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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9/A
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
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ANDROS INCORPORATED
(NAME OF SUBJECT COMPANY)
ANDROS INCORPORATED
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
345281
(CUSIP NUMBER OF CLASS OF SECURITIES)
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Dane Nelson
President and Chief Executive Officer
Andros Incorporated
2332 Fourth Street
Berkeley, California 94710-2402
(510) 849-5700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of
the Person(s) Filing Statement)
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WITH A COPY TO:
Steven J. Tonsfeldt, Esq. Susan Cooper Philpot, Esq.
Brobeck, Phleger & Harrison LLP Cooley Godward Castro Huddleson & Tatum
One Market, Spear Street Tower One Maritime Plaza, Suite 2000
San Francisco, California 94105 San Francisco, California 94111
(415) 442-0900 (415) 693-2000
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This Amendment No. 1 to the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Statement") dated February 21, 1996 relates to the offer
by Andros Acquisition Inc., a corporation organized and existing under the
laws of the State of Delaware ("Purchaser") and wholly owned subsidiary of
Andros Holdings Inc., a Delaware corporation ("Parent") formed at the
direction of Genstar Capital Partners II, L.P. ("GCP II"), a Delaware limited
partnership the sole general partner of which is Genstar Capital, L.L.C.
("GCLLC"), to purchase all outstanding shares of common stock, par value $.01
per share (the "Shares"), of Andros Incorporated, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), at a price
of $18.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in Purchaser's Offer to Purchase dated February 20,
1996 (the "Offer to Purchase") and in the related Letter of Transmittal
(which together constitute the "Offer"), copies of which were attached to the
Tender Offer Statement on Schedule 14D-1 as Exhibits (a)(1) and (a)(2),
thereto, respectively.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Item 8 is hereby amended and supplemented by adding thereto the following:
On March 4, 1996, a putative class action was filed in the Court of
Chancery in the State of Delaware on behalf of the stockholders of the
Company alleging causes of action arising out of the Offer and the proposed
Merger. IRA FBO DANIEL W. KRASNER V. ANDROS INCORPORATED, ET AL., Civ. Action
No. 14872. The defendants in this action include the Company and its
directors. The action alleges that the Board breached its fiduciary duties
and specifically alleges that the Board breached its fiduciary duties by
failing to undertake an adequate evaluation of the Company as a potential
acquisition candidate and to take adequate steps to enhance the Company's
value as an acquisition candidate. The action seeks INTER ALIA to enjoin the
defendants from taking steps to accomplish the Offer and the proposed Merger
under their present terms. The Company believes that the putative class
action suit is without merit and intends to defend it vigorously.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended and supplemented by adding thereto the following:
Exhibit 7 Complaint in IRA FBO DANIEL W. KRASNER V. ANDROS
INCORPORATED, ET AL.,
Civ. Action No. 14872, Court of Chancery in the State of
Delaware.
After reasonable 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.
Dated: March 6, 1996 ANDROS INCORPORATED
By: /s/ Dane Nelson
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Dane Nelson
President and Chief Executive Officer
1.
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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IRA FBO DANIEL W. KRASNER, :
DLJSC as custodian, :
:
Plaintiff, :
:
v. : Civil Action No. 14872
:
ANDROS INCORPORATED, DANE :
NELSON, JOHN M. HUNEKE, :
EUGENE KLEINER, DR. KARL H. :
SCHIMMER and ROBERT C. WILSON, :
:
Defendants. :
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O R D E R
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Plaintiff having moved for an Order appointing a special process
server, and the Court having considered plaintiff's Motion, it is hereby ordered
this 29th day of February, 1996, as follows:
1. That Summons be issued forthwith in the above-captioned action to
serve the defendants listed below.
2. That PARCELS, INC., a messenger service, by TIM KADY or SCOTT
WEIR or ROBERT RHINE, is appointed special process server to serve process upon
defendant Andros Incorporated ("Andros") by serving its registered agent: The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
1.
