Exhibit (a)(1)(A)
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
FRACTIONAL UNITS OF PREFERRED STOCK)
OF
DEXTER CORPORATION
AT
$45 NET PER SHARE
BY
ISP ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
INTERNATIONAL SPECIALTY PRODUCTS INC.
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON JULY 24, 2000
UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
A SUMMARY OF THE PRINCIPAL TERMS OF THE OFFER APPEARS ON
PAGES (III) THROUGH (VI). YOU SHOULD READ THIS ENTIRE DOCUMENT CAREFULLY BEFORE
DECIDING WHETHER TO TENDER YOUR SHARES.
THE DEALER MANAGER
FOR THE OFFER IS:
CHASE SECURITIES INC.
JUNE 26, 2000
NY2:\878980\07\$%8407!.DOC\54104.0016
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TABLE OF CONTENTS
<TABLE>
<S> <C>
PAGE
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SUMMARY TERM SHEET.............................................................................................................iii
IMPORTANT........................................................................................................................1
INTRODUCTION.....................................................................................................................2
Merger and Plans.................................................................................................................3
Certain Conditions to the Offer..................................................................................................4
THE OFFER ......................................................................................................................7
1. Terms of the Offer; Expiration Date...................................................................................7
2. Acceptance for Payment and Payment...................................................................................10
3. Procedures for Accepting the Offer and Tendering Shares..............................................................11
4. Withdrawal Rights....................................................................................................15
5. Certain Federal Income Tax Consequences..............................................................................16
6. Price Range of the Shares; Dividends.................................................................................17
7. Effect of the Offer on the Market for the Shares; Stock Exchange Listing; Exchange Act Registration; Margin
Regulations..........................................................................................................18
8. Certain Information Concerning Dexter................................................................................19
9. Certain Information Concerning Purchaser and ISP.....................................................................21
10. Background of the Offer; Contacts with Dexter........................................................................24
11. Purpose of the Offer and the Proposed Merger; Plans for Dexter.......................................................24
12. Source and Amount of Funds...........................................................................................32
13. Dividends and Distributions..........................................................................................33
14. Certain Conditions of the Offer......................................................................................34
15. Certain Legal Matters; Required Regulatory Approvals.................................................................36
16. Certain Fees and Expenses............................................................................................38
17. Miscellaneous........................................................................................................39
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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Schedule I
Directors and Executive Officers of ISP ........................................................................................40
Schedule II
Directors and Executive Officers of Purchaser...................................................................................44
Schedule III
Background of the Offer.........................................................................................................46
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SUMMARY TERM SHEET
The following is a brief summary of the material terms of the Offer
to purchase all outstanding shares of common stock of Dexter Corporation being
made by ISP Acquisition Corp. This summary term sheet is not meant to be a
substitute for the fuller descriptions and explanations contained in the
remainder of this Offer to Purchase. You should read the remainder of this
document carefully, together with the Letter of Transmittal, prior to deciding
whether to tender your Dexter shares.
Q.........WHO IS OFFERING TO PURCHASE MY DEXTER SHARES?
A.........ISP Acquisition Corp., a Delaware corporation formed solely
to make the Offer ("ISP Acquisition"), is offering to purchase your shares of
Dexter common stock, together with the related rights to purchase fractional
units of preferred stock. In this Offer to Purchase, we use the term "Shares" to
refer to Dexter's common stock and the related preferred stock purchase rights,
collectively. ISP Acquisition is an indirect wholly-owned subsidiary of
International Specialty Products Inc., a Delaware corporation ("ISP"). ISP is a
New York Stock Exchange listed, multinational manufacturer of specialty
chemicals and mineral products. As of the date of this Offer to Purchase, ISP
beneficially owns 2,299,200 shares of Dexter's common stock, representing
approximately 9.91% of the outstanding shares. In addition, on such date, ISP,
together with its reporting "group" for Schedule 13D purposes, beneficially
owned 5,417,991 shares of common stock of Dexter's majority-owned subsidiary,
Life Technologies, Inc., representing approximately 21.7% of the outstanding
shares of Life Technologies. See "Introduction" and Section 9.
Q.........WHAT IS ISP ACQUISITION SEEKING TO PURCHASE, AT WHAT PRICE,
AND DO I HAVE TO PAY ANY BROKERAGE OR SIMILAR FEES TO TENDER?
A.........ISP Acquisition is offering to purchase all of the
outstanding Shares of Dexter at a price of $45 per Share in cash. If you are the
record owner of your Shares, you will not have to pay any brokerage or similar
fees. However, if you own your Shares through a broker or other nominee, your
broker or nominee may charge you a fee to tender. You should consult your broker
or nominee to determine whether any charges will apply. See "Introduction" and
Section 1.
Q.........WHY IS ISP ACQUISITION MAKING THIS OFFER?
A.........ISP Acquisition is making this Offer because ISP wants to
acquire control of Dexter. Dexter's incumbent directors have rejected ISP's
proposed business combination in which all Dexter shareholders would receive $45
per share in cash, subject to the execution of a mutually acceptable merger
agreement. By making this Offer, ISP Acquisition can offer $45 per Share
directly to Dexter shareholders despite the fact that Dexter's Board has not
accepted ISP's business combination proposal. However, this Offer is subject to
important conditions, a number of which cannot be satisfied without the approval
of Dexter's Board. See "Introduction" and Section 14.
Q.........HOW IS THE OFFER RELATED TO ISP'S PROXY FIGHT?
A.........ISP is soliciting proxies for use at the 2000 Annual
Meeting of the Shareholders of Dexter now scheduled for July 14, 2000. In
connection with ISP's proxy solicitation, ISP is asking Dexter shareholders to
elect its nominees and approve certain proposals intended to facilitate this
Offer or a superior proposal. See "Introduction" and Section 11. This document
is not being used by ISP to solicit proxies. Solicitations of proxies by ISP are
being made only pursuant to ISP's definitive proxy statement filed with the
Securities and Exchange Commission.
Q.........HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER INTO THE
OFFER?
A.........You have until 12:00 midnight, New York City time, on July
24, 2000. Under certain circumstances, the Offer may be extended. If the Offer
is extended, we will issue a press release announcing the extension on or before
the first business morning following the date the Offer was scheduled to expire.
See Section 1.
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Q.........WHAT ARE THE MOST IMPORTANT CONDITIONS TO THE OFFER?
A.........The most important conditions to the Offer are that:
o Dexter shareholders validly tender and do not withdraw before the
expiration of the Offer enough Shares so that, taking into account the
Shares already beneficially owned by ISP, ISP Acquisition and ISP will own
at least two-thirds of the outstanding Shares on a fully diluted basis;
o Dexter's Board redeems the preferred stock purchase rights, or ISP is
satisfied in its sole discretion that the rights have been invalidated or
are otherwise inapplicable to the Offer and the proposed subsequent
merger;
o Dexter's Board approves the acquisition of Shares by ISP Acquisition in
the Offer and proposed second step merger for purposes of Sections 33-841
and 33-844 of the Connecticut Business Corporation Act, so that ISP
Acquisition can consummate a proposed second step merger as soon as
practicable following consummation of the Offer, in which all remaining
Dexter shareholders would receive $45 in cash for each of their Shares;
o Dexter has not sold or otherwise disposed of any assets of Dexter or its
subsidiaries outside the ordinary course of business, including, without
limitation, any shares of any subsidiary of Dexter, such as Life
Technologies, and any agreements which Dexter has entered into with
respect to the sale or disposition of such assets shall have been
terminated and, in the sole determination of ISP, no material termination
fees or other liabilities shall have been incurred in connection
therewith;
o ISP Acqusition has available borrowings of $1.775 billion to, among other
things, purchase Shares in the Offer, on the terms set forth in the senior
credit facilities commitment letter issued by The Chase Manhattan Bank and
Chase Securities Inc. to a subsidiary of ISP; and
o Dexter's Board agrees to cause a majority of the Board to be comprised of
representatives of ISP immediately following the consummation of the
Offer.
A more complete discussion of the conditions to consummation of the
Offer may be found in the Introduction and Section 14.
Q.........DOES ISP ACQUISITION HAVE THE FINANCIAL RESOURCES TO PAY
FOR ALL TENDERED SHARES?
A.........ISP has received from The Chase Manhattan Bank and Chase
Securities Inc. a commitment to lend, subject to the conditions set forth in the
commitment letter, up to $1.775 billion to a wholly-owned subsidiary of ISP for
the purpose of purchasing shares of Dexter common stock pursuant to the Offer,
refinancing certain existing indebtedness and providing working capital
following the acquisition. If the conditions to funding under such bank
commitment are not satisfied, ISP Acquisition will not be able to or obligated
to purchase shares of Dexter common stock pursuant to the Offer. Conditions to
funding under the bank commitment letter include, among other things, that there
has been no material adverse change in the business, operations or financial
condition of ISP or Dexter and that there has been no material disruption of or
material adverse change in financial, banking or capital market conditions that,
in the judgment of The Chase Manhattan Bank, could materially impair the
syndication of the loan. A more complete discussion of the conditions to funding
under the bank commitment is contained in Section 12.
Q.........HOW DO I ACCEPT THE OFFER AND TENDER MY SHARES?
A.........To tender your Shares, you must completely fill out the
enclosed Letter of Transmittal and deliver it, along with your Share
certificates, to the Depositary identified in the Letter of Transmittal prior to
the expiration of the Offer. If your shares are held in street name (i.e.,
through a broker, dealer or other nominee), they can be tendered by your nominee
through The Depository Trust Company. If you cannot deliver all necessary
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documents to the Depositary in time, you might be able to complete and deliver
to the Depositary, in lieu of the missing documents, the enclosed Notice of
Guaranteed Delivery, provided you are able to fully comply with its terms. See
Section 3.
Q.........IF I ACCEPT THE OFFER, WHEN WILL I GET PAID?
A.........Provided the conditions to the Offer are satisfied and ISP
Acquisition consummates the Offer and accepts your Shares for payment, you will
receive a check equal to the number of Shares you tendered multiplied by $45,
subject to any required withholding for federal income tax, as promptly as
practicable following the expiration of the Offer. ISP Acquisition expects that
checks will be mailed out promptly following expiration of the Offer. See
Section 2.
Q.........CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
A.........You may withdraw a portion or all of your tendered Shares
by delivering written, telegraphic or facsimile notice to the Depositary prior
to the expiration of the Offer. Further, if ISP Acquisition has not agreed to
accept your Shares for payment within 60 days of the commencement of the Offer,
you can withdraw them at any time after that 60-day period until ISP Acquisition
does accept your Shares for payment. Once Shares are accepted for payment by ISP
Acquisition, they cannot be withdrawn. See Section 4.
Q.........WHAT DOES DEXTER'S BOARD THINK OF THIS OFFER?
A.........Dexter's Board has previously rejected our $45 per Share
proposal as inadequate. Within ten business days after the date of this Offer,
Dexter is required by law to publish, send or give to you (and file with the
Securities and Exchange Commission) a statement as to whether it recommends
acceptance or rejection of this Offer, that it has no opinion with respect to
this Offer or that it is unable to take a position with respect to this Offer.
Q.........IF I DO NOT TENDER BUT THE OFFER IS SUCCESSFUL, WHAT WILL
HAPPEN TO MY SHARES?
A.........As indicated above, if the Offer is successful, ISP
Acquisition expects to conclude a merger transaction in which all remaining
shareholders of Dexter at the time of the proposed merger, other than those that
properly assert dissenters' rights under Connecticut law (discussed immediately
below and in Section 11 below), will receive $45 per Share in cash for each
Share, without interest. Dexter will then become a wholly-owned subsidiary of
ISP.
You should also be aware that, after the Offer is consummated, the
number of shareholders of Dexter other than ISP may be so small that Dexter
Shares may not be eligible for trading on any national securities exchange.
Also, depending on the remaining number of shareholders, Dexter may cease to
comply with the rules of the Securities and Exchange Commission requiring the
public filing of periodic reports. These factors may adversely affect the market
value of any remaining Shares held by the public. In addition, ISP may cause
Dexter to sell or otherwise dispose of its shares of Life Technologies common
stock or other significant assets. See Section 7.
Q.........ARE DISSENTERS' RIGHTS AVAILABLE IN EITHER THE OFFER OR THE
PROPOSED MERGER?
A. Dissenters' rights are not available in the Offer. However, if you
choose not to tender and the Offer is consummated, dissenters' rights may be
available in the proposed merger of ISP Acquisition and Dexter. If dissenters'
rights are available and you choose to exercise your dissenters' rights and
comply with the applicable legal requirements, you will be entitled to the fair
value of your Shares. The fair value may be more or less than $45 per share.
Q.........WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE
TRANSACTION?
A. The receipt of cash by you in exchange for your Shares pursuant to
the Offer or the subsequent merger proposed by ISP Acquisition (or upon exercise
of dissenters' rights) is a taxable transaction for federal income tax purposes
and may also be a taxable transaction under applicable state, local or foreign
tax laws. In general, you will recognize capital gain or loss equal to the
difference between the amount of cash you receive for the Shares you tender and
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your adjusted tax basis in those Shares. You should consult your tax advisor
about the particular tax consequences of tendering your shares. See Section 5.
Q.........WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A.........On June 23, 2000, the last trading day before the
commencement of the Offer, the shares of Dexter closed on the New York Stock
Exchange at $46 13/16. Please obtain a recent quotation for your shares prior to
deciding whether or not to tender. See Section 6.
Q.........WHO CAN I CALL WITH QUESTIONS?
A......... You can call Innisfree M&A Incorporated, the Information
Agent for the Offer, toll-free at (888) 750-5834 with any questions you may
have.
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IMPORTANT
ISP MAY SEEK TO NEGOTIATE WITH DEXTER WITH RESPECT TO THE
ACQUISITION OF DEXTER BY ISP OR ISP ACQUISITION. THERE CAN BE NO ASSURANCE THAT
ISP AND DEXTER WILL ENGAGE IN SUCH NEGOTIATIONS OR THAT ISP WILL ENTER INTO AN
AGREEMENT WITH DEXTER. ISP ACQUISITION AND ISP RESERVE THE RIGHT TO AMEND THE
OFFER, INCLUDING, WITHOUT LIMITATION, UPON ENTERING INTO A MERGER AGREEMENT WITH
DEXTER. ACCORDINGLY, SUCH NEGOTIATIONS COULD RESULT IN, AMONG OTHER THINGS,
TERMINATION OF THE OFFER AND SUBMISSION OF A DIFFERENT ACQUISITION PROPOSAL TO
DEXTER SHAREHOLDERS FOR THEIR APPROVAL.
Any shareholder desiring to tender Shares should either (a)
complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, have such
shareholder's signature thereon guaranteed if required by Instruction 1 to the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in Section 3, an Agent's Message (as defined herein), and
any other required documents to the Depositary and either deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal (or facsimile thereof) or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 3, or (b) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. A shareholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such shareholder desires to tender such Shares. If a
Distribution Date (as defined in "Introduction--Conditions to the Offer--Rights
Condition") occurs, shareholders will be required to tender both a common stock
certificate and a rights certificate for each Share tendered in order to effect
a valid tender of such Share.
A shareholder who desires to tender Shares and whose
certificates representing such Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis may
tender such Shares by following the procedures for guaranteed delivery set forth
in Section 3.
Questions and requests for assistance may be directed to
the Information Agent at its address and telephone number set forth on the back
cover of this Offer to Purchase. Additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained from the Information Agent.
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To: All Holders of Shares of Common Stock
(Including the Associated Preferred Stock
Purchase Rights) of Dexter Corporation:
INTRODUCTION
ISP Acquisition (also referred to in this Offer to Purchase
as "Purchaser") hereby offers to purchase all of the outstanding shares of
common stock, par value $1.00 per share (the "Common Stock"), of Dexter, and
(unless and until ISP declares that the Rights Condition (as defined below) has
been satisfied) the associated rights to purchase fractional units of Preferred
Stock of Dexter (the "Rights" and, together with the Common Stock, the "Shares")
issued pursuant to the Rights Agreement, dated as of August 23, 1996, by and
between Dexter and ChaseMellon Shareholder Services L.L.C., as Rights Agent (as
amended, the "Rights Agreement"), at a price of $45 per Share, net to the seller
in cash, without interest thereon (as amended, the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which together, as amended or supplemented,
constitute the "Offer"). Unless the context otherwise requires, all references
to Shares shall include the Rights and all references to the Rights shall
include all benefits that may inure to holders of the Rights pursuant to the
Rights Agreement.
Tendering shareholders will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
Chase Securities Inc., as Dealer Manager (in such capacity, the "Dealer
Manager"), Wilmington Trust Company, as Depositary (the "Depositary"), and
Innisfree M&A Incorporated, as Information Agent (the "Information Agent"),
incurred in connection with the Offer. See Section 16.
ISP has filed with the Securities and Exchange Commission
(the "Commission") a definitive proxy statement pursuant to which it is
soliciting the proxies of Dexter shareholders in connection with Dexter's 2000
Annual Meeting, now scheduled for July 14, 2000. ISP is asking Dexter
shareholders to approve three sets of proposals, described below, which are
intended to facilitate this Offer or a superior proposal. There can be no
assurance that ISP's proposals will be adopted at the 2000 Annual Meeting. In
addition, as described below, certain proposals are subject to litigation and
Dexter has indicated that it will not implement such proposals, regardless of
the outcome of the vote. Accordingly, the outcome of ISP's proxy solicitation
will not necessarily lead to the satisfaction of material conditions to this
Offer such as the Rights Condition or the Director Majority Condition.
o ISP'S NOMINEE ELECTION PROPOSALS: ISP is nominating three persons for
election as directors of Dexter in the class with a three-year term
continuing until the 2003 Annual Meeting. ISP is also proposing to
amend the Dexter Bylaws to increase the size of Dexter's Board to
seventeen directors (the "Board Size Bylaw Proposal") and is nominating
seven additional persons for election as directors (the "Additional
Directors Election Proposal"). While a Connecticut federal court has
held the Board Size Bylaw Proposal and Additional Directors Election
Proposal to be invalid as being inconsistent with Dexter's Certificate
of Incorporation and Connecticut law, ISP believes that the court erred
for the reasons set forth in its definitive proxy statement and has
appealed this decision. ISP is soliciting proxies to vote in favor of
the Board Size Bylaw Proposal and Additional Directors Election
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Proposal, despite the court's decision, so that such proposals may be
implemented if the decision of the court is reversed on appeal. Votes
in favor of the Board Size Bylaw Proposal and Additional Directors
Election Proposal will not be effective unless the decision of the
court is reversed. However, even if the decision of the court is not
reversed, ISP's three nominees for election to the class of 2003 will
remain eligible for election and, if elected, are committed, subject to
their fiduciary duties, to pursue this Offer or a superior proposal.
o ISP'S SHAREHOLDER RIGHTS PROPOSALS: ISP is proposing that the Dexter
Bylaws be amended to require Dexter's Board to implement any special
resolution passed by Dexter shareholders directing Dexter's Board to
redeem the Rights issued under the Rights Agreement or to amend the
Rights Agreement to render it inapplicable to types of offers or
transactions specified in any such resolution. Furthermore, in
connection with this Bylaw amendment, ISP is seeking approval of a
special resolution directing Dexter's Board to amend the Rights
Agreement promptly to make it inapplicable to any offer to purchase all
shares of Dexter for at least $45 per share in cash. Accordingly, if
each of ISP's Shareholder Rights Proposals is adopted, the Rights
Agreement will not apply to proposals to acquire all Dexter shares for
at least $45 per share in cash. The Shareholder Rights Proposals, if
adopted, will also allow the Dexter shareholders to decide whether
Dexter's Board can adopt any future "poison pill" shareholder rights
plans. Dexter has indicated in its definitive proxy statement filed
with the Commission that it will not implement ISP's Shareholder Rights
Proposals, whatever the outcome of the vote is, because it believes
that these proposals are illegal and unenforceable under Connecticut
law.
o ISP'S VOTING RIGHTS PROPOSALS: In order to minimize any attempt by
Dexter's Board to frustrate the consideration or implementation of
ISP's proposals, ISP is also proposing to repeal any Bylaw amendments
that may be unilaterally adopted by Dexter's Board between February 26,
1999 and the date of the 2000 Annual Meeting. Finally, ISP is proposing
a resolution to set the order in which its proposals will be voted upon
at the 2000 Annual Meeting.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FROM DEXTER
SHAREHOLDERS. SOLICITATIONS OF PROXIES BY ISP ARE BEING MADE ONLY PURSUANT TO
ISP'S DEFINITIVE PROXY STATEMENT FILED WITH THE COMMISSION AND COMPLYING WITH
THE REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
MERGER AND PLANS
The purpose of the Offer is to enable ISP to acquire
control of, and beneficial ownership of the entire equity interest in, Dexter.
The Offer, as the first step in the acquisition of Dexter, is intended to
facilitate the acquisition of all outstanding Shares. Purchaser currently
intends, as soon as practicable following consummation of the Offer, to seek to
have Dexter consummate a merger or similar business combination with Purchaser
or a direct or indirect wholly-owned subsidiary of ISP (the "Merger"), pursuant
to which each then-outstanding Share (other than Shares held by ISP, Purchaser
or any of their respective wholly-owned subsidiaries, treasury shares and Shares
held by security holders who properly exercise any appraisal rights available to
them under the Connecticut Business Corporation Act (the "CBCA")) would be
converted into the right to receive in cash the price per Share paid by
Purchaser pursuant to the Offer.
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Although Purchaser will seek to have Dexter consummate the
proposed Merger as soon as practicable after consummation of the Offer, if the
Dexter Board opposes the Offer and the proposed Merger, certain terms of the
Rights and certain provisions of the CBCA and Dexter's Certificate of
Incorporation (the "Charter") and Bylaws (the "Bylaws") may affect the ability
of Purchaser to obtain control of Dexter and to effect the proposed Merger.
Accordingly, the timing and details of the Merger will depend on a variety of
factors and legal requirements, the actions of the Dexter Board, the number of
Shares acquired by Purchaser pursuant to the Offer, and whether the Minimum
Condition, the Rights Condition, the Business Combination Condition, the Asset
Retention Condition, the Funding Condition and the Director Majority Condition
(each as defined below) are satisfied. There can be no assurances that the
Purchaser will be able to consummate the Offer or, if the Offer is consummated,
will in fact be able to consummate the proposed Merger on the terms or within
the time outlined above. See Sections 10 and 11.
Purchaser reserves the right to acquire additional Shares
after consummation of the Offer in open market purchases, through a tender
offer, in privately negotiated transactions or otherwise, in order to obtain a
sufficient number of Shares to approve the transactions contemplated hereby.
