SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
Amendment No. 8
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"), and Parent hereby amend and supplement their Tender
Offer Statement on Schedule 14D-1 (as amended from time to time, the
"Schedule 14D-1"), filed with the Securities and 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 $0.01 per share, and
the associated preferred stock purchase rights if and when issued
(collectively, 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 29, 1999, Parent and Purchaser filed a motion to dismiss and
memorandum of law in support of the motion to dismiss the amended
counterclaims of the Company (collectively, the "Second Motion to Dismiss")
with respect to the litigation initiated by Parent and Purchaser in the
United States District Court for the District of Connecticut on April 7,
1999. Parent, in the Second Motion to Dismiss, argues that the Court should
dismiss the Company's amended counterclaims filed on April 22, 1999 (the
"Amended Counterclaims") which allege violations of Sections 14(d) and 14
(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Section 8 of the Clayton Act.
Parent has moved to dismiss the Exchange Act allegations of the
Amended Counterclaims on the grounds that Parent has received a commitment
letter (the "Commitment Letter") from Goldman Sachs Credit Partners L.P., a
copy of which has been filed as Exhibit (b)(i) to this Schedule 14D-1, and,
as such, Parent considers the Offer to be "fully financed". As disclosed in
the Offer to Purchase, the Offer is subject to Parent receiving the funds
contemplated by the Commitment Letter; however, the Offer is not subject to
Parent seeking any other commitment for, or sources of, any financing
necessary to consummate the Offer and the Proposed Merger. While the
Company alleges that Parent failed to prominently state that the Offer is
subject to a financing condition, the "Introduction" to the Offer to
Purchase states that the Offer is conditioned on "receipt of the financing
pursuant to the Commitment Letter" and the customary conditions to the
Commitment Letter are summarized in "Section 10--Source and Amount of
Funds" of the Offer to Purchase.
Parent has moved to dismiss the Clayton Act allegations of the
Amended Counterclaims on the grounds that the nine persons designated by
Parent as nominees in its revised Preliminary Consent Statement, filed with
the SEC on April 27, 1999, are not officers and/or directors of Parent or
its affiliates and thus would not create an unlawful officer or director
interlock. As a result of the foregoing, Parent believes Parent's Second
Motion to Dismiss should be granted.
The foregoing is qualified in its entirety by reference to the
complete text of Parent's and Purchaser's Second Motion to Dismiss, a copy
of which is filed as Exhibit (g)(8) hereto, which 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)(8) Plaintiff's Motion to Dismiss and Memorandum of Law in Support
of the Motion to Dismiss the Amended Counterclaims of the
Company, dated April 29, 1999, filed by Parent and Purchaser in
the United States District Court for the District of
Connecticut.
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 29, 1999
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- --------
(g)(8) Plaintiff's Motion to Dismiss and Memorandum of Law in Support
of the Motion to Dismiss the Amended Counterclaims of the
Company, dated April 29, 1999, filed by Parent and Purchaser in
the United States District Court for the District of
Connecticut.
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UR ACQUISITION CORPORATION, a Delaware :
corporation, and UNITED RENTALS, INC., a :
Delaware corporation, :
:
Plaintiffs and Counter :
Defendants, : CIVIL ACTION NO.
: 399CV00625(DJS)
v. :
:
JAMES L. KIRK, RENTAL SERVICE :
CORPORATION and NATIONSRENT, INC., :
: April 29, 1999
Defendants. :
PLAINTIFF'S MOTION TO DISMISS AMENDED
COUNTERCLAIMS OF RENTAL SERVICE CORPORATION
Pursuant to Federal Rule of Civil Procedure 12(b)(6), the
Plaintiffs-Counter Defendants UR Acquisition Corporation and United
Rentals, Inc., and additional Counter Defendants Bradley S. Jacobs, Richard
J. Heckmann, Wayland R. Hicks, John N. Milne, Michael J. Nolan and Gerald
Tsai, Jr., move to dismiss the Amended Counterclaims of Defendant Rental
Service Corporation because they do not state claims upon which relief can
be granted. The grounds for this Motion are set forth in the accompanying
Memorandum of Law.
ORAL ARGUMENT REQUESTED
TESTIMONY NOT REQUIRED
PLAINTIFFS-COUNTER DEFENDANTS UR
ACQUISITION CORPORATION and UNITED
RENTALS, INC. and COUNTER-DEFENDANTS
BRADLEY JACOBS, RICHARD HECKMANN,
WAYLAND HICKS, JOHN MILNE, MICHAEL NOLAN
AND GERALD TSAI, JR.
