<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/x/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
ELCO INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
ILLINOIS TOOL WORKS INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1) or 14a-6(i)(2).
/X/ $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION
AUGUST 21, 1995
1995 ANNUAL MEETING OF STOCKHOLDERS
OF
ELCO INDUSTRIES, INC.
-----------------------------------
PROXY STATEMENT
OF
ILLINOIS TOOL WORKS INC.
-----------------------------------
This Proxy Statement (the "Proxy Statement"), the accompanying letter to
stockholders and the enclosed WHITE proxy card are furnished in connection with
the solicitation of proxies by ILLINOIS TOOL WORKS INC., a Delaware corporation
("ITW"), for use at the 1995 Annual Meeting of Stockholders of ELCO INDUSTRIES,
INC., a Delaware corporation (the "Company") or ("Elco"), to be held on November
3, 1995 at _________. m. at ___________________________ and at any adjournments
or postponements thereof (the "Annual Meeting").
At the Annual meeting, three directors of Elco will each be elected for a
three-year term or until the election and qualification of each of their
successors. ITW is soliciting proxies pursuant to this Proxy Statement to elect
the three nominees of ITW named herein (the "ITW Nominees") to the Board of
Directors of Elco (the "Elco Board").
THE THREE NOMINEES ARE COMMITTED, SUBJECT TO DIRECTOR FIDUCIARY DUTIES, TO
A SALE OR MERGER OF ELCO TO OR WITH THE HIGHEST QUALIFIED BIDDER AND WILL
ATTEMPT TO INFLUENCE THE MAJORITY OF THE ELCO BOARD TO EFFECT SUCH A SALE OR
MERGER RATHER THAN HAVE ELCO REMAIN INDEPENDENT.
The record date for determining stockholders of Elco (collectively,
"Stockholders") entitled to notice of and to vote at the Annual Meeting is the
close of business on September 5, 1995 (the "Record Date"). Stockholders of
record at the close of business on the Record Date will be entitled to one vote
for each share of Elco common stock, par value $5.00 per share (the "Shares"),
held on the Record Date on all matters submitted to a vote of Stockholders at
the Annual Meeting. A majority of the outstanding Shares represented at the
Annual Meeting either in person or by proxy and entitled to vote at the meeting
will constitute a quorum for the transaction of business at the meeting.
[Abstentions and broker non-votes will be counted for purposes of determining
the presence of a quorum.] The election of directors will be decided by a
plurality of the votes cast. Broker non-votes will not be counted. If the
enclosed WHITE proxy card is executed, returned and unrevoked, it will be voted
at the Annual Meeting and any adjournments or postponements thereof. Where the
stockholder specifies a choice with respect to any matter to be acted upon, the
Shares will be voted in accordance with such specification(s). Unless otherwise
instructed, properly executed WHITE proxy cards which are returned in a timely
manner will be voted for the ITW Nominees. As set forth in the definitive proxy
statement of Elco filed with the Securities and Exchange Commission on _______,
1995 (the "Elco Proxy Statement"), as of the Record Date, there were
_______________ Shares issued and outstanding.
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This Proxy Statement, the accompanying letter to Stockholders and the WHITE
proxy card are first being furnished to Stockholders on or about September __,
1995. The principal executive offices of Elco are located at 1111 Samuelson
Road, Rockford, Illinois 61125.
IMPORTANT
At the Annual Meeting, ITW seeks to elect the ITW Nominees as three of the
directors of Elco.
ITW URGES YOU TO MARK, SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD
TO VOTE FOR THE ELECTION OF THE ITW NOMINEES.
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A VOTE FOR THE ITW NOMINEES WILL PROVIDE YOU -- AS THE OWNERS OF ELCO --
WITH AT LEAST THREE REPRESENTATIVES ON THE ELCO BOARD WHO ARE COMMITTED, SUBJECT
TO DIRECTOR FIDUCIARY DUTIES, TO A SALE OR MERGER OF ELCO TO OR WITH THE HIGHEST
QUALIFIED BIDDER.
ITW URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY ELCO. IF YOU HAVE
ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY BY DELIVERING A SIGNED WRITTEN NOTICE
OF REVOCATION OR A SIGNED LATER DATED PROXY FOR THE ANNUAL MEETING TO ITW, C/O
MACKENZIE PARTNERS, INC., 156 FIFTH AVENUE, 13TH FLOOR, NEW YORK, NY 10010, OR
TO THE SECRETARY OF ELCO, SO AS TO BE RECEIVED PRIOR TO THE VOTE AT THE ANNUAL
MEETING, OR BY VOTING IN PERSON AT THE ANNUAL MEETING. SEE "VOTING AND PROXY
PROCEDURES" BELOW.
THE ITW NOMINEES SUPPORT THE SALE OR MERGER OF ELCO
The ITW Nominees are committed to a sale or merger of Elco to or with the
highest qualified bidder. If elected, the ITW Nominees will, subject in all
respects to their fiduciary duties to Elco, seek to cause the full Elco Board to
consummate the sale or merger of Elco at the earliest practicable date.
As indicated under "Background and Reasons for the Solicitation" below, the
incumbent Elco directors have rejected ITW's acquisition proposals but have not
presented to you any alternative other than Elco remaining independent.
If, like us, you believe that you should have the opportunity to decide the
future of Elco and that Elco should be sold or merged so that you can maximize
the value of your Shares, ITW urges you to vote your WHITE proxy card FOR the
election of the ITW Nominees. All of the ITW Nominees will, subject to their
fiduciary duties to Elco, support a transaction with the highest qualified
bidder for your Shares. In this connection, if elected, it is anticipated that
the ITW nominees, subject to their fiduciary duties to Elco, would attempt (i)
to convince the Elco Board to sell or merge Elco to or with the highest
qualified bidder rather than have Elco remain independent, (ii) to redeem, or
otherwise make inapplicable, the Elco "poison pill", (iii) to grant requisite
approval under Section 203 of the Delaware General Corporation Law, and (iv) to
remove any barriers to a sale or merger of Elco.
