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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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
PACIFIC SCIENTIFIC COMPANY
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(Name of Registrant as Specified in Its Charter)
KOLLMORGEN CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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 the registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[KOLLMORGEN LETTERHEAD] RESERVOIR PLACE
1601 TRAPELO ROAD
WALTHAM, MA 02154
(781) 890-5655
DECEMBER 15, 1997
Dear Pacific Scientific Shareholders:
Kollmorgen Corporation has proposed a business combination with Pacific
Scientific Company (the "Proposed Combination") which Kollmorgen believes would
offer exceptional benefits to the shareholders of both Pacific Scientific and
Kollmorgen. To date, the Pacific Scientific Board of Directors (the "Board") has
refused to enter into negotiations regarding the Proposed Combination despite
Kollmorgen's repeated requests to do so. Because the Board is attempting to deny
you the opportunity to share in the rewards of the combined company, Kollmorgen
is presenting this opportunity directly to the Pacific Scientific shareholders.
Kollmorgen urges you to join us in calling for a special meeting of Pacific
Scientific shareholders (the "Special Meeting") in order to remove the entire
Board and elect Kollmorgen's nominees to the Board. Kollmorgen expects that if
they are elected, and subject to their fiduciary duties under applicable law,
Kollmorgen's nominees would act to facilitate the Proposed Combination.
WE HAVE PROVIDED YOU WITH A FORM OF CONSENT FOR USE IN CALLING THE SPECIAL
MEETING. WE ASK THAT YOU COMPLETE IT, SIGN IT, AND RETURN IT TO US IN THE
ENVELOPE PROVIDED.
As part of the Proposed Combination, we have commenced a tender offer (the
"Tender Offer") to acquire a majority of Pacific Scientific's outstanding common
stock for $20.50 per share in cash. Assuming the Tender Offer is successful,
Kollmorgen and Pacific Scientific will then merge (the "Proposed Merger"), and
each remaining share of Pacific Scientific common stock will be exchanged for
Kollmorgen common stock with a value of $20.50 per share, subject to a collar.
If the Tender Offer is successful, the affirmative vote of Pacific Scientific's
shareholders on the Proposed Merger is assured.
If more than half of Pacific Scientific's outstanding common stock is
tendered into the Tender Offer, tendered shares will be purchased on a pro rata
basis. In such case, shareholders who tendered shares will receive a mix of cash
and stock in the Proposed Combination. You are free to tender all, part or none
of your Pacific Scientific common shares into the Tender Offer. However, to the
extent that your shares are purchased in the Tender Offer, you will not receive
Kollmorgen stock for such purchased shares and, as a result, you will not
participate in any future growth of the combined company.
Enclosed with this letter is important information about the Proposed
Combination. It is important that you understand the purpose of each of the
documents you are receiving. First, we have sent you an Offer to Purchase, a
Letter of Transmittal and other documents relating to the Tender Offer. These
documents describe our offer to purchase your Pacific Scientific common stock
for $20.50 per share in cash. Following the instructions contained in the Tender
Offer documents, you can tender your shares to us as soon as you wish. The
second set of materials sent to you relate to calling the Special Meeting.
Accompanying this letter is a consent solicitation statement/preliminary
prospectus, which describes the Proposed Combination in detail, along with a
Form of Consent which you can use to join us in calling for the Special Meeting.
After the Special Meeting has been called, we will send you proxy materials
asking you to vote in favor of our proposals in connection with the Proposed
Combination, namely the removal of the entire Board, the election of our
nominees to the Board and the repeal of any bylaws not filed with the Securities
and Exchange Commission prior to August 11, 1997, including any amendments
adopted on or after December 15, 1997. In the next few weeks, we will make
additional mailings to you. WE URGE YOU TO READ CAREFULLY EACH DOCUMENT SENT TO
YOU.
Kollmorgen is not currently seeking your proxy for the removal of the entire
Pacific Scientific Board, the election of the Kollmorgen nominees to the Pacific
Scientific Board or the approval of the bylaw repeal
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proposal. After the Special Meeting has been called, Kollmorgen will send you
proxy materials urging you to take such actions.
