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DETECTION SYSTEMS, INC.
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As filed with the Commission on December 12, 2000
DETECTION SYSTEMS, INC.
130 Perinton Parkway
Fairport, New York 14450
[GRAPHIC OMITTED]
December 12, 2000
Dear Shareholder:
I am very pleased to announce that your Company has entered into an
agreement with Robert Bosch GmbH, which provides that Bosch will buy all
outstanding shares of the Company for $18 per share in cash!!
ANNUAL MEETING CANCELLED
In light of the Bosch transaction, we have cancelled the annual
meeting of shareholders, which was scheduled for Tuesday, December 19. Your
Board determined that the meeting should be cancelled, especially because
we would not have enough time to inform you about the Bosch transaction
sufficiently in advance of the meeting, and also because the Company will
soon be wholly-owned by Bosch.
BOSCH TO ACQUIRE DETECTION SYSTEMS FOR $18 CASH PER SHARE
This agreement is the result of your Board's commitment to explore
strategic alternatives to enhance value for all shareholders. We believe it
justifies our earlier decision not to hastily sell the Company at lower
values. We're pleased to make available such an attractive transaction for
all shareholders, and believe our shareholders have been well served. We
are also assured that the merged company will continue the traditions of
employee satisfaction, technological innovation, high quality and customer
service that form the basis of your Company's 32 year history of success.
We believe that bringing Bosch's security technology to the U.S. market
will enhance our ability to service our customers.
Robert Bosch is a $30 billion global company with activities in
automotive components, consumer products, capital goods and security
products. The security division of Bosch has annual sales of $450 million
with a strong presence in Germany and other European markets. Bosch has
decided to expand its activities in this industry in the U.S. and other
markets as part of its strategy to become a global supplier of security
products. Since 1997, the Company has had discussions with Bosch regarding
various potential business transactions, arrangements and combinations.
Uwe Glock, President, Security Systems, of Bosch Telecom GmbH, has
said, "We look forward to working together with Detection Systems' customers
and employees toward a prosperous future. We have long been interested in
acquiring Detection Systems, because we believe there are tremendous
product and technology synergies. It is our intention to keep intact the
operations of Detection Systems and to utilize its Rochester operation and
its employees as the basis of our security business in the United States.
Mr. Kostusiak will continue as President of Detection Systems operations
worldwide."
The merger agreement with Bosch provides that a subsidiary of Bosch
will launch a tender offer to buy all of the Company's outstanding shares
for $18 per share in cash. Following completion of the tender offer, a
subsidiary of Bosch will merge with Detection Systems, and the remaining
shares will be converted into the right to receive $18. As a result of the
tender offer and merger, the Company will become a wholly-owned subsidiary
of Bosch. The transaction is contingent upon customary regulatory review
and is expected to close in January 2001.
As part of the merger agreement, the Company granted to Bosch an
option to purchase approximately 16.9% of its outstanding shares, at $18
per share. In addition David B. Lederer, Executive Vice President of the
Company, and I have agreed to tender all of our shares into Bosch's offer
and to grant Bosch an option to purchase all of our shares at $18 per
share.
The Company and Bosch will each be sending you additional
information about the tender offer and merger in the coming weeks. The
Company's materials will include the recommendation of your Board of
Directors on the Bosch offer.
In the meanwhile, if you have any questions, please contact either
Frank Ryan or Chris Gerace at the Company at (716) 223-4060.
Your continued interest and participation in the affairs of the
Company are most appreciated.
Sincerely,
/s/ Karl H. Kostusiak
Karl H. Kostusiak
Chairman and CEO
This letter contains forward-looking information which involves
expressions of management's current expectations. All forward-looking
information is subject to various risks and uncertainties that may be
beyond the Company's control and may cause results to differ from
management's current expectations. Information concerning factors that
could cause actual results to differ materially from management's current
expectations are set forth on pages 9 - 13 of the Company's 2000 Annual
Report on Form 10-K.