CERTAIN CONDITIONS TO THE OFFER
The Offer is subject to the fulfillment of certain
conditions, including the following:
MINIMUM CONDITION. Consummation of the Offer is conditioned
(the "Minimum Condition") upon there being validly tendered and not properly
withdrawn prior to the Expiration Date (as defined in Section 1) that number of
Shares (the "Minimum Number of Shares") which, together with the Shares
beneficially owned by ISP and Purchaser, constitutes at least two-thirds of the
outstanding Shares on a fully diluted basis on the date of purchase of the
Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer,
if more than the Minimum Number of Shares are validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4 of this
Offer to Purchase, Purchaser will accept for payment and pay for such Shares.
According to Dexter's definitive proxy statement filed with
the Commission on June 2, 2000, there were 23,195,118 Shares outstanding as of
May 15, 2000. According to Dexter's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 (the "1999 Annual Report"), filed with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), there were 369,868 Shares issuable upon the exercise of
outstanding options as of December 31, 1999. Accordingly, based on this
information, there are 23,564,986 Shares outstanding on a fully-diluted basis,
assuming (i) that no Shares were issued (other than those reserved for issuance
on December 31, 1999 for options then outstanding) or acquired by Dexter after
May 15, 2000, (ii) the exercise of all options outstanding as of December 31,
1999 and (iii) as of the date of purchase there are no other obligations to
issue Shares. On the date of this Offer to Purchase, ISP beneficially owned
2,299,200 Shares. Based on the foregoing, the Minimum Condition would be
satisfied if 13,489,340 Shares are validly tendered pursuant to the Offer and
not withdrawn.
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RIGHTS CONDITION. Consummation of the Offer is conditioned
upon the Rights having been redeemed by Dexter's Board or ISP being satisfied,
in its sole discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and to the Merger (the "Rights Condition"). The Rights
are described in Dexter's Report on Form 8-A, dated November 12, 1996, as
amended on October 13, 1999 and February 14, 2000 (the "Dexter 8-A"), and such
description is summarized in Section 11.
According to the Dexter 8-A, at any time until the earlier
of (i) 10 days following the first date of public announcement that a person or
group of affiliated persons has become an Acquiring Person (as defined in
Section 11) and (ii) August 31, 2006 (the "Final Expiration Date"), Dexter's
Board may redeem the then outstanding Rights in whole, but not in part, at a
price of $.01 per Right.
According to the Dexter 8-A, until the earlier to occur of
(i) 10 business days following the first date of public announcement that a
person or group of affiliated persons has become an Acquiring Person and (ii) 10
business days (or such later date as may be determined by action of Dexter's
Board) following the date that a tender offer or exchange offer is first
published or sent or given within the meaning of Rule 14d-2(a) under the
Exchange Act, if upon consummation thereof, the offering person would be the
beneficial owner of 20% or more of the outstanding Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the common stock certificates (the "Share Certificates")
outstanding as of the Record Date (as defined in Section 11), by such Share
Certificate. From and after the Distribution Date, the Rights will separate from
the Shares and the Share Certificates.
Based on publicly available information, Purchaser believes
that as of June 26, 2000, the Rights were not exercisable, certificates
representing the Rights (the "Rights Certificates") had not been issued and the
Rights were evidenced by the Share Certificates. The Purchaser believes that as
a result of the commencement of the Offer, the Distribution Date will be 10
business days following commencement, or announcement of the Offer, unless prior
to such date Dexter's Board of Directors redeems the Rights or takes action to
delay the Distribution Date. See Section 11.
BUSINESS COMBINATION CONDITION. Consummation of the Offer
is conditioned upon the acquisition of Shares pursuant to the Offer and the
proposed Merger having been approved by Dexter's Board for purposes of Sections
33-841 and 33-844 of the CBCA (the "Business Combination Statute"), so that
Purchaser can consummate the proposed Merger as soon as practicable following
consummation of the Offer, or ISP being satisfied, in its sole discretion, that
the Business Combination Statute is invalid or otherwise inapplicable to the
Offer and the proposed Merger (the "Business Combination Condition").
The proposed Merger is subject to the provisions of Section
33-844 of the CBCA, which, in general, prohibits public Connecticut corporations
from engaging in a "Business Combination" (defined to include a variety of
transactions, including mergers) with an "Interested Shareholder" (defined
generally as a person owning shares entitled to cast at least 10% of the voting
power of a corporation) for a period of five years following the date the person
became an Interested Shareholder, unless before the person became an Interested
Shareholder, the board of directors of the corporation approved either the
Business Combination or the transaction in which the Interested Shareholder
became an Interested Shareholder.
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In addition, Section 33-841 of the CBCA provides that any
Business Combination with an Interested Shareholder that was not approved by the
board of directors prior to the date such person became an Interested
Shareholder, must be approved by the board of directors, 80% of the voting power
of the outstanding voting stock and two-thirds of the voting power of the
outstanding voting stock not controlled by the Interested Shareholder or meet
certain conditions regarding minimum price and type of consideration. See
Section 11 for a more detailed description of the Business Combination Statute.
Purchaser and ISP are hereby requesting that Dexter's Board
adopt a resolution approving the Offer and the proposed Merger for purposes of
the Business Combination Statute. However, there can be no assurance that
Dexter's Board will do so.
ASSET RETENTION CONDITION. Consummation of the Offer is
conditioned on Dexter not selling or otherwise disposing of any assets of Dexter
or its subsidiaries outside the ordinary course of business, including, without
limitation, any shares of any subsidiary of Dexter, such as Life Technologies,
and upon the termination of any agreements which Dexter has entered into with
respect to the sale or disposition of such assets and, in the sole determination
of ISP, that no material termination fees or other liabilities shall have been
incurred in connection therewith (the "Asset Retention Condition").
On June 20, 2000, Dexter announced that it has entered into
definitive agreements for the sale of certain of its wholly-owned businesses.
Dexter agreed to sell its electronic materials, adhesives and polymer systems
businesses for $400 million in cash to Loctite Corporation, a U.S. affiliate of
Henkel KGaA. Dexter disclosed that the agreement is subject to requisite
regulatory clearances and the approval of Henkel's shareholders' committee, to
be voted on at its regularly scheduled meeting on June 29, 2000. Dexter states
that the transaction, expected to close in July 2000, is not subject to Dexter
shareholder approval. Dexter also agreed to sell its nonwoven materials business
to Ahlstrom Paper Group Oy for $275 million in cash. Dexter disclosed that the
agreement is subject to clearance under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the approval of
Dexter's shareholders, which Dexter expects to obtain in the third quarter of
2000. In order for the Asset Retention Condition to be satisfied, the agreements
described above must be terminated without Dexter incurring any termination fees
or other liabilities which, in the sole determination of ISP, are material. ISP
has reviewed the sale agreements described above and does not deem the expense
reimbursement or termination fee provisions contained therein to be material. In
addition, for the Asset Retention Condition to be satisfied, Dexter may not
enter into any other agreements for the sale of assets outside the ordinary
course of business or any such agreements shall have been similarly terminated
without material termination fees or other liabilities. In this regard, ISP
notes that Dexter's June 21 announcement stated that it "is in active
discussions regarding a potential sale of its Coatings business" and is "moving
forward aggressively to achieve maximum value for the Company's Life
Technologies stake."
ISP believes that the planned sale of these businesses and
Dexter's interest in Life Technologies is the equivalent of a sale of "all or
substantially all" of Dexter's assets as defined under Connecticut law - thereby
necessitating Dexter shareholder approval pursuant to Section 33-831 of the
CBCA. A July 18, 2000 hearing has been scheduled by the United States District
Court for the District of Connecticut on ISP's motion for a temporary
restraining order or a preliminary injunction preventing Dexter from selling
these assets without a shareholder vote. If the asset sales are submitted to a
vote of Dexter shareholders and the shareholders fail to approve these
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transactions (and the agreements are thereby terminated), the Asset Retention
Condition may thereby be satisfied so long as Dexter has not entered into any
other agreements for the sale or other disposition of any assets of Dexter or
its subsidiaries outside the ordinary course of business.
FUNDING CONDITION. Consummation of the Offer is conditioned
upon the Purchaser having available borrowings of $1.775 billion to, among other
things, purchase Shares in the Offer, on the terms set forth in the senior
credit facilities commitment letter (the "Commitment Letter") issued by The
Chase Manhattan Bank and Chase Securities Inc. (together, "Chase") to ISP Opco
Holdings Inc., a subsidiary of ISP (the "Funding Condition"). If the conditions
to funding under the Commitment Letter are not satisfied, ISP Acquisition will
not be able to or obligated to purchase Shares pursuant to the Offer. Conditions
to funding under the Commitment Letter include, among other things, that there
has been no material adverse change in the business, operations or financial
condition of ISP or Dexter and that there has been no material disruption of or
material adverse change in financial, banking or capital market conditions that,
in the judgement of Chase, could materially impair the syndication of the loan.
A fuller discussion of the conditions to funding under the Commitment Letter is
contained in Section 12.
THE DIRECTOR MAJORITY CONDITION. Consummation of the Offer
is conditioned upon Dexter's Board agreeing to cause a majority of the Board to
be comprised of representatives of ISP immediately following the consummation of
the Offer.
CERTAIN OTHER CONDITIONS TO THE CONSUMMATION OF THE OFFER
ARE DESCRIBED IN SECTION 14.
ISP RESERVES THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND
REGULATIONS OF THE COMMISSION) TO AMEND OR WAIVE THE MINIMUM CONDITION, THE
RIGHTS CONDITION, THE BUSINESS COMBINATION CONDITION, THE ASSET RETENTION
CONDITION, THE FUNDING CONDITION, THE DIRECTOR MAJORITY CONDITION AND ANY OTHER
TERMS AND CONDITIONS OF THE OFFER. SEE SECTIONS 1 AND 14.
THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of any
such extension or amendment), Purchaser will accept for payment and thereby
purchase all Shares validly tendered and not properly withdrawn in accordance
with the procedures set forth in Section 4 on or prior to the Expiration Date
(as hereinafter defined). The term "Expiration Date" means 12:00 midnight, New
York City time, on Monday, July 24, 2000, unless and until Purchaser, in
accordance with the terms of the Offer, extends the period of time for which the
Offer is open, in which event the term "Expiration Date" means the time and date
at which the Offer, as so extended once or more than once by Purchaser, will
expire.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM
CONDITION, THE RIGHTS CONDITION, THE BUSINESS COMBINATION CONDITION, THE ASSET
RETENTION CONDITION, THE FUNDING CONDITION, THE DIRECTOR MAJORITY CONDITION, AND
ANY OTHER TERMS AND CONDITIONS SET FORTH IN SECTION 14.
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The Purchaser reserves the right (but will not be
obligated), in accordance with applicable rules and regulations of the
Commission, to amend or waive the Minimum Condition or any other condition of
the Offer. If the Minimum Condition or any of the other conditions set forth in
Section 14 have not been satisfied by 12:00 midnight, New York City time, on
Monday, July 24, 2000 (or any other time then set as the Expiration Date), the
Purchaser may elect to: (i) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the Offer,
as extended; (ii) subject to complying with applicable rules and regulations of
the Commission, waive all of the unsatisfied conditions and accept for payment
and pay for all Shares tendered and not withdrawn prior to the Expiration Date;
or (iii) terminate the Offer and not accept for payment or pay for any Shares
and return all tendered Shares to tendering shareholders.
If the Purchaser decides, in its sole discretion, to
increase the consideration offered in the Offer to holders of Shares and if, at
the time that notice of the increase is first published, sent or given to
holders of Shares in the manner specified below, 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 such notice is first so
published, sent or given, then the Offer will be extended until at least the
expiration of 10 business days from the date the notice of the increase is first
published, sent or given to holders of Shares. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday,
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time. IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER INCREASES THE
CONSIDERATION BEING PAID FOR SHARES ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER,
THIS INCREASED CONSIDERATION WILL BE PAID TO ALL SHAREHOLDERS WHOSE SHARES ARE
PURCHASED PURSUANT TO THE OFFER WHETHER OR NOT THE SHARES WERE TENDERED PRIOR TO
THE ANNOUNCEMENT OF THE INCREASE IN CONSIDERATION.
The Purchaser expressly reserves the right (but will not be
obligated), in its sole discretion, at any time and from time to time, to extend
the period during which the Offer is open for any reason by giving oral or
written notice of the extension to the Depositary and by making a public
announcement of the extension. There can be no assurance that the Purchaser will
exercise its right to extend the Offer. During any extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer and
subject to the right of a tendering shareholder to withdraw the Shares.
Subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act described below,
Purchaser expressly reserves the right to (a) delay acceptance for payment of
or, payment for, any tendered Shares (whether or not Purchaser has previously
accepted any Shares for payment), pending receipt of any regulatory or
governmental approvals specified in Section 15, (b) terminate or amend the Offer
as to any Shares not then paid for whether or not any Shares have theretofore
been accepted for payment if any of the conditions referred to in Section 14 has
not been satisfied or upon the occurrence of any of the events specified in
Section 14 and which events continue in effect immediately prior to the
expiration of the Offer, or (c) waive any condition or otherwise amend the Offer
in any respect, in each case, by giving oral or written notice of such delay,
termination, waiver or amendment to the Depositary and other than in the case of
a waiver, by making a public announcement thereof. Purchaser acknowledges (i)
that Rule 14e-1(c) under the Exchange Act requires Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (ii) that Purchaser may not delay
acceptance for payment of, or payment for, any Shares (except as provided in
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clause (a) of the preceding sentence) upon the occurrence of any of the
conditions specified in Section 14 without extending the period of time during
which the Offer is open.
If Purchaser extends the Offer or if Purchaser is delayed
in its acceptance for payment of or payment (whether before or after its
acceptance for payment of Shares) for Shares or it is unable to pay for Shares
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer, the Depositary may retain tendered Shares on behalf of
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described herein under Section
4. However, the ability of Purchaser to delay the payment for Shares that
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of shareholders promptly after
the termination or withdrawal of such bidder's offer, unless such bidder elects
to offer a subsequent offering period (a "Subsequent Offering Period") under
Rule 14d-11 under the Exchange Act and pays for Shares tendered during the Offer
and the Subsequent Offering Period in accordance with Rule 14d-11.
Any such extension, delay, termination, waiver or amendment
will be followed as promptly as practicable by public announcement thereof, and
such announcement in the case of an extension will be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Purchaser may
choose to make any public announcement, subject to applicable law (including
Rules 14d-4(d) and 14e-1(e) under the Exchange Act, which require that material
changes be promptly disseminated to holders of Shares in a manner reasonably
designed to inform such holders of such change), Purchaser currently intends to
make announcements by issuing a press release to Business Wire.
If Purchaser makes a material change in the terms of the
Offer, or if it waives a material condition to the Offer, Purchaser will extend
the Offer and disseminate additional tender offer materials to the extent
required by Rules 14d-4(d) and 14e-1 under the Exchange Act. The minimum period
during which an Offer must remain open following material changes in the terms
of the Offer, other than a change in price or a change in percentage of
securities sought or a change in any dealer's soliciting fee, will depend upon
the facts and circumstances, including the materiality, of the changes. With
respect to a change in price or, subject to certain limitations, a change in the
percentage of securities sought or a change in any dealer's soliciting fee, a
minimum ten business day period from the date of such change is generally
required to allow for adequate dissemination to shareholders.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser
may, subject to certain conditions, include a Subsequent Offering Period
following the expiration of the Offer on the Expiration Date. Rule 14d-11
provides that Purchaser may include a Subsequent Offering Period so long as,
among other things, (1) the Offer remained open for a minimum of 20 business
days and has expired, (2) the Offer was for all outstanding Shares, (3)
Purchaser accepts and promptly pays for all Shares tendered during the Offer,
(4) Purchaser announces the results of the Offer, including the approximate
number and percentage of Shares deposited, no later than 9:00 a.m., New York
City time, on the next business day after the Expiration Date and immediately
begins the Subsequent Offering Period, (5) Purchaser immediately accepts and
promptly pays for Shares as they are tendered during the Subsequent Offering
Period and (6) Purchaser pays the Offer Price for all Shares tendered in the
Subsequent Offering Period. Purchaser will be able to include a Subsequent
Offering Period if it satisfies the conditions above. In a public release, the
Commission expressed the view that the inclusion of a Subsequent Offering Period
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would constitute a material change to the terms of the Offer requiring Purchaser
to disseminate new information to shareholders in a manner reasonably calculated
to inform them of such change sufficiently in advance of the Expiration Date
(generally five business days). In the event Purchaser elects to include a
Subsequent Offering Period, it will notify shareholders of the Company
consistent with the requirements of the Commission.
A Subsequent Offering Period, if one is included, is not an
extension of the Offer. A Subsequent Offering Period would be an additional
period of time, following the expiration of the Offer, in which shareholders may
tender Shares not tendered during the Offer. Purchaser does not currently intend
to include a Subsequent Offering Period in the Offer, although it reserves the
right to do so in its sole discretion.
Pursuant to Rule 14d-7 under the Exchange Act, no
withdrawal rights will apply to Shares tendered in a Subsequent Offering Period
and no withdrawal rights apply during the Subsequent Offering Period with
respect to Shares tendered in the Offer and accepted for payment. The same
consideration, the Offer Price, will be paid to shareholders tendering Shares in
the Offer or in a Subsequent Offering Period, if one is included.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of the
Offer as so extended or amended), Purchaser will purchase, by accepting for
payment, and will pay for all Shares validly tendered and not properly withdrawn
prior to the Expiration Date (as permitted by Section 4) promptly after the
later to occur of (i) the Expiration Date and (ii) subject to compliance with
the applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, the satisfaction or waiver of the conditions to the
Offer set forth in Section 14.
In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares or timely confirmation (a "Book-Entry
Confirmation") of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in Section 3, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by
a Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares which are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, upon the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
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the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering shareholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or the Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to the Purchaser's rights under
Section 1, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and the Shares may not be withdrawn, except to the extent that
the tendering shareholders are entitled to withdrawal rights as described in
Section 4 below and as otherwise required by Rule 14e-1(c) under the Exchange
Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY PURCHASER REGARDLESS OF ANY EXTENSION OF THE OFFER OR BY REASON OF ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the
Offer for any reason, or if certificates representing Shares are submitted
representing more Shares than are tendered, certificates representing
unpurchased or untendered Shares will be returned, without expense to the
tendering shareholder (or, in the case of Shares delivered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3, such Shares will be credited
to an account maintained within such Book-Entry Transfer Facility), as promptly
as practicable following the expiration, termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER ANNOUNCES AN
INCREASE IN THE CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE
OFFER, SUCH INCREASED CONSIDERATION WILL BE PAID TO ALL HOLDERS OF SHARES THAT
ARE PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED
PRIOR TO SUCH ANNOUNCEMENT OF AN INCREASE IN CONSIDERATION.
Purchaser reserves the right to transfer or assign to one
or more of Purchaser's subsidiaries or affiliates, in whole or from time to time
in part, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES
Except as set forth below, in order for Shares to be
validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date and either (i) certificates representing tendered Shares must be received
by the Depositary, or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case on or prior to the Expiration Date, or
(ii) the guaranteed delivery procedures set forth below must be complied with.
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THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING
TENDERED SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS
AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL
BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER
The Depositary will make a request to establish accounts
with respect to the Shares at the Book-Entry Transfer Facility for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make book-entry delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES
No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
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GUARANTEED DELIVERY
If a shareholder desires to tender Shares pursuant to the
Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by Purchaser,
is received by the Depositary, as provided below, prior to the
Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation
with respect to) such Shares, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents, are
received by the Depositary within three (3) trading days after the
date of execution of such Notice of Guaranteed Delivery. A "trading
day" is any day on which the NYSE is open for business.
The Notice of Guaranteed Delivery may be delivered by hand
to the Depositary or transmitted by telegram, facsimile transmission or mailed
to the Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering shareholders at the same
time, and will depend upon when certificates representing, or Book-Entry
Confirmations of, such Shares are received into the Depositary's account at a
Book-Entry Transfer Facility.
BACKUP FEDERAL TAX WITHHOLDING
Under the federal income tax laws, payments in connection
with the Offer and the proposed Merger may be subject to "backup withholding" at
a rate of 31% unless a shareholder that holds Shares (i) provides a correct
taxpayer identification number (which, for an individual shareholder, is the
shareholder's social security number) and any other required information, or
(ii) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, and otherwise complies with applicable
requirements of the backup withholding rules. A shareholder that does not
provide a correct taxpayer identification number also may be subject to
penalties imposed by the Internal Revenue Service. To prevent backup federal
income tax withholding on payments with respect to the purchase price of Shares
purchased pursuant to the Offer, each shareholder should provide the Depositary
with his correct taxpayer identification number and certify that he is not
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subject to backup federal income tax withholding by completing the Substitute
Form W-9 included in the Letter of Transmittal. See Instruction 10 of the Letter
of Transmittal.
APPOINTMENT AS PROXY
By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of Purchaser, and each of them, as
such shareholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment and paid for by Purchaser and with respect
to any and all other Shares and other securities or rights issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase. All such
powers of attorney and proxies will be considered coupled with an interest in
the tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser pays for such Shares by depositing the purchase price
therefor with the Depositary. Upon such payment, all prior powers of attorney
and proxies given by such shareholder with respect to such Shares, and such
other securities or rights granted prior to such payment will be revoked,
without further action, and no subsequent powers of attorney and proxies may be
given by such shareholder (and, if given, will not be deemed effective). The
designees of Purchaser will, with respect to the Shares for which such
appointment is effective, be empowered to exercise all voting and other rights
of such shareholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's shareholders, or any adjournment or
postponement thereof. Purchaser requires that, in order for Shares to be deemed
validly tendered, immediately upon the payment for such Shares, Purchaser or its
designee must be able to exercise full voting rights with respect to such Shares
and other securities, including voting at any meeting of shareholders.
DISTRIBUTION OF RIGHTS
Holders of Shares will be required to tender one Right for
each Share tendered to effect a valid tender of a Share. Unless and until the
Distribution Date occurs, the Rights are represented by and transferred with the
Shares. Accordingly, if the Distribution Date does not occur prior to the
Expiration Date of the Offer, a tender of Shares will constitute a tender of the
associated Rights. If a Distribution Date has occurred, certificates
representing a number of Rights equal to the number of Shares being tendered
must be delivered to the Depositary in order for the Shares to be validly
tendered in accordance with the procedures described in this Section 3. If a
Distribution Date has occurred, a tender of Shares without Rights constitutes an
agreement by the tendering shareholder to deliver certificates representing a
number of Rights equal to the number of Shares tendered pursuant to the Offer to
the Depositary within three trading days after the date the certificates are
distributed. The Purchaser reserves the right to require that it receive these
certificates prior to accepting Shares for payment. Payment for Shares tendered
and purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of the certificates representing the Rights, if such certificates
have been distributed to holders of Shares. The Purchaser will not pay any
additional consideration for the Rights tendered pursuant to the Offer.
