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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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GRIST MILL CO.
(Name of Subject Company)
GRIST MILL CO.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(AND ASSOCIATED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
398629204
(CUSIP Number of Class of Securities)
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GLEN S. BOLANDER
CHIEF EXECUTIVE OFFICER AND PRESIDENT
GRIST MILL CO.
21340 HAYES AVENUE
LAKEVILLE, MINNESOTA 55044-0430
(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:
CHARLES H. PERLMAN, ESQ.
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
333 WEST WACKER DRIVE, SUITE 2700
CHICAGO, ILLINOIS 60606
(312) 984-3100
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This Amendment No. 1 amends and supplements the Schedule 14D-9 (the
"Schedule 14D-9") filed by Grist Mill Co., a Delaware corporation (the
"Company"), relating to the tender offer by IHF/GM Acquisition Corporation, a
Delaware corporation ("Purchaser"), a direct wholly owned subsidiary of IHF/GM
Holding Corporation, a Delaware corporation ("Parent"), and an indirect wholly
owned subsidiary of International Home Foods, Inc., a Delaware corporation
("IHF"), to purchase all outstanding Shares at a purchase price of $14.50 per
Share, net to the Seller in cash. All capitalized terms contained herein and not
otherwise defined shall have the meanings assigned to them in the Schedule
14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) The penultimate paragraph under the heading "Background of the
Transaction" of Item 4 of the Schedule 14D-9 is hereby amended in its entirety
to read as follows:
In reaching the determination and recommendation described above, the Board
of Directors considered a number of factors, each of which supported the Board's
determination and recommendation, including, among other things, the following:
(i) Information regarding the Company's business, its current
financial condition and results of operations and its future prospects. To
that end, the Board considered that the Company's revenues had not
increased substantially during the course of fiscal year 1998. The Board
also considered the decline in the Company's contract sales since fiscal
year 1996, which decline management anticipated would total $9.5 million
for fiscal year 1998, representing a 44% decline from fiscal year 1997, and
would offset anticipated fiscal year 1998 growth in the Company's core
grocery business of 8% from fiscal year 1997.
(ii) The projected financial results, prospects and strategic
objectives of the Company, as well as the risks involved in achieving those
results, prospects and objectives. In addition to the estimates with
respect to the Company's net sales and net earnings for fiscal year 1998
discussed below under "Information Provided to IHF," the directors
specifically reviewed the financial analysis of discounted cash flow and
the other financial analyses provided by ABN AMRO in the ABN AMRO Opinion
as discussed below under "ABN AMRO Opinion."
(iii) The fact that the $14.50 per share price to be received by the
Company's stockholders in both the Offer and the Merger represents a
substantial premium of 24% over the closing market price of $11.6875 on
March 9, 1998, the last full trading day prior to the Board's approval of
the transaction, and substantial premiums of 26% and 46.8% over the closing
market price of $11.50 and $9.875, respectively, for March 2, 1998, the
date that was one week prior to the Board's approval of the transaction,
and February 9, 1998, the date that was one month prior to the Board's
approval of the transaction. In addition, the Board considered that such
$14.50 per share price would be payable in cash, thus eliminating any
uncertainties involving the consideration to be received by the Company's
stockholders.
(iv) That while the Company is prohibited from soliciting or
encouraging Acquisition Proposals, following the receipt of an unsolicited
written bona fide Acquisition Proposal, the Company may provide information
concerning the Company to, or enter into discussions or negotiations with,
the person or entity that made such Acquisition Proposal if the Board of
Directors of the Company, after consultation with its legal counsel,
determines in good faith that such actions are advisable for the Board to
act in the best interest of the Company and its stockholders. Thus, under
certain circumstances the Company would be able to pursue, although not
solicit, an Acquisition Proposal which might lead to a better offer for the
acquisition of the Company.
(v) The favorable timing of a sales transaction in light of the equity
markets being at an all-time high.