By: /s/ Robin L. Smith
---------------------------------------
Thomas J. Groark, Jr. (ct04245)
Richard M. Reynolds (ct06124)
Philip S. Wellman (ct09636)
Robin L. Smith (ct13345)
DAY, BERRY & HOWARD LLP
CityPlace I
Hartford, Connecticut 06103
(860) 275-0100
OF COUNSEL:
Jay B. Kasner
Clifford H. Aronson
Steven J. Kolleeny
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing has been served
on the following counsel and parties this date, via overnight courier:
Marc W. Rappel, Esquire
LATHAM & WATKINS
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Joseph B. Frumkin, Esquire
SULLIVAN & CROMWELL
125 Broad Street
New York, NY 10004
James L. Kirk
450 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Rental Service Corporation
6929 East Greenway Parkway
Suite 200
Scottsdale, AZ 85254
Nationsrent, Inc.
450 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
and via hand delivery to:
William H. Champlin III, Esquire
Mark V. Connolly, Esquire TYLER, COOPER & ALCORN, LLP CityPlace I - 35th
Floor Hartford, CT 06103-3488
/s/ Robin L. Smith
--------------------------
Robin L. Smith
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UR ACQUISITION CORPORATION :
and UNITED RENTALS, INC., :
:
Plaintiffs, :
: CIVIL ACTION NO.
-against- : 399CV00625(DJS)
:
JAMES L. KIRK, RENTAL SERVICES :
CORPORATION, and NATIONSRENT, :
INC., :
:
Defendants. : April 29, 1999
MEMORANDUM OF LAW IN SUPPORT OF
MOTION TO DISMISS AMENDED COUNTERCLAIMS
OF RENTAL SERVICE CORPORATION
Plaintiffs and Counter Defendants UR Acquisition Corporation and
United Rentals, Inc. (collectively "URI") and additional Counter Defendants
Bradley S. Jacobs, Richard J. Heckmann, Wayland R. Hicks, John N. Milne,
Michael J. Nolan and Gerald Tsai, Jr. respectfully submit this memorandum
of law in support of their motion, pursuant to Fed. R. Civ. P. 12(b)(6),
Section 14 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15
U.S.C. section 78n, and Section 8 of the Clayton Act, 15 U.S.C. section 19,
to dismiss the Amended Counterclaims of Defendant Rental Service
Corporation ("RSC") dated April 22, 1999.
PRELIMINARY STATEMENT
RSC's First and Second Counterclaims, which allege that URI has
failed to disclose the conditional nature of financing for its tender
offer, disregard two facts: (i) Goldman Sachs provided a firm $2 billion
commitment to consummate URI's tender offer and proposed merger, to
refinance certain RSC indebtedness, and for other corporate purposes, and
(ii) URI has fully disclosed the limited, customary conditions contained in
its signed commitment letter. RSC's amended counterclaims are little more
than a frivolous public relations gambit.(1)
RSC acknowledges, as it must, that URI has in fact disclosed all
the conditions to the Goldman Sachs financing. Nonetheless, RSC complains
that URI violated the securities law anti-fraud provisions when it
disclosed these customary conditions to its financing "only at the very end
of a boilerplate description of the conditions to the offer at the back of
its filing" and not in a summary advertisement, press release, or interview
with a reporter. This aspect of RSC's claim is factually flawed and
legally irrelevant. This circuit routinely holds that an allegation
like RSC's that an offeror "buried" information in its filings fails to
state a claim under section 14(e) of the Williams Act when the information
in fact appears in those filings and is accessible to the reasonable
investor.
- --------------------
(1) In fact, RSC continues to include these claims in its April 22, 1999
Amended Counterclaims notwithstanding that Counter Defendants had
moved to dismiss the original counterclaim on these grounds two days
earlier on April 20, 1999.
Far from "burying" the customary conditions to the Goldman Sachs
commitment, URI has disclosed all conditions to financing in its Schedule
14D-1 filing. The customary conditions of which RSC complains were
disclosed expressly in the introduction to and section 10 ("Source and
Amount of Funds") of the Offer to Purchase, included as an exhibit to URI's
filing with the Securities and Exchange Commission. They were disclosed
yet again (and in more detail) when URI attached the Commitment Letter from
Goldman Sachs as another exhibit to the filing and were referenced yet
again when, on April 19, 1999, URI filed its fifth amendment to Schedule
14D-1 which directly addresses (and includes in full) RSC's counterclaim.
Because URI has complied fully with the Williams Act, RSC's counterclaim
should be dismissed.
As described below, the Third and Fourth Counterclaims, which are
predicated upon violations of the interlocking officer or director statute
of the federal antitrust laws, 15 U.S.C. section 19, are based on selective
filings of URI at the United States Securities and Exchange Commission
("SEC") and fail to take into account the fact that URI had designated
(before these counterclaims were filed) an alternative slate of directors,
none of whom is an officer or director of URI, in the very event that the
initial slate is in any way unable to serve on the RSC board. Indeed, were
this Court to take judicial notice of public filings made by URI with the
SEC, it would learn that none of the individuals on the actual slate of
directors proposed by URI and contained in its latest publicly-filed proxy
materials is an officer or director of URI, thus mooting these
counterclaims. See, e.g., In re Penn Central Sec. Litig., 367 F. Supp.