DETERMINATION OF VALIDITY
All questions as to the form of documents and validity,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. Purchaser reserves the
absolute right to reject any or all tenders determined by it not to be in proper
form or the acceptance of or payment for which may, in the opinion of
14
<PAGE>
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender of Shares of any particular shareholder whether or not similar defects or
irregularities are waived in the case of other shareholders without any impact
on the rights of such other shareholders.
Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the instructions thereto)
will be final and binding. No tender of Shares will be deemed to have been
validly made until all defects and irregularities with respect to such tender
have been cured or waived. None of Purchaser, ISP or any of their affiliates or
assigns, if any, the Depositary, the Information Agent or any other person will
be under any duty to give any notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering shareholder and Purchaser upon the terms and
subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of
Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to
the Offer may be withdrawn at any time on or prior to the Expiration Date and,
unless theretofore accepted for payment as provided herein, may also be
withdrawn at any time after August 25, 2000 (or such later date as may apply in
case the Offer is extended). A withdrawal of a share of Common Stock will also
constitute a withdrawal of the related Right. Rights may not be withdrawn unless
the related shares of Common Stock are also withdrawn.
If, for any reason whatsoever, acceptance for payment of
any Shares tendered pursuant to the Offer is delayed, or Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares and such Shares may
not be withdrawn except to the extent that the tendering shareholder is entitled
to and duly exercises withdrawal rights as described in this Section 4. Any such
delay will be by an extension of the Offer to the extent required by law.
To be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
15
<PAGE>
Withdrawals of Shares may not be rescinded. Any Shares
properly withdrawn will be deemed not validly tendered for purposes of the
Offer, but may be retendered at any subsequent time prior to the Expiration Date
by following any of the procedures described in Section 3.
No withdrawal rights will apply to Shares tendered during
any Subsequent Offering Period (if there is one) and no withdrawal rights apply
during any such Subsequent Offering Period with respect to Shares tendered in
the Offer and accepted for payment.
All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding. None of
Purchaser, ISP or any of their affiliates or assigns, if any, the Depositary,
the Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash in exchange for Shares pursuant to the
Offer, the proposed Merger or upon the exercise of dissenters' rights will be a
taxable event for federal income tax purposes and may also be taxable under
applicable state, local or foreign tax laws. A shareholder who receives cash
will generally recognize gain or loss for federal income tax purposes in an
amount equal to the difference, if any, between the amount of cash received by
the shareholder and the shareholder's adjusted tax basis in the Shares exchanged
therefor. Gain or loss must be determined separately for each block of Shares
held by the shareholder (for example, Shares acquired at the same cost in a
single transaction). Such gain or loss will be capital gain or loss (provided
that the Shares are held as capital assets) and any such capital gain or loss
will be long-term if, as of the date of the disposition, the Shares were held
for more than one year.
The foregoing discussion may not be applicable to certain
types of shareholders or Shares, including shareholders who acquired Shares
pursuant to the exercise of options or otherwise as compensation, individuals
who are not citizens or residents of the United States, and foreign
corporations, Shares held as part of a straddle, hedge, conversion transaction,
synthetic security or other integrated investment, or entities that are
otherwise subject to special tax treatment under the Internal Revenue Code of
1986, as amended (such as dealers in securities or foreign currency, insurance
companies, regulated investment companies, financial institutions, tax-exempt
entities, and investors in pass-through entities).
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY. EACH SHAREHOLDER IS URGED TO CONSULT SUCH
SHAREHOLDER'S TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO
SUCH SHAREHOLDER OF THE OFFER AND THE PROPOSED MERGER, INCLUDING FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES.
16
<PAGE>
PRICE RANGE OF THE SHARES; DIVIDENDS.
According to Dexter's 1999 Annual Report, the Shares are
listed and traded principally on the New York Stock Exchange (the "NYSE"). The
Shares are traded on the NYSE under the symbol "DEX." The following table sets
forth, for the periods indicated, the reported high and low sale prices for the
Shares on the NYSE Composite Tape and the amount of cash dividends paid per
Share, all as reported in published financial sources.
Cash
High Low Dividends
---- --- ---------
1998
First Quarter $43 3/8 $37 1/2 $0.24
Second Quarter 42 15/16 31 9/16 0.26
Third Quarter 33 5/16 23 7/8 0.26
Fourth Quarter 32 7/8 23 1/2 0.26
1999
First Quarter 32 5/16 26 11/16 0.26
Second Quarter 41 5/8 31 7/8 0.26
Third Quarter 41 3/8 35 15/16 0.26
Fourth Quarter 41 13/16 32 9/16 0.26
2000
First Quarter 54 5/16 34 0.26
Second Quarter (to June 23, 2000) 56 1/4 41 1/4 0.26
On June 23, 2000, the last full day of trading prior to the
commencement of the Offer, according to published sources, the reported closing
price on the NYSE Composite Tape for the Shares was $46 13/16 per Share.
Shareholders are urged to obtain a current market quotation for the Shares.
Purchaser believes, based upon publicly available
information, that as of the date of this Offer to Purchase, the Rights are
listed on the NYSE, are attached to the Shares and are not traded separately. As
a result, the sale prices per Share set forth above are also the high and low
sale prices per Share and associated Right during such periods. Upon the
occurrence of the Distribution Date, the Rights are to detach, and may trade
separately, from the Shares. See Section 11. As a result of the commencement of
the Offer by Purchaser, the Distribution Date will occur following the close of
business on July 11, 2000, unless, prior to such time, Dexter's Board redeems
the Rights or takes action to delay the Distribution Date. If the Distribution
Date occurs and the Rights begin to trade separately from the Shares,
shareholders are also urged to obtain a current market quotation for the Rights.
17
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK
EXCHANGE LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Shares held by the
public. The purchase of Shares pursuant to the Offer can also be expected to
reduce the number of holders of Shares.
STOCK EXCHANGE LISTING
According to the NYSE's published guidelines, the NYSE
would consider delisting the Shares if, among other things, the number of record
holders of at least 100 Shares should fall below 1,200, the number of publicly
held Shares (exclusive of holdings of officers, directors, their immediate
families and other concentrated holdings of 10% or more ("NYSE Excluded
Holdings")) should fall below 600,000 or the aggregate market value of publicly
held Shares (exclusive of NYSE Excluded Holdings) should fall below $5,000,000.
Depending upon the number of Shares acquired pursuant to
the Offer, the Shares may no longer meet the requirements for continued listing
on the NYSE or any other exchanges upon which the Shares are listed. Under the
published guidelines described above, the purchase of approximately 13.5 million
Shares pursuant to the Offer may result in a delisting of the Shares by the
NYSE. According to Dexter's 1999 Annual Report, there were approximately 2,600
holders of record of Shares as of December 31, 1999. If, however, as a result of
the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer
meet the requirements of the NYSE for continued listing and/or trading and such
trading of the Shares were discontinued, the market for the Shares could be
adversely affected.
In the event that the Shares were no longer listed or
traded on the NYSE, it is possible that the Shares would trade on another
securities exchange or in the over-the-counter market and that price quotations
would be reported by such exchange, through the Nasdaq or other sources. Such
trading and the availability of such quotations would, however, depend upon the
number of shareholders and/or the aggregate market value of the Shares remaining
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act as described below and other factors.
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act.
The purchase of the Shares pursuant to the Offer may result in the Shares
becoming eligible for deregistration under the Exchange Act. Registration of the
Shares may be terminated upon application by Dexter to the Commission if the
Shares are not listed on a "national securities exchange" and there are fewer
than 300 record holders of Shares. Termination of registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by Dexter to its shareholders and the Commission and would make
certain provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirements of furnishing a proxy statement
in connection with shareholder's meetings pursuant to Section 14(a), no longer
18
<PAGE>
applicable to Dexter. If the Shares are no longer registered under the Exchange
Act, the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions would no longer be applicable to Dexter.
Furthermore, the ability of "affiliates" of Dexter and persons holding
"restricted securities" of Dexter to dispose of such securities pursuant to Rule
144 promulgated under the Securities Act of 1933, as amended, may be impaired or
eliminated. If, as a result of the purchase of Shares pursuant to the Offer or
the proposed Merger, Dexter is no longer required to maintain registration of
the Shares under the Exchange Act, the Purchaser intends to cause Dexter to
apply for termination of such registration. See Section 11.
Based upon publicly available information, Purchaser
believes that, as of the date of this Offer to Purchase, the Rights are
registered under the Exchange Act and are listed on the NYSE, but are attached
to the Shares and are not separately transferable. As a result of the
commencement of the Offer by the Purchaser, the Distribution Date will occur
following the close of business on July 11, 2000 unless, prior to such time,
Dexter's Board redeems the Rights or delays such Distribution Date. See Section
11. According to the Dexter 8-A, as soon as practicable after the occurrence of
the Distribution Date, Rights Certificates will be sent to all holders of Rights
and the Rights will become transferable apart from the Shares. See Section 11.
If the Distribution Date occurs and the Rights separate from the Shares, the
foregoing discussion with respect to the effect of the Offer on the market for
the Shares, stock exchange listings and Exchange Act registration would apply to
the Rights in a similar manner.
If registration of the Shares is not terminated prior to
the Merger, then the Shares will be delisted from all stock exchanges and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
MARGIN REGULATIONS
The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which have the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ("Purpose Loans"). Depending upon
factors such as the number of record holders of the Shares and the number and
market value of publicly held Shares, following the purchase of Shares pursuant
to the Offer the Shares might no longer constitute "margin securities" for
purposes of the Federal Reserve Board's margin regulations and, therefore, could
no longer be used as collateral for Purpose Loans made by brokers. In addition,
if registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING DEXTER.
The information concerning Dexter contained in this Offer
to Purchase has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources and is qualified in
its entirety by reference thereto. None of ISP, Purchaser, the Information Agent
or the Depositary can take responsibility for the accuracy or completeness of
the information contained in such documents and records, or for any failure by
Dexter to disclose events which may have occurred or may affect the significance
or accuracy of any such information but which are unknown to ISP, Purchaser, the
Information Agent or the Depositary.
19
<PAGE>
Dexter is a Connecticut corporation with its principal
executive offices located at One Elm Street, Windsor Locks, Connecticut. The
following description of Dexter's business has been taken from Dexter's 1999
Annual Report.
Founded in 1767 and incorporated in the state of
Connecticut in 1914, Dexter operates specialty materials businesses with
leadership positions in markets that provide opportunities for profitable
growth. The principal markets served by the Company are the worldwide aerospace,
electronics, food packaging and medical markets.
Dexter has three operating segments: life sciences,
nonwovens, and specialty polymers. The businesses of Dexter are organized and
reported based on the commonality of the products, services and technologies
employed within these segments.
The life sciences segment focuses on the development and
manufacture of precise, reproducible biological and biochemical products used in
applications of life sciences discovery, development and production processes
for research and commercial applications. Life Technologies, Inc. is reported in
this segment.
The nonwovens segment focuses on the proprietary
formulation and manufacture of long-fiber, wet-formed, and hydroentangled
products, primarily for use in the food packaging, medical, and hygiene markets.
The Nonwoven Materials business and its cogeneration facility, which provides
electricity and steam to the Nonwoven Materials, Windsor Locks, Connecticut
facility, as well as, electricity to the local utility, are reported in this
segment.
The specialty polymers segment includes businesses whose
product offerings are based on polymer technology for the formulation and
processing of specialty adhesives, coatings, and encapsulants primarily for use
in the aerospace and electronics markets. Long-term polymer research and
development for this segment is performed at the segment's specialty polymer
research and development laboratories in San Diego, California. The Adhesive &
Coating Systems business and the Electronic Materials business are reported in
this segment.
Dexter is subject to the informational filing requirements
of the Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
Commission by telephoning 1-800-SEC-0330. Dexter's filings are also available to
the public on the Commission's Internet site (http://www.sec.gov). Copies of
such materials may also be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
Dexter has provided ISP with certain non-public information
concerning Dexter and its subsidiaries, including the projections summarized
below (the "Projections"). ISP and Purchaser direct shareholders' attention to
the Schedule 14D-9 to be filed by Dexter in response to this Offer. ISP and
Purchaser assume that such Schedule 14D-9 will contain any additional non-public
20
<PAGE>
information provided by Dexter to ISP that Dexter believes to be material to a
shareholder's decision whether or not to tender its shares in response to this
Offer.
The Projections reflect total net sales for the years
ending December 31, 2000, 2001 and 2002 of $1,048,000,000, $1,132,000,000 and
$1,223,000,000, respectively, and net income for the years ending December 31,
2000, 2001 and 2002 of $56,600,000, $66,100,000 and $77,000,000, respectively.
None of ISP, Purchaser or any of their affiliates or representatives had any
role in the preparation of the Projections, and Purchaser therefore has no basis
for determining their reliability. Moreover, ISP and Purchaser understand that
the Projections were not prepared with a view to publication nor with a view
toward compliance with published guidelines of the Commission or the American
Institute of Certified Public Accountants regarding projections or forecasts.
Such Projections are being included herein solely because they were furnished to
ISP and Purchaser in connection with their evaluation of a possible transaction
with Dexter. For these reasons and because the Projections are inherently
subject to uncertainty, neither ISP nor Purchaser assumes any responsibility for
the accuracy or completeness of the Projections. In addition, neither ISP nor
Purchaser assumes any responsibility for any failure by Dexter to disclose
events that may have occurred or which may subsequently occur and may affect the
significance or accuracy of the Projections but that are unknown to ISP and
Purchaser.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND ISP.
ISP was incorporated in 1996 under the laws of the State of
Delaware. Purchaser was incorporated on June 22, 2000 under the laws of the
State of Delaware for the purpose of acquiring Dexter. Purchaser is an indirect
wholly-owned subsidiary of ISP. Purchaser has not, and is not expected to,
engage in any business other than in connection with its organization, the
Offer, the proposed Merger and the related financing. The principal executive
offices of ISP and Purchaser are located at 300 Delaware Avenue, Wilmington,
Delaware 19801.
ISP, a leading multinational manufacturer of specialty
chemicals and mineral products, operates its business exclusively through direct
and indirect subsidiaries, including ISP Opco Holdings Inc., ISP Chemicals Inc.,
ISP Technologies Inc., ISP Van Dyk Inc., ISP Fine Chemicals Inc., ISP Freetown
Fine Chemicals Inc. and ISP Alginates Inc.
ISP manufactures a broad spectrum of specialty chemicals
having numerous applications in consumer and industrial products. ISP uses
proprietary technology to convert various raw materials, through a chain of one
or more processing steps, into increasingly complex and higher value-added
specialty chemicals specifically developed to meet customer requirements.
ISP's specialty chemicals business is organized based upon
the markets for its products. Accordingly, ISP manages its specialty chemicals
in the following three business segments:
o Personal Care - whose products are sold to the skin
care and hair care markets;
o Pharmaceutical, Food and Beverage - whose products
are sold to these three government-regulated
industries; and
21
<PAGE>
o Performance Chemicals, Fine Chemicals and Industrial
- whose products are sold to numerous consumer and
industrial markets.
The name, business address, citizenship, present principal
occupation and employment history of each of the directors and executive
officers of ISP and Purchaser are set forth in Schedules I and II of this Offer
to Purchase.
ISP is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is required to file
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Certain
information, as of particular dates, concerning ISP's business, principal
physical properties, capital structure, material pending legal proceedings,
operating results, financial condition, directors and officers (including their
remuneration and stock options granted to them), the principal holders of ISP's
securities, any material interests of such persons in transactions with ISP and
certain other matters is required to be disclosed in proxy statements and annual
reports distributed to ISP's shareholders and filed with the Commission. Such
reports, proxy statements and other information may be inspected and copied at
the Commission's public reference facilities in the same manner as set forth
with respect to Dexter in Section 8.
Set forth below is a summary of certain consolidated
financial information with respect to ISP and its subsidiaries for its fiscal
years ended December 31, 1999, 1998, 1997, 1996 and 1995, excerpted from
financial statements presented in ISP's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and for the three months ended April 2,
2000 and April 4, 1999, excerpted from financial statements presented in ISP's
Quarterly Report on Form 10-Q for the quarter ended April 2, 2000 filed with the
Commission. More comprehensive financial information is included in such reports
(including management's discussion and analysis of results of operations and
financial position) and other documents filed by ISP with the Commission, and
the financial information summary set forth below is qualified in its entirety
by reference to such reports, which are incorporated herein by reference, and
all the financial information and related notes contained therein.
SELECTED FINANCIAL DATA OF ISP
Set forth below are selected consolidated financial data of
ISP, formerly ISP Holdings Inc. ("ISP Holdings"), and its subsidiaries. On July
15, 1998, International Specialty Products Inc. ("Old ISP") merged (the "ISP
Merger") with and into ISP Holdings. In connection with the ISP Merger, ISP
Holdings changed its name to International Specialty Products Inc. The financial
information presented herein for periods prior to the ISP Merger of Old ISP and
ISP Holdings represent the results of the former ISP Holdings. Prior to January
1, 1997, ISP Holdings was a wholly-owned subsidiary of GAF Corporation ("GAF").
On January 1, 1997, GAF effected a series of transactions that resulted in,
among other things, the capital stock of ISP Holdings being distributed to the
stockholders of GAF. As a result of such distribution, ISP ceased to be a direct
or indirect subsidiary of GAF, and GAF's subsidiaries are no longer included in
the consolidated assets and liabilities of ISP. The results of operations and
assets and liabilities of GAF's subsidiaries, as well as GAF Broadcasting
Company, Inc. (whose assets were sold in August 1996), have been classified as
"discontinued operations" within the Selected Financial Data below for all
periods presented prior to January 1, 1997. In October 1999, ISP sold the stock
of its filter products subsidiaries. Accordingly, the results of operations and
22
<PAGE>
assets and liabilities of the filter products subsidiaries have been classified
as a discontinued operation for all periods presented.
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended
-------------------------------------------------------------------- -------------------------
April 4, April 2,
1999 2000
1995 1996 1997 1998 1999 (Unaudited) (Unaudited)
---- ---- ---- ---- ---- ----------- -----------
(Dollars In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Net Sales.......................... $651,834 $676,951 $708,971 $784,616 $787,356 $201,648 $197,941
Gross profit................... 258,593 283,186 295,199 321,105 304,959 82,263 68,507
Operating income............... 123,599 135,784 137,689 66,177 145,978 46,803 25,597
Interest expense............... 33,091 38,333 73,612 75,564 78,552 20,240 19,722
Income from continuing
operations before income
taxes and extraordinary
losses...................... 102,605 116,388 104,219 27,168 76,454 17,687 11,788
Income from continuing
operations before
extraordinary losses........ 52,848 60,683 51,702 2,779 49,632 12,022 7,672
Net income..................... 32,828 53,933 54,005 4,812 74,930 12,022 7,672
Income from continuing
operations per common
share:
Basic.......................... $ .98 $ 1.13 $ .96 $ .05 $ .72 $ .16 $.11
Diluted........................ $ .98 $ 1.13 $ .96 $ .05 $ .72 $ .16 $.11
Other Data:
Depreciation................... $ 35,533 $ 37,801 $ 41,236 $ 49,272 $ 48,590 $ 12,000 $ 12,432
Goodwill amortization.......... 13,223 13,200 13,294 15,025 16,344 4,195 4,048
Capital expenditures
and acquisitions............ 37,138 51,411 67,674 163,850 108,955 14,346 11,284
December 31,
--------------------------------------------------------------------
April 2, 2000
1995 1996 1997 1998 1999 (Unaudited)
---- ---- ---- ---- ---- -----------
(Thousands)
Balance Sheet Data:
Total working capital..........$ 290,001 $ 476,846 $ 322,080 $ 406,654 $ 438,083 $ 535,671
Total assets................... 1,460,382 1,600,114 1,483,977 1,763,870 1,835,308 1,961,605
Long-term debt less current
maturities.................. 280,254 834,284 798,762 896,095 820,141 841,209
Stockholders' equity (deficit). (1,707) 42,653 261,841 501,723 587,261 633,215
</TABLE>
Except as set forth elsewhere in this Offer to Purchase:
(i) none of ISP, the Purchaser nor, to the best knowledge of ISP, any of the
persons listed in Schedules I and II hereto or any associate or majority-owned
subsidiary of ISP or any of the persons so listed, beneficially owns or has a
right to acquire any Shares or any other equity securities of Dexter; (ii) none
of ISP, the Purchaser nor, to the best knowledge of ISP, any of the persons or
entities referred to in clause (i) above or any of their executive officers,
directors or subsidiaries has effected any transaction in the Shares or any
other equity securities of Dexter during the past 60 days; (iii) none of ISP,
the Purchaser nor, to the knowledge of ISP, any of the persons listed in
Schedules I and II hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of Dexter,
including, but not limited to, the transfer or voting thereof, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans, guarantees
against loss or the giving or withholding of proxies, consents or
authorizations; (iv) during the two years prior to the date of this Offer to
23
<PAGE>
Purchase, there have been no transactions which would require reporting under
the rules and regulations of the Commission between ISP, Purchaser or any of
their respective subsidiaries or, to the best knowledge of ISP, ISP or the
Purchaser, any of the persons listed in Schedules I and II hereto, on the one
hand, and Dexter or any of its executive officers, directors or affiliates, on
the other hand; and (v) during the two years prior to the date of this Offer to
Purchase, there have been no contracts, negotiations or transactions between
ISP, Purchaser or any of their respective subsidiaries or, to the best knowledge
of ISP, any of the persons listed in Schedules I and II hereto, on the one hand,
and Dexter or its subsidiaries or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets of Dexter.
On February 23, 2000, ISP and Dexter entered into a
confidentiality agreement which provided for ISP to conduct a review of
non-public information relating to the business, finances and operations of
Dexter and its subsidiaries. The confidentiality agreement did not contain any
provisions which would limit ISP's ability to make the Offer. The
confidentiality agreement is filed as an exhibit to the Schedule TO to which
this Offer to Purchase is also an exhibit.
10. BACKGROUND OF THE OFFER; CONTACTS WITH DEXTER.
ISP began purchasing shares of Dexter and Life Technologies
common stock in September 1998 because ISP believed that the shares of both
companies were substantially undervalued. As the largest Dexter shareholder and
an investor in the Company's shares since September 1998, ISP has been
dissatisfied with the share price performance of Dexter's common stock.
