<PAGE>
EXHIBIT 99(a)(1)(i)
Grubb & Ellis Company
Offer to Purchase for Cash up to
7,000,000 Shares of its Common Stock
at a Purchase Price of $7.00 Per Share
The offer, proration period and withdrawal rights will expire at 5:00
p.m., New York City time, on Wednesday, January 17, 2001, unless the offer
is extended.
Grubb & Ellis Company ("Grubb & Ellis" or the "Company") hereby offers to
purchase up to 7,000,000 shares of its common stock, $0.01 par value, at a
price of $7.00 per share, net to the seller in cash, without interest, upon
the terms and subject to the conditions described in this Offer to Purchase
and in the related Letter of Transmittal which, as amended or supplemented
from time to time, together constitute the offer. The number of shares to be
purchased by Grubb & Ellis includes shares that may be tendered upon
conditional exercise of vested stock options with an exercise price of less
than $7.00 per share ("Option Shares"), as described in Section 3. As used in
this Offer to Purchase, unless otherwise noted, the term "shares" includes
Option Shares. The relevant Memo to Optionees and Notice of Instructions
(Options) applicable to tenders of Option Shares, Notice to ESPP Participants
and Tender Instruction Form for ESPP Shares applicable to shares held in
accounts under the Grubb & Ellis Employee Stock Purchase Plan ("ESPP Shares")
and Letter to Participants and Trustee Direction Form applicable to shares
held in the Grubb & Ellis 401(k) Plan ("401(k) Plan Shares") described in
Section 3 are also part of the terms of the offer.
Only shares properly tendered and not properly withdrawn will be purchased.
Since certain stockholders have indicated that they intend to tender an
aggregate of more than 7,000,000 shares, it is expected that tendered shares
will be purchased on a pro rata basis, with appropriate adjustments to avoid
the purchase of fractional shares, except for "odd lots" which will be
purchased on a priority basis. Shares not purchased in the offer will be
returned as promptly as practicable following the Expiration Date (as defined
in Section 1). See Section 3.
The offer is not conditioned on any minimum number of shares being
tendered. However, the offer is subject to other conditions, including Grubb &
Ellis having obtained sufficient financing to purchase shares pursuant to the
offer and to pay related fees and expenses. See Section 7.
The shares are listed and traded on the New York Stock Exchange ("NYSE")
under the symbol "GBE." On December 4, 2000, the last full trading day before
the announcement of the offer, the last reported sale price of the shares on
the NYSE Composite Tape was $4.625 per share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 8.
None of Grubb & Ellis, its Board of Directors, the Dealer Manager or the
Information Agent makes any recommendation to you as to whether to tender or
refrain from tendering your shares. You must make your own decision as to
whether to tender your shares and, if so, how many shares to tender. In doing
so, you should read carefully the information in this Offer to Purchase and in
the related Letter of Transmittal, including the Company's reasons for making
the offer. See Section 2. Certain major stockholders, directors and officers
of Grubb & Ellis have indicated that they intend to tender, in the aggregate,
approximately 15,584,149 shares beneficially owned by them (including shares
underlying certain exercisable warrants and options). See Section 11.
If you wish to tender all or any part of the shares registered in your
name, you should follow the instructions described in Section 3 carefully,
including completing a Letter of Transmittal in accordance with the
instructions and delivering it, along with your share certificates and any
other required items, to Computershare Trust Company of New York, the
Depositary. If your shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, you should contact the
nominee if you desire to tender your shares.
<PAGE>
If you desire to tender your shares and certificates for your shares are
not immediately available or cannot be delivered to the Depositary, or you
cannot comply with the procedure for book-entry transfer, or your other
required documents cannot be delivered to the Depositary by the Expiration
Date, you must tender your shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
Optionees holding Option Shares granted under the Grubb & Ellis 1990
Amended and Restated Stock Option Plan, as amended and the Grubb & Ellis 1998
Stock Option Plan, as amended (together, the "Stock Option Plans"),
participants in the Grubb & Ellis Employee Stock Purchase Plan (the "ESPP")
and the Grubb & Ellis 401(k) Plan (the "401(k) Plan") who wish to tender any
of their shares held in accounts under these plans, and holders of warrants to
purchase shares who wish to tender any of such shares, must follow the
separate instructions and procedures described in Section 3.
You may request additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery from the Information Agent at
its address and telephone numbers set forth on the back cover of this Offer to
Purchase.
Grubb & Ellis has not authorized any person to make any recommendation on
its behalf as to whether you should tender or refrain from tendering your
shares in the offer. You should rely only on the information contained in this
document or to which Grubb & Ellis has referred you. Grubb & Ellis has not
authorized anyone to provide you with information or to make any
representation on behalf of us in connection with the offer other than those
contained in this Offer to Purchase, the related Letter of Transmittal or in
the other documents that constitute a part of the offer. If given or made, you
should not rely on that information or representation as having been
authorized by Grubb & Ellis or the Dealer Manager.
The Dealer Manager for the offer is:
[LOGO OF BANC OF AMERICA SECURITIES LLC]
December 15, 2000
<PAGE>
SUMMARY TERM SHEET
This summary highlights the most material information from this Offer to
Purchase. To understand the offer fully and for a more complete description of
the terms of the offer, you should read carefully this entire Offer to
Purchase, the Letter of Transmittal and the other documents that constitute
part of the offer. We have included page references to direct you to a more
complete description of the topics in this summary.
What security is Grubb & Ellis offering to purchase? (Page 1)
. We are offering to purchase up to 7,000,000 shares of our common stock that
stockholders properly tender in the offer.
. Certain of our major stockholders, directors and officers have indicated
that they intend to tender, in the aggregate, approximately 15,584,149
shares beneficially owned by them (including shares underlying certain
exercisable warrants and options).
. As a result, we expect that we will purchase tendered shares on a pro rata
basis, with appropriate adjustments to avoid the purchase of fractional
shares, except for "odd lots" which we will purchase on a priority basis.
How much will Grubb & Ellis pay me for my shares and in what form of payment?
(Page 13)
. We will pay you a price of $7.00 per share, net to you in cash, for each of
your shares that is properly tendered and not properly withdrawn and is
purchased in the offer. We will make this payment as soon as practicable
after the expiration of the offer period and determination of the proration
factor.
. Under no circumstances will we pay interest on the purchase price,
including but not limited to, by reason of any delay in making payment.
Does Grubb & Ellis have the financial resources to pay me for my shares? (Page
17)
. We intend to obtain approximately $40 million of the approximately $50
million of funds required to purchase the shares in the offer and pay
related fees and expenses through an amended credit facility, which we
intend to enter into prior to the expiration of the offer, and the
remainder from cash from operations. Bank of America, N.A., and certain
other lenders have provided a commitment, subject to customary conditions,
to provide up to $55 million under the amended credit facility. The offer
is conditioned upon our having obtained sufficient financing on terms and
conditions satisfactory to us.
When does the tender offer expire? Can Grubb & Ellis extend the offer, and if
so, how will I be notified? (Page 30)
. The offer expires on Wednesday, January 17, 2001, at 5:00 p.m., New York
City time, unless it is extended by us.
. We may extend the offer at any time.
. We cannot assure you that we will extend the offer or, if we extend it, for
how long.
. If we extend the offer, we will make a public announcement of the extension
no later than 9:00 a.m. on the next business day following the previously
scheduled expiration of the offer.
What is the purpose of the offer? (Page 4)
. The offer allows stockholders an opportunity to sell all or a portion of
their investment in Grubb & Ellis at a premium over the recent stock price.
. At the same time, we believe that the offer is an attractive use of our
financial resources, will result in a more appropriate capital structure
for us, and will allow us to maintain the financial flexibility we need to
continue to execute our strategic plan. Accordingly, we believe that the
offer is consistent with our corporate goal of increasing long-term
stockholder value.
. However, stockholders who choose not to tender their shares may also
benefit from the offer. Non-tendering stockholders will own a greater
interest in a company with potentially stronger earnings per share.
i
<PAGE>
What are the most significant conditions to the offer? (Page 15)
. Our obligation to accept for payment, purchase and pay for any shares
tendered depends upon a number of conditions, including:
(a) We shall have obtained approximately $40 million of long-term financing
on terms and conditions satisfactory to us, in our reasonable judgment.
(b) No legal action shall have been threatened, pending or taken, that
might adversely affect the offer.
(c) No one shall have proposed, announced or made a tender or exchange
offer (other than the offer), merger, business combination or other
similar transaction involving us.
How do I tender my shares? (Page 8)
. If you are the registered holder of your shares and decide to tender your
shares, you must:
(a) Deliver your shares by mail, physical delivery or book-entry transfer
and deliver a completed and signed Letter of Transmittal or an Agent's
Message to the Depositary before 5:00 p.m. on Wednesday, January 17,
2001, or such later time and date to which we may extend the offer; or
(b) If certificates for your shares are not immediately available for
delivery to the Depositary, comply with the guaranteed delivery
procedure before 5:00 p.m. on Wednesday, January 17, 2001, or such
later time and date to which we may extend the offer; or
(c) If you hold your shares through a broker, dealer, commercial bank,
trust company or other nominee, you must contact the nominee if you
wish to tender your shares.
. Contact the Information Agent, the Dealer Manager or your broker for
assistance. The contact information for the Information Agent and the
Dealer Manager is on the back cover page of this Offer to Purchase.
. Holders of vested options with an exercise price of less than $7.00 per
share granted under the Grubb & Ellis Company 1990 Amended and Restated
Stock Option Plan, as amended, and the Grubb and Ellis 1998 Stock Option
Plan, as amended, may either:
(a) conditionally exercise such options (that is, exercise them if and only
to the extent that the Option Shares are purchased in the offer) on a
"cashless" basis and tender the underlying Option Shares by following
the special instructions and procedures for optionees described in
Section 3, or
(b) exercise their vested options and tender shares issued upon exercise by
following the instructions and procedures for tendering stockholders
described in Section 3.
. Holders of warrants may exercise their warrants and tender shares issued
upon exercise by following the instructions and procedures described in
Section 3.
. Participants in the Grubb & Ellis Employee Stock Purchase Plan and the
Grubb & Ellis 401(k) Plan who wish to tender any of the shares held on
their behalf in those plans must instruct the plan administrator and plan
trustee, respectively, to tender their shares by following the instructions
and procedures described in Section 3.
. Holders of shares which were not exchanged in the one-for-five stock split
as of January 29, 1993 may tender their shares by following the
instructions and procedures described in Section 3.
Until what time can I withdraw previously tendered shares? (Page 13)
. You may withdraw your tendered shares at any time before 5:00 p.m. on
Wednesday, January 17, 2001 or such later time and date to which we may
extend the offer, and, unless we have already accepted your shares for
payment by us, at any time after February 13, 2001.
In what order will tendered shares be purchased? Will tendered shares be
prorated? (Page 2)
. First, We will purchase shares from all holders of "odd lots" of less than
100 shares (not including any ESPP Shares, 401(k) Plan Shares or Option
Shares) who properly tender all of their shares; and
ii
<PAGE>
. Second, after purchasing all shares from the "odd lot holders," we will
then purchase shares from all other stockholders who properly tender shares
on a pro rata basis, with appropriate adjustments to avoid the purchase of
fractional shares, subject to the conditional tender provisions described
in Section 6 and in the order of priority, if any, designated by registered
holders tendering shares, optionees tendering shares underlying options,
and participants in our Employee Stock Purchase Plan and 401(k) Plan
tendering shares held in accounts under those plans, as described in
Section 1.
. Since certain stockholders have indicated that they intend to tender an
aggregate of more than 7,000,000 shares, it is expected that we will
purchase tendered shares on a pro rata basis (except for "odd lots" which
we will purchase on a priority basis).
What do Grubb & Ellis and its Board of Directors think of the offer? (Page 1)
. While our Board of Directors has authorized the offer, none of the Company,
the Board, the Dealer Manager or the Information Agent makes any
recommendation to you as to whether to tender or refrain from tendering
your shares.
. Certain of our major stockholders, directors and officers have indicated
that they intend to tender, in the aggregate, approximately 15,584,149
shares beneficially owned by them (including shares underlying certain
exercisable warrants and options).
. You must decide whether to tender your shares and, if so, how many shares
to tender. We expect that shares tendered by stockholders (other than
holders of odd lots) will be prorated.
What is the recent market price of my shares? (Page 17)
. On December 4, 2000, the last full trading day before the announcement of
the offer, the last reported sale price of the shares on the NYSE Composite
Tape was $4.625 per share.
. On December 13, 2000, the most recent practicable trading day prior to the
commencement of the offer, the last reported sale price of the shares on
the NYSE Composite Tape was $5.50 per share.
. Stockholders are urged to obtain current market quotations for their
shares.
Who do I contact if I have questions about the tender offer?
For additional information or assistance, you may contact:
. Information Agent:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms Call:
(800) 654-2468
Stockholders Please Call:
(800) 607-0088
. Dealer Manager:
BANC OF AMERICA SECURITIES LLC
9 W. 57th Street
New York, NY 10019
(212) 583-8537
1-888-583-8900 ext. 8537
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
<C> <S> <C>
SUMMARY TERM SHEET...................................................... i
INTRODUCTION............................................................ 1
THE OFFER............................................................... 2
1. Number of Shares; Purchase Price; Proration........................ 2
2. Purpose of the Offer; Certain Effects of the Offer................. 4
3. Procedures for Tendering Shares.................................... 8
4. Withdrawal Rights.................................................. 13
5. Purchase of Shares and Payment of Purchase Price................... 13
6. Conditional Tender of Shares....................................... 14
7. Conditions of the Offer............................................ 15
8. Price Range of Shares.............................................. 17
9. Source and Amount of Funds......................................... 17
10. Certain Information Concerning Grubb & Ellis....................... 18
11. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares................................ 25
12. Effects of the Offer on the Market for Shares; Registration Under
the Exchange Act.................................................. 27
13. Certain Legal Matters; Regulatory Approvals........................ 27
14. Certain United States Federal Income Tax Consequences.............. 28
15. Extension of the Offer; Termination; Amendment..................... 30
16. Fees and Expenses.................................................. 31
17. Miscellaneous...................................................... 32
</TABLE>
(iv)
<PAGE>
FORWARD LOOKING STATEMENTS
This Offer to Purchase, including the Summary, the Introduction, Section 2
and Section 10, contains statements that are not historical facts and
constitute projections, forecasts or forward-looking statements. When we use
words such as "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "may," "should" or similar expressions, or when we discuss our
strategy or plans, we are making projections, forecasts or forward-looking
statements. These statements are not guarantees of performance. They involve
risks, uncertainties and assumptions that could cause our future results and
stockholder value to differ materially from those expressed in these
statements. Many of the factors that will determine these results and value
are beyond our ability to control or predict. These statements are necessarily
based upon various assumptions involving judgments with respect to the future.
