SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
AMENDMENT NO. 1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
RENTAL SERVICE CORPORATION
(Name of Subject Company)
UR ACQUISITION CORPORATION
UNITED RENTALS, INC.
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
76009V 10 2
(CUSIP Number of Class of Securities)
UNITED RENTALS, INC.
FOUR GREENWICH OFFICE PARK
GREENWICH, CT 06830
ATTN.: BRADLEY S. JACOBS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
TELEPHONE:(203) 622-3131
FACSIMILE:(203) 622-6080
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of Bidders)
COPY TO:
MILTON G. STROM, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-3000
FACSIMILE: (212) 735-2000
UR Acquisition Corporation, a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of United Rentals, Inc., a
Delaware corporation ("Parent"), hereby amend and supplement their Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), filed with the
Securities Exchange Commission (the "Commission") on April 5, 1999, with
respect to the Purchaser's offer to purchase all of the shares of common
stock, par value $.01 per share (the "Shares"), of Rental Service
Corporation, a Delaware corporation (the "Company"), at a price of $22.75
per Share, net to the seller in cash, (such price, or such higher price
per Share as may be paid in the Offer, the "Offer Price") upon the terms
and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer").
ITEM 10. ADDITIONAL INFORMATION.
The information set forth in Item 10(e) of the Schedule 14D-1 is
hereby amended and supplemented by the following information:
On April 5, 1999, Parent and Purchaser commenced litigation
against the Company, the Company Board and NationsRent in the Chancery
Court of the State of Delaware by filing a complaint (the "Complaint")
alleging, among other things, breaches of fiduciary duties by the Company
Board in connection with the NationsRent Merger Agreement. Parent and
Purchaser seek an order, among other things, (i) invalidating the
NationsRent Option and the NationsRent Termination Fee and (ii) compelling
the Company Board to approve the Offer and the proposed Merger for
purposes of Section 203 of the Delaware General Corporation Law.
The foregoing is qualified in its entirety by reference to the
text of the Complaint, a copy of which is filed as Exhibit (g)(1) hereto
and is incorporated by reference herein.
Unless otherwise indicated herein, each capitalized term used
but not defined herein shall have the meaning ascribed to such term in the
Schedule 14D-1 or in the Offer to Purchase referred to therein.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(g)(1) Complaint, filed April 5, 1999, by Parent and Purchaser in
the Chancery Court of the State of Delaware.
SIGNATURE
After due 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.
UR Acquisition Corporation
By: /s/ John N. Milne
------------------------------
Name: John N. Milne
Title: President
United Rentals, Inc.
By: /s/ Bradley S. Jacobs
------------------------------
Name: Bradley S. Jacobs
Title: Chairman and Chief Executive
Officer
Date: April 6, 1999
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
(g)(1) Complaint, filed April 5, 1999, by Parent and Purchaser in the
Chancery Court of the State of Delaware.
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
UR ACQUISITION CORPORATION, a Delaware :
corporation, and UNITED RENTALS, INC., a :
Delaware corporation, :
:
Plaintiffs, :
: Civil Action No. 17090
:
v. :
:
MARTIN R. REID, WILLIAM M. BARNUM, JR., :
JAMES R. BUCH, DAVID P. LANOHA, :
CHRISTOPHER A. LAURENCE, ERIC L. MATTSON,:
BRITTON H. MURDOCH, JOHN M. SULLIVAN, :
RENTAL SERVICE CORPORATION, a Delaware :
corporation, and NATIONSRENT, INC., :
a Delaware corporation, :
:
Defendants. :
COMPLAINT
Plaintiffs UR Acquisition Corporation ("UR Acquisition") and
United Rentals, Inc. ("URI"), as and for their Complaint herein, by and
through their undersigned attorneys, allege, upon knowledge as to
themselves and their own acts and upon information and belief as to all
other matters, as follows:
NATURE OF THIS ACTION
1. Plaintiff UR Acquisition, a wholly owned subsidiary of
plaintiff URI, has today commenced a tender offer (the "Tender Offer" or
the "URI Tender Offer") for all of the outstanding shares of defendant
Rental Services Corporation ("RSC") at $22.75 per share in cash,
representing a 32% premium over the market price for URI's shares (as of
the close of trading on the New York Stock Exchange on April 1, 1999).
2. In an agreement dated as of January 20, 1999 (the "Merger
Agreement"), RSC and defendant NationsRent, Inc. ("NationsRent") agreed to
merge in a stock-for-stock exchange. The RSC board approved the Merger
Agreement less than one week after RSC's Chief Executive Officer rebuffed
an offer from URI to discuss a possible acquisition by URI, stating in
substance that RSC was not for sale.
