<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
(AMENDMENT NO. 2)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
VALLEN CORPORATION
(Name of Subject Company)
SHIELD ACQUISITION CORP.
HAGEMEYER P.P.S. NORTH AMERICA, INC.
HAGEMEYER N.V.
(Bidders)
----------------
COMMON STOCK, PAR VALUE $0.50 PER SHARE
(Title of Class of Securities)
----------------
919260109
(CUSIP Number of Class of Securities)
----------------
DAVID G. GUNDLING
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
HAGEMEYER P.P.S. NORTH AMERICA, INC.
100 GALLERIA PARKWAY, SUITE 1120
ATLANTA, GEORGIA 30339
TELEPHONE: (770) 541-6151
FACSIMILE: (770) 541-6645
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
<PAGE>
COPY TO:
GABRIEL DUMITRESCU, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 PEACHTREE STREET, N.E.
16TH FLOOR
ATLANTA, GEORGIA 30303
TELEPHONE: (404) 572-6600
FACSIMILE: (404) 572-6999
<TABLE>
<CAPTION>
TRANSACTION VALUE* AMOUNT OF FILING FEE**
<S> <C>
$190,881,675 $38,177
</TABLE>
* Estimated solely for purposes of calculating the amount of the filing fee.
The filing fee calculation assumes the purchase of 7,635,267 shares of
common stock, par value $0.50 per share, (the "Shares"), of Vallen
Corporation at a price of $25.00 per Share in cash, without interest. Such
amount reflects the purchase of 7,192,264 Shares outstanding and 443,003
Shares issuable pursuant to the exercise of outstanding options.
** The amount of the filing fee calculated in accordance with Rule 0-11 under
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the value of the transaction.
[X]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $38,177
Form or Registration No.: 14D-1
Filing Party: Shield Acquisition Corp., Hagemeyer
P.P.S. North America, Inc. and
Hagemeyer N.V.
Date Filed: November 19, 1999
- --------------------------------------------------------------------------------
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CUSIP NO. 919260109
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
Shield Acquisition Corp.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
58-2504037
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b)[_]
(3) SEC USE ONLY
-------------------------------------------------------------------------
(4) SOURCE OF FUNDS
AF
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
[_]
(6) CITIZENSHIP OR PLACE OF ORIGIN
Texas
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
(9) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0.0%
(10) TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP NO. 919260109
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
Hagemeyer P.P.S. North America, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
58-2501931
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[_]
(b)[_]
(3) SEC USE ONLY
-------------------------------------------------------------------------
(4) SOURCE OF FUNDS
AF
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
[_]
(6) CITIZENSHIP OR PLACE OF ORIGIN
Delaware
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
(9) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0.0%
(10) TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP NO. 919260109
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
Hagemeyer N.V.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
N/A
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[_]
(b)[_]
(3) SEC USE ONLY
-------------------------------------------------------------------------
(4) SOURCE OF FUNDS
WC
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
[_]
(6) CITIZENSHIP OR PLACE OF ORIGIN
The Netherlands
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
(9) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0.0%
(10) TYPE OF REPORTING PERSON
OO
<PAGE>
TENDER OFFER
This Amendment No. 2 to Tender Offer Statement on Schedule 14D-1 amends and
supplements the Tender Offer Statement on Schedule 14D-1 originally filed on
November 19, 1999 (the "Schedule 14D-1") by Shield Acquisition Corp., a Texas
corporation ("Purchaser") and wholly owned subsidiary of Hagemeyer P.P.S. North
America, Inc., a Delaware corporation ("Parent") and an indirect wholly owned
subsidiary of Hagemeyer N.V., a corporation organized under the laws of the
Netherlands ("Hagemeyer"). The Schedule 14D-1 relates to the offer by Purchaser
to purchase all of the outstanding shares of common stock, par value $0.50 per
share (the "Shares"), of Vallen Corporation, a Texas corporation (the
"Company"), at a price of $25.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated November 19, 1999 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), copies of which were filed as
Exhibits (a)(1) and (a)(2), respectively, to the Schedule 14D-1. Unless
otherwise defined herein, all capitalized terms used herein shall have the
respective meanings given to such terms in the Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(e) of the Schedule 14D-1 is hereby amended and restated to read in
its entirety as follows: On November 22, 1999, an action styled Siegel v.
