<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
(AMENDMENT NO. 3)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------
VARLEN CORPORATION
(Name of Subject Company)
VARLEN CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(And Associated Preferred Share Purchase Rights)
(Title of Class of Securities)
922248 10 9
(CUSIP Number of Class of Securities)
RAYMOND A. JEAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VARLEN CORPORATION
55 SHUMAN BOULEVARD, P.O. BOX 3089
NAPERVILLE, ILLINOIS 60566-7089
(630) 420-0400
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person Filing Statement)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C> <C>
Vicki L. Casmere, Esq. R. Scott Falk, Esq. Kevin G. Abrams, Esq.
Vice President, General Counsel & Kirkland & Ellis Richards, Layton & Finger
Secretary 200 East Randolph Drive One Rodney Square
Varlen Corporation Chicago, Illinois 60601 P. O. Box 551
55 Shuman Boulevard (312) 861-2000 Wilmington, Delaware 19899
P.O. Box 3089 (302) 658-6541
Naperville, Illinois 60566-7089
(630) 420-0400
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 3 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (as subsequently amended, the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission") on June 7,
1999, by Varlen Corporation (the "Company" or "Varlen"), relating to the cash
tender offer by Track Acquisition Incorporated ("Track"), a Delaware corporation
and a wholly owned subsidiary of Amsted Industries Incorporated ("Amsted"), to
purchase all outstanding shares of the Company's common stock, par value $.10
per share (the "Common Stock"), including the associated Preferred Share
Purchase Rights (the "Rights," and together with the Common Stock, the "Shares")
issued pursuant to the Rights Agreement dated as of June 17, 1996 (as amended,
the "Rights Agreement"), between the Company and Harris Trust and Savings Bank
(the "Rights Agent"). Amsted and Track have offered to purchase the Shares for
$42.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in Track's Offer to Purchase dated May 24, 1999, as amended
and supplemented by the Supplement to the Offer to Purchase dated August 4, 1999
and the related revised Letter of Transmittal (which together constitute the
"Amended Amsted Offer"). The Amended Amsted Offer is disclosed in a Tender Offer
Statement on Schedule 14D-1, dated May 24, 1999 (as subsequently amended, the
"Schedule 14D-1"), as filed with the Commission. Unless otherwise indicated, all
capitalized terms used but not defined shall have the meanings ascribed to them
in the Schedule 14D-9.
ITEM 2. TENDER OFFER OF THE BIDDER.
The description under Item 2 is hereby amended and supplemented by adding
the following information:
The Amended Amsted Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of August 1, 1999, among the Company, Track and Amsted (the
"Merger Agreement"). The Merger Agreement provides that following consummation
of the Amended Amsted Offer, subject to the other conditions contained in the
Merger Agreement, including, if required by law, obtaining the necessary vote of
the Company's stockholders in favor of the Merger Agreement, Track will be
merged with and into the Company (the "Merger") and each outstanding Share
(other than Shares owned by Amsted, Track or their subsidiaries, and other than
any Shares held by stockholders who perfect their appraisal rights under
Delaware law) will be converted into the right to receive $42.00 in cash.
ITEM 3. IDENTITY AND BACKGROUND.
The description under Item 3(b) is hereby amended and supplemented by adding
the following information:
The Company issued letters (the "Letters") dated July 12, 1999 (a) to
Raymond A. Jean, with respect to both his Change in Control Agreement, dated as
April 8, 1999 (Mr. Jean's "Agreement") and a letter from the Company dated May
14, 1999, relating to Mr. Jean's participation in the Company's Supplemental
Executive Retirement Plan (the "SERP"), and to (b) Richard A. Nunemaker, with
respect to both his Change in Control Agreement, dated May 14, 1999 (Mr.
Nunemaker's "Agreement") and a letter from the Company of the same date relating
to Mr. Nunemaker's participation in the SERP. The Letters clarify that (i) any
benefits to which Mr. Jean and Mr. Nunemaker are entitled under the SERP upon
termination of their respective employment are not "change of control" payments
subject to Section 280G of the Internal Revenue Code, and (ii) any benefits to
which Mr. Jean and Mr. Nunemaker are entitled under the SERP will not be offset
from any payments that may be due to them pursuant to their respective
Agreements following a change of control. The Letter to Mr. Jean is filed as
Exhibit 46 to the Schedule 14D-9 and is incorporated by reference herein. The
Letter to Mr. Nunemaker is filed as Exhibit 47 to the Schedule 14D-9 and is
incorporated by reference herein.
