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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 25, 1997
Armstrong World Industries, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 1-2116 23-0366390
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number Identification Number)
313 West Liberty Street, P.O. Box 3001, Lancaster, Pennsylvania 17604
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (717) 397-0611
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Item 5. Other Events.
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(a) Update on the Tender Offer for all the Outstanding Common Shares and
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Common Share Equivalents Domco, Inc.
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On June 9, 1997, the registrant announced its intention to commence an all
cash tender offer for all the outstanding common shares and common share
equivalents of Domco, Inc., a corporation organized under the Canadian Business
Corporations Act ("Domco"), at a purchase price of CDN$23 per share (the
"Offer"). On July 16, 1997, the registrant mailed its Offering Circular to
Domco's securityholders, filing copies with the applicable securities regulatory
authorities in all the provinces of Canada and with the United States Securities
and Exchange Commission (the "SEC"). In response, on June 25, 1997, Domco's
Board of Directors issued its first circular addressing the Offer (the
"Directors' Circular"). The Directors' Circular made no recommendation to
Domco's security holders to accept or reject the Offer.
On July 2, 1997, the registrant announced that it was amending the Offer by
extending the expiry date to August 15, 1997 and reducing the minimum condition
to the Offer. The Offer was initially contingent upon the valid tender and non-
withdrawal of two-thirds of the outstanding common shares of Domco considered on
a fully diluted basis (the "Minimum Condition"). Pursuant to the registrant's
Notice of Change and Variation, the Minimum Condition was lowered to 51% of the
outstanding common shares of Domco considered on a fully diluted basis. At the
same time, the registrant offered to Domco's Board of Directors to subscribe for
that number of Domco common shares, at a purchase price of CDN$23 per share,
which when combined with the common shares and common share equivalents validly
tendered in the Offer would constitute 51% of the outstanding Domco common
shares on a fully diluted basis (the "Subscription").
Domco's Board of Directors issued its first update to the Directors'
Circular on July 8, 1997 (the "First Update"), which again did not recommend
acceptance or rejection of the Offer as varied and extended by Armstrong's
Notice of Change and Variation. In the First Update, Domco's Board of Directors
advised that a recommendation, if any, would be made as soon as practicable
thereafter and, if the expiry date of the Offer was not extended, by August 8,
1997.
On August 5, 1997, Domco's Board of Directors issued a press release which
indicated that, based on the recommendation it had received from the committee
of directors independent to Domco and Sommer formed to review the Offer (the
"Committee"), the Board was prepared to recommend that holders of Domco
Securities not tender their securities pursuant to the Offer. Domco's Board of
Directors mailed a second update to the Directors' Circular on the same day (the
"Second Update") to holders of Domco Securities in which, as previously
disclosed in the press release, Domco's Board made its formal recommendation.
In the Second Update, Domco's Board noted that it had rejected the
Subscription. In the Second Update, Domco's Board reasoned that "it would be
inappropriate ... to issue shares to Armstrong, inter alia because the duty of
the directors is to Domco and, by extension, to all its shareholders.
Accordingly, the Board of Directors cannot favor one group of shareholders over
another. It should remain neutral in the face of competing shareholders."
Domco's Board also
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noted that because Sommer Allibert, S.A., a French corporation owning 57.1% of
Domco's outstanding common shares considered on a fully diluted basis
("Sommer"), does not intend to tender its common shares, in part because of a
contractual obligation with Tarkett, AG, a German corporation with whom Sommer
has agreed to enter into a business combination involving, in part, Sommer's
interest in Domco ("Tarkett").
On August 25, 1997, the registrant filed a Notice of Extension circular
with the applicable securities regulatory authorities in all the provinces of
Canada and with the SEC thereby officially amending the Offer by extending the
expiry date for the Offer from August 15, 1997 to October 10, 1997 (the
"Offer"). The press release attached hereto as Exhibit 99.01 more fully
describes the action taken by the registrant.
(b) Update on U.S. Litigation Initiated by the Registrant Related to the
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Offer.
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As previously reported by the registrant, at the same time that the
registrant announced its intention to commence the Offer, the registrant also
announced that it had filed a ten count complaint in the United States District
Court for the Eastern District of Pennsylvania against Sommer. In its original
complaint, the registrant sought a preliminary and permanent injunction to
enjoin Sommer from merging its floor covering business, including Domco, with
Tarkett. The registrant alleged in its complaint that Sommer fraudulently
induced the registrant to provide confidential information to Sommer during the
course of negotiations concerning a proposed acquisition of Sommer's world-wide
floor covering business for US$775 million (FF 4.5 billion). The registrant's
complaint also alleged that Sommer then used the registrant's confidential
information, including information concerning the registrant's proposed cash
acquisition of Sommer's floor covering business, to fashion a combination with
Tarkett. The registrant also alleged that the misappropriation of its
confidential information was in breach of a confidentiality agreement entered
into between it and Sommer. In the complaint, the registrant sought a court
order enjoining Sommer from consummating the proposed combination with Tarkett,
a court order enjoining Sommer from continuing to misappropriate the
registrant's confidential information, and unspecified compensatory, exemplary
and punitive damages.