1158, 1168 (E.D. Pa. 1973) (finding that fact that director interlock no
longer exists makes the claim moot and precludes injunctive relief).
STATEMENT OF FACTS(2)
On April 5, 1999, URI commenced a non-discriminatory, non-
coercive, all-cash offer to purchase all outstanding shares of RSC common
stock at a price of $22.75 per share, representing a 32% premium over the
closing price of such shares on the last trading day prior to the offer
("Tender Offer"). On that day, URI filed with the SEC information required
to be disclosed by Section 14(d) of the Exchange Act and the rules and
regulations promulgated thereunder: a Schedule 14D-1 ("14D-1"), and
attached several exhibits, including an Offer to Purchase dated April 5,
1999 ("Offer to Purchase"), Summary Advertisement dated April 5, 1999
("Summary Advertisement"), Press Release dated April 5, 1999 ("Press
Release"), and Commitment Letter from Goldman Sachs Credit Partners L.P.
("Goldman Sachs") dated April 4, 1999 ("Commitment Letter"). (The 14D-1,
including all exhibits is attached hereto as Exhibit A.)
-----------------
(2) For purposes of this motion, only well pleaded allegations
of fact are accepted as true. In deciding this motion, the
Court may properly review the documents cited herein because
these public documents are incorporated by reference into
RSC's counterclaim, see Cortec Indus., Inc. v. Sum Holding
L.P., 949 F.2d 42, 47-48 (2d Cir. 1991), cert. denied, 503
U.S. 960 (1992), or are public securities filings with
respect to which the Court may take judicial notice. See
Levin v. Hunter Envtl. Servs., 921 F. Supp. 914, 918 (D.
Conn. 1996).
The 14D-1, with its exhibits, discloses in detail the terms and
conditions of the Tender Offer. In the first sentence of the filing, URI
states that the Tender Offer is made "upon the terms and subject to the
conditions set forth in the Offer to Purchase". See 14D-1 at 1. The Offer
to Purchase, in turn, consists of an introduction and seventeen sections,
all referenced in a table of contents, that stockholders are told should be
read in their entirety. See Offer to Purchase at 6.
Section 10 of the Offer to Purchase is a two-and-a-half page
section entitled "Source and Amount of Funds," in which URI details the
firm financing arrangements made with Goldman Sachs in connection with the
Tender Offer. In this section, the Offer to Purchase states that Goldman
Sachs has committed to provide the financing for the Tender Offer "upon the
terms and subject to the conditions set forth in the Commitment Letter."
See Offer to Purchase at 18-19. Moreover, the section discloses that
funding,
will be subject to customary closing conditions, including, among
others (1) execution of satisfactory documentation, (2) granting
of perfected first priority security interests in all assets to
the extent described above, (3) since December 31, 1998, there
shall not have been any adverse change in or affecting the
general affairs, management, prospects, financial position,
shareholders' equity or results of operations of [URI] or [RSC],
together with their respective subsidiaries, which [Goldman
Sachs], in its judgment deems material, (4) no disruption of
financial and capital markets, (5) the receipt of all necessary
governmental and third party approvals in connection with the
Facilities and the consummation of the Offer, and (6) the absence
of any litigation that could be reasonably likely to have a
material adverse effect in or affecting the general affairs,
management, prospects, financial position, shareholders' equity
or results of operations of [URI] or [RSC], together with their
respective subsidiaries, taken as a whole, or the Offer or the
Proposed Merger or any of the Facilities. Although [URI] expects
that the Facilities will be available to provide funds for the
consummation of the Offer and the Proposed Merger in accordance
with their respective terms, there can be no assurance that the
Facilities will be consummated. See "Conditions to the Offer"
set forth in Section 14 hereof.
Offer to Purchase at 20.
Section 14 of the Offer to Purchase states that in the event
"[URI] shall not have received the financing for the Offer and the Proposed
Merger pursuant to the Commitment Letter," URI may terminate the Tender
Offer. See Offer to Purchase at 30.
URI's 14D-1 also attaches the Commitment Letter from Goldman
Sachs. Beyond establishing the firm nature of the Goldman Sachs
commitment, this letter also details the precise terms and conditions of
the financing. See Commitment Letter, 14D-1, Exhibit (b)(1). In the
Commitment Letter, Goldman Sachs states that it is "pleased to confirm its
commitment to provide [URI] the full $2.0 billion of the Facilities . . .
on the terms and subject to the conditions contained in this Commitment
Letter." See Commitment Letter at 2. Among the conditions specified in
the Commitment Letter are the customary conditions to closing that URI
disclosed in Section 10 of the Offer to Purchase.