1
<PAGE>
THE MERGER AGREEMENT.
On August 1, 1999, the Merger Agreement was executed by the Company, Amsted
and Track. A summary of the Merger Agreement is contained in Section 7 of the
Supplement to Offer to Purchase, which has been filed with the Commission as
Exhibit (a) (22) to Amsted's Schedule 14D-1. Such summary is incorporated by
reference herein and should be read in its entirety for a more complete
description of the terms and provisions of the Merger Agreement. The Merger
Agreement is attached as Exhibit 42 to Amendment No. 2 to the Schedule 14D-9
filed on August 2, 1999 and is incorporated by reference herein.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
The description under Item 4(a) is hereby amended and supplemented by adding
the following information:
On July 9, 1999, Amsted and the Company entered into the Amsted
Confidentiality Agreement pursuant to which the Company agreed that it would
provide to Amsted and its affiliates access to the Company's senior management
and certain non-public information concerning the Company and its affairs.
On July 13, 1999, certain officers and management of the Company made a
presentation to Amsted concerning the business and operations of the Company. On
July 16 and 17, 1999, representatives of Amsted met with representatives of the
Company to conduct due diligence investigations of the Company's business.
Follow-up diligence investigations continued through the week of July 26, 1999.
On July 23, 1999, Morgan Stanley sent a letter to third parties, including
Amsted, inviting the submission of an offer to acquire all of the Company's
Shares pursuant to the enclosed form of merger agreement. The Company set July
30, 1999 as the deadline for submitting such offers.
On July 30, 1999, Amsted submitted its $42.00 per Share offer together with
Amsted's proposed changes to the form of merger agreement circulated by Morgan
Stanley.
Beginning on the morning of July 31, 1999, and continuing through the
morning of August 1, 1999, Winston & Strawn and Schiff Hardin & Waite, counsel
to Amsted, and Kirkland & Ellis and Richards, Layton & Finger, counsel to the
Company, negotiated the terms of a definitive merger agreement. The Board
unanimously approved the Merger Agreement at a special meeting of the Board held
on the morning of August 1, 1999. Amsted, Track and the Company executed the
Merger Agreement later in the morning on August 1, 1999.
THE BOARD HAS UNANIMOUSLY DETERMINED THAT EACH OF THE AMENDED AMSTED OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF
THE COMPANY, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING THE AMENDED AMSTED OFFER AND THE MERGER, HAS DECLARED THAT
THE MERGER AGREEMENT IS ADVISABLE AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
AMENDED AMSTED OFFER AND TENDER THEIR SHARES PURSUANT TO THE AMENDED AMSTED
OFFER.
The description under Item 4(b) is hereby amended and supplemented by adding
the following information:
In reaching its conclusions with respect to the Amended Amsted Offer, the
Board considered the following factors:
(1) The terms and conditions of the Amended Amsted Offer and the Merger
Agreement, including the price to be paid in the Amended Amsted Offer and
the Merger which is a 61.9% premium over the closing price of Shares on May
17, 1999, the day before Track announced its
2
<PAGE>
intention to commence the Amsted Offer, a 20% premium over the original
offer price in the Amsted Offer of $35.00 per Share, and an 11% premium over
the closing price of Shares on July 30, 1999;
(2) The presentation by Morgan Stanley concerning the Company and the
financial aspects of the Amended Amsted Offer as well as the opinion of
Morgan Stanley stating that, as of the date of such opinion, the Amended
Amsted Offer and the Merger are fair, from a financial point of view, to
holders of Shares, other than Amsted and its affiliates. The full text of
the Morgan Stanley opinion, dated August 1, 1999, setting forth the
assumptions made, matters considered and limitations on the review
undertaken, which was filed as Exhibit 43 to Amendment No. 2 to the Schedule
14D-9 and is set forth in Annex A attached hereto and incorporated by
reference herein; and
(3) The directors' knowledge of the Company's business, financial
condition, results of operations, current business strategy and future
growth prospects, the nature of the markets in which the Company operates,
the Company's position in such markets, and the efforts of management and
directors of the Company, with the advice and assistance of the Company's
legal and financial advisors, to explore other possible transactions
involving the Company.
The Board did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Board may have given
different weights to different factors.