Vallen Corporation, et al., Cause No. 1999-58238, was commenced by a purported
shareholder in the District Court of Harris County, Texas. The petition names as
defendants the Company, the members of the Company's board of directors, Parent
and Purchaser. The petition seeks to proceed on behalf of a purported class of
the Company shareholders other than the defendants and alleges that the price
for the Company shares agreed to in the Merger Agreement (as defined in the
Offer to Purchase) is inadequate, that the members of the Company's board of
directors breached their fiduciary duties by approving the Merger Agreement
allegedly in order to obtain personal financial benefits, and that Parent and
Purchaser purportedly aided and abetted these alleged breaches of duty. The
petition seeks preliminary and permanent injunctive relief, unspecified damages,
and plaintiff's costs and attorneys' fees.
Hagemeyer, Parent and Purchaser have been advised by the Company that the
Company believes all of the claims in the petition against it and its board of
directors are entirely without merit and that the Company and its board of
directors will vigorously contest the lawsuit. Parent and Purchaser believe that
the claims in the petition against them are entirely without merit and they will
vigorously contest the lawsuit. A copy of the Original Petition is attached
hereto as Exhibit (g)(1) and is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby supplemented and amended by adding the following at the
end thereof: (g)(1) A copy of the Original Petition filed on November 22, 1999
in the District Court of Harris County, Texas, in an action entitled Siegel v.
Vallen Corporation, et al.
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SIGNATURE
After due inquiry and to the best of their knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
correct and complete.
Dated: December 10, 1999
SHIELD ACQUISITION CORP.
By: /s/ David G. Gundling
__________________________________
Name: David G. Gundling
Title: President and Chief Executive Officer
HAGEMEYER P.P.S. NORTH AMERICA, INC.
By: /s/ David G. Gundling
__________________________________
Name: David G. Gundling
Title: President and Chief Executive Officer
HAGEMEYER N.V.
By: /s/ I.H.H.J.M. Manders
__________________________________
Name: I.H.H.J.M. Manders
Title: Corporate Secretary
<PAGE>
Exhibit (g)(1)
No. 1999-58238
ALBERT SIEGEL, On Behalf of Himself and (S) IN THE DISTRICT COURT OF
All Others Similarly Situated, (S)
(S)
Plaintiff, (S)
(S)
vs. (S) HARRIS COUNTY, TEXAS
(S)
VALLEN CORPORATION, LEONARD J. (S)
BRUCE, JAMES W. THOMPSON, ROBERT (S)
W. BRUCE, KIRBY ATTWELL, JOHN T. (S)
MYSER, DARVIN M. WINICK, (S) 55 JUDICIAL DISTRICT
HAGEMEYER P.P.S. NORTH AMERICA, (S)
INC. and SHIELD ACQUISITION CORP., (S)
(S)
Defendants. (S) DEMAND FOR JURY TRIAL
PLAINTIFF'S ORIGINAL PETITION
-----------------------------
Plaintiff, by his attorneys, alleges as follows:
INTRODUCTION
1. Pursuant to Rule 190.1 of the Texas Rules of Civil Procedure,
Plaintiff would show that discovery is intended to be conducted under Level 3 of
this rule due to the complexity of this case.
2. This is a class action on behalf of the public stockholders of Vallen
Corporation ("Vallen" or the "Company") against Vallen and its Board of
Directors (collectively the "Vallen Defendants") as well as Hagemeyer P.P.S.
North America, Inc. and Shield Acquisition Corp. (collectively "Hagemeyer"),
arising out of Hagemeyer's November 16, 1999 offer to purchase the outstanding
shares of Vallen for $25.00 per share.
3. Each of the defendants has directly violated and/or aided and abetted
the other defendants' violations of the fiduciary duties owed to the public
shareholders of Vallen. Absent
<PAGE>
judicial intervention, the merger will be consummated which will result in
irreparable injury to the plaintiff and the Class. This action seeks to enjoin
defendants' unlawful conduct.
JURISDICTION AND VENUE
4. This Court has jurisdiction over each of the defendants because they
conduct business in, reside in and/or are citizens of Texas. Certain of the
defendants are citizens of Texas, including defendant Vallen which is
incorporated in Texas and has its principal place of business in the State of
Texas. The amount in controversy of plaintiff's claim exclusive of interest and
costs is less than $75,000. Venue is proper in this Court because defendants'
wrongful acts arose in and emanated from this county.