(vi) The Board's view, after consultation with management and ABN
AMRO, regarding the likelihood of the existence of other buyers on terms as
favorable as those in the Offer and the Merger. Specifically, the Board
considered, among other things, two previous expressions of interest in
acquiring the Company. See "Previous Interest in Acquisition of the
Company."
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(vii) The presentation made to the Company's Board of Directors by a
representative of ABN AMRO and the opinion of ABN AMRO that the $14.50 per
share price to be received by the stockholders of the Company pursuant to
the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger, is fair to such stockholders from a financial
point of view. See "ABN AMRO Opinion" below.
(viii) The availability of appraisal rights under Section 262 of the
DGCL for Dissenting Shares.
(ix) The terms and conditions of the Merger Agreement and the course
of the negotiations resulting in the execution thereof, including
provisions of the Merger Agreement allowing the Company to terminate the
Merger Agreement under certain circumstances to enter into an agreement
relating to an Acquisition Proposal, the amount of the fee and expense
reimbursement payable by the Company in connection with any such
termination and the conditions to the consummation of the Offer and the
Merger contained in the Merger Agreement.
(x) The likelihood that the proposed acquisition would be consummated,
including the likelihood of obtaining the regulatory approvals required
pursuant to the Merger Agreement, and satisfying the other conditions to
the Offer and the Merger contained in the Merger Agreement, the experience,
reputation and financial condition of IHF and the risks to the Company if
the acquisition were not consummated.
(xi) The Board's view as to the means by which the value of the
consideration received by stockholders of the Company in any transaction
would be maximized.
(b) Item 4 of the Schedule 14D-9 is hereby amended and supplemented by
adding the following information at the end thereof:
Financial Information Provided to IHF
THE COMPANY DOES NOT AS A MATTER OF COURSE MAKE PUBLIC FORECASTS AS TO ITS
FUTURE ECONOMIC PERFORMANCE. THE PROJECTIONS DISCUSSED BELOW (THE "PROJECTIONS")
WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE
PUBLISHED GUIDELINES OF THE COMMISSION REGARDING PROJECTIONS, NOR WERE THEY
PREPARED IN ACCORDANCE WITH THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE
OF CERTIFIED PUBLIC ACCOUNTANTS FOR PREPARATION AND PRESENTATION OF FINANCIAL
PROJECTIONS. THE PROJECTIONS DO NOT PURPORT TO PRESENT OPERATIONS OF THE COMPANY
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND HAVE NOT BEEN
AUDITED, COMPILED OR OTHERWISE EXAMINED BY INDEPENDENT ACCOUNTANTS. THESE
FORWARD LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE PROJECTIONS. THE
PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY MANAGEMENT OF THE COMPANY,
WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND
FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE DIFFICULT TO PREDICT
AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE TO
BE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE
CONTAINED IN THE PROJECTIONS.
IN LIGHT OF THE UNCERTAINTIES DESCRIBED ABOVE AND THE UNCERTAINTIES
INHERENT IN PROJECTIONS OF ANY KIND, THE INCLUSION OF THE PROJECTIONS HEREIN
SHOULD NOT BE REGARDED AS AN INDICATION THAT ANY OF PURCHASER, PARENT, IHF, THE
COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS CONSIDERED OR CONSIDER THE
PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS
SHOULD NOT BE RELIED UPON AS SUCH. NONE OF PURCHASER, PARENT, IHF, THE COMPANY
OR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY
PERSON REGARDING THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM
INTENDS TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES
EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS
EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS
ARE SHOWN TO BE IN ERROR.
In connection with IHF's due diligence investigation of the Company, the
Company provided IHF in January 1998 with estimates of net sales and net
earnings for the fiscal year ending May 31, 1998 of
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$106.2 million and $5.4 million, respectively. Certain of the key factors and
assumptions considered by the Company's management in preparing such estimates
were as follows:
(i) Actual results for the six month period ending November 28, 1997.
During this period the Company generated $2.7 million in net earnings on
sales of $54.7 million.
