustive but includes the material factors considered by the Board in
determining 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 stockholders, approving the Merger Agreement and the transactions
contemplated thereby including the Offer and the Merger, and in recommending
that stockholders accept the Offer and tender their Shares pursuant to the
Offer. The Board did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered. In
addition, individual members of the Board may have given different weights to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company entered into an agreement with Merrill Lynch dated June 10,
1999 (the 'Retention Letter') pursuant to which Merrill Lynch was retained as
the Company's financial advisor in connection with evaluating strategic
alternatives and, if management and the Board determine to proceed with a
transaction, in effecting such transaction. For its services, the Company has
agreed to pay Merrill Lynch a fee contingent upon the consummation of an
acquisition transaction equal to 1.0% of the purchase price paid in such
acquisition transaction. The Company has also agreed to reimburse Merrill Lynch
for its reasonable out-of-pocket expenses, including reasonable fees and
expenses of counsel, and to indemnify Merrill Lynch and certain related persons
against certain liabilities in connection with their engagement, including
liabilities under the federal securities laws.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to stockholders on its behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) There have been no transactions in the Shares during the past 60 days
by the Company or, to the best knowledge of the Company, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, each of the Company's executive
officers and directors intends to tender all Shares over which he has sole
dispositive power into the Offer except if such tender would subject such person
to liability under Section 16(b) of the Exchange Act.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiations in response to the Offer which relate to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of 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 3(b) and Item 4 of this Schedule 14D-9,
which Items are hereby incorporated by reference into this Item 7(b), 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 paragraph (a) of this Item 7, except that the Board of
Directors of the Company has adopted resolutions, among other things, (i)
determining 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 stockholders, approving and adopting the Merger Agreement and
transactions contemplated thereby, including the Offer and the Merger, and
recommending that stockholders accept the Offer and tender all of their Shares
pursuant to the Offer.
17
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Reference is made to the Information Statement Pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder, which is attached as Annex A and
filed as an Exhibit hereto and is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
[Enlarge/Download Table]
Exhibit 1 -- Form of Offer to Purchase, dated November 10, 1999 (incorporated by reference to
Exhibit (a)(1) to the Schedule 14D-1).
Exhibit 2 -- Form of Letter of Transmittal to Tender Shares of Common Stock (incorporated by
reference to Exhibit (a)(2) to the Schedule 14D-1).
Exhibit 3 -- Letter to Stockholders of the Company, dated November 10, 1999.
Exhibit 4 -- Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated dated November 4,
1999. (Annex B to the Schedule 14D-9).
Exhibit 5 -- Agreement and Plan of Merger, dated as of November 4, 1999, among Parent,
Purchaser and the Company (incorporated by reference to Exhibit (c)(1) of the
Schedule 14D-1).
Exhibit 6 -- Confidentiality Agreement, dated August 23, 1999, between Parent and the Company
(incorporated by reference to Exhibit (c)(2) to the Schedule 14D-1).
Exhibit 7 -- Press Release, dated September 2, 1999.
Exhibit 8 -- Information Statement Pursuant to Section 14(f) of the Exchange Act and
Rule 14f-l thereunder (Annex A to the Schedule 14D-9).
Exhibit 9 -- Form of Amendment No. 1 to Employment and Change in Control Agreements.
18
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.
GIANT CEMENT HOLDING, INC.
By: /s/ GARY L. PECHOTA
.......................
Name: Gary L. Pechota
Title: President and Chief Executive
Officer
Dated: November 10, 1999
19
ANNEX A
GIANT CEMENT HOLDING, INC.
320-D MIDLAND PARKWAY
SUMMERVILLE, SC 29485
------------------------
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AND RULE 14f-1 PROMULGATED THEREUNDER
------------------------
GENERAL
This Information Statement is being mailed on or about November 10, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (as amended
from time to time, the 'Schedule 14D-9') of Giant Cement Holding, Inc. (the
'Company'). Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Schedule 14D-9. You are receiving this
Information Statement in connection with the possible election of persons
designated by Parent (the 'Parent Designees') to the Board. The Merger Agreement
requires the Company, upon the acceptance for payment of and payment for a
majority of the shares of common stock, par value $.01, of the Company (the
'Shares') by Purchaser pursuant to the Offer and upon request of Purchaser, to
take certain action to cause the Parent Designees to be elected to the Board.
The Offer commenced on November 10, 1999 and is scheduled to expire at
12:00 midnight, New York City time, on December 9, 1999, unless extended upon
the terms set forth in the Offer to Purchase.