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3. That PARCELS, INC., a messenger service, by TIM KADY or SCOTT
WEIR or ROBERT RHINE, is appointed special process server to serve process upon
defendants Dane Nelson, John M. Huneke, Eugene Kleiner, Dr. Karl H. Schimmer and
Robert C. Wilson, pursuant to 10 DEL. C. Section 3114, by serving Andros's
registered agent: The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801.
4. A copy of this Order shall be served together with a copy of the
Summons and the Complaint.
/s/ Illegible
---------------------------------------------
Master in Chancery
2.
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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IRA FBO DANIEL W. KRASNER, :
DLJSC as custodian, :
:
Plaintiff, :
:
v. : Civil Action No. 14872
:
ANDROS INCORPORATED, DANE :
NELSON, JOHN M. HUNEKE, :
EUGENE KLEINER, DR. KARL H. :
SCHIMMER and ROBERT C. WILSON, :
:
Defendants. :
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CLASS ACTION COMPLAINT
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Plaintiff, by his attorneys, alleges upon information and belief,
except with respect to his ownership of common stock of Andros Incorporated
("Andros" or the "Company") as follows:
PARTIES
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1. Plaintiff is the owner of 500 shares of defendant Andros.
2. Andros is a Delaware corporation with executive offices at 2332
Fourth Street, Berkeley, California. As of January 31, 1996, Andros had
approximately 4.628 million shares of common stock outstanding.
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3. Defendant Dane Nelson is, and has been since September 1, 1991,
President and Chief Executive Officer and a Director of Andros.
4. Defendant John M. Huneke is, and has been since 1968, a Director
of Andros.
5. Defendant Eugene Kleiner is, and has been since 1972, a Director
of Andros and served as Chairman of the Company from January 1993 until July
1995.
6. Defendant Dr. Karl H. Schimmer is, and has been since 1979, a
Director of Andros.
7. Defendant Robert C. Wilson is, and has been since December 1992,
a Director of Andros and has served as Chairman of the Board of the Company
since July 1995. Wilson has also been employed by the Company as an adviser to
the President, Nelson, since November 1992.
8. The foregoing Directors of Andros (collectively the "Director
Defendants"), owe fiduciary duties to Andros and its public shareholders.
CLASS ACTION ALLEGATIONS
------------------------
9. Plaintiff brings this action on his own behalf and as a class
action on behalf of all shareholders of defendant Andros (except defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants) or their successors in interest, who have
been or will be adversely affected by the conduct of defendants alleged herein.
2.
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10. This action is properly maintainable as a class action for the
following reasons:
(a) The class of shareholders for whose benefit this action is
brought is so numerous that joinder of all class members is impracticable. As
of January 31, 1996, there were over 4.6 million shares of defendant Andros
common stock outstanding owned by shareholders scattered throughout the United
States.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over any questions affecting any
individual members. The common questions include, INTER ALIA, the following:
(i) whether the Director Defendants have engaged in a
proper process to ensure maximization of shareholder value;
(ii) whether the Director Defendants have breached fiduciary
duties owed by them to plaintiff and members of the Class, and/or have aided and
abetted in such breaches, by virtue of their participation and/or acquiescence
and by their other conduct complained of herein;
(iii) whether the Director Defendants have wrongfully
failed adequately to seek a purchaser of Andros at the highest available price
and, instead, have agreed to allow the valuable assets of defendant Andros to be
acquired at an unfair and inadequate price to Andros's public shareholders;
(iv) whether the Director Defendants have breached their
fiduciary duty of disclosure; and
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(v) whether plaintiff and the other members of the Class
will be irreparably damaged by the conduct and transactions complained of
herein.
11. 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 interest 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.
12. Defendants have acted or refused to act on grounds generally
applicable to the Class, thereby making appropriate injunctive relief with
respect to the Class as a whole.
13. The prosecution of separate actions by individual members of the
Class could create a risk of inconsistent or varying adjudications with respect
to individual members of the Class which would establish incompatible standards
of conduct for defendants or adjudications with respect to individual members of
the Class which would as a practical matter be dispositive of the interests of
the other members not parties to the adjudications.
14. Plaintiff anticipates that there will not be any difficulty in
the management of this litigation.
15. For the reasons stated herein, a class action is superior to
other available methods for the fair and efficient adjudication of this action.