ELECTION OF DIRECTORS
According to publicly available information, Elco currently has nine
directors. The terms of three incumbent directors, G. Robert Evans, David D.
Peterson and James H. Rilott, will expire at the Annual Meeting.
ITW proposes that the Stockholders elect the ITW Nominees to the Elco Board
of Directors at the Annual Meeting. The three ITW Nominees are listed below and
have furnished the following information concerning their principal occupations
or employment and certain other matters. Each ITW Nominee, if elected, would
hold office for a three-year term or until a successor has been elected and
qualified. Although ITW has no reason to believe that any of the ITW Nominees
will be unable to serve as directors, if any one or more of the ITW Nominees
shall not be available for election, the persons named on the WHITE proxy card
as proxies have agreed to vote for the election of such substitute nominees as
may be proposed by ITW.
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ITW NOMINEES FOR DIRECTORS:
NAME, AGE AND PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
PRINCIPAL BUSINESS ADDRESS DURING LAST FIVE YEARS; CURRENT DIRECTORSHIPS
John G. Powers, Jr. (64) Retired. Former Executive Vice President, Signode
3980 Gregory Drive Packaging Systems Group of ITW during last five
Northbrook, Illinois 60062 years to December 1993 when the nominee retired.
John W. Mills (64) Retired. Former Vice President and General
211 Essex Road Counsel of Tenneco Inc.'s Tenneco Automotive
Kenilworth, Illinois 60043 Division (manufacturer and marketer of automotive
parts) during last five years to December 1994
when the nominee retired.
Arthur M. Wright (64) Retired. Former Vice President, General Counsel
156 Barranca Road and Secretary of ITW during last five years to
Santa Fe, New Mexico 87501 December 1991 when the nominee retired.
From time to time subsequent to their respective retirements, Messrs. Mills
and Wright have performed legal services for ITW, but they currently are not
performing legal services for ITW.
It is contemplated that each ITW Nominee will be paid a fee of $5,000 by
ITW for agreeing to stand for election as a director of the Company. In
addition, it is anticipated that each ITW Nominee, upon election, will receive
directors fees, consistent with the Company's past practice, for services as a
director of the Company. [According to Elco's Proxy Statement, directors of the
Company receive an annual retainer of $12,000 and fees of $800 for each Board
meeting attended.] ITW has agreed to indemnify each ITW Nominee, to the fullest
extent permitted by applicable law, from and against any and all expenses
(including, without limitation, attorneys fees), liabilities or damages of any
kind arising out of any threatened or filed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative, asserted against or
incurred by the ITW Nominee in his capacity as a nominee for election as a
director of Elco, and, if elected, as a director of Elco, or arising out of his
status in either such capacity to the extent not covered by insurance or
indemnity obligations of Elco to its directors.
The election of the ITW Nominees requires the affirmative vote of a
plurality of the votes cast for the election of directors, assuming a quorum is
present or otherwise represented at the Annual Meeting. Consequently, only
Shares that are voted in favor of a particular nominee will be counted toward
that nominee's attaining a plurality of votes. Shares present at the meeting
that are not voted for a particular nominee (including broker non-votes) and
Shares present by proxy where the stockholder properly withheld authority to
vote for such nominee will not be counted toward such nominee's attainment of a
plurality.
The accompanying WHITE proxy card will be voted at the Annual Meeting in
accordance with your instructions on such card. You may vote FOR the election
of the ITW Nominees as directors of Elco or withhold authority to vote for the
election of the ITW Nominees by marking the proper box on the WHITE proxy card.
You may also withhold your vote from any of the ITW Nominees by striking the
name of such nominee in the list provided on the WHITE proxy card. IF NO
MARKING IS MADE AND YOU HAVE SIGNED AND DATED THE PROXY CARD, YOU WILL BE DEEMED
TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES REPRESENTED BY THE WHITE PROXY CARD
FOR THE ELECTION OF THE ITW NOMINEES.
ITW STRONGLY RECOMMENDS A VOTE FOR THE ELECTION OF THE ITW NOMINEES.
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<PAGE>
BACKGROUND AND REASONS FOR THE SOLICITATION
BACKGROUND
On December 10, 1994, Mr. John D. Nichols, Chairman and Chief Executive
Officer of ITW, contacted a representative of William Blair & Company, the
Company's investment banking firm, and expressed ITW's interest in a possible
combination with the Company. No specific transaction was proposed at that
time. During the subsequent week, Mr. Nichols was informed by William Blair &
Company that because of travel schedules of directors of the Company, there
would be a delay in responding to ITW's expression of interest. Subsequently,
the William Blair & Company representative reported to Mr. Nichols that because
of the holidays Mr. Nichols would not receive a response until after the first
of January 1995. On the morning of January 5, 1995, the William Blair & Company
representative contacted Mr. Nichols and reported that the Board of Directors of
the Company had decided not to pursue ITW's expression of interest in a possible
combination with Elco.
On the afternoon of January 5, 1995, Mr. Nichols had the following
letter delivered to Mr. John C. Lutz, President and Chief Executive Officer of
the Company:
Dear Mr. Lutz:
I was disappointed to learn your decision not to meet to
explore the benefits that would result from a possible
combination of Elco Industries, Inc. with Illinois Tool
Works Inc.
However, to provide you and your Board of Directors a
specific proposal for consideration, I have been authorized
to inform you and your Board that, subject to your Board's
approval, a wholly owned subsidiary of Illinois Tool Works
Inc. is prepared to offer to acquire Elco for a
consideration of $22.00 per share in cash or ITW common
stock. Please be assured that we have available financing
to consummate an all cash transaction for all Elco shares.