These risks and uncertainties include, among others:
. the volume of transactions and prices for real estate in the real estate
markets generally;
. a general or regional or local market economic downturn that would
create a recession in the real estate markets;
. the definitive terms of the credit facilities pursuant to which the
Company expects to obtain the financing necessary to complete the offer;
. the Company's increased debt level and ability to make principal and
interest payments;
. expenses or capital requirements related to initiatives, investments in
people, technology and service improvements;
. the success of new initiatives and investments;
. the ability of the Company to integrate acquired companies and assets;
. control by existing stockholders; and
. other factors described in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 2000 and in the Quarterly Report on Form
10-Q for the quarter ended September 30, 2000. See Section 10.
. Please be advised that the safe harbor protections of the Private
Securities Litigation Reform Act of 1995 are not available to statements
made in connection with a tender offer.
(v)
<PAGE>
To the Holders of Common Stock of Grubb & Ellis Company:
INTRODUCTION
Grubb & Ellis Company hereby offers to purchase up to 7,000,000 shares of
its common stock, par value $0.01, at a price of $7.00 per share, net to the
seller in cash, without interest. Grubb & Ellis' offer is being made upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal which, as amended or supplemented from time
to time, together constitute the offer. The number of shares to be purchased
by Grubb & Ellis includes Option Shares as described in Section 3. As used in
this Offer to Purchase, unless otherwise noted, the term "shares" includes
Option Shares. The relevant Memo to Optionees and Notice of Instruction
(Options) applicable to tenders of Option Shares, Notice to ESPP Participants
and Tender Instruction Form for ESPP Shares and Letter to Participants and
Trustee Direction Form applicable to 401(k) Plan Shares described in Section 3
are also part of the terms of the offer.
Only shares properly tendered and not properly withdrawn will be purchased.
Since certain stockholders have indicated that they intend to tender an
aggregate of more than 7,000,000 shares, it is expected that tendered shares
will be purchased on a pro rata basis, with appropriate adjustments to avoid
the purchase of fractional shares, except for "odd lots" which will be
purchased on a priority basis. See Section 1. Shares not purchased because of
proration or conditional tenders will be returned as promptly as practicable
following the Expiration Date. See Section 3.
The offer is not conditioned on any minimum number of shares being
tendered. The offer is, however, subject to other conditions, including Grubb
& Ellis having obtained sufficient financing to purchase shares pursuant to
the offer and to pay related fees and expenses. See Section 7.
The Board of Directors of Grubb & Ellis has authorized the offer. However,
none of Grubb & Ellis, its Board of Directors, the Dealer Manager or the
Information Agent makes any recommendation to you as to whether to tender or
refrain from tendering your shares. You must make your own decision whether to
tender your shares and, if so, how many shares to tender. In doing so, you
should consider Grubb & Ellis' reasons for making the offer. See Section 2.
Certain major stockholders, directors and officers of Grubb & Ellis have
indicated that they intend to tender, in the aggregate, approximately
15,584,149 shares beneficially owned by them (including shares underlying
certain exercisable warrants and options). See Section 11.
If, as expected, at the expiration of the offer more than 7,000,000 shares
(or a greater number of shares as Grubb & Ellis may elect to purchase--see
below) are properly tendered and not properly withdrawn, Grubb & Ellis will
buy shares first from all Odd Lot Holders (as defined in Section 1) who
properly tender all their shares, and second, on a pro rata basis from all
other stockholders who properly tender shares, subject to any conditional
tenders and appropriate adjustments to avoid the purchase of fractional
shares. See Section 1.
The purchase price will be paid net to the tendering stockholders in cash,
without interest, for all shares purchased. Tendering stockholders who hold
shares registered in their own name and who tender their shares directly to
the Depositary, holders of options who conditionally exercise their options
and tender the underlying Option Shares and holders of ESPP Shares and 401(k)
Plan Shares who tender such shares will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter of
Transmittal, stock transfer taxes on the purchase of shares by Grubb & Ellis
in the offer. Stockholders holding shares through brokers, dealers, commercial
banks, trust companies or other nominees are urged to consult such nominees to
determine whether transaction costs may apply if stockholders tender shares
through such nominees and not directly to the Depositary. See Sections 3 and
14 regarding certain tax consequences of the offer.
Grubb & Ellis will pay all fees and expenses incurred in connection with
the offer by Computershare Trust Company of New York, the Depositary for the
offer, Morrow & Co., Inc., the Information Agent for the offer, Banc of
America Securities LLC, the Dealer Manager for the offer, E*TRADE Business
Solutions, the administrator of the ESPP and the Stock Option Plans, and
Fidelity Management Trust Company, the Trustee of the 401(k) Plan. See Section
16.
1
<PAGE>
As of December 8, 2000, Grubb & Ellis had 19,934,622 issued and outstanding
shares, 2,629,505 shares reserved for issuance upon exercise of outstanding
stock options under the Stock Option Plans (of which options to purchase
855,305 shares have an exercise price of less than $7.00 and are or will be
vested by January 17, 2001), and 2,285,899 shares reserved for issuance upon
exercise of outstanding warrants. The 7,000,000 shares that Grubb & Ellis is
offering to purchase pursuant to the offer represent approximately 33% of
Grubb & Ellis' shares outstanding (including the 855,305 Option Shares, and
348,541 shares issuable upon exercise of warrants that are expected to be
tendered) on December 8, 2000. The shares are listed and traded on the New
York Stock Exchange under the symbol "GBE." On December 4, 2000, the last full
trading day before the announcement of the offer, the last reported sale price
of the shares as reported on the NYSE Composite Tape was $4.625 per share. On
December 13, 2000, the most recent practicable trading date prior to
commencement of the offer, the last reported sale price of the shares was
$5.50 per share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES. See Section 8.
Special Information for Holders of Certain Types of Shares
Holders of shares held in accounts under the ESPP or the 401(k) Plan and of
vested options under the Stock Option Plans with an exercise price of less
than $7.00 per share who wish to tender their ESPP Shares, 401(k) Plan Shares
or Option Shares, respectively, must follow the procedures described in
Section 3 under "Special Procedures for Holders of Option Shares, ESPP Shares
and 401(k) Plan Shares." Instructions for the tender of ESPP Shares and 401(k)
Plan Shares must be received by the parties named in Section 3 at least three
business days prior to the Expiration Date. Instructions for the conditional
exercise of options and tender of Option Shares must be received by Grubb &
Ellis at least five business days prior to the Expiration Date. Section 14
sets forth information about tax considerations with respect to tenders of
Option Shares, ESPP Shares and 401(k) Plan Shares.
Holders of warrants may exercise their warrants and tender shares issued
upon exercise by following the instructions described in Section 3.
Holders of shares which were not exchanged in the one-for-five stock split
as of January 29, 1993 may tender their shares by following the instructions
described in Section 3.
THE OFFER
1. Number of Shares; Purchase Price Proration.
Upon the terms and subject to the conditions of the offer, Grubb & Ellis
will purchase up to 7,000,000 shares properly tendered and not properly
withdrawn in accordance with Section 4 before the Expiration Date, as defined
below, at a price of $7.00 per share, net to the seller in cash, without
interest.
The term "Expiration Date" means 5:00 p.m., New York City time, on
Wednesday, January 17, 2001. Grubb & Ellis may, in its sole discretion, extend
the period of time during which the offer will remain open. In the event of an
extension, the term "Expiration Date" will refer to the latest time and date
at which the offer, as extended by Grubb & Ellis, will expire. See Section 15
for a description of the Company's right to extend, delay, terminate or amend
the offer.
In accordance with Instruction 5 of the Letter of Transmittal, stockholders
desiring to tender shares must specify the number of shares they are willing
to sell to Grubb & Ellis.
Only shares properly tendered and not properly withdrawn will be purchased.
Since certain stockholders have indicated that they intend to tender an
aggregate of more than 7,000,000 shares, it is expected that tendered shares
will be purchased on a pro rata basis (other than odd lots which will be
purchased on a priority basis). All shares tendered and not purchased pursuant
to the offer, including shares not purchased because of proration or
conditional tenders, will be returned to the tendering stockholders at Grubb &
Ellis' expense as promptly as practicable following the Expiration Date. The
proration period also expires on the Expiration Date.
2
<PAGE>
Grubb & Ellis reserves the right to purchase more than 7,000,000 shares
pursuant to the offer. In accordance with applicable regulations of the
Securities and Exchange Commission, Grubb & Ellis may purchase pursuant to the
offer an additional amount of shares not to exceed 2% of the outstanding
shares without amending or extending the offer. See Section 15.
If Grubb & Ellis (1) increases or decreases the price that may be paid for
shares above or below $7.00 per share, (2) increases the number of shares that
it may purchase in the offer by more than 2% of the outstanding shares or (3)
decreases the number of shares that it may purchase in the offer, then the
offer must remain open for at least ten business days following the date that
notice of the increase or decrease is first published, sent or given in the
manner specified in Section 15.
Priority of Purchases. If, as expected, more than 7,000,000 shares (or a
greater number of shares as Grubb & Ellis may elect to purchase) have been
properly tendered and not properly withdrawn before the Expiration Date, Grubb
& Ellis will purchase properly tendered shares on the basis set forth below:
. First, Grubb & Ellis will purchase all shares tendered by any Odd Lot
Holder (as defined below) who:
(1) tenders all shares owned beneficially or of record by the Odd Lot
Holder (tenders of less than all of the shares owned by the Odd Lot
Holder will not qualify for this preference); and
(2) completes the section entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed
Delivery.
. Second, after the purchase of all of the shares properly tendered by Odd
Lot Holders, subject to the conditional tender provisions described in
Section 6, Grubb & Ellis will purchase all other shares tendered on a
pro rata basis, with appropriate adjustments to avoid purchases of
fractional shares, as described below.
If, as expected, more than 7,000,000 shares have been tendered, ESPP
Shares, Option Shares and 401(k) Plan Shares will each be separately subject
to the same proration as all other shares, with the following additional
administrative rules applicable to the ESPP Shares and Option Shares and those
instructions set forth in Section 3:
. Stockholders tendering ESPP Shares may direct Grubb & Ellis to purchase
shares in a specific order. If the holder of ESPP Shares does not so
direct, Grubb & Ellis will purchase the ESPP Shares in order of their
original purchase price beginning with the lowest purchase price.
. Optionees who are eligible to conditionally exercise their options and
tender the resulting Option Shares may direct the order in which such
options will be exercised. If the optionee does not so direct, then
options will be exercised based on exercise price, with the lowest
priced options exercised first.
Odd Lots. The term "odd lots" means all shares tendered by any person (an
"Odd Lot Holder") who owned beneficially or of record an aggregate of fewer
than 100 shares (not including any ESPP Shares, 401(k) Plan Shares or Option
Shares) and so certified in the appropriate place on the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery. To qualify for this
preference, an Odd Lot Holder must tender all shares owned by the Odd Lot
Holder in accordance with the procedures described in Section 3. Odd lots will
be accepted for payment before any proration of the purchase of other tendered
shares. This preference is not available to partial tenders or to beneficial
or record holders of an aggregate of 100 or more shares, even if these holders
have separate accounts or certificates representing fewer than 100 shares, or
with respect to any ESPP Shares, 401(k) Plan Shares or Option Shares. By
tendering in the offer, an Odd Lot Holder who holds shares in its name and
tenders its shares directly to the Depositary would not only avoid the payment
of brokerage commissions, but also would avoid any applicable odd lot
discounts in a sale of the holder's shares. Any Odd Lot Holder wishing to
tender all of the stockholder's shares pursuant to the offer should complete
the section entitled "Odd Lots" in the Letter of Transmittal and, if
applicable, in the Notice of Guaranteed Delivery.
3
<PAGE>
Any stockholder who holds certificates representing fewer than 500 shares
of the Company's common stock which were issued before January 29, 1993 and
were not exchanged in the one-for-five reverse stock split at that time, and
does not hold, beneficially or of record, any other shares, could tender their
shares under the "Odd Lot" provisions, because such certificates represent,
upon exchange, fewer than 100 shares. See Section 3 for instructions for
tendering certificates for shares not exchanged in the one-for-five reverse
stock split.
Grubb & Ellis also reserves the right, but will not be obligated, to
purchase all shares properly tendered by any stockholder who tenders any
shares owned beneficially or of record and who, as a result of proration,
would then own beneficially or of record an aggregate of fewer than 100
shares. If Grubb & Ellis exercises this right, it will increase the number of
shares that it is offering to purchase in the offer by the number of shares
purchased through the exercise of the right.
Proration. If, as expected, proration of tendered shares is required, Grubb
& Ellis will determine the proration factor as promptly as practicable
following the Expiration Date. Proration for each stockholder tendering
shares, other than Odd Lot Holders, will be based on the ratio of the number
of shares tendered by the stockholder to the total number of shares tendered
by all stockholders, other than Odd Lot Holders, subject to conditional
tenders. Because of the difficulty in determining the number of shares
properly tendered and not properly withdrawn, and because of the odd lot
procedure described above and the conditional tender procedure described in
Section 6, Grubb & Ellis does not expect that it will be able to announce the
final proration factor or commence payment for any shares purchased pursuant
to the offer until approximately seven business days after the Expiration
Date. The preliminary results of any proration will be announced by press
release as promptly as practicable after the Expiration Date. Stockholders may
obtain preliminary proration information from the Dealer Manager or the
Information Agent and also may be able to obtain the information from their
brokers.