The information contained in this Information Statement concerning Parent
and Purchaser has been furnished to the Company by Parent. The Company assumes
no responsibility for the accuracy or completeness of such information.
THIS INFORMATION STATEMENT IS REQUIRED BY SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 (THE 'EXCHANGE ACT'), AS AMENDED, AND RULE 14f-1
THEREUNDER. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
INFORMATION REGARDING THE SHARES
The Shares constitute the only class of voting securities of the Company
outstanding. As of November 2, 1999, there were 8,731,562 Shares outstanding.
Each Share is entitled to one vote.
DESIGNATION OF DIRECTORS BY PURCHASER
The Merger Agreement provides that, immediately upon the acceptance for
payment of and payment for a majority of the Shares by Purchaser pursuant to the
Offer, Parent will be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company equal to the
product of (i) the total number of directors on the Company's Board of Directors
and (ii) the percentage that the number of Shares beneficially owned by Parent
bears to the total number of Shares outstanding on a fully diluted basis. The
Company has agreed, upon the request of Parent, to use its best efforts promptly
either to increase the size of the Board or to secure the resignations of such
number of its incumbent directors, or both, as is necessary to enable persons
designated by Parent to be elected or appointed to the Board and shall take all
actions available to the Company to cause such designees to be so elected or
appointed. The Company has also agreed, if requested by Parent, to
A-1
take all action necessary to cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Board of (a) each committee (or similar body) of the Board, (b) each board of
directors (or similar body) of each subsidiary of the Company and (c) each
committee (or similar body) of each such boards. From and after the time that
the Parent Designees constitute a majority of the Board, any amendment or
termination of the Merger Agreement by the Company, any extension of the time
for the performance of any of the obligations of Parent or Purchaser thereunder,
any waiver of any condition to the Company's obligations thereunder or any of
the Company's rights thereunder or other action by the Company thereunder, may
be effected only by the action of a majority of those directors of the Company
then in office who were directors on the date of the Merger Agreement and who
are not officers or affiliates of the Company, Parent or any of their respective
subsidiaries.
It is expected that the Parent Designees will assume office promptly
following the purchase by Purchaser of a majority of the outstanding Shares on a
fully diluted basis pursuant to the terms of the Offer, which purchase cannot be
earlier than December 10, 1999, and that, upon assuming office, the Parent
Designees together with the continuing directors of the Company will thereafter
constitute the entire Board.
Parent has informed the Company that the Parent Designees shall be the
persons set forth below. The name, present principal occupation or employment
and five-year employment history of each of the persons is set forth below. The
Company has been advised by Parent that none of the persons listed below owns
any Shares or has engaged in any transactions with respect to the Shares during
the past 60 days. The Company also has been advised by Parent that during the
last five years, none of the persons listed below has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
was such person a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction, and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation or such laws. The Company also has been advised by Parent that
none of the persons listed below (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any of the
directors or executive officers of the Company or (iii) to the best of Parent's
knowledge, beneficially owns any securities (or rights to acquire any
securities) of the Company. The Company has been advised by Parent that, to the
best of Parent's knowledge, none of the persons listed below has been involved
in any transaction with the Company or any of its directors, executive officers
or affiliates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission (the 'Commission' or
'SEC'), except as may be disclosed herein or in the Schedule 14D-9. All of the
individuals listed below are citizens of Spain, except for Mr. Culbert who is
a United States citizen. The business address of each such person other than
Mr. Culbert is Jose Abascal, 59, 28003 Madrid, Spain. Mr. Culbert's business
address is c/o Masterman, Culbert & Tully LLP, One Lewis Wharf, Boston, MA
02110.
[Enlarge/Download Table]
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AGE AND FIVE-YEAR EMPLOYMENT HISTORY
---- --- --------------------------------
Rafel Martinez-Ynzenga....................... 69 Chairman of Parent; Chairman and CEO of Portland
Valderrivas, S.A.
Manuel de Melgar y Oliver.................... 54 Managing Director of Parent
Andrew C. Culbert............................ 55 Partner, Masterman, Culbert & Tully LLP
Jose Ignacio Martinez-Ynzenga................ 61 Chief Technical Officer of Portland Valderrivas,
S.A.
Fernando Ferreras Fernandez.................. 62 Chief Financial Officer of Parent
A-2
ANNEX B
[MERRILL LYNCH LETTERHEAD]
November 4, 1999
Board of Directors
Giant Cement Holding, Inc.
320-D Midland Parkway
Summerville, SC 29485
Members of the Board of Directors:
Giant Cement Holding, Inc. (the "Company"), Cementos Portland, S.A.