We believe that our proposal will provide a significantly
enhanced return for your public stockholders and, if the
decision of your Board is to proceed with a stock
transaction, the opportunity to participate in the growth of
the continuing enterprise.
The proposed consideration is based upon a review of
publicly available information relating to Elco. We have
reviewed our respective products and believe there is an
unusually fine compatibility with little duplication. ITW
offers Elco employees the stability of significant financial
and technical resources, as well as market strengths. If
you enter into good faith negotiations and can demonstrate
additional value, it may be possible for us to increase the
proposed price.
Immediate negotiations will be in the best interests of all
parties as alternative actions would require major
expenditures that could adversely affect the ultimate value
received by your stockholders. We continue to believe that
exploring an arrangement on a confidential basis is in the
best interests of both parties. Therefore, we are treating
this matter confidentially and trust that you will do the
same.
Again, I wish to reiterate our desire to form an amicable combination
of the two companies. Please respond no later than 4:00 PM on
Wednesday, January 11, 1995.
Very truly yours,
/s/John D. Nichols
On January 10, 1995, Mr. Lutz called Mr. Nichols and stated that the
Board of Directors of the Company had carefully reviewed ITW's proposal set
forth in Mr. Nichols' letter of January 5, 1995 and that the Board concluded
that the Company would remain independent and pursue its strategic plan.
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<PAGE>
On January 19, 1995, Mr. Nichols sent a letter to Okabe Company Limited
("Okabe"), a principal stockholder of Elco, in which Mr. Nichols stated that ITW
was interested in acquiring Elco and had submitted a proposal to Elco's Board to
acquire Elco at a premium to the market but that the Elco Board had rejected the
idea of a sale and wanted to pursue its own strategy and remain independent.
Mr. Nichols inquired as to whether Okabe might be in favor of ITW's proposal and
whether Okabe had any influence with Elco's Board on matters of this nature. By
letter dated January 31, 1995, a Representative Director of Okabe responded that
Okabe was interested in ITW's proposal to Elco's Board and wanted to communicate
with Elco.
On February 2, 1995, Mr. Nichols wrote to Mr. Lutz as follows:
Dear Mr. Lutz:
As you may have surmised, we maintain a strong interest in
sitting down with you to explore the business issues that I
outlined in my previous letter.
We believe that discussions on these business issues would
be in the best interests of your shareholders, some of whom
happen to have holdings in both our companies.
I hope very much that you will reconsider your current
position and that we can get together in the near future.
Sincerely,
/s/ John D. Nichols
On February 16, 1995, Mr. Lutz sent to Mr. Nichols the following letter:
Dear Mr. Nichols:
Thank you for your letter of February 2.
We have just completed the annual review of our Strategic Plan as part
of our regular quarterly board meeting. I did take the opportunity to
acquaint the Board with your February 2 letter.
The Board strongly reaffirmed its position that the long-
term interests of our shareholders and employees are best
served by Elco's continuing its present course as an
independent public company.
I hope very much that you respect our position in this
matter.
Sincerely,
/s/ John C. Lutz
President
Chief Executive Officer
On March 8, 1995, at the suggestion of Okabe's Representative Director,
representatives of ITW met with representatives of Okabe. At the meeting, ITW
informed the Okabe representatives of ITW's communications to Elco and Elco's
responses to ITW's expressions of interest and proposal. ITW also informed the
Okabe representatives that ITW did not want to buy a minority position in Elco
but was interested in acquiring the entire company. The Okabe representatives
stated that they would inform the Okabe Representative Director of the
information disclosed to them at the meeting.
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On April 25, 1995 a representative of Okabe called Mr. Nichols and informed
Mr. Nichols that Okabe had had discussions with Mr. Lutz regarding ITW's
proposal to Elco and that Mr. Lutz stated to Okabe that the Elco Board of
Directors had reaffirmed its position that the long-term interests of Elco's
stockholders are best served by Elco continuing with its strategic plan and
remaining independent. On June 5, 1995 a representative of Okabe spoke with an
Executive Vice President of ITW and inquired if there had been any developments
as to ITW's interest in Elco. The ITW officer responded that someone would call
back the representative later in the week. On June 7, 1995, a Senior Vice
President of ITW called the Okabe representative and stated to the
representative that ITW continued to have an interest in Elco but that Elco
refused to meet with ITW.
On June 26, 1995, the Representative Director of Okabe sent a letter to Mr.
Nichols inquiring about ITW's intentions with respect to Elco. By letter dated
July 6, 1995, Mr. Nichols responded that ITW was looking forward to Elco's
earnings report for the June 30, 1995 fiscal year and would make some decisions
after the earnings were announced.
On August 10, 1995, Elco announced to the public Elco's earnings for the
fiscal year ended June 30, 1995. That afternoon ITW delivered to Elco the
following letter addressed to Mr. Lutz:
Dear Mr. Lutz:
Since our communications in February of this year, Illinois Tool
Works Inc. (ITW) has continued to give consideration to a
possible combination of Elco Industries, Inc. (Elco) and ITW. I
understand your personal desire and that of your Board of
Directors to remain independent. However, ITW is certain that a
combination of our two companies would be beneficial to our
respective stockholders.
We believe that on reflection you and your Board of Directors
will conclude that a combination with ITW will provide an
extraordinary opportunity for your stockholders and other
constituencies. In addition, based upon our preliminary Hart-
Scott-Rodino filing research, we find an unusually attractive
complimentary product line blend which will provide beneficial
solutions for each of our customers in the current very
competitive marketplaces.
Consequently, by this letter ITW is making a firm proposal to
Elco to pay $27.00 per share in cash for all of Elco's
outstanding common stock. This offer is not contingent on
financing and is a premium of 45% over the closing market price
of your stock on August 9, 1995. Our objective is to work with
you in a professional and constructive manner to complete a
transaction so that the best interests of all of your
stockholders can be served.
