SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13E-3
TRANSACTION STATEMENT UNDER SECTION 13(E) OF THE SECURITIES
EXCHANGE ACT OF 1934
AND RULE 13E-3 THEREUNDER
RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(E) OF THE
SECURITIES EXCHANGE
ACT OF 1934
THE CHERRY CORPORATION
(Name of the Issuer)
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THE CHERRY CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
164541401
(CUSIP Number of Class of Securities)
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PETER B. CHERRY
3600 SUNSET AVENUE
WAUKEGAN, ILLINOIS 60087
(847) 662-9200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With copies to:
WILLIAM J. QUINLAN, ESQ.
HELEN R. FRIEDLI, P.C.
MCDERMOTT, WILL & EMERY
227 WEST MONROE STREET
CHICAGO, ILLINOIS 60606
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the transaction, passed upon the merits
or fairness of the transaction, or passed upon the adequacy or accuracy of the
disclosure in this document. Any representation to the contrary is a criminal
offense.
This statement is filed in connection with (check the appropriate box):
<PAGE>
a. [ ] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
Check the following box if the filing is a final amendment reporting the results
of the transaction: [ ]
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CALCULATION OF FILING FEE
Transaction Valuation: $138,315,672* Amount Of Filing Fee: $27,664
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* Estimated for purposes of calculating the amount of the filing fee only. This
amount assumes the purchase by CABO Acquisition Corp. ("Purchaser") of 5,239,230
shares of common stock, par value $1.00 per share (the "Shares"), of The Cherry
Corporation, a Delaware corporation (the "Company"), at the tender price of
$26.40 of total per share net to the seller in cash, without interest thereon.
As of May 5, 2000, it had 10,168,066 Shares outstanding. In addition, there are
vested options to purchase 526,830 Shares outstanding. Purchaser and its
stockholders already beneficially own 5,455,666 Shares which will not be
tendered. Based on the foregoing, the transaction value is equal to the product
of (i) (a) 10,694,896 Shares (the number of Shares and Shares subject to vested
options outstanding), minus (b) 5,455,666 (the number of Shares beneficially
owned by Purchaser), multiplied by (ii) $26.40. The amount of the filing fee,
calculated in accordance with Rule 0-11 under the Securities Exchange Act of
1934, as amended, equals 1/50 of one percent of the aggregate of the cash
offered by the Purchaser.
.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $27,664 Filing Party: CABO Acquisition Corp.
Form or Registration No.: Schedule TO Date Filed: June 15, 2000
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This Schedule 13E-3 relates to the offer by CABO Acquisition Corp., a Delaware
corporation ("Purchaser"), to purchase any and all outstanding shares of common
stock, par value $1.00 per share (the "Shares" or "Common Stock"), of The Cherry
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$26.40 per share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
June 15, 2000 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). The Offer is described in a Tender Offer
Statement on Schedule TO (as amended or supplemented from time to time, the
"Schedule TO"), initially filed by Purchaser and Peter B. Cherry with the SEC on
June 15, 2000 and as amended on July 6, 2000 and as further amended on July 10,
2000. Copies of the Offer to Purchase and the Letter of Transmittal are filed as
Exhibits (a)(1)(i) and (a)(1)(ii) hereto, respectively, of the Schedule TO and
are incorporated herein by reference to this Schedule 13E-3.
The Offer is being made pursuant to the terms of the Agreement and Plan of
Merger, dated as of June 5, 2000 (the "Merger Agreement"), between Purchaser and
the Company. The Merger Agreement provides that, among other things, if
Purchaser acquires Shares pursuant to the Offer, following the completion of the
Offer and the satisfaction of the other conditions contained in the Merger
Agreement, Purchaser will be merged with and into the Company (the "Merger"),
with the Company continuing as the surviving corporation (the "Surviving
Corporation"). At the effective time of the Merger (the "Effective Time"),
except for Shares held by holders exercising their rights to dissent in
accordance with the Delaware General Corporation Law (the "DGCL") and Shares
held, directly or indirectly, by Purchaser, each then outstanding Share will, by
virtue of the Merger and without any action on the part of the holder thereof,
be canceled and be converted into the right to receive an amount per Share (the
"Merger Consideration") equal to the $26.40 per Share (the "Offer Price"),
without interest. The Merger Agreement also provides that contemporaneously with
the consummation of the offer, the Company will make a loan to Purchaser. See
"Item 10--Source and amount of Funds or Other Consideration" below. The terms
and conditions of the Merger Agreement are more fully described in "SPECIAL
FACTORS--The Merger Agreement and the Stockholder Agreement" of the Offer to
Purchase.
