SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant {X}
Filed by a Party other than the Registrant { }
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
{ } Definitive Additional Materials
{X} Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMP INCORPORATED
----------------------------
(Name of Registrant as specified in its charter)
----------------------------
(Name of person(s) filing proxy statement, if other than Registrant)
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:
(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:
(4) Proposed maximum aggregate value of transactions:
(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:
FOR IMMEDIATE RELEASE
Contacts:
Richard Skaare Dan Katcher / Joele Frank
AMP Corporate Communication Abernathy MacGregor Frank
717/592-2323 212/371-5999
Doug Wilburne
AMP Investor Relations
717/592-4965
AMP'S BOARD RESPONDS TO HIXON FAMILY LETTER
HARRISBURG, Pennsylvania (October 5, 1998) AMP Incorporated (NYSE: AMP),
in response to an announcement earlier today by the Hixon family, released
a letter dated October 1, 1998, from Chairman and Chief Executive Officer
Robert Ripp to the Hixon family. The letter sets forth in great detail
AMP's position in connection with the AlliedSignal offer. Attached is the
full text of that letter:
October 1, 1998
Mr. Alexander P. Hixon
Mr. Benson K. Whitney
Mr. Dylan H. Hixon
c/o Mr. Alexander P. Hixon
70 South Lake Avenue, Suite 1075
Pasadena, California 91101-2601
Dear Alex, Ben and Dylan:
The Hixon family's involvement with AMP since its inception has been an
important source of strength and pride to the company. It is a
relationship which the entire Board of Directors, and I personally as the
recently appointed Chairman and Chief Executive Officer of AMP, have valued
enormously. In this context, it is very disturbing to all of us to have
received your letter of 29 September 1998 to me, and the accompanying
proposed letter to our Board.
As a Board, we have considered your letters and the thoughts expressed in
them on behalf of the extended Hixon family. Our Board has asked me to
respond to you on its behalf.
We, as AMP's Board of Directors, have the responsibility to make decisions,
to the best of our ability, diligently and in good faith, with the goal of
protecting and advancing the best interests of AMP and its various
constituencies, including shareholders. I can assure you that our Board
has worked exceedingly hard to meet this responsibility, and under very
trying circumstances. I know it has been difficult for Joe Hixon as an AMP
director, but you should know that he has participated in all of the
Board's deliberations and, together with every other AMP director, has
supported and voted for every decision made by the Board since AlliedSignal
launched its unsolicited takeover bid for AMP.
Importantly, and as your letter clearly acknowledges, the Hixon family and
AMP's Board of Directors are of exactly the same opinion on the critical
point: in your words, AlliedSignal has proposed a "transaction at the low
price of $44.50." As a Board, we have deemed it inadequate, not reflective
of the value or prospects of AMP, and not in the best interests of AMP and
its relevant constituencies, including its shareholders.
Succinctly put, AlliedSignal has proposed an opportunistic, low-ball bid --
and there is no quarrel between us about that. AlliedSignal priced and
timed its unsolicited takeover bid perfectly -- for AlliedSignal:
o AMP's business has been temporarily hurt by the Asian economic
problem.
o AMP's stock price mid-year was temporarily depressed, and was
trading at its low point in the last 12 years.
o AMP's Profit Improvement Plan, announced shortly before
AlliedSignal surfaced, while moving ahead better than planned,
has not yet had enough time to demonstrate results that translate
into enhanced stock market value.
o AMP's new management team is injecting enormous energy and focus
at AMP but, again, this positive impact needs some time to
reflect itself in performance and, ultimately, in enhanced stock
market value.
o The recent volatility and uncertainty in the stock market has
caused many shareholders of many companies to have a short term
focus and, from an investment perspective, to be particularly
risk averse.
This combined set of circumstances is being deliberately exploited by
AlliedSignal allowing it to offer an apparent premium (stated to be
"55%", but only when measured against AMP's clearly undervalued stock
price) and to play off the fear-driven current investor environment which
is motivating many investors simply to take some money and run.