(ii) Then anticipated growth in the Company's core grocery business
which was then estimated to lead to sales growth for fiscal year 1998 of
approximately 8% for the Company's core grocery business. This projected
growth over the prior year was attributable primarily to the Company's
wholesale snack bar business which was then estimated to have a projected
growth from fiscal year 1997 of approximately 23% for fiscal year 1998.
(iii) Then anticipated decline in the Company's contract sales of $9.5
million or 44% from the prior year offsetting core grocery growth. The
Company's largest contract customer had reduced the amount of product
ordered from the Company compared to fiscal year 1997.
(iv) Slightly higher operating margins were then projected over the
six month period ending May 31, 1998 reflecting the product mix being more
heavily weighted to the Company's higher margin core products.
ABN AMRO Opinion
On March 10, 1998, ABN AMRO rendered an opinion that, as of such date, the
proposed consideration to be received by the stockholders of the Company
pursuant to the Merger Agreement, and the transactions contemplated thereby,
including the Offer and the Merger, is fair to such stockholders from a
financial point of view.
THE FULL TEXT OF THE ABN AMRO OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION
WITH THE ABN AMRO OPINION, WAS FILED AS AN EXHIBIT TO THE SCHEDULE 14D-9 AND WAS
CIRCULATED TO THE COMPANY'S STOCKHOLDERS AS ANNEX B TO THE SCHEDULE 14D-9. THE
ABN AMRO OPINION SHOULD BE READ IN ITS ENTIRETY FOR INFORMATION WITH RESPECT TO
PROCEDURES FOLLOWED, ASSUMPTIONS MADE AND MATTERS CONSIDERED BY ABN AMRO IN
RENDERING SUCH OPINION. THE ABN AMRO OPINION WAS PREPARED FOR THE COMPANY'S
BOARD OF DIRECTORS AND ADDRESSES THE FAIRNESS TO THE STOCKHOLDERS OF THE COMPANY
FROM A FINANCIAL POINT OF VIEW OF THE PROPOSED CONSIDERATION TO BE RECEIVED BY
SUCH STOCKHOLDERS PURSUANT TO THE MERGER AGREEMENT, AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER. THE ABN AMRO OPINION
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY COMPANY STOCKHOLDER TO TENDER THEIR
SHARES PURSUANT TO THE OFFER. THE FOLLOWING SUMMARY OF EACH OF THE MATERIAL
FINANCIAL ANALYSES ABN AMRO UTILIZED IN CONNECTION WITH PROVIDING THE WRITTEN
ABN AMRO OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
SUCH OPINION.
In connection with the ABN AMRO Opinion, ABN AMRO reviewed the Merger
Agreement and related documents and held discussions with certain senior
officers of the Company, members of its Board of Directors, and other
representatives and advisors of the Company concerning the business, operations
and prospects of the Company. ABN AMRO also reviewed publicly available business
and financial information relating to the Company as well as certain financial
and other data provided by the Company's management. ABN AMRO also reviewed the
financial terms of the Offer and the Merger as set forth in the Merger Agreement
in relation to: (i) current and historical market prices of the Common Stock;
(ii) the Company's financial operating data; (iii) the financial terms, to the
extent publicly available, of certain recent similar transactions ABN AMRO
considered relevant in evaluating the Offer and the Merger and (iv) certain
financial, stock market and other publicly available information relating to
other companies ABN AMRO considered relevant in evaluating the Company. ABN AMRO
also considered such other information, financial studies, analyses and
investigations, and financial, economic and market criteria that it deemed
relevant. In rendering its opinion, ABN AMRO assumed and relied upon the
accuracy and completeness of the financial and other information reviewed by it,
and it did not make, obtain or assume any responsibility for independent
verification of such information. In addition, ABN AMRO did not make an
independent evaluation or appraisal of the Company. With respect to the
financial data, ABN AMRO assumed that it was
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reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of the Company as to the future financial
performance of the Company. ABN AMRO assumed that the Offer and the Merger would
be consummated in accordance with the terms of the Merger Agreement. In
connection with ABN AMRO's engagement, ABN AMRO did not solicit indications of
interest from third parties for the possible acquisition of the Company, nor did
ABN AMRO recommend or determine the amount of consideration to be paid.
