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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
ROTO-ROOTER, INC.
(NAME OF SUBJECT COMPANY)
ROTO-ROOTER, INC.
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
778786103
(CUSIP NUMBER OF CLASS OF SECURITIES)
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MR. BRIAN A. BRUMM
VICE PRESIDENT, TREASURER AND CHIEF FINANCIAL OFFICER
ROTO-ROOTER, INC.
2500 CHEMED CENTER
CINCINNATI, OH 45202
(513) 762-6690
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE
PERSON(S) FILING STATEMENT)
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Roto-Rooter, Inc. (the "Company") hereby amends and supplements its
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Statement")
originally filed on August 27, 1996, with respect to the Tender Offer Statement
on Schedule 14D-1 dated August 14, 1996 and the Amendments thereto dated August
19, 1996 and August 22, 1996 of Chemed Corporation, as set forth in this
Amendment No. 1. Capitalized terms not defined herein have the meaning assigned
thereto in the Statement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4. of the Statement is hereby amended to add the following information
at the end thereof:
On August 30, 1996, Hilliard delivered to the Special Committee a written
opinion as to the fairness of the Offer (the "Fairness Opinion"). The Fairness
Opinion concludes that as of the date thereof and based upon and subject to the
factors and assumptions set forth therein, the Offer Price is fair to the
Company's stockholders (other than the Bidder) from a financial point of view.
The summary of the Fairness Opinion set forth herein is qualified in its
entirety by reference to the full text of the Fairness Opinion which is filed as
Exhibit 12 hereto and is incorporated herein by reference. The Fairness Opinion
does not constitute a recommendation to any stockholder as to whether such
stockholder should tender shares of Common Stock pursuant to the Offer.
At the time that Hilliard delivered the Fairness Opinion, Hilliard
presented its analysis to the Special Committee and orally opined that the Offer
Price is fair to the stockholders (other than the Bidder) from a financial point
of view. In arriving at its opinion, Hilliard reviewed i) certain publicly
available business and financial information relating to the Company; ii) the
terms of the Offer; iii) the Rule 13E-3 Transaction Statement dated August 14,
1996 and the Amendments thereto dated August 19, 1996 and August 22, 1996 filed
by the Bidder with the Securities and Exchange Commission; iv) certain other
information, including financial forecasts, provided to Hilliard by the Company;
v) certain financial and stock market data for the Company and for other
publicly held companies in businesses similar to those of the Company; vi) the
financial terms of certain other acquisitions and business combinations that
have recently been effected; and, vii) such other information as Hilliard deemed
necessary.
The following is a summary of the primary analyses performed by Hilliard
and presented to the Special Committee in connection with the preparation of the
Fairness Opinion.
Discounted Cash Flow Analysis
Hilliard performed discounted cash flow ("DCF") analyses of the projected
cash flows of the Company for the fiscal years 1996 through 2000, based upon
projections developed by the Company's management. The projections were produced
in conjunction with its business planning in late 1995; however, the 1996
projections were updated by the Company's management in mid-1996 to reflect
recent operating results.
Based upon the Company's projections, Hilliard derived per share equity
value ranges for the Company on a consolidated basis. For this analysis,
Hilliard calculated a weighted average cost of capital range from 12.0% to
13.2%. Hilliard used three methods to determine terminal value: i) growth
multiple of year-2000 free cash flow, using rates of 5% and 6% for post-2000
growth in perpetuity; ii) multiple of 8.0x to 9.0x projected year-2000 earnings
before interest and taxes; and iii) multiple of 6.0x to 7.0x projected year-2000
earnings before interest, taxes, depreciation and amortization.
Based upon its DCF analyses, Hilliard derived a per share equity value
reference range of $33.00 to $43.70 per share for the Company.
Comparable Companies Analysis
Hilliard performed a comparable companies analysis in which it compared
historical financial and operating data, projections of future financial
performance and market statistics of selected publicly traded companies
considered by Hilliard to be reasonably comparable to the Company with similar
historical financial and operating data, projections of future financial
performance (reflecting Company projections), market statistics and business of
the Company. Hilliard compared the market capitalization (defined as the
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product of shares outstanding and price per share) as a multiple of selected
historical and projected operating data for each of the comparable companies
with those of the Company. Further, Hilliard compared the enterprise value
(defined as the sum of market capitalization plus debt less cash and
equivalents) as a multiple of selected historical and projected operating data
for each of the comparable companies with those of the Company.
Based upon its comparable companies analyses, Hilliard derived a per share
equity value reference range of $34.00 to $39.98 per share for the Company.
Summary Valuation
In arriving at its opinion and based upon the foregoing DCF and comparable
companies analyses, Hilliard performed other objective and subjective analyses
as Hilliard deemed necessary. Based on all analyses and factors, Hilliard
derived a per share equity value reference range of $35.53 to $42.57 for the
Company.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Exhibit 10 -- Text of Press Release issued by the Company on August 30,
1996.
Exhibit 11 -- Text of Letter to Stockholders dated August 30, 1996.
Exhibit 12 -- Opinion dated August 30, 1996 from J.J.B. Hilliard, W.L.
Lyons, Inc. to Roto-Rooter, Inc.
(b) Not applicable.
(c) Not applicable.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 is true, complete
and correct.
ROTO-ROOTER, INC.
By: /s/ BRIAN A. BRUMM
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NAME: BRIAN A. BRUMM
TITLE: VICE PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
DATED: August 30, 1996
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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<S> <C> <C>
10 Text of Press Release issued by the Company on August 30, 1996. ............
11 Text of Letter to Stockholders dated August 30, 1996. ......................
12 Opinion dated August 30, 1996 from J.J.B. Hilliard, W.L. Lyons, Inc. to
Roto-Rooter, Inc. ..........................................................