Timing, of course, is critical. The fact is, AMP's management is moving
ahead with a real sense of urgency not to "defend" against AlliedSignal
but to deliver AMP's promise of performance under its Profit Improvement
Plan. We feel very good about where we are. Despite a continuing
difficult environment, we expect that operating margins in the third
quarter will show a meaningful improvement. We expect to report third
quarter results in the latter part of October.
As a Board, we have considered very carefully over numerous meetings how to
respond to AlliedSignal's actions. We have had the benefit of experienced
advisors and have been extremely mindful of our responsibilities under
applicable law. We have reached a number of conclusions and judgments that
relate directly to comments contained in your letters. I would like to
share them openly with you:
o A sale of AMP to AlliedSignal or anyone else at $44.50 at this
time would be an exceedingly poor decision and one which the
AMP Board believes it is duty-bound to fight.
o Putting the company up for sale against a $44.50 low-ball price
is an equally poor decision and one which AMP's Board believes
simply transfers value away from its shareholders. Your Board
and your management have developed and are implementing AMP's
Profit Improvement Plan. It is working. We believe that the
benefit of this Plan should inure to you and the other
shareholders of AMP.
o At the same time, AMP's directors have made it clear that they
have no intention to "entrench" themselves or management:
o In fact, they have changed management in order to enhance
the ability of AMP to deliver the value inherent in its
recently announced Profit Improvement Plan.
o And the Board has set a clear deadline for testing the
performance of the Profit Improvement Plan particularly by
committing to eliminate any rights plan as an impediment to
the acquisition of the company for six months after November
6, 1999.
o In addition, as an "interim" check by shareholders on the
Board's actions to date, the entire Board will stand for
election at the 1999 annual meeting, which we intend to hold
no later than May.
o If a reasonable offer were made today or at any time for
AMP, that was more reflective of its fair value, we have
publicly stated, and reiterate, that AMP's Board would give
it serious consideration. In this context, we would, of
course, be quite focused on achieving beneficial tax
treatment for AMP shareholders. And let me be clear about
AlliedSignal in this connection. The issue is not whether
we would negotiate with AlliedSignal it is, rather, under
what circumstances would that serve the best interests of
AMP and its constituencies. AlliedSignal wants to force a
negotiation to start against a patently opportunistically
timed, low-priced offer. Our answer must be "No."
AlliedSignal has the power to do better on both price and
structure, but obviously up to this time has chosen not to
do so.
o Although we believe that under existing circumstances it is
best to give the new AMP the opportunity to demonstrate its
value through the performance of its Profit Improvement Plan
over the next year, we also believe that it is reasonable to
accelerate some of that value by making a down payment in
the near term. Accordingly, we have announced AMP's
intention to commence a self-tender at $55 per share for 30
million AMP shares.
o While we recognize that this would be a taxable transaction
to those taxable shareholders who sell shares to AMP in it,
we believe that many of AMP's shareholders still would like
the opportunity to do so. We also believe, although we
understand that each shareholder's particular circumstances
may differ, that most tendering shareholders will be able to
obtain capital gains treatment.
o In order to make a down payment on the Profit Improvement
Plan, it is necessary to borrow. We have carefully examined
our projected cash flow generation and needs, and have
arranged for borrowings of types, at levels and with
repayment terms that we are quite comfortable will permit
AMP to continue to grow and prosper. As you may know, we
have received indications from the two principal rating
agencies that, giving effect to the self-tender and related
borrowings, our debt rating is expected to continue to be
investment grade.
o Moreover, as part of the Board's desire to act in a
financially prudent manner, it authorized the establishment
of a so-called "Flexitrust." In essence this is a cash flow
cushion, credit support arrangement and means of increasing
the company's equity base over time. It provides these
benefits because it is being funded with 25 million AMP
shares, a significant portion of which would be used over
time to satisfy compensation and benefit obligations
otherwise payable by AMP from operating cash flow. There
appears to be some confusion about the Flexitrust in other
respects. Let me be clear that the 25 million shares in the
trust will have no effect at all on any shareholder vote
process, whether by consent or at a meeting. The Board
expressly decided that these shares will be voted in direct
proportion to shareholders generally and, therefore, will be
completely neutral. I should add that neither the
establishment nor funding of the Flexitrust will have any
EPS impact or add any debt on the company.