4.
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BACKGROUND OF THE TRANSACTION
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16. On February 21, 1996, Andros Acquisition Inc., a Delaware
corporation and a wholly owned subsidiary of Andros Holdings Inc., a corporation
formed at the direction of Genstar Capital Partners II, L.P., a Delaware limited
partnership, the sole general partner of which is Genstar Capital LLC ("GCLLC"),
commenced an offer to purchase all of the outstanding shares of common stock of
Andros at a price of $18 per share (the "Tender Offer"). The Tender Offer is to
be followed by a merger at the same price. The terms of and the background
leading to the Tender Offer are described in an offer to purchase dated
February 21, 1996 (the "Offer to Purchase"), and the Schedule 14D-9 dated
February 21, 1996, filed by the Company (the "14D-9").
17. The 14D-9, which essentially tracks the description of the
background of the transaction as described in the Offer to Purchase, provides as
follows. After the close of the Company's fiscal year ending July 31, 1994, the
Board of Directors of Andros (the "Board") authorized a formation of a Special
Committee consisting of two unidentified members of the Board which was charged
with the responsibility of exploring various alternatives to maximize
shareholder value, and empowered to contact possible financial advisors to
assist it in that context.
18. On October 25, 1994 the Special Committee engaged Donaldson,
Lufkin & Jenrette ("DLJ") to consider and advise the Special Committee with
respect to various strategic and financial alternatives and to evaluate, and as
appropriate to render a fairness opinion, regarding proposals or transactions.
5.
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19. Following a presentation by DLJ in December 1994, the Board, upon
the recommendation of the Special Committee and with one abstention, directed
DLJ to explore the possible sale of the Company. From December 1994 until the
Company entered into a letter of intent with GCLLC on September 29, 1995, the
Company purportedly entertained proposals from and engaged in discussions with
several potential purchasers, and during that period, the Special Committee was
reconstituted to include all the members of the Board other than defendant
Nelson. Nelson apparently will have a financial interest in the Company after
completion of the proposed transaction with GCLLC. The Schedule 14D-9 does not
disclose when the Special Committee was reconstituted, or of the terms,
structure and timing of the proposals other than the GCLLC proposal which were
considered by the reconstituted Special Committee.
20. In the last week of September of 1995, DLJ received two formal
acquisition proposals, one of which was a proposal from GCLLC regarding an
acquisition of the Company in a leveraged buyout transaction for $20 per share.
The Board, upon the recommendation of the Special Committee and with one
abstention, determined that of the acquisition proposals received, the GCLLC
proposal was the most attractive to the Company's stockholders. However, the
terms or the other formal proposal are not disclosed. Further, the basis for
the Board's determination that the GCLLC proposal was the most attractive, as
compared to the other formal proposal, is not disclosed.
21. On September 29, 1995, a letter of intent was signed between
Andros and GCLLC (the "Letter of Intent") which contemplated that an offer would
be made at $20 per share. On November 10, 1995, the Letter of Intent was
amended,
6.
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among other things, to set the offer price at $20.25 a share. However, on
January 8, 1996, certain prospective purchasers of subordinated debt to be used
to finance the transaction with GCLLC indicated that they were no longer
interested in providing financing under the terms originally contemplated.
Thereafter, GCLLC informed the board that financing was not available on the
terms contemplated and thus, GCLLC was not in a position to go forward with a
transaction at the price of $20.25. Rather, on January 13, 1996, GCLLC made an
oral presentation regarding, and on January 23, 1996 confirmed in writing, a
proposal to acquire all of Andros's shares at $18 per share. On January 26,
1996, notwithstanding the reduction in the GCLLC proposal by $2.25 per share,
and, apparently without revisiting the other formal proposal, the Board, upon
the recommendation of the Special Committee and with one abstention and with one
member voting against the proposal, voted to approve the $18 per share revised
offer. On February 5, 1996 the Board, upon the recommendation of the Special
Committee with one abstention and with one member voting against, voted to
approve the form of merger agreement, which was executed on February 14, 1996.
The merger agreement includes a termination fee of $3.1 million.
