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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
FINAL AMENDMENT NO. 5
DYNATECH CORPORATION
_____________________________________________
(Name of the Issuer)
DYNATECH CORPORATION, JOHN F. RENO,
ALLAN M. KLINE, JOHN R. PEELER, CLAYTON, DUBILIER &
RICE FUND V LIMITED PARTNERSHIP,
CLAYTON, DUBILIER & RICE, INC. AND CD&R INVESTMENT ASSOCIATES II, INC.
______________________________________________
(Names of Person(s) Filing Statement)
COMMON STOCK, $.20 PAR VALUE
______________________________________________
(Title of Class of Securities)
268138104
______________________________________________
(CUSIP Number of Class of Securities)
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John F. Reno Franci J. Blassberg Dwight W. Quayle Peter B. Tarr
Chairman, President and Chief Debevoise & Plimpton Ropes & Gray Hale and Dorr LLP
Executive Officer 875 Third Avenue One International Place 60 State Street
Dynatech Corporation New York, NY 10022 Boston, MA 02110 Boston, MA 02109
3 New England Executive Park (212) 909-6000 (617) 951-7000 (617) 526-6000
Burlington, MA 01803
(781) 272-6100
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_______________________________________________
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications
on Behalf of Person(s) Filing Statement)
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This statement is filed in connection with (check the appropriate box):
/ / a. The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
[X] b. The filing of a registration statement under the Securities Act of
1933.
/ / c. A tender offer.
/ / d. None of the above.
/ / Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies:
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INTRODUCTION
This Rule 13e-3 Transaction Statement (the "Statement") relates to the
Agreement and Plan of Merger dated as of December 20, 1997 (the "Merger
Agreement") between Dynatech Corporation, a Massachusetts corporation
("Dynatech" or the "Company") and CDRD Merger Corporation, a Delaware
corporation ("MergerCo"). A copy of the Merger Agreement is attached as Appendix
A to the Proxy Statement/Prospectus filed by the Company (the "Proxy Statement")
and is attached hereto as Exhibit (c)(1). The Merger Agreement and the Merger
(defined herein) were formally approved by the stockholders of the Company at a
Special Meeting of the stockholders held on May 21, 1998. The Merger was
consummated the same day.
The Merger Agreement provided, among other things, for the merger of
MergerCo into the Company (the "Merger") with the Company continuing as the
surviving corporation (the "Surviving Corporation"). In the Merger, (i) each
outstanding share of common stock, par value $0.20 per share (the "Common
Stock"), of the Company was converted into the right to receive $47.75 in
cash and 0.5 shares of common stock, no par value, of the Surviving Corporation
(the "Recapitalized Common Stock") (except that any shares held by MergerCo or
held in the Company's treasury were canceled and any Stockholder who
properly dissented from the Merger was entitled to appraisal rights under
Massachusetts law); and (ii) each outstanding share of common stock, $.01 par
value per share, of MergerCo ("MergerCo Common Stock") was converted into
one share of Recapitalized Common Stock.
Immediately prior to the Merger, (a) John F. Reno, Chairman, President and
Chief Executive Officer, together with two family trusts established by Mr.
Reno, contributed 40,804 shares of Common Stock to MergerCo in exchange for
799,758 shares of MergerCo Common Stock and (b) Clayton, Dubilier & Rice Fund V
Limited Partnership ("CDR Fund V") purchased 110,790,770 shares of MergerCo
Common Stock for approximately $277 million. In the Merger, all such shares of
MergerCo Common Stock were converted into Recapitalized Common Stock as
described above. As a result of the Merger and these related transactions,
immediately following the Merger, (x) CDR Fund V owned approximately 92.3% of
the outstanding Recapitalized Common Stock, (y) the stockholders of the Company
prior to the Merger other than Mr. Reno and his family trusts, owned
approximately 7% of the outstanding Recapitalized Common Stock and (z) Mr. Reno
(together with his family trusts) owned approximately 0.7% of the outstanding
Recapitalized Common Stock.
