SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
AMENDMENT NO. 21
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
(collectively with the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of April 16,
1999 (the "Rights Agreement"), between Rental Service Corporation and
ChaseMellon Shareholder Services, L.L.C., 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"). 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 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 June 4, 1999, Parent filed a reply memorandum of law in support of
its motion to dismiss the two amended counterclaims of the Company
regarding Section 8 of the Clayton Act (the "Reply Memorandum of Law") in
the pending litigation between Parent and the Company, among others, in the
United States District Court for the District of Connecticut.
The foregoing is qualified in its entirety by reference to the
complete text of the Reply Memorandum of Law, a copy of which is filed as
Exhibit (g)(20) hereto, which is incorporated by reference herein.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(g)(20) Reply Memorandum of Law in Support of the Motion to
Dismiss Amended Counterclaims III and IV of the
Company, dated June 4, 1999, filed by Parent 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: June 7, 1999
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
(g)(20) Reply Memorandum of Law in Support of the Motion to Dismiss
Amended Counterclaims III and IV of the Company, dated June
4, 1999, filed by Parent in the United States District Court
for the District of Connecticut.
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UR ACQUISITION CORPORATION and :
UNITED RENTALS, INC., :
:
Plaintiffs, : CIVIL ACTION NO.
: 399CV00625(DJS)
-against- :
:
JAMES L. KIRK, RENTAL SERVICE :
CORPORATION, and NATIONSRENT, INC., :
: June 4, 1999
Defendants. :
REPLY MEMORANDUM OF LAW IN SUPPORT OF MOTION
TO DISMISS AMENDED COUNTERCLAIMS III AND IV
OF RENTAL SERVICE CORPORATION
At the May 19th hearing, this Court streamlined the issues
relating to whether Rental Service has stated a claim under Section 8 of
the Clayton Act with respect to United Rentals' proposed slate of nominees
to Rental Service's board of directors by requesting that the nominees
"aver in a disclosure any and all relationships of a beneficial, equitable
or business nature between these nominees" and United Rentals. (Complete
Transcript of May 19, 1999 Hearing Before the Court, at 26-27) (hereinafter
Transcript). The Court unequivocally instructed Rental Service that it
should review the declarations, which were filed on May 28, 1999, and by
June 2, 1999, either: (i) amend its Section 8 counts alleging that those
nominees, who are neither officers nor directors of United Rentals, violate
the Clayton Act, assuming it has a good faith basis to do so; or (ii)
withdraw its amended counterclaims. (Transcript at 35-36). Because the
allegations in the amended counterclaims did not challenge the current
nominees being proposed for the Rental Service board, the Court also
expressly stated it would not allow Rental Service to "engage in discovery"
on these claims without an appropriate pleading. (Transcript at 22-23).
Ignoring the Court's instruction, Rental Service filed a brief captioned
"Memorandum in Response to [United Rentals'] Nominee Affidavits" ("Rental
Service Brief") asking for "authority" to depose each of the nine nominees.
As discussed below, Rental Service's request should be denied and United
Rentals' Motion to Dismiss should be granted because Rental Service has
shown absolutely no basis for its Clayton Act claims, let alone to take the
discovery it seeks. To hold otherwise would be to sanction an impermissible
"fishing expedition . . . to determine if there is some basis, however
farfetched, to prosecute a claim." Lyeth v. Chrysler Corp., 929 F.2d 891,
899 (2d Cir. 1991).
PRELIMINARY STATEMENT
United Rentals' arguments as to why the amended counterclaims
fail to state a claim under the antitrust laws are fully briefed in its
moving papers. (See United Rentals' Memorandum of Law in Support of Motion
to Dismiss Amended Counterclaims of Rental Service Corporation (filed April
29, 1999); see also Memorandum of Law in Opposition to Rental Service
Corporation's Motion for a Preliminary Injunction (filed May 13, 1999)). As
this Court recognized at the May 19th hearing, United Rentals "committed .
. . that the old board members would never be part of the new board."
(Transcript at 18). United Rentals memorialized that commitment with a
Stipulation, which it sent to Rental Service.(1) That Stipulation states, in
relevant part:
URI will not nominate the following individuals for election to RSC's
board of directors and such individuals will not serve on RSC's board
of directors: a) Bradley S. Jacobs, Richard J. Heckmann, Wayland R.
Hicks, John N. Milne, Michael J. Nolan or Gerald Tsai, Jr. or b) any
other URI officer, director or employee.
(Draft Stipulation and Order P. 1, attached hereto as Exhibit 1).
- -------------
(1) Rental Service has not signed the Stipulation or provided United
Rentals with comments since receiving it on May 27, 1999.