PARTIES
5. Plaintiff Albert Siegel at all times relevant hereto has been a
stockholder of Vallen.
6. Defendant Vallen is a corporation with its principal executive offices
located at 13333 Northwest Freeway, Houston, Texas. Vallen is a Houston-based
provider of industrial safety and health products and services designed for the
protection of the individual worker and the workplace environment. Vallen's
common shares are publicly traded on the NASDAQ. Vallen has over 7.1 million
shares outstanding held by hundreds if not thousands of shareholders.
7. Defendant Leonard J. Bruce ("L. Bruce") is the Chairman of the Board
and has served as a director of the Company since 1960. L. Bruce is the father
of defendant Robert W. Bruce.
8. Defendant James W. Thompson ("Thompson") is the Company's President
and Chief Executive Officer and has served as a director of the Company since
1994.
2
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9. Defendant Robert W. Bruce ("R. Bruce") has served as a director of the
Company since 1998. Robert W. Bruce is the son of defendant L. Bruce.
10. Defendant Kirby Attwell ("Attwell") has served as a director of the
Company since 1978.
11. Defendant John T. Myser ("Myser") has served as a director of the
Company since 1997.
12. Defendant Darvin M. Winick ("Winick") has served as a director of the
Company since 1984.
13. The defendants named in (P)(P)6-11 are sometimes collectively referred
to herein as the "Individual Defendants."
14. Defendant Hagemeyer P.P.S. North America, Inc. is a Delaware
corporation and the parent of defendant Shield Acquisition Corp., a Texas
corporation.
15. By virtue of their positions as directors and/or officers of Vallen,
the Individual Defendants have, and at all relevant times had, the power to
control and influence, and did control and influence and cause Vallen to engage
in the practices complained of herein.
FIDUCIARY DUTIES OF THE INDIVIDUAL DEFENDANTS
16. By reason of the above Individual Defendants' positions with the
Company as officers and/or directors, said individuals are in a fiduciary
relationship with plaintiff and the other public stockholders of Vallen and owe
plaintiff and the other members of the Class a duty of highest good faith, fair
dealing, loyalty and full, candid and adequate disclosure.
17. Each of the Individual Defendants is required to act in good faith, in
the best interests of a corporation's shareholders and with such care, including
reasonable inquiry, as would be expected of an ordinarily prudent person. In a
situation where the directors of a
3
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publicly traded company undertake a transaction that may result in a change in
corporate control (particularly when it involves a decision to eliminate the
shareholders' equity investment in a company), the applicable state law requires
the directors to take all steps reasonably required to maximize the value
shareholders will receive rather than use a change of control to benefit
themselves. To diligently comply with this duty, the directors of a corporation
may not take any action that:
(a) adversely affects the value provided to the corporation's
shareholders;
(b) contractually prohibits them from complying with or carrying out their
fiduciary duties;
(c) discourages or inhibits alternative offers to purchase control of the
corporation or its assets; or
(d) will otherwise adversely affect their duty to search and secure the
best value reasonably available under the circumstances for the corporation's
shareholders.
18. As described herein, the Individual Defendants have breached their
fiduciary duties by taking actions designed to deter higher offers from other
potential acquirers so as to ensure the defendants receive hundreds of thousands
of dollars in personal benefits at the expense of Vallen's shareholders.
Defendants cannot possibly fulfill their fiduciary obligations after
implementing provisions which disable them from maximizing shareholder value.
The Individual Defendants have breached their fiduciary obligation to act
reasonably.
CLASS ACTION ALLEGATIONS
19. Plaintiff brings this action pursuant to Rule 42 of the Texas Rules of
Civil Procedure on his own behalf and as a class action on behalf of all holders
of Vallen common stock, who are being and will be harmed by defendants' actions
described below (the "Class").
4
<PAGE>
Excluded from the Class are defendants herein and any person, firm, trust,
corporation, or other entity related to or affiliated with any defendants.
20. This action is properly maintainable as a class action.
21. The Class is so numerous that joinder of all members is impracticable.
There are over 7.1 million shares of Vallen stock issued. The shares trade on
the NASDAQ and thousands of Vallen stockholders of record are located throughout
the United States.