</TABLE>
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Exhibit 10
DRAFT
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CONTACT: Brian A. Brumm [FOR IMMEDIATE RELEASE]
(513) 762-6685
ROTO-ROOTER'S SPECIAL COMMITTEE
RECEIVES FAIRNESS OPINION ON CHEMED TENDER OFFER
CINCINNATI, August 30, 1996 -- Roto-Rooter, Inc. (NASDAQ:ROTO) today
announced that the Special Committee of its Board of Directors had received a
written fairness opinion from the Committee's financial advisor with respect to
the tender offer made by Chemed Corporation (NYSE:CHE) to purchase any and all
of the outstanding shares of Common Stock of Roto-Rooter for a cash price of
$41.00 per share. The Special Committee was formed by the Roto-Rooter Board of
Directors to respond to Chemed's tender offer. The fairness opinion from J.J.B.
Hilliard, W.L. Lyons, Inc. states that, subject to the conditions and
limitations expressed in the opinion, the $41.00 offer price is fair to
Roto-Rooter's stockholders (other than Chemed) from a financial point of view.
The fairness opinion and a brief summary of Hilliard Lyons' analyses are set
forth in an amendment to Roto-Rooter's Solicitation/Recommendation Statement on
Schedule 14D-9, which amendment was filed with the Securities and Exchange
Commission today and is being mailed to Roto-Rooter's stockholders.
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[LETTERHEAD OF]
ROTO-ROOTER, INC.
AUGUST 30, 1996
To our stockholders:
As you know, Roto-Rooter's Board of Directors appointed one of its members
as a Special Committee to determine Roto-Rooter's response to the tender offer
made by Chemed Corporation to purchase all of Roto-Rooter's outstanding stock
not owned by Chemed for $41.00 per share. On August 27, 1996, the Special
Committee determined to take a neutral position with respect to Chemed's offer.
The Special Committee's conclusion was set forth in a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which was filed with the Securities and Exchange Commission and mailed to
Roto-Rooter's stockholders.
The Special Committee today received a written fairness opinion from its
financial advisor concluding that, subject to the conditions and limitations
stated in the opinion, the $41.00 offer price is fair to Roto-Rooter's
stockholders (other than Chemed) from a financial point of view. Enclosed with
this letter is a copy of an amendment to the Schedule 14D-9 which briefly
summarizes and sets forth a copy of the fairness opinion.
The Special Committee has not changed its neutral position with respect to
the tender offer.
On behalf of the Board of Directors,
Sincerely,
/s/ Edward L. Hutton
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Edward L. Hutton
Chairman
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Exhibit 12
August 30, 1996
Donald E. Saunders, as the
Sole Member of the
Special Committee of the
Board of Directors
Roto-Rooter, Inc.
2500 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Dear Mr. Saunders:
You have requested our opinion as to the fairness, from a financial
point of view, to the stockholders of Roto-Rooter, Inc. (the "Company") other
than Chemed Corporation (the "Acquiror") of the cash consideration to be
received by such stockholders pursuant to the tender offer made by the Acquiror
(the "Tender Offer"). Pursuant to the Tender Offer, the Acquiror has offered to
purchase any and all shares of common stock, par value $1.00 per share (the
"Shares"), of the Company (other than Shares currently held by the Acquiror) for
$41.00 per share in cash.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company, as well as the
Acquiror's offer to purchase dated August 14, 1996 distributed to the
stockholders of the Company in connection with the Tender Offer. We have
also reviewed certain other information, including financial forecasts,
provided to us by the Company and have met with members of senior management of
the Company regarding the past and current business operations, financial
results and future prospects of the Company.
We have also considered certain financial and stock market data of the
Company. We have compared that data with similar data for other publicly held
companies in businesses similar to those of the Company and we have considered
the financial terms of certain other acquisitions and business combinations
that have recently been effected. We have also reviewed such other
information, performed such other analyses and taken into account such other
matters as we deemed necessary.
In preparing our opinion, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that, at the time they were prepared, they
were reasonably prepared in accordance with accepted industry practice, reflect
the best available estimates and judgments of the Company's management as to
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Donald E. Saunders,
as the Sole Member of the
Special Committee of the
Board of Directors
Roto-Rooter, Inc.
August 30, 1996
Page Two
the expected future financial performance of the Company at the time of their
preparation and, as currently updated and adjusted, reflect the best currently
available estimates and judgments of the Company's management as to the
expected future financial performance of the Company. In addition, we have not
made an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company. Our opinion is necessarily based
upon financial, economic, market and other conditions as they exist and can be
evaluated on the date hereof. We were not requested to, and did not, solicit
third party indications of interest in acquiring all or any part of the Company.
We have acted as financial advisor to the Special Committee of the
Board of Directors of the Company formed in connection with the Tender Offer
and will receive a fee for our services, including a fee for advising as to the
fairness of the Tender Offer.
In the ordinary course of our securities business, J.J.B. Hilliard, W.L.
Lyons, Inc. and its affiliates may actively trade the debt and equity
securities of both the Company and Acquiror for our own account and for the
accounts of customers and, accordingly, we therefore may at any time hold a
long or short position in such securities.
It is understood that this letter is for the information of the Special
Committee of the Board of Directors of the Company formed in connection with
the Tender Offer and does not constitute a recommendation to any stockholder of
the Company as to whether such stockholder should tender Shares pursuant to the
Tender Offer.
On the basis of, and subject to the foregoing and other matters which
we deem relevant, it is our opinion that, as of the date hereof, the cash
consideration to be received by the stockholders of the Company pursuant to the
Tender Offer is fair to such stockholders (other than the Acquiror, as to which
we express no opinion) from a financial point of view.
Sincerely,
J.J.B. HILLIARD, W.L. LYONS, INC.