We would very much like to meet with you and, if you feel it is
appropriate, with the members of your Board of Directors and your
advisers. I and other representatives of ITW are available to
meet with you for this purpose at any time.
I would appreciate receiving your response to the proposal set
forth in this letter by August 14, 1995. If your response is not
favorable, ITW will consider its various alternatives.
Very truly yours,
/s/ John D. Nichols
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Later on August 10, 1995, ITW issued the following news release:
ITW OFFERS TO ACQUIRE ELCO INDUSTRIES, INC.
GLENVIEW, IL (August 10, 1995) - Illinois Tool Works Inc. (NYSE:ITW)
announced that it has submitted to Elco Industries, Inc. (NASDAQ:ELCN)
a proposal to acquire all of the outstanding common shares of Elco
Industries, Inc. at a price of $27 per share in cash, which is a
premium of 45% over the closing price of Elco Industries, Inc. common
stock on August 9, 1995 on The Nasdaq National Market. ITW has
requested Elco Industries, Inc. to respond to ITW's proposal by August
14, 1995. ITW believes that a combination of the two companies will
be beneficial to their respective stockholders and customers.
Elco Industries, Inc., headquartered in Rockford, Illinois,
manufactures and supplies automotive and commercial original
equipment manufacturers with parts, components and assemblies
made of metal and plastic. Elco also supplies the consumer do-
it-yourself and commercial construction markets with fasteners
and related products. For fiscal year ended June 30, 1994 Elco
had net sales of $225.9 million.
ITW is a multinational manufacturer of highly engineered
components and industrial systems. The company has approximately
290 operations in 34 countries and 20,900 employees. For 1994
its operating revenues aggregated $3.5 billion and for the first
six months of 1995 its operating revenues were $2.02 billion.
On August 17, 1995, the Elco Board rejected ITW's proposal to acquire all
the outstanding Elco common shares for $27 per share in cash and issued the
following news release:
ELCO INDUSTRIES, INC. REJECTS PROPOSAL TO ACQUIRE
ALL OF ITS OUTSTANDING COMMON STOCK
ROCKFORD, ILLINOIS, August 17, 1995 -- Elco Industries, Inc.
(NASDAQ:ELCN), announced today that it has rejected an unsolicited
proposal from Illinois Tool Works (NYSE:ITW) to acquire all of Elco's
outstanding common stock for $27 per share in cash.
"This proposal has been carefully reviewed by Elco's Board of
Directors, and the Board has unanimously concluded that the proposal
is inadequate," reported John C. Lutz, president and chief executive
officer of Elco Industries, Inc. "In taking such a position, the Elco
Board of Directors is taking into account other strategic alternatives
available to Elco, as well as Elco's prospects as an independent
company. The Board believes that Elco is an outstanding company.
Elco has achieved excellent results for our stockholders, as seen in
our recently announced record sales and profits for the fiscal year
ended June 30, 1995, with net income up 25 percent and sales up 10
percent over the record performance of the prior year."
Elco Industries, Inc. headquartered in Rockford, Illinois, is
comprised of two operating groups. The Industrial Products Group is a
leading manufacturer and supplier of custom-designed fasteners and
precision-engineered metal and plastic components for the automotive
and industrial markets. The Home and Construction Products Group is a
leading supplier of packaged fasteners and related products as well as
complete merchandising programs for the consumer do-it-yourself and
construction markets.
Also on August 17, 1995, Mr. Lutz sent to Mr. Nichols the following letter:
Dear Mr. Nichols:
The Board of Directors of Elco Industries, Inc. has carefully reviewed
your proposal to acquire all of Elco's outstanding common stock for
$27 per share in cash set forth in your letter dated August 10, 1995
and has unanimously concluded that the proposal is inadequate. In
taking its position, the Board is taking into account other strategic
alternatives available to Elco, as well as Elco's prospects as an
independent company. A copy of a press release that has been issued
by the company today is enclosed with this letter.
Sincerely,
/s/ John C. Lutz
President
Chief Executive Officer
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On August 21, 1995, Mr. Nichols sent the following letter to Mr. Lutz and
ITW made the following announcement:
Dear Mr. Lutz,
I was disappointed with your response to our offer. I continue to believe
that a combination of our companies is in the best interests of
stockholders, employees and our customers. I have enclosed a copy of a
press release that was made public today.
Once again, I urge you to enter into discussions as to the value to all
parties in the combination of our companies. It would be prudent to try
and resolve this matter before the process escalates further. I will give
you a call to see if we can arrange a meeting.
Sincerely,
/s/ John D. Nichols
ILLINOIS TOOL WORKS INC TO SUBMIT NOMINEES TO ELCO BOARD
AND FILES HART-SCOTT-RODINO REPORT
GLENVIEW, IL (August 21, 1995) - Illinois Tool Works Inc. (NYSE:ITW)
announced it was disappointed that its proposal made on August 10, 1995 to
acquire all the outstanding shares of Elco Industries, Inc. (NASDAQ:ELCN)
at a price of $27 per share was rejected by the Elco Board of Directors on
August 17, 1995.
ITW feels strongly that a combination of Elco with ITW will be
beneficial to the stockholders, employees and customers of both companies
and plans to support for election to Elco's Board of Directors candidates
who are committed to a sale or merger of Elco. ITW stated that it is the
owner of over 1,000 shares of common stock of Elco and intends to submit a
slate of three nominees for election to Elco's Board and a written demand
for a stockholders list so that ITW may communicate with the Elco
stockholders. ITW is also filing the appropriate proxy materials with the
Securities and Exchange Commission. In addition, ITW stated that on
August 15, 1995 it filed with the Federal Trade Commission and the
Department of Justice, under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, a notification and report with respect to ITW's proposed
acquisition.