22. Questions of law and fact are common to the Class and predominate over
questions affecting any individual Class members. The common questions include,
inter alia, the following:
(a) whether the defendants breached their fiduciary duties of care,
loyalty and/or candor owed by them to plaintiff and the other members of the
Class in connection with the proposed sale of Vallen;
(b) the defendants have breached their fiduciary duty to secure and
obtain the best price reasonable under the circumstances for the benefit of
plaintiff and the other members of the Class in connection with the proposed
sale of Vallen;
(c) whether the defendants have, in bad faith or for improper
motives, erected and/or retained barriers to discourage other offers for the
Company or its assets;
(d) whether plaintiff and the other members of the Class would be
irreparably damaged were the provisions and conduct detailed herein allowed to
persist; and
(e) whether the compensation to be paid to plaintiff and the Class is
unfair and inadequate.
23. The defendants have acted or refused to act on grounds generally
applicable to the Class thereby making appropriate final injunctive relief with
respect to the Class as a whole.
5
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24. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of
plaintiff are typical of the claims of the other members of the Class and
plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
25. Plaintiff anticipates that there will be no difficulty in the
management of this litigation as a class action.
26. For the reasons stated herein, a class action is superior to other
available methods for the fair and efficient adjudication of this controversy.
BACKGROUND TO PROPOSED MERGER
27. Vallen is engaged in the manufacturing of a variety of safety products
and other products for industrial and commercial application. The Company serves
industrial, commercial and public sector customers. Vallen has continued to
progress forward with its long-term strategy of a mixed services and products
based distribution process, expanding its ability to bring total safety
solutions to a diverse customer base and cross leveraging the various business
lines and significant markets throughout North America. The Company had viewed
this strategy as a centerpiece to its long-term business plan and believed that
as a more diversified distributor, it would become less market-sector dependant
and less subjected to individual market economic cycles in terms of its overall
operating results. In the summer of 1999, Vallen's efforts and the shareholders'
investment in Vallen were just beginning to pay off as its products were in
increasing demand and the Company was just recovering from the loss of a
significant contract with the Air Force accounting for almost 20% of its net
income.
6
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28. As a result of the loss of the Company's contract with the Air Force,
Vallen's stock was artificially depressed, but such depressed share price was
only temporary. The Company had recently entered into a partnership (the "Lion-
Vallen Partnership") wherein the Company would provide a new supply chain
management contract to the Department of Defense but which would not begin until
the second quarter of the year 2000 (the current quarter). The Company expected
to mitigate the earnings shortfall resulting from the loss of the Air Force
contract with the Lion-Vallen Partnership but such results would not be seen by
the public until after the Company disclosed its second quarter results for
fiscal year 2000, which ends on November 30, 1999 (just prior to the date of
consummation of the tender offer). In fact, contrary to what was disclosed to
the public but what was disclosed to Hagermeyers, Vallen's operating results
were projected to be phenomenal. The following are the results that were
disclosed to Hagemeyers:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
VALLEN'S INTERNAL OPERATING PROJECTIONS
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Vallen's FY May 31, 1999 Vallen's FY May 31, 2000 Vallen's FY May 31, 2001
Results (Actual) Estimates Estimates
Revenue $306 million Revenue $386 million Revenue $465 million
Net Income $7.3 million Net Income $12 million Net Income $16.7 million
- -------------------------------------------------------------------------------------------
Net Income Growth 99 v. 00 Net Income Growth 00 v. 01
64% projected growth 40% projected growth
- -------------------------------------------------------------------------------------------
</TABLE>
29. The defendants, who held thousands of options which were for the most
part worthless due to a long-term vesting schedule which prevented defendants
from reaping the benefits of the options but which would accelerate upon a
change of control, sought to capitalize on just such an opportunity to
capitalize upon the change of control of the Company. Vallen engaged two
financial advisors, William Blair & Company and Salomon Smith Barney, Inc.
Defendants negotiated with both advisers so that both financial advisors' fees
for rendering services to Vallen were, for the most part, contingent upon the
consummation of the sale of the
7
<PAGE>
Company which would trigger the acceleration of the defendants' options and
would provide for change-of-control payments of hundreds of thousands of dollars
to certain of the Individual Defendants.