As described in Section 14, the number of shares that Grubb & Ellis will
purchase from a stockholder pursuant to the offer may affect the United States
federal income tax consequences to the stockholder of the purchase and,
therefore, may be relevant to a stockholder's decision whether or not to
tender shares. The Letter of Transmittal affords each stockholder who tenders
shares registered in such stockholder's name directly to the Depositary the
opportunity to designate the order of priority in which shares tendered are to
be purchased in the event of proration as well as the ability to condition
such tender on a minimum number of shares being purchased. See Section 6.
Holders of ESPP Shares and Option Shares have the opportunity to designate the
order in which such shares will be purchased in the event less than all of
such shares tendered are purchased as a result of proration. Holders of ESPP
Shares and Option Shares are urged to read the instruction letters delivered
to them with this Offer to Purchase.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of the shares and will be furnished to brokers, dealers and
other nominee stockholders and similar persons whose names, or the names of
whose nominees, appear on Grubb & Ellis' stockholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of shares.
2. Purpose of the Offer; Certain Effects of the Offer.
In 1997 Grubb & Ellis commenced a three-year rebuilding program that
focused on transforming the Company from a national transaction-focused
brokerage firm to a global, full-service provider of real estate services,
returning Grubb & Ellis to profitability and improving annual revenue growth
and the condition of its balance sheet. The Company pursued several
initiatives designed to help meet its goal of enhancing the quality of its
service lines and expanding and diversifying sources of revenue beyond
traditional commercial brokerage and property and facilities management. These
strategic initiatives included
. continuing to build its Corporate Services Group and Institutional
Services Group,
. expanding its national affiliate program,
4
<PAGE>
. investing in technology systems designed to provide a scalable platform
for growth and efficiently deliver and share data with clients,
. completing several acquisitions that reinforced its strategy of
increasing its presence in key markets, and
. establishing a global strategic alliance with Knight Frank, a London
based international real estate services company.
In August 1999, Grubb & Ellis announced an open market stock repurchase
program to repurchase up to $3,000,000 of its common stock from time to time
as market conditions warranted. The Company has purchased 359,900 shares of
common stock pursuant to that program at a total cost of approximately
$1,938,000.
In March 2000, as part of its continuing goal of enhancing stockholder
value, Grubb & Ellis engaged Banc of America Securities LLC ("BAS") to assist
the Board and management in reviewing and evaluating strategic alternatives,
including a potential acquisition or merger or sale of the Company. As part of
such review, a number of potential buyers, both strategic and financial, for
the Company were identified and contacted. This process accelerated following
the resignation of the Company's chief executive officer in May 2000. A number
of companies reviewed information concerning the Company and a few provided
preliminary indications of interest with respect to a possible acquisition of
the Company. No offer was made or agreement was reached with any of these
companies concerning the acquisition of the Company.
In October 2000, the Board, in conjunction with its financial advisor, BAS,
continued to review the strategic alternatives of the Company. The process of
evaluating the strategic alternatives reinforced the Board of Directors'
belief that Grubb & Ellis is an industry leader. The Board concluded, as a
result of the process, that the value of the Company's business is not
reflected in its stock price today, and that an investment in Grubb & Ellis
could be an effective and efficient use of the Company's capital. The Board
therefore appointed a special committee of independent directors to consider a
self-tender offer by the Company for the shares and to make recommendations to
the Board regarding the terms and conditions of an offer. The special
committee, following its review and with the advice and assistance of BAS,
recommended that the Board approve a self-tender offer for up to 7,000,000
shares at $7.00 per share through the use of not more than $40 million of debt
and approximately $10 million of operating cash flow. Following further
review, the Board concluded that the interests of the Company and its
stockholders, employees and clients are best served at this time by Grubb &
Ellis remaining independent and continuing to invest in the Company's
infrastructure, including employees, and pursue strategic acquisitions that
have the potential to broaden its geographic reach, increase its market share
and/or expand the depth and breadth of its current lines of business. Upon the
special committee's recommendations, and upon the advice of BAS and counsel,
the full Board, by vote of all directors present, approved the offer. After
the close of business on December 4, 2000, the Company announced its intention
to make the offer.
In connection with its decision to pursue the offer, the Board determined
to accelerate its search for a new chief executive officer. The Company has
retained the executive search firm of Seiden Krieger Associates, Inc. to lead
the process. Until a CEO is selected, three members of senior management--
Maureen A. Ehrenberg, President of Grubb & Ellis Management Services, Inc.,
John G. Orrico, President of Real Estate Advisory Services, and Brian D.
Parker, Executive Vice President--will continue to manage the Company's day-
to-day activities. The Company may make changes in these executives'
compensation in light of their increased responsibilities.
In considering the offer, the Board took into account the expected
financial impact of the offer, including the Company's increased long-term
obligations under its bank credit agreement as a result of the offer, as
described in Section 9. The Board believes that, in light of Grubb & Ellis'
financial condition and outlook and current market conditions, including
recent trading prices of the common stock, the offer is an attractive use of
the Company's financial resources as it will
. provide liquidity to stockholders at a premium to the recent stock
price,
5
<PAGE>
. result in a more appropriate capital structure for the Company, and
. allow the Company to maintain the financial flexibility it needs to
continue to execute its strategic plan.
Accordingly, the Company believes that the offer is consistent with its
corporate goal of increasing long-term stockholder value. After the offer is
completed, assuming the incurrence of $40 million of debt for the repurchase,
the Company believes that its capital structure will be strong enough to allow
it to continue to make the necessary investments in technology, people and
service delivery as well as to make selective synergistic acquisitions. Grubb
& Ellis believes that its anticipated cash flow from operations, access to
credit facilities and capital markets, and financial condition will, taken
together, be adequate for its needs for the foreseeable future. However,
actual experience may differ significantly from the Company's expectations.
Future events, such as the condition of the real estate markets, regulatory
developments, adverse effects on operations, or levels of capital and other
expenditures, could have the effect of reducing the Company's available cash
or might reduce or adversely affect the availability or cost of external
financial resources. Grubb & Ellis expects that its strategic review,
including the write-off of certain deferred costs incurred in connection with
amending its credit facilities to provide funds for the offer, will impact
earnings in its second quarter ending December 31, 2000. As such, as announced
on December 4, 2000, the Company expects to report earnings of approximately
$.20 per diluted share, which is below then current analyst estimates.
The offer allows stockholders an opportunity
. to sell a portion of their investment in Grubb & Ellis at a premium over
the recent stock price while retaining a continuing equity interest in
the Company, and
. to sell shares for cash without the usual transaction costs associated
with open market sales, subject to the terms and conditions of the offer
(including proration) and, if such shares are held through a broker,
dealer, commercial bank, trust company or other nominee and tendered by
such nominee, subject to any transaction costs assessed by the nominee,
and allows Odd Lot Holders who hold shares in their names and tender all of
their shares directly to the Depositary, and whose shares are purchased
pursuant to the offer, to avoid the payment of brokerage commissions and any
applicable odd lot discounts payable on a sale of their shares in an NYSE
transaction.
Stockholders who determine not to accept the offer will realize a
proportionate increase in their relative ownership interest in the Company and
thus in its future earnings and assets. There can be no assurance that the
Company will not issue additional shares and other equity securities in the
future. Non-tendering stockholders will own a greater interest in a company
with potentially stronger earnings per share, although Grubb & Ellis cannot
assure you that it will achieve that earnings per share growth.
Stockholders may be able to sell shares which are not tendered, or tendered
and not purchased, in the offer in the future on the NYSE or otherwise, at a
net price higher than the purchase price in the offer. Grubb & Ellis can give
no assurance, however, as to the price at which a stockholder may be able to
sell his or her shares in the future, which may be higher or lower than the
purchase price paid by the Company in the offer.
In addition, although it has no current plans to do so, following the offer
the Company may purchase additional shares in the open market (including
pursuant to the previously approved open market repurchase program), in
private transactions, through tender offers or otherwise, subject to
applicable regulations. Future purchases may be on the same terms or on terms
which are more or less favorable to stockholders than the terms of the offer.
However, Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prohibits Grubb & Ellis and its affiliates from purchasing
any shares other than pursuant to the offer, until at least ten business days
after the Expiration Date. Any future purchases by Grubb & Ellis, including
purchases pursuant to its open market repurchase program, will depend on many
factors, including:
. the market price of the shares;
. the results of the offer;
6
<PAGE>
. the Company's business and financial position; and
. general economic and market conditions.
In addition, Grubb & Ellis does not presently intend to repurchase shares if
such repurchases could have the effect of causing the common stock to be
delisted from the NYSE (see Section 12) or become eligible for termination of
registration under Section 12(g)(4) of the Exchange Act.
Shares that Grubb & Ellis acquires in the offer will immediately be
canceled and restored to the status of authorized but unissued shares and will
be available for the Company to issue without further stockholder action
(except as required by applicable law or stock exchange rules) for all
purposes including, but not limited to, the acquisition of other businesses,
the raising of additional capital and the satisfaction of obligations under
existing or future employee compensation plans. Grubb & Ellis has no current
plans for the issuance of shares repurchased pursuant to the offer.
Except as disclosed in this Offer to Purchase, Grubb & Ellis currently has
no plans, proposals or negotiations underway that relate to or would result
in:
. any extraordinary transaction, such as a merger, reorganization or
liquidation, involving Grubb & Ellis or any of its subsidiaries;
. any purchase, sale or transfer of a material amount of assets of Grubb &
Ellis or any of its subsidiaries, taken as a whole;
. any material change in the present dividend rate or policy, or
indebtedness or capitalization of Grubb & Ellis;
. any change in the present Board of Directors or management of Grubb &
Ellis, including, but not limited to, any plans or proposals to change
the number or the term of directors or to fill any existing vacancies on
the Board or to change any material term of the employment contract of
any executive officer;
. any other material change in Grubb & Ellis' corporate structure or
business;
. any class of equity securities of Grubb & Ellis to be delisted from a
national securities exchange;
. any class of equity securities of Grubb & Ellis becoming eligible for
termination of registration under Section 12(g)(4) of the Exchange Act;
. the suspension of Grubb & Ellis' obligation to file reports under
Section 15(d) of the Exchange Act;
. the acquisition by any person of additional securities of Grubb & Ellis,
or the disposition of securities of Grubb & Ellis; or
. any changes in Grubb & Ellis' charter, bylaws or other governing
instruments or other actions that could impede the acquisition of
control of Grubb & Ellis.
The Board of Directors of Grubb & Ellis has authorized the offer. However,
none of Grubb & Ellis, its Board of Directors, the Dealer Manager or the
Information Agent makes any recommendation to stockholders as to whether to
tender or refrain from tendering their shares, and neither has authorized any
person to make any recommendation. Stockholders are urged to evaluate
carefully all information in the offer, consult with their own investment and
tax advisors and make their own decision whether to tender and, if so, how
many shares to tender. Certain major stockholders, directors and officers of
Grubb & Ellis have indicated that they intend to tender an aggregate of
approximately 15,584,149 shares (including shares underlying certain
exercisable warrants and options). See Section 11.
7
<PAGE>
3. Procedures for Tendering Shares.
Proper Tender of Shares. For shares to be tendered properly pursuant to the
offer:
(1) the certificates for the shares, or confirmation of receipt of the
shares pursuant to the procedure for book-entry transfer set forth below,
together with a properly completed and duly executed Letter of Transmittal, or
a manually signed facsimile of the Letter of Transmittal, including any
required signature guarantees, or an Agent's Message (as defined below) in the
case of a book-entry transfer, and any other documents required by the Letter
of Transmittal, must be received before the Expiration Date by the Depositary
at its address set forth on the back cover of this Offer to Purchase; or
(2) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender shares pursuant to the offer must indicate the
number of shares being tendered.
In addition, Odd Lot Holders who tender all of their shares must complete
the section captioned "Odd Lots" in the Letter of Transmittal and, if
applicable, in the Notice of Guaranteed Delivery, to qualify for the
preferential treatment available to Odd Lot Holders as set forth in Section 1.
Stockholders holding their shares through a broker, dealer, commercial
bank, trust company or other nominee, must contact the nominee in order to
tender their shares. Stockholders who hold shares through nominee stockholders
are urged to consult their nominees to determine whether transaction costs may
apply if stockholders tender shares through the nominees and not directly to
the Depositary.
Stockholders may tender shares subject to the condition that all, a
specified minimum number of shares or none be purchased. Any stockholder
desiring to make such a conditional tender should so indicate in the box
captioned "Conditional Tender" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery. It is the tendering
stockholder's responsibility to determine the minimum number of shares to be
purchased. ESPP Shares, 401(k) Plan Shares and Option Shares are not eligible
for conditional tenders. STOCKHOLDERS SHOULD CONSULT THEIR OWN INVESTMENT AND
TAX ADVISORS WITH RESPECT TO THE EFFECT OF PRORATION OF THE OFFER AND THE
ADVISABILITY OF MAKING A CONDITIONAL TENDER. See Section 14.
Holders of vested options to purchase shares with an exercise price of less
than $7.00 per share who wish to conditionally exercise their options and
tender any of their Option Shares, and participants in the ESPP and 401(k)
Plan who wish to tender any of their ESPP Shares or 401(k) Plan Shares must
follow the separate instructions described below under "Special Procedures for
Holders of Option Shares, ESPP Shares and 401(k) Plan Shares." Optionees
holding vested options to purchase shares (without regard to exercise price)
may also exercise their options and tender the shares received upon exercise
in accordance with the instructions and procedures described in Section 3 with
respect to shares generally. Except for the conditional exercise of an option
in accordance with the Notice of Instructions (Options), the exercise of an
option cannot be revoked even if the shares received upon the exercise and
tendered in the offer are not purchased for any reason.
Warrants. Holders of warrants who wish to tender the underlying shares must
exercise the warrants and tender the shares received upon exercise in
accordance with the instructions and procedures described in this Section 3
with respect to shares generally. Holders of warrants may exercise the
warrants by delivery to the Company, c/o the Assistant General Counsel, 1646
N. California Blvd., Suite 500, Walnut Creek, CA 94596, of the warrants, along
with an exercise agreement and a request to exercise on a cashless basis or
the payment of the exercise price pursuant to the requirements of the
warrants. The warrants must be validly exercised at least five business days
prior to the Expiration Date in order for the Company to issue the shares in
sufficient time to permit their tender prior to the Expiration Date. In no
event are any warrants to be delivered to the Depositary in connection with a
tender of shares hereunder. An exercise of a warrant cannot be revoked even if
shares received upon the exercise and tendered in the offer are not purchased
in the offer for any reason.