A copy of the letter to the Company's stockholders communicating the Board's
recommendation is filed as Exhibit 48 to the Schedule 14D-9 and is incorporated
by reference herein.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
The description under Item 6 is hereby amended and supplemented by adding
the following information:
To the best of the Company's knowledge, all of its executive officers,
directors or affiliates currently intend to tender any Shares which are held of
record or beneficially owned by such persons pursuant to the Amended Amsted
Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
The description under Item 7 is hereby amended and supplemented by adding
the following information:
On August 1, 1999, the Company entered into the Merger Agreement with Amsted
and Track.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The description under Item 8 is hereby amended and supplemented by adding
the following information:
THE RIGHTS AGREEMENT
At its meeting on August 1, 1999, the Board adopted an amendment to the
Rights Agreement in order to render the Rights inapplicable to the execution of
the Merger Agreement, the Merger and other transactions contemplated by the
Merger Agreement, including the consummation of the Amended Amsted Offer.
DELAWARE TAKEOVER STATUTE
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware General Corporation Law (the "DGCL"). Under Section 203,
certain "business combinations" between a
3
<PAGE>
Delaware corporation whose stock is publicly traded or held of record by more
than 2,000 stockholders and an "interested stockholder" are prohibited for a
three-year period following the date that such a stockholder became an
interested stockholder, unless, among other possible exemptions, the transaction
in which the stockholder became an interested stockholder or the business
combination was approved by the board of directors of the corporation before
such other party to the business combination became an interested stockholder.
The term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an interested stockholder,
transactions with an interested stockholder involving the assets or stock of the
corporation or its majority-owned subsidiaries and transactions which increase
an interested stockholder's percentage ownership of stock. The term "interested
stockholder" is defined generally as a stockholder who, together with affiliates
and associates, owns (or, within three years prior, did own) 15% or more of a
Delaware corporation's voting stock. An owner includes a person who has the
right to acquire such stock, including upon the exercise of an option.
In accordance with the Merger Agreement and Section 203, at its meeting on
August 1, 1999, the Board unanimously approved the Amended Amsted Offer and the
Merger and determined to make the restrictions of Section 203 inapplicable to
the Amended Amsted Offer and the Merger.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended by the addition of the following new exhibits:
46. Letter from the Company to Raymond A. Jean, dated July 12, 1999.
47. Letter from the Company to Richard A. Nunemaker, dated July 12,
1999.
48. Letter to the Company's stockholders dated August 4, 1999.
4
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
<TABLE>
<S> <C><C>
VARLEN CORPORATION
By: /s/ RAYMOND A. JEAN
-----------------------------------
Raymond A. Jean
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>
Dated: August 4, 1999
5
<PAGE>
ANNEX A
[LETTERHEAD]
August 1, 1999
Board of Directors
Varlen Corporation
55 Shuman Boulevard
P.O. Box 3089
Naperville, IL 60566
Members of the Board:
We understand that Varlen Corporation ("Varlen" or the "Company"), Amsted
Industries Incorporated ("Amsted") and Track Acquisition Incorporated, a wholly
owned subsidiary of Amsted ("Track"), propose to enter into the Agreement and
Plan of Merger, dated as of August 1, 1999 (the "Merger Agreement"), which
provides, among other things, for (i) the commencement by Track of a tender
offer (the "Tender Offer") for all outstanding shares of common stock, par value
$0.10 per share, including the associated preferred share repurchase rights (the
"Common Stock") of Varlen for $42.00 per share net to the seller in cash, and
(ii) the subsequent merger (the "Merger") of Track with and into Varlen.
Pursuant to the Merger, Varlen will become a wholly owned subsidiary of Amsted
and each outstanding share of Common Stock, other than shares held in treasury
or held by Amsted or any subsidiary of Amsted or as to which dissenters' rights
have been perfected, will be converted into the right to receive $42.00 per
share in cash. The terms and conditions of the Tender Offer and the Merger are
more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of
the Company;
(iii) analyzed certain financial forecasts prepared by the management of the
Company;
(iv) discussed the past and current operations and financial condition and
the prospects and business strategy of the Company with senior
executives of the Company;
(v) reviewed the reported prices and trading activity for the Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
A-1
<PAGE>
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives of
the Company, Amsted and certain other parties and their financial and
legal advisors;
(ix) reviewed the Merger Agreement and certain related documents; and
(x) performed such other and considered such other factors as we have
deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting management's best
currently available estimates and judgments of the future financial performance
of the Company. We have not made any independent valuation or appraisal of the
assets or liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Company in respect of the transaction with the
Securities and Exchange Commission. This opinion is not intended to be and shall
not constitute a recommendation to any holder of Common Stock as to whether to
tender shares of Common Stock pursuant to the Tender Offer.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of shares of Common
Stock pursuant to the Merger Agreement is fair from a financial point of view to
such holders.