30. In October 1999, Vallen and Hagemeyer engaged in serious merger
negotiations. While in negotiations, the defendants, by written consent of
Vallen's Board of Directors, passed a resolution that provided that defendants
L. Bruce, Myser and Thompson would have their options immediately accelerated
and immediately vested upon the change of control of the Company. This provision
allowed the defendants to immediately capitalize upon the sale of the Company
and generate hundreds of thousands of dollars for themselves that they would not
have otherwise received. In addition, by unanimous written consent of the Board
of Directors, on October 20, 1999, the Company granted "retention and transition
awards" to defendants R. Bruce and Thompson totaling hundreds of thousands of
dollars, and such awards were compensation for "the transactions contemplated in
the merger agreement."
31. Although the other Individual Defendants held significant positions
with Vallen, the Company's Founder and Chairman of the Board demanded special
treatment if he was to go along with defendants' plan to sell the Company.
Specifically, L. Bruce, Vallen's Founder and Chairman of the Board, demanded and
Hagemeyer agreed to provide:
(a) a three year consulting agreement with Hagemeyer;
(b) an office;
(c) a secretary;
(d) a car of his choice;
(e) medical insurance for himself; and
(f) medical insurance for his wife.
8
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32. With their severance agreements, consultancy agreements, benefits,
retention awards, transition awards and accelerated options in hand, the
defendants bound the Company to merge with Hagemeyer - via the merger agreement-
for a grossly inadequate price.
THE PROPOSED MERGER
33. On November 15, 1999, Vallen announced that it had entered into a
merger agreement with Hagemeyer to acquire, via a tender offer, the outstanding
shares of Vallen for approximately $191 million dollars or $25.00 per share.
34. The proposed acquisition price is a discount to where Vallen stock
would have traded had the Individual Defendants disclosed the Company's
preliminary second quarter results and the Company's internal operating
projections for the following years - both of which were disclosed to Hagemeyer.
In fact, the merger was timed to close just before the Company would be
obligated to disclose its financial results for the second quarter 2000.
35. The price of $25.00 per share which Hagemeyer proposes to pay to Class
members is grossly unfair and inadequate because, among other things:
(a) The announcement of the proposed merger was made at a time when
the Company's stock price was artificially depressed following an announcement
that it had lost a contract with the Air Force;
(b) The defendants timed the announcement of the merger to place an
artificial cap on the price for Vallen stock to enable them to acquire the stock
at the lowest possible price;
(c) The defendants timed the merger to close prior to the date on
which they would disclose Vallen's strong second quarter 2000 results;
9
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(d) Vallen's earnings for its most recent quarter were artificially
depressed as the result of a loss of a contract with the Air Force which
accounted for almost 20% of its net income and which the Company had mitigated
by entering into a new contract with Lion and such mitigating earnings would be
realized in the quarterly results following the consummation of the tender
offer; and
(e) The merger with Hagemeyer was agreed to at a grossly inadequate
price in exchange for, among other things, Hagemeyer's agreement to enter into
employment agreements with certain of the Vallen insiders.
THE MERGER AGREEMENT
36. The merger agreement contained numerous provisions designed to tilt
the playing field in favor of Hagemeyer and/or make it difficult for a competing
bid from a third party to succeed, including:
. A "termination fee" of $7.5 million in the event Vallen were to
recommend that the shareholders oppose the Hagemeyer offer - in favor of a
superior offer.
. A "no shop" provision which states in part that
Until the termination of the Merger Agreement and except as expressly
permitted by the following provisions, the Company has agreed that it will
not, and that it will instruct (or where it has such power cause) each of
its subsidiaries and each officer, director or employee of or any
investment banker, attorney, accountant or other advisor or representative
of, the Company or any of its subsidiaries not to, directly or indirectly,
(i) solicit or initiate the submission of any Acquisition Proposal (as
defined below) or of any inquiries or proposals that constitute, or may
reasonable be expected to lead to, any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to the Company or any of its
subsidiaries to facilitate, the submission of any Acquisition Proposal or
the making of any inquiries or proposals that constitute, or may reasonably
be expected to lead to, any Acquisition Proposal, (iii) amend or grant any
waiver or release under any standstill or similar agreement with respect to
any class of equity securities of the Company, or (iv) agree to, approve or
recommend any Acquisition Proposal or enter into any agreement with respect
to any Acquisition Proposal...."