This final amendment to this Statement reports the consummation of the
transactions contemplated by the Merger Agreement following approval thereof by
the Stockholders of the Company at a special meeting of such Stockholders held
on May 21, 1998 (the "Special Meeting").
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SCHEDULE 13E
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g). This Amendment No. 5 to this Statement is being filed
jointly by (i) Dynatech Corporation, the issuer of the class of equity
securities which is the subject of this Rule 13e-3 transaction, (ii) John F.
Reno, Allan M. Kline and John R. Peeler, and (iii) CDR Fund V, CDR and
Associates II Inc.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(b) At the Special Meeting held on May 21, 1998, the Merger and the Merger
Agreement were approved by holders of two-thirds of the Shares of Common Stock
entitled to vote at the meeting. On May 21, 1998, a certificate of merger was
filed with the Secretary of State of Delaware and articles of merger were filed
with the Secretary of State of Massachusetts. As a result, the Effective Time
occurred on May 21, 1998 and MergerCo was merged with and into the Company.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE
The Merger was consummated on May 21, 1998.
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ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
(a) Prior to consummating the transaction, the Board of
Directors of the Company received a solvency opinion with respect to the Company
and Telecommunications Techniques Co., L.L.C. ("TTC") from Houlihan Lokey Howard
& Zukin ("Houlihan Lokey").
(b) (1) Houlihan Lokey is an investment banking firm
specializing in business and securities valuation, middle market investment
banking and financial restructuring.
(b) (2) Houlihan Lokey has provided solvency opinions in over 40
transactions in the past year.
(b) (3) The Company selected Houlihan Lokey based on its
qualifications and reputation.
(b) (4) Not applicable.
(b) (5) Not applicable.
(b) (6) Houlihan Lokey concluded that, after giving effect to
the Merger and related transactions, (i) the fair value and present saleable
value of each of the Company's and TTC's assets exceeds and would exceed its
respective stated liabilities and identified contingent liabilities, (ii) each
of the Company and TTC should be able to pay its respective debts as they become
absolute and mature, and (iii) the capital remaining in each of the Company and
TTC would not be unreasonably small for the business in which the Company is
engaged. Houlihan Lokey based its opinion on such reviews, analyses and inquires
as it deemed necessary and appropriate under the circumstances. Pursuant to
General Instruction D of Schedule 13E-3, the full text of the opinion which sets
forth the assumptions made, matters considered and limitation on the review
undertaken is attached hereto as an exhibit and incorporated herein by
reference.
(c) The full text of the opinion is attached hereto as an
exhibit and incorporated herein by reference.
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ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
Exhibit Description
(b)(7) Solvency Opinion of Houlihan, Lokey, Howard and Zukin dated May 21, 1998.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Statement is true, complete and correct as
of June 1, 1998.
DYNATECH CORPORATION
By: /s/ John F. Reno
---------------------------------
Name: John F. Reno
Title: Chairman, President and
Chief Executive Officer
/s/ John F. Reno
---------------------------------
John F. Reno
/s/ Allan M. Kline
---------------------------------
Allan M. Kline
/s/ John R. Peeler
---------------------------------
John R. Peeler
CLAYTON, DUBILIER & RICE
FUND V LIMITED PARTNERSHIP
By: CD&R Associates V Limited
Partnership, the General Partner
By: CD&R Investment Associates II, Inc.,
its managing general partner.
By: /s/ Donald J. Gogel
----------------------------------
Name: Donald J. Gogel
Title: President, Assistant Secretary
and Assistant Treasurer
CLAYTON, DUBILIER & RICE, INC.
By: /s/ Donald J. Gogel
----------------------------------
Name: Donald J. Gogel
Title: President, Assistant Secretary
and Assistant Treasurer
CD&R INVESTMENT ASSOCIATES II, INC.
By: /s/ Donald J. Gogel
----------------------------------
Name: Donald J. Gogel
Title: President, Assistant Secretary
and Assistant Treasurer
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<PAGE>
[LETTERHEAD OF HOULIHAN LOKEY HOWARD & ZUKIN]
EXHIBIT 99.1
May 21, 1998
To The Board of Directors of Dynatech Corporation
To The Board of Telecommunications Techniques Co., L.L.C.