o AlliedSignal has openly indicated in its SEC filings that it
is using the consent solicitation process to force AMP to
negotiate with AlliedSignal. It is crystal clear that this
is not an exercise in shareholder rights designed by someone
interested in AMP's shareholders. Rather, it is one of
power and positioning by AlliedSignal to serve its interest
in buying AMP fast and cheap. AlliedSignal blatantly
acknowledges that its game plan is to threaten AMP's
directors with loss of control in order to force them to
capitulate. In direct response to AlliedSignal's tactic of
attempted intimidation of a disinterested Board charged with
the responsibility of looking out for AMP, we have
undertaken an effort to cause Pennsylvania law to be amended
to prevent the use of the written consent process to support
a hostile takeover effort for a period of time. We believe
we must continue this effort which, if successful, would
not, of course, restrict AMP's current Board from honoring
its commitment to give serious consideration to a reasonable
business combination or acquisition proposal, if presented.
The issue is one of process and time and flows directly
from the opportunistic timing of AlliedSignal's $44.50
unsolicited bid. AlliedSignal understands full well that
time is its enemy the more chance there is for a
reasonable period to measure the performance under AMP's
Profit Improvement Plan, the less opportunity AlliedSignal
will have to buy AMP on the cheap.
It is for this reason that AMP intends to hold its 1999 annual
meeting promptly after first quarter results reflecting the early
stage of the Profit Improvement Plan's performance are available.
At that point, AMP shareholders will have at least some fair
basis to see and understand the real value of the Profit
Improvement Plan. If not sufficient, shareholders will be able
to vote to replace AMP's current Board. This would put AMP's
shareholders in the same position as shareholders of virtually
every other Pennsylvania corporation and in a "better" position
that AlliedSignal's shareholders (who have no right to act by
written consent, but also could not change a majority of
AlliedSignal's Board even at an annual meeting, because it has a
staggered Board).
The Hixon family have been loyal supporters of AMP over many years. Do not
for a minute think that our Board of Directors, or I personally, do not
feel a very real sense of appreciation for this and responsibility to you.
As a Board, we have an overarching responsibility to AMP, all of its
shareholders and its other constituencies which we believe we are serving
on a basis consistent with your interests. I have gone into some detail in
this letter to try to explain why.
Perhaps, in the end, your family will not view its interests as aligned
with AMP as a whole. Certainly, if the unique circumstances of the Hixon
family lead to that conclusion, we will understand.
However, I would be remiss if I did not urge you to reconsider your
position in light of the thoughts presented in this letter. They are the
Board's thoughts, not just mine. And I will add one more thought. If I
were your advisor, I would recommend that you not make your letters public
and not tender into AlliedSignal's 9% tender offer at $44.50 per share.
Both acts will provide significant public relations ammunition for
AlliedSignal and, accordingly, strengthen its resolve to stand pat on its
belief (which it clearly has) that it will not need to offer fair value for
AMP. AMP's Board really has no choice under present circumstances. By the
Hixon family giving aid and comfort to AlliedSignal, I personally believe
you make less likely the optimal outcome you would like. In that regard,
what I have said on the Board's behalf in this letter particularly in the
first four "bullet" paragraphs starting on page 3 we would be prepared to
say publicly. In the end, of course, I recognize that you will make your
own assessment.
AMP's Board and I take with equal seriousness as you the matters raised by
you in your letters. I hope this extensive response underscores our
continuing strong concern for the Hixon family. I would very much welcome
the opportunity to meet personally with you to discuss these matters
further, with one or more of our other Board members if you would like.
Please let me know if this can be arranged.
I appreciate your having proceeded privately in the first instance. I hope
that you will maintain that approach at least until we have had a chance to
talk following your review of this letter.
Sincerely,
/s/ Robert Ripp
-----------------------
Robert Ripp
Chairman and
Chief Executive Officer
cc: AMP Board of Directors
Headquartered in Harrisburg, PA, AMP is the world's leading manufacturer of
electrical, electronic and fiber optic wireless interconnection devices and
systems. The Company has 48,300 employees in 53 countries serving
customers in the automotive, computer, communications, consumer, industrial
and power industries. AMP sales reached $5.75 billion in 1997.