On April 19, 1999, URI filed a fifth amendment to its Schedule
14D-1 (the "Amendment") (attached hereto as Exhibit B) and took issue
directly with RSC's original counterclaim (which is substantially the same
as the First and Second Counterclaims filed by RSC on April 22, 1999). As
an exhibit to the Amendment, URI includes the full text of RSC's original
counterclaim. Moreover, in the Amendment, URI discloses that it considers
this Tender Offer to indeed be "fully financed" because, given the Goldman
Sachs firm $2 billion commitment, no other source of financing will be
necessary to effect the transaction. The Amendment again acknowledges the
customary conditions to the Goldman Sachs commitment (which were, of
course, already disclosed in full in the initial 14D-1 filing). In short,
this filing places RSC's and URI's positions on this entire issue squarely
before RSC's stockholders.
URI's sixth amendment to its Schedule 14D-1, filed on April 21,
1999 (attached hereto as Exhibit C), the day before RSC filed its amended
counterclaims, also undermines the Third and Fourth Counterclaims. It
identifies URI's primary nominees for RSC's board, three of whom are not
being challenged by RSC. Moreover, it describes the alternate slate, which
was to serve in the event that any of URI's nine primary nominees were
unable or unwilling to serve, or were otherwise disqualified from serving.(3)
In fact, URI's most recent public filing, a revised preliminary Schedule
14A Consent Solicitation Statement filed with the SEC on April 27, 1999
(attached hereto as Exhibit D), states, as a matter of public record, that
the slate of directors URI is nominating for membership on RSC's board is
comprised of those individuals who were on the alternate slate and the
three nominees from the primary slate who are not parties to the amended
counterclaims. In other words, not a single person being proposed as a
nominee is an officer or director of URI, thus mooting RSC's claims.
------------------
(3) RSC was on notice of the alternate slate and the terms upon
which the slate was to serve. In fact, RSC expressly relied
on this notice in moving for a preliminary injunction on
April 22, 1999. (Memorandum of Points and Authorities in
Support of Rental Service Corporation's Motion for Preliminary
Injunction, at 3-4).
ARGUMENT
I. THE UNDERLYING REGULATORY FRAMEWORK:
THE WILLIAMS ACT, AS AMENDED
The Williams Act amendments to the Exchange Act enacted in 1960
is a broad anti-fraud statute specifically aimed at tender offers for
securities. Its purpose is "to compel the disclosure of information
pertaining to tender offers and offering parties to the public shareholders
of target companies, thereby enabling those shareholders to make informed
decisions regarding the tender offers for their stock." Sydell v. Ares-
Serono, 892 F. Supp. 498, 501 (S.D.N.Y. 1995) (citing Schreiber v.
Burlington Northern, Inc., 472 U.S. 1, 10-11, 105 S. Ct. 2458, 2463-64
(1985)). The Williams Act does not "favor one side or the other in a
tender offer dispute." Iavarone v. Raymond Keyes Assoc., Inc., 733 F.
Supp. 727, 734 (S.D.N.Y. 1990) (citations omitted). Rather, the Act and
the regulatory scheme promulgated by the SEC thereunder contain affirmative
obligations and negative restrictions regarding communications with
shareholders applicable both to the offeror and the target company. The
purpose of the disclosure requirements under the Williams Act are fully
satisfied "when shareholders receive the information required to be filed."
Treadway Cos. v. Care Corp., 638 F.2d 357, 380 (2d Cir. 1980).
First, an offeror may commence a tender offer by making an
announcement in the manner proscribed in SEC Rule 14d-2, including by
publication or other public announcement. 17 CFR section 240.14d-2. As
soon as practicable on the date of commencement of a tender offer, the
offeror must file a 14D-1 that, among other things, identifies the offeror,
the offeror's purpose in making the tender offer and the terms of the
offer. See SEC Rule 14d-3, 17 CFR section 240.14d-3. The tender offer
must be published, sent, or given to the shareholders of the target
company, and a copy of the 14D-1 must be hand-delivered to the target at
its principal executive office. Id.
Once a tender offer has commenced, the conduct of the target is
also highly regulated. A target may immediately issue a "stop, look, and
listen" statement to its shareholders advising them of when the target will
issue a recommendation with respect to the offer. See SEC Rule 14d-1, 17
CFR section 240.14d-9. The target, however, may not issue any solicitation
or recommendation to shareholders, unless as soon as practicable on the
date the solicitation or recommendation is first made, the target files and
distributes a Schedule 14D-9 ("14D-9") setting forth, in full with detailed
reasoning, the target's recommendation with respect to the tender offer.
Finally, all communications regarding the tender offer, including
the 14D-1, 14D-9, any amendments thereto, and any press releases or other
public statements, are subject to Section 14(e) of the Williams Act, which
prohibits any person from making "any untrue statement of a material fact
or omit[ting] to state any material fact necessary in order to make the
statements made, in the light of the circumstances under which they are
made, not misleading, . . . in connection with any tender offer or request
or invitation for tenders, or any solicitation of security holders in
opposition to or in favor of any such offer, request, or invitations." 15
U.S.C. section 78n(e) (1998).