8
<PAGE>
Unexchanged Shares. Holders of certificates representing shares issued
prior to January 29, 1993 that have not been exchanged for new shares
following the Company's one-for-five reverse stock split may tender such
shares by one of the procedures available for shares generally. Each share
represented by such certificates will be treated as .202418 shares for the
purpose of the offer. The reason for this treatment is that, effective
January 29, 1993, each five shares held were converted to one share, and in
addition, the Company redeemed certain preferred stock purchase rights which
were outstanding at the same time. The rights redeemed amounted to $.01 per
share, and each $3.92 in redeemed rights was equivalent to one share after the
reverse split. If less than all of such holder's shares are purchased in the
offer, the holder will receive from the Depositary certificates for shares
with the current CUSIP number representing the appropriate number of exchanged
shares in accordance with such ratio. Cash will be paid in lieu of any
fractional shares resulting from the exchange and tender of such shares.
Signature Guarantees and Method of Delivery. No signature guarantee is
required if:
(1) the Letter of Transmittal is signed by the registered holder of the
shares (which term, for purposes of this Section 3, will include any
participant in The Depository Trust Company (the "Book-Entry Transfer
Facility") whose name appears on a security position listing as the
owner of the shares) tendered and the holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal; or
(2) shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or an
"eligible guarantor institution," as the term is defined in Rule 17Ad-
15 under the Exchange Act (each of the foregoing constituting an
"Eligible Institution"). See Instruction 1 of the Letter of
Transmittal.
If a certificate for shares is registered in the name of a person other
than the person executing a Letter of Transmittal, or if payment is to be
made, or shares not purchased or tendered are to be issued, to a person other
than the registered holder, then the certificate must be endorsed or
accompanied by an appropriate stock power, signed in either case exactly as
the name of the registered holder appears on the certificate, with the
signature guaranteed by an Eligible Institution.
In all cases, payment for shares tendered and accepted for payment pursuant
to the offer will be made only after timely receipt by the Depositary of
certificates for the shares (or a timely confirmation of the book-entry
transfer of the shares into the Depositary's account at the Book-Entry
Transfer Facility, as described above), a properly completed and duly executed
Letter of Transmittal, or a manually signed facsimile of the Letter of
Transmittal, including any required signature guarantees, or an Agent's
Message (as defined below) in the case of a book-entry transfer, and any other
documents required by the Letter of Transmittal.
The method of delivery of all documents, including certificates for shares,
the Letter of Transmittal and any other required documents, is at the election
and risk of the tendering stockholder. If delivery is by mail, then registered
mail with return receipt requested, properly insured, is recommended. In all
cases, sufficient time should be allowed to ensure timely delivery.
Book-Entry Delivery. The Depositary will establish an account with respect
to the shares for purposes of the offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the shares by causing the
Book-Entry Transfer Facility to transfer shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (1) a
properly completed and duly executed Letter of Transmittal, or a manually
signed facsimile of the Letter of Transmittal, with any required signature
guarantees, or an Agent's Message, and any other required documents must be
transmitted to and received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase before the Expiration Date,
or (2) the guaranteed delivery procedure described below must be followed.
Delivery of the Letter of Transmittal and any other required documents to the
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
9
<PAGE>
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgement from the participant in the Book-Entry
Transfer Facility tendering shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Grubb &
Ellis may enforce such agreement against the participant.
Guaranteed Delivery. If a stockholder desires to tender shares pursuant to
the offer and the stockholder's share certificates are not immediately
available or cannot be delivered to the Depositary before the Expiration Date
(or the procedure for book-entry transfer cannot be completed on a timely
basis), or if time will not permit all required documents to reach the
Depositary before the Expiration Date, the shares still may be tendered, if
all of the following conditions are satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) the Depositary receives by hand, mail, overnight courier, telegram or
facsimile transmission, on or before the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially
in the form Grubb & Ellis has provided with this Offer to Purchase,
including (where required) a signature guarantee by an Eligible
Institution in the form set forth in the Notice of Guaranteed Delivery;
and
(3) the certificates for all tendered shares, in proper form for transfer
(or confirmation of book-entry transfer of the shares into the
Depositary's account at the Book-Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile of the Letter of Transmittal, or an Agent's
Message in the case of a book-entry transfer, and any required
signature guarantees and other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading
days after the date of receipt by the Depositary of the Notice of
Guaranteed Delivery.
Return of Unpurchased Shares. If any tendered shares are not purchased, or
if less than all shares evidenced by a stockholder's certificates are
tendered, certificates for unpurchased shares will be returned as promptly as
practicable after the expiration or termination of the offer or, in the case
of shares tendered by book-entry transfer at the Book-Entry Transfer Facility,
the shares will be credited to the appropriate account maintained by the
tendering stockholder at the Book-Entry Transfer Facility, in each case
without expense to the stockholder. ESPP Shares and 401(k) Plan Shares not
purchased will be returned to the administrator for the ESPP or the Trustee
for the 401(k) Plan, as applicable.
Special Procedures for Holders of Option Shares, ESPP Shares and 401(k)
Plan Shares.
Option Shares, ESPP Shares, and 401(k) Plan Shares may not be tendered by a
Letter of Transmittal. Proper tender may only be made by following the
separate instructions and procedures applicable to each type of shares that
are described below. Please note that the deadlines for submitting
instructions regarding the tender of Option Shares, ESPP Shares and 401(k)
Plan Shares are earlier than the Expiration Date. The deadline for submitting
the tender instructions for the ESPP Shares and 401(k) Plan Shares is three
business days prior to the Expiration Date. The deadline for submitting
instructions regarding the conditional exercise of options and the tender of
such underlying Option Shares is five business days prior to the Expiration
Date.
Option Shares. Optionees with vested (but unexercised) options to purchase
shares granted under the Stock Option Plans with an exercise price of less
than $7.00 per share may conditionally exercise some or all of such options as
part of the offer by instructing Grubb & Ellis to tender all of the Option
Shares resulting from the exercise. This exercise of options is "conditional"
because the optionee is deemed to exercise the option (and pay the exercise
price) only if and to the extent that the Company actually purchases the
Option Shares in the offer. If the Company does not purchase an Option Share,
the option for the Option Share will not be deemed exercised and will remain
outstanding. The Company will, as an accommodation to the optionees planning
to tender Option Shares in the offer, permit a "cashless" exercise of such
options. In this event, the consideration
10
<PAGE>
received by optionees whose Option Shares are purchased in the offer will be
the difference between $7.00 and the exercise price relating to the Option
Shares so purchased (less applicable tax withholding). Optionees who wish to
conditionally exercise their options and tender the resulting shares may not
use the Letter of Transmittal. Rather, such optionees must follow the
procedures set forth in the Memo to Optionees and the Notice of Instructions
(Options), printed on beige paper and mailed to them with this Offer to
Purchase. Optionees are urged to read the Memo to Optionees and the Notice of
Instructions (Options) carefully.
Optionees eligible to conditionally exercise their options, may direct on
the Notice of Instructions (Options) the order in which an optionee wishes to
have his or her options exercised. If an optionee does not direct the order in
which he or she wishes to have the options exercised, then options will be
exercised in order of exercise price, beginning with options having the lowest
exercise price.
Optionees may also exercise vested but unexercised options (regardless of
exercise price) in accordance with the terms of the applicable Stock Option
Plan and tender the shares received upon exercise in accordance with the
instructions and procedures described in this Section 3 with respect to shares
generally.
Employee Stock Purchase Plan. Holders of ESPP Shares through E*TRADE as
Administrator of the ESPP may not use the Letter of Transmittal to direct the
tender of their ESPP Shares. Rather, holders of such ESPP Shares must follow
the procedures for tender described in the Notice to ESPP Participants and the
Tender Instruction Form for ESPP Shares, printed on gold paper and mailed to
them with this Offer to Purchase, to instruct E*TRADE as the administrator of
the ESPP to tender shares held in their accounts under the ESPP. On the Tender
Instruction Form for ESPP Shares, each participant may designate that all or
some of the ESPP Shares credited to his or her account under the ESPP be
tendered. Participants tendering ESPP Shares may direct Grubb & Ellis to
purchase such shares in a specific order. If the holder of ESPP Shares does
not so direct, Grubb & Ellis will purchase the ESPP Shares in order of their
original purchase price beginning with the lowest purchase price. Any ESPP
shares tendered but not purchased will be returned to the participant's ESPP
account. Participants in the ESPP are urged to read the Notice to ESPP
Participants and Tender Instruction Form for ESPP Shares carefully.
Participants in the ESPP who hold certificates in their own names for shares
purchased under the ESPP and who wish to tender those shares should comply
with the instructions for tendering shares generally and use the Letter of
Transmittal.
401(k) Plan. Participants in the 401(k) Plan may instruct Fidelity
Management Trust Company as the Trustee of the 401(k) Plan, to tender some,
all or none of the shares held in their account under the 401(k) Plan by
following the procedures described in the Letter to Participants and the
Trustee Direction Form, printed on white paper and mailed to them with this
Offer to Purchase. Participants in the 401(k) Plan cannot use the Letter of
Transmittal to direct the tender of shares, but must use the Trustee Direction
Form.
The terms of the 401(k) Plan normally prohibit participants from directing
the Trustee to sell the shares of Grubb & Ellis stock held in their accounts
or regarding the investment of those shares. However, the 401(k) Plan has been
amended by Grubb & Ellis to permit participants to direct the Trustee as to
the tender of their shares under the 401(k) Plan. The proceeds received by the
Trustee for the shares tendered in the 401(k) Plan will be invested in the
Fidelity Retirement Money Market Portfolio within the 401(k) Plan and will not
be distributed to participants. After the administrative processing of the
proceeds is completed, participants may then direct the Trustee to exchange
the proceeds received from the tender of shares which were invested in the
Fidelity Retirement Money Market Portfolio into the other investment options
available under the 401(k) Plan.
Under certain circumstances the Trustee may be prohibited by the terms of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
the Code from following participants instructions regarding whether or not to
tender their shares. In particular, the 401(k) Plan is prohibited from selling
shares to Grubb & Ellis for a price that is less than "adequate consideration"
within the meaning of Section 3(18) of ERISA. Adequate consideration for a
publicly traded security generally is defined as the prevailing market price
of the security. Accordingly, if the prevailing market price of Grubb & Ellis'
common stock at the Expiration Date is higher than $7.00 per share, the
Trustee may not tender the shares, regardless of participant instructions.
11
<PAGE>
Participants in the 401(k) Plan are urged to read the separate Letter to
Participants and Trustee Direction Form carefully.
United States Federal Income Tax Backup Withholding. Under the federal
income tax laws, the Depositary will be required to withhold a portion of the
amount of the purchase price paid to certain stockholders pursuant to the
offer. To avoid such backup withholding, each such stockholder must provide
the Depositary with such stockholder's taxpayer identification number and
certify that such stockholder is not subject to backup withholding by
completing the Substitute Form W-9 in the Letter of Transmittal, and/or with
respect to ESPP Shares tendered through E*TRADE, the Tender Instruction Form
for ESPP Shares. See Instructions 12 and 15 of the Letter of Transmittal.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of shares
to be accepted, the purchase price to be paid for shares to be accepted and
the validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of shares will be determined by Grubb & Ellis, in its
reasonable discretion, and its determination will be final and binding on all
parties. Grubb & Ellis reserves the absolute right to reject any or all
tenders of any shares that it determines are not in proper form or the
acceptance for payment of or payment for which may, in the opinion of the
Company's counsel, be unlawful. Grubb & Ellis also reserves the absolute right
to waive any of the conditions of the offer or any defect or irregularity in
any tender with respect to any particular shares or any particular
stockholder, and the Company's interpretation of the terms of the offer will
be final and binding on all parties. No tender of shares will be deemed to
have been properly made until all defects or irregularities have been cured by
the tendering stockholder or waived by Grubb & Ellis. Grubb & Ellis will not
be liable for failure to waive any condition of the offer, or any defect or
irregularity in any tender of shares. None of Grubb & Ellis, the Dealer
Manager, the Depositary, the Information Agent or any other person will be
obligated to give notice of any defects or irregularities in tenders, nor will
any of them incur any liability for failure to give any notice.
Tendering Stockholder's Representation and Warranty; Grubb & Ellis'
Acceptance Constitutes an Agreement. A tender of shares pursuant to any of the
procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the offer, as well as the tendering
stockholder's representation and warranty to Grubb & Ellis that (1) the
stockholder has a "net long position," within the meaning of Rule 14e-4
promulgated by the SEC under the Exchange Act, in the shares or equivalent
securities at least equal to the shares being tendered, and (2) the tender of
shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender shares for that person's own account unless,
at the time of tender and at the end of the proration period or period during
which shares are accepted by lot (including any extensions thereof), the
person so tendering (1) has a net long position equal to or greater than the
amount of (a) shares tendered or (b) other securities convertible into or
exchangeable or exercisable for the shares tendered and will acquire the
shares for tender by conversion, exchange or exercise and (2) will deliver or
cause to be delivered the shares in accordance with the terms of the offer.
Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person. Grubb & Ellis' acceptance
for payment of shares tendered pursuant to the offer will constitute a binding
agreement between the tendering stockholder and Grubb & Ellis upon the terms
and conditions of the offer.
Lost or Destroyed Certificates. If any certificate representing shares has
been lost, destroyed or stolen, the stockholder should promptly notify the
Depositary. The stockholder will then be instructed as to the steps that must
be taken in order to replace the certificate. The Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost
or destroyed certificates have been followed. Stockholders are requested to
contact the Depositary immediately in order to permit timely processing of
this documentation.
Certificates for shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal,
must be delivered to the Depositary and not to Grubb & Ellis, the Dealer
Manager or the Information Agent. Any certificates delivered to Grubb & Ellis,
the Dealer Manager or the Information Agent will not be forwarded to the
Depositary and will not be deemed to be properly tendered.