# # #
AMP and certain other persons named below may be deemed to be participants
in the solicitation of revocations of consents in response to
AlliedSignal's consent solicita-tion. The participants in this solicitation
may include the directors of AMP (Ralph D. DeNunzio, Barbara H. Franklin,
Joseph M. Hixon III, William J. Hudson, Jr., Joseph M. Magliochetti, Harold
A. McInnes, Jerome J. Meyer, John C. Morley, Robert Ripp, Paul G. Schloemer
and Takeo Shiina); the following executive officers of AMP: Robert Ripp
(Chairman and Chief Executive Officer), William J. Hudson (Vice Chairman),
James E. Marley (former Chairman), William S. Urkiel (Corporate Vice
President and Chief Financial Officer), Herbert M. Cole (Senior Vice
President for Operations), Juergen W. Gromer (Senior Vice President, Global
Industry Busi-nesses), Richard P. Clark (Divisional Vice President, Global
Wireless Products Group), Thomas DiClemente (Corporate Vice President and
President, Europe, Middle East, Africa), Rudolf Gassner (Corporate Vice
President and President, Global Personal Computer Division), Charles W.
Goonrey (Corporate Vice President and General Legal Counsel), John E.
Gurski (Corporate Vice President and Presi-dent, Global Value-Added
Operations and President, Global Operations Division), David F. Henschel
(Corporate Secretary), John H. Kegel (Corporate Vice President,
Asia/Pacific), Mark E. Lang (Corporate Controller), Philippe Lemaitre
(Corporate Vice President and Chief Technology Officer), Joseph C.
Overbaugh (Corporate Treasurer), Nazario Proietto (Corporate Vice President
and President, Global Consumer, Industrial and Power Technology Division);
and the following other members of management and employees of AMP: Merrill
A. Yohe, Jr. (Vice President, Public Affairs), Richard Skaare (Director,
Corporate Communication), Douglas Wilburne (Director, Investor Relations),
Suzanne Yenchko (Director, State Government Relations), Mary Rakoczy
(Manager, Shareholder Services), Dorothy J. Hiller (Assistant Manager,
Shareholder Services), Melissa E. Witsil (Communica-tions Assistant) and
Janine M. Porr (Executive Secretary). As of the date of this communication,
none of the foregoing participants individually beneficially own in excess
of 1% of AMP's common stock or in the aggregate in excess of 2% of AMP's
common stock.
AMP has retained Credit Suisse First Boston Corporation ("CSFB") and
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to act as its
financial advisors in connection with the AlliedSignal Offer, for which
CSFB and DLJ will receive customary fees, as well as reimbursement of
reasonable out-of-pocket expenses. In addition, AMP has agreed to indemnify
CSFB, DLJ and certain related persons against certain liabilities,
including certain liabilities under the federal securities laws, arising
out of their engagement. CSFB and DLJ are investment banking firms that
provide a full range of financial services for institutional and individual
clients. Neither CSFB nor DLJ admits that it or any of its directors,
officers or employees is a "participant" as defined in Schedule 14A
promulgated under the Securities Ex-change Act of 1934, as amended, in the
solicitation, or that Schedule 14A requires the disclosure of certain
information concerning either CSFB or DLJ. In connection with CSFB's role
as financial advisor to AMP, CSFB and the following investment banking
employees of CSFB may communicate in person, by telephone or otherwise with
a limited number of institutions, brokers or other persons who are
stockholders of AMP: Alan Howard, Steven Koch, Scott Lindsay, and Lawrence
Hamdan. In connection with DLJ's role as financial advisor to AMP, DLJ and
the following investment banking employees of DLJ may communicate in
person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are stockholders of AMP: Douglas V. Brown and
Herald L. Ritch. In the normal course of its business, each of CSFB and
DLJ regularly buys and sells securities issued by AMP for its own account
and for the accounts of its customers, which transactions may result in
CSFB, DLJ or the associates of either of them having a net "long" or net
"short" position in AMP securities, or option contracts or other
derivatives in or relating to such securities. As of September 25, 1998,
DLJ held no shares of AMP common stock for its own account and CSFB had a
net long position of 132,266 shares of AMP common stock.