Elco Industries, Inc., headquartered in Rockford, Illinois, manufactures
and supplies automotive and commercial original equipment manufacturers
with parts, components and assemblies made of metal and plastic. Elco
also supplies the consumer do-it-yourself and commercial construction
markets with fasteners and related products. For the fiscal year ended
June 30, 1995, Elco had net sales of $249 million.
ITW is a multinational manufacturer of highly engineered components and
industrial systems. The company has approximately 290 operations in 34
countries and 20,900 employees. For 1994, its operating revenues
aggregated $3.5 billion and for the first six months of 1995 its operating
revenues were $2.02 billion.
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ITW remains willing to negotiate with Elco with respect to a combination
between ITW and Elco. If negotiations ensue and are satisfactory to ITW, they
could result in, among other things, termination of the proxy solicitation. As
indicated elsewhere in this Proxy Statement, the ITW Nominees, if elected, will,
subject in all respects to their fiduciary duties to Elco, seek to cause the
full Elco Board to commence a negotiated acquisition of Elco. ITW reserves the
right to submit proposals to Elco for a combination of Elco with ITW, to alter
the terms of any proposals and to terminate its interest in a combination with
Elco at any time, without notice to the Stockholders.
REASONS FOR THE SOLICITATION; PLANS FOR SALE OF ELCO
In light of the failure of the Elco Board to commit to the sale or
merger of the Company or even to meet to discuss a possible sale or merger of
the Company, ITW has determined to seek your votes in support of the ITW
Nominees for election to the Elco Board at the Annual Meeting. Each ITW
Nominee is committed, subject in all respects to his fiduciary duties, to
support a sale or merger of Elco to or with the highest qualified bidder and
will urge the full Elco Board to do so. In this connection, if the ITW
Nominees are elected, it is anticipated that the ITW Nominees, subject in all
respects to their fiduciary duties to Elco, would attempt (i) to convince
the Elco Board to sell or merge Elco to or with the highest qualified bidder
rather than have Elco remain independent, (ii) to redeem, or otherwise make
inapplicable, the Elco "poison pill", (iii) to grant requisite approval under
Section 203 of the Delaware General Corporation Law and (iv) to remove any
barriers to a sale or merger of Elco.
The ITW Nominees, if elected, would be three of nine members of the Elco
Board and would not be able to control the Elco Board. Also, under certain
circumstances they might not be included as "Continuing Directors" or
"Disinterested Directors" for purposes of directors taking certain action under
Elco's Rights Agreement dated as of January 20, 1988, with The First National
Bank of Chicago, as Rights Agent, as amended (Elco's "poison pill") or the
business combination provisions of Article Tenth of Elco's Certificate of
Incorporation. However, ITW believes that, if elected, the ITW Nominees will
have some influence on the Elco Board to remove barriers to a sale or merger of
Elco.
In the event the ITW Nominees are elected and the Elco Board recommends
acceptance of an offer from a person other than ITW, ITW will seek reimbursement
from Elco for all of ITW's expenses incurred in connection with this proxy
solicitation (including, without limitation, legal, soliciting fees, printing
and, if any, investment banking costs). ITW does not intend to submit the
question of reimbursement to Stockholders.
In the event ITW acquires the entire equity interest in Elco, ITW has no
present intention to make any significant changes in the business strategies of
Elco, and ITW has not identified any specific assets, corporate structure or
other business strategy which warrants change. However, ITW has made a
preliminary review of, and will continue to review,
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on the basis of available information, various possible business strategies that
it might consider if it acquires control of Elco. If ITW acquires control of
Elco, ITW intends to conduct a detailed review of Elco and its assets,
operations, properties, policies, management and personnel and consider what, if
any, changes would be desirable in light of the circumstances which then exist.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Except for the election of directors, ITW is not aware of any proposals to
be brought before the Annual Meeting. Should other proposals be brought before
the Annual Meeting, the persons named on the WHITE proxy card as proxies will
vote all proxies (unless otherwise directed by Stockholders) on such proposals
at their discretion.
VOTING AND PROXY PROCEDURES
TO VOTE FOR THE ITW NOMINEES AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND
DATE THE ENCLOSED WHITE PROXY CARD AND RETURN IT TO ITW, c/o MACKENZIE PARTNERS,
INC., 156 FIFTH AVENUE, 13TH FLOOR, NEW YORK, NY 10010, IN THE ENCLOSED
ENVELOPE IN TIME TO BE VOTED AT THE ANNUAL MEETING. Execution of the WHITE
proxy card will not affect your right to attend the Annual Meeting and to vote
in person. Any proxy may be revoked at any time prior to the Annual Meeting by
delivering a signed written notice of revocation or a signed later dated proxy
at the Annual Meeting or by voting in person at the Annual Meeting. ONLY YOUR
LATEST DATED PROXY FOR THE ANNUAL MEETING WILL COUNT.
Only Stockholders of record as of the close of business on the Record Date
will be entitled to vote. If you were a Stockholder of record on the Record
Date, you will retain your voting rights for the Annual Meeting even if you sell
such Shares after the Record Date. ACCORDINGLY, IT IS IMPORTANT THAT YOU VOTE
THE SHARES HELD BY YOU ON THE RECORD DATE, OR GRANT A PROXY TO VOTE SUCH SHARES
ON THE WHITE PROXY CARD, EVEN IF YOU SELL SUCH SHARES AFTER THE RECORD DATE.
If any of your Shares are held in the name of a brokerage firm, bank, bank
nominee or other institution on the Record Date, only it can vote such Shares
and only upon receipt of your specific instructions. Accordingly, please
contact the person responsible for your account and instruct that person to
execute on your behalf the WHITE proxy card in favor of the election of the ITW
Nominees.