3. Unlike RSC, the shares of which are owned by a large number
of unaffiliated stockholders, approximately 48% of the outstanding common
stock of NationsRent is controlled by its three founding stockholders (the
"NationsRent Founding Stockholders"). Two of the NationsRent Founding
Stockholders, H. Family Investments, Inc. and James L. Kirk (NationsRent's
chairman and chief executive officer), collectively own approximately
46.1% of NationsRent's common stock and have entered into a voting
agreement with RSC in which they have agreed to vote their shares together
in favor of the NationsRent merger. The effect of the proposed
NationsRent/RSC merger would thus be to transfer control of RSC from a
disparate unaffiliated group of stockholders to an entity effectively
controlled by the NationsRent Founding Stockholders.
4. According to the limited information that is currently
publicly available, RSC and NationsRent agreed in their Merger Agreement
to a breakup fee of more than 11% of the value of the merger consideration
(calculated as a percentage of the value of the proposed transaction
contemplated by the Merger Agreement) (the "Breakup Fee"), as well as a
"lock-up" cross-stock option (the "Lockup Option") which permits
NationsRent and RSC to purchase approximately 19.9% of each other's common
stock. The Lockup Option becomes exercisable upon the occurrence of any
event that would result in NationsRent becoming entitled to the Breakup
Fee.
5. Despite the RSC directors' (the "Individual Defendants")
fiduciary duty to act to maximize the value obtained for all RSC
stockholders, the Breakup Fee and Lockup Option are designed to preclude,
and have the effect of precluding, among other things, a superior offer
for RSC from URI.
6. Plaintiffs' Tender Offer is non-discriminatory, non-
coercive, and provides a substantial premium to the stockholders of RSC in
exchange for their RSC shares. Through the Tender Offer and a proposed
second-step merger, plaintiffs intend to acquire control of, and
ultimately the entire equity interest in, RSC. However, the Tender Offer
is conditioned upon, among other things, setting aside of the Breakup Fee
contained in RSC's Merger Agreement with NationsRent and the attendant
Lockup Option.
7. Accordingly, plaintiffs seek declaratory and injunctive
relief, among other things, enjoining the triggering or enforcement of the
Breakup Fee and Lockup Option.
THE PARTIES
8. Plaintiff URI is a Delaware corporation with its principal
executive offices in Connecticut. URI, an owner of RSC stock, is primarily
engaged in the equipment rental business, as are RSC and NationsRent.
9. Plaintiff UR Acquisition is a Delaware corporation with its
principal executive offices in Connecticut. UR Acquisition is a wholly
owned subsidiary of URI.
10. Defendant RSC is a Delaware corporation with its principal
place of business in Scottsdale, Arizona.
11. Defendant Martin R. Reid is the Chairman and Chief Executive
Officer of RSC.
12. Defendant Daniel P. Lanoha is Senior Vice President of
Operations and a director of RSC.
13. Defendants William M. Barnum, Jr., James R. Buch,
Christopher A. Laurence, Eric L. Mattson, Britton H. Murdoch and John M.
Sullivan are directors of RSC. According to RSC's filing on Form 10-K for
the year ended December 31, 1998, its board of directors "presently
consists of eight members, including four independent directors." Thus, by
RSC's own admission, a majority of its directors are not independent.
14. Defendant NationsRent is a Delaware corporation with its
principal executive offices in Ft. Lauderdale, Florida.
THE MERGER AGREEMENT
15. In December 1998, a representative of URI's financial
advisor telephoned defendant Martin Reid, RSC's Chairman of the Board and
Chief Executive Officer, to arrange a meeting between them. While Reid
stated he did not believe it was a good time to sell RSC, he agreed to
meet in January 1999.
16. On January 15, 1999, such a meeting took place with Reid and
Robert M. Wilson, RSC's Executive Vice President, Secretary and Treasurer.
At the meeting, Reid was asked whether RSC was interested in discussing a
business combination with URI, and Reid stated that his company was not
for sale.
17. Six days later, NationsRent and RSC announced that they had
entered into the Merger Agreement, pursuant to which RSC would merge with
NationsRent in a stock-for-stock transaction valued at approximately $360
million when the agreement was announced.
18. According to the current report on Form 8K of RSC filed on
January 28, 1999, pursuant to the Merger Agreement, each share of
NationsRent would be converted into 0.355 share of RSC common stock.
According to public sources, pursuant to the Merger Agreement, NationsRent
would have the right to nominate five of the nine directors of the
combined companies.
19. Under the circumstances presented here, the aggregate effect
of the structural barriers to an alternative transaction, created by the
NationsRent transaction, is both preclusive and coercive. Pursuant to the
Merger Agreement, a termination by either party under certain specified
circumstances requires the terminating party to pay the other party $35
million as a Breakup Fee, and up to an additional $5 million in expenses.