Specifically, ISP has discussed with representatives of Dexter a recommendation
with respect to the separation of Life Technologies and Dexter. Dexter rejected
ISP's recommendation. Therefore, on December 14, 1999, ISP proposed a business
combination in which Dexter shareholders would receive at least $45 per share in
cash, subject to the negotiation of a mutually acceptable merger agreement. A
summary of events leading up to and following ISP's $45 per share proposal is
contained in Schedule III to this Offer to Purchase and is incorporated by
reference herein.
11. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR
DEXTER.
THE PROPOSED MERGER
The purpose of the Offer is to enable ISP and Purchaser to
acquire control of, and ultimately the entire equity interest in, Dexter. ISP
currently intends, following completion of the Offer, to seek to consummate the
proposed Merger. ISP intends that in the proposed Merger, each then outstanding
Share (other than Shares owned by ISP, Purchaser or any of their wholly-owned
subsidiaries, Shares held in the treasury of Dexter, and, if shareholder
dissenters' rights are available with respect to Shares, Shares held by
shareholders who perfect any available dissenters' rights under the CBCA) would
be converted into the right to receive in cash the same price per Share paid by
Purchaser pursuant to the Offer.
In general, pursuant to the CBCA, the approval of both the
shareholders and the board of directors of a corporation is required to effect a
proposed merger of that corporation with or into another corporation except that
no shareholder approval is required in the case of a corporation merging with a
parent that owns 90% or more of the corporation pursuant to the provisions of
Section 33-818 of the CBCA. A merger effected pursuant to such provision is
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referred to herein as a "short-form merger." If the Offer is consummated and
Purchaser acquires 90% or more of the outstanding Shares pursuant to the Offer
(and subsequent purchases, if any), it will seek to effect the proposed Merger
as a short-form merger promptly thereafter. As described above, if the Offer is
consummated and Purchaser acquires less than 90% of the outstanding shares
pursuant to the Offer (and subsequent purchases, if any), the Merger can only be
effected with the approval of Dexter's Board and, except under certain limited
circumstances, shareholders. If the Director Majority Condition is satisfied,
the Purchaser's director nominees will constitute a majority of Dexter's Board
and Purchaser anticipates that, subject to their fiduciary duties, they will
approve the Merger. If the Minimum Condition and the other conditions to the
Offer are satisfied, Purchaser will own two-thirds of the outstanding Shares
following consummation of the Offer and the voting power necessary to assure
approval of the proposed Merger by Dexter shareholders.
Certain terms of the Charter, the Bylaws, certain of the
Company's contractual obligations (including the Rights and the terms of its
outstanding indebtedness) and Sections 33-841 and 33-844 of the CBCA may affect
the ability of ISP to obtain control of Dexter and to cause Purchaser to
consummate the proposed Merger. ISP believes that, if the Minimum Condition, the
Rights Condition, the Business Combination Condition, the Asset Retention
Condition, the Funding Condition and the Director Majority Condition are
satisfied, it should be able to implement the proposed Merger. Nevertheless, ISP
can give no assurance that the proposed Merger will be consummated or as to the
timing of the proposed Merger if it is consummated.
CLASSIFIED BOARD
Unless the proposed Merger is consummated pursuant to a
short-form merger, approval by Dexter's Board will be required under the CBCA to
effect the proposed Merger. If the Director Majority Condition were not
satisfied and Dexter's Board in office at the time of the consummation of the
Offer were to refuse to approve the proposed Merger (or any transaction or
corporate action proposed by Purchaser that required the approval of Dexter's
Board), Purchaser, in order to consummate such transaction or cause Dexter to
take such action, would have to replace at least a majority of Dexter's Board
with its own designees. Certain provisions of the Charter and Bylaws could
prevent the Purchaser from replacing or electing a majority of Dexter's Board
for up to two years. Pursuant to Article VII of the Charter and Article III,
Section 1 of the Bylaws, Dexter's Board is divided into three classes with each
class elected for a term of three years and one class elected at Dexter's annual
meeting of shareholders each year (the "Classified Board Provision"). Pursuant
to Article VII of the Charter, directors can be removed from Dexter's Board only
for cause and only by the affirmative vote of holders representing a majority of
all the shares of Common Stock entitled to vote for the election of directors
(the "Director Removal Provision"). As a result of these provisions, at least
two annual meetings of the Dexter shareholders would be required to elect new
directors comprising a majority of Dexter's Board who could approve the proposed
Merger (or any similar transaction requiring the approval of Dexter's Board),
absent the directors' removal in accordance with the Director Removal Provision
(or their resignations) or unless ISP is successful in expanding Dexter's Board
and shareholders elect ISP's nominees to take control of the expanded Board.
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THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES
FROM DEXTER SHAREHOLDERS RELATING TO THE PROPOSED MERGER. SOLICITATIONS OF
PROXIES BY ISP WILL BE MADE ONLY PURSUANT TO A DEFINITIVE PROXY STATEMENT FILED
WITH THE COMMISSION AND COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
EXCHANGE ACT.
THE FOREGOING SUMMARY OF CERTAIN PROVISIONS OF THE CHARTER
AND THE BYLAWS ARE QUALIFIED BY REFERENCE TO THE TEXT THEREOF AS FILED BY DEXTER
WITH THE COMMISSION AND WHICH CAN BE EXAMINED OR COPIES OBTAINED AS SET FORTH IN
SECTION 8.
BUSINESS COMBINATION STATUTE
Section 33-844 of the CBCA provides that a public
Connecticut corporation may not engage in any "Business Combination" (defined to
include a variety of transactions, including mergers) with any Interested
Shareholder (defined generally as the beneficial owner of 10% or more of the
voting power of a corporation) for a period of five years following the date
that such shareholder became an Interested Shareholder (the "Stock Acquisition
Date"), unless, prior to the Stock Acquisition Date, the board of directors of
the corporation and a majority of the non-employee directors (of which there
shall be at least two) approved either the Business Combination or the
transaction which resulted in the shareholder becoming an Interested Shareholder
before the Stock Acquisition Date. A corporation may opt out of the above
provision through an amendment to the corporation's certificate of incorporation
or bylaws approved through the affirmative vote of the holders of two-thirds of
the voting power of the outstanding voting stock excluding the voting stock of
Interested Shareholders and their affiliates and associates. However, no such
amendment shall be effective until 18 months after such shareholder vote and
shall not apply to any Business Combination with an Interested Shareholder whose
Stock Acquisition Date is on or prior to the effective date of such amendment.
Neither Dexter's Charter nor its Bylaws exclude the Company from the
restrictions imposed under Section 33-844 of the CBCA.
In addition, Section 33-841 of the CBCA provides that any
Business Combination with an Interested Shareholder that was not approved by the
board of directors prior to the Stock Acquisition Date, must be approved by the
board of directors, 80% of the voting power of the outstanding voting stock and
two-thirds of the voting power of the outstanding voting stock not controlled by
the Interested Shareholder or meet certain conditions regarding minimum price
and type of consideration.
Purchaser believes that, if the Business Combination
Condition is satisfied, Sections 33-841 and 33-844 of the CBCA will not be an
impediment to consummating the proposed Merger.
CONNECTICUT TAKEOVER STATUTE
As described in Section 3, above, a number of states
(including Connecticut, where Dexter is incorporated) have adopted takeover laws
and regulations that purport to be applicable to attempts to acquire securities
of corporations that are incorporated in those states or that have substantial
assets, stockholders, principal executive offices or principal places of
business in those states. To the extent that these state takeover statutes
purport to apply to the Offer or the proposed Merger, ISP and Purchaser believe
that those laws conflict with U.S. federal law and are an unconstitutional
burden on interstate commerce. In 1982, the Supreme Court of the United States,
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in Edgar v. Mite Corp., invalidated on constitutional grounds the Illinois
Business Takeovers Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. The
reasoning in that decision is likely to apply to certain other state takeover
statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, as long as those laws were applicable
only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma, because they would subject those corporations to inconsistent
regulations. Similarly in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in Grand
Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
ISP and Purchaser have not attempted to comply with any
state takeover statutes in connection with the Offer or the proposed Merger. ISP
and Purchaser reserve the right to challenge the validity or applicability of
any state law allegedly applicable to the Offer or the proposed Merger, and
nothing in this Offer to Purchase nor any action that ISP and Purchaser take in
connection with the Offer is intended as a waiver of that right. In the event
that it is asserted that one or more takeover statutes apply to the Offer or the
proposed Merger, and it is not determined by an appropriate court that the
statutes in question do not apply or are invalid as applied to Offer or the
proposed Merger, as applicable, ISP and Purchaser may be required to file
certain documents with, or receive approvals from, the relevant state
authorities, and ISP and Purchaser might be unable to accept for payment or
purchase Shares tendered in the Offer or be delayed in continuing or
consummating the Offer. In that case, ISP and Purchaser may not be obligated to
accept for purchase, or pay for, any Shares tendered. See Section 14.
APPRAISAL RIGHTS
The following discussion is not a complete statement of the
law pertaining to dissenters' rights under the CBCA and is qualified in its
entirety by the full text of Part XIII (Sections 33-855 through 33-872) of the
CBCA.
Holders of Shares do not have dissenters' rights as a
result of the Offer. However, in connection with the proposed Merger, holders of
Shares, by complying with the provisions of Part XIII of the CBCA, have certain
rights to dissent and to require the surviving corporation in the proposed
Merger to purchase their Shares for fair value. In general, a holder of Shares
will be entitled to exercise "dissenters' rights" under the CBCA only if such
holder of Shares (i) delivers to Dexter prior to the time the vote is taken with
respect to the proposed Merger, written notice of his or her intent to demand
payment for his or her Shares if the proposed Merger is effectuated and (ii)
does not vote his or her Shares in favor of the proposed Merger. If the
statutory procedures relating to dissenters' rights are complied with, such
rights could result in a judicial determination of the fair value of the
dissenter's Shares. The "fair value" would be determined based on the value of
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the dissenter's Shares immediately before the proposed Merger, excluding any
appreciation or depreciation in anticipation of the proposed Merger. The value
so determined could be more or less than the price per Share offered in the
proposed Merger.
THE RIGHTS
According to the Dexter 8-A, on August 23, 1996, Dexter's
Board declared a dividend distribution of one Right for each outstanding Share.
The dividend is payable to the shareholders of record on November 17, 1996 (the
"Record Date"), and with respect to Shares issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with respect
to Shares issued after the Distribution Date. Except as set forth below, each
Right, when it becomes exercisable, entitles the registered holder to purchase
from Dexter one two-hundredth (1/200th) of a share of Series A Junior
Participating Preferred Stock, without par value (the "Preferred Shares"), of
Dexter at a price of $90 per one two-hundredth (1/200th) of a Preferred Share
(the "Purchase Price"), subject to adjustment.
According to the Dexter 8-A, initially, the Rights will be
attached to all Share Certificates then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the Shares upon
the earliest to occur of (i) the close of business on the tenth business day
following a Stock Acquisition Date (as defined below) or (ii) the close of
business on the tenth business day following (or such later date as Dexter's
Board may determine) the date that a tender offer or exchange offer is first
published or sent or given within the meaning of Rule 14d-2(a) under the
Exchange Act, if upon consummation thereof, the offering person would be the
beneficial owner of 20% or more of the outstanding shares (the earlier of such
dates being called the "Distribution Date").
A person or group of persons who become the beneficial
owner of 11% or more of the outstanding Shares is an "Acquiring Person", subject
to certain exceptions as set forth in the Rights Agreement, including if the
acquisition of such shares is pursuant to a Qualifying Offer (as defined below).
The date that a person or group is first publicly announced to have become such
by Dexter or such Acquiring Person is the "Stock Acquisition Date." A person or
group of persons who beneficially own 11% or more of the outstanding Shares is
not an Acquiring Person if such person or group of persons acquired the 11% or
more of the outstanding Shares pursuant to a tender offer or exchange offer for
all outstanding Shares which (i) is at a price and on terms that a majority of
Dexter's Board has determined to be in the best interests of Dexter and its
shareholders or (ii) meets all of the following requirements: (A) the offer is
substantially unconditional immediately prior to the expiration of such tender
offer or exchange offer; (B) the per Share consideration offered to Dexter
shareholders is, in the opinion of Dexter's financial advisor, fair to Dexter
shareholders from a financial point of view, (C) with respect to the cash
portion of the offer, such person has received firm written commitments from
responsible financial institutions to provide, subject only to customary terms
and conditions, funds which, when added to the cash and cash equivalents which
such person then has available and has irrevocably committed in writing to
Dexter to utilize for purposes of the offer, sufficient to pay the total cash
consideration to be paid to Dexter shareholders as part of the offer and all
related expenses; (D) with respect to the securities portion of the offer, such
person has received the opinion of a nationally recognized investment bank
(jointly chosen by Dexter and such person) that the value of the securities
offered as consideration in the offer for each Share receiving such securities
is, at the time of expiration of the offer, equal to or greater to the cash
offered as consideration in the offer for each Share not receiving securities;
(E) such offer must remain open for at least 60 calendar days; provided, that
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(x) if there is an increase in the price of such offer, then the offer must
remain open for at least 10 business days after the last such increase, and (y)
such offer must remain open for at least 10 business days after the date that
any bona fide alternative offer is made which, in the opinion of Dexter's
financial advisor, provides for consideration per Share in excess of that
provided for in such offer; provided further, that such offer need not remain
open beyond (1) the time which any other offer satisfying the criteria for a
Qualifying Offer is then required to be kept open, or (2) an announcement prior
to the then scheduled expiration date, of any other offer with respect to which
Dexter's Board has agreed to redeem the Rights immediately prior to acceptance
for payment of Shares (unless such offer is terminated prior to its expiration
without any Shares having been purchased thereunder); and (F) on the date such
offer is commenced within the meaning of Rule 14d-2(a) under the Exchange Act,
such person makes an irrevocable commitment (x) to consummate promptly upon
completion of such offer a transaction whereby all Shares not purchased in such
offer will be acquired at the same price per Share paid pursuant to the offer,
and otherwise not to purchase any Shares following completion of the offer and
(y) that such person or group of persons will not amend such offer in a manner
adverse to Dexter shareholders (a transaction described in (i) or (ii) above, a
"Qualifying Offer").
According to the Dexter 8-A, until the Distribution Date,
the Rights will be transferred with and only with the Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new Share
Certificates issued after the Record Date upon transfer or new issuance of
Shares will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any Share Certificates outstanding as of the
Record Date, even without such notation, will also constitute the transfer of
the Rights associated with the Shares represented by such certificate. As soon
as practicable following the Distribution Date, separate Rights Certificates
will be mailed to the holders of record of the Shares as of the close of
business on the Distribution Date (and to each initial record holder of certain
Shares issued after the Distribution Date), and such separate Right Certificates
alone will evidence the Rights.
According to the Dexter 8-A, the Rights are not exercisable
until the Distribution Date and will expire at the close of business on August
30, 2006 unless earlier redeemed by Dexter.
According to the Dexter 8-A, in the event that any person
becomes the beneficial owner of 11% or more of the outstanding shares (other
than pursuant to a Qualifying Offer), each holder of a Right will thereafter
have the right (the "Flip-In Right") to receive upon exercise the number of
Shares (or, in certain circumstances, of one two-hundredth (1/200th) of a
Preferred Share or other securities of Dexter) having a value (immediately prior
to such triggering event) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of the event described
above, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or any
affiliate or associate thereof will be null and void.
According to the Dexter 8-A, in the event that, at any time
following the Stock Acquisition Date, (i) Dexter is acquired in a merger or
other business combination transaction in which Dexter is not the surviving
corporation or pursuant to which all or a part of the outstanding Shares are
exchanged for securities of any other company or cash or other property, or (ii)
more than 50% of Dexter's assets or earning power is sold or transferred, in
either case with or to any other person or group of persons other than Dexter or
its subsidiaries, then each holder of a Right (except Rights which previously
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have been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of the acquiring
company having a value equal to two times the exercise price of the Right. The
holder of a Right will continue to have the Flip-Over Right whether or not such
holder exercises or surrenders the Flip-In Right.
According to the Dexter 8-A, the Purchase Price payable,
and the number of Preferred Shares, Shares or other securities issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Shares, (ii) upon the grant to holders of
the Preferred Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into Preferred Shares
with a conversion price, less than the then current market price of the
Preferred Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidence of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the number of
two-hundredths (1/200th) of a Preferred Share issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Shares
or a stock dividend on the Shares payable in Shares or subdivisions,
consolidations or combinations of the Shares occurring, in any such case, prior
to the Distribution Date.
According to the Dexter 8-A, Preferred Shares purchasable
upon exercise of the Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of $10.00 per
share but, if greater, will be entitled to an aggregate dividend per share of
200 times the dividend declared per Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment per share in the amount of $300 per Preferred Share plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference"); thereafter, and after the holders of the Shares receive a
liquidation payment of an amount equal to the quotient obtained by dividing the
Series A Liquidation Preference by 200 (subject to certain adjustments for stock
splits, stock dividends and recapitalizations with respect to the Shares), the
holders of the Preferred Shares and the holders of the Shares will share the
remaining assets in the ratio of 200 to 1 (as adjusted) for each Preferred Share
and Share so held, respectively. Finally, in the event of any merger,
consolidation or other transaction in which Shares are exchanged, each Preferred
Share will be entitled to receive 200 times the amount received per Share. These
rights are protected by customary antidilution provisions. In the event that the
amount of accrued and unpaid dividends on the Preferred Shares is equivalent to
six full quarterly dividends or more, the holders of the Preferred Shares shall
have the right, voting as a class, to elect two directors in addition to the
directors elected by the holders of the Shares until all cumulative dividends on
the Preferred Shares have been paid through the last quarterly dividend payment
date.
According to the Dexter 8-A, with certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are one
two-hundredth (1/200th) or integral multiples of one two-hundredth (1/200th) of
a Preferred Share, which may, at the election of Dexter, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last trading day prior
to the date of exercise.
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According to the Dexter 8-A, at any time prior to the
earlier to occur of (i) a person becoming an Acquiring Person or (ii) the
expiration of the Rights, and under certain other circumstances, Dexter may
redeem the Rights in whole, but not in part, at a price (payable in cash or, at
Dexter's election, in Shares) of $.01 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of Dexter's Board.
According to the Dexter 8-A, until a Right is exercised,
the holder thereof, as such, will have no rights as a shareholder of Dexter,
including, without limitation, the right to vote or to receive dividends.
The foregoing summary of the Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Dexter 8-A and the text of the Rights Agreement as set forth as an exhibit
thereto, filed with the Commission, copies of which may be obtained in the
manner set forth in Section 8.
If the Rights Condition is not satisfied and Purchaser
elects, in its sole discretion, to waive the Rights Condition and consummate the
Offer, and if there are outstanding Rights which have not been acquired by
Purchaser, Purchaser will evaluate its alternatives. Such alternatives could
include purchasing additional Rights in the open market, in privately negotiated
transactions, in another tender or exchange offer or otherwise. Any such
additional purchase of Rights could be for cash or other consideration. Under
such circumstances, the proposed Merger might be delayed or abandoned as
impracticable. The form and amount of consideration to be received by the
holders of Shares in the proposed Merger, if consummated, might be subject to
adjustment to compensate Purchaser for, among other things, the costs of
acquiring Rights and a portion of the potential dilution cost to Purchaser of
Rights not owned by Purchaser and its wholly owned subsidiaries at the time of
the proposed Merger. In such event, the value of the consideration to be
exchanged for Shares in the proposed Merger could be substantially less than the
consideration paid in the Offer. In addition, Purchaser may elect under such
circumstances not to consummate the proposed Merger.
UNLESS THE RIGHTS ARE REDEEMED, SHAREHOLDERS WILL BE
REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID
TENDER OF SUCH SHARE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 3.
IF SEPARATE CERTIFICATES FOR THE RIGHTS ARE NOT ISSUED, A TENDER OF SHARES WILL
ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. SEE SECTIONS 1 AND 3.
"GOING PRIVATE" TRANSACTIONS
The Commission has adopted Rule 13e-3 under the Exchange
Act which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the proposed Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. However,
Rule 13e-3 would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the proposed Merger or other business combination or (ii)
the proposed Merger or other business combination is consummated within one year
after the purchase of the Shares pursuant to the Offer and the amount paid per
Share in the proposed Merger or other business combination is at least equal to
the amount paid per Share in the Offer. If applicable, Rule 13e-3 requires,
among other things, that certain financial information concerning the fairness
of the proposed transaction and the consideration offered to minority
shareholders in such transaction be filed with the Commission and disclosed to
shareholders prior to the consummation of the transaction.
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PLANS FOR DEXTER
In connection with the Offer, ISP and ISP Acquisition have
reviewed and will continue to review various possible business strategies that
they might consider in the event that ISP acquires control of Dexter, whether
pursuant to the Offer, the proposed Merger or otherwise. Such changes could
include, among other things, the sale of Dexter's shares of Life Technologies,
the sale of any of Dexter's wholly owned chemicals businesses, or other changes
in Dexter's corporate structure, capitalization and management.
12. SOURCE AND AMOUNT OF FUNDS.
The consummation of the Offer is conditioned upon, among
other things, the Purchaser having available borrowings of $1.775 billion to,
among other things, purchase Shares in the Offer, on the terms set forth in the
Commitment Letter. See the Introduction and Section 14.
ISP Opco Holdings Inc., a subsidiary of ISP, has entered
into the Commitment Letter with Chase pursuant to which Chase has, subject to
conditions described in the letter, committed to provide senior credit
facilities in the aggregate amount of up to $1.775 billion in order to finance
the acquisition of Dexter, to refinance certain existing indebtedness of ISP's
subsidiaries, Dexter and its subsidiaries, to provide working capital for the
combined companies following the acquisition and to pay certain related fees and
expenses. The definitive agreements between ISP Opco Holdings Inc. and Chase
providing for the senior credit facilities (the "Credit Facilities") have not
been finalized. The following is a summary of the anticipated principal terms of
the Credit Facilities based on the Commitment Letter. This summary is subject to
finalizing the definitive agreements and is qualified in its entirety by
reference to the Commitment Letter, which is filed as an exhibit to the Schedule
TO to which this Offer to Purchase is also an exhibit.
The Credit Facilities will consist of a nine-month tender
term facility and a nine-month tender revolving credit facility, each of which
will be repaid with the proceeds of a seven year revolving credit facility, a
seven year term loan and an 18 month term loan that will be available on the
date on which the proposed Merger occurs. The amount of each facility is to be
specified in the definitive documentation for the credit facilities. The
Commitment Letter provides that obligations under the Credit Facilities will be
guaranteed by all of the domestic wholly owned subsidiaries of ISP and, if the
acquisition is completed, by Dexter and its wholly owned subsidiaries. The
Commitment Letter further provides that the Credit Facilities will be secured by
the capital stock of certain ISP subsidiaries, and all of the capital stock of
Dexter and Life Technologies to be owned by ISP following the consummation of
the proposed Merger. The collateral will be released upon the occurrence of
certain events to be agreed upon in the definitive documentation.
