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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
(AMENDMENT NO. 42)
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
PENNZOIL COMPANY
(Name of Subject Company)
PENNZOIL COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.83 1/3 PER SHARE
(including the associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
709903 10 8
(CUSIP Number of Class of Securities)
LINDA F. CONDIT
CORPORATE SECRETARY
PENNZOIL COMPANY
PENNZOIL PLACE, P.O. BOX 2967
HOUSTON, TEXAS 77252-2967
(713) 546-8910
(Name, address and telephone number of person authorized
to receive notice and communications on behalf of the person(s) filing
statement)
Copies to:
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MOULTON GOODRUM, JR. CHARLES F. RICHARDS, JR.
BAKER & BOTTS, L.L.P. RICHARDS, LAYTON & FINGER
ONE SHELL PLAZA ONE RODNEY SQUARE
HOUSTON, TEXAS 77002-4995 P.O. BOX 551
(713) 229-1234 WILMINGTON, DELAWARE 19899-0551
(302) 658-6541
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This Amendment No. 42 (this "Amendment") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9, as amended, originally
filed on July 1, 1997 by Pennzoil Company, a Delaware corporation ("Pennzoil"
or the "Company"), relating to a tender offer commenced by Resources Newco,
Inc., a wholly owned subsidiary of Union Pacific Resources Group Inc. ("UPR"),
on June 23, 1997.
All capitalized terms used in this Amendment without definition have the
meanings attributed to them in the Schedule 14D-9.
The items of the Schedule 14D-9 set forth below are hereby amended by
adding the following:
ITEM 4. THE SOLICITATION OR RECOMMENDATION
On November 11, 1997, Lehman Brothers Inc. ("Lehman Brothers"),
Evercore Group Inc. ("Evercore Group") and J. P. Morgan Securities Inc. ("J.P.
Morgan"), financial advisors to the Company, delivered opinions to the effect
that, as of such date, the consideration offered to stockholders of the Company
pursuant to the Revised UPR Offer is inadequate from a financial point of
view. The full text of the opinions of Lehman Brothers, Evercore Group and J.
P. Morgan is included as Exhibits 111, 112 and 113 hereto, respectively.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT
NO. DESCRIPTION
------- -----------
111 Opinion of Lehman Brothers Inc. dated November 11, 1997
delivered to the Company.
112 Opinion of Evercore Group Inc. dated November 11, 1997
delivered to the Company.
113 Opinion of J. P. Morgan Securities Inc. dated November
11, 1997 delivered to the Company.
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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.
PENNZOIL COMPANY
Dated: November 13, 1997 By: /s/ James L. Pate
James L. Pate
Chairman of the Board, President
and Chief Executive Officer
3
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INDEX TO EXHIBITS
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EXHIBIT
NO. DESCRIPTION
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111 Opinion of Lehman Brothers Inc. dated November 11, 1997
delivered to the Company.
112 Opinion of Evercore Group Inc. dated November 11, 1997
delivered to the Company.
113 Opinion of J. P. Morgan Securities Inc. dated November 11, 1997
delivered to the Company.
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EXHIBIT 111
[LEHMAN BROTHERS LETTERHEAD]
November 11, 1997
Board of Directors
Pennzoil Company
Pennzoil Place
P.O. Box 2967
Houston, Texas 77252
Members of the Board:
Resources Newco, Inc., a wholly owned subsidiary of Union Pacific
Resources Group Inc. (together, the "Bidder"), has made a tender offer to the
shareholders of Pennzoil Company (the "Company") to purchase all outstanding
shares of common stock (the "Shares") of the Company, together with the
associated preferred stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement dated as of October 28, 1994, between the Company and Chemical
Bank, as Rights Agent, at a price of $84.00 per Share (and associated Right),
net to the seller in cash, without interest thereon (the "Consideration"), upon
the terms and subject to the conditions set forth in the Supplement (the
"Supplement"), dated October 7, 1997, to the Offer to Purchase dated June 23,
1997 and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"). The
Supplement states that if the Offer is consummated, the Bidder intends to effect
a merger with the Company in which all outstanding Shares not tendered into the
Offer will be converted into $84.00 in cash, without interest. The terms and
conditions of the Offer are set forth in more detail in Amendment No. 27, dated
October 7, 1997, to the Schedule 14D-1 originally filed by the Bidder with the
Securities and Exchange Commission on June 23, 1997 (together, with any
amendments or supplements thereto, the "Schedule 14D-1").
We have been requested by the Board of Directors of the Company to confirm
our opinion with respect to the adequacy, from a financial point of view, to
the shareholders of the Company of the Consideration offered to them by the
Bidder pursuant to the Offer.
