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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 4, 1998
Bethlehem Steel Corporation
(Exact name of registrant as specified in its charter)
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Delaware 1-1941 24-0526133
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
1170 Eighth Avenue
Bethlehem, Pennsylvania 18016-7699
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 694-2424
None
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Bethlehem Steel Corporation, a Delaware corporation ("Bethlehem"),
Lukens Inc., a Delaware corporation ("Lukens"), and Lukens Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of
Bethlehem ("Merger Sub"), have entered into an Amendment dated as of
January 4, 1998 (the "Amendment") to the Agreement and Plan of Merger dated
as of December 15, 1997 (as so amended, the "Amended Merger Agreement").
The Amendment increases the value of the consideration to be paid by
Bethlehem from $25 to $30 per share of common stock, par value $.01 per
share, of Lukens (a "Lukens Common Share"). Under the Amended Merger
Agreement, Bethlehem will acquire Lukens for approximately $490 million in
cash and stock. The Merger Agreement provides for the merger of Merger Sub
with and into Lukens (the "Merger"). The Merger is expected to be completed
early in the second quarter of 1998. Following the Merger, Bethlehem
intends to cause Lukens to be merged with and into Bethlehem.
In the Merger, each Lukens Common Share that is issued and outstanding
immediately prior to the effective time of the Merger will be converted
into the right to receive, subject to proration and certain other
conditions and limitations, at the election of the holder either (i) cash
from Bethlehem in an amount equal to $30 or (ii) a number of shares of
common stock, par value $1.00 per share, of Bethlehem ("Bethlehem Shares")
equal to the Conversion Number. The "Conversion Number" will be equal to
$30 divided by the average of the daily closing prices per Bethlehem Share
for the 15 consecutive full NYSE trading days immediately preceding the
third full NYSE trading day prior to the effective time of the Merger (the
"Average Bethlehem Market Price"), but will not be less than 2.878 or more
than 4.317. Each issued and outstanding share of Lukens Series B Preferred
Stock (a "Lukens Preferred Share") will be converted into the right to
receive the consideration that a holder of the number of Lukens Common
Shares into which such Lukens Preferred Share could have been converted
would have the right to receive if such holder did not elect to receive
cash.
The Merger consideration will consist of approximately 68% cash and 32%
Bethlehem Shares. If Lukens stockholders elect to receive cash in an
aggregate amount in excess of 68% of the total Merger consideration, each
Lukens share for which an election to receive cash is made will be
converted into the right to receive a prorated amount of cash and Bethlehem
Shares. An election to receive Bethlehem Shares will be deemed to have been
made with respect to each Lukens share for which an election to receive
cash is not made. If Lukens stockholders are deemed to have elected to
receive Bethlehem Shares in an aggregate amount in excess of 32% of the
total Merger consideration, each Lukens share for which a deemed election
to receive Bethlehem Shares is made will be converted into the right to
receive a prorated amount of Bethlehem Shares and cash.
Consummation of the Merger is subject to termination or expiration of
the waiting period under the Hart- Scott-Rodino Antitrust Improvement Act
of 1976, approval by the Lukens stockholders and certain other conditions.
Furthermore, Lukens will not be obligated to effect the Merger if the
Average Bethlehem Market Price is less than a specified amount.
The foregoing description of the Amended Merger Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement, which is incorporated herein by reference, and the
Amendment, which is attached hereto as an exhibit.
The equity value of the amended transaction between Bethlehem and
Lukens represents an increase of about 7% over the offer previously made to
Lukens by Allegheny Teledyne Incorporated to acquire Lukens in a merger
transaction for $28 in cash per share.
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3
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Description
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2.1* Agreement and Plan of Merger dated as of December 15, 1997,
between Bethlehem Steel Corporation and Lukens Inc.
2.2 Amendment dated as of January 4, 1998 to the Agreement and Plan
of Merger dated as of December 15, 1997 among Bethlehem Steel
Corporation, Lukens Acquisition Corporation and
Lukens Inc.
99.1* Press Release dated December 15, 1997, announcing the execution
of the Merger Agreement between Bethlehem Steel Corporation and
Lukens Inc.