Kollmorgen is not currently soliciting proxies for a vote on the Proposed
Merger. You may, however, be asked to vote on the Proposed Merger in the future.
THE ONLY ACTION WE ARE CURRENTLY ASKING YOU TO TAKE IS GIVE YOUR CONSENT TO
CALLING THE SPECIAL MEETING BY EXECUTING THE ENCLOSED FORM OF CONSENT.
If consummated, the financial benefits of the Proposed Combination will
include:
- A PREMIUM OF 33%. The purchase price of $20.50 per common share represents
approximately a 33% premium over Pacific Scientific's closing share price
of $15.44 on the New York Stock Exchange on Friday, December 12, 1997, and
approximately a 37% premium over the average of the company's closing
share price for the preceding 30 trading days.
- IMMEDIATE CASH PAYMENT FOR HALF OF PACIFIC SCIENTIFIC'S CAPITAL STOCK.
Half of Pacific Scientific's outstanding shares will be purchased for a
cash payment of $20.50 per share if the Tender Offer is successfully
consummated.
- CONTINUED PARTICIPATION IN THE FUTURE GROWTH OF THE COMBINED COMPANY.
Because Pacific Scientific's shareholders have the ability to receive
Kollmorgen common stock in the proposed merger, you will have the
opportunity to participate in the future growth and success of the
combined enterprise. Upon consummation of the Proposed Merger, Pacific
Scientific shareholders will hold an equity stake of approximately 43% in
the combined company, based upon an assumed market value for Kollmorgen
common stock of $16.88 per share (the closing price of Kollmorgen common
stock on December 12, 1997).
- OPERATING AND REVENUE SYNERGIES. Based on public information, Kollmorgen
management believes that the combined company can achieve more than $15
million of annual operating synergies in 1999, rising to more than $20
million in 2000 and increasing thereafter. Management believes these
synergies can be achieved principally from cost savings in selling and
marketing expenses and consolidation of research and development, and
expects to realize additional synergies from cross-selling opportunities,
joint purchasing savings and reduction in corporate expenses.
- AN ACCRETIVE TRANSACTION. Kollmorgen is confident that the Proposed
Combination will be accretive to earnings per share in 1999, the first
full year of operations of the combined company, and increasingly so
thereafter, based upon the anticipated synergies described above.
Kollmorgen expects that, due to the substantial non-recurring charges
associated with the Proposed Combination (which are not currently
quantifiable) consisting of restructuring charges and a charge for
acquired in-process research and development, the Proposed Combination
will be substantially dilutive in fiscal 1998.
- COMMITTED FINANCING. Kollmorgen has entered into a binding commitment
letter with Salomon Smith Barney and its affiliate Salomon Brothers
Holding Company Inc in which Salomon Brothers Holding Company Inc has
committed to provide, subject to certain conditions, what Kollmorgen
believes is a conservatively financed secured bank facility to fully
finance the transaction, including the refinancing of existing
indebtedness and the provision of a working capital facility for the
combined company.
Kollmorgen's management team and advisors have carefully analyzed the
implications of the Proposed Combination between Kollmorgen and Pacific
Scientific. We concluded that a combination offered real benefits to our
respective shareholders, customers and employees. We then approached Pacific
Scientific's management on several occasions to discuss our analysis and to
pursue discussions we hoped would lead to a merger agreement between our two
companies. Despite what we are convinced are the compelling benefits offered by
such a combination, Pacific Scientific management decided not to enter into
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a meaningful dialogue with us. We were surprised at Pacific Scientific
management's reaction to the opportunities offered by this combination.
We continue to firmly believe that consolidation in our industry is
inevitable, and neither Pacific Scientific nor Kollmorgen can sit by idly while
competitors, many of which are much larger than Pacific Scientific and
Kollmorgen, create the international network and broad product offerings that
our customers demand. Kollmorgen believes that this reality, coupled with the
natural fit of our two companies, makes a Pacific Scientific-Kollmorgen
combination compelling. Kollmorgen believes that the combined company will
achieve financial results superior to that which either company could achieve on
a stand-alone basis and will offer customers superior products and services.