12
<PAGE>
4. Withdrawal Rights.
Shares tendered pursuant to the offer may be withdrawn at any time before
the Expiration Date. In addition, unless Grubb & Ellis has already accepted
your tendered shares for payment, you may withdraw your tendered shares at any
time after February 13, 2001. Except as otherwise provided in this Section 4,
tenders of shares pursuant to the offer are irrevocable.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic, telex or facsimile transmission form and must be
received in a timely manner by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase. Any notice of withdrawal
must specify the name of the tendering stockholder, the number of shares to be
withdrawn and the name of the registered holder of the shares. If the
certificates for shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, before the release of the certificates,
the tendering stockholder must also submit the serial numbers shown on the
particular certificates for shares to be withdrawn and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of shares tendered for the account of an Eligible Institution). If
shares have been tendered pursuant to the procedure for book-entry transfer
described in Section 3, the notice of withdrawal also must specify the name
and the number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn shares and must otherwise comply with the Book-
Entry Transfer Facility's procedures. All questions as to the form and
validity, including the time of receipt, of any notice of withdrawal will be
determined by Grubb & Ellis, in its reasonable discretion, which determination
will be final and binding on all parties. None of Grubb & Ellis, the Dealer
Manager, the Depositary, the Information Agent or any other person will be
obligated to give notice of any defects or irregularities in any notice of
withdrawal, nor will any of them incur liability for failure to give any
notice.
Participants in Grubb & Ellis' 401(k) Plan and holders of ESPP Shares and
Option Shares who wish to withdraw their shares must follow the instructions
found in the Letter to Participants, Notice to ESPP Participants and Memo to
Optionees, respectively, sent to them with this Offer to Purchase.
Withdrawals may not be rescinded, and any shares properly withdrawn will be
deemed not properly tendered for purposes of the offer. However, withdrawn
shares may be re-tendered before the Expiration Date by again following one of
the procedures described in Section 3.
If Grubb & Ellis extends the offer, is delayed in its purchase of shares or
is unable to purchase shares pursuant to the offer for any reason, then,
without prejudice to the Company's rights under the offer, the Depositary may,
subject to applicable law, retain tendered shares on behalf of Grubb & Ellis,
and the shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
5. Purchase of Shares and Payment of Purchase Price.
As promptly as practicable following the Expiration Date, Grubb & Ellis
will accept for payment and pay for (and thereby purchase) up to 7,000,000
shares (or such greater number of shares as the Company may elect to purchase)
properly tendered and not properly withdrawn before the Expiration Date. For
purposes of the offer, Grubb & Ellis will be deemed to have accepted for
payment (and therefore purchased), subject to the "odd lot" priority,
proration and conditional tender provisions of the offer, shares that are
properly tendered and not properly withdrawn only when, as and if it gives
oral or written notice to the Depositary of its acceptance of the shares for
payment pursuant to the offer.
Grubb & Ellis will accept for payment and pay the per share purchase price
for all of the shares accepted for payment pursuant to the offer as soon as
practicable after the Expiration Date. In all cases, payment for shares
tendered and accepted for payment pursuant to the offer will be made promptly,
subject to possible delay due to expected proration, but only after timely
receipt by the Depositary of certificates for shares, or of a timely Book-
Entry Confirmation of shares into the Depositary's account at the Book-Entry
Transfer Facility, and a properly completed and duly executed Letter of
Transmittal, or manually signed facsimile of the Letter of Transmittal,
13
<PAGE>
and any other required documents. In the case of Option Shares, ESPP Shares
and 401(k) Plan Shares, payment for shares (less any applicable income tax
withholding) will be made only after timely receipt by the appropriate
administrators of documentation as set forth in the instruction letters for
each of the Option Shares, ESPP Shares and 401(k) Plan Shares.
Grubb & Ellis will pay for shares purchased pursuant to the offer by
depositing the aggregate purchase price for the shares with the Depositary,
which will act as agent for tendering stockholders for the purpose of
receiving payment from Grubb & Ellis and transmitting payment to the tendering
stockholders.
In the event of proration, Grubb & Ellis will determine the proration
factor and pay for those tendered shares accepted for payment as soon as
practicable after the Expiration Date. However, Grubb & Ellis does not expect
to be able to announce the final results of any proration and commence payment
for shares purchased until approximately seven business days after the
Expiration Date. Certificates for all shares tendered and not purchased due to
proration or conditional tenders, will be returned or, in the case of shares
tendered by book-entry transfer, will be credited to the account maintained
with the Book-Entry Transfer Facility by the participant who delivered the
shares, to the tendering stockholder at Grubb & Ellis' expense as promptly as
practicable after the Expiration Date or termination of the offer without
expense to the tendering stockholders. ESPP Shares and 401(k) Plan Shares not
purchased will be returned to the administrator for the ESPP or the Trustee
for the 401(k) Plan, as applicable. Under no circumstances will Grubb & Ellis
pay interest on the purchase price, including but not limited to, by reason of
any delay in making payment. In addition, if certain events occur, Grubb &
Ellis may not be obligated to purchase shares pursuant to the offer. See
Section 7.
Grubb & Ellis will pay all stock transfer taxes, if any, payable on the
transfer to it of shares purchased pursuant to the offer. If, however, payment
of the purchase price is to be made to, or (in the circumstances permitted by
the offer) unpurchased shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered
in the name of any person other than the person signing the Letter of
Transmittal, the amount of all stock transfer taxes, if any (whether imposed
on the registered holder or the other person), payable on account of the
transfer to the person will be deducted from the purchase price unless
satisfactory evidence of the payment of the stock transfer taxes, or exemption
from payment of the stock transfer taxes, is submitted. See Instruction 7 of
the Letter of Transmittal.
Any tendering stockholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included with the Letter
of Transmittal, and/or with respect to ESPP Shares tendered through E*TRADE,
the Tender Instruction Form for ESPP Shares, may be subject to required United
States federal income tax backup withholding of 31% of the gross proceeds paid
to the stockholder or other payee pursuant to the offer. See Section 3. Non-
United States Holders are urged to consult their tax advisors regarding the
application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption, and the refund
procedure.
6. Conditional Tender of Shares.
Subject to the exceptions for Odd Lot Holders described in Section 1, it is
expected that Grubb & Ellis will prorate the number of shares purchased
pursuant to the offer. As discussed in Section 14, the number of shares to be
purchased from a particular stockholder may affect the tax treatment of the
purchase to the stockholder and the stockholder's decision whether to tender.
Accordingly, a stockholder may tender shares subject to the condition that a
specified minimum number of the stockholder's shares tendered pursuant to a
Letter of Transmittal or Notice of Guaranteed Delivery must be purchased if
any shares tendered are purchased. Any stockholder desiring to make a
conditional tender must so indicate in the box captioned "Conditional Tender"
in the Letter of Transmittal or, if applicable, the Notice of Guaranteed
Delivery. Each stockholder is urged to consult with his or her own tax
advisor.
14
<PAGE>
Any tendering stockholder wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of shares that must be
purchased if any are purchased. If the effect of accepting tenders on a
pro rata basis would be to reduce the number of shares to be purchased from
any stockholder (tendered pursuant to a Letter of Transmittal or Notice of
Guaranteed Delivery) below the minimum number specified, the tender will
automatically be regarded as withdrawn (except as provided in the next
paragraph). All shares tendered by a stockholder subject to a conditional
tender pursuant to the Letter of Transmittal or Notice of Guaranteed Delivery
and regarded as withdrawn as a result of proration will be returned as
promptly as practicable after the Expiration Date.
Holders of ESPP Shares, 401(k) Plan Shares and Option Shares are not
eligible to make a conditional tender for any such shares.
If conditional tenders would otherwise be regarded as withdrawn and would
cause the total number of shares to be purchased to fall below 7,000,000 (or
such greater number of shares as the Company may elect to purchase) then, to
the extent feasible, Grubb & Ellis will select enough of the conditional
tenders that would otherwise have been withdrawn to permit Grubb & Ellis to
purchase 7,000,000 shares (or such greater number of shares as the Company may
elect to purchase). In selecting among the conditional tenders, Grubb & Ellis
will select by lot treating all tenders by a particular taxpayer as a single
lot and will limit its purchase in each case to the designated minimum of
shares to be purchased.
7. Conditions of the Offer.
Notwithstanding any other provision of the offer, Grubb & Ellis will not be
required to accept for payment, purchase or pay for any shares tendered, and
may terminate or amend the offer or may postpone the acceptance for payment
of, or the purchase of and the payment for shares tendered, subject to the
rules under the Exchange Act, (i) if Grubb & Ellis is or will be unable prior
to the Expiration Date to obtain sufficient financing on terms and conditions
satisfactory to the Company to enable it to purchase the shares pursuant to
the offer and pay the related fees and expenses or (ii) if at any time on or
after the commencement of the Offer and before the Expiration Date any of the
following events have occurred (or have been determined by Grubb & Ellis to
have occurred) that, in the Company's reasonable judgment and regardless of
the circumstances giving rise to the event or events (including any action or
omission to act by Grubb & Ellis), makes it inadvisable to proceed with the
offer or with acceptance for payment:
. there has been threatened, instituted or pending any action, suit or
proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or by any other person,
domestic, foreign or supranational, before any court, authority, agency
or other tribunal that directly or indirectly:
(1) challenges or seeks to make illegal, or to delay or otherwise
directly or indirectly to restrain, prohibit or otherwise affect
the making of the offer, the acquisition of some or all of the
shares pursuant to the offer or otherwise relates in any manner to
the offer; or
(2) in Grubb & Ellis' reasonable judgment, could materially and
adversely affect the business, condition (financial or otherwise),
income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in
any way the contemplated future conduct of the business of the
Company or any of its subsidiaries or materially impair the
contemplated benefits of the offer to Grubb & Ellis;
. there has been any action threatened, pending or taken, including any
settlement, or any approval withheld, or any statute, rule, regulation,
judgment, order or injunction threatened, invoked, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the offer or Grubb & Ellis or any of its subsidiaries,
including any settlement, by any court, government or governmental,
regulatory or administrative authority, agency or tribunal, domestic,
foreign or supranational, that, in Grubb & Ellis' reasonable judgment,
could directly or indirectly:
(1) make the acceptance for payment of, or payment for, some or all of
the shares illegal or otherwise restrict or prohibit consummation
of the offer;
15
<PAGE>
(2) delay or restrict the ability of Grubb & Ellis, or render the
Company unable, to accept for payment or pay for some or all of the
shares;
(3) materially impair the contemplated benefits of the offer to Grubb &
Ellis; or
(4) materially and adversely affect the business, condition (financial
or otherwise), income, operations or prospects of Grubb & Ellis and
its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Company or any of its subsidiaries or materially impair the
contemplated benefits of the offer to Grubb & Ellis;
. there has occurred any of the following:
(1) any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in
the over-the-counter market;
(2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, whether or not
mandatory;
(3) the commencement of a war, armed hostilities or other international
or national calamity directly or indirectly involving the United
States;
(4) any limitation, whether or not mandatory, by any governmental,
regulatory or administrative agency or authority on, or any event
that, in Grubb & Ellis' reasonable judgment, could materially
affect, the extension of credit by banks or other lending
institutions in the United States;
(5) any changes in the general political, market, economic or financial
conditions in the United States or abroad that could have, in the
reasonable judgment of Grubb & Ellis, a material adverse effect on
the business, condition (financial or otherwise), income,
operations or prospects of the Company and its subsidiaries, taken
as a whole, or on the trading in the shares or on the proposed
financing of the offer; or
(6) in the case of any of the foregoing existing at the time of the
commencement of the offer, a material acceleration or worsening
thereof;
. a tender or exchange offer for any or all of the shares (other than the
offer), or any merger, acquisition, business combination or other
similar transaction with or involving Grubb & Ellis or any subsidiary,
has been proposed, announced or made by any person or has been publicly
disclosed; or
. Grubb & Ellis determines that the consummation of the offer and the
purchase of the shares may cause the shares to be delisted from the NYSE
or to be eligible for deregistration under the Exchange Act.
The conditions referred to above are for the sole benefit of Grubb & Ellis
and may be asserted by the Company regardless of the circumstances (including
any action or omission to act by Grubb & Ellis) giving rise to any condition,
and may be waived by Grubb & Ellis, in whole or in part, at any time and from
time to time in its reasonable discretion. The Company's failure at any time
to exercise any of the foregoing rights will not be deemed a waiver of any
right, and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time. In certain circumstances, if Grubb
& Ellis waives any of the conditions described above, it may be required to
extend the Expiration Date. Any determination by Grubb & Ellis concerning the
events described above will be final and binding on all parties.
16
<PAGE>
8. Price Range of Shares.
Grubb & Ellis' common stock is listed for trading on the New York Stock
Exchange under the symbol "GBE." The following table sets forth, for the
fiscal quarters indicated, the high and low sales prices per share as reported
on the NYSE Composite Tape:
<TABLE>
<CAPTION>
High Low
------ -----
<S> <C> <C>
FY ended June 30, 1999
First quarter................................................ $14.44 $8.38
Second quarter............................................... 10.75 7.25
Third quarter................................................ 8.13 6.13
Fourth quarter............................................... 7.06 5.00
FY ended June 30, 2000
First quarter................................................ $ 6.13 $4.38
Second quarter............................................... 6.25 4.56
Third quarter................................................ 6.00 4.56
Fourth quarter............................................... 7.00 5.13
FY ended June 30, 2001
First quarter................................................ $ 6.50 $5.50
Second quarter (through December 13, 2000)................... 6.38 4.13
</TABLE>
On December 4, 2000, the last full trading day before the announcement of
the offer, the last reported sale price of the shares as reported on the NYSE
Composite Tape was $4.625 per share. On December 13, 2000, the most recent
practicable trading day before the commencement of the offer, the last
reported sale price of the shares as reported on the NYSE Composite Tape was
$5.50 per share. GRUBB & ELLIS URGES STOCKHOLDERS TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
9. Source and Amount of Funds.
Assuming Grubb & Ellis purchases 7,000,000 shares pursuant to the offer at
the purchase price of $7.00 per share, Grubb & Ellis expects the maximum
aggregate cost, including all fees and expenses applicable to the offer, to be
approximately $50 million. The Company intends to finance $40 million of this
amount on a long-term basis through senior credit facilities with Bank of
America, N.A., as administrative agent, and a syndicate of financial
institutions (the "Proposed Credit Facility"). The Proposed Credit Facility
will provide up to $55 million under an amendment to the Company's existing
senior credit facilities. The Company intends to enter into the Proposed
Credit Facility prior to the expiration of the offer. The Company currently
has no alternate financing plans.