URI's disclosures in connection with this Tender Offer are
complete and accurate, and they comport fully with the requirements of the
Williams Act. URI's full and fair disclosure of all the conditions of its
financing, coupled with the frivolous character of RSC's claimed
"omissions," require that the First and Second Counterclaims be dismissed.
II. URI, IN ITS INITIAL SCHEDULE 14D-1, FAIRLY AND FULLY
DISCLOSED THE NATURE OF ITS FINANCING COMMITMENT
A. URI FAIRLY AND FULLY DISCLOSED THE FACT THAT GOLDMAN SACHS HAS MADE A
FIRM COMMITMENT OF $2 BILLION, AND THE CONDITIONS TO THAT COMMITMENT
The gravamen of RSC's First and Second Counterclaims are that URI
has deceived RSC shareholders. RSC contends that because URI has stated to
the media that it has a firm financing commitment from Goldman Sachs, but
has not at the same time discussed, in each communication all the
conditions to that firm commitment, URI has engaged in a deceptive scheme
in violation of the securities laws. (Amended Counterclaims
paragraphparagraph 25, 30). RSC claims that corrective disclosures and an
injunction are necessary to prevent RSC's stockholders from making a
decision based on "false and misleading" information. See Amended
Counterclaims Prayer For Relief.
i. THE GOLDMAN SACHS COMMITMENT
The Commitment Letter speaks for itself: Goldman Sachs has
provided a firm $2 billion commitment to consummate URI's tender offer and
proposed merger, to refinance certain RSC indebtedness, and for other
corporate purposes. RSC may choose to ignore the import of a firm
commitment from Goldman Sachs, but that does not somehow transform the
legitimate representations that URI has made to the public regarding the
security of this financing into Williams Act violations. With the Goldman
Sachs commitment in place, URI need not secure any other source of
financing to complete its Tender Offer. URI has made a certain offer to
the RSC stockholders, and URI's statements to that effect have been
accurate. RSC's claim to the contrary is nonsense.
ii. THE COMMITMENT IS SUBJECT ONLY TO CUSTOMARY AND USUAL CONDITIONS
In the face of URI's fully-financed, all-cash offer, RSC points
to standard and customary conditions for a transaction of this nature, and
attempts to create a cloud of doubt and uncertainty as to URI's ability to
finance the Tender Offer. None of the conditions, however, undermines
Goldman Sachs' firm commitment, and all of them were disclosed to RSC's
stockholders.
The conditions to Goldman Sachs' commitment themselves are
unremarkable. See Offer to Purchase section 10; Commitment Letter at 2. A
reasonable investor would not be surprised to discover that Goldman Sachs
insists on proper loan documentation before providing $2 billion for a
transaction. Nor would an investor debate why it is that Goldman Sachs
insists that a proposed transaction comply with governmental regulations
before supplying this amount of capital, or why it insists that the
business prospects of the companies involved are, at the time the funds are
provided, as they were stated to be when the commitment was made. Simply
put, a reasonable investor would not consider these customary financing
conditions as significant factors in his or her decision-making process.
In fact, a reasonable stockholder would be shocked if customary conditions
such as these were not part of a $2 billion financing commitment.
Of equal importance, the very conditions that RSC claims have
been "omitted" from URI's statements to RSC shareholders are in fact fully
disclosed in URI's public filings. Section 10 of URI's Offer to Purchase
details the conditions to the Goldman Sachs financing. Furthermore, the
Commitment letter itself, is an exhibit to URI's 14D-1 filing. And now, to
ensure that this issue is rendered moot, URI has again referenced these
customary conditions as part of full public disclosure of RSC's meritless
claims. See Exh. B. There is no misrepresentation here. RSC's claims are
groundless and must be dismissed.
B. URI DID NOT "BURY" THE CONDITIONS
RSC does not and cannot dispute that the very conditions of which
it complains are in fact fully disclosed in URI's public filings. Instead,
RSC complains that URI "buried" these "troubling" conditions regarding its
Tender Offer financing "deep within the Offer to Purchase." Amended
Counterclaims paragraph 17. As discussed above, RSC's premise is simply
wrong, as the customary conditions to the Goldman Sachs commitment are
discussed directly in two separate portions of URI's 14D-1.
More importantly, as a legal matter, RSC's premise is irrelevant,
because all of the conditions to URI's financing (indeed, to the entire
Tender Offer) are in fact disclosed in a full and fair fashion. This Court
need look no further than URI's public filings to dispose of RSC's
meritless counterclaims. See Levin v. Hunter Envtl. Servs., 921 F. Supp.
914, 918 (D. Conn. 1996) ("[I]f the [SEC filings and other] documents
portray a picture substantially different from that painted by the
plaintiff in the complaint, the court will base its decision on the
scenario supported by the complete exhibits.").