The commitment of Chase to provide the Credit Facilities is
subject to certain material conditions, including the absence of a material
adverse change in the business, operations or financial condition of ISP or
Dexter, and the absence of a material disruption of or a material adverse change
in financial, banking or capital market conditions that, in Chase's judgment,
could materially impair the syndication of the Credit Facilities. In addition,
the availability of the Credit Facilities will be conditioned upon satisfaction
of, among other things, the following customary conditions precedent on or
before the closing date of the Offer (but in no event later than October 31,
2000):
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o The Offer shall have been consummated in accordance with applicable law
and pursuant to documentation reasonably satisfactory to Chase, and no
material waiver, amendment, supplement or other modification to such
documentation shall be in effect.
o No shareholders rights plan or statutory provision that would impede or
limit completion of the Offer or the proposed Merger shall be in effect,
and any material conditions to the completion of the proposed Merger shall
have been satisfied or shall be reasonably capable of being satisfied.
o All governmental and third party approvals necessary in connection with
the Offer, the financing and the continuing operations of ISP and its
subsidiaries shall have been obtained and be in full force and effect, and
all applicable waiting periods shall have expired without any action that
would restrain, prevent or otherwise impose material adverse conditions on
the Offer or the proposed Merger or the financing thereof.
o The lenders shall have received certain reasonably satisfactory financial
statements of ISP and Dexter and shall have received and be reasonably
satisfied with certain pro forma financial information and financial
projections for ISP and its subsidiaries.
o Certain existing indebtedness of ISP and its subsidiaries shall have been
repaid on satisfactory terms, and the existing credit agreement of ISP
shall have been terminated.
o The capital structure of each party to the Credit Facilities shall be
reasonably satisfactory to Chase.
Similar conditions apply with respect to the availability
of financing for ISP Acquisition to pay for shares in the proposed Merger, which
conditions must be satisfied by no later than nine months following the closing
date of the Offer.
The Credit Facilities will require, under certain
circumstances, mandatory prepayments and commitment reductions and ISP will be
permitted to make optional prepayments and commitment reductions. Borrowings
under the facilities will bear interest at either a base rate or a eurodollar
rate, plus an applicable margin based upon ISP's consolidated leverage ratio
(which margin will not exceed 1.50% for base rate loans or 2.50% for eurodollar
rate loans).
The definitive loan documents for the facilities will
contain certain customary covenants that, among other things, will restrict
ISP's ability to dispose of assets, incur additional indebtedness, repay
indebtedness or amend debt instruments, pay dividends, create liens on assets,
make investments, make acquisitions, engage in mergers or consolidations, or
engage in certain transactions with affiliates. In addition, the facilities will
require ISP to comply with certain financial ratios and maintenance tests.
13. DIVIDENDS AND DISTRIBUTIONS.
If, on or after June 26, 2000, Dexter (i) splits, combines
or otherwise changes the Shares or its capitalization, (ii) acquires Shares or
otherwise causes a reduction in the number of Shares, (iii) issues or sells
additional Shares, except pursuant to the exercise of employee options
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outstanding prior to June 26, 2000, or any shares of any other class of capital
stock, other voting securities or any securities convertible into or
exchangeable for shares of any class of capital stock, or rights, warrants or
options, conditional or otherwise, to acquire any of the foregoing or (iv)
discloses that it has taken such action, then, ISP, in its sole discretion, may
make such adjustments in the purchase price and other terms of the Offer and the
proposed Merger as it deems appropriate to reflect such split, combination or
other change including, without limitation, the number or type of securities
offered to be purchased.
If on or after June 26, 2000, Dexter declares or pays any
dividend on the Shares, other than its regular quarterly dividend of no more
than $0.26 per Share, or any distribution (including, without limitation, the
issuance of additional Shares pursuant to a stock dividend or stock split, the
issuance of other securities or the issuance of rights (other than the
separation of the Rights from the Shares) for the purchase of any securities)
with respect to the Shares or Rights (other than the Redemption Price) that is
payable or distributable to shareholders of record on a date prior to the
transfer into the name of the Purchaser or its nominees or transferees on
Dexter's stock transfer records of the Shares and Rights purchased pursuant to
the Offer (except that if the Rights are redeemed by Dexter's Board, tendering
shareholders who are holders of record as of the applicable record date will be
entitled to receive and retain the Redemption Price), and if Shares are
purchased in the Offer, then (i) the purchase price per Share payable by
Purchaser pursuant to the Offer shall be reduced by the amount of any such cash
dividend or cash distribution and (ii) any such noncash dividend, distribution,
issuance, proceeds or right to be received by the tendering shareholders shall
(a) be received and held by the tendering shareholders for the account of
Purchaser and will be required to be promptly remitted and transferred by each
tendering shareholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer or (b) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of such exercise will promptly be remitted to Purchaser. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance,
proceeds or right and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by Purchaser in its
sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer,
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate or amend the
Offer as to any Shares not then paid for, unless the Minimum Condition, the
Rights Condition, the Business Combination Condition, the Asset Retention
Condition, the Funding Condition and the Director Majority Condition are
satisfied. Furthermore, notwithstanding any other term of the Offer, Purchaser
shall not be required to accept for payment or to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, if at any time prior to the expiration of the Offer any of the following
additional conditions exist or shall occur and remain in effect:
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(i) (a) a court of competent jurisdiction or
other governmental entity shall have issued an order,
judgment, decree or ruling which (1) restrains or prohibits
the acquisition by Purchaser or ISP of Shares pursuant to
the Offer, or the making or consummation of the Offer or
the proposed Merger, (2) makes the purchase of or payment
for some or all of the Shares pursuant to the Offer or the
proposed Merger illegal, (3) imposes material limitations
on the ability of ISP (or any of its affiliates) to acquire
or hold, or which requires ISP or any of its affiliates or
subsidiaries to dispose of or hold separate any material
portion of the assets or the business of ISP and its
affiliates taken as a whole or Dexter and its subsidiaries
taken as a whole, or (4) imposes material limitations on
the ability of Purchaser or ISP (or its affiliates) to
exercise full rights of ownership of the Shares purchased
by it, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to
the shareholders of Dexter, or (b) there shall have been
instituted and pending any action or proceeding by any
governmental entity which, in the opinion of ISP's counsel
(assuming, for purposes of such opinion only, the validity
of the allegations) has a reasonable likelihood of success
on the merits, and which (1) seeks to challenge the
acquisition by Purchaser or ISP of the Shares pursuant to
the Offer, restrain, prohibit or delay the making or
consummation of the Offer or the proposed Merger, or obtain
any material damages in connection therewith, (2) seeks to
make the purchase of or payment for some or all of Shares
pursuant to the Offer or the proposed Merger illegal, (3)
seeks to impose material limitations on the ability of
Purchaser or ISP (or any of its affiliates) effectively to
acquire or hold, or to dispose of any material portion of
the assets or the business of ISP and its affiliates taken
as a whole or Dexter and its subsidiaries taken as a whole,
(4) seeks to require ISP or Dexter or any of their
respective affiliates or subsidiaries to dispose of or hold
separate any material portion of the assets or the business
of ISP and its affiliates taken as a whole or Dexter and
its affiliates taken as a whole, or (5) seeks to impose
material limitations on the ability of Purchaser or ISP (or
its affiliates) to exercise full rights of ownership of the
Shares purchased by them, including, without limitation,
the right to vote Shares on all matters properly presented
to the shareholders of Dexter; or
(ii) there shall have occurred (a) any general
suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market in the United States, (b) the
declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (c) the
commencement of a war, armed hostilities or other
international or national calamity directly or indirectly
involving the United States, or (d) any limitation (whether
or not mandatory) by any governmental or regulatory
authority on, or any other event which has a material
adverse effect on, the extension of credit by banks or
other lending institutions in the United States; or
(iii) there shall have been promulgated, enacted,
entered, enforced or deemed applicable to the Offer or the
proposed Merger, by any governmental entity, any law or
there shall have been issued any injunction resulting in
any of the consequences referred to in subsection (i)
above; or
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(iv) Dexter and Purchaser shall have reached an
agreement or understanding that the Offer be terminated or
amended or the purchase or payment for Shares be postponed
pursuant thereto or Purchaser or any of its affiliates
shall have entered into a definitive agreement or announced
an agreement in principle with respect to the proposed
Merger or any other business combination with Dexter or any
of its affiliates or the purchase of any material portion
of the securities or assets of Dexter or any of its
subsidiaries; or
(v) any waiting periods under the HSR Act
applicable to the purchase of the Shares pursuant to the
Offer shall not have expired or been terminated or any
other approval, permit, authorization, consent or other
action of any domestic, foreign or supranational
governmental, administrative or regulatory agency,
authority or tribunal (including those described in Section
15) shall not have been obtained on terms satisfactory to
Purchaser in its sole discretion.
The foregoing conditions are for the sole benefit of
Purchaser and its affiliates and may be asserted by Purchaser regardless of the
circumstances (including, without limitation, any action or inaction by
Purchaser or any of its affiliates) giving rise to any such condition or may be
waived by Purchaser, in whole or in part, from time to time in its sole
discretion. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time. Any determination by Purchaser concerning any of the events
described in this Section 14 shall be final and binding.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.
Except as set forth in this Offer to Purchase, Purchaser is
not aware of any licenses or regulatory permits that would be material to the
business of Dexter and its subsidiaries, taken as a whole, and that might be
adversely affected by Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of Dexter's subsidiaries) as contemplated herein, or
any filings, approvals or other actions by or with any domestic, foreign or
supranational governmental authority or administrative or regulatory agency that
would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of Dexter's subsidiaries) by Purchaser pursuant to the
Offer as contemplated herein. Should any such approval or other action be
required, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to Dexter's business, or that certain parts of
Dexter's or Purchaser's business might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action or in the event that such approvals were not obtained or such
actions were not taken. Purchaser's obligation to purchase and pay for Shares is
subject to certain conditions, including conditions with respect to governmental
actions. See the Introduction and Section 14 for a description of certain
conditions to the Offer, including with respect to litigation and governmental
actions.
Federal Reserve Board Regulations. Regulations G, U and X
(the "Margin Regulations") of the Federal Reserve Board restrict the extension
or maintenance of credit for the purpose of buying or carrying margin stock, if
the credit is secured directly or indirectly by margin stock. The restrictions
provided for in the Margin Regulations will not apply in connection with the
financing of the Offer and the proposed Merger.
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State Takeover Laws. A number of states (including
Connecticut, where Dexter is incorporated) have adopted takeover laws and
regulations which purport, to varying degrees, to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have substantial assets, security holders, principal executive offices or
principal places of business therein. To the extent that certain provisions of
certain of these state takeover statutes purport to apply to the Offer,
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce.
Except as described herein, Purchaser has not attempted to
comply with any state takeover statutes in connection with the Offer. Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor any
action taken in connection herewith is intended as a waiver of that right. In
the event that any state takeover statute is found applicable to the Offer,
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, Purchaser may not be obligated to accept for purchase, or pay for,
any Shares tendered. See Section 14.
Antitrust. Under the HSR Act, and the rules and regulations
that have been promulgated thereunder by the Federal Trade Commission (the
"FTC"), certain acquisition transactions may not be consummated until certain
information and documentary material has been furnished for review by the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of shares pursuant to the Offer is, and the proposed Merger may be,
subject to such requirements. On June 23, 2000, Purchaser filed a Premerger
Notification and Report Form with the Antitrust Division and the FTC in
connection with the purchase of Shares pursuant to the Offer.
Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares pursuant to the Offer may not be consummated until
the expiration of a 15-calendar-day waiting period following the filing by
Purchaser, unless such waiting period is earlier terminated by the FTC and the
Antitrust Division. Accordingly, the waiting period under the HSR Act which is
applicable to the Offer will expire at 11:59 p.m., New York City time, on July
10, 2000, unless earlier terminated by the Antitrust Division and the FTC or
Purchaser receives a request for additional information or documentary material
from the Antitrust Division or the FTC prior thereto. If either the FTC or the
Antitrust Division were to request additional information or documentary
material from Purchaser, the waiting period with respect to the Offer would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance with such request by Purchaser. Thereafter, the
waiting period could be extended only by court order or with the consent of
Purchaser. The additional 10-calendar-day waiting period may be terminated
sooner by the FTC and the Antitrust Division. Although Dexter is required to
file certain information and documentary material with the Antitrust Division
and the FTC in connection with the Offer, neither Dexter's failure to make such
filings nor a request made to Dexter from the Antitrust Division or the FTC for
additional information or documentary material will extend the waiting period
with respect to the Offer.
The Antitrust Division and the FTC frequently scrutinize
the legality under the antitrust laws of transactions such as the acquisition of
Shares by Purchaser pursuant to the Offer and the proposed Merger. At any time
before or after Purchaser's purchase of Shares, the Antitrust Division or the
FTC could take such action under the antitrust laws as either deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
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Shares pursuant to the Offer, the divestiture of Shares purchased pursuant to
the Offer or the divestiture of substantial assets of Dexter or Purchaser.
Private parties as well as state attorneys general may also bring legal actions
under the antitrust laws under certain circumstances. See Section 14.
Based upon an examination of publicly available information
relating to the businesses in which Dexter is engaged, Purchaser believes that
the acquisition of Shares pursuant to the Offer and the proposed Merger would
not violate the antitrust laws. Purchaser believes that retention of all of the
operations of Dexter and Purchaser should be permitted under the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made, or, if such challenge is made, what the
result will be. See Section 14.
16. CERTAIN FEES AND EXPENSES.
Chase Securities Inc. is acting as ISP's financial advisor
in connection with any proposed business combination transaction involving
Dexter, and is assisting ISP in connection with the financing of any such
transaction. For its financial advisory services, Chase Securities will receive
from ISP a fee of $1 million upon the consummation of any such transaction, plus
an additional amount based on the performance of Chase Securities, to be
determined by ISP and paid in ISP's sole discretion. Chase Securities will also
receive reimbursement of its reasonable and documented expenses. In addition,
ISP has agreed to indemnify Chase Securities and related persons against certain
liabilities arising out of the engagement. In its capacity as ISP's financial
advisor, Chase Securities has agreed, among other things, to assist ISP by
acting as Dealer Manager in connection with the Offer and may act at ISP's
request in contacting (in person, by telephone or otherwise) shareholders of
Dexter identified to Chase Securities by ISP in connection with the Offer. Chase
Securities will not receive any separate or additional fee for, or in connection
with, acting as Dealer Manager. Chase Securities will be reimbursed for all
out-of-pocket expenses incurred by it in connection with acting as Dealer
Manager, and will be indemnified against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws. Chase Securities and its affiliates are engaged in providing a
full range of banking, securities trading, market making and brokerage services
to institutional and individual clients. In the normal course of its business
Chase Securities and its affiliates may have provided, and may in the future
provide, subject to certain contractual and conflict of interest limitations,
financial advisory, investment banking or other such services to Dexter, ISP or
their respective affiliates, and may trade securities of Dexter, ISP or their
respective affiliates for its own account and the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
Innisfree M&A Incorporated has been retained by ISP to
provide consulting and analytic services in connection with any proposal by ISP
to acquire Dexter in opposition to Dexter's Board. Among other things, Innisfree
has agreed to act as Information Agent in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers and other
nominee shareholders to forward material relating to the Offer to beneficial
owners. Customary compensation will be paid for all such services in addition to
reimbursement of reasonable out-of-pocket expenses. ISP has agreed to indemnify
the Information Agent against certain liabilities and expenses, including
liabilities under the federal securities laws.
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In addition, Wilmington Trust Company has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services in connection with the
Offer, will be reimbursed for its reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith.
Except as set forth above, the Purchaser will not pay any
fees or commissions to any broker, dealer or other person (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Shares and
Rights pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Purchaser for
customary clerical and mailing expenses incurred by them in forwarding materials
to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares or Rights residing in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the securities, blue sky or other laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Shares in such 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 behalf of the Purchaser by the Dealer Manager or one or
more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Purchaser has filed with the Commission the Schedule TO,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. Such Schedule TO and
any amendments thereto, including exhibits, may be examined and copies may be
obtained from the office of the Commission in the same manner as described in
Section 8 with respect to information concerning Dexter, except that they will
not be available at the regional offices of the Commission.
No person has been authorized to give any information or to
make any representation on behalf of Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, any such
information or representation must not be relied upon as having been authorized.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to the
Offer shall, under any circumstances, create any implication that there has been
no change in the affairs of Purchaser or Dexter since the date as of which
information is furnished or the date of this Offer to Purchase.
ISP ACQUISITION CORP.
June 26, 2000
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF ISP
Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employments for the past five years of each director and executive officer of
ISP. The business address of each director and executive officer is c/o ISP
Management Company, Inc., 1361 Alps Road, Wayne, New Jersey 07470, except as
indicated below. All executive officers and directors are citizens of the United
States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
---- ----------------------------------------------
Samuel J. Heyman Mr. Heyman has been a director and Chairman of the
Board of ISP since its formation and was Chief
Executive Officer of ISP and certain of its
subsidiaries from its formation to June 1999. Mr.
Heyman also has been a director, Chairman of the
Board, President and Chief Executive Officer of
GAF and certain of its subsidiaries for more than
five years. He has been a director and Chairman of
the Board of Building Materials Corporation of
America ("BMCA"), an indirect, approximately
98%-owned subsidiary of GAF, since its formation
and has served as Chief Executive Officer of BMCA
and certain of its subsidiaries since June 1999,
which position he also held from June 1996 to
January 1999. He is also the Chief Executive
Officer, Manager and General Partner of a number
of closely held real estate development companies
and partnerships whose investments include
commercial real estate and a portfolio of publicly
traded securities.
Sunil Kumar Mr. Kumar has been a director, President and Chief
Executive Officer of ISP and President and Chief
Executive Officer of certain of its subsidiaries
since June 1999. He was a director, President and
Chief Executive Office of BMCA and certain of its
subsidiaries from May 1995, July 1996 and January
1999, respectively, to June 1999. He also was
Chief Operating Officer of BMCA and certain of its
subsidiaries from March 1996 to January 1999. Mr.
Kumar was President, Commercial Roofing Products
Division, and Vice president of BMCA from February
1995 to March 1996. From 1992 to February 1995, he
was Executive Vice President of
Bridgestone/Firestone Inc., a retail distributor
and manufacturer of tires and provider of
automobile services.
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Carl R. Eckardt Mr. Eckardt has been a director of ISP since its
formation and was Executive Vice President,
Corporate Development, of ISP from November 1996
to November 1999, which position he also held from
ISP's formation to January 1994. From January 1994
to November 1996, Mr. Eckardt was President and
Chief Operating Officer of ISP. Mr. Eckardt was
Vice Chairman of GAF Corporation ("GAF"), an
affiliate of the Company, from November 1996 to
January 1999 and a director of GAF for more than
five years until January 1999. He was Executive
Vice President of GAF for more than five years
until November 1996.
Randall R. Lay Mr. Lay has been Executive Vice President and
Chief Financial Officer of ISP and its
subsidiaries since July 1999, was Senior Vice
President and Chief Financial Officer of ISP and
its subsidiaries from December 1998 to July 1999
and was Vice President and Chief Financial Officer
of ISP and its subsidiaries from April 1995 to
December 1998. From August 1993 to April 1995, he
served as Controller, Specialty Derivatives of
ISP.
Richard A. Weinberg Mr. Weinberg has been Executive Vice President,
General Counsel and Secretary of ISP and its
subsidiaries since May 1998 and was Senior Vice
President, General Counsel and Secretary of ISP
and its subsidiaries from May 1996 to May 1998.
Mr. Weinberg has held the same positions during
the same time periods with GAF Corporation and
certain of its subsidiaries, including BMCA. He
has been a director of certain of ISP's
subsidiaries since May 1996 and a director of GAF
Corporation since February 2000. He was Vice
President and General Counsel of BMCA from
September 1994 to May 1996.
Andrew G. Mueller Mr. Mueller has been Executive Vice
President-Operations of ISP and certain of its
subsidiaries since May 1997. He was employed by
BASF Corporation as Group Vice President,
Colorants & Textile/Leather Chemicals from
December 1995 to April 1997 and as Vice President,
Fiber Intermediates for more than five years until
November 1995.
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Susan B. Yoss Ms. Yoss has been Senior Vice President and
Treasurer of ISP and its subsidiaries since July
1999 and was Vice President and Treasurer of ISP
and its subsidiaries from February 1998 to June
1999. She also has been Senior Vice President and
Treasurer of BMCA and its subsidiaries and Senior
Vice President, Chief Financial Officer and
Treasurer of GAF Corporation and certain of its
subsidiaries since July 1999. Ms. Yoss was Vice
President and Treasurer of BMCA from February 1998
to June 1999. She was Assistant Treasurer of
Joseph E. Seagram & Sons, Inc., a global beverage
and entertainment company, for more than five
years until February 1998.
Ronald E. Brandt Mr. Brandt has been Senior Vice President, Sales
and Commercial Director-Americas of ISP and
certain of its subsidiaries since July 1999 and
was Senior Vice President, Personal Care and Fine
Chemicals Group of ISP and certain of its
subsidiaries from December 1998 to July 1999. He
served as Vice President and General Manager,
Performance and Fine Chemicals of ISP and certain
of its subsidiaries from July 1998 to December
1998 and as Vice President, Performance and Fine
Chemicals of ISP and certain of its subsidiaries
from October 1997 to July 1998. From July 1996 to
January 1997, Mr. Brandt was Senior Vice President
of Lawson Mardon Wheaton, a packaging
manufacturer, and from 1992 to June 1996, he
served as Senior Vice President of Lonza Inc., a
chemicals manufacturer.
Harrison J. Goldin Mr. Goldin has been a director of ISP since its
formation. He has been the senior managing
director of Goldin Associates, L.L.C., a
consulting firm, since January 1990. Mr. Goldin
was the Comptroller of the City of New York from
1974 to 1989 and a New York State Senator from
1966 to 1973.
Charles M. Diker Mr. Diker has been a director of ISP since
February 1992. He has been a non-managing
principal of Weiss, Peck & Greer, an investment
management firm, since 1975. He also has been
Chairman of the Board of Cantel Industries Inc., a
manufacturer of medical diagnostic and infection
control products, since 1986. Mr. Diker is a
director of BeautiControl Cosmetics, a cosmetics
company; Data Broadcasting Company, a financial
data broadcasting company; Chyron Corporation, a
designer and manufacturer of digital equipment,
software and systems; and AMF Bowling, Inc., an
owner and operator of, and manufacturer of
equipment for, commercial bowling centers.
