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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) ----- May 20, 1996
BEC GROUP, INC.
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(Exact name of Registrant as specified in charter)
Delaware 1-14360 13-3868804
(State of Incorporation) (Commission File No.) (IRS Employer Id. No.)
Suite B-302, 555 Theodore Fremd Avenue, Rye, New York 10580
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(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 967-9400
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(Former name or former address, if changed since last report.)
Page 1 of 9.
Exhibit Index at page 4.
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ITEM 5. OTHER EVENTS.
On May 20, 1996, BEC Group, Inc. ("BEC") announced that it had made a formal
offer to acquire ILC Technologies, Inc. ("ILC"). In a letter addressed to the
Board of Directors of ILC, BEC proposed a merger of the two companies through a
pooling transaction, pursuant to which ILC stockholders would receive two
shares of BEC common stock for each share of ILC common stock issued and
outstanding. Under the proposed transaction, outstanding ILC stock options
would be exchanged for BEC options and BEC would be responsible for the costs
of ILC's legal and financial advisors incurred in connection with the
transaction. BEC would be the surviving entity. The offer was conditioned on
negotiation and execution of a mutually satisfactory definitive agreement, a
proposed draft of which was presented with BEC's offer, and consummation of the
transaction would be subject to the approval of both ILC's and BEC's
stockholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS. The following exhibits are filed herewith:
99.1 Press Release, dated May 20, 1996, announcing offer of
BEC Group, Inc. to Board of Directors of ILC
Technologies, Inc.
99.2 Offer letter sent by BEC Group, Inc. to Board of
Directors of ILC Technologies, Inc. on May 15, 1996.
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BEC GROUP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BEC GROUP, INC.
By: /s/ Ian Ashken
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Ian Ashken
Chief Financial Officer
DATE: MAY 20, 1996
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EXHIBIT INDEX
NUMBER EXHIBIT PAGE NO.
- ------ ------- --------
99.1 Press Release, dated May 20, 1996, announcing offer of BEC
Group, Inc. to Board of Directors of ILC Technologies, 5
Inc.
99.2 Offer letter sent by BEC Group, Inc. to Board of Directors
of ILC Technologies, Inc. on May 15, 1996 7
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EXHIBIT 99.1
[LOBSENZ-STEVENS LETTERHEAD]
On behalf of: Contacts:
BEC Group, Inc. Martin E. Franklin
555 Theodore Fremd Ave., Suite B-302 Chairman and CEO
Rye, NY 10580 (914) 967-9400
(NYSE: EYE) or
Mark Perlgut
FOR IMMEDIATE RELEASE at Lobsenz-Stevens, Inc.
May 20, 1996 (212) 684-6300, Ext 309
BEC GROUP, INC. OFFERS MERGER TO ILC TECHNOLOGIES, INC.
RYE, N.Y., May 20, 1996 -- BEC Group, Inc. (NYSE: EYE), a sunglass and optical
technologies company, today announced that it has made a formal merger proposal
to the Board of Directors of ILC Technologies, Inc. (NASDAQ: ILCT).
The proposal, detailed in a Form 8-K to be filed with the Securities
and Exchange Commission, calls for ILC shareholders to receive two shares of
BEC Group common stock for each share of ILC common stock. The proposed
transaction would be structured as a pooling of interests. Based on the closing
price of BEC Group stock on the day the offer was made, the offer's total value
was approximately $75 million, or $15 per share of ILC common stock.
"We believe this transaction would significantly benefit the
shareholders of both ILC and BEC Group," said Martin E. Franklin, chairman and
chief executive of BEC Group. "The synergies between our two companies are
substantial. Together, we would become the leading U.S.-based manufacturer of
specialty discharge lighting products, and we would be better positioned
against our larger international competitors.
"If consummated, the merger should be anti-dilutive, increasing BEC
Group's earnings per share in the first 12 months of combined operations. We
are seeking a friendly, negotiated transaction and desire to proceed swiftly
for the benefit of ILC's shareholders as well as our own. Direct and immediate
negotiations could result in enhanced value for ILC shareholders."
BEC Group, Inc. is a leading optics company through its Sunglass Group
and Optical Technologies Group. The Sungalss Group includes the Foster Grant
Group, the largest distributor of popular-priced sunglasses and reading glasses
in the United States,
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BEC Group, Inc.
May 20, 1996
Page 2
and Bolle America, the exclusive marketer and distributor of Bolle(R) premium
sunglasses, sports shields and goggles. The Optical Technologies Group
manufactures and markets advanced lighting, electronic and electroformed
products to a diverse customer base. BEC Group also owns 28% of Eyecare
Products plc, a London Stock Exchange listed company.
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EXHIBIT 99.2
[BEC GROUP, INC. LETTERHEAD]
MARTIN E. FRANKLIN
CHAIRMAN OF THE BOARD
TO: THE BOARD OF DIRECTORS OF ILC TECHNOLOGIES, INC.