The following is a brief summary (and does not purport to be a complete
description) of each of the material financial analyses ABN AMRO utilized in
connection with providing the written ABN AMRO Opinion. ABN AMRO obtained
certain information regarding the projected net income and earnings per share
("EPS") for calendar 1998 and 1999 for the Company and the Comparable Companies
(as hereinafter defined) from Zack's, a research service that compiles for
public use estimates of corporate earnings prepared by various industry
analysts.
Implied Multiple and Premium Analysis. For the purpose of comparison, ABN
AMRO calculated certain valuation multiples implied by the terms of the Merger
Agreement based on a per Share value of $14.50 in cash. ABN AMRO calculated that
the total equity value as a multiple of the Company's latest twelve months'
("LTM") net income, projected calendar 1998 net income, and projected calendar
1999 net income was 22.3x, 19.1x, and 16.5x, respectively, based on a per Share
value of $14.50. ABN AMRO also calculated that the total enterprise value
(defined to be total equity value plus total debt less cash and cash
equivalents, also referred to as total market capitalization) as a multiple of
the Company's LTM earnings before interest and taxes ("EBIT"), LTM earnings
before interest, taxes, depreciation and amortization ("EBITDA"), and LTM sales
was 14.1x, 7.9x and 1.0x respectively, based on a per Share value of $14.50.
ABN AMRO also calculated the percentage premium implied by the terms of the
Merger Agreement relative to the market price of the Common Stock one day, one
week and four weeks prior to the announcement of the Merger. ABN AMRO calculated
that the percentage premium to the market price of the Common Stock one day, one
week and four weeks prior to the announcement of the Merger was 26.1%, 29.6% and
52.6%, respectively.
Share Trading History. ABN AMRO reviewed the performance of the trading
price and volume of the Common Stock for the one year period from February 28,
1997 through March 2, 1998. This examination indicated that during this period,
the trading price of the Common Stock ranged from $5.75 per share to $11.63 per
share. In addition, ABN AMRO reviewed the performance of the trading price and
volume of the Common Stock for the three year period from March 3, 1995 through
March 2, 1998. This examination indicated that during this period, the trading
price of the Common Stock ranged from $5.00 per share to $12.88 per share.
Comparable Public Company Analysis. ABN AMRO compared certain financial and
operating information for the Company to the corresponding financial and
operating information of private label and regional brand producers of food and
other related products (the "Comparable Companies"). This group included the
following companies: Chock Full O Nuts, Cott Corp., J.B. Sanfilippo & Sons, J&J
Snack Foods, Nutramax Products, Perrigo Co., Riviana Foods, Inc., and Small Fry
Snack Foods. ABN AMRO analyzed, among other parameters, the market price per
share of common stock of each of the Comparable Companies and the Company as a
multiple of LTM EPS, estimated calendar 1998 EPS, and estimated calendar 1999
EPS, and the total market capitalization as a multiple of LTM EBIT, LTM EBITDA,
and LTM sales and compared these multiples to those derived from the
transactions contemplated by the Merger Agreement. For the Comparable Companies,
excluding outliers, an analysis of market price per share as a multiple of LTM
EPS yielded a range of 12.6x to 17.9x with a mean of 15.0x; an analysis of
market price per share as a multiple of estimated 1998 EPS yielded a range of
12.8x to 16.3x with a mean of 14.8x; an analysis of market price per share as a
multiple of estimated 1999 EPS yielded a range of 9.6x to 14.0x with a mean of
12.8x; an analysis of total market capitalization as a multiple of LTM EBIT
yielded a range of 5.7x to 12.7x with a mean of 9.1x; an analysis of total
market capitalization as a multiple of LTM EBITDA yielded a range of 4.3x to
7.8x with a mean of 6.0x; and an analysis of total market capitalization as a
multiple of LTM sales yielded a range of 0.5x to 1.0x with a mean of 0.7x.