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Sanford Kaplan Mr. Kaplan has been a director of ISP since
November 1992. He has been a private investor and
consultant since 1977 when he retired from Xerox
Corporation, where he was a Senior Vice President
and a director.
Burt Manning Mr. Manning has been a director of ISP since
November 1992. He is President of Brookbound Inc.,
a strategic consulting company. He was Chairman of
J. Walter Thompson Company, a multinational
advertising company, from July 1987 to December
1997 and was Chief Executive Officer of such
company from July 1987 to December 1996. He has
served as Chairman Emeritus of such company since
January 1998. Mr. Manning is a director of
Friendly Ice Cream Corporation.
Mr. Goldin is the senior managing director of Goldin
Associates, L.L.C., a consulting firm, the address of which is 767 Fifth Avenue,
New York, New York 10153. Mr. Diker is a non-managing principal of Weiss, Peck &
Greer, an investment management firm, the address of which is 1 New York Plaza,
New York, New York 10004. Mr. Manning is Chairman Emeritus of J. Walter Thompson
Company, a multinational advertising company, and President of Brookbound
Incorporated, a strategic consultancy company, the address of which is 105 East
67th Street, New York, New York 10021.
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SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employments for the past five years of each director and executive officer of
Purchaser. The business address of each director and executive officer is c/o
ISP Management Company, Inc., 1361 Alps Road, Wayne, New Jersey 07470. All
executive officers and directors are citizens of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
---- ----------------------------------------------
Sunil Kumar Mr. Kumar has been a director, President and Chief
Executive Officer of ISP and President and Chief
Executive Officer of certain of its subsidiaries
since June 1999. He was a director, President and
Chief Executive Office of BMCA and certain of its
subsidiaries from May 1995, July 1996 and January
1999, respectively, to June 1999. He also was
Chief Operating Officer of BMCA and certain of its
subsidiaries from March 1996 to January 1999. Mr.
Kumar was President, Commercial Roofing Products
Division, and Vice president of BMCA from February
1995 to March 1996. From 1992 to February 1995, he
was Executive Vice President of
Bridgestone/Firestone Inc., a retail distributor
and manufacturer of tires and provider of
automobile services.
Randall R. Lay Mr. Lay has been Executive Vice President and
Chief Financial Officer of ISP and its
subsidiaries since July 1999, was Senior Vice
President and Chief Financial Officer of ISP and
its subsidiaries from December 1998 to July 1999
and was Vice President and Chief Financial Officer
of ISP and its subsidiaries from April 1995 to
December 1998. From August 1993 to April 1995, he
served as Controller, Specialty Derivatives of
ISP.
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Richard A. Weinberg Mr. Weinberg has been Executive Vice President,
General Counsel and Secretary of ISP and its
subsidiaries since May 1998 and was Senior Vice
President, General Counsel and Secretary of ISP
and its subsidiaries from May 1996 to May 1998.
Mr. Weinberg has held the same positions during
the same time periods with GAF Corporation and
certain of its subsidiaries, including BMCA. He
has been a director of certain of ISP's
subsidiaries since May 1996 and a director of GAF
Corporation since February 2000. He was Vice
President and General Counsel of BMCA from
September 1994 to May 1996.
Susan B. Yoss Ms. Yoss has been Senior Vice President and
Treasurer of ISP and its subsidiaries since July
1999 and was Vice President and Treasurer of ISP
and its subsidiaries from February 1998 to June
1999. She also has been Senior Vice President and
Treasurer of BMCA and its subsidiaries and Senior
Vice President, Chief Financial Officer and
Treasurer of GAF Corporation and certain of its
subsidiaries since July 1999. Ms. Yoss was Vice
President and Treasurer of BMCA from February 1998
to June 1999. She was Assistant Treasurer of
Joseph E. Seagram & Sons, Inc., a global beverage
and entertainment company, for more than five
years until February 1998.
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SCHEDULE III
BACKGROUND OF THE OFFER
ISP began purchasing shares of Dexter and Life Technologies
common stock in September 1998 because ISP believed that the shares of both
companies were substantially undervalued. As the largest Dexter shareholder and
an investor in the Company's shares since September 1998, ISP has been
dissatisfied with the share price performance of Dexter's common stock.
Specifically, ISP has discussed with representatives of Dexter a recommendation
with respect to the separation of Life Technologies and Dexter. Dexter rejected
ISP's recommendation. Therefore, on December 14, 1999, ISP proposed a business
combination in which Dexter shareholders would receive at least $45 per share in
cash, subject to the negotiation of a mutually acceptable merger agreement.
Life Technologies is the surviving corporation of a merger
in 1983 of Bethesda Research Laboratories, Inc. with a Dexter-owned subsidiary.
Dexter owned approximately 52% of the outstanding stock of Life Technologies in
1998.
On July 7, 1998, Dexter proposed to purchase the remaining
48% of the outstanding shares of Life Technologies that it did not already own,
at a purchase price of $37 per share in cash. The proposal was made subject to,
among other things, the approval of the Board of Directors of Life Technologies,
and, since a majority of the Life Technologies Board was affiliated with Dexter,
the approval of the Life Technologies Board's unaffiliated directors. Following
receipt of Dexter's proposal, Life Technologies' Board of Directors formed a
special committee of independent directors (the "Special Committee") to consider
and respond to the proposal. Thomas H. Adams, Ph.D., Frank F. Samuel, Jr. and
Iain C. Wylie were appointed as the members of the Special Committee, with Dr.
Adams to act as chairman. The Special Committee retained outside counsel and a
nationally recognized investment banking firm to assist in their analysis of
Dexter's proposal.
After a comprehensive valuation of Life Technologies and
its prospects by the Special Committee and its advisors, on October 27, 1998,
the Special Committee reported to the Life Technologies Board that it would be
unable to recommend that Life Technologies shareholders accept Dexter's offer of
$37 per share of Life Technologies stock. Among its findings, the Special
Committee reported that:
A. it did not believe that Dexter's proposal adequately
reflected the value of the prospects of Life Technologies;
in particular, the Special Committee noted that Dexter's
proposal did not adequately address the value of Life
Technologies' research and development pipeline;
B. it had received inquiries from a third party interested in
acquiring all of Life Technologies at a price in excess of
Dexter's $37 per share offer, but was unable to respond to
such offer because Dexter had advised that it was not
interested in disposing of its controlling block of Life
Technologies shares; and
C. Dexter's proposed purchase price of $37 per share of Life
Technologies common stock was substantially below the $50+
range which the Special Committee considered an appropriate
price range for shares of Life Technologies at that time.
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In response to the Special Committee's findings, K. Grahame
Walker, Chairman and Chief Executive Officer of Dexter and Chairman of the Board
of Life Technologies, proposed that the Life Technologies Board disband the
Special Committee. Mr. Walker also announced that Dexter was withdrawing its
original proposal and would make an offer directly to the shareholders of Life
Technologies to tender their shares for $37 per share in cash. All five of the
directors affiliated with Dexter, representing a majority of the Life
Technologies Board, voted in favor of a resolution to disband the Special
Committee, while all three members of the Special Committee voted against the
resolution. A few days thereafter, two of the three independent Life
Technologies directors who served on the Special Committee (Messrs. Samuel and
Wylie) resigned as directors of Life Technologies in protest of the disbanding
of the Special Committee.
In his resignation letter, dated November 3, 1998, to the
Life Technologies Board, Frank E. Samuel, Jr. stated that Dexter's proposal
"ignored important components of Life Technologies' overall value, including the
value of the products in Life Technologies' R&D Pipeline." Mr. Samuel further
characterized Dexter's Proposal as "heavyhanded" and as a "coercive attempt to
buy out the [Life Technologies] public shareholders at a price which, I believe,
deprives these shareholders of the significant inherent values to which they are
rightfully entitled." Iain C. Wylie, in his resignation letter to the Life
Technologies Board, echoed Mr. Samuel's concerns with respect to Dexter's
proposal.
Despite the Special Committee's findings, on November 2,
1998, Dexter commenced a tender offer for the outstanding shares of Life
Technologies at $37 per share. Dexter also announced its intention to acquire
any shares not purchased in the tender offer through a second-step merger in
which the remaining shareholders would receive the same share price paid in the
tender offer.
On November 16, 1998, Life Technologies filed a Schedule
14D-9 Solicitation/Recommendation Statement in which Life Technologies disclosed
that the Life Technologies Board would remain neutral and express no opinion
with respect to Dexter's tender offer, since a majority of the Life Technologies
Board was affiliated with Dexter. However, Life Technologies included in the
Schedule 14D-9 the view of the Special Committee that the shareholders should
reject Dexter's tender offer and not tender their shares, along with the
analysis by the investment banking firm hired by the Special Committee which
detailed its finding that Dexter's offer price was inadequate to Life
Technologies shareholders.
On December 7, 1998, Dexter amended its tender offer by
increasing the purchase price from $37 per share to $39.125 per share and
dropping the condition that Dexter acquire at least 80% of the outstanding
shares of Life Technologies following the consummation of the tender offer. Upon
the completion of the tender offer, Dexter owned approximately 71% of the
outstanding shares of Life Technologies.
Shortly after the commencement of Dexter's tender offer, in
November 1998, we filed a Schedule 13D with respect to our beneficial ownership
of shares of Life Technologies. On November 25, 1998, we signed an agreement
with Bear, Stearns & Co. Inc., The Frederick R. Adler Intangible Asset
Management Trust, The Cohen Revocable Trust and Annie Chang, each of whom is a
shareholder of Life Technologies, to form a group (the "Life Technologies
Group") for purposes of Section 13(d) of the Exchange Act. The agreement was for
a term of six months and provided for, among other things, each party not to
sell or otherwise dispose of its Life Technologies shares without the consent of
the other parties to the agreement. Thereafter, we, together with the other
members of the Life Technologies Group, filed an amendment to our Schedule 13D
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reporting our group ownership of Life Technologies shares. On December 2, 1998,
each of York Capital Management, L.P., JGD Management Corp. and York Investment
Limited became members of the Life Technologies Group, and on December 18, 1998,
each of Idoya Partners, Prescott Associates, Prescott International Partners,
L.P., Thomas W. Smith as Trustee for the Jack McKenzie Trust Under Agreement
Dated April 12, 1992, Thomas W. Smith as Trustee for the Leo Carroll Wolfensohn
Trust Under Agreement Dated March 9, 1994 and Thomas W. Smith (collectively, the
"Prescott Entities") joined the Life Technologies Group, in each case by
entering into similar agreements with the other existing members of the Life
Technologies Group. Additional amendments to our Schedule 13D were filed to
reflect the additional members of the Life Technologies Group, so that, as of
December 23, 1998 we, together with the other members of the Life Technologies
Group, owned approximately 26.2% of the outstanding shares of Life Technologies.
On that date, ISP individually owned approximately 14.75% of the outstanding
shares of Life Technologies.
On February 1, 1999, the common stock of Life Technologies
was delisted from the Nasdaq Stock market because of Life Technologies'
inability to remain in compliance with certain maintenance standards required
for continued listing, including the number of shareholders and public float
requirements, as a result of Dexter's completed tender offer for Life
Technologies' stock. Life Technologies currently remains a reporting company
under the Securities and Exchange Commission rules and its common stock is
available for quotation on the OTC Bulletin Board.
On July 26, 1999, Life Technologies announced that its
Board had decided to discontinue regular quarterly dividends on its common
stock.
On September 27, 1999, pursuant to an amended Schedule 13D
filing, we disclosed that we beneficially owned approximately 9.98% of the
outstanding common stock of Dexter. Soon thereafter, on October 4, 1999,
Dexter's Board amended Dexter's Rights Agreement to lower the threshold of
beneficial ownership that will trigger the defensive provisions of the Rights
Agreement from 20% to 11% of the outstanding common stock of Dexter, applicable
to any shareholder who does not file a Schedule 13G with the SEC stating that
its ownership position has been acquired without any intent to change or
influence control of Dexter.
On December 3, 1999, representatives of ISP and Dexter met
to discuss our dissatisfaction with Dexter's share price performance. At such
meeting, we expressed our belief that Life Technologies, with its higher growth
and higher margins, can better fulfill its potential as an independent entity or
in combination with another similarly strategically situated company, rather
than in combination with Dexter, for reasons detailed in Mr. Heyman's letter to
Mr. Walker on December 14, 1999. Our representatives noted that there are no
apparent synergies between Dexter and Life Technologies that would justify
Dexter's continued control of Life Technologies and, as an independent company,
Life Technologies would likely have greater access to the capital markets and
receive a higher level of analyst coverage. We therefore recommended that it
would be in the best interests of both companies and their respective
shareholders if Dexter and Life Technologies were independent corporate
entities. We further offered to work with Dexter to try to develop a tax
efficient strategy (i.e. - a strategy which minimizes tax costs to investors and
the respective companies), subject to a proper business purpose, to separate
Dexter and Life Technologies.
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On December 6, 1999, pursuant to an amended Life
Technologies 13D filing, we disclosed that our initial group agreements with
other Life Technologies shareholders, which had been renewed and extended on May
10, 1999, had been further extended until September 30, 2000 by all of the
members of the Life Technologies Group other than the Prescott Entities.
Currently, the continuing members of the Life Technologies Group beneficially
own approximately 21.7% of the outstanding shares of Life Technologies.
After receiving no response to our proposal made during the
December 3, 1999 meeting, on December 14, 1999, Samuel J. Heyman, Chairman of
the Board of ISP, sent the following letter to Mr. Walker proposing to acquire
all of the shares of Dexter not owned by ISP for a price of $45 per share:
Dear Grahame:
It was nice meeting with you, John Thompson, and Bruce
Beatt on December 3rd.
As Kumar Shah and I indicated to you, our interest is in
the realization of shareholder values for all Dexter Corporation and
Life Technology shareholders. In this connection, based on our
analysis, we believe that Life Technologies, with its higher growth
and higher margins, can better fulfill its potential as an
independent entity, or in combination with another similarly
strategically situated company, rather than in combination with
Dexter Corporation. We also believe that it will be in the best
interests of both companies and their respective shareholders if
Dexter Corporation and Life Technologies were separate corporate
entities.
The overriding reason for this conclusion stems primarily
from the fact that there are practically no overlaps and the
companies add no value to each other. Specifically, Dexter
Corporation's R&D, product development and manufacturing technology
have no interface, and lack any synergy, with Life Technologies.
Furthermore, we believe that Dexter Corporation has restrained Life
Technologies' growth by limiting Life Technologies' R&D expenditures,
new product development and new product introductions. Marketing,
sales and distribution likewise provide no crossover benefits for the
two companies. In addition to the operational issues, we note that
Dexter Corporation management has little or no experience in the life
science field.
From a financial perspective, as an independent company,
Life Technologies would have much greater access to the capital
markets, without the constraints of Dexter Corporation's financial
profile. Life Technologies, as a pure play on which analysts and
shareholders can more clearly and easily focus, would attract a high
level of Wall Street coverage, providing the opportunity to achieve
P/E multiples similar to those achieved by others, who serve the same
market. This would enable Life Technologies to consummate attractive
stock acquisitions and mergers in the emerging life science field,
which you acknowledge has been constrained under your ownership.
Finally, as an independent company, or as part of a high
technology company serving the biotechnology industry, Life
Technologies would be in a position to provide greater incentives for
its executives. Through making available stock options with a
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significant upside potential to all key-operating employees, Life
Technologies would be providing a better opportunity to attract,
hire, and most importantly, retain quality personnel to insure and
maximize its continued profitable growth.
As a substantial shareholder of both Dexter Corporation and
Life Technologies, it is our position that, for the foregoing
reasons, there is value to be realized in the separate corporate
existence of these two entities. At our meeting, while I was pleased
that you appeared to share our view that there are few, if any,
synergies between Dexter Corporation and Life Technologies, I had
hoped that you would be more receptive to our proposal. However,
since that time, by your lack of response and your recent comments to
security analysts, it appears that you disagree with our approach to
maximizing shareholder value nor do you appear to have in mind any
alternative strategy for accomplishing the same goal.
As long term shareholders of both Dexter and Life
Technologies, we think we have been more than patient. Our Board has
therefore decided to propose acquiring all of the Dexter Corporation
common stock not owned by ISP and its affiliates for a price of
$45.00 per share subject to the execution of a mutually acceptable
merger agreement. Such a price represents a 38% premium over where
Dexter Corporation closed last night (329/16), and is higher than the
stock has ever traded. In addition, if you would provide us
additional information on Dexter Corporation and Life Technologies
that justifies an increased price we would be willing to pay more. We
would be willing to enter into a confidentiality agreement in
connection therewith (but not any such agreement that would limit our
rights as shareholders).
We and our advisors are available to move quickly to
consummate this transaction. Grahame, please let me know how you and
your Board would like to proceed.
Sincerely,
/s/ Samuel J. Heyman
On December 14, 1999, Dexter issued a press release
indicating that it had received ISP's December 14 letter and that Dexter's Board
would consider ISP's proposed offer, but noting that the December 14th letter
did not mention a source of funds for ISP's cash offer.
In response to Dexter's press release, on December 16,
1999, Mr. Heyman sent the following letter to Mr. Walker:
Dear Grahame:
I note from Dexter's news release yesterday your mention
that our letter "contained no information concerning the source of
funds for its proposal."
In this regard, we intend to finance with bank borrowings
and will provide commitments for such financing as appropriate.
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As I indicated in yesterday's letter, we stand
ready with our advisors to meet with you as soon as possible
regarding all aspects of the proposed merger agreement.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On December 23, 1999, Mr. Walker sent the following letter
to ISP rejecting ISP's offer to purchase the outstanding shares of Dexter:
Dear Mr. Heyman:
On behalf of Dexter's Board of Directors, I am replying to
your letter of December 14.
The Board has carefully considered your proposal to
negotiate an acquisition of Dexter at a price of $45 per share. It
has discussed the proposal as well as the strategic initiatives
mentioned in your letter with the company's management and its
advisors - Lehman Brothers and Skadden, Arps. The Board has received
an opinion from Lehman Brothers that $45 per share is inadequate from
a financial point of view to the shareholders of Dexter. It is the
unanimous view of the Board of Directors that your proposal is both
inadequate and contrary to the best interests of the shareholders of
Dexter. Accordingly, it is hereby rejected.
We noted with interest the research comment on your
proposal published by Merrill Lynch the same day you made it. Merrill
Lynch said, "... the bid is too low. It appears that ISP could be
just trying to put Dexter in play." The comment also noted:
"Interestingly, ISP's total bid for Dexter is only slightly larger
than Dexter's bid for Life Technologies - an offer that was deemed as
too low by ISP management." New Vernon Associates, an institutional
research firm, was even more definitive in its characterization of
the ISP proposal. "Mr. Heyman is clearly playing the role of
arbitrageur here. There is little or no strategic fit between ISP and
either Dexter or Life Technologies." Yet a third report published by
Schroders on December 15 was to a similar effect.
The Board has thoroughly reviewed the company's present
circumstances in light of your public proposal to acquire Dexter for
an inadequate price, ostensibly to separate Dexter and Life
Technologies. In consequence of that review, they have asked me to
share the following additional thoughts with you.
The Dexter Board is committed to its business strategy of
maximizing the long-term growth of Dexter through its investment in
Life Technologies. It will continue these efforts, despite any
attempt on your part to divert their benefits for ISP's short-term
interests, as you have done in numerous other cases in which you
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purchased shares of a company - purporting to espouse shareholder
interests - and subsequently sold out your position at a profit.
Last year, in pursuit of its shareholder value growth
strategy, Dexter decided to strengthen its focus on life sciences.
Among other initiatives, it sought to acquire the public minority
shares of Life Technologies. Your company opportunistically
intervened to frustrate this objective and bought 15% of the
outstanding shares in the open market, while Dexter was proceeding
with its tender offer at a price that was available to every LTI
shareholder. Our Board's plan was to realize synergistic benefits and
cost savings from 100% ownership of LTI, in addition to securing our
platform for growth in life sciences. The Dexter shareholders have
been denied those benefits and the related shareholder value
enhancement by your actions, not by any inadequacy in our basic
strategy.
The second phase of your opportunistic strategy was an
open-market purchase program in Dexter shares which purported to be
"for investment purposes only." Immediately after you assembled a 10%
block, you dropped your pretense of being a passive investor. You
invited yourself to a meeting with management, asserted Dexter and
Life Technologies should be separated, waited 11 days and then made a
public unsolicited acquisition proposal at an inadequate price
benefiting only ISP and not all Dexter shareholders. Your disregard
for the interests - indeed welfare - of Dexter shareholders is
especially exemplified by the fact that both Moody's and Standard &
Poor's have now put Dexter on credit watch with negative implications
expressly as a result of the apprehension that ISP will over-leverage
in order to combine with Dexter.
You have also made some factual assertions about Dexter and
Life Technologies which are simply wrong and which are potentially
damaging to one or both companies. Dexter has not been a restraining
influence on LTI's R&D spending. Indeed, you sought to elicit such a
statement from the Life Technologies management in your meeting with
them but they declined to provide it. Nor is there any basis for your
claim that Dexter's ownership of LTI shares makes it difficult to
attract, hire and retain quality management. Quite simply, that has
not been the case. Your contention further implies that the current
management of LTI is not first rate, a similarly baseless suggestion.
You have mischaracterized the relationship between Dexter
and Life Technologies, and your position is internally inconsistent.
You affirmatively asserted in our conversation on December 3 that
Life Technologies has no place with ISP. We agree. However, it is
illogical and self-contradictory for you to suggest that you wish to
acquire Dexter in order to spin off Life Technologies in some
unspecified transaction likely to have adverse tax consequences to
all participants. Second, and more important by far, we are convinced
that both Dexter and Life Technologies have bright future prospects
which justify a valuation of Dexter shares significantly in excess of
what is reflected in the current market price. We fervently hope (and
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strongly recommend) that you return your managerial focus to your own
companies, leaving the stewardship of Dexter and LTI where it belongs
- with their respective Boards.
Sincerely
/s/ K. Grahame Walker
In a complaint filed in Connecticut Superior Court dated
January 18, 2000, Lee Brennan and Ellis Investments LTD. asserted claims on
behalf of themselves and a putative class consisting of all Dexter shareholders
(other than the defendants and any person or entity affiliated with them)
against Dexter, Mr. Walker and the directors of Dexter, asserting claims which
were previously brought separately in the Delaware courts. In their complaint,
such shareholders allege, among other things, that "[i]n rejecting the ISP
offer, reducing the threshold for activation of the shareholder rights plan and
failing to make any attempts to negotiate with ISP, [Dexter, Mr. Walker and
Dexter's Board] have acted wrongfully to the detriment of Dexter public
shareholders."