To The Lenders to Dynatech Corporation and Telecommunications Techniques Co.,
L.L.C.
Dear Ladies and Gentlemen:
We understand that on December 20, 1997, Dynatech Corporation, a Massachusetts
corporation (the "Company") entered into an Agreement and Plan of Merger by and
between Dynatech and CDRD Merger Corporation ("MergerCo"), a corporation formed
by Clayton, Dubilier & Rice Fund V Limited Partnership (the "Fund"), pursuant to
which MergerCo will merge with and into Dynatech, with Dynatech as the surviving
corporation (the "Merger"). In connection with the Merger, the stockholders of
Dynatech will receive consideration of approximately $803.1 million in the
aggregate, consisting of $47.75 per share in cash and 0.5 share of common stock,
no par value, of the recapitalized Company (the "Recapitalization Common
Stock"), representing $1.25 in equity value for each 0.5 share received by the
stockholders. The merger and other related transactions disclosed to Houlihan
Lokey are referred to collectively herein as the "Transaction." It is our
understanding that a significant part of the financing for the Transaction (the
"Financing") will be obtained from one or more institutional lenders (the
"Lenders"). We further understand that the initial obligors with respect to the
Financing will be Dynatech and TTC MergerCo, Inc., a Delaware company to be
formed as a subsidiary of Dynatech ("TTC MergerCo"). Immediately following the
closing of the Merger, TTC MergerCo will be merged with and into
Telecommunications Techniques Co., L.L.C., a Delaware limited liability company
to be formed by Dynatech ("TTC"). Simultaneously, Dynatech will contribute the
shares of all of its subsidiaries to TTC, Dynatech will be released as an
obligor under the Financing, and TTC will succeed to all obligations with
respect to the Financing.
You have requested our written opinion (the "Opinion") as to the matters set
forth below. This Opinion values each of the Company and TTC as a going-concern
(including goodwill), on a pro forma basis, immediately after and giving effect
to the Transaction and the incurence of the associated indebtedness. For
purposes of this Opinion, "fair value" shall be defined as the amount at which
each of the Company and TTC would change hands between a willing buyer and a
willing seller, each having reasonable knowledge of the relevant facts, neither
being under any compulsion to act, with equity to both; and "present fair
saleable value" shall be defined as the amount that may
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To The Board of Directors of Dynatech COrporation
To The Board of Telecommunications Techniques Co., L.L.C.
To The Lenders to Dynatech COrporation and Telecommunications Techniques Co.,
L.L.C.
May 21, 1998 Page 2
be realized if each of the Company's and TTC's aggregate assets (including
goodwill) are sold as an entirety with reasonable promptness in an arm's length
transaction under present conditions for the sale of comparable business
enterprises, as such conditions can be reasonably evaluated by Houlihan Lokey.
We have used the same valuation methodologies in determining fair value and
present fair saleable value for purposes of rendering this Opinion. The term
"identified contingent liabilities" shall mean the stated amount of contingent
liabilities identified to us and valued by responsible officers of the Company,
upon whom we have relied upon without independent verification; no other
contingent liabilities will be considered. Being "able to pay its debts as they
become absolute and mature" shall mean that, assuming the Transaction has been
consummated as proposed, the Company's financial forecasts for the years ended
March 1999 to March 2002 indicate positive cash flow for such period, including
(and after giving effect to) the payment of installments due under loans made
pursuant to the indebtedness incurred in the Transaction, as such installments
are scheduled at the close of the Transaction. It is Houlihan Lokey's
understanding, upon which it is relying, that each of the Company's and TTC's
Boards of Directors and any other recipient of the Opinion will consult with and
rely solely upon their own legal counsel with respect to said definitions. No
representation is made herein, or directly or indirectly by the Opinion, as to
any legal matter or as to the sufficiency of said definitions for any purpose
other than setting forth the scope of Houlihan Lokey's Opinion hereunder.