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Comparable Transactions Analysis. ABN AMRO analyzed certain information
relating to the following selected transactions in the food industry (the
"Comparable Transactions"): Bumble Bee Seafoods/IHF, Foodbrands America,
Inc./IBP Inc., Papetti's Hygrade Egg Products, Inc./Michael Foods Inc., Ralcorp
Holdings/General Mills, Lenders Bagel Bakery/Kellogg Co., Presto Food Products,
Inc./Morningstar Group, Merkts Cheese Company/Morningstar Group, KPR Holdings
Inc./Foodbrands America Inc., TNT Crust Inc./Foodbrands America Inc., Kraft
General Foods Baking Division/CPC International, Inc., Arden International
Kitchens/Schreiber Foods, Inc., Curtice-Burns Foods, Inc./Pro-Fac Cooperative,
Inc., and International Multifoods Corp. Frozen Specialty Foods
Division/Foodbrands America Inc. Such analysis indicated that for the Comparable
Transactions, excluding outliers, total enterprise value as a multiple of LTM
EBIT ranged from 7.7x to 18.6x with a mean of 11.4x; total enterprise value as a
multiple of LTM EBITDA ranged from 5.6x to 9.0x with a mean of 7.5x; and total
enterprise value as a multiple of LTM sales ranged from 0.4x to 1.7x with a mean
of 0.8x.
Stock Price Analysis. ABN AMRO completed a stock price analysis of the
Company and calculated a range of present values based on (i) the Company's
estimated EPS using a compounded annual growth rate ranging from 8% to 16% (ii)
a discount rate ranging from 12% to 18% and (iii) a 14.0x price earnings ratio
("P/E") multiple for the projected Common Stock price. Using the preceding
ranges, ABN AMRO calculated the equity value per share of Common Stock to range
from $6.55 to $12.15. ABN AMRO also calculated a range of present values based
on (i) the Company's estimated five year EPS using a compounded annual growth
rate ranging from 10% to 14% (ii) using a 14% discount rate and (iii) a range of
P/E multiples from 14.0x to 18.0x for the projected Common Stock price. Using
the foregoing values and ranges, ABN AMRO calculated the equity value per share
of Common Stock to range from $8.58 to $13.18.
Discounted Cash Flow Analysis. ABN AMRO performed discounted cash flow
analyses of the Company based on estimates of projected financial performance
prepared by the Company's management for the fiscal year 1998 and for the fiscal
years 1999 to 2003. In the discounted cash flow analyses, ABN AMRO calculated a
range of present values of the sum of (i) the Company's estimated free cash
flows for the fiscal year 1998 and the fiscal years 1999 through 2003 using
discount rates ranging from 12.0% to 16.0% and (ii) the estimated terminal value
in fiscal year 2003 based on a multiple of the Company's EBIT in fiscal 2003
ranging from 9.0x to 10.0x and discounted at rates ranging from 12% to 16%.
Using the foregoing discounted cash flows and terminal values, ABN AMRO
calculated the equity value per share of Common Stock to range from $11.17 to
$14.09.
Control Premium Analysis. ABN AMRO analyzed the percentage premiums offered
in 19 public transactions within the food industry consummated since January
1992. ABN AMRO calculated the premium offered relative to the market price one
day, one week and four weeks prior to the announcement date of each transaction.
The analysis indicated that the mean percentage premium offered in these
transactions one day, one week and four weeks prior to announcement was 22.3%,
24.8% and 31.9% respectively. The median percentage premium one day, one week
and four weeks prior to the announcement was 23.5%, 26.0% and 29.1%,
respectively.
ABN AMRO also analyzed the percentage premiums offered in all cash
transactions of $50 million to $250 million in size announced since January 1,
1995. ABN AMRO calculated the premium offered relative to the market price one
day, one week and four weeks prior to the announcement date of each transaction.