On July 8, 1997, the registrant amended its complaint to, among other
things, add Marc Assa, President du Directoire of Sommer, and Tarkett as
defendants in the action. On that date, the registrant also filed a motion for
a preliminary injunction to enjoin the proposed Sommer-Tarkett transaction and
for an order to accelerate discovery in preparation for the hearing on the
preliminary injunction. On July 15, 1997, the federal district court granted
the registrant's motion to accelerate discovery and set September 9, 1997 as a
tentative date for the hearing on the requested preliminary injunction By
mutual agreement between the registrant and Sommer, the date for the hearing on
the preliminary injunction has been rescheduled for September 30, 1997.
(c) Update on Canadian Proceedings Related to the Offer.
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As previously reported, the registrant commenced an action on June 11, 1997
in the Ontario Court (General Division) against the directors of Domco and
against Sommer in which the registrant, in its capacity as a minority
shareholder of Domco, is seeking a declaration that the
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directors of Domco have subordinated the interests of Domco and its minority
shareholders to those of Sommer and have thereby breached their duties and
disregarded the interests of Domco's minority shareholders.
On June 23, 1997, the registrant filed a claim in the Ontario Court
alleging that the members of Domco's Board of Directors breached their fiduciary
duties to Domco and acted in a manner that is oppressive and unfairly
prejudicial to and has unfairly disregard the interests of the minority
shareholders of Domco by subordinating their interests to those of Sommer.
Among the relief sought on behalf of all minority shareholders of Domco is the
replacement of Domco's Board of Directors with independent directors selected or
approved by the court.
The statement of claim was amended on August 11, 1997 to include
particulars of the continuing breaches of fiduciary duty and oppressive conduct
on the part of the Domco Board that have occurred since the commencement of this
action. In the amended claim, the registrant seeks $50 million in damages and
asks that the court instruct the new directors of Domco to consider afresh
the Subscription and to issue Domco common shares to the registrant if they
consider that it will benefit Domco and provide value to all Domco shareholders.
Sommer commenced an action against the registrant in Quebec on July 7,
1997, claiming CDN$8 million in damages for defamation, bad faith and abuse of
process, all of which the registrant denies. The registrant has filed a motion
requesting that the action be dismissed on the basis that the Quebec courts do
not have jurisdiction over the subject matter of the claim or alternatively,
that the action be stayed on the basis that other proceedings instituted by the
registrant are pending before Ontario and Pennsylvania courts and that those
courts are in a better position to hear and decide Sommer's claim.
(d) Update on Securities Commissions Hearings.
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On June 23, 1997, the registrant filed petitions with the Quebec Securities
Commission (the "QSC") and with the Ontario Securities Commission (the "OSC")
for a ruling that the proposed Sommer-Tarkett transaction constitutes an
indirect takeover of Domco and that the implied value on the shares of Domco
held by Sommer was greater than 15% of the prevailing market price. The
securities laws of the Provinces of Quebec and Ontario exempt private
transactions from the requirement to make the same offer to all shareholders
only if the price is less than 15% of the prevailing market price.
On August 14, 1997, the staff of the QSC announced that the proposed
Sommer-Tarkett transaction constitutes an indirect take-bid for Domco. The
staff also announced that, based on a report by the financial adviser to the
Committee, they believed that the price to be paid by Tarkett does not exceed
the allowable premium of 15% over market price. The registrant's financial
advisers dispute this valuation, attributing the difference in part to varying
valuation methodologies. The staff of the OSC has also advised that it does not
plan to take action. The registrant intends to continue to pursue its request
that a hearing be held on these issues.
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Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description Reference
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<S> <C> <C>
99.01 Press Release (August 26, 1997) Filed herewith
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARMSTRONG WORLD INDUSTRIES, INC.
Dated: August 29, 1997 By: /s/ L. A. Pulkrabek
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L. A. Pulkrabek
Senior Vice President, Secretary
and General Counsel
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Exhibit Index
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<TABLE>
<CAPTION>
Sequential Page No. or
Exhibit No. Description Reference
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<S> <C> <C>
99.01 Press Release (August 26, 1997) Filed herewith at page 8
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Exhibit 99.01
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Media Contact: Cam L. Collova Investor Contact: Warren M. Posey
VP, Corporate Relations Assistant Treasurer
(717) 396-2169 (717) 396-2216
Tom Daly/David Kronfeld
Kekst and Company
(212) 521-4800
In Europe: Seth Goldschlager
Idees/Dialogue Conseil
(33) 01-44-43-79-42
In Canada: Ken Cavanagh
NATIONAL Public Relations
(514) 843-2386
</TABLE>
FOR IMMEDIATE RELEASE
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ARMSTRONG ISSUES CIRCULAR FOR EXTENSION OF DOMCO OFFER
-- Armstrong's Pending Lawsuits to be Supported
by Quebec Securities Commission Ruling
that Tarkett's Proposed Acquisition is a Takeover of Domco --
LANCASTER, PA, August 26, 1997 -- Armstrong World Industries, Inc. (NYSE:ACK)
today announced that it has filed its amended circular to extend its CDN$23.00
all cash offer for all the outstanding common shares of Domco, Inc. (MSE:DOC;
TSE:DOC) until October 10, 1997.