In arriving at our opinion, we reviewed and analyzed: (1) the Supplement,
the Schedule 14D-1 and the specific terms and conditions of the Offer, (2) such
publicly available information concerning the Company which we believe to be
relevant to our analysis, (3) financial and operating information with respect
to the business, operations and prospects of the Company furnished to us by the
Company, including, without limitation, certain projections of future financial
performance of the Company prepared by the management of Company, (4) a trading
history of the Company's common stock and a comparison of that trading history
with the trading histories of other companies that we deemed relevant, (5) a
comparison of the historical financial results and present financial condition
of the Company with those of other companies that we deemed relevant and (6) a
comparison of the financial terms of the Offer with the financial terms of
certain other transactions that we deemed relevant. In addition, we have had
discussions with the management of the Company concerning its business,
operations, assets, financial condition
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LEHMAN BROTHERS
Board of Directors
Pennzoil Company
November 11, 1997
Page 2
and prospects and have undertaken such other studies, analyses and
investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial projections of the
Company, upon advice of the Company we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company, and we have relied upon such projections
in arriving at our opinion. In arriving at our opinion, we have not conducted
a physical inspection of the properties and facilities of the Company and have
not made or obtained any evaluations or appraisals of the assets or liabilities
of the Company. Our opinion necessarily is based upon market, economic and
other conditions as they exist on, and can be evaluated as of, the date of this
letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the Consideration offered by
the Bidder to the shareholders of the Company pursuant to the Offer is
inadequate to such shareholders.
We have, in the past, provided certain financial advisory and financing
services to the Company and are acting as financial advisor to the Company in
connection with the Offer. In addition, the Company has agreed to indemnify us
for certain liabilities that may arise out of the rendering of this opinion. In
the ordinary course of our business, we may actively trade in the securities of
the Company and the Bidder for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. This opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company as to whether to accept the
Consideration offered to the shareholders in the Offer.
Very truly yours,
LEHMAN BROTHERS
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[EVERCORE GROUP LETTERHEAD]
EXHIBIT 112
November 11, 1997
Board of Directors
Pennzoil Company
Pennzoil Place
P.O. Box 2967
Houston, TX 77252
Gentlemen:
On October 7, 1997 Resources Newco, Inc. (the "Purchaser"), a wholly owned
subsidiary of Union Pacific Resources Group Inc. ("UPR", and together with the
Purchaser, the "Bidder"), amended its tender offer under which it is now
offering to purchase all outstanding shares of common stock, par value $0.83-1/3
per share (the "Shares"), of Pennzoil Company ("Pennzoil" or the "Company"),
together with the associated preferred stock purchase rights (the "Rights")
issued pursuant to the Rights Agreement dated as of October 28, 1994, between
Pennzoil and Chemical Bank, as Rights Agent, at a price of $84.00 per Share (and
associated Right), net to the seller in cash, without interest thereon (the
"Consideration"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated June 23, 1997 (the "Offer to Purchase"), as heretofore
amended, the Supplement to the Offer to Purchase dated October 7, 1997, and in
the revised Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). If the Offer were
consummated, UPR intends to effect a merger with Pennzoil in which all
outstanding Shares would be converted into the right to receive $84.00 in cash.
The terms and conditions of the Offer are more fully set forth in the Schedule
14D-1 (the "Schedule 14D-1") originally filed by Purchaser and UPR with the
Securities and Exchange Commission on June 23, 1997, together with any
amendments or supplements thereto, and the Supplement dated October 7, 1997.
We have been requested by the Board of Directors of the Company to confirm
our opinion with respect to the adequacy, from a financial point of view, to the
shareholders of the Company of the Consideration offered to them by the Bidder
pursuant to the Offer.
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November 11, 1997
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For purposes of the opinion set forth herein, we have:
(i) reviewed the Offer to Purchase, the Schedule 14D-1, the
amendments and supplements to the Schedule 14D-1 (including the
Supplement dated October 7, 1997), and certain related documents;
(ii) analyzed certain publicly available financial statements and other
information of the Company;
(iii) analyzed certain internal financial statements and other financial
and operating data concerning the Company prepared by the
management of the Company;
(iv) analyzed certain financial projections for the Company prepared by
the management of the Company;
(v) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(vi) reviewed the reported prices and trading activity for the Company
Shares;
(vii) compared the financial performance of the Company and the prices
and trading activity of the Company Shares to similar publicly
available information for publicly-traded companies having lines
of business similar to those of the Company;
(viii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(ix) performed such other analyses and examinations and considered
such other factors as we have in our sole judgment deemed
appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals. In addition, you have not authorized us to solicit, and we have not
solicited, any indications of interest from any third party with respect to
the purchase of all or a part of the Company's
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November 11, 1997
Page