The analysis indicated that the mean percentage premium offered on these
transactions one day, one week and four weeks prior to announcement was 26.5%,
31.1% and 35.3%, respectively. The median percentage premium one day, one week
and four weeks prior to the announcement was 26.0%, 28.9% and 34.8%,
respectively.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to practical analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying the ABN AMRO Opinion. In arriving at its determination of fairness
from a financial point of view, ABN AMRO considered the results of all such
analyses. No company or transaction used in the above analyses as a comparison
is identical to the Company or the transactions contemplated by the Merger
Agreement. The analyses were prepared for purposes of ABN AMRO's opinion
provided to the Board of Directors of the
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Company as to the fairness of the consideration to be received by the Company's
stockholders pursuant to the Merger Agreement from a financial point of view and
do not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Because such analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or their respective
advisors, none of the Company, IHF, Purchaser, Parent, ABN AMRO or any other
person assumes responsibility if future results are materially different from
those forecast.
The Company has agreed to pay ABN AMRO a non-contingent financial advisory
fee of $250,000 for its services as financial advisor and has agreed to
indemnify ABN AMRO in certain circumstances. See Item 5 of the Schedule 14D-9.
Previous Interest in Acquisition of the Company
In May 1996, a leveraged buyout group approached the Company and expressed
an interest in acquiring all of the outstanding Common Stock of the Company in a
leveraged buyout at $9.50 per share of Common Stock (the "LBO Proposal"). At a
meeting of the Company's Board of Directors held on May 22, 1996, the Board
discussed the LBO Proposal and whether it was in the best interests of the
Company and the Company's stockholders. The directors discussed various possible
approaches for valuing the Company at that time and agreed that, regardless of
the valuation approach considered, the Company was worth significantly more than
its then current market value of $6.50 per share. The Board, however, concluded
that given the early stage of development of the Company's business plan and the
unquantifiable nature of the full extent of the potential of such business plan,
it would be imprudent to attempt to value the Company for sale at that time. The
Company's Board of Directors ultimately concluded that it was in the best
interests of the Company and its stockholders that the Company remain
independent, and the Company terminated its discussions with such group.
In July 1997, an entity engaged in the manufacture, distribution and
marketing of packaged food products expressed an interest in acquiring the
Company. Discussions between the Company and this suitor continued through
October 1997, at which time such suitor indicated that its valuation of the
Company and thus its offer price for the Company was between $11.00 and $13.00
per share. Based upon the refusal of such suitor to increase its offer price and
after reviewing such proposal and the long-term prospects of the Company as an
independent entity, the Company's Board of Directors determined that it was in
the best interests of the Company and its stockholders that the Company remain
independent, and the Company terminated its discussions with such suitor.
Following the public announcement of the Merger Agreement, this suitor
telephoned the Company and, in addition to discussing unrelated business
matters, noted disappointment that the Company had agreed to the transaction
with IHF, and such suitor indicated that it may have been interested in pursuing
a transaction with the Company in the price range of the Offer.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) Item 8 of the Schedule 14D-9 is hereby amended and supplemented by
adding the following information at the end thereof:
Bylaw Amendment. During the course of the telephonic meeting of the
Company's Board of Directors held on March 10, 1998, the Board unanimously
adopted an amendment to the Company's bylaws, which amendment was required to be
effected pursuant to the terms of the Merger Agreement. The amendment modified
Section 7 of Article II of the Company's bylaws to conform to Section 228 of the
DGCL. Prior to said amendment, the section purported to require unanimous
consent in order for stockholders to act by written consent in lieu of a
meeting. As amended, the section now permits action to be taken by written
consent of stockholders in lieu of a meeting if a consent or consents to such
action are signed by the holders of outstanding shares of Common Stock having
not less than the minimum number of votes that would be necessary to authorize
such actions at a meeting at which all shares entitled to vote thereon were
present and voted. A copy of such bylaw amendment is filed as Exhibit 18 to this
Schedule 14D-9.