In its circular, Armstrong takes issue with the recent rejection of Armstrong's
offer by the Domco Board. Armstrong notes that the Domco Board has refused to
issue new shares to Armstrong, which would ensure the success of Armstrong's
CDN$23.00 offer to all shareholders. In support
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of its refusal, the Domco Board incorrectly determined that Domco is not "in
play." The circular states:
"...the Board's determination that Domco is not 'in play' is contrary to
the history of the negotiations between Sommer and Armstrong and to the
conclusion of the staff of the Quebec Securities Commission that the
proposed Sommer-Tarkett transaction constitutes an indirect take-over bid
for Domco. The Board used the 'not in play' rationalization to support its
refusal to issue Common Shares to Armstrong and thereby enable the Minimum
Condition [which would allow Armstrong to provide CDN$23.00 to all
shareholders] to be met. Armstrong was invited by Sommer to make an all
cash offer for Sommer's flooring business, including Domco, which would
have included the Common Shares owned by Sommer and those owned by the
minority. Armstrong made such an offer in April 1997. Almost immediately
after rejecting this offer, Sommer and Tarkett announced the Tarkett Bid.
Subsequently, Armstrong made the Offer which is available to all holders of
Domco Securities. The Tarkett Bid clearly put Domco in play."
Armstrong's circular also criticizes the Domco Board for its favoritism to
Domco's majority shareholder and its lack of neutrality in evaluating
Armstrong's offer. The circular states:
"The Board's recommendation amounts to an endorsement of the proposed
Sommer-Tarkett transaction which excludes Domco's minority shareholders....
This endorsement has been made despite the fact that Sommer and Tarkett
have not provided any meaningful information about their plans for Domco
and Tarkett U.S., and the fact that the Tarkett Bid is at an implied value
which the Committee's own financial adviser has reported is less than
current market price... The Board's action does not reflect a neutral
course. It favours Sommer's interest over the interests of Domco's
minority shareholders. The Board's duty is not to protect Sommer at the
expense of minority shareholders but to enhance value for all
securityholders."
George A. Lorch, Chairman and Chief Executive Officer of Armstrong, said, "We
are pressing forward with our offer for Domco and we look forward to a full
hearing in court, where we believe our complaints against the actions of Sommer,
Tarkett, and the Domco Board will be completely vindicated. The recent ruling
by the Quebec Securities Commission, affirming that the proposed Sommer-Tarkett
transaction does indeed constitute an indirect take-over bid for
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Domco, supports our position that Sommer improperly kept the Domco Board in the
dark regarding take-over negotiations affecting Domco's future, and that the
Domco Board subsequently acted in contradiction to its fiduciary duties to all
shareholders in rejecting Armstrong's clearly superior offer.
"We are today in a global economy. If multinational companies wish to avail
themselves of capital markets around the world, then shareholders, in all
markets, must be treated equitably," he concluded.
Background
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On June 9, Armstrong announced its offer to acquire all of the outstanding
shares of Domco, which is approximately 57% owned by Sommer Allibert S.A., for
CDN$23.00 per share. Also on June 9 Armstrong filed suit in the United States
District Court for the Eastern District of Pennsylvania alleging that Sommer had
used confidential information provided by Armstrong, obtained during
negotiations with Armstrong regarding the purchase of Sommer's worldwide
flooring assets, to structure a proposed transaction with Tarkett AG, which
Sommer announced immediately after it broke off negotiations with Armstrong.
This use of confidential information by Sommer and Tarkett was in violation of a
Confidentiality Agreement, an exclusivity understanding and Sommer's obligation
to negotiate with Armstrong fairly and in good faith.
On June 23, Armstrong filed a claim, amended on August 11, in the Ontario Court
(General Division) alleging that members of Domco's Board breached their
fiduciary duty to Domco and
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acted in a manner that is oppressive to minority shareholders. Among other
things, Armstrong is seeking the replacement of Domco 's Board with independent
directors, and instruction by the court to the new Domco Board to consider
afresh Armstrong's proposal that the Board issue new shares to Armstrong to
bring Armstrong to the 51 % ownership threshold so that it may provide value to
all Domco shareholders.
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