<TABLE>
<S> <C><C>
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ FRANCIS J. OELERICH III
-----------------------------------
Francis J. Oelerich III
MANAGING DIRECTOR
</TABLE>
A-2
<PAGE>
Exhibit 46
VARLEN CORPORATION
55 SHUMAN BOULEVARD
NAPERVILLE, IL 60566
July 12, 1999
Mr. Ray Jean
1815 N. Pond Lane
Lake Forest, Ill. 60045
Dear Ray:
This letter confirms that, as reflected in our Change of Control
Agreement with you dated April 8, 1999 (the "Agreement"), and the letter dated
May 14, 1999, relating to your participation in Varlen's SERP, (1) any benefits
to which you are entitled under the SERP upon termination of your employment are
not "change of control" payments subject to Section 280G of the Internal Revenue
Code even if you cease employment subsequent to a change of control of Varlen,
and (2) any benefits to which you are entitled under the SERP will not be offset
from any payments that may be due to you pursuant to the Agreement following a
change of control.
Very truly yours,
VARLEN CORPORATION
By: /s/ G.A. Rosenbaum
-----------------------------
Chair, Compensation Committee
<PAGE>
Exhibit 47
VARLEN CORPORATION
55 SHUMAN BOULEVARD
NAPERVILLE, IL 60566
July 12, 1999
Mr. Richard A. Nunemaker
141 Cottage Hill Avenue
Elmhurst, Ill. 60126
Dear Rick:
This letter confirms that, as reflected in our Change of Control
Agreement with you dated May 14, 1999 (the "Agreement"), and the letter of the
same date relating to your participation in Varlen's SERP, (1) any benefits to
which you are entitled under the SERP upon termination of your employment are
not "change of control" payments subject to Section 280G of the Internal Revenue
Code even if you cease employment subsequent to a change of control of Varlen,
and (2) any benefits to which you are entitled under the SERP will not be offset
from any payments that may be due to you pursuant to the Agreement following a
change of control.
Very truly yours,
VARLEN CORPORATION
By: /s/ G.A. Rosenbaum
-----------------------------
Chair, Compensation Committee
<PAGE>
EXHIBIT 48
- --------------------------------------------------------------------------------
[LETTERHEAD]
[VARLEN LOGO]
August 4, 1999
To Our Stockholders:
Varlen Corporation has entered into a merger agreement with Amsted
Industries Incorporated which provides for a wholly owned subsidiary of Amsted
to amend its existing cash tender offer to increase the price offered for all
outstanding shares of common stock of Varlen from $35.00 per share to $42.00 per
share. The Amsted tender offer will be followed by a merger of the Amsted
subsidiary with Varlen. In the merger, each Varlen share which is not purchased
in the tender offer will be converted into $42.00 in cash.
The Board of Directors of Varlen has unanimously approved the transaction
with Amsted, has determined that the amended offer and the merger are fair to
and in the best interests of Varlen and its stockholders and recommends that
stockholders accept the $42.00 amended offer and tender their shares. The
amended offer is scheduled to expire at midnight on Friday, August 13, 1999.
Enclosed is Amsted's Supplement dated August 4, 1999 to its Offer to
Purchase dated May 24, 1999, and a revised Letter of Transmittal. These
documents set forth the amended terms and conditions of the Amsted tender offer
and contain other important information relating to the tender offer and the
merger. These documents also provide instructions as to how to tender your
Varlen shares. Also attached is a copy of an amendment to Varlen's Schedule
14D-9, as filed with the Securities and Exchange Commission. The attached
Schedule 14D-9 describes in more detail the reasons for your Board's decision.
Among other things, the Board considered the opinion of Morgan Stanley & Co.
Incorporated, its financial advisor, that the consideration to be received by
Varlen stockholders pursuant to the tender offer and the merger is fair to such
stockholders from a financial point of view. We urge you to read all of these
materials carefully.
Your Board of Directors, the management and employees of Varlen thank you
sincerely for your loyal support.
On Behalf of the Board of Directors,
Sincerely,
/s/ Raymond A. Jean
Raymond A. Jean
PRESIDENT AND CHIEF EXECUTIVE OFFICER