All information in the (i) Offer to Purchase, including all schedules thereto,
(ii) the Letter of Transmittal, and (iii) the Schedule 14D-9 filed by the
Company on June 15, 2000 and (iii) amendments to the Schedule TO filed on July
6, 2000 and July 10, 2000 are incorporated by reference in answer to all of the
items in this Schedule 13E-3. Additional information with respect to certain
items in this Schedule 13E-3 is set forth below. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Schedule TO.
ITEM 2. SUBJECT COMPANY INFORMATION
In December 1998, the Company completed a "Dutch Auction" self tender offer and
acquired 2,340,926 Shares for an aggregate purchase price of approximately $36.3
million at a price of $15.50 per share. At various times in 1999, depending on
market conditions, the Company repurchased an aggregate of 154,000 Shares, at
the then prevailing market prices on the open market or through private
transactions, for an aggregate purchase price of $2.0 million.
The following is the amount of securities purchased, excluding the Dutch Auction
purchase, the range of prices paid and the average purchase price for each
fiscal quarter since March 1, 1998.
<TABLE>
Amount Purchased Average Share Price Share Price Range
---------------- ------------------- -----------------
<S> <C> <C> <C>
Quarter ended May 31, 1998................................ None -- --
Quarter ended August 30, 1998............................. None -- --
Quarter ended November 30, 1998........................... None -- --
Quarter February 28, 1999................................. None -- --
Quarter ended May 31, 1999................................ 5,000 $14.375 $14.375
Quarter ended August 30, 1999............................. 22,000 $14.053 $13.50-$14.250
Quarter ended November 30, 1999........................... 127,000 $12.378 $12.00-$12.625
Quarter February 28, 2000................................. None -- --
Quarter ended May 31, 2000................................ None -- --
</TABLE>
<PAGE>
ITEM 4. TERMS OF THE TRANSACTION.
The Company has not made any provision in connection with the Offer to grant
unaffiliated security holders access to the corporate files of the Company or to
obtain counsel or appraisal services at the expense of the Company.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
The information contained in Items 11, 12 and 13 of the Company's
Annual Report on Form 10-K for the year ended February 29, 2000, as amended on
June 28, 2000, is incorporated herein by reference.
All non-employee directors of the Company are paid an annual fee of
$15,000, plus $1,500 for each meeting they attend. Employee directors of the
Company receive no compensation as such. Non-employee directors in office on
adjournment of the Company's annual meeting also receive a nonqualified stock
option to purchase the number of whole shares of Common Stock equal to the
amount of the director's annual fee divided by the fair market value of a share
of Common Stock on the date of the annual meeting. The Board of Directors has an
Audit Committee and a Compensation Committee, each composed of all of the
non-employee directors. The Committee Chairman receives $1,500 and the other
members receive $500 for each meeting held. The Audit Committee held two
meetings and the Compensation Committee held one meeting in fiscal 2000. All
members of the Special Committee receive a fee of $1,500 for each meeting that
they attend, and Robert McDermott, the Chairman of the Special Committee
receives $350 per hour for his performance of services as Chairman of the
Special Committee.
ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION
Purchaser has estimated in the Offer to Purchase that the total amount of funds
required to purchase all Shares validly tendered and not withdrawn pursuant to
the Offer, to consummate the Merger and to pay all related costs and expenses
will be approximately $150 million. The Offer is not conditioned upon any
external financing arrangements, except that the Company is required to make a
loan to Purchaser contemporaneously with the consummation of the Offer in a
maximum amount equal to the number of Shares not owned by Purchaser or the
Cherry Family Members (on a fully diluted basis) multiplied by the Offer Price,
but not to exceed $150 million (the "Loan"). The Loan will be due one hundred
twenty days from funding and will bear interest at the greater of the Company's
cost of funding or the prime rate plus 0.25%. As security for the Loan, the
Merger Agreement states that the Purchaser and the Cherry Family Members will
pledge all of their Shares that they own in addition to Shares acquired in the
Offer. The Loan will have other terms and conditions for Loans of this nature.