Since the commitment and Stipulation moot the need for this
Court to review the legality under the Clayton Act of the preliminary slate
of nominees, "the only theory that [Rental Service] can go on would be the
Square D theory of agency." (Transcript at 19). While recognizing that
Square D Co. v. Schneider S.A., 760 F. Supp. 362 (S.D.N.Y. 1991), is a
district court opinion and "not binding," the Court went to great lengths
to point out on May 19 that, unlike the amended counterclaims in this case,
which do not even mention the proposed nominees, generically or by name,
the complaint in the Square D case contained "very specific allegations."
(Transcript at 19-20) (emphasis added). This Court went to on to state that
"I will allow you to amend your complaint, but you have to have specificity
of some magnitude or some specificity ala the Square D case that you cite.
This is a fact specific complaint." (Transcript at 22).
Without waiving its contention that Section 8 is very clear on
its face and prohibits only "officer and director" interlocks and not
"agency" relationships, United Rentals agreed to obtain declarations from
each of the nine nominees it has proposed for the Rental Service board
attesting to the fact that they have no relationship of a "beneficial,
equitable or business nature" with United Rentals. (Transcript at 25, 27,
33). United Rentals obtained declarations from each of the nine nominees
identifying "[a]ny and every blood, contractual, marriage, significant
other, or business relationship, contractually or beneficial, with any of
these people and the takeover corporation and any of the officers and
directors." (Transcript at 31). As those declarations make abundantly
clear, there is not a single relationship between any of the nominees and
United Rentals that even the most expansive reading of the Square D
decision would cover. (See May 26, 1999, Declaration of William E. Aaron,
at P. P. 1-7; May 26, 1999, Declaration of David A. Bronner, at P. P. 1-7;
May 26, 1999, Declaration of Richard N. Daniel, at P. P. 1-7; May 26, 1999,
Declaration of Peter Gold, at P. P. 1-7; May 26, 1999, Declaration of
Stephanie R. Joseph, at P. P. 1-7; May 26, 1999, Declaration of David C.
Katz, at P. P. 1-7; May 26, 1999, Declaration of Elliot H. Levine, at P. P.
1-7; May 26, 1999, Declaration of Jeffrey M. Parker, at P. P. 1-7; May 26,
1999, Declaration of Raymond S. Troubh, at P. P. 1-8). Accordingly, Rental
Service should do what its counsel said it would do under these
circumstances and just "walk away." (Transcript at 35).
ARGUMENT
I. THE PROPOSED NOMINEES HAVE NO BUSINESS
RELATIONSHIP WITH UNITED RENTALS
Rental Service argues that the nine declarations should somehow
be discounted because they are "conclusory," do not "reveal any factual
basis for such conclusions," are "written in the present tense," and
"'protest too much' because they deny any relationship at all." (Rental
Service Brief at 2-3). However, as demonstrated below and in the sworn
declarations filed with the Court, none of the nominees has or has had a
relationship with United Rentals.(2)
- -------------
(2) As the Square D court noted, "Section 8 would not be implicated where
a competitor seeks the election of an 'agent' whose only purpose is
to consummate a takeover and who does not otherwise have a business
relationship--such as that of an officer, director or employee--with
the firm promoting his election." 760 F. Supp. at 367.
First, the declarations are each sworn to under penalty of
perjury. While it may be "incredibl[e]" to Rental Service that Mr. Troubh,
a leading business figure in the United States, has sworn that he never
discussed United Rentals with Mr. Tsai, whom he knows from serving on the
board of a beverage company, those are the facts, whether Rental Service
likes it or not. Similarly, to suggest that the nominees, all of whom are
highly regarded business persons, would carefully craft their declarations
to avoid stating that they had a "historic business relationship that was
terminated just prior to the candidates' nomination" is offensive. (Rental
Service Brief at 3). Moreover, each individual has also identified in their
declarations and in United Rentals' Schedule 14A Consent Solicitation
Statement, filed with the Securities and Exchange Commission on May 13,
1999, their business experience during at least the last five years.
Second, and despite Rental Service's characterization, the
declarations do not "protest too much," but rather set forth in the
broadest terms possible the extent of any relationship between the nominee
and his or her family, on the one hand, and United Rentals, on the other.
It was the Court that said the nominees "could respond . . . summarily" by
putting in a "a statement by them under oath at least that they -- they and
none of their immediate family are employed by or have a business
relationship with this corporation or any of its officers and directors."