Gentlemen:
BEC Group, Inc. is pleased to propose the merger of our respective companies
through a pooling transaction that would result in ILC shareholders receiving
two BEC Group shares of common stock for each ILC share. These shares would be
registered, freely tradeable shares with no holding restrictions other than for
"affiliates" in compliance with pooling rules.
Based upon yesterday's closing price of BEC Group, Inc. common stock of $7.50
per share, this provides a value of approximately $75 million for the equity of
ILC Technologies. In addition, options of ILC management would be rolled into
new BEC Group options to comply with pooling rules, with a further value of
approximately $5 million based upon information received. Furthermore, BEC
Group would be responsible for the costs of your legal and financial advisors
estimated to be $1 million, and assume the $6 million of net debt existing in
ILC. In total, the all-in enterprise value as paid by BEC Group is equivalent
to approximately $86 million. The value of this transaction represents a
significant premium to our first discussions, when ILC's stock was trading in
the $9 to $10 range. It is our belief, that the stock's recent rise is as a
direct result of various discussions initiated by ILC and the effect of an
information memorandum having been widely circulated. Nevertheless, BEC Group
believes the value enhancement opportunities for ILC shareholders are far
greater than the short term $14 to $15 per share valuation derived today. This
is due to the benefits of the combination that would be fully shared in the
future as explained in this letter.
The detailed terms of our acquisition proposal are described in the attached
draft contract that we suggest be the basis in forming a definitive agreement.
The signing of a mutually satisfactory definitive agreement is a condition of
this offer. We have compiled this offer based upon the assistance of Mr. Henry
Baumgartner and his management team who have been extremely helpful in our due
diligence process to date. In addition, our frequent contact with your
financial advisor has helped us enhance our valuation.
For the Board's consideration, we wish to underscore the reasons we believe
this proposal is clearly in the best interest of ILC shareholders as well as
those of BEC Group.
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First and foremost is the industrial logic of the combination. Together, our
group would be the nation's leading manufacturer of specialty discharge lamps,
with a product portfolio to rival major international competitors. ILC's
leadership in ceramic lamps and fiber optic illuminators would be enhanced by
our presence in that market. ORC's expertise in short-arc Xenon and Mercury
Xenon would enhance efforts ILC has been making in that area. All told,
following a combination our group would have technology, manufacturing
capability and distribution for 14 of the 15 specialty discharge product types
in the lighting industry. The combination market served would be over $400
million with our market share at 20%.
Synergies would arise in sales and marketing as ORC's expertise is in
distribution and end user sales whereas ILC's come largely from OEM sales. This
combination would maximize opportunities among OEM's, distributor and end users
for the products manufactured by both companies.
For ILC shareholders there are numerous factors that we believe are critical in
considering our proposal. First, liquidity. BEC Group is a New York Stock
Exchange Company with one of the finest institutional shareholder lists of any
company with a similar capitalization. The trading history of our common stock
clearly indicates materially higher levels of liquidity for ILC's shareholders
than currently exist.
Second, critical mass. With combined revenues of approximately $250 million,
BEC Group will continue to attract top quality research and attention from Wall
Street. In contrast, ILC has not had a published report written on it in five
years. Furthermore, research following is critical for capitalizing on any
progress made as a company; it is our belief that the credibility is not
achievable for ILC in its current form as its prospects and ideas are largely
identical to research published in reports dating back to 1991 when its market
capitalization was equivalent to that of today.
Third, capital. As with the research element, the combination's critical mass
and BEC Group's proven ability to raise various forms of debt and equity
capital will give ILC access to substantial funds for growth at rates far more
favorable than they have enjoyed in the past.
Fourth, management. BEC Group's management ranks from top to bottom are highly
operations focused, and not financial engineers. BEC Group's Optical
Technologies Group has enjoyed gains in sales and operating income of over 25%
compounded in the past three years due to motivated and talented management
that have executed plans based on clearly defined goals. We invite you to
interview our managers to appreciate the positive impact BEC Group's philosophy
and management expertise has had on accelerating the performance of these
operations. Based on BEC Group's due diligence, we wish to convey our belief
that there exists a great deal of frustration in ILC's management ranks, no
clearly defined objectives, a lack of accountability, and results that annually
miss forecasts. Despite these facts, we believe there is a very substantial
pool of talented executives, who, properly directed and motivated, could
substantially improve the company's prospects.
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Finally, BEC Group sincerely believes the combination would be warmly received
by shareholders and potential investors in both companies because the
combination makes sense. BEC Group's credibility has been proved by its track
record of building shareholder value over the long term by building and
improving businesses. We believe the benefits would be substantial for ILC
stockholders and superior to any other alternative.
We hope you will consider our proposal and contact us to explore its merits
further.
Yours sincerely,
/s/ MARTIN E. FRANKLIN
Martin E. Franklin