10
<PAGE>
37. If the acquisition is consummated, plaintiff and the other members of
the Class will no longer own shares in a "growth" company, which is growing at a
64+% rate and will post $12 million in profits, but rather will be cashed out of
their Vallen shares for just $25.00 per share.
38. The shareholders have been denied the fair process and arm's-length
negotiated terms to which they are entitled in a sale of their Company. The
offices and directors are obligated to maximize shareholder value, not structure
a preferential deal for themselves where they will receive "change of control"
payments following the consummation of this proposed merger.
39. The Class members are being deprived of their right to a fair and
unbiased process to sell the Company, and the opportunity to obtain maximum
value and terms for their interests, without preferential treatment to the
insiders.
40. By reason of their positions with Vallen, the Individual Defendants
are in possession of non-public information concerning the financial condition
and prospects of Vallen, and especially the true value and expected increased
future value of Vallen and its assets, which they have not disclosed to Vallen's
public stockholders, including, but not limited to Vallen's second quarter 2000
results.
41. The Individual Defendants concealed the true worth of Vallen by, among
other things, never revealing (prior to agreeing to support Hagemeyer's tender
offer and thereby capping the price of Vallen shares) that the Board of
Directors expected Vallen's income to grow to the rate of 64% following the
consummation of the merger. Thus, the Individual Defendants have failed to
ensure that Vallen shareholders obtained the highest value reasonably available
prior to entering into the merger agreement.
11
<PAGE>
FIRST CAUSE OF ACTION
Breach of Fiduciary Duty of Loyalty
And Due Care Against the Vallen Defendants
42. Plaintiff repeats and realleges each allegation set forth herein.
43. The Individual Defendants have thus far failed to announce active
auction, open bidding or other procedures best calculated to maximize
shareholder value. Instead of attempting to obtain the highest price reasonably
available for Vallen's shareholders, the Individual Defendants have taken
actions that will only serve their own interests while inhibiting the
maximization of shareholder value.
44. The Individual Defendants were and are under a duty:
(a) to fully inform themselves of the market value of Vallen before
taking, or agreeing to refrain from taking, action;
(b) to act in the interests of the equity owners;
(c) to maximize shareholder value;
(d) to obtain the best financial and other terms when the Company's
independent existence will be materially altered by a transaction; and
(e) to act in accordance with their fundamental duties of due care
and loyalty.
45. By the acts, transactions and courses of conduct alleged herein, the
Vallen Defendants, individually and as part of a common plan and scheme, or in
breach of their fiduciary duties to plaintiff and the other members of the
Class, are implementing and abiding by a process that will deprive plaintiff and
other members of the Class of the true value of their investment in Vallen.
12
<PAGE>
46. Vallen shareholders will, if these defendants' actions are allowed to
stand, be deprived of the opportunity for substantial gains the plaintiff and
Class members may realize if an active auction or open bidding process is
allowed to occur.
47. By reason of the foregoing acts, practices and course of conduct, the
Vallen Defendants failed to exercise ordinary care and diligence in the exercise
of their fiduciary obligations toward plaintiff and the other Vallen public
stockholders and were assisted in that failure by Hagemeyer, which knowingly
assisted defendants' wrongful acts.
48. In light of the foregoing, plaintiff demands that the individual
Defendants, as their fiduciary obligations require, immediately:
. Undertake an independent evaluation of Vallen's worth as an
acquisition candidate.
. Rescind any and all agreements that inhibit the maximization of
shareholder value, including but not limited to the "no shop" provision and
agreements to obtain employment for Vallen insiders.
. Rescind the termination fee of $7.5 million.
. Allow Vallen's shares to trade without the restrictions and barriers
of the unfair agreement "termination fee," "no shop" clause and after full
disclosure of Vallen's internal operating projections.
. Retain independent advisors and appoint a truly independent committee
of persons so that the interests of Vallen's public stockholders will be
protected and any subsequent offers will be considered and negotiated in
the interest of Vallen's public stockholders.
49. As a result of these defendants' failure to take such steps to date,
plaintiff and the other members of the Class have been and will be damaged in
that they have been and will be prevented from obtaining a fair price for their
shares.
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50. Defendants are not acting in good faith toward plaintiff and the other
members of the Class, and have breached and are continuing to breach their
fiduciary duties to plaintiff and the members of the Class.