At least one District Court in this Circuit has addressed and
rejected an argument nearly identical to the one RSC advances. In
Consolidated Gold Fields v. Anglo American Corp. of South Africa, Ltd, 713
F. Supp. 1457 (S.D.N.Y. 1989), the target of a tender offer claimed that
the offeror had violated the Williams Act by "burying" valuation
information in its 14D-1 filing. The court disagreed, relying on the
principal that it is
sufficient if the company provides information as to material
facts in a format from which a reasonable investor could reach
his own conclusions as to the risks of the transaction.
Consolidated Gold Fields, 713 F. Supp. at 1470. In that case, the
valuation information was not prominently displayed, but was referenced in
footnotes. Because the information was available and accessible to the
reasonable investor, there was simply no violation of the anti-fraud
provisions of the securities laws. Id. at 1471.
As a general proposition, this Circuit has routinely rejected
claims similar to RSC's where a purported violation was premised on the
placement of information in a required filing. See Kramer v. Time Warner,
937 F.2d 767 (2d Cir. 1991) (Warner management's conflict of interest was
adequately disclosed where the filing incorporated by reference relevant
portions of the Joint Proxy Statement that disclosed the information);
Feder v. MacFadden Holdings, Inc., 698 F. Supp. 47, 51 (S.D.N.Y. 1988)
(condition to tender offer was not "buried" when it was mentioned in the
introductory section of the Offer to Purchase and was cross-referenced and
discussed in more detail in a subsequent section of the document).
There is no doubt that URI's disclosure of its financing
condition is well within the bounds of the securities laws. The Tender
Offer begins with an admonition that it is subject to the conditions in the
Offer to Purchase. The Offer to Purchase, in turn, devotes an entire
section to the financing of the tender offer, including the customary
conditions to the Commitment Letter imposed by Goldman Sachs. See Offer to
Purchase at 18-21 (section 10). Finally, URI included in its 14D-1 the
Commitment Letter itself, so that any investor may examine all aspects of
the Goldman Sachs agreement.
In short, the information regarding the Goldman Sachs $2 billion
commitment, including the customary conditions to closing, is readily
available to RSC's stockholders. Because this is plain from the documents
themselves, RSC's claims should be rejected.
III. IN ANY CASE, THIS ISSUE HAS BEEN
FULLY ADDRESSED IN URI'S AMENDED 14D-1 FILING
Even if, arguendo, the disclosures in URI's initial 14D-1 were,
in any way, incomplete which they were not URI's Amendment to its
Schedule 14D-1 (Amendment No. 5) filed on April 19, 1999, renders RSC's
First and Second Counterclaims moot. In the Amendment, URI puts before
RSC's stockholders the full nature of the current dispute. Far from
attempting to conceal facts from the public, URI has again provided RSC
stockholders with all the information necessary to make an informed choice.
Even if there had been some confusion among RSC stockholders regarding
URI's financing and there was not that confusion would now be gone.
RSC stockholders can therefore decide for themselves whether the Goldman
Sachs $2 billion commitment represents certainty in this Tender Offer.
A. THE AMENDMENT DISCLOSES BOTH RSC'S AND URI'S POSITIONS IN FULL
To eliminate any doubt that RSC stockholders have a full and fair
picture of the Tender Offer's financing and RSC's complaints in this
regard, URI, in the Amendment, fully discloses both RSC's and URI's
position on this issue. RSC's original counterclaim is included, in full,
as an exhibit to the filing, so it cannot be asserted that URI is
mischaracterizing RSC's position. URI offers a brief restatement of its
own position. Finally, all possible contingencies with the financing of
the Tender Offer are set out, once again, either directly, or by reference
to prior filings, so that stockholders may make their own assessment of the
certainty of URI's offer. Given the full nature of the disclosure on this
issue, RSC's First and Second Counterclaims are moot. See West Point -
Pepperell, Inc. v. Farley, Inc., 711 F. Supp. 1088, 1094 (N.D. Ga. 1989);
Arvin Industries v. Wanandi, 722 F. Supp. 532, 539 (S.D. Ind. 1989); Avnet
v. Scope, 499 F. Supp. 1121, 1124 (S.D.N.Y. 1980) (amendment to SEC filling
was sufficient to cure any defect in prior filing).
B. THE TOTAL MIX OF INFORMATION ON THIS ISSUE IS COMPLETE
URI believes that all of the material facts regarding the
financing of this Tender Offer have been disclosed, at multiple times and
in multiple places. To the extent that any additional facts might exist on
this issue, such facts could not alter the total mix of information already
available to the RSC shareholders, and hence, they would not be material.