99.2 Press Release dated January 5, 1998 announcing the execution of
the Amendment to the Merger Agreement among Bethlehem Steel
Corporation, Lukens Acquisition Corporation and Lukens Inc.
99.3 Press Release dated January 5, 1998 confirming the execution of
the Amendment to the Merger Agreement among Bethlehem Steel
Corporation, Lukens Acquisition Corporation and Lukens Inc.
99.4 Press Release dated January 5, 1998 responding to inquiries
concerning the Amendment to the Merger Agreement among Bethlehem
Steel Corporation, Lukens Acquisition Corporation and Lukens
Inc.
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* Incorporated by reference to the Form 8-K of Bethlehem Steel Corporation
dated December 15, 1997, File No. 1-1941.
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4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Bethlehem Steel Corporation
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(Registrant)
Date: January 12, 1998 By: /s/ Lonnie A. Arnett
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Name: Lonnie A. Arnett
Title: Vice President and Controller
(principal accounting officer)
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5
EXHIBIT INDEX
Exhibit Description
2.1* Agreement and Plan of Merger dated as of December 15, 1997,
between Bethlehem Steel Corporation and Lukens Inc.
2.2 Amendment dated as of January 4, 1998 to the Agreement and Plan
of Merger dated as of December 15, 1997 among Bethlehem Steel
Corporation, Lukens Acquisition Corporation and
Lukens Inc.
99.1* Press Release dated December 15, 1997, announcing the execution
of the Merger Agreement between Bethlehem Steel Corporation and
Lukens Inc.
99.2 Press Release dated January 5, 1998 announcing the execution of
the Amendment to the Merger Agreement among Bethlehem Steel
Corporation, Lukens Acquisition Corporation and Lukens Inc.
99.3 Press Release dated January 5, 1998 confirming the execution of
the Amendment to the Merger Agreement among Bethlehem Steel
Corporation, Lukens Acquisition Corporation and Lukens Inc.
99.4 Press Release dated January 5, 1998 responding to inquiries
concerning the Amendment to the Merger Agreement among Bethlehem
Steel Corporation, Lukens Acquisition Corporation and Lukens
Inc.
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* Incorporated by reference to the Form 8-K of Bethlehem Steel Corporation
dated December 15, 1997, File No. 1-1941.
AMENDMENT dated as of January 4, 1998, to the Agreement
and Plan of Merger dated as of December 15, 1997, among
BETHLEHEM STEEL CORPORATION, a Delaware corporation
("Bethlehem"), LUKENS ACQUISITION CORPORATION, a Delaware
corporation ("MERGER SUB") and LUKENS INC., a Delaware
corporation (the "Company").
WHEREAS Bethlehem and the Company have entered into an Agreement
and Plan of Merger dated as of December 15, 1997 (the "Merger Agreement";
all terms used herein that are defined in the Merger Agreement have the
meanings set forth therein);
WHEREAS Merger Sub has become a party to the Merger Agreement
pursuant to Section 5.15 thereof;
WHEREAS the parties wish to amend certain terms of the Merger
Agreement as hereinafter provided.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. The dollar amount set forth in Section 2.01(c)(i) is
hereby amended to be $30.
Section 2. The reference to 3.62 in the proviso in Section
2.01(c)(ii) shall be amended to be 4.317 and the reference to 2.797 in such
proviso shall be amended to be 2.878.
Section 3. The reference to .62 in clause (z) of Section 2.03(a)
and to .38 in clause (z) of Section 2.03(c) shall be amended to be .68 and
.32, respectively.
Section 4. The reference to $6.906 in Section 6.03(c) shall be
amended to be $6.950.
Section 5. Section 8.11 shall be amended by adding at the end
thereof the following: "The parties agree to the exclusive jurisdiction of
the Federal and state courts in the State of Delaware for any disputes
arising under this Agreement or the transactions contemplated hereby."
Section 6. Except as amended hereby, the Merger Agreement
continues to be, and shall remain, in full force and effect in accordance
with its terms. The General Provisions set forth in Article VIII of the
Merger Agreement are incorporated herein by reference and deemed made a
part hereof, mutatis mutandis.