In connection with the Proposed Credit Facility, Bank of America, American
National Bank and Trust Company of Chicago and LaSalle Bank National
Association have provided a commitment letter (the "Commitment Letter"),
pursuant to which they have proposed a five-year $40 million term loan
facility and a five-year $15 million revolving credit facility, including
letters of credit. The Commitment Letter provides that principal on the term
loan facility will be subject to quarterly amortization of principal at the
rate of $8 million per year and also be subject to mandatory prepayment under
certain circumstances, including as a result of certain asset sales, equity
issuances and the Company generating excess cash flow. The Commitment Letter
also provides that the interest charged will be a base rate (generally the
London InterBank Offered Rate ("LIBOR") or the prime rate) plus a spread not
to exceed 2.25% over LIBOR or not to exceed 1.25% over the prime rate. The
spread is dependent on Grubb & Ellis' quarterly financial leverage ratio. It
is currently estimated that the interest rate initially will be approximately
8.4% per annum. The Company will be required to enter into interest rate
protection agreements for a portion of the facility for the first three years
of the term. It is expected that the Proposed Credit Facility will subject the
Company to certain covenants, including covenants that would limit the ability
of the Company to (i) incur additional indebtedness, (ii) create certain
liens, (iii) pay dividends or make distributions, (iv) make certain
investments and acquisitions, and (v) enter into certain transactions with
17
<PAGE>
affiliates. It is also expected that the Proposed Credit Facility will require
the Company to meet certain financial covenants, including with respect to
debt levels, interest coverage and cash flow. Grubb & Ellis believes that cash
generated from operations will be sufficient to repay the Proposed Credit
Facility in accordance with its terms. Consummation of the offer is contingent
upon, among other things, financing of the offer from the net proceeds
received from such issuance of indebtedness.
The preceding summary of the Proposed Credit Facility is qualified in its
entirety by reference to the text of the Proposed Credit Facility and the
amendments thereto, which will be filed as an exhibit to the Issuer Tender
Offer Statement on Schedule TO to which this Offer to Purchase is attached at
least five business days prior to the Expiration Date. A copy of the Schedule
TO may be obtained from the SEC in the manner provided in Section 10.
10. Certain Information Concerning Grubb & Ellis.
Grubb & Ellis, a Delaware corporation organized in 1980, is the successor
by merger to a real estate brokerage company first established in California
in 1958. The Company is a full service commercial real estate company. Grubb &
Ellis has a global strategic alliance with Knight Frank, one of the leading
property consulting firms in Europe and Asia. Through its offices, affiliates
and alliance with Knight Frank, Grubb & Ellis provides a full range of real
estate services, including advisory, management and consultative services, to
users and investors worldwide. With the collective resources of nearly 7,000
people in 200 offices in 27 countries, the Company's professionals arrange the
sale or lease of such business properties as industrial, retail and office
buildings, as well as the acquisition and disposition of multi-family and
hospitality properties and commercial land. Major multiple-market clients have
a single point of contact through Grubb & Ellis' Corporate and Financial
Services Groups for coordination of all services as well as site selection,
feasibility studies, market forecasts and research. Grubb & Ellis is one of
the nation's largest publicly traded commercial real estate firms, based on
total revenue.
Property and facilities management services are provided by Grubb & Ellis
Management Services, Inc., a wholly owned subsidiary of Grubb & Ellis
("GEMS"). GEMS had approximately 150 million square feet of property under
management as of December 15, 2000.
Grubb & Ellis is headquartered at 2215 Sanders Road, Suite 400, Northbrook
IL, 60062. Its telephone number is (847) 753-7500.
18
<PAGE>
Summary Historical Condensed Consolidated Financial Information. The
following table contains summary historical condensed consolidated financial
information of Grubb & Ellis. The summary historical condensed consolidated
financial information for the fiscal years ended June 30, 2000 and 1999 has
been derived from the audited consolidated financial statements of Grubb &
Ellis. The summary historical condensed consolidated financial information for
the three months ended September 30, 2000 and 1999 has been derived from the
unaudited consolidated financial statements of Grubb & Ellis. In the opinion
of management, the interim condensed consolidated financial information
reflects all adjustments necessary for a fair presentation. These adjustments
are only of a normal recurring nature. The summary historical condensed
consolidated financial information should be read in conjunction with and is
qualified in its entirety by reference to the audited and unaudited
consolidated financial statements and the related notes thereto from which it
has been derived. More comprehensive financial information is included in the
consolidated financial statements and related notes contained in Grubb &
Ellis' Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which it
files with the SEC.
GRUBB & ELLIS COMPANY
SUMMARY HISTORICAL CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the three
For the years months ended
ended June 30, September 30,
----------------- ----------------
2000 1999 2000 1999
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Revenue..................................... $413,535 $314,101 $106,367 $95,201
Costs and expenses.......................... 388,118 302,266 102,453 89,691
Income before income taxes.................. 25,888 12,055 4,310 5,569
Net income.................................. 16,290 8,079 2,518 3,341
Net income per common share:
Basic..................................... $ 0.82 $ 0.41 $ 0.13 $ 0.17
Diluted................................... $ 0.77 $ 0.37 $ 0.12 $ 0.16
Weighted average common shares outstanding:
Basic..................................... 19,779 19,786 19,856 19,851
Diluted................................... 21,037 21,588 21,020 21,072
Ratio of earnings to fixed charges(1)....... 4.4 2.7 3.2 3.9
</TABLE>
--------
(1) The ratio of earnings to fixed charges is calculated by dividing the sum
of pre-tax income and fixed charges by fixed charges. Fixed charges
include all interest expense, an estimate of the interest component
inherent in rent expense and amortization of debt issuance costs.
19
<PAGE>
GRUBB & ELLIS COMPANY
SUMMARY HISTORICAL CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
As of
As of June 30, September 30,
---------------- -------------
2000 1999 2000
-------- ------- -------------
<S> <C> <C> <C>
ASSETS
Current assets................................... $ 43,947 $24,770 $ 50,944
Noncurrent assets................................ 59,288 55,023 59,404
-------- ------- --------
Total assets................................... $103,235 $79,793 $110,348
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities.............................. $ 32,064 $25,070 $ 36,502
Long-term liabilities............................ 9,551 10,241 9,613
-------- ------- --------
Total liabilities.............................. 41,615 35,311 46,115
Total stockholders' equity..................... 61,620 44,482 64,233
-------- ------- --------
Total liabilities and stockholders' equity..... $103,235 $79,793 $110,348
======== ======= ========
Book value per common share(1)................... $ 3.11 $ 2.24 $ 3.23
======== ======= ========
Common shares outstanding........................ 19,811 19,885 19,882
</TABLE>
--------
(1) Book value per common share is calculated as total stockholders' equity
divided by the number of shares outstanding at the end of the period.
Summary Unaudited Pro Forma Condensed Consolidated Financial
Statements. The following summary unaudited condensed consolidated pro forma
financial statements give effect to the purchase of shares of Grubb & Ellis
common stock pursuant to this Offer to Purchase, including the related
issuance of indebtedness by Grubb & Ellis, based on certain assumptions
described below and in the related Notes below.
The Summary Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 2000 gives effect to the purchase of common stock pursuant to the
offer, including the related issuance of indebtedness by Grubb & Ellis, as
though such events occurred as of the date of such balance sheet. The Summary
Unaudited Pro Forma Condensed Consolidated Statements of Income for the three
months ended September 30, 2000 and for the year ended June 30, 2000 give
effect to the purchase of common stock pursuant to the offer, including the
related issuance of indebtedness by Grubb & Ellis, as though such events
occurred on such dates.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet and Statements
of Income should be read in conjunction with the summary historical condensed
consolidated financial information included in this Offer to Purchase and the
historical consolidated financial information incorporated by reference
herein. The Pro Forma Condensed Consolidated Balance Sheet and Statements of
Income are subject to a number of uncertainties and assumptions and do not
purport to be indicative of the operating results that would actually have
been obtained, or operating results that may be obtained in the future, or the
financial position that would have resulted had the purchase of the common
stock pursuant to this Offer to Purchase, including the related incurrence of
indebtedness by Grubb & Ellis, been completed at the dates indicated.
20
<PAGE>
GRUBB & ELLIS COMPANY
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Cash and equivalents....................... $ 22,138 $(10,000)(a) $ 12,138
Other current assets....................... 28,806 282 (b) 29,088
Noncurrent assets.......................... 59,404 (105)(c) 59,299
-------- -------- --------
Total Assets............................. $110,348 $ (9,823) $100,525
======== ======== ========
LIABILITIES
Current liabilities, except debt........... $ 36,502 $ -- $ 36,502
Current portion of long-term debt.......... -- 8,000 (d) 8,000
Long-term debt............................. -- 32,000 (d) 32,000
Other noncurrent liabilities............... 9,613 -- 9,613
-------- -------- --------
Total Liabilities........................ $ 46,115 $ 40,000 $ 86,115
======== ======== ========
STOCKHOLDERS' EQUITY
Paid-in-capital............................ $113,692 $(49,400)(e) $ 64,292
Retained deficit........................... (49,459) (423)(f) (49,882)
-------- -------- --------
Total Stockholders' Equity............... 64,233 (49,823) 14,410
-------- -------- --------
Total Liabilities & Stockholders'
Equity.................................. $110,348 $ (9,823) $100,525
======== ======== ========
Book Value per Common Share................. $ 3.23 $ 1.12
Common Shares Outstanding................... 19,882 (7,000)(g) 12,882
</TABLE>
--------
(a) Cash and equivalents:
Reflects the cash on hand to be utilized to fund a portion of the share
repurchase and related transaction costs.
(b) Current assets:
Reflects the increase in the prepaid income tax balance due to the benefit
of writing off the remaining deferred financing costs associated with the
Company's existing credit facility of $705,000, tax-effected at the
Company's statutory income tax rate of approximately 40%.
(c) Noncurrent assets:
Reflects the write-off of the remaining deferred financing costs from the
Company's existing credit facility ($705,000), net of the estimated costs
to be capitalized for the Proposed Credit Facility ($600,000).
(d) Long-term debt:
Reflects the $40 million to be borrowed to fund a portion of the share
repurchase and related transaction costs. The new credit agreement has a
gross commitment of $55 million and a term of five years. Interest is
payable at a variable rate of either LIBOR or Prime plus a spread that is
dependent on the Company's quarterly financial leverage ratio. Scheduled
principal amortization is $2 million per quarter plus an annual payment
based on the Company's excess cash flow for the period.
(e) Paid-in-capital:
Reflects the cost of repurchased and retired shares ($49 million), assuming
7 million shares are repurchased at $7.00 per share, plus the estimated
transaction costs associated with the repurchase ($400,000).
21
<PAGE>
(f) Retained deficit:
Reflects the after-tax earnings impact of the write-off of the remaining
deferred financing costs on the Company's existing credit facility.
(g) Weighted average outstanding shares:
Assumes 7 million shares are repurchased and retired on September 30, 2000.
Note that while the terms of the tender offer provide for option and
warrant holders to tender their positions, the impact of the tendering of
option and warrant positions, if any, is not reflected in this adjustment.
22
<PAGE>
GRUBB & ELLIS COMPANY
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 2000
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
<S> <C> <C> <C>
Revenue............................... $ 413,535 $ -- $ 413,535
Costs and expenses.................... 388,118 (50)(a) 388,068
---------- ---------- ----------
Total operating income.............. 25,417 50 25,467
Interest and other income............. 884 (222)(b) 662
Interest expense...................... (413) (3,879)(c) (4,292)
---------- ---------- ----------
Income before income taxes.......... 25,888 (4,051) 21,837
Provision for income taxes............ 9,598 (1,621)(d) 7,977
---------- ---------- ----------
Net Income.......................... $ 16,290 $ (2,430) $ 13,860
========== ========== ==========
Net income per common share:
Basic............................... $ 0.82 $ 1.08
========== ==========
Diluted............................. $ 0.77 $ 0.99
========== ==========
Weighted average common shares
outstanding:
Basic............................... 19,779,220 (7,000,000)(e) 12,779,220
========== ========== ==========
Diluted............................. 21,037,311 (7,000,000)(e) 14,037,311
========== ========== ==========
Ratio of Earnings to Fixed
Charges(f)........................... 4.4 2.9
========== ==========
</TABLE>
-------
(a) Costs and expenses:
Reflects the decline in amortization expense associated with lower deferred
financing costs under the new credit agreement as compared to deferred
financing costs under the existing credit agreement.
(b) Interest and other income:
Reflects the decline in interest income due to the use of cash to fund the
quarterly principal amortization and interest payments under the new credit
agreement.
(c) Interest expense:
Reflects the increase in interest expense associated with the borrowings
(under the new credit agreement) at an effective interest rate of
approximately 8.4% ($4 million), net of a decline in fees on the unused
portion of the new credit agreement ($136,000). This expense adjustment
assumes initial borrowings of $50 million, an interest rate based on LIBOR
plus 1.75%, and quarterly principal amortization of $2 million. The impact
of a one-eighth percent (0.125%) change in interest rate would result in a
change in annual interest expense of approximately $60,000. The pro forma
interest expense adjustment does not reflect the impact, if any, of an
interest rate hedge which the Company is required to provide according to
the committed terms of the new credit agreement. It is anticipated that the
Company will be required to provide interest rate protection on 50% of the
term loan balance for a period of at least three years. The exact terms of
the agreement will not be determined until after the closing of the new
credit agreement.
(d) Provision for income taxes:
Reflects the reduction in income tax expense at the Company's statutory
rate of approximately 40%.
(e) Weighted average outstanding shares:
Assumes 7 million shares are repurchased and retired on July 1, 1999. Note
that while the terms of the tender offer provide for option and warrant
holders to tender their positions, the impact of the tendering of option
and warrant positions, if any, is not reflected in this adjustment.
(f) Ratio of Earnings to Fixed Charges:
The ratio of earnings to fixed charges is calculated by dividing the sum of
pre-tax income and fixed charges by fixed charges. Fixed charges include
all interest expense, an estimate of the interest component inherent in
rent expense and amortization of debt issuance costs.