(Transcript at 30). This is exactly what the nominees did, namely to file a
statement under oath addressing each and every relationship they or their
family has with United Rentals. If there is no relationship whatsoever, it
is difficult to state its scope in anything other than "conclusory" terms.
Finally, Rental Service states that the "affidavits do not
disclose that David A. Bonner's [sic] law firm (Katten Muchin & Zavis)
performed an extensive amount of work for [United Rental's] Chairman and
CEO Bradley Jacobs and his predecessor company, United Waste." (Rental
Service Brief at 3). Rental Service says that "[i]ndeed, none of the
affidavits address a former or current relationship between the nominees
and United Waste, even though this issue was expressly raised at the May
19, 1999 hearing." (Rental Service Brief at 3). What Rental Service fails
to mention was that in response to Rental Service's attempt to get into
this very issue of relationships with "predecessor" companies, this Court
specifically said "[t]hat wouldn't be appropriate unless there is some
tie-in to United Wastes." (Transcript at 32). Indeed, United Waste was a
different company in a different industry and, in any event, is now part of
a major public company traded on the New York Stock Exchange. (See Form 8-K
of United Waste Systems, Inc., filed September 23, 1997 (attached hereto as
Exhibit 2); see also 1998 Form 10-K of Waste Management, Inc., filed March
30, 1999 (attached hereto as Exhibit 3)). Moreover, Section 8 is an
antitrust statute designed to eliminate the potential for an interlocking
officer or director of two competing companies to act as a conduit for a
conspiracy between those companies. (See generally United Rentals'
Memorandum of Law in Support of Motion to Dismiss Amended Counterclaims of
Rental Service Corporation at 17-20 (filed April 29, 1999); see also
Memorandum of Law in Opposition to Rental Service Corporation's Motion for
a Preliminary Injunction at 5-6 (filed May 13, 1999)). Even under Square D,
a relationship between Mr. Bronner, his law firm and a waste hauling
company no longer in existence can hardly form the basis for an agreement
in restraint of trade with an equipment rental company.
II. WITHOUT A PROPERLY PLEADED CLAIM,
THERE SHOULD BE NO FURTHER DISCOVERY
This Court made it clear that it was not going to allow
discovery without an amended pleading. The declarations also make it
crystal clear that there is no basis for such an amendment. Any discovery
in this context is nothing more than a "fishing expedition . . . to
determine if there is some basis, however farfetched, to prosecute a
claim." Lyeth, 929 F.2d at 899 (in action to confirm arbitration award,
discovery was properly denied when defendant was merely engaging in a
fishing expedition to find some basis for arguing that arbitrator was
biased); see also Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir.
1992) ("Some threshold showing of relevance must be made before parties are
required to open wide the doors of discovery."). Indeed, in order to be
entitled to discovery, Rental Service must pay "the price of entry . . .
[which] is for the plaintiff to allege a factual predicate concrete enough
to warrant further proceedings." DM Research, Inc. v. College of American
Pathologists, 170 F.3d 53, 55 (1st Cir. 1999); see also LaMar Printing,
Inc. v. Minuteman Press Int'l, Inc., 1981-1 Trade Cas. P. 64,034, at 76,349
(N.D. Ga. 1981) ("The court is of the firm belief that facts necessary to
state a cause of action must be stated in the complaint and that a
plaintiff should not be allowed to file a suit and then conduct discovery
to see if he, in fact, has a case."). In any event, the declarations have
already given Rental Services much more in terms of discovery than it is
entitled to, especially given the fact that its pleading does not even
mention a single nominee by name, let alone challenge any of the nominees
under Section 8 of the Clayton Act.
CONCLUSION
Rental Service has not amended its pleadings to allege that any
of the independent nominees violates Section 8 of the Clayton Act because
it cannot do so, even under the broadest reading of Section 8. Rental
Service is not entitled to discovery and its amended counterclaims should
be dismissed.
PLAINTIFFS-COUNTER DEFENDANTS UR ACQUISITION
CORPORATION and UNITED RENTALS, INC. and COUNTER-
DEFENDANTS BRADLEY S. JACOBS, RICHARD J.
HECKMANN, WAYLAND R. HICKS, JOHN N. MILNE,
MICHAEL J. 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
City Place I
Hartford, Connecticut 06103
(860) 275-0100
OF COUNSEL:
Jay B. Kasner (ct05025)
Clifford H. Aronson (ct20258)
Steven J. Kolleeny (ct20257)
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
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
Robert A. Izard, Esquire
Bradford S. Babbitt, Esquire
ROBINSON & COLE LLP
280 Trumbull Street
Hartford, CT 06103-3597
/s/ Robin L. Smith
-------------------------
Robin L. Smith