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Settlement of Litigation. On March 12, 1998, a complaint alleging a class
action on behalf of persons who own Common Stock was filed in the Delaware Court
of Chancery by attorneys for The Great Neck Capital Appreciation Investment
Partnership, L.P. ("Plaintiff"), against the individuals serving as directors of
the Company, the Company and IHF (the "Initial Defendants"). In substance, the
complaint alleges that the Initial Defendants possess material non-public
information regarding the fair value of the Company and that the Company's
directors breached their fiduciary duties to the public stockholders of the
Company by, among other things, failing to take adequate steps to determine the
fair value of the Company, failing to investigate other potential transactions
and failing to take adequate steps to maximize stockholder value. The relief
sought by the Plaintiff includes an injunction against the acquisition of Shares
by Purchaser, an injunction requiring that certain steps be taken to evaluate
the value of the Company, an accounting for damages, and an award of costs of
suit and attorneys' and experts' fees in unspecified amounts.
On March 20, 1998, Plaintiff filed an amended complaint with the Court (the
"Amended Complaint") and added Purchaser as a defendant (together with the
Initial Defendants, the "Defendants"). The Amended Complaint repeats the claim
that the Company's directors breached their fiduciary duties in connection with
their recommendation of the transaction and alleges new claims which include,
among others, the lack of certain disclosures in the Schedule 14D-9. The Amended
Complaint seeks as relief, among other things, an order enjoining consummation
of the proposed transaction and requiring the Company to make additional
disclosures to the Company's stockholders concerning the proposed transaction.
The Company and the Company's directors believe the allegations in the
Amended Complaint are without merit. However, they also believe that this
litigation could delay and cause uncertainty with respect to the acquisition of
Shares in connection with the Offer and consummation of the Merger and that such
delay and uncertainty are not in the best interests of the Company and the
Company's stockholders. Accordingly, representatives of the Defendants entered
into discussions with counsel for Plaintiff concerning a potential settlement of
the action.
The Defendants entered into an agreement in principle on March 25, 1998
with Plaintiff to settle the action. Pursuant to the agreement in principle, the
Company has agreed to make the disclosures in this Amendment No. 1 to Schedule
14D-9 regarding certain financial information, the ABN AMRO Opinion, previous
interest in the acquisition of the Company and the amendment to the Company's
bylaws required by the Merger Agreement. In connection with the agreement in
principle, Plaintiff agreed that it will refrain from further proceedings and
withdraw its motion for a preliminary injunction pending approval of a final
settlement agreement by the Court. Finally, pursuant to the agreement in
principle, the defendants agreed not to oppose an application by plaintiff's
counsel for an award of counsel fees and expenses not to exceed $200,000 in the
aggregate. If the fee application is approved, such amount will be payable by
the Company.
(b) The Information Statement attached to the Schedule 14D-9 as Annex A is
hereby amended by adding the following paragraph at the end of the section
entitled "Security Ownership of Certain Beneficial Owners:
On March 30, 1998, Gabelli Funds, Inc., and certain related entities
and individuals filed a Schedule 13D with the SEC to report the beneficial
ownership of 372,350 shares of Common Stock representing 5.43% of the
Company's Common Stock outstanding as of March 10, 1998.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 of the Schedule 14D-9 is hereby amended and supplemented by adding
the following information:
Exhibit 17 Bylaws of the Company, as amended (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on Form 10-K
for the year ended May 31, 1989).
Exhibit 18 Amendment to Bylaws of the Company adopted on March 10,
1998.
Exhibit 19 Joint Press Release dated April 2, 1998 (incorporated by
reference to Exhibit (a)(10) to the Schedule 14D-1).
7
<PAGE> 9
SIGNATURE
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.