23
<PAGE>
GRUBB & ELLIS COMPANY
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
<S> <C> <C> <C>
Revenue............................... $ 106,367 $ -- $ 106,367
Costs and expenses.................... 102,453 (19)(a) 102,434
---------- ---------- ----------
Total operating income.............. 3,914 19 3,933
Interest and other income............. 426 (160)(b) 266
Interest expense...................... (30) (837)(c) (867)
---------- ---------- ----------
Income before income taxes.......... 4,310 (978) 3,332
Provision for income taxes............ 1,792 (391)(d) 1,401
---------- ---------- ----------
Net Income.......................... $ 2,518 $ (587) $ 1,931
========== ========== ==========
Net income per common share:
Basic............................... $ 0.13 $ 0.15
========== ==========
Diluted............................. $ 0.12 $ 0.14
========== ==========
Weighted average common shares
outstanding:
Basic............................... 19,855,920 (7,000,000)(e) 12,855,920
========== ========== ==========
Diluted............................. 21,019,631 (7,000,000)(e) 14,019,631
========== ========== ==========
Ratio of Earnings to Fixed
Charges(f)........................... 3.2 2.2
========== ==========
</TABLE>
--------
(a) Costs and expenses:
Reflects the decline in amortization expense associated with lower deferred
financing costs under the new credit agreement as compared to deferred
financing costs under the existing credit agreement.
(b) Interest and other income:
Reflects the decline in interest income due to the use of $10 million of
cash to fund a portion of the share repurchase and related transaction
costs.
(c) Interest expense:
Reflects the increase in interest expense associated with the new credit
agreement borrowings (under the new credit agreement) at an effective
interest rate of approximately 8.4% ($862,000), net of a decline in fees on
the unused portion of the new credit agreement ($25,000). This expense
adjustment assumes initial borrowings of $40 million, an interest rate
based on LIBOR plus 1.75%, and quarterly principal amortization of $2
million. The impact of a one-eighth percent (0.125%) change in interest
rate would result in a change in quarterly interest expense of
approximately $13,000. The pro forma interest expense adjustment does not
reflect the impact, if any, of an interest rate hedge which the Company is
required to provide according to the committed terms of the new credit
agreement. It is anticipated that the Company will be required to provide
interest rate protection on 50% of the term loan balance for a period of at
least three years. The exact terms of the agreement will not be determined
until after the closing of the new credit agreement.
(d) Provision for income taxes:
Reflects the reduction in income tax expense at the Company's statutory
rate of approximately 40%.
(e) Weighted average outstanding shares:
Assumes 7 million shares are repurchased and retired on July 1, 2000. Note
that while the terms of the tender offer provide for option and warrant
holders to tender their positions, the impact of the tendering of option
and warrant positions, if any, is not reflected in this adjustment.
(f) Ratio of Earnings to Fixed Charges:
The ratio of earnings to fixed charges is calculated by dividing the sum of
pre-tax income and fixed charges by fixed charges. Fixed charges include
all interest expense, an estimate of the interest component inherent in
rent expense and amortization of debt issuance costs.
24
<PAGE>
Additional Information. Grubb & Ellis is subject to the informational
filing requirements of the Exchange Act, and, accordingly, is obligated to
file reports, statements and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Grubb & Ellis' directors and officers, their remuneration,
options granted to them, the principal holders of Grubb & Ellis' securities
and any material interest of these persons in transactions with Grubb & Ellis
is required to be disclosed in proxy statements distributed to Grubb & Ellis'
stockholders and filed with the SEC. Grubb & Ellis also has filed an Issuer
Tender Offer Statement on Schedule TO with the SEC which includes certain
additional information relating to the offer. These reports, statements and
other information can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549; and at its regional offices located at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of this material may also be
obtained by mail, upon payment of the SEC's customary charges, from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC also maintains a web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
These reports, statements and other information concerning Grubb & Ellis also
can be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York, 10005, on which the shares are listed.
Incorporation by Reference
The rules of the SEC allow us to "incorporate by reference" information
into this document, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
offer incorporates by reference the financial statements and the notes related
thereto contained in the documents listed below that have been previously
filed with the SEC. These documents contain important information about Grubb
& Ellis.
<TABLE>
<CAPTION>
Sec Filings (File No. 1-8122) Period
----------------------------- ------
<S> <C>
Annual Report on Form 10-K.................. Year ended June 30, 2000
Quarterly Report on Form 10-Q............... Quarter ended September 30, 2000
</TABLE>
11. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares.
As of December 8, 2000, Grubb & Ellis had 19,934,622 issued and outstanding
shares, 2,629,505 shares reserved for issuance upon exercise of all
outstanding stock options under the Stock Option Plans (of which options to
purchase 855,305 shares have an exercise price of less than $7.00 per share
and are or will be vested by January 17, 2001), and 2,285,899 shares reserved
for issuance upon exercise of warrants. The 7,000,000 shares that Grubb &
Ellis is offering to purchase represent approximately 33% of the shares
outstanding (including the 855,305 Options Shares, and 348,541 shares issuable
upon exercise of warrants that are expected to be tendered) on December 8,
2000.
25
<PAGE>
The following table shows the share ownership by certain stockholders of
the Company and all current directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount of Beneficial Percent of
Stockholder Ownership Class(1)
----------- -------------------- ----------
<S> <C> <C>
Warburg Pincus Investors, L.P.(2).......... 10,443,339 49.1%
The Goldman Sachs Group, Inc.(3)........... 2,500,000 12.5%
C. Michael Kojaian (also a director)(4).... 1,393,428 7.0%
Mike Kojaian(5)............................ 1,393,428 7.0%
Joe F. Hanauer (also a director)(6)........ 1,008,323 4.9%
All Current Directors and Executive
Officers as a Group (other than those
persons named in this table or in the
footnotes to this table)(7)............... 545,931 2.7%
</TABLE>
--------
(1) The percentage of shares shown for each person in this column assumes that
such person has exercised any currently outstanding warrants or options
held by that person and that no one else has exercised outstanding
warrants or options.
(2) Includes 9,105,981 shares and currently exercisable warrants to purchase
an aggregate of 1,337,358 shares of common stock. Reuben Leibowitz is a
director of the Company and a managing director and member of E.M.
Warburg, Pincus & Co., LLC and a general partner of Warburg, Pincus & Co.,
a partnership which is the sole general partner of Warburg Pincus
Investors, L.P. Ian Morgan is a director of the Company and an Associate
of E.M. Warburg, Pincus & Co., LLC.
(3) Includes 175,000 shares held by Archon Group, L.P., which is a majority
owned subsidiary of The Goldman Sachs Group, Inc. Todd Williams is a
director of the Company and an officer of Goldman Sachs & Co., and a
director of Archon Group, L.P.
(4) Includes 1,250,000 shares owned directly and 143,428 shares of common
stock held jointly with Mike Kojaian, his father.
(5) Includes 1,250,000 shares owned directly and 143,428 shares of common
stock held jointly with C. Michael Kojaian, his son.
(6) Includes 14,497 shares owned directly, an option to purchase 237,850
shares of common stock, 319,607 shares and currently exercisable warrants
to purchase 348,541 shares held by a family trust and 87,828 shares of
common stock held by a charitable remainder trust of which Mr. Hanauer and
his wife are beneficiaries during their lives, and his daughter is
trustee.
(7) Includes options to purchase 437,750 shares issuable upon exercise of
stock options vested within 60 days after December 1, 2000 (of which
options to purchase 266,750 shares have an exercise price of less than
$7.00 and are or will be vested by January 17, 2001).
Each of The Goldman Sachs Group, Inc., C. Michael Kojaian, Mike Kojaian and
Joe F. Hanauer have indicated that they intend to tender the shares listed
next to their names in the above table, except that Warburg Pincus Investors,
L.P., has indicated its intention not to tender the shares issuable upon
exercise of the warrants it holds. In addition, officers and directors, other
than those named in the table above or in the footnotes, have indicated that
they intend to tender an aggregate of approximately 315,371 shares
beneficially owned by them (including 210,750 shares underlying certain
exercisable options). The aggregate number of shares expected to be tendered
by all such holders is approximately 15,584,149, which represents
approximately 75% of the outstanding shares as of December 8, 2000 (including
the shares issuable upon exercise of options and warrants that are expected to
be tendered by such holders). It is anticipated that the stockholders named in
the table above will continue to hold a majority of the shares outstanding
immediately outstanding after the offer.
Based on Grubb & Ellis' records and on information provided to Grubb &
Ellis by its directors, executive officers, affiliates and subsidiaries,
neither Grubb & Ellis nor any of its affiliates or subsidiaries nor, to the
best of Grubb & Ellis' knowledge, any of the directors or executive officers
of Grubb & Ellis or any of its
26
<PAGE>
subsidiaries, nor any associates or subsidiaries of any of the foregoing, has
effected any transactions involving the shares during the 60 days prior to
December 15, 2000, other than purchases of shares through the Stock Option
Plans. Grubb & Ellis expects that the ESPP will, in accordance with the terms
of the plan, elections in effect and present patterns of contribution,
continue to purchase shares prior to the expiration of the offer.
Except as otherwise described in this Offer to Purchase or as described in
its most recent proxy statement, neither Grubb & Ellis nor, to the best of
Grubb & Ellis' knowledge, any of its affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
offer or with respect to any securities of Grubb & Ellis, including, but not
limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of the securities, joint ventures, loan
or option arrangements, puts or calls, guaranties of loans, guaranties against
loss or the giving or withholding of proxies, consents or authorizations.
12. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act.
Grubb & Ellis' purchase of shares pursuant to the offer will reduce the
number of shares that might otherwise trade publicly and is likely to reduce
the number of stockholders. Nonetheless, Grubb & Ellis anticipates that there
will be a sufficient number of shares outstanding and publicly traded
following consummation of the offer to ensure a continued trading market for
the shares.
Based upon published guidelines of the NYSE, Grubb & Ellis does not believe
that its purchase of shares pursuant to the offer will cause its remaining
shares to be delisted from the NYSE. The NYSE will normally consider delisting
a security if the issuer or its listed securities fail to meet certain
qualifications and other criteria, including with respect to the number of
stockholders, trading volume, number of shares not held by affiliates, market
capitalization, stockholders' equity and trading price. One of such criterion
is that the issuer have at least $50 million of stockholders' equity or $50
million of market capitalization. Following the offer, Grubb & Ellis will have
total stockholders' equity of less than $50 million but is expected to have a
market capitalization of over $50 million, and therefore will still comply
with the NYSE criteria. The Company does not expect the offer to result in a
reduction of holders or trading volume below the NYSE minimum levels. However,
there can be no assurance that, following the offer the number of stockholders
or trading volume will not be reduced below such levels, or that the Company
will not be in compliance with other NYSE criteria for continued listing. The
offer is conditioned upon Grubb & Ellis not having determined that the
consummation of the offer and the purchase of shares may cause the stock to be
delisted from the NYSE. See Section 7.
The shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using the shares as collateral. Grubb & Ellis
believes that, following the purchase of shares pursuant to the offer, the
shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The shares are registered under the Exchange Act, which requires, among
other things, that Grubb & Ellis furnish information to its stockholders and
to the SEC and comply with the SEC's proxy rules in connection with meetings
of Grubb & Ellis' stockholders. Grubb & Ellis believes that its purchase of
shares pursuant to the offer will not result in the shares becoming eligible
for deregistration under the Exchange Act.
13. Certain Legal Matters; Regulatory Approvals.
Grubb & Ellis is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of shares as contemplated in the offer or of any approval or other
action by any government or governmental, administrative or regulatory
authority or agency, domestic, foreign or supranational, that would be
required for the Company's acquisition or ownership of shares as contemplated
by the offer. Should any approval or other action be required, Grubb & Ellis
presently contemplates that it will seek that approval or other action. Grubb
& Ellis cannot predict whether it will be required to delay the acceptance for
payment of or payment for shares tendered pursuant to the offer pending the
outcome of any
27
<PAGE>
such matter. There can be no assurance that any approval or other action, if
needed, would be obtained or would be obtained without substantial conditions
or that the failure to obtain the approval or other action might not result in
adverse consequences to the Company's business. Grubb & Ellis' obligations
under the offer to accept for payment and pay for shares are subject to
conditions. See Section 7.
14. Certain United States Federal Income Tax Consequences.
The following is a summary of certain United States federal income tax
consequences of the offer to United States Holders (as defined below) whose
shares are tendered and accepted for payment pursuant to the offer. Those
stockholders who do not participate in the offer should not incur any United
States federal income tax liability from the exchange. This summary is based
upon the Internal Revenue Code of 1986, as amended to the date of the offer
(the "Code"), existing and proposed United States Treasury Regulations
promulgated under the Code, published rulings, administrative pronouncements
and judicial decisions, any changes to which could affect the tax consequences
described in this Offer to Purchase (possibly on a retroactive basis). This
summary assumes that shares held by stockholders are held as capital assets.
It does not address all of the tax consequences that may be relevant to
particular stockholders in light of their personal circumstances, or to other
types of stockholders subject to special rules (including, without limitation,
certain financial institutions, brokers, dealers or traders in securities or
commodities, insurance companies, "S" corporations, expatriates, tax-exempt
organizations, Non-United States Holders (as defined below), persons who are
subject to alternative minimum tax, or persons who hold shares as a position
in a "straddle" or as part of a "hedging" or "conversion" transaction, persons
that have a functional currency other than the United States dollar, or
persons who acquired their shares upon the exercise of stock options or
otherwise as compensation). This summary also does not address the state,
local, foreign or other tax consequences of participating in the offer.
You are urged to consult your tax advisor as to the particular consequences to
you of participation in the offer.
A "United States Holder" is a holder of shares that for United States
federal income tax purposes is:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the laws
of the United States or any State or the District of Columbia;
. an estate the income of which is subject to United States federal income
taxation regardless of its source; or
. a trust (a) the administration over which a United States court can
exercise primary supervision and (b) all of the substantial decisions of
which one or more United States persons have the authority to control
and certain other trusts considered United States Holders for federal
income tax purposes.
A "Non-United States Holder" is a holder of shares other than a United
States Holder.