CERTAIN ADDITIONAL INFORMATION
The Elco Proxy Statement contains additional information with respect to
the Record Date, the number of Shares outstanding on the Record Date, the voting
and revocation of proxies, Elco's nominees for election of directors, the
beneficial owners of more than five percent of the Shares, the Share ownership
of directors and officers of Elco, and the date by which Stockholder proposals
intended to be submitted at Elco's next annual stockholders' meeting must be
received by Elco for inclusion in its proxy statement for that meeting. Such
information, which ITW has not independently verified, is incorporated by
reference in this Proxy Statement, upon reliance on Elco.
SOLICITATION OF PROXIES
Proxies may be solicited by mail, advertisement, telephone, telecopier or
in person. Solicitations may be made by directors and officers of ITW, none of
whom will receive additional compensation for such solicitations. ITW has
requested banks, brokerage firms and other custodians, nominees and fiduciaries
to forward all of its solicitation materials to the beneficial owners of the
Shares they hold of record. ITW will reimburse these record holders for
customary clerical and mailing expenses incurred by them in forwarding these
materials to their customers.
ITW has retained MacKenzie Partners, Inc. ("MacKenzie") for solicitation
and advisory services in connection with the solicitation, for which MacKenzie
is to receive a fee of approximately $______________, together with
reimbursement for its reasonable out-of-pocket expenses. ITW has also agreed to
indemnify MacKenzie against certain liabilities and expenses, including
liabilities and expenses under the federal securities laws. MacKenzie will
solicit proxies for the
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<PAGE>
Annual Meeting from individuals, brokers, banks, bank nominees and other
institutional holders. It is anticipated that MacKenzie will employ
approximately ____ persons to solicit votes from Stockholders for the Annual
Meeting.
The entire expense of soliciting proxies for the Annual Meeting is being
borne by ITW. ITW will not seek reimbursement for such expenses from Elco
except that in the event the Elco Board recommends acceptance of an offer from a
person other than ITW, the ITW Nominees, if elected, will seek to cause Elco to
reimburse ITW for all of its expenses incurred in connection with this proxy
solicitation (including, without limitation, legal, printing and, if any,
investment banking costs). Although no precise estimate can be made at this
time, ITW anticipates that the aggregate amount to be spent by ITW will be
approximately $______________________ of which approximately $__________________
has been incurred to date. This amount includes expenditures for printing,
postage, legal, accounting, soliciting and related expenses.
INFORMATION CONCERNING ITW
ITW develops and manufactures a wide range of products and systems designed
to reduce its customers' manufacturing and assembly costs and improve product
quality. ITW's products are divided into two segments: Engineered Components
(plastic and metal components and small assemblies, metal fasteners and
adhesives) and Industrial Systems and Consumables (systems and related
consumables for packaging, quality measurement, tools and specialty
applications).
Elco is a licensee of certain trademarks and technology of ITW. During
1994, Elco paid to ITW license fees aggregating less than $230,000. Certain
products sold by Elco may serve a purpose similar in nature to products sold by
ITW. However, based upon an examination of publicly available information
relating to the businesses in which ITW and its subsidiaries and Elco and its
subsidiaries are engaged, ITW believes that the combination of Elco with ITW
would not violate the antitrust laws. However, there can be no assurance that
a challenge to a combination of Elco and ITW or to the ITW Nominees on antitrust
grounds will not be made or, if such a challenge is made, what the result will
be.
In connection with a possible acquisition of Elco by ITW, on August 11,
1995, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder ("HSR Act"), ITW filed with
the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") and the Federal Trade Commission ("FTC") a Notification
and Report Form with respect to the possible combination of Elco with ITW.
Under the HSR Act, ITW and Elco are obligated to file certain information with
the Antitrust Division and the FTC and there is a waiting period that must be
satisfied before an acquisition could be consummated if not opposed by the
Government.
ITW is subject to the reporting requirements of the Securities Exchange Act
of 1934 and, in accordance therewith, has filed periodic reports, proxy
statements and other information with the Securities and Exchange Commission
relating to its business, financial condition and other matters. Such reports,
proxy statements and other information may be examined at, and copies may be
obtained from, the Securities and Exchange Commission (the "Commission") at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549 and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661. In addition, such information should
also be available for inspection at The New York Stock Exchange, Inc., 20 Broad
Street, New York, NY 10005.
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<PAGE>
Set forth below is certain summary financial information for ITW and its
subsidiaries with respect to the last three years, which is excerpted or derived
from ITW's audited financial statements and certain unaudited summary financial
information for ITW and its subsidiaries with respect to the six months ended
June 30, 1995 and 1994. More comprehensive financial information is included in
such reports and other documents filed by ITW with the Commission, and the
financial information that follows is qualified in its entirety by reference to
such reports and other documents and all the financial information and related
notes contained therein.
ILLINOIS TOOL WORKS INC.
AND SUBSIDIARIES
Summary Consolidated Financial Information
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30
---------------------- ------------------------
INCOME STATEMENT DATA: 1994 1993 1992 1995 1994
<S> <C> <C> <C> <C> <C>
Operating Revenues $3,461,315 $3,159,181 $2,811,645 $2,019,798 $1,652,481
Income from Operations $498,785 $385,562 $343,923 $314,435 $222,429
Net Income $277,783 $206,570 $192,080 $181,279 $121,642
Net Income Per Share $2.45 $1.83 $1.72 $1.55 $1.07
BALANCE SHEET DATA: 6/30/95
Working Capital $634,500 $547,506 $492,118 $674,603
Total Assets $2,580,498 $2,336,891 $2,204,187 $3,047,020
Long-Term Debt $272,987 $375,641 $251,979 $282,775
Stockholders' Equity $1,541,521 $1,258,669 $1,339,673 $1,750,122
</TABLE>
Certain information about certain directors and executive officers of ITW,
who, in each case, may also assist MacKenzie in soliciting proxies, is set forth
in the attached Schedule I. Schedule II sets forth certain information relating
to Shares owned by ITW, certain individuals and the ITW Nominees and certain
transactions between any of them and Elco. Schedule III sets forth certain
information, as made available in public documents, regarding Shares held by
Elco's management and five percent stockholders.