On January 20, 2000, Dexter announced that it had sent a
letter to Life Technologies proposing to acquire for $49.00 per share the 28.5%
of Life Technologies that Dexter does not own in a merger transaction. Dexter
asked for "appropriate indications of support" for the merger from ISP and the
other members of the 13D group.
On January 27, 2000, Mr. Heyman sent the following letter
to Mr. Walker:
Dear Grahame:
In view of ISP's $45 all cash offer and our stated
willingness to pay more if additional information justified a higher
price, I was disappointed that your Board did not decide to encourage
negotiations with a view toward increasing shareholder value for
Dexter shareholders. Its refusal to do so leaves us no choice but to
take our proposal directly to our fellow shareholders.
We are today delivering to your Corporate Secretary a
notice of our intention to present a series of resolutions at your
April Annual Meeting. The effect of the resolutions is to elect ten
of our nominees to the Dexter Board, including eight directors
independent of ISP, who are committed to considering and pursuing
ISP's offer or a superior proposal. We are also proposing a by-law
amendment and a resolution requiring Dexter's Board to remove its
"poison pill" in favor of offers for all shares of at least $45 per
share in cash. We intend to solicit proxies in favor of these
resolutions.
Your December 23rd letter questioned the seriousness of
ISP's intent. First, as you know, ISP currently holds a stake in
Dexter which is more than five times that held by Dexter's entire
Board. Second, so that there should be no doubt as to our ability to
finance the acquisition, Chase Securities Inc. advised us, confirmed
in writing, that they are highly confident in their ability to
arrange the credit facilities for this acquisition.
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There are so many inaccuracies and mischaracterizations in
your letter that I find it difficult to know where to start. By way
of just one example, your heavy reliance upon security analysts to
defend your rejection of our proposal is misplaced. For instance, in
comparing ISP's offer to Dexter's bid last year for Life
Technologies, the Merrill Lynch report contained an error of almost
$300 million by ignoring the value of the minority interests. Also,
you failed to quote a relevant section of the New Vernon Associates
report you cited, which states the following: "there is little or no
interplay between the company's [Dexter's] industrial and life
sciences businesses," "we do find merit in his [Mr. Heyman's]
initiative to separate the company's [Dexter's] disparate assets,"
and "in our view Dexter's ownership of LTEK is constraining the
latter company's ability to recruit and retain key employees." With
regard to the last point, it should be made clear that we indeed view
the management of Life Technologies as first rate. However, your
attempted squeeze-out of the minority shareholders more than a year
ago resulted in the elimination of meaningful stock incentives for
Life Technologies executives, which ultimately impacts the ability to
retain and recruit key personnel.
As you know, Life Technologies' shareholders have rejected
Dexter's recent belated $49 per share offer. Parenthetically, it
should be noted that Dexter's own shareholders appear to have
rejected its business strategy as well, as Dexter's stock price has
declined substantially since the company's rejection of our offer and
its decision to attempt to acquire 100% of Life Technologies. It is
apparent from the timing of Dexter's offer for our Life Technologies
shares, coming on the heels of ISP's $45 per share offer for Dexter,
upon which many of Dexter's shareholders have relied, seeks to divert
ISP from a course of action designed to maximize shareholder values
for all Dexter shareholders. In this connection, we believe that
Dexter's attempt to deter us by providing benefits to ISP not
available to other Dexter shareholders is simply not appropriate.
Grahame, I just do not think it would be productive at this
time to respond to your mischaracterizations and attempts to impugn
our motives - which by the way I do not appreciate. The real issue
here, however, is the maximization of shareholder value for all
Dexter shareholders, and I believe that shareholders will more likely
benefit from a dialogue along this line. In fact, I would be willing
to appear with you before any group of Dexter shareholders to discuss
the merits of Dexter's proposed course of action vs. ISP's offer.
All the best.
Sincerely,
/s/ Samuel J. Heyman
Also on January 27, 2000, we gave formal written notice to
Dexter of our intention to bring our proposals before the 2000 Annual Meeting.
On that same day, we filed a complaint against Dexter and seven members of
Dexter's Board in the United States District Court for the District of
Connecticut. The Dexter directors who are named as defendants are K. Grahame
Walker, Henrietta Holsman Fore, Robert M. Furek, Edgar G. Hotard, Peter G.
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Kelly, Jean-Francois Saglio and George M. Whitesides. These developments were
reflected in an amended 13D filing with respect to our Dexter shares on the same
day.
On January 28, 2000, we, together with the other members of
the Life Technologies Group, amended our 13D filing to reflect the group's
rejection of Dexter's offer to purchase shares of Life Technologies. Also on
January 28, we demanded a copy of Dexter's shareholder list and certain other
corporate information to which we are entitled under the Connecticut Business
Corporation Act, by no later than February 7, 2000.
On February 4, 2000, Dexter acknowledged its receipt of our
written notice to bring our proposals before the 2000 Annual Meeting. Shortly
thereafter, by letter dated February 7, 2000, Dexter's counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, acknowledged its receipt of our demand for a copy of
Dexter's shareholder list and certain other corporate information. In its
February 7 letter, Dexter's counsel stated that ISP needed to provide Dexter
with a certified check in the amount of $1,454.86 to cover expenses incurred by
Dexter in providing the requested materials before such materials would be made
available, and a check was forwarded by ISP to Dexter promptly thereafter.
Certain, but not all, of the materials requested were received on February 11,
2000.
On February 8, 2000, Dexter's Board amended the Rights
Agreement, causing the poison pill Rights to be inapplicable to any offer which
is for all shares, is substantially unconditional, remains available to
shareholders for 60 days, is supported by firm financing commitments and is for
a price which is, in the opinion of Dexter's financial advisor, fair from a
financial point of view. See Section 11 for a more complete description of the
Rights Agreement.
On February 9, 2000, Mr. Walker sent the following letter
to ISP responding to ISP's notice of its intention to present its proposals and
director nominations at the 2000 Annual Meeting:
Dear Mr. Heyman:
Just last month ISP disclosed that your company's 4th
quarter operating results would be 40% to 57% below analyst's
estimates and that full fiscal year operating results would be 19% to
20% below analyst's estimates. You publicly attributed ISP's
disappointing performance to "substantial unabsorbed manufacturing
costs" and to "competitive pressures." With evidence of this kind of
managerial dereliction so recently emerging, we are incredulous that
you have apparently launched a campaign that deflects the focus from
concentrating on improving your own poor results to one that will
inevitably harass and distract Dexter's Board and its management at
this crucial time in our company's history. We think ISP's
shareholders have a right to expect undivided and more effective
attention to ISP's obvious strategic and operational deficiencies. We
think they are entitled to expect that you would not spend hundreds
of thousands of dollars - to say nothing of the time, effort and
managerial distraction ISP will devote to matters unrelated to its
immediate business problems - to run a spurious and legally defective
proxy campaign in support of your invitation to negotiate that has
been rejected.
However, since you are anxious to pursue a course of action
that can be harmful to our shareholders and to yours, you leave us
with no reasonable alternative but to deal with you in the most
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responsible manner that we can. To that end, our Board has authorized
the following actions:
Specifically to address your claim of "[ISP's]
stated willingness to pay more [than $45 per share] if additional
information justified a higher price," we are prepared to make
available a due diligence data room containing detailed and
comprehensive information relating to both Dexter and Life
Technologies. Because our Board and its advisors believe that your
offer is inadequate from a financial point of view, we are inviting
ISP to send representatives into the data room for the purpose of
ascertaining whether you are indeed willing to pay more. If you wish,
you are welcome to bring representatives of your lender Chase
Securities Inc. with you. We are prepared to respond to reasonable
requests for additional information and we will make appropriate
members of senior management available for presentations and
question/answer sessions that should provide you with more than
adequate "additional information." We accept your offer of a
confidentiality agreement in this connection. We accept in principle
your limitation that the agreement not "limit your rights as
shareholders" by which we mean one which will not prevent you from
making a tender offer to Dexter shareholders, proceeding with your
proxy campaign or making a proposal to the Board of Dexter.
Do not misread the Board's decision or its intentions: we
have made no decision to sell the company or to explore a sale of the
company or to test the market for a possible sale of the company, and
no one else will be invited into the data room. It is simply the
Board's firm belief that Dexter's shareholders should not be
victimized by your disingenuous suggestion that your price could be
higher but for reasons beyond your control. We offer you the
opportunity to conduct a reasonable due diligence so that you can
honestly, forthrightly and candidly tell our shareholders what your
proposal is - not that it might be higher if . . .
Our Board has amended Dexter's shareholder rights
plan. As a consequence of the amendment, the rights will not be
triggered by and the plan will pose no obstacle for any offer to our
shareholders for all shares which Dexter's financial advisor opines
is fair from a financial point of view, is supported by liquid funds
on hand or by fully committed financing, is substantially
unconditional and has been open to Dexter shareholders for at least
60 calendar days. Although we believe your rights plan proposals for
our shareholder meeting are illegal and unenforceable, we have
elected to preempt this issue. We believe our shareholder's interests
will be better served if we relieve them of the burden of a lot of
rhetorical sound and fury from ISP designed to obfuscate its plan and
intention to seize control of Dexter without paying a fair price for
the company.
We will address your proposals for Dexter's 2000
Annual Meeting of Shareholders separately. However, on the subject of
electing directors, Dexter accepts the nomination of yourself, Mr.
Kumar and Mr. Peller as timely in accordance with the Bylaws.
You claim Chase Securities Inc. has advised ISP in writing
"that they are highly confident in their ability to arrange credit
facilities for this acquisition." If that were true, we think ISP
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owes it to the Dexter shareholders to make an honest, forthright and
candid public disclosure of the letter text. We think ISP's failure
to do so is yet another instance of its disregard for the federal
securities laws which we believe required disclosure of ISP's
contracts, arrangements, understandings and relationships with Chase
Securities promptly after it received their assurances. We also think
ISP's disclosure is legally deficient for failing to describe the
transactions in which the funds will be borrowed and the names of the
parties thereto.
In December you said that the impetus for your takeover
proposal was, among other things, your belief that it was in the best
interests of both Dexter and Life Technologies and their shareholders
"if Dexter Corporation and Life Technologies were separate corporate
entities." In our meeting you stated that you would support a
pro-rata spinoff of the LTI shares owned by Dexter to Dexter
shareholders and you stated that such a transaction could be effected
on a tax-free basis. We are advised to the contrary. We should
provide our shareholders an honest, forthright and candid assessment
of this issue. In order to achieve that, we invite you to help us
arrange a meeting among our respective tax advisors to reach a common
analytical conclusion. We think the Dexter shareholders are entitled
to know whether or not there is any possibility that such a
transaction could be effected without incurring material tax
liabilities at Dexter or for the account of the shareholder
recipients of the spinoff.
There is another allegation in your letter relating to LTI
which I feel I must briefly address. You keep talking about Dexter's
ability to retain and recruit key personnel at LTI. We have been a
majority shareholder of LTI for nearly two decades without any
problems either in recruiting or retaining key personnel, and if it
were not for the uncertainty that your tactics have introduced we are
confident that would continue. I think it particularly telling on the
subject of executive retention that, in contract to ISP, LTI has
retained its entire senior management team (except the CFO who
retired to teach and remains a director of LTI).
Your letter claims "[a]s you know, Life Technologies'
shareholders have rejected Dexter's recent belated $49 per share
offer." As you know, this statement is false. First, as of this very
moment, neither you nor any other member of your current 13D group
has spoken or written a word to Dexter in response to our good faith
$49 proposal. Second, a former member of your 13D group who owned
more than 825,000 shares (about 3.3% of LTI and over 13% of the
shares owned by your former 13D group) responded favorably to our
proposal, and we acquired those shares for $49 each. Moreover, you
also know our offer was in no way an attempt to provide benefits to
ISP not available to other Dexter shareholders - it was an offer to
buy LTI shares from LTI shareholders, whether or not they were Dexter
shareholders. In fact, it was an honest, forthright and candid
attempt to resolve a difficult situation created by ISP solely for
its own selfish purposes. Although obvious from the terms of our
offer, we repeat here for the record there was no condition
associated with ISP's reaction to our proposal. As we clearly stated,
we were perfectly willing to discuss our proposal with any other
shareholders of Life Technologies who wished to do so, and we in fact
did that very thing.
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Mr. Heyman, your campaign to anoint yourself as the savior
of Dexter shareholders is misleading because, ultimately, it is ISP's
own selfish interests which drive your program. The shareholders will
understand that. Moreover, it appears that your hand-picked nominees
lack the necessary experience in corporate governance and in our
industry and none owns a single share of Dexter stock. By contrast,
the Dexter Board has demonstrated its independence and commitment to
serving the Dexter shareholders. We will continue to forthrightly and
clearly articulate our program for value enhancement for our
shareholders to consider. I am confident that our shareholders will
understand it, agree with it and act accordingly.
Sincerely,
/s/ K. Grahame Walker
On February 9, 2000, Mr. Heyman sent the following letter
to Mr. Walker in response to Dexter's offer to allow ISP to conduct a due
diligence review of the business, finances and operations of Dexter and its
subsidiaries:
Dear Grahame:
We are in receipt of your letter today and, while not
commenting on the host of ancillary issues raised, we agree that the
central focus should be whether Dexter's shareholders are able to
maximize the value of their investment. We take at face value your
statement that Dexter is willing to enter into substantive
discussions with us regarding ISP's proposal and are delighted that
you have taken this step. I have asked our legal counsel to prepare a
confidentiality agreement and advise you that we are in a position to
move very promptly.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On February 9, 2000, Mr. Walker sent the following letter
to Mr. Heyman in response to Mr. Heyman's letter of the same date:
Dear Mr. Heyman:
Your letter this afternoon suggests that you need to reread
my letter of this morning. Please have your counsel contact ours on
the subject of a confidentiality agreement. I believe they are
well-acquainted.
Sincerely,
/s/ K. Grahame Walker
On February 23, 2000, ISP and Dexter entered into a
confidentiality agreement which provided for ISP to conduct a review of
non-public information relating to the business, finances and operations of
Dexter and its subsidiaries and which did not contain any standstill provisions.
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On February 24, 2000, ISP commenced a review of certain information made
available by Dexter in a data room.
On February 28, 2000, Dexter issued a press release in
which it announced that it would "institute a process in which we [Dexter] will
survey all of the Company's available options." Dexter stated in its press
release that although Dexter's Board "has made no decision to sell the Company
at this time," it would explore "every available alternative - including a
merger or sale of the Company, a financial restructuring, or a spin-off or sale
of one or more of the Company's businesses." Dexter further stated in its press
release that "third parties will be invited to sign confidentiality agreements,
review comprehensive data room materials and receive Dexter management
presentations."
On March 1, 2000, Dexter filed its preliminary proxy
statement with the SEC. Mr. Heyman sent the following letter to Mr. Walker
addressing Dexter's February 28 press release and the filing:
Dear Grahame:
With regard to your February 28th announcement that your
Board "has decided to institute a process in which we will survey all
of the Company's options," we would hope that this move was indeed
designed with the view toward maximizing shareholder value for all
Dexter shareholders as we have been urging for quite some time now.
As you know, while your Board has made no decision to sell Dexter at
this time, our nominees are committed to pursue ISP's $45 per share
merger proposal or a superior proposal.
We also note Dexter's statement that it will consider a
"spin-off or sale of one or more of the Company's businesses." In
this connection, we would remind you that ISP's interest continues to
be in the acquisition of Dexter as a whole and therefore trust that,
before considering any such dismemberment, Dexter will enter into
discussions with ISP concerning our acquisition proposal.
Although we are pleased that you have started to provide us
with information, we will need certain additional technical,
financial and operating data. We are compiling a separate list
concerning these requirements which we will furnish shortly to your
representatives, and I would very much appreciate your cooperation
with regard to these requests.
Finally, we have just received your preliminary proxy
statement that was filed with the SEC for the first time today. We
were shocked and surprised by your decision to selectively choose
among the ISP proposals to be presented to Dexter shareholders at
this year's Annual Meeting scheduled for April 27 - and especially by
your attempt to deny Dexter shareholders the right to vote on our
proposal to increase the size of the Dexter Board. We believe this
proposal is legal, appropriate, and was timely made, and ISP intends
to present this proposal at the Annual Meeting and take all necessary
legal action to cause its implementation if passed. We also do not
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understand your position that Dexter will refuse to follow the wishes
of its shareholders in the event that they adopt ISP's Rights Plan
proposals.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On March 9, 2000, in response to Mr. Heyman's March 1
letter, Mr. Walker sent a letter to Mr. Heyman in which he reiterated Dexter's
rejection of the ISP Proposal, stating that "[t]here is nothing to discuss or
negotiate." Mr. Walker also stated that Dexter is continuing to conduct its
previously announced process to explore its alternatives. Finally, Mr. Walker
defended Dexter's refusal to present at the 2000 Annual Meeting ISP's proposals
to increase the size of Dexter's Board and elect additional directors to fill
the vacancies created by such increase.
ISP and Dexter exchanged further correspondence in March
relating to ISP's additional requests for documents and information to assist
ISP in its assessment of Dexter and Life Technologies. Dexter has not yet
provided certain items requested by ISP.
On March 23, 2000, Mr. Heyman sent the following letter to
Mr. Walker in which ISP increased to $50 per share the price at which it
proposed to acquire all of the outstanding common stock of Dexter in a business
combination:
Dear Grahame:
Based upon our evaluation to date, ISP's Board has
authorized an increase in the price of ISP's cash merger proposal to
$50 per share. If we receive the proper cooperation from Dexter in
connection with the balance of the due diligence process and Dexter
can demonstrate that the value of the Company would justify a higher
price, we would consider increasing this price as well.
You should know that ISP has, on this date, executed a
commitment letter in which Chase has committed to raise all the
financing necessary for the acquisition, a copy of which I have
attached. You should note that Chase's commitment for $1.825 billion
contains provision for a tender facility so that Dexter shareholders
can receive cash payments promptly.
Grahame, we are most interested in concluding this
transaction and are prepared to proceed promptly. However, should
Dexter be inclined to proceed on a different course, I sincerely hope
that it will allow the Company's shareholders to make the ultimate
decision as to what is in their best interests.
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We are still awaiting the due diligence information which
we requested in our March 8th letter.
Sincerely,
/s/ Samuel J. Heyman
On that same day, Dexter announced that 29 third parties,
including ISP, had signed confidentiality agreements with the Company, and that
"every available alternative will be examined and the one that will maximize the
value of the Dexter shareholder's investment will be aggressively pursued."
Also on March 23, 2000, ISP's counsel, Weil, Gotshal &
Manges LLP, sent a letter to Dexter's counsel, Skadden, Arps, Slate, Meagher &
Flom LLP, requesting that the Poison Pill Amendment Proposal be amended to
provide that offers or transactions in which Dexter shareholders would receive
at least $50 per share in cash (rather than $45) will not trigger the defensive
provisions of the Rights Agreement. Dexter has refused to assure us that such
amendment would be deemed timely made under Dexter's Bylaws.
On April 2, 2000, Dexter announced that it had postponed
the 2000 Annual Meeting, originally scheduled for April 27, 2000, until June 30,
2000, stating that it had received "several indications of interest in acquiring
the entire company and . . . multiple indications of interest in Dexter's
various constituent businesses." In connection with this postponement, Mr.
Walker stated that "we are very pleased with the results of the first stage of
our sale process . . .", that "it is our objective to present a definitive
transaction to our shareholders well before [June 30, 2000]" and that "we expect
to be in a position to make a definitive announcement in the next few weeks or
so."
On April 3, 2000, ISP reiterated its $50 per share proposal
and stated that "[w]e trust that Dexter shareholders will hold Dexter's Board
accountable for its promise to `present a definitive transaction to [its]
shareholders well before' June 30."
On April 20, 2000, in response to a deadline for final bids
from Dexter's financial advisor, Lehman Brothers Inc., ISP submitted a proposal
to acquire all of the outstanding common stock of Dexter for a price per share
of $50 plus one "contingent value right." The contingent value rights were
intended to allow Dexter shareholders to participate in the proceeds from a
subsequent sale by ISP of Dexter's shares in Life Technologies. The proposal
also included an amendment to the financing commitment from The Chase Manhattan
Bank that would allow for the issuance of the contingent value rights by ISP.
The proposal, by its own terms, expired on April 24, 2000.
Dexter announced that on April 24, 2000 its Board met to
review proposals received, but "reached no conclusions." Dexter further stated
that it "authorized management and its advisors to proceed with next steps in
the process," but did not specify what they were.
After Dexter rejected ISP's proposal, on May 1, 2000, Mr.
Heyman sent the following
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letter to Mr. Walker in which ISP terminated discussions with Dexter and
restated its commitment to continue the proxy contest:
Dear Grahame,
This is to advise you that ISP is terminating further
discussions with Dexter and continuing its proxy contest so that
Dexter shareholders can decide for themselves how to best realize
shareholder values.
The reasons for this are as follows:
First, your representatives have indicated that ISP's most
recent offer is unacceptable, both as to price and a number of
contract terms. As you know, we consider our recent offer (which by
its own terms has expired) to have been a very fair and full one and
tried to meet with your advisors and lawyers over the April 22-23
weekend to try and consummate a transaction, but your people refused
to meet;
Second, despite the continued optimistic, public
prognostications of Dexter and its representatives -- 29 interested
parties, results of first stage of sale program "very positive," and
"we expect to be in a position to make a definitive announcement in
the next few weeks or so" (April 2nd statement) -- Dexter has failed
over the last four months to provide shareholders with a creditable
alternative to our proposals for the Company; and
Finally, although ISP suggested that Dexter demonstrate
additional value, if it could, by providing information with respect
to third party interest in Life Technologies, no such information has
been forthcoming. While it was constructive for Dexter to have
facilitated our contact with a third party interested in acquiring
Life Technologies, presumably with a view toward assisting us in
creating additional value for Dexter shareholders, based upon the
most preliminary of discussions with the third party's advisors,
there is little reason to believe that this avenue will prove
fruitful. You should know that we intend now to deal directly with
interested parties for Life Technologies, with a view toward
determining what makes the most sense, while at the same time
continuing our proxy contest.
Sincerely,
/s/ Samuel J. Heyman
On May 2, 2000, Mr. Walker sent the following letter to Mr.
Heyman:
Dear Mr. Heyman:
This is in reply to your letter of May 1, 2000, which came
as a total surprise. The reasons you assign for your precipitous and
very public new position require some rebuttal.