An exchange of shares for cash pursuant to the offer will be a taxable
transaction for United States federal income tax purposes. If an exchange of
shares for cash by a United States Holder pursuant to the offer is treated as
a sale or exchange of such shares for United States federal income tax
purposes, the holder will recognize capital gain or loss equal to the
difference between the amount of cash received and the holder's adjusted tax
basis in the shares purchased by Grubb & Ellis, except to the extent that the
amount of cash received is attributable to accrued but unpaid dividends of
which there is none. The gain or loss would be long-term capital gain or loss
if the holding period for the shares exceeded one year.
The receipt of cash by a stockholder pursuant to the offer will be treated
as a sale or exchange for United States federal income tax purposes if the
exchange:
. is "not essentially equivalent to a dividend" with respect to the holder
under section 302(b)(1) of the Code;
28
<PAGE>
. is a "substantially disproportionate" redemption with respect to the
holder under section 302(b)(2) of the Code; or
. results in a "complete termination" of the holder's stock interest in
Grubb & Ellis under section 302(b)(3) of the Code.
In determining whether any of these tests has been met, a United States
Holder must take into account not only shares it actually owns, but also
shares it constructively owns within the meaning of section 318 of the Code
(including shares that may be acquired through options that it owns).
A distribution to a stockholder will be treated as "not essentially
equivalent to a dividend" if it results in a "meaningful reduction" in the
stockholder's stock interest in Grubb & Ellis. Whether the receipt of cash by
a stockholder will result in a meaningful reduction of the stockholder's
proportionate interest will depend on the stockholder's particular facts and
circumstances. If, however, as a result of an exchange of shares for cash
pursuant to the offer, a United States Holder whose relative stock interest in
Grubb & Ellis is minimal and who exercises no control over corporate affairs
suffers a reduction in its proportionate interest in Grubb & Ellis (including
any ownership of shares constructively owned), the holder should generally be
regarded as having suffered a meaningful reduction in its interest in Grubb &
Ellis.
Satisfaction of the "complete termination" and "substantially
disproportionate" exceptions is dependent upon compliance with the respective
objective tests set forth in section 302(b)(2) and section 302(b)(3) of the
Code. A distribution to a stockholder will result in a "complete termination"
if either (1) all of the shares actually and constructively owned by the
stockholder are exchanged pursuant to the offer or (2) all of the shares
actually owned by the stockholder are exchanged pursuant to the offer and the
stockholder is eligible to waive, and effectively waives, the attribution of
shares constructively owned by the stockholder in accordance with the
procedures described in section 302(c)(2) of the Code. A distribution to a
stockholder will be "substantially disproportionate" if the percentage of the
outstanding voting stock of Grubb & Ellis actually and constructively owned by
the stockholder immediately following the exchange of shares pursuant to the
offer (treating shares exchanged pursuant to the offer as not outstanding) is
less than 80% of the percentage of the outstanding voting stock of Grubb &
Ellis actually and constructively owned by the stockholder immediately before
the exchange (treating shares exchanged pursuant to the offer as outstanding),
and immediately following the exchange the stockholder owns less than 50% of
the total combined voting power of Grubb & Ellis.
If a United States Holder's exchange of shares for cash pursuant to the
offer does not constitute a sale or exchange, the receipt of cash by such
holder pursuant to the offer will be treated as a dividend, taxable as
ordinary income, to the extent of Grubb & Ellis' current or accumulated
earnings and profits, as determined under Federal income tax principles. To
the extent that the amount of the distribution exceeds Grubb & Ellis' current
and accumulated earnings and profits, the excess first will be treated as a
return of capital that will reduce the holder's tax basis in the shares
exchanged in the offer, and any remaining portion will be taxable as capital
gains. Any such capital gain will be long-term capital gain if the holder has
held the shares for more than one year at the time of the exchange. A dividend
received by a corporate United States Holder may be (1) eligible for a
dividends-received deduction (subject to applicable exceptions and
limitations) and (2) subject to the "extraordinary dividend" provisions of
section 1059 of the Code.
Tax Considerations for Holders of ESPP Shares, Option Shares and 401(k) Plan
Shares
Employee Stock Purchase Plan. If a participant in the ESPP tenders and has
purchased in the offer shares which were acquired under the ESPP, then the
participant will be treated for federal income tax purposes as having received
ordinary compensation income on a portion of the proceeds he or she receives.
Any amount received over the ordinary compensation income portion in the
tender will be treated as capital gain or loss or dividend income, as
described in the description of Certain United States Federal Income Tax
Consequences applicable to all stockholders.
29
<PAGE>
The amount of ordinary compensation income the participant will be treated
as receiving depends upon how long the shares acquired under the ESPP were
held by the participant prior to the Expiration Date. If the shares tendered
and purchased are held by the participant for two years or less from the first
day of the offering period in which the shares were acquired under the ESPP,
then the amount of ordinary compensation income will be an amount equal to the
excess of the fair market value of the shares on the date the shares were
acquired under the ESPP over the price that the participant paid for the
shares. If the shares tendered and purchased are held by the participant for
more than two years from the first day of the offering period in which the
shares were acquired under the ESPP then the amount of the ordinary
compensation income will be an amount equal to the lesser of: (a) the excess
of the fair market value of the shares on the Expiration Date over the amount
originally paid for such shares, or (b) the excess of the fair market value of
the shares on the first day of the offering period in which the shares were
acquired over the purchase price per share.
The amount of ordinary compensation income that a participant receives upon
tender of his or her shares under the ESPP will be subject to ordinary income
and employment taxes and will be included on the participant's year 2001 Form
W-2.
Stock Option Plans. An optionee who exercises options and receives cash in
the offer in exchange for Option Shares will be treated as receiving
compensation income per share sold equal to the excess of the $7.00 per share
tender offer price over the exercise price per share of the options from which
the Option Shares are sold in the offer. Such income will be taxed to the
optionee at ordinary income rates and, for current and former employees, will
be subject to withholding for income and employment taxes.
401(k) Plan. The 401(k) Plan is a tax exempt trust and therefore, no gain
or loss will be recognized by the participant upon the tender of shares
credited to their account under the 401(k) Plan. However, by tendering the
shares a participant may be giving up special tax consequences applicable to
employer securities upon distribution of such shares from the 401(k) Plan.
Please refer to the Letter to Participants, printed on white paper and sent to
401(k) Plan participants together with this Offer to Purchase for a
description of these tax consequences.
The tax discussion set forth above is included for general information only
and is not tax advice. You are urged to consult your tax advisor to determine
the particular tax consequences to you of the offer, including the
applicability and effect of state, local, foreign and other tax laws.
15. Extension of the Offer; Termination; Amendment.
Grubb & Ellis expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 have occurred or are deemed by Grubb & Ellis to have
occurred, to extend the period of time the offer is open and delay acceptance
for payment of, and payment for, any shares by giving oral or written notice
of the extension to the Depositary and making a public announcement of the
extension. Grubb & Ellis also expressly reserves the right, in its sole
discretion, to terminate the offer and reject for payment and not pay for any
shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for shares upon the occurrence of any of
the conditions specified in Section 7 by giving oral or written notice of the
termination or postponement to the Depositary and making a public announcement
of the termination or postponement. The Company's reservation of the right to
delay payment for shares which it has accepted for payment is limited by Rule
13e-4(f)(5) under the Exchange Act, which requires that Grubb & Ellis must pay
the consideration offered or return the shares tendered promptly after
termination or withdrawal of a tender offer. Subject to compliance with
applicable law, Grubb & Ellis further reserves the right, in its sole
discretion, and regardless of whether any of the events set forth in Section 7
have occurred or are deemed by Grubb & Ellis to have occurred, to amend the
offer in any respect (including, without limitation, by decreasing or
increasing the consideration offered in the offer to holders of shares or by
decreasing or increasing the number of shares being sought in the offer).
Amendments to the offer may be made at any time and from time to time by
public announcement of the amendment. In the case of an extension, the
amendment must be issued no later than 9:00 a.m., New York City time, on the
next business day after the last
30
<PAGE>
previously scheduled or announced Expiration Date. Any public announcement
made pursuant to the offer will be disseminated promptly to stockholders in a
manner reasonably designed to inform stockholders of the change. Without
limiting the manner in which Grubb & Ellis may choose to make a public
announcement, except as required by applicable law, Grubb & Ellis will have no
obligation to publish, advertise or otherwise communicate any public
announcement other than by issuing a press release to the Dow Jones News
Service.
If Grubb & Ellis materially changes the terms of the offer or the
information concerning the offer, or if it waives a material condition of the
offer, Grubb & Ellis will extend the offer to the extent required by
Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act. These
rules provide that the minimum period during which an offer must remain open
following material changes in the terms of the offer or information concerning
the offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of the terms or information. If:
(1) Grubb & Ellis increases or decreases the price to be paid for shares or
increases or decreases the number of shares being sought in the offer
and, in the event of an increase in the number of shares being sought,
the increase exceeds 2% of the outstanding shares, and
(2) the offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and
including, the date that notice of an increase or decrease is first
published, sent or given in the manner specified in this Section 15,
then in each case the offer will be extended until the expiration of the
period of ten business days. For purposes of the offer, a "business day" means
any day other than a Saturday, Sunday or Federal holiday and consists of the
time period from 12:01 a.m. through 12:00 Midnight, New York City time.
16. Fees and Expenses.
Grubb & Ellis has retained BAS to act as its financial advisor in
connection with the strategic review referred to in Section 2 and as the
Dealer Manager in connection with the offer. BAS will receive, for its
services, a fee of $250,000, earned upon commencement of the offer and payable
no later than the Expiration Date. Grubb & Ellis also has agreed to reimburse
BAS for reasonable out-of-pocket expenses incurred in connection with the
offer, including reasonable fees and expenses of counsel, and to indemnify BAS
against liabilities in connection with the offer, including liabilities under
the federal securities laws.
Grubb & Ellis has retained Morrow & Co., Inc., to act as Information Agent
and Computershare Trust Company of New York to act as Depositary in connection
with the offer. The Information Agent may contact holders of shares by mail,
telephone, telegraph and personal interviews and may request brokers, dealers
and other nominee stockholders to forward materials relating to the offer to
beneficial owners. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their respective services, will be
reimbursed by Grubb & Ellis for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection with the offer,
including liabilities under the federal securities laws.
E*TRADE Business Solutions acts as the administrator of the ESPP and the
Stock Option Plans. E*TRADE Business Solutions will receive reasonable and
customary compensation for its services as plan administrator in connection
with the offer and will be reimbursed for certain out-of-pocket costs.
Fidelity Management Trust Company acts as the Trustee of the Grubb & Ellis
401(k) Plan. Fidelity Management Trust Company will receive from Grubb & Ellis
its customary fees for its services in connection with the offer and will be
reimbursed for certain out-of-pocket costs.
Grubb & Ellis will not pay any fees or commissions to brokers, dealers or
other persons (other than fees to the Dealer Manager, the Information Agent,
E*TRADE as the administrator of the ESPP and the Stock Option Plans and
Fidelity Management Trust Company as Trustee of the 401(k) Plan as described
above) for soliciting tenders of shares pursuant to the offer. Stockholders
holding shares through brokers, dealers and other nominee
31
<PAGE>
stockholders are urged to consult the brokers, dealers and other nominee
stockholders to determine whether transaction costs may apply if stockholders
tender shares through the brokers, dealers and other nominee stockholders and
not directly to the Depositary. Grubb & Ellis will, however, upon request,
reimburse brokers, dealers and commercial banks for customary mailing and
handling expenses incurred by them in forwarding the offer and related
materials to the beneficial owners of shares held by them as a nominee or in a
fiduciary capacity. No broker, dealer, commercial bank or trust company has
been authorized to act as the agent of Grubb & Ellis, the Dealer Manager, the
Information Agent or the Depositary for purposes of the offer. Grubb & Ellis
will pay or cause to be paid all stock transfer taxes, if any, on its purchase
of shares except as otherwise provided in Instruction 7 in the Letter of
Transmittal.
17. Miscellaneous.
Grubb & Ellis is not aware of any jurisdiction where the making of the
offer is not in compliance with applicable law. If Grubb & Ellis becomes aware
of any jurisdiction where the making of the offer or the acceptance of shares
pursuant to the offer is not in compliance with any valid applicable law,
Grubb & Ellis will make a good faith effort to comply with the applicable law.
If, after a good faith effort, Grubb & Ellis cannot comply with the applicable
law, the offer will not be made to, nor will tenders be accepted from or on
behalf of, the holders of shares residing in that jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the offer to
be made by a licensed broker or dealer, the offer will be deemed to be made on
Grubb & Ellis' behalf by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of the jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, Grubb & Ellis
has filed with the SEC an Issuer Tender Offer Statement on Schedule TO, which
contains additional information relating to the offer. The Schedule TO,
including the exhibits and any amendments thereto, may be examined, and copies
may be obtained, at the same places and in the same manner set forth in
Section 10 with respect to information concerning Grubb & Ellis.
You should rely only on the information contained in this document or to
which we have referred you. Grubb & Ellis has not authorized anyone to provide
you with information or make any representation on behalf of Grubb & Ellis in
connection with the offer other than those contained in this Offer to
Purchase, the related Letter of Transmittal or in the other documents that
constitute a part of the offer. If given or made, you should not rely on that
information or representation as having been authorized by Grubb & Ellis or
the Dealer Manager.
Grubb & Ellis Company
December 15, 2000
32
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for shares and any other
required documents should be sent or delivered by each stockholder or the
stockholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below. To confirm delivery of
shares, stockholders are directed to contact the Depositary.
The Depositary for the offer is:
COMPUTERSHARE TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery:
Computershare Trust Company Computershare Trust Company
of New York of New York
Wall Street Station Wall Street Plaza
P.O. Box 1023 88 Pine Street--19th Floor
New York, NY 10268-1023 New York, NY 10005
</TABLE>
Facsimile Transmission:
(212) 701-7636
Telephone:
(212) 701-7624
You may request additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery and direct questions and
requests for assistance to the Information Agent at its address and telephone
number set forth below.
The Information Agent for the offer is:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms Call: (800) 654-2468
Stockholders Please Call: (800) 607-0088
The Dealer Manager for the offer is:
BANC OF AMERICA SECURITIES LLC
9 W. 57th Street
New York NY 10019
(212) 583-8537
1-888-583-8900 ext. 8537