Before an omission runs afoul of the Williams Act, it must be
material. Consolidated Gold Fields, 713 F. Supp. at 1470 (citing Basic
Inc. v. Levinson, 485 U.S. 224 (1988)). The test for materiality is well-
established: The omitted fact must have been one that would have had
actual significance in the deliberations of the reasonable shareholder, or,
put another way
there must be a substantial likelihood that the disclosure of the
omitted fact would have been viewed by the reasonable investor as
having significantly altered the 'total mix' of information made
available.
Avnet, 499 F. Supp. at 1127 (S.D.N.Y. 1980) (citing TSC Industries, Inc. v.
Northway, Inc., 426 U.S. 438 (1976) (emphasis added)).
IV. THE THIRD COUNTERCLAIM SHOULD BE DISMISSED
BECAUSE THE NINE NOMINEES ARE NOT OFFICERS OR
DIRECTORS OF URI AND THUS THEIR ELECTION TO RSC'S
BOARD WILL NOT VIOLATE SECTION 8 OF THE CLAYTON ACT
In the Third Counterclaim, RSC alleges that six of the nine
nominees proposed by URI would, if elected to the RSC board of directors,
create interlocking officers and directors in violation of Section 8 of the
Clayton Act, 15 U.S.C. section 19.(4) Publicly available "filings with the
SEC," which RSC relies upon, at least in part, in its amended
counterclaims,(5) expressly provide for an alternate slate of nominees. See
Exh. C. Moreover, URI notified RSC that members of the alternate slate
would serve in the event that any of URI's nine primary nominees were
-------------------
(4) RSI does not challenge Richard N. Daniel, a director of the
Treasurer's Fund, Inc., Stephanie R. Joseph, Secretary and
Principal Legal Officer of the Petrie Stores Liquidating Trust, or
Raymond S. Troubh, business consultant and a Liquidating Trustee
and Chairman of the Board of the Liquidating Trustees of the
Petrie Stores Liquidating Trust, under Section 8 of the Clayton Act
because they are not officers or directors of URI.
(5) Among other documents relied on by RSI in its amended counterclaims
are "(a) an interview given by Bradley Jacobs to Reuters, a major
news agency; (b) a formal press release; (c) a summary
advertisement in the Wall Street Journal; and (d) filings with the
SEC." (Amended Counterclaims paragraph 13).
unable or unwilling to serve, or were otherwise disqualified from serving.(6)
Thus, even were the original slate to create an alleged director or officer
interlock in violation of Section 8 of the Clayton Act, those directors
would be replaced by the alternate slate and the amended counterclaims
would immediately be made moot. It is on this basis that the Third
Counterclaim fails to state a claim upon which relief can be granted.
Moreover, as official filings with the SEC on April 27, 1999 make
abundantly clear, the six nominees who are alleged to be officers and/or
directors of URI have in fact been replaced by the alternative slate, none
of whom is an officer or director of URI and thus, as a matter of law,
cannot violate Section 8.(7)
Section 8 of the Clayton Act prohibits any person from serving
simultaneously as a director or officer in any two companies that are
engaged in commerce and, by virtue of their business and location of
operation, are competitors so that the elimination of competition between
them would constitute a violation of any of the United States' antitrust
laws.(8) Section 8's prohibition is limited to those situations in which
each of the competing corporations has capital, surplus and undivided
profits aggregating more than ten million dollars, as adjusted for inflation.
----------------
(6) URI's sixth amendment to its Schedule 14D-1 was, as noted above,
filed before RSC filed these amended counterclaims. (Exh. C). In
other words, RSC knew, as a matter of public record, that there was
an alternative slate of directors who did not present any antitrust
issues whatsoever.
(7) Specifically, the six new nominees are William E. Aaron, President
of Executive Monetary Management, Inc., David Bonner, Esq., member
Katten, Muchin and Zavis, Peter Gold, certified public accountant
at Peter Gold CPA, David Katz, business consultant, Elliot H.
Levine, certified public accountant at Levine & Seltzer LLP, and
Jeffrey Parker, President of Financial Advisory Services of Genesis
Capital, Inc. See Exh. D at 5-7.
(8) Notably, URI's "primary purpose in seeking to elect the Nominees to
the Rental Service Board is to take all action necessary to satisfy
the conditions to the offer, and thereby facilitate the
consummation of the offer and the Proposed United Rentals Merger,"
(Exh. D at 4), not to facilitate an agreement in restraint of
trade.
15 U.S.C. section 19. See BankAmerica Corp. v. United States, 462 U.S.
122, 124-28 (1983) (reviewing the history of Section 8); see also White v.
Central Vt. Pub. Serv. Corp., 958 F. Supp. 174, 176-78 (D. Vt. 1996)
(construing 1990 amendments to Section 8); Protectoseal Co. v. Barancik,
1994-1 Trade Cas. (CCH) paragraph 70,494 (N.D. Ill. 1993) (same), aff'd,
23 F.3d 1184 (7th Cir. 1994).
For purposes of this motion, it is assumed that RSC has properly
pleaded that URI and RSC are engaged in commerce, are competitors and have
capital, surplus and undivided profits aggregating more than $10 million.