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IN WITNESS WHEREOF, the parties have executed this Amendment by
their respective officers thereunto duly authorized as of the date first
above written,
BETHLEHEM STEEL CORPORATION,
by /s/ C.H. Barnette
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C.H. Barnette
LUKENS INC.,
by /s/ R.W. Van Sant
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Name:
Title:
LUKENS ACQUISITION CORPORATION,
by /s/ C.H. Barnette
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C.H. Barnette
Bethlehem Steel Corporation Lukens Inc.
Bette Kovach Rick Whitmyre
(610) 694-3711 (610) 383-3393
LUKENS AND BETHLEHEM STEEL AMEND DEFINITIVE MERGER AGREEMENT
Bethlehem Offer Increased To $30 Per Share For Lukens Common Stock
COATESVILLE, PA., January 5, 1998 - Lukens Inc. (NYSE: LUC) and
Bethlehem Steel Corporation (NYSE: BS) announced today the signing of an
amendment to their definitive merger agreement of December 15, 1997.
Under the terms of the amendment, Bethlehem would acquire Lukens
in a transaction valued at about $740 million, including the assumption of
about $250 million of debt. The equity value of about $490 million is based
on Bethlehem paying $30 for each share of Lukens common stock outstanding
on the date of closing, by issuing Bethlehem common stock for approximately
32 percent of the total equity value and paying cash for the remaining 68
percent.
The amount of Bethlehem common stock per Lukens share will be
based on the 15-day average closing price of Bethlehem common stock prior
to transaction closing, but not less than 2.878 Bethlehem shares or more
than 4.317 Bethlehem shares. The other material terms and conditions of the
definitive merger agreement remain substantially unchanged.
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The equity value of the amended transaction between Bethlehem and
Lukens represents an increase of about 7 percent over the offer received
from Allegheny Teledyne Incorporated to acquire Lukens in a merger
transaction for $28 in cash for each share of Lukens common stock.
Completion of the merger is subject to certain conditions,
including approval by Lukens' stockholders and the receipt of regulatory
approvals.
Lukens Inc. is a leading North American specialty steel
manufacturer whose operating units supply carbon, alloy and clad plate
steels; and stainless steel sheet, strip and plate products.
Bethlehem Steel, with current annual sales of about $4.7 billion,
is the second largest steel producer in the United States. It produces
plate at is Burns Harbor, Ind., and Sparrows Point, Md., facilities, and
consumes plate at its Pennsylvania Steel Technologies' pipe mill in
Steelton, Pa.
# # #
BETHLEHEM STEEL CORPORATION
Corporate Communication Division
Public Affairs Department
1170 Eighth Avenue
Bethlehem, PA 18016-799
(610) 694-3711 - Phone
(610) 694-1509 - Fax
FOR IMMEDIATE RELEASE
BETHLEHEM, Pa., January 5, 1998 - In response to media inquiries
concerning a joint announcement earlier today by Bethlehem Steel
Corporation and Lukens, Inc., the following statement was issued by
Bethlehem:
Bethlehem Steel Corporation confirmed today that it has increased
its offer to acquire Lukens Inc. to $30 per share by amending the
definitive merger agreement it had signed with the Coatesville, Pa.-based
steelmaker on December 15, 1997. Under the amended agreement signed by
Bethlehem and Lukens, Bethlehem would acquire Lukens in a transaction
valued at about $740 million, including the assumption of about $250
million of debt. The equity value of the transaction is about $490 million.
Of the total consideration to be paid by Bethlehem, 68% will be in the form
of cash, with the remaining 32% to be in the form of Bethlehem common
stock. The amount of Bethlehem common stock to be issued for each Lukens'
share exchanged for Bethlehem common stock will be based on the 15-day
average closing price of Bethlehem common stock prior to the closing of the
transaction, but will not be less than 2.878 Bethlehem shares or more than
4.317 Bethlehem shares. Under the
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agreement, Bethlehem will issue no more than 22.5 million shares, nor less
than 15.1 million shares, of its common stock.
Curtis H. Barnette, chairman and chief executive officer of
Bethlehem, said, "We continue to believe that this transaction has
significant strategic benefits to Bethlehem, and that the combination of
the strengths of each company will establish the premier plate business in
North America and, perhaps, the world.