PLEASE INDICATE YOUR SUPPORT OF THE ITW NOMINEES BY MARKING, SIGNING AND
DATING THE ENCLOSED WHITE PROXY CARD AND RETURN IT PROMPTLY TO ITW, c/o
MACKENZIE PARTNERS, INC., 156 FIFTH AVENUE, 13TH FLOOR, NEW YORK, NY 10010 IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF THE ENCLOSED ENVELOPE IS
MAILED IN THE UNITED STATES.
September __, 1995 ILLINOIS TOOL WORKS INC.
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<PAGE>
SCHEDULE I
INFORMATION CONCERNING CERTAIN DIRECTORS AND OFFICERS OF ITW
The following table set forth the name, business address, principal
occupation or employment at the present time, and the name, principal business
and address of any corporation or other organization in which such occupation or
employment is conducted, of the executive officers and directors of Illinois
Tool Works Inc. ("ITW"), all of whom are citizens of the United States. Except
as otherwise listed, the business address of such persons is in care of Illinois
Tool Works Inc., 3600 West Lake Avenue, Glenview, Illinois 60025-5811.
PRESENT PRINCIPAL OCCUPATION
NAME AND ADDRESS OR EMPLOYMENT
---------------- ----------------------------
John D. Nichols. . . . . . . . . . Director, Chairman and, until September 1,
1995, Chief Executive Officer.
W. James Farrell . . . . . . . . . Director and President and, effective
September 1, 1995, Chief Executive Officer.
Harold Byron Smith . . . . . . . . Director and Chairman of the Executive
Committee.
Julius W. Becton, Jr . . . . . . . Director. Retired Lieutenant General,
7737 Jewelweed Court United States Army.
Springfield, VA 22152
Silas S. Cathcart. . . . . . . . . Director. Former Chairman, Kidder, Peabody
222 Wisconsin Avenue Group Inc. (investment banking).
Suite 103
Lake Forest, IL 60045
Susan Crown. . . . . . . . . . . . Director. Vice President, Henry Crown and
Henry Crown & Co. Company (diversified investments).
222 North LaSalle Street
Chicago, IL 60601
H. Richard Crowther. . . . . . . . Director. Former Vice Chairman.
36273 Fredericksburg
Farmington Hills, MI 48331
L. Richard Flury . . . . . . . . . Director. Senior Vice President-Shared
Amoco Corporation Services, Amoco Corporation (international
Mail Code 3000 oil company).
200 East Randolph Drive
Chicago, IL 60601-7125
Richard M. Jones . . . . . . . . . Director. Former Chairman and Chief
1205 Burr Ridge Club Drive Executive Officer, Guaranty Federal Savings
Burr Ridge, IL 60521 Bank (savings bank).
George D. Kennedy. . . . . . . . . Director. Former Chairman, Mallinckrodt
P. O. Box 559 Group (animal and human health).
789 Humboldt Street
Winnetka, IL 60093
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<PAGE>
PRESENT PRINCIPAL OCCUPATION
NAME AND ADDRESS OR EMPLOYMENT
---------------- ----------------------------
Richard H. Leet. . . . . . . . . . Director. Former Vice Chairman, Amoco
Lighthouse Acres Corporation (oil and chemicals).
P. O. Box 1686
Gainesville, GA 30503
Robert C. McCormack . . . . . . . Director. Partner, Trident Capital L.P.
Trident Capital, L.P. (venture capital).
190 S. LaSalle Street,
Suite 2760
Chicago, IL 60604
Phillip B. Rooney. . . . . . . . . Director. President and Chief Operating
WMX Technologies, Inc. Officer, WMX Technologies, Inc. (waste
3003 Butterfield Road management services).
Oak Brook, IL 60521
Ormond J. Wade . . . . . . . . . . Director. Former Vice Chairman, Ameritech
21 East Pembroke Drive Corp. (telecommunications).
Lake Forest, IL 60045
Calvin A. H. Waller. . . . . . . . Director. Senior Vice President-Site
Kaiser-Hill L.L.C. Operations and Integration, Kaiser-Hill
P. O. Box 464 L.L.C. (energy and environmental group).
Golden, CO 80402-0464
Russell M. Flaum . . . . . . . . . Executive Vice President.
Robert H. Jenkins. . . . . . . . . Executive Vice President.
Frank S. Ptak. . . . . . . . . . . Executive Vice President.
F. Ronald Seager . . . . . . . . Executive Vice President.
Hugh J. Zentmyer . . . . . . . . . Executive Vice President.
Thomas W. Buckman. . . . . . . . . Vice President -- Patents and Technology.
Michael W. Gregg . . . . . . . . . Senior Vice President and Controller,
Accounting.
Stewart S. Hudnut. . . . . . . . . Senior Vice President, General Counsel and
Secretary.
John Karpan. . . . . . . . . . . . Senior Vice President.
Donald L. Van Erden. . . . . . . . Vice President, Research and Advanced
Development.
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<PAGE>
SCHEDULE II
SHARES HELD BY ILLINOIS TOOL WORKS INC., CERTAIN OF
ITS DIRECTORS AND OFFICERS AND THE ITW NOMINEES
AND CERTAIN TRANSACTIONS BETWEEN ANY OF THEM AND ELCO
Illinois Tool Works Inc. ("ITW") is the beneficial and record holder of
Shares purchased in open market transactions executed on the Nasdaq National
Market in the amount and on the dates set forth below:
Date of Transaction Number of Shares Purchased
5/18/95 300
5/19/95 400
5/23/95 500
5/25/95 500
5/26/95 500
6/02/95 500
-----
Total 2,700
Except as disclosed in this Proxy Statement, none of ITW, any of its
directors or officers named in Schedule I or the ITW Nominees owns any
securities of Elco or any subsidiary of Elco, beneficially or of record, has
purchased or sold any of such securities within the past two years or is or was
within the past year a party to any contract, arrangement or understanding with
any person with respect to any such securities. Except as disclosed in this
Proxy Statement, to the best knowledge of ITW, none of such directors or
officers, the ITW Nominees, or their associates beneficially owns, directly or
indirectly, any securities of Elco.