Purchaser will also pay a loan fee equal to 3/8% of the loaned amount to be
delivered by a note upon funding of the Loan and which shall be payable at the
maturity of the Loan. There are no alternative financing arrangements in the
event that the Loan is not available.
The margin regulations promulgated by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") place restrictions on the amount of
credit that may be extended for the purposes of purchasing margin stock,
including if such credit is secured directly or indirectly by margin stock. The
Company believes that the Loan will be in full compliance with the margin
regulations.
ITEM 16. EXHIBITS.
The following Exhibits are filed herewith:
EXHIBIT
NUMBER TITLE
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(a)(1)(i) Offer to Purchase, dated June 14, 2000 (incorporated by
reference to Exhibit (a)(1)(i) to the Schedule TO of Purchaser
filed on June 15, 2000).
<PAGE>
(a)(1)(ii) Letter of Transmittal (incorporated by reference to Exhibit
(a)(1)(ii) to the Schedule TO of Purchaser filed on June 15,
2000).
(a)(1)(iii) Notice of Guaranteed Delivery (incorporated by reference to
Exhibit (a)(1)(iii) to the Schedule TO of Purchaser filed on
June 15, 2000).
(a)(1)(iv) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees (incorporated by reference to Exhibit
(a)(1)(iv) to the Schedule TO of Purchaser filed on June 15,
2000).
(a)(2) Letter to stockholders from Robert B. McDermott, Chairman of
the Special Committee of the Board of Directors of the Company
(incorporated by reference to Exhibit (a)(2) to the Schedule
TO of Purchaser filed on June 15, 2000).
(a)(3) Exhibit (a)(1)(i) is incorporated herein by reference.
(a)(4) Not applicable.
(a)(5)(i) Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients (incorporated by
reference to Exhibit (a)(5)(i) to the Schedule TO of Purchaser
filed on June 15, 2000).
(a)(5)(ii) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 (incorporated by reference to Exhibit
(a)(5)(ii) to the Schedule TO of Purchaser filed on June 15,
2000).
(a)(5)(iii) Audited financial statements for the Company's 1999 and 2000
fiscal years, beginning on page F-1 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 29,
2000 (incorporated by reference to the Company's Annual Report
on Form 10-K filed with the Commission on May 30, 2000).
(a)(5)(iv) Joint Press Release of the Company and the Purchaser, dated
June 15, 2000 (incorporated by reference to Exhibit (a)(5)(iv)
to the Schedule TO of Purchaser filed on June 15, 2000).
(b) Not applicable.
(c)(1) Opinion of Wasserstein Perella & Co., Inc., dated June 4, 2000
(included as Annex A to the Offer to Purchase which is
incorporated herein by reference to Exhibit (a)(1)(i)) to the
Schedule TO of Purchaser filed on June 15, 2000).
(c)(2) Presentation to the Special Committee by Wasserstein Perella &
Co., Inc., dated June 4, 2000. (incorporated by reference to
Exhibit (c)(2) of the Schedule TO of Purchaser filed on June
15, 2000).
(d)(1) Agreement and Plan of Merger, dated as of June 5, 2000,
between Purchaser and the Company. (included as Annex B to the
Offer to Purchase which is incorporated herein by reference to
Exhibit (a)(1)(i)) to the Schedule TO of Purchaser filed on
June 15, 2000).
(d)(2) Stockholder Agreement, dated as of June 5, 2000, among certain
stockholders and the Company (included as Annex C to the Offer
to Purchase which is incorporated herein by reference to
Exhibit (a)(1)(i)) to the Schedule TO of Purchaser filed on
June 15, 2000).
(f) Section 262 of the Delaware General Corporation Law (included
as Schedule II to the Offer to Purchase which is incorporated
herein by reference to Exhibit (a)(1)(i)) to the Schedule TO
of Purchaser filed on June 15, 2000).
<PAGE>
(g) Not applicable.
(h) Not applicable.
<PAGE>
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.
THE CHERRY CORPORATION
/s/ Dan A. King
Dan A. King, Chief Financial Officer
July 10, 2000