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In discussing your April 20 proposal, our representatives
expressed to yours the Board's desire for the best possible economics
on the best possible contract terms. If you choose to translate those
objectives into a characterization of your proposal as unacceptable,
so be it. Your suggestion that our representatives "refused to meet"
with yours over the April 22-23 weekend does not reflect the facts.
In fact, Dexter's representatives offered not only to meet with ISP's
representatives, but also to negotiate a transaction if ISP submitted
a proposal at a "compelling price," which ISP refused to do.
Nonetheless, our representatives were told by yours in telephone
discussions that occurred during the April 22-23 weekend that they
believed ISP's proposal had flexibility to be increased. Moreover, in
response to ISP's self-imposed deadline of Monday, April 24, 2000,
our representatives told yours that the Dexter Board would not be
meeting until Monday afternoon when it would consider its
alternatives. Promptly following the Board meeting, on Monday evening
our representatives called yours and said the Board was prepared to
authorize a transaction with ISP at a price higher than what ISP was
offering and invited ISP to negotiate. Your representatives refused
and demanded that ISP be shown all of the bids received by Dexter in
its value maximization process, a demand which on its face was
unreasonable.
Your suggestion that Dexter refused to provide ISP with
information regarding third party interest in Life Technologies is
entirely inaccurate. Not only did Dexter introduce ISP last Thursday
to a third party bidder for Life Technologies that had indicated
strong interest at an attractive value, but Dexter also acceded to
ISP's demand (which was made a non-negotiable condition of
proceeding) that Dexter be excluded from any discussions between ISP
and the third party. In view of the facts, your contention is hardly
credible. Moreover, your position is even less credible when
considered in light of the facts that ISP never had a meeting with
the third party, that ISP demanded to know the third party's bid as a
condition of the meeting and that there were no conversations at all
between ISP and the third party after last Sunday.
Your contention regarding a "creditable alternative to
[ISP's] proposals for the Company" is similarly untenable. The
problem here is not creditable alternatives. The problem is ISP's
determination to frustrate the Board's efforts on behalf of
shareholders, to seize control of Dexter as cheaply as possible and
to dispose of Life Technologies at a price which allows ISP to keep
Dexter's wholly-owned businesses at minimal cost. It is for these
reasons that the Dexter Board must be in charge of conducting the
auction process. ISP is not interested in paying fair value for the
Dexter wholly-owned businesses, nor is it interested in any bidder
willing to do so. Based on ISP's conduct during the course of the
last weekend, ISP's interest in a Life Technologies bidder only
extends to the price such party will pay ISP for that business, an
approach which we have previously illustrated to be tax inefficient.
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We will continue to move forward with our program to
maximize value in the short term for all Dexter shareholders, which
may result in the sale of the assets you are interested to acquire.
Sincerely,
/s/ K. Grahame Walker
On May 2, 2000, Mr. Heyman sent the following letter to Mr.
Walker:
Dear Grahame:
While I believe your May 2nd letter is filled with
mischaracterizations, inaccuracies and irrelevancies, it is not
productive for you and I to engage in a debate about "who said or did
what to whom." Parenthetically, at Dexter's request, we had agreed to
keep discussions to which you refer "confidential" -- an agreement
which we have honored and you have now chosen to ignore.
The simple fact of the matter is that we have made, in our
view, a fair and full offer for Dexter - which Dexter has seen fit to
reject. Notwithstanding Dexter's rhetoric and repeated optimistic
prognostications as to its progress with respect to the bidding
process, we believe that our offer is still the best offer for
Dexter, and if your company has a better one, we can only assume that
it would have been disclosed by now.
Your threats to dismember the company with the piecemeal
sale of one or more businesses smacks of scorched-earth tactics
which, while they may operate to entrench your management, may only
destroy shareholder value for Dexter shareholders.
Finally, whatever our differences, we believe that Dexter
has a legal and moral obligation to let its shareholders decide what
is in their best interests, and we trust that you will hold to your
previously announced commitment to present any transaction to Dexter
shareholders for their approval.
Sincerely,
/s/ Samuel J. Heyman
Mr. Walker's May 2 letter to Mr. Heyman stated that "[w]e
will continue to move forward with our program . . . which may result in the
sale of the assets you are interested to acquire" (referring to the non-Life
Technologies chemicals assets). This statement constitutes the threat to
dismember the company referred to by Mr. Heyman in the above letter. ISP
believes that any piecemeal sale of assets by Dexter could discourage bidders
from formulating a proposal for the entire company, as ISP has done, thereby
depriving shareholders of the value associated with such bids.
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On May 15, 2000, Mr. Heyman sent the following letter to
Mr. Walker:
Dear Grahame,
We just don't seem to be on the same wavelength. While your
representatives have communicated with ours about Dexter's demand
that ISP increase its proposal as the price for moving forward, you
should know that we have been struggling for quite some time now to
just keep our $50 per share proposal in place. As one can imagine,
the substantial costs to any acquirer of Dexter in connection with
golden parachute, retention, and severance agreements put into place
for the most part after we surfaced with our Dexter interest,
together with other "change of control" provisions relating to debt
instruments, does not make this any easier. Parenthetically, we
believe that Dexter should explicitly disclose to its shareholders
all information concerning these added costs.
By way of recapitulation, after making a $45 per share
proposal in December, with the hope of quickly consummating a
transaction, ISP increased its proposal to $50 per share this past
March. Notwithstanding the fact that this was in our opinion a very
fair and full proposal, since that time, Dexter has conducted what we
believe to be an outrageously unfair process. In addition to those
matters mentioned in previous letters, we cite just a few examples.
(1) When we made our proposal in March, Dexter
refused to discuss it and chose instead to
conduct an auction for the Company. While it had
every right to do so, when we (to the best of our
knowledge) then won the auction fair and square,
in a "have your cake and eat it too" approach,
instead of proceeding to consummate the
transaction with ISP, Dexter took the position
that it was only then willing to negotiate and
even then only if ISP first put a substantially
higher bid on the table;
(2) Dexter's solicitation of proposals from 29
different parties, most of whom we believe were
interested only in isolated Dexter assets and
some of whom were its competitors, coupled with
its May 2nd threat to dismember the Company, was
hardly a constructive process. Surprisingly
enough, despite the broad ranging nature of the
Company's solicitation process, we understand
Dexter is now apparently refusing to waive
provisions of its confidentiality agreements with
certain third parties, in effect precluding our
discussions with these parties to develop
alternatives for Dexter shareholders; and
(3) I understand that just this past Friday Dexter
refused to definitively commit that it will not
attempt a further postponement of the Annual
Meeting. In a similar vein, it is worth noting
that it was only after our prodding that Dexter
set a new record date as it was obligated to do
in accordance with legal requirements.
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All this has taken place, of course, against the backdrop
of extreme volatility in the financial markets and substantial
increases in interest rates. Grahame, I firmly believe that Dexter is
overplaying its hand here and urge reconsideration of any course of
action aimed at dismemberment of the Company, which very process, in
and of itself, we believe can only diminish value.
Sincerely,
/s/ Samuel J. Heyman
Mr. Heyman stated in his May 15 letter that "we (to the
best of our knowledge) then won the auction fair and square" because Dexter's
Board has not announced any alternative transaction for the sale of Dexter (or
any of its assets). ISP believes that if Dexter had a superior alternative to
the ISP Proposal, it would have made an announcement to such effect by May 15,
seven weeks after Mr. Walker's April 2 statement that "we expect to be in a
position to make a definitive announcement in the next few weeks or so." At that
time, Dexter had announced that it "had received several indications of interest
in acquiring the entire company and had also received multiple indications of
interest in Dexter's various constituent businesses." Furthermore, statements
made by Mr. Walker on May 2 indicate that Dexter had a third party bidder for
Life Technologies and alternatives for the sale of Dexter's wholly-owned
businesses, but there is no mention of a competing bidder for the entire
company. It should be noted that confirmation of Mr. Heyman's statement can be
found in Mr. Walker's May 17 letter (set forth below), which discloses
"significant indications of interest" by unnamed parties in one or more of
Dexter's Nonwoven Materials, Electronic Materials and Adhesive & Coating Systems
businesses, but does not disclose a bidder with an interest in the entire
Company that made a proposal superior to the ISP Proposal. To the contrary, Mr.
Walker stated in his May 17 letter that the other parties that expressed
interest in acquiring all of Dexter were principally life sciences companies,
and "the decline in the public equity markets since March has adversely affected
the trading prices of their equity securities and, accordingly, the value of the
consideration they offered."
Mr. Heyman's statement that "Dexter's solicitation of
proposals from 29 different parties, most of whom we believe were interested
only in isolated Dexter assets and some of whom were its competitors . . ." is
based on the fact that ISP was aware of other parties involved in the sale
process who are competitors of Dexter, including through conversations among
ISP's and the other partie's respective financial advisors. In addition, as
noted above, Mr. Walker confirmed in his May 17 letter (set forth below) that
there were significant indications of interest for one or more of Dexter's
wholly-owned businesses, but did not disclose the existence of any bidder (other
than ISP) with an interest in the entire company.
Mr. Heyman stated in his May 15 letter that "we understand
Dexter is now apparently refusing to waive provisions of its confidentiality
agreements with certain third parties" because ISP has explored the possibility
of joining together with other bidders for Dexter's businesses to formulate a
joint bid for the entire company. Bidders approached by ISP would not enter into
such discussions on the grounds that they were prohibited from discussing a
joint bid with ISP under the terms of their respective confidentiality
agreements with Dexter.
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On May 17, 2000, Mr. Walker sent the following letter to
Mr. Heyman:
Dear Mr. Heyman:
First, on behalf of the Board of Directors, I want to thank
ISP and its management for their efforts in connection with Dexter's
short-term value maximization program. Unfortunately, we have not yet
arrived at a point that causes the Dexter Board to believe the
process is complete and should be closed. Nevertheless, we encourage
ISP to continue its efforts in that direction.
Second, on behalf of the Board of Directors, I want to
clearly and unambiguously offer to sell Dexter to ISP and further to
offer to enter immediately into negotiations with your
representatives for the purpose of reaching definitive agreements
with ISP that will provide the following:
-- Prompt commencement by ISP of a cash tender offer for
all outstanding Dexter common shares, to be followed
by a merger of Dexter and ISP
-- Merger of Life Technologies with ISP or a wholly owned
affiliate of ISP in which LTEK shares not owned by
Dexter or ISP receive fair consideration
Your counsel, Weil, Gotshal & Manges, and ours, Skadden,
Arps, Slate, Meagher & Flom, have discussed the drafts of these
agreements we submitted to ISP and the comprehensive comments on
those drafts that ISP returned to us. We concluded, as we believe you
very likely did, that our only real differences on the form of Dexter
merger agreement involved the level of certainty it provided that
once signed the tender offer would be commenced, consummated and
closed. In a similar vein, our counsel expressed concern regarding
certain overly conditional features of ISP's commitment letter from
The Chase Manhattan Bank. Your counsel has invited us to negotiate
the specific terms of concern to us. We accept that invitation as
well as the implicit invitation to negotiate the features of the
merger agreement you proposed to change which concerned us. For that
purpose, we have enclosed a revised Dexter merger agreement and a
copy of the Chase commitment letter which has been hand-marked to
show the revisions we would request that ISP and Chase consider. The
enclosed Dexter merger agreement is in substance the draft your
counsel proposed, with very modest modifications intended to provide
us with a high level of confidence that, once signed, it will close.
Our inclusion of the Life Technologies merger agreement is
intended to renew our request that you forthrightly deal with the
acquisition of all publicly-held shares of the Dexter-controlled
entities in a single transaction. We believe this is not only an
appropriate action for Dexter to seek, but also one that ISP should
embrace to ensure fair and equitable treatment of the Life
Technologies minority. We assume this belief reflects the belief of
the independent members of the Life Technologies Board of Directors,
although we have not discussed it with them.
We firmly believe our actions today leave Dexter and ISP
with only a single issue between us - price. You contend that ISP is
offering $50. Taking ISP at its word, we know that the difference
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between us is not an unbridgeable chasm. We urge you to join us in a
negotiation that resolves the remaining difference between us.
Third, as you know from our discussions, we believe that
values in excess of $50 for Dexter shareholders can be achieved
through a strategy commencing with disposition of Dexter's wholly
owned businesses - Nonwoven Materials, Electronic Materials and
Adhesive & Coating Systems. Our process has already produced
significant indications of interest from financially capable,
responsible bidders for those businesses. We are proceeding
expeditiously to develop those interests and to enter into contracts
providing for those sales as promptly as possible. We believe your
interest in Dexter is especially focused on one or more of these
businesses. Accordingly, we strongly urge you to join the process and
to submit proposals on the businesses you wish to own, because we
expect that this process will move quickly and that this opportunity
may not be open to you for very long. To be clear, if you choose not
to participate in this part of the process, ISP will receive no
further notice of the status or development of the process, except as
all Dexter shareholders are so informed, and the next announcement
could be that Dexter has entered into unconditional, binding
agreements to sell the businesses.
We look forward to hearing from you in the near future, as
well as to working with you on whichever avenue of interest in Dexter
you wish to pursue.
Sincerely,
/s/ K. Grahame Walker
On May 23, 2000, Mr. Heyman sent the following letter to
Mr. Walker:
Dear Grahame,
This is to advise you that ISP is withdrawing herewith the
increase in its proposal to acquire Dexter from $45 to $50 per share.
Our original December $45 per share cash proposal to acquire the
Company still stands.
As we previously indicated, ISP has been struggling for
quite some time now to keep its offer in place in the face of what we
view to be Dexter's delaying tactics and its mishandling of the
process to maximize shareholder value, as well as the recent
volatility of the financial markets and substantial increases in
interest rates. In addition, as we previously warned, your most
recent decision to proceed down a path toward piecemeal liquidation
of the Company's wholly owned businesses, we believe, has now
diminished shareholder values. As a result of the above, ISP is no
longer in a position to continue its $50 per share offer for Dexter.
We note that although the financial and equity markets were
taking a decided downturn over recent months, you persisted in our
view in overplaying your hand -- refusing to accept any of our
proposals. Moreover, Dexter has continued to make repeated optimistic
prognostications as to its progress with respect to the bidding
process. Notwithstanding the fact that Dexter's deadline for final
bids was April 19th, not until your May 17th letter to Dexter
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shareholders did you disclose for the first time that the downturn in
the markets had adversely affected your efforts to sell Dexter. We
also take note of the fact that, notwithstanding these developments,
you continue to report in your May 17th shareholder's letter that you
believe there is strong interest in the acquisition of Dexter and
Life Technologies in a single transaction and that values in excess
of $50 per share are achievable by selling off Dexter's individual
businesses.
We are extremely skeptical of these pronouncements in light
of the fact that your Company has been unable to realize on its
program for maximizing shareholder values since our proposal for
Dexter more than five months ago. So also, as we stated earlier, we
believe that the way in which the Company has handled this entire
matter has only diminished shareholder value and will in our opinion
continue to do so. We, of course, reserve the right to make further
adjustments to our proposal for Dexter prior to the June 30 Annual
Meeting so as to reflect the impact of any additional actions you may
take.
As is made clear by your threat to enter into
"unconditional, binding agreements to sell the businesses" and
statements by Dexter's representatives in the press to do so before
the June 30 Annual Meeting, it would appear that you do not intend to
seek the approval of Dexter shareholders for such sale of assets. As
we have communicated earlier, we believe this is not only violative
of Connecticut corporate law but totally contrary to Dexter's prior
stated commitment to "present a definitive transaction to [its]
shareholders". Accordingly, unless you disavow such intention, we
intend to bring a legal action to preserve the right of Dexter
shareholders to vote on any transactions you may be contemplating.
Sincerely,
/s/ Samuel J. Heyman
On May 30, 2000, Mr. Heyman sent the following letter to
Mr. Walker:
Dear Grahame,
We note that you continue to issue optimistic
prognostications to Dexter shareholders concerning your "short term
value maximization program" ("29 [interested] third parties" (March
23rd statement); results of first stage of program "very positive,"
"several indications of interest in acquiring the entire Company,"
"multiple indications of interest in Dexter's various constituent
businesses," "we expect to be in a position to make a definitive
announcement in the next few weeks or so," "very pleased with the
results of the first stage of our sale process," "it is our objective
to present a definitive transaction to our shareholders well before
[June 30 2000]" (April 2nd statement); and "strong continuing
interest in a transaction involving all of Dexter," "received a
number of significant indications of interest for Dexter's
wholly-owned businesses," "we believe that values in excess of $50
per share ...can be achieved," "process has already produced
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significant indications of interest from financially capable,
responsible bidders," "we are proceeding expeditiously to develop
those interests and to enter into contracts providing for those sales
as promptly as possible" (May 17 statements)), which although it has
been underway for some months now does not appear to have a single
concrete result to show for it.
And what we find particularly questionable are recent
Dexter statements that your piecemeal liquidation program can be
expected to achieve values in excess of $50 per share for Dexter
shareholders. Based upon our own analysis, we believe that the
results of your program will fall in all likelihood substantially
short of our $45 proposal, without even taking into account the
present value advantage of our all cash offer.
But putting our analysis aside, don't you think that Dexter
shareholders should be provided the necessary information to enable
them to make their own evaluation? For example, we believe that a
piecemeal liquidation of Dexter would be enormously tax inefficient.
In fact, Dexter in its preliminary proxy makes reference to the
"enormous tax costs" associated with the separation of Dexter and
Life Technologies, and we trust that you are not suggesting that the
piecemeal sale of Dexter's businesses, together with its interest in
Life Technologies, would not result in a huge tax liability as well.
Don't you think that you should disclose the tax basis for Dexter's
assets and some estimate of the amount of taxes resulting from your
proposed program? In addition, we had previously asked you to
disclose the cost to the Company of the golden parachute, severance,
and retention agreements that you have put in place, together with
other costs relating to "change of control" provisions in the
Company's debt instruments. Why isn't Dexter willing to disclose to
its shareholders the amount of these costs and confirm the fact that
they would be triggered in a piecemeal liquidation?
Moreover, why is Dexter refusing to agree to submit its
proposed liquidation transactions, which you have acknowledged are
part of an overall "maximization program," to its shareholders for
their approval -- which has now forced ISP to go into a Federal court
in Connecticut seeking to require Dexter to comply with what we
believe to be Connecticut law? In this connection, although Dexter
may have a different view as to its legal obligation in this regard,
which I would have hoped it would have articulated to its
shareholders, your plan to sell Dexter's wholly-owned chemicals
businesses and its interest in Life Technologies is we believe the
equivalent of a sale of "substantially all" of Dexter's assets as
defined under Connecticut law - thereby requiring shareholder
approval. Parenthetically, we believe that the same result would
pertain even if Dexter were to sell only its chemicals businesses
while retaining its interest in Life Technologies. In any event,
putting the law aside for a moment, why simply as a matter of
fairness and deference to your shareholders would you want to deprive
them of the opportunity to express themselves on an issue which is so
critical to their investments and one which is at the very heart of
the proxy contest -- which is, of course, in turn to be determined by
Dexter shareholders?
Grahame, we believe that your proposed course of action is
a big mistake. You should know that ISP is scheduling a conference
call with Dexter shareholders for Wednesday, May 31st at 8:30 AM
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EDST, and I would invite you to join me on the call so that we could
have a constructive exchange of views, which I believe would be of
interest to Dexter shareholders. If for any reason this time is not
convenient for you, please call promptly, and we would be willing to
reschedule for a mutually convenient time.
Sincerely,
/s/ Samuel J. Heyman
On June 5, 2000, ISP and Dexter mailed their respective
definitive proxy statements to all Dexter shareholders as of May 15, 2000 (the
record date for the 2000 Annual Meeting).
On June 20, 2000, Dexter announced that it has entered into
definitive agreements for the sale of certain of its wholly-owned businesses.
Dexter has agreed to sell its electronic materials, adhesives and polymer
businesses for $400 million in cash to Loctite Corporation, a U.S. affiliate of
Henkel KGaA. Dexter disclosed that the agreement is subject to requisite
regulatory clearances and the approval of Henkel's shareholders' committee, to
be voted on at its regularly scheduled meeting on June 29, 2000. Dexter stated
that the transaction, expected to close in July 2000, is not subject to Dexter
shareholder approval. Dexter has also agreed to sell its nonwoven materials
business to Ahlstrom Paper Group Oy for $275 million in cash. Dexter disclosed
that the agreement is subject to clearance under the HSR Act and the approval of
Dexter's shareholders, which Dexter expects to receive in the third quarter of
2000. In addition, Dexter announced that it had postponed its 2000 Annual
Meeting from June 30 until July 14, 2000. Furthermore, Dexter claimed in its
June 20 announcement that it "is in active discussions" regarding a potential
sale of its Coatings business and is "moving forward" with its efforts to
achieve maximum value for the Company's Life Technologies stake. Dexter's
announcement failed to disclose, however, how and when values at Life
Technologies are going to be maximized. In addition, significant information
concerning Dexter's plans, including information concerning tax consequences,
cost of golden parachute contracts, the form of consideration that shareholders
are to receive as well as the timing of any distribution, was not disclosed.
ISP believes that the planned sale of these businesses and
Dexter's interest in Life Technologies is the equivalent of a sale of "all or
substantially all" of Dexter's assets as defined under Connecticut law - thereby
necessitating Dexter shareholder approval pursuant to Section 33-831 of the
CBCA. A July 18, 2000 hearing has been scheduled by the United States District
Court for the District of Connecticut on ISP's motion for a preliminary
injunction preventing Dexter from selling these assets without a shareholder
vote.
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The Depositary for the Offer is:
Wilmington Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Delivery:
Corporate Trust Operations (302) 651-1079 Wilmington Trust Company
Wilmington Trust Company 1105 North Market Street,
P.O. Box 8861 First Floor
Wilmington, DE 19885-9472 Wilmington, DE 19801
Attn: Corporate Trust Operations
</TABLE>
Confirm Facsimile
by Telephone:
(302) 651-8869
-----------------
Questions and requests for assistance may be directed to
the Information Agent or the Dealer Manager at their respective addresses and
telephone numbers listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. Facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for Shares and Rights and any other required documents should be
sent or delivered by each shareholder of Dexter or his broker, dealer,
commercial bank, trust Dexter or other nominee to the Depositary at one of its
addresses set forth above. You may also contact your broker, dealer, commercial
bank, trust Dexter or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
INNISFREE
M&A Incorporated
Banks and Brokers call collect: (212) 750-5833
All others Call Toll-Free: (888) 750-5834
The Dealer Manager for the Offer is:
Chase Securities Inc.
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