Moreover, we believe it will create a more globally competitive
and customer-focused plate business, with the broadest range of plate
products in the industry. It will also result in significant synergies,
improved customer satisfaction, overall lower costs and, we believe,
enhanced stockholder value."
Bethlehem said there were a number of reasons why the company was
able to improve the consideration from its previously signed definitive
merger agreement with Lukens to a level superior to Allegheny Teledyne
Incorporated's recent $28 per share offer to acquire Lukens. First, the
combination will generate identifiable operating and administrative
synergies at the high end of the range of synergies that Allegheny Teledyne
said it could achieve from its combination with Lukens. In addition,
Bethlehem will be able to utilize its significant tax net operating
carryforwards to shield Lukens' pre-tax earnings and the pre-tax synergies
from its combination with Lukens.
Bethlehem said that it is continuing to actively study options
for maximizing the value of Lukens' stainless businesses and its Washington
Specialty Metals business, a leading distributor of stainless steel
products. Bethlehem said that these operations
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are not part of its core business strategy and, therefore, it would divest
these assets. Bethlehem said that it believed these businesses had very
good potential for significant value.
Bethlehem said that it continues to believe that the combination
would increase its earnings per share after an initial transition period
required to integrate the operations of the two companies and to sell the
stainless assets. The transaction is expected to close by early Second
Quarter 1998, subject to approval by Lukens' shareholders and regulatory
authorities.
In announcing the amended agreement, Bethlehem said it would act
promptly after closing to combine the plate businesses of both companies
and to take full and immediate advantage of the merged facilities'
capabilities. As previously announced, Bethlehem said it would have the
Bethlehem and Lukens' plate operations function as a separate Division of
Bethlehem, headquartered in Coatesville, with consolidated operations and
marketing responsibilities. Mr. Barnette said, "This will allow the newly
created Business Division, which is to be called the "Bethlehem-Lukens
Plate Division", to concentrate solely on the plate business and to provide
its customers a greater level of quality and service." Mr. Barnette also
said, "The Division's name would allow for continued recognition of the
Lukens name, which has a rich history and importance in the marketplace,
with Lukens' employees and others."
Bethlehem's three plate mills -- Burns Harbor's 160" and 110"
sheared plate mills and Sparrows Point's 160" sheared plate mill -- have
annual shipments of about 1.5 million tons. Lukens ships approximately
750,000 tons of carbon and alloy plate
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and 260,000 tons of stainless steel products from its Coatesville 140" and
206" plate mills, its Conshohocken 110" combination Steckel/sheared mill
and its stainless facilities in Pennsylvania and Ohio.
After an appropriate period of transition, the new Division will
operate four of the six carbon and alloy plate mills now operated by both
companies. Bethlehem said that the business of the Coatesville 206" plate
mill and Sparrows Point's 160" plate mill will be consolidated with the
other four plate mills. These two mills will be closed at a future time to
be determined, consistent with customer requirements and other factors. The
combined business will produce the widest range of plate gauges and grades
in North America, including carbon, alloy, resulphurized, high strength-low
alloy, normalized, quenched and tempered, and clad. Bethlehem said that the
rationalization of its Sparrows Point 160" plate mill was appropriate even
though this mill is a competitive and profitable mill that benefits from
Sparrows Point having among the lowest cost slabs in the domestic steel
industry for rolling into plate products. The Lukens' 110" Conshohocken
Steckel mill is currently underutilized and would receive slabs from
Sparrows Point, and has the capability, along with Burns Harbor's plate
capability, to handle all of Sparrows Point's 160" plate mill business
without any loss of shipments. However, there is expected to be
significantly improved operating efficiencies as a result of the higher
volumes. Discontinuing the Sparrows Point plate mill will result in a
restructuring charge at the time the transaction closes of no more than $50
million.
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The Bethlehem-Lukens combination should significantly reduce
costs by improving utilization of the remaining mills. Lukens has just
completed a major modernization program to enhance melting, rolling and
certain finishing capabilities, which will enhance the new Division's
strengths. Bethlehem said that the combined plate businesses would cause it
to be one of the lowest-cost carbon and alloy plate producers, to improve
the utilization of its raw steelmaking capabilities, and to reduce
administrative and associated costs.