Among the many advantages contributing to the combined company's ability to
achieve these goals would be:
- CREATION OF AN INDUSTRY LEADER. A merger of Kollmorgen and Pacific
Scientific will establish the combined enterprise as a leader in high
performance electronic motion control--one of the fastest-growing segments
of the motors and controls business. In a fragmented industry, the
combined enterprise will be better-positioned to comprehensively serve the
needs of customers and take advantage of consolidation opportunities.
- STRATEGIC AND OPERATIONAL FIT. Highly complementary motion control product
lines will enable the combined company to become a full-service provider.
The combined company will be well-positioned to capitalize on the
complementary product lines and differing strengths of Kollmorgen and
Pacific Scientific, enabling it to offer a broader array of products and
support services to an expanded customer base. In addition, the combined
company would take advantage of cost savings and efficiencies resulting
from economies of scale in research and development, marketing, production
and sourcing.
- ENHANCED CAPABILITY TO TAP FOREIGN MARKETS. The increased size and global
scope of the combined company will enable it to more effectively market
its products to customers around the world. Kollmorgen has already
established a local presence in Germany, France, Israel, India, China and
elsewhere. The combined enterprise will be well-positioned to build on
this foundation, particularly in Europe and the Pacific Rim. Kollmorgen
believes that the combined company will be able to expand its customer
base and offer international on-site product support to customers, while
conducting more effective and cost-efficient research and development,
marketing, production and sourcing.
- MANAGEMENT TEAM WITH PROVEN TRACK RECORD. Kollmorgen's management has
delivered year over year growth in sales and operating income from
continuing operations from 1994 through 1996, and will do so again in
1997. Kollmorgen has achieved this by focusing on its core operations.
Kollmorgen also believes that its management has maximized its returns
from non-strategic operations. In addition, Kollmorgen's management has
considerable expertise in managing debt, having reduced Kollmorgen's debt
and preferred stock obligations by more than 40% during the past three
fiscal years and transitioned from fully-secured to unsecured credit
arrangements.
- ENHANCED GROWTH OPPORTUNITIES. Kollmorgen believes that the combined
enterprise will be well-positioned, strategically, operationally and
financially, to aggressively pursue attractive opportunities for external
and internal growth. Kollmorgen is confident that the combined company's
increased size and scope will enable it to be a leader in the accelerating
consolidation of the motion control industry and raise its visibility in
the business and financial communities.
Your execution of a Form of Consent to call the Special Meeting will not
require you to tender your shares or to vote for any of the proposals at the
Special Meeting. You will still have the choice of whether or not to tender and
of how you will vote on any matter to be proposed at the Special Meeting. Even
if you are currently undecided as to whether to embrace the Proposed
Combination, calling the Special Meeting
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will preserve your right and the right of your fellow shareholders to decide
whether to receive $20.50 per share in the Tender Offer and the Proposed Merger.
PLEASE EXECUTE THE ENCLOSED FORM OF CONSENT AND RETURN IT TO KOLLMORGEN, C/O
GEORGESON & COMPANY INC., IN THE ENCLOSED ENVELOPE TO JOIN WITH US IN CALLING
THE SPECIAL MEETING TO PERMIT SHAREHOLDERS TO CONSIDER AND VOTE UPON OUR
PROPOSALS.
We at Kollmorgen are excited at the prospect of combining our two fine
companies. Once you have had the chance to review the enclosed materials, we are
certain that you will share our vision and give us your support.
Sincerely,
Gideon Argov
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Kollmorgen Corporation
IF YOUR SHARES ARE HELD BY YOUR BANK OR BROKERAGE FIRM, ONLY THAT FIRM CAN
EXECUTE YOUR FORM OF CONSENT TO CALL THE SPECIAL MEETING. CALL YOUR BANK OR
BROKER WITH YOUR INSTRUCTIONS TO EXECUTE YOUR FORM OF CONSENT.
IF YOU HAVE ANY QUESTIONS, PLEASE CALL GEORGESON & COMPANY INC., WHICH IS
ASSISTING US, TOLL FREE AT 1-800-223-2064.
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