Notwithstanding the use of the defined terms "fair value" and "present fair
saleable value," we have not been engaged to identify prospective purchasers or
to ascertain the actual prices at which and terms on which the Company can
currently be sold, and we know of no such efforts by others. Because the sale of
any business enterprise involves numerous assumptions and uncertainties, not all
of which can be quantified or ascertained prior to engaging in an actual selling
effort, we express no opinion as to whether the Company would actually be sold
for the amount we believe to be its fair value and present fair saleable value.
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
1. reviewed the Company's annual reports to shareholders and on Form 10-K
for the two fiscal years ended 1997 and quarterly reports on Form 10-Q
for the three quarters December 31, 1997 which the Company's
management has identified as the most current information available;
2. reviewed copies of the following documents:
- $370 million senior Credit Facility COnfidential Information
Memorandum dated February 1998;
- $275 million Preliminary Offering Circular;
<PAGE>
To The Board of Directors of Dynatech Corporation
To The Board of Telecommunications Techniques Co., L.L.C.
To The Lenders to Dynatech Corporation and Telecommunications Techniques Co.,
L.L.C.
May 21, 1998 Page 3
3. reviewed the amended proxy statement, dated April 29, 1998;
4. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and
projected operations and performance of the Company, and met with
representatives of the Company's independent accounting firm and
counsel to discuss certain matters;
5. visited certain facilities and business offices of the Company;
6. reviewed forecasts and projections prepared by the Company's
management with respect to the Company for the years ended March,
1999 through March, 2002;
7. reviewed the historical market prices and trading volume for the
Company's publicly traded securities;
8. reviewed other publicly available financial data for the Company
and certain companies that we deem comparable to the Company;
9. reviewed drafts of certain documents to be delivered at the closing
of the Transaction, including, but not limited to, the reports of
the Company's chief financial officer and of the Company's
independent public accountants, and the Credit Agreement dated as
of May 18, 1998; and
10. conducted such other studies, analyses and investigations as we
have deemed appropriate.
We have relied upon and assumed, without independent verification, that the
financial forecasts and projections provided to us have been reasonably prepared
and reflect the best currently available estimates of the future financial
results and condition of the Company, and that there has been no material
adverse change in the assets, financial condition, business or prospects of the
Company since the date of the most recent financial statements made available to
us.
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it. We have not made any physical inspection
other than as described above or independent appraisal of any of the properties
or assets of the Company. Our opinion is necessarily based on business,
economic, market an other conditions as they exist and can be evaluated by us at
the date of this letter.
Based upon the foregoing, and in reliance thereon, it is our opinion as of the
date of this letter that, assuming the Transaction had been consummated as
proposed, immediately after and giving effect to the Transaction:
<PAGE>
To The Board of Directors of Dynatech Corporation
To The Board of Telecommunications Techniques Co., L.L.C.
To The Lenders of Dynatech Corporation and Telecommunications Techniques Co.,
L.L.C.
May 21, 1998 Page 4
(a) on a pro forma basis, the fair value and present fair saleable value of
each of the Company's and TTC's assets would exceed the Company's or
TTC's, as the case may be stated liabilities and identified contingent
liabilities;
(b) each of the Company and TTC should be able to pay its debts as they
become absolute and mature; and
(c) the capital remaining in each of the Company and TTC after the
Transaction would not be unreasonably small for the business in which
the Company is engaged, as management has indicated it is now conducted
and is proposed to be conducted following the consummation of the
Transaction.
This Opinion is furnished solely for your benefit and may not be relied upon by
any other person without our express, prior written consent. This Opinion is
delivered to each recipient subject to the conditions, scope of engagement,
limitations and understandings set forth in this Opinion and our engagement
letter dated March 16, 1998, and subject to the understanding that the
obligations of Houlihan Lokey in the Transaction are solely corporate
obligations, and no officer, director, employee, agent, shareholder or
controlling person of Houlihan Lokey shall be subjected to any personal
liability whatsoever to any person, nor will any such claim be asserted by or on
behalf of you or your affiliates.
HOULIHAN, LOKEY, HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
/s/ Houlihan, Lokey, Howard & Zukin Financial Advisors, Inc.