(Amended Counterclaims paragraphparagraph 19, 33-37).(9) However, in
focusing on six individuals who are officers and/or directors of URI,
(Amended Counterclaims paragraph 38), RSC has ignored that the other three
members of URI's primary slate and the six members of the alternative slate
are not officers or directors of URI. As the SEC materials make clear,
these individuals are independent nominees without any officer or director
relationship with URI. See Exh. D at 4-7. Without that, there can be no
violation of Section 8 of the Clayton Act.
Indeed, as reflected in filings with the SEC (and which are
available on EDGAR), the original three non-officers or non-directors on
the primary slate and the six alternatives are the only slate being
nominated by URI. See Exh. D at 4-7. Where, as here, the
counterclaimants directly rely upon unspecified "filings with the SEC,"
(Amended Counterclaims paragraph 13), and incorporate them by reference in
their antitrust allegations, then it is proper for this court to consider
them in the context of a motion under Rule 12(b)(6). In any event, as this
Court has said previously, "a trial court can 'take judicial notice of the
contents of relevant public disclosure documents required to be filed with
the SEC.'" Levin, 921 F. Supp. at 917 (quoting Kramer, 937 F.2d at 774).
Indeed, "after viewing these additional documents, the court need not
continue to blindly accept the factual scenario that plaintiff has spelled
out. If the full text of the additional documents reveal that the
plaintiff cannot possibly prove a claim, then the claim will be dismissed."
Id. at 45. Accordingly, the Third Counterclaim must be dismissed.
--------------
(9) Section 8 provides for certain de minimis exceptions, which are not
addressed in the context of this Rule 12(b)(6) motion.
V. THE FOURTH COUNTERCLAIM SHOULD BE DISMISSED
BECAUSE THERE IS NO CONTROVERSY AS TO THE LEGALITY
OF URI'S ATTEMPTS TO ELECT THE NOMINEES RSC'S BOARD
The Fourth Counterclaim realleges and incorporates by reference
each and every allegation of the Third Counterclaim. In the Fourth
Counterclaim, RSC asserts that there "exists a controversy between RSC and
URI as to the legality of URI's attempts to elect the Nominees to RSC's
Board, and as to RSC's obligation to recognize those attempts under
governing law," and that a declaration of the parties' rights and
responsibilities by the court is necessary to resolve this dispute.
(Amended Counterclaims paragraphparagraph 46-47). However, as explained
above, the revised slate of nominees contained in the SEC filings includes
no officer or director of URI and thus there exists no set of facts upon
which RSC could successfully establish that the election of these nominees
to its board would constitute a violation of Section 8. Because there is
no valid controversy as to the legality under Section 8 of the Clayton Act
of the election of these nominees to the board of RSC, the Fourth
Counterclaim should be dismissed under Rule 12(b)(6).
* * *
In sum, in light of URI's full disclosure of the Commitment
Letter, and the fact that the Third and Fourth Counterclaims fail to plead
sufficient facts to establish that the service of any of URI's nine
nominees as directors of RSC would violate Section 8, RSC's amended
counterclaims should be dismissed as a matter of law.
CONCLUSION
For the foregoing reasons, this Court should dismiss RSC's
amended counterclaims, with prejudice.
PLAINTIFFS-COUNTER DEFENDANTS UR ACQUISITION
CORPORATION and UNITED RENTALS, INC. and COUNTER-
DEFENDANTS BRADLEY JACOBS, RICHARD HECKMANN,
WAYLAND HICKS, JOHN MILNE, MICHAEL NOLAN AND
GERALD TSAI, JR.
By: /s/ Robin L. Smith
------------------------------------------
Thomas J. Groark, Jr. (ct04245)
Richard M. Reynolds (ct06124)
Philip S. Wellman (ct09636)
Robin L. Smith (ct13345)
DAY, BERRY & HOWARD LLP
CityPlace I
Hartford, Connecticut 06103
(860) 275-0100
OF COUNSEL:
Jay B. Kasner
Clifford H. Aronson
Steven J. Kolleeny
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing has been served on
the following counsel and parties this date, via overnight courier:
Marc W. Rappel, Esquire
LATHAM & WATKINS
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071
Joseph B. Frumkin, Esquire
SULLIVAN & CROMWELL
125 Broad Street
New York, NY 10004
James L. Kirk
450 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Rental Service Corporation
6929 East Greenway Parkway
Suite 200
Scottsdale, AZ 85254
Nationsrent, Inc.
450 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
and via hand delivery to:
William H. Champlin III, Esquire
Mark V. Connolly, Esquire
TYLER, COOPER & ALCORN, LLP
CityPlace I 35th Floor
Hartford, CT 06103-3488
/s/ Robin L. Smith
--------------------------
Robin L. Smith