The principal consuming industries for plate products are
construction, farm equipment, industrial machinery, oil and gas pipeline,
pipe and tube, railroad cars, service centers, shipbuilding and
transportation. The total domestic sales for both cut and coil plate were
about twelve million tons in 1997, including about 25 percent imports.
Bethlehem Steel, with current annual sales of about $4.7 billion,
is the second largest steel company in the United States. Bethlehem
produces plate at its Burns Harbor, Ind. and Sparrows Point, Md.
facilities, and consumes plate at its Pennsylvania Steel Technologies' pipe
mill in Steelton, Pa. Lukens, which currently has sales of about $1.0
billion per year, is the only steelmaker in North America that produces
carbon, alloy and stainless steels on a flexible, fully integrated
manufacturing system. Lukens presently has major steelmaking and finishing
facilities in Coatesville, Conshohocken, Houston and Washington, Pa., and
Massillon, Ohio.
After the combination of the two companies, Bethlehem's annual
sales will be about $5.5 billion per year, with annual shipments of about
ten million tons.
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Bethlehem currently has about 15,500 employees and Lukens has about 3,400
employees.
Following the combination, Mr. Barnette will continue as Chairman
and Chief Executive Officer of Bethlehem Steel Corporation. Mr. R.W. Van
Sant, currently Chairman and Chief Executive Officer of Lukens Inc., will
serve as the President of the Bethlehem-Lukens Plate Division.
J.P. Morgan acted as financial advisor to Bethlehem on the
transaction.
#
BETHLEHEM STEEL CORPORATION
Corporate Communication Division
Public Affairs Department
1170 Eighth Avenue
Bethlehem, PA 18016-799
(610) 694-3711 - Phone
(610) 694-1509 - Fax
FOR IMMEDIATE RELEASE
BETHLEHEM, Pa., January 5, 1998 -- In response to media inquiries, the
following additional information was released concerning Bethlehem Steel's
offer to merge with Lukens Inc.:
1. The analysts are saying that the benefits to Bethlehem could be realized
as early as three to nine months.
Answer: Yes, Bethlehem expects the combination clearly to be accretive to
earnings, but realistically a transition period will be recognized in the
near term, perhaps three to nine months to integrate our respective
operations.
2. This shortened time frame to realize benefits indicates that Bethlehem
has done additional due diligence.
Answer: Yes, Bethlehem performed additional due diligence.
3. Is the anticipated $50 million charge only to close the Sparrows Point
plate mill?
Answer: Yes.
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4. Does Bethlehem expect a counter offer from Allegheny Teledyne?
Answer: We do not speculate on the possible actions of other companies.
5. A debt analyst said that Bethlehem has casually discussed selling the
Burns Harbor coke ovens to an outside party to create tax benefits that
could be used in connection with the Lukens merger. Bethlehem would buy
coke from the new owner.
Answer: Bethlehem is discussing the possible sale of its No. 1 coke oven
battery at Burns Harbor to an independent party. The possible sale of this
battery has been under discussion for the past several months and is
unrelated to the merger agreement with Lukens Inc. If successful, the new
owner would be able to access Section 29 energy credits under the IRS tax
regulations.
6. How can Bethlehem not afford to keep the Bethlehem Coke Oven Division
operating but can afford another $90 million to bid for Lukens?
Answer: As we have said previously, the coke ovens in Bethlehem cannot
achieve satisfactory levels of profitability. The merger with Lukens allows
Bethlehem Steel to achieve its financial objective of creating satisfactory
return on net investment.
7. Explain the tax benefits to Bethlehem through the proposed merger with
Lukens.
Answer: Bethlehem has net operating loss carryforwards as a result of
losses sustained in previous years. We can use those NOLs to shield Lukens'
pre-tax earnings and the pre-tax synergies that would arise from a
Bethlehem-Lukens combination.
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8. Is Bethlehem's offer, which includes stock, really better than Allegheny
Teledyne's?
Answer: In our news release, we state that Bethlehem "was able to improve
the consideration from its previously signed definitive merger agreement
with Lukens to a level superior to Allegheny Teledyne Incorporated's recent
$28 per share offer to acquire Lukens." Lukens' board has signed the
amended merger agreement with Bethlehem.
#