GRIST MILL CO., a Delaware corporation
By: /s/ GLEN S. BOLANDER
------------------------------------
Name: Glen S. Bolander
Title: Chief Executive Officer and
President
Dated: April 2, 1998
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
Exhibit 1* Offer to Purchase (incorporated by reference to Exhibit
(a)(1) to the Tender Offer Statement on Schedule 14D-1 filed
with the Securities and Exchange Commission by IHF, Parent
and Purchaser dated March 17, 1998 (the "Schedule 14D-1")).
Exhibit 2* Letter of Transmittal (incorporated by reference to Exhibit
(a)(2) to the Schedule 14D-1).
Exhibit 3** Opinion of ABN AMRO dated March 10, 1998 (attached to
Schedule 14D-9 mailed to stockholders as Annex B).
Exhibit 4* Joint Press Release dated March 11, 1998 (incorporated by
reference to Exhibit (a)(8) to the Schedule 14D-1).
Exhibit 5** Letter dated March 18, 1998 from Glen S. Bolander to the
stockholders of the Company (included with Schedule 14D-9
mailed to stockholders).
Exhibit 6* Agreement and Plan of Merger, dated March 10, 1998, by and
among IHF, Parent, Purchaser and the Company (incorporated
by reference to Exhibit (c)(1) to the Schedule 14D-1).
Exhibit 7* Stockholder Agreement dated March 10, 1998, among Purchaser,
Parent, the Company and the Selling Stockholder
(incorporated by reference to Exhibit (c)(2) to the Schedule
14D-1).
Exhibit 8* Form of Option Surrender Agreement, Release and Waiver dated
March 10, 1998, among the Company and holders of options to
acquire shares of the Company's Common Stock (incorporated
by reference to Exhibit (c)(3) to the Schedule 14D-1).
Exhibit 9* Employment and Noncompetition Agreement dated March 10,
1998, between IHF and the Selling Stockholder (incorporated
by reference to Exhibit (c)(4) to the Schedule 14D-1).
Exhibit 10* Confidentiality Agreement dated as of February 2, 1998,
between IHF and the Company (incorporated by reference to
Exhibit (c)(5) to the Schedule 14D-1).
Exhibit 11* Confidentiality Agreement dated as of February 9, 1998,
between IHF and the Company (incorporated by reference to
Exhibit (c)(6) to the Schedule 14D-1).
Exhibit 12* Standstill Agreement dated as of March 10, 1998, between IHF
and the Company (incorporated by reference to Exhibit (c)(7)
to the Schedule 14D-1).
Exhibit 13* Employment Agreement dated January 10, 1990, between the
Company and Glen S. Bolander (incorporated by reference to
Exhibit 10(d) to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1994).
Exhibit 14* Amendment No. 1 to Employment Agreement dated October 1993,
between the Company and Glen S. Bolander (incorporated by
reference to Exhibit 10(e) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1994).
Exhibit 15* Employment Agreement effective June 4, 1994, between the
Company and Ronald K. Zuckerman (incorporated by reference
to Exhibit 10(g) to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1994).
Exhibit 16* Amendment No. 1 to Employment Agreement dated June 3, 1997,
between the Company and Ronald K. Zuckerman (incorporated by
reference to Exhibit 10(i) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1997).
Exhibit 17* Bylaws of the Company, as amended (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on Form 10-K
for the year ended May 31, 1989).
Exhibit 18+ Amendment to Bylaws of the Company adopted on March 10,
1998.
Exhibit 19* Joint Press Release dated April 2, 1998 (incorporated by
reference to Exhibit (a)(10) to the Schedule 14D-1).
</TABLE>
- -------------------------
* Incorporated by reference
** Previously filed
+ Filed herewith
<PAGE> 1
EXHIBIT 18
RESOLVED, that Section 7 of Article II of the By-laws of the Company be,
and hereby is, amended to read in its entirety as follows:
SECTION 7. ACTION WITHOUT A MEETING. Except as otherwise provided by
the Certificate of Incorporation, whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken in connection with any
corporate action by any provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, the meeting and vote of stockholders may
be dispensed with, if the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted, shall consent in writing to such corporate action being
taken.