As of the date of the Merger Agreement, the up to $40 million total
Breakup Fee (including expenses) represented approximately 11% of the
value of the NationsRent transaction.
20. RSC and NationsRent have also each granted to the other the
Lockup Option to purchase approximately 19.9% of the stock of their
respective corporations pursuant to a "stock option agreement" dated on or
about January 20, 1999. The Lockup Option becomes exercisable upon the
occurrence of any event that would result in the holder of the option
being entitled to receive payment of the Breakup Fee under the Merger
Agreement. Among other things, the Lockup Option is designed (i) to ensure
that the only transaction that RSC stockholders are permitted to consider
is between RSC and NationsRent; (ii) deter URI from seeking to acquire RSC
upon terms that are economically superior to the NationsRent/RSC Merger
Agreement; and (iii) penalize either party to the Merger Agreement should
it attempt to secure a better transaction for its stockholders. Thus,
should RSC decide to accept an offer for a different business combination
transaction from URI no matter how advantageous to RSC's stockholders RSC
would be forced to allow NationsRent to purchase approximately 19.9% of
the common equity of RSC at an undisclosed price, as well as being forced
to pay NationsRent up to $40 million.
URI TAKES ITS CASE
DIRECTLY TO RSC'S STOCKHOLDERS
21. On April 5, 1999, plaintiffs announced the commencement of a
tender offer to purchase all of the outstanding common stock of RSC at
$22.75 per share in cash a 32% premium over RSC's last closing price.
22. Among other things, consummation of the offer is conditioned
upon the Breakup Fee and the Lockup Option's having been terminated or
invalidated without any funds having been paid or stock having been issued
thereunder. Based upon plaintiffs' understanding of the terms of the
Lockup Option attendant to a Merger Agreement which, to plaintiffs'
knowledge, has never been publicly filed or disclosed the cost to
plaintiffs of their Tender Offer if NationsRent were to exercise the
Lockup Option and then to tender its shares in plaintiffs' Tender Offer
would be increased significantly.
23. On April 5, 1999, URI's chairman and chief executive officer
sent a letter to Mr. Reid of RSC advising him of the Tender Offer and the
benefits of a combination between URI and RSC, and offering to meet with
him and RSC directors to discuss the URI proposal and answer relevant
questions.
IRREPARABLE INJURY
24. Defendants' conduct has irreparably harmed and, unless
enjoined, will continue to irreparably harm plaintiffs by depriving them
of the unique opportunity to acquire RSC. The actions of the Individual
Defendants constitute a breach of the fiduciary duties owed by the
Individual Defendants to RSC's stockholders. Plaintiffs' resulting injury
is not compensable in monetary damages and they, therefore, have no
adequate remedy at law.
COUNT I
25. Plaintiffs repeat and reallege each of the foregoing
allegations as if fully set forth herein.
26. By virtue of their positions as directors of RSC, the
Individual Defendants owe fiduciary duties to RSC and its stockholders.
These duties include, but are not limited to, the obligation to consider
and fairly evaluate all offers for RSC, the obligation to act reasonably
to seek a transaction offering the highest value reasonably available to
RSC's stockholders in the sale or merger of RSC, and the obligation not to
put self-interests and personal considerations, or any other
considerations, ahead of the interests of RSC's stockholders. The
Individual Defendants are also obligated to conduct the affairs of RSC
with due care.
27. The agreement of the Individual Defendants to the Breakup
Fee and Lockup Option demonstrates a lack of good faith, could not have
been based upon a reasonable inquiry, and unreasonably precludes any
possibly superior offer for RSC such as the Tender Offer.
28. In engaging in the foregoing conduct, the RSC directors
breached their fiduciary duties by, among other things, failing to act in
a manner that was entirely fair to all RSC stockholders. The Individual
Defendants have also failed to obtain a transaction offering the best
value available to all RSC stockholders. Further, the conduct of the
Individual Defendants was wholly unreasonable in relation to any "threat"
posed by URI and was not undertaken in good faith and after reasonable
investigation.
29. Unless enjoined by this Court, the Individual Defendants
will continue to breach their fiduciary duties, to the detriment of RSC
and its stockholders, including URI.
30. Plaintiffs have no adequate remedy at law.
COUNT II
31. Plaintiffs repeat and reallege each of the foregoing
allegations as if fully set forth in this paragraph.
32. The Tender Offer is non-coercive and non-discriminatory. It
is fair to RSC stockholders, poses no threat to RSC's corporate policy and
effectiveness, and represents a substantial premium over both the market
price of RSC common stock prior to the announcement of the Tender Offer
and the implied value of RSC's proposed Merger Agreement with NationsRent.