(the "Acquiror") and CP Acquisition, Inc., a newly formed, wholly owned
subsidiary of the Acquiror (the "Acquisition Sub"), propose to enter into an
Agreement and Plan of Merger (the "Agreement") pursuant to which (i) the
Acquiror and the Acquisition Sub would commence a tender offer (the "Tender
Offer") for all outstanding shares of the Company's common stock, par value
$0.01 per share (the "Company Shares"), for $31.00 per share, net to the seller
in cash, and (ii) Acquisition Sub would be merged with the Company in a merger
(the "Merger") in which each Company Share not acquired in the Tender Offer,
other than Company Shares held in treasury or held by the Acquiror or any
affiliate of the Acquiror or as to which dissenter's rights have been perfected,
would be converted into the right to receive $31.00 per Company Share in cash.
The Tender Offer and the Merger, taken together, are referred to as the
"Transaction."
You have asked us whether, in our opinion, the proposed cash
consideration to be received by the holders of the Company Shares pursuant to
the Transaction is fair from a financial point of view to such holders, other
than the Acquiror and its affiliates.
In arriving at the opinion set forth below, we have, among other
things:
(1) Reviewed certain publicly available business and financial
information relating to the Company that we deemed to be
relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities and prospects of the Company furnished to us by the
Company;
(3) Conducted discussions with members of senior management and
representatives of the Company concerning the matters described
in clauses 1 and 2 above;
(4) Reviewed the market prices and valuation multiples for the
Company Shares and compared them with those of certain publicly
traded companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and compared
them with those of certain publicly traded companies that we
deemed to be relevant;
(6) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions that we deemed to
be relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and the Acquiror and their
financial and legal advisors;
(8) Reviewed a draft dated November 2, 1999 of the Agreement; and
(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or been furnished with any such evaluation or
appraisal. In addition, we have not assumed any obligation to conduct any
physical inspection of the properties or facilities of the Company. With respect
to the financial forecast information furnished to or discussed with us by the
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Company's management as
to the expected future financial performance of the Company. We have also
assumed that the final form of the Agreement will be substantially similar to
the last draft reviewed by us.
2
Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on, and on the information made
available to us as of, the date hereof.
In connection with the preparation of this opinion, we have been
authorized by the Company and the Board of Directors to solicit only a limited
number of third party indications of interest for the acquisition of all or any
part of the Company.
We are acting as financial advisor to the Company in connection with
the Transaction and will receive a fee from the Company for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. We have in the past, provided
financial advisory and financing services to the Acquiror or its affiliates and
may continue to do so and have received, and may receive fees for the rendering
of such services. In addition, in the ordinary course of our business, we may
actively trade the Company Shares as well as securities of the Acquiror or its
affiliates for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of
the Company. Our opinion does not address the merits of the underlying decision
by the Company to engage in the Transaction and does not constitute a
recommendation to any shareholder as to whether such shareholder should tender
any Company Shares pursuant to the Tender Offer.
On the basis of and subject to the foregoing, we are of the opinion
that, as of the date hereof, the cash consideration to be received by the
holders of the Company Shares pursuant to the Transaction is fair from a
financial point of view to the holders of such Company Shares, other than the
Acquiror and its affiliates.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
3
EXHIBIT INDEX
[Download Table]
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
1 -- Form of Offer to Purchase, dated November 10, 1999
(incorporated by reference to Exhibit (a)(1) to the
Schedule 14D-1)...........................................
2 -- Form of Letter of Transmittal to Tender Shares of Common
Stock (incorporated by reference to Exhibit (a)(2) to the
Schedule 14D-1)...........................................
3 -- Letter to Stockholders of the Company, dated November 10,
1999......................................................
4 -- Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated dated November 4, 1999. (Annex B to the
Schedule 14D-9)...........................................
5 -- Agreement and Plan of Merger, dated as of November 4,
1999, among Parent, Purchaser and the Company
(incorporated by reference to Exhibit (c)(1) of the
Schedule 14D-1)...........................................
6 -- Confidentiality Agreement, dated August 23, 1999, between
Parent and the Company (incorporated by reference to
Exhibit (c)(2) to the Schedule 14D-1).....................
7 -- Press Release, dated September 2, 1999....................
8 -- Information Statement Pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder (Annex A to the
Schedule 14D-9)...........................................
9 -- Form of Amendment No. 1 to Employment and Change in Control
Agreements.
Dates Referenced Herein and Documents Incorporated by Reference
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