22. The 14D-9 fails to identify the member of the Board who voted
against the $18 per share proposal, and does not disclose the basis for the
unidentified member of the Board's vote against the proposal. Moreover, the
14D-9 does not provide an analysis comparing the $18 per share proposal to the
other formal proposal.
23. Further, notwithstanding that GCLLC reduced by $2.25 per share
the price upon which the Board originally made its determination that proceeding
with
7.
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GCLLC was the most attractive to the Company's stockholders, apparently there
was no effort to approach the source of the other formal proposal to negotiate
any improved transaction or to determine whether the unknown entity would bid
against the GCLLC $18 per share proposal transaction.
24. On February 14, 1996, DLJ provided the Andros Board with an
opinion that the $18 per share offer is fair to the shareholders of Andros from
a financial point of view. However, the Schedule 14D-9 does not disclose the
results of analyses engaged in by DLJ, including comparable companies analyses
and comparable acquisitions analyses, notwithstanding that such analyses were
identified as a reason for the Board's determination to recommend the $18 per
share offer.
25. Moreover, the DLJ opinion provides that DLJ was engaged by the
acquiror in connection with placing $15 million in senior subordinated notes and
warrants to help finance the acquisition. As such, DLJ suffers from a conflict
of interest. Further, the Schedule 14D-9 does not disclose how the DLJ
financing arrangement came about, including its timing and initiation, when the
Special Committee was informed of the financing arrangement, whether DLJ
discussed a financing arrangement with other bidders, whether DLJ considered a
financing arrangement with respect to a higher offer, and the amount of the
"usual and customary" fees to be received by DLJ or its affiliate DLJ Private
Placement Group in connection with the financing arrangement.
26. On or about February 23, 1996, it was reported that a group which
holds a 15.75% stake in Andros opposes the transaction with GCLLC, and stated in
a
8.
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filing with the SEC that the transaction is neither fair to nor in the best
interests of Andros shareholders.
27. The Director Defendants failed to take adequate steps in
connection with fulfilling their obligation to maximize shareholder value in the
sale of Andros. While the Director Defendants should continue to seek out other
possible purchasers of the assets of Andros or its stock in a manner designed to
obtain the best transaction reasonably available for Andros's shareholders, they
have instead resolved wrongfully to allow GCLLC to obtain the valuable assets of
Andros at an inadequate price.
28. As a result of the actions of the defendants, plaintiff and the
Class have been and will be damaged.
29. In contemplating, planning and/or effecting the foregoing,
defendants are not acting in good faith toward plaintiff and the Class, and
defendants have breached, and are breaching, their fiduciary duties to plaintiff
and the Class.
30. By reason of the foregoing acts, practices and course of conduct,
the Director Defendants have failed to exercise loyalty, good faith and due care
toward Andros and its public shareholders, and have breached their duty of
disclosure.
31. Unless enjoined by this Court, the Director Defendants will
continue to breach fiduciary duties owed to plaintiff and the Class, all to the
irreparable harm of the Class.
32. Plaintiff has no adequate remedy at law.
9.
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WHEREFORE, plaintiff demands judgment as follows:
A. Declaring that this action may be maintained as a class action;
B. Declaring that the proposed transaction is unfair, unjust and
inequitable to plaintiff and the other members of the Class;
C. Enjoining preliminarily and permanently the defendants from
taking any steps necessary to accomplish or implement the proposed transaction
that is not fair and equitable;
D. Requiring defendants to supplement the Schedule 14D-9 with all
material information;
E. Requiring defendants to compensate plaintiff and the members of
the Class for all losses and damages suffered and to be suffered by them as a
result of the acts and transactions complained of herein, together with
prejudgment and post-judgment interest;
F. Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys', accountants', and experts' fees; and
G. Granting such other and further relief as may be just and proper.
Dated: February 28, 1996 CHIMICLES, JACOBSEN & TIKELLIS
/s/ James C. Strum
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Pamela S. Tikellis
James C. Strum
Robert J. Kriner, Jr.
One Rodney Square
P.O. Box 1035
Wilmington, DE 19899
(302) 656-2500
Attorneys for Plaintiff
10.