33. Section 203 of the Delaware General Corporation Law, 8 Del.
C. section 203, entitled "Business Combinations with Interested
Stockholders", applies to any Delaware corporation, including RSC, that
has not opted out of such statute's coverage.
34. Among other things, Section 203, which was designed to
impede coercive and inadequate tender and exchange offers, provides that
if a person acquires 15% or more of a corporation's stock (thereby
becoming an "interested stockholder"), such interested stockholder may not
engage in a "business combination" with the corporation (defined to
include a merger or consolidation) for three years after the person
becomes an interested stockholder, unless (i) prior to the 15%
acquisition, the board of directors has approved either the acquisition or
the business combination; (ii) the interested stockholder acquires 85% of
the corporation's voting stock in the transaction in which it crosses the
15% threshold; or (iii) on or subsequent to the date of the 15%
acquisition, the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders
(and not by written consent) by the affirmative vote of at least 66-2/3%
of the outstanding voting stock which is not owned by the interested
stockholder.
35. Section 203 may not properly be used by the RSC Board to
obstruct RSC's stockholders from considering URI's non-coercive,
non-discriminatory, all cash offer, which offer is superior to that
implied in the Merger Agreement with NationsRent, nor may it be used to
prevent substantive negotiations between URI and RSC that could lead to an
even more advantageous deal between URI and RSC. Section 203 was designed
to allow a board of directors to ensure that their stockholders received
the highest possible value for their shares, not to allow the board to
refuse to consider all possible alternatives to their chosen deal or to
deny stockholders the right to vote on any other deal.
36. Pursuant to Section 203, the Individual Defendants can
render the statute inapplicable to the URI Tender Offer by approving it.
The Individual Defendants' presumptive failure to approve the URI Tender
Offer for purposes of Section 203 and to take any other steps necessary to
render Section 203 inapplicable (presumed based upon the conduct of RSC
and the Individual Defendants towards URI to this point) constitutes a
breach of the fiduciary duty owed by the Board to RSC's stockholders.
37. Plaintiffs have no adequate remedy at law.
COUNT III
38. Plaintiffs repeat and reallege each of the foregoing
allegations as if fully set forth herein.
39. The Individual Defendants have breached their fiduciary
duties to RSC and its stockholders.
40. NationsRent has aided and abetted the Individual Defendants
in their breaches of fiduciary duty. As a direct participant in the Merger
Agreement between NationsRent and RSC, NationsRent knew of the breaches of
fiduciary duty set forth herein, and in fact actively encouraged and
participated in said breaches of fiduciary duty. NationsRent induced the
Individual Defendants' breaches in order to obtain the substantial
financial benefits that the Merger Agreement between NationsRent and RSC
would provide it at the expense of RSC's stockholders.
41. Plaintiffs have no adequate remedy at law.
WHEREFORE, Plaintiffs UR Acquisition and URI respectfully
request that this Court:
A. Declare and decree that (i) the Breakup Fee provisions of the
Merger Agreement, and (ii) the Lockup Option were approved in breach of
the fiduciary duties of the Individual Defendants and that each of them is
unlawful and invalid, null and void and of no further effect;
B. Temporarily, preliminarily and permanently enjoin
NationsRent, RSC, and their respective employees, agents and all persons
acting on their behalf from taking further steps or any actions with
respect to (i) the Lockup Option and/or (ii) the Breakup Fee and/or (iii)
any other unlawful provisions of the Merger Agreement;
C. Temporarily, preliminarily and permanently enjoin RSC and the
Individual Defendants to render Section 203 inapplicable to the URI Tender
Offer by approving the URI Tender Offer for purposes of Section 203;
D. Temporarily, preliminarily and permanently enjoin the adoption
or exercise of any measures by RSC or the Individual Defendants which have
the effect of impeding, thwarting, frustrating or interfering with the URI
Tender Offer;
E. Require RSC and the Individual Defendants to take all steps
necessary to provide plaintiffs with a fair and equal opportunity to
acquire RSC, including furnishing to URI the same information and access
to information as was provided to NationsRent;
F. Temporarily, preliminarily and permanently enjoin NationsRent,
and its employees, agents and all persons acting on its behalf, from
aiding and abetting the Individual Defendants' breach of their fiduciary
duties to RSC and its stockholders, including with respect to the Merger
Agreement, the Breakup Fee, the Lockup Option, or the Tender Offer
Commenced by plaintiffs; and
G. Grant such other and further relief as the Court may deem just
and proper, including the costs and disbursements of this action and
reasonable plaintiffs' attorneys' fees.
/S/ EDWARD P. WELCH
--------------------------------
Edward P. Welch
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
Attorneys for Plaintiffs,
UR Acquisition Corporation and
United Rentals, Inc.
OF COUNSEL:
Jay B. Kasner
Steven J. Kolleeny
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
Dated: April 5, 1999