51. As a result of the Vallen Defendants' unlawful actions, plaintiff and
the other members of the Class will be irreparably harmed in that they will not
receive fair value for Vallen's assets and business and will be prevented from
obtaining the real value of their equity ownership in Vallen. Unless the
defendants' actions are enjoined by the Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the members of the Class,
and will engage in a process that inhibits the maximization of shareholder
value.
52. Plaintiff and the other members of the Class have no adequate remedy
at law.
SECOND CAUSE OF ACTION
Breach of Duty of Candor Against the Vallen Defendants
53. Plaintiff repeats and realleges each allegation set forth herein.
54. As fiduciaries of the Vallen shareholders, the Individual Defendants
owe the Vallen shareholders a duty to fully disclose the existence and nature of
all material facts in their possession or control with respect to the Hagemeyer
merger and all other alternative transactions.
55. The Individual Defendants breached and are continuing to breach their
duties of candor and full disclosure owed to Vallen's shareholders by failing to
disclose material facts concerning Vallen and its operations, including but not
limited to Vallen's preliminary second quarter results and the fact that
Vallen's Board had projected Vallen to grow at the rate of 64% over the previous
year and that such knowledge of earnings growth had been concealed from the
shareholders until after the price of Vallen stock had been capped - via the
merger agreement.
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Plaintiff has no adequate remedy at law for defendants' misrepresentations
and/or omissions. Only through this Court's exercise of its broad equitable
powers can plaintiff and the Class be fully protected from the immediate and
irreparable injury that defendants' actions threaten to inflict.
THIRD CAUSE OF ACTION
Aiding and Abetting of Breach of
Fiduciary Duties Against Hagemeyer
56. Plaintiff repeats and alleges each allegation set forth herein.
57. Hagemeyer aided and abetted the Vallen Defendants' breach of fiduciary
duties to Vallen's shareholders to maximize shareholder value by actively
participating and colluding in the Vallen Defendants' breach. Hagemeyer aided in
timing the acquisition to close before Vallen reveals that its second quarter
2000 financial results and its earnings attributable to the Lion-Vallen
Partnership, all of which has deprived the Vallen shareholders of the highest
value available to them. As a result of Hagemeyer's conduct alleged herein,
Hagemeyer benefited financially.
58. Defendants must be enjoined from continuing with the tender offer.
Only through this Court's exercise of its broad equitable powers can plaintiff
and the Class be fully protected from the immediate and irreparable injury that
defendants' actions threaten to inflict.
PRAYER
WHEREFORE, plaintiff demands judgment and preliminary and permanent relief,
including injunctive relief, in plaintiff's favor and in favor of the Class and
against defendants as follows:
A. Declaring that this action is properly maintainable as a class action;
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B. Declaring and decreeing that the Hagemeyer merger agreement was
entered into in breach of the fiduciary duties of the Individual Defendants and
its therefore unlawful and unenforceable;
C. Enjoining defendants from proceeding with the Hagemeyer merger
agreement and tender offer;
D. Enjoining defendants from consummating the merger and/or tender offer
unless and until the Company discloses all material facts regarding the tender
offer/merger and implements procedures to obtain the highest possible price for
the Company.
E. Directing the Individual Defendants to exercise their fiduciary duties
to obtain a transaction which is in the best interests of shareholders until the
process for the sale or auction of the Company is completed and the highest
possible price is obtained;
F. Awarding plaintiff and the Class appropriate damages;
G. Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys' and experts' fees; and
H. Granting such other and further relief as this Court may deem just and
proper.
JURY DEMAND
Plaintiff demands a trial by jury.
DATED this 22/nd/ day of November, 1999.
WHITTINGTON, VON STERNBERG,
EMERSON & WILSHER, L.L.P.
JOHN G. EMERSON, JR.
Texas State Bar No. 06602600
-------------------------------------
JOHN G. EMERSON, JR.
2600 South Gessner, Suite 600
Houston, TX 77063-3291
Telephone: 713/789-8850
713/789-0033 (fax)
MILBERG WEISS BERSHAD HYNES &
LEARACH LLP
WILLIAM S. LERACH
DARREN J. ROBBINS
RANDALL H. STEINMEYER
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
SHEPHERD & GELLER, LLC
PAUL J. GELLER
7200 W. Camino Real, Suite 203
Boca Raton, FL 33433
Telephone: 561/750-3000
561/750-3364 (fax)
Attorneys for Plaintiff
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