Except as disclosed in this Proxy Statement, none of ITW, its directors and
officers or the ITW Nominees or, to the best knowledge of ITW, their associates
has any arrangement or understanding with any person (1) with respect to any
future employment by Elco or its affiliates or (2) with respect to future
transactions to which Elco or any of its affiliates will or may be a party,
other than purchases and sales of products and services in the ordinary course
of business.
Daniel H. Burch, Neil J. Call and Stanley J. Kay, Jr. of MacKenzie
Partners, Inc., ITW's proxy solicitation firm, have agreed to serve as the
proxies on the WHITE proxy card.
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<PAGE>
SCHEDULE III
SHARES HELD BY ELCO'S MANAGEMENT
AND FIVE PERCENT STOCKHOLDERS
As of ______________, 1995, the directors and executive officers of Elco
Industries, Inc. ("Elco") beneficially owned (within the meaning of the rules
under Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) ____________________ Shares (or approximately _____% of the
Shares reported as outstanding on such date). All of the foregoing information
has been taken from the Elco Proxy Statement.
To the knowledge of ITW, based on a review of the Elco Proxy Statement,
each of the following stockholders as of ____________, 1995 beneficially owns 5%
or more of the outstanding Shares:
[Insert to come]
Although ITW does not have any information that would indicate that any
information contained in this Proxy Statement that has been taken from the Elco
Proxy Statement or any other document on file with the Securities and Exchange
Commission is inaccurate or incomplete, ITW takes no responsibility for the
accuracy or completeness of such information.
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<PAGE>
IMPORTANT
Your proxy is important. No matter how many Shares you own, please give
ITW your proxy FOR the election of the ITW Nominees by:
MARKING the enclosed WHITE proxy card,
SIGNING the enclosed WHITE proxy card,
DATING the enclosed WHITE proxy card, and
MAILING the enclosed WHITE proxy card TODAY in the envelope provided
(no postage is required if mailed in the United States).
If you have already submitted a proxy to Elco for the Annual Meeting, you
may change your vote to a vote FOR the election of the ITW Nominees by marking,
signing, dating and returning the enclosed WHITE proxy card for the Annual
Meeting, which must be dated after any proxy you may have submitted to Elco, or
delivering it to the Secretary of Elco, so as to be received prior to the vote
at the Annual Meeting, or by voting in person at the Annual Meeting.
If you have any questions or require any additional information concerning
this Proxy Statement, please contact MACKENZIE PARTNERS, INC. at the address set
forth below. IF ANY OF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM,
BANK, BANK NOMINEE OR OTHER INSTITUTION, ONLY IT CAN VOTE SUCH SHARES AND ONLY
UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. ACCORDINGLY, PLEASE CONTACT THE
PERSON RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO EXECUTE THE
WHITE PROXY CARD.
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
13TH FLOOR
NEW YORK, NY 10010
1-800-322-2885
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<PAGE>
ELCO INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 3, 1995
THIS PROXY IS SOLICITED ON BEHALF OF ITW INC.
The stockholder designated on the reverse of this card hereby appoints
Daniel H. Burch, Neil J. Call and Stanley J. Kay, Jr. as proxies, and each of
them, the stockholder's attorney and proxy, each with full power of
substitution, to vote upon the propositions set forth herein all shares of Elco
Industries, Inc. ("Elco") common stock held as of September 5, 1995 which the
undersigned may be entitled to vote, at the Annual Meeting of Stockholders of
Elco and at all postponements and adjournments thereof to be held at
_____________________________________ on November 3, 1995. This proxy revokes
all prior proxies given by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. WITH RESPECT TO THE ELECTION OF DIRECTORS, WHERE NO VOTE IS SPECIFIED
OR WHERE A VOTE FOR ALL ITW NOMINEES IS MARKED, THE VOTES REPRESENTED BY A PROXY
WILL BE CAST FOR THE ITW NOMINEES. IF YOU WITHHOLD YOUR VOTE FOR A NOMINEE OR
NOMINEES, YOUR VOTES WILL BE CAST FOR THE REMAINING NOMINEE OR NOMINEES. THE
INDIVIDUALS NAMED ABOVE ARE AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY OTHER
MATTERS THAT PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON THE OTHER SIDE
SEE REVERSE SIDE
-19-
<PAGE>
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE
1. ELECTION OF DIRECTORS
/ / FOR ALL NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY TO VOTE FOR
(EXCEPT AS MARKED TO THE ALL NOMINEES LISTED BELOW
CONTRARY BELOW)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME ON THE SPACE BELOW.)
John G. Powers, Jr.
John W. Mills
Arthur M. Wright
2. In their discretion the proxies are authorized to vote for the election of
such substitute nominee(s) for director(s) as such proxies shall select if
any nominee(s) named above become(s) unable to serve and upon such other
business as may properly come before the meeting and any postponements and
adjournments thereof.
Please date this Proxy and sign exactly as
your name(s) appears hereon. When signing as
attorney, executor, administrator, trustee,
guardian or other representative, give your
full title as such. If a corporation, sign
the full corporate name by an authorized
officer, stating his/her title. If a
partnership, sign in partnership name by
authorized person.
Date: ____________________________, 1995
Signature ______________________________
Signature ______________________________
if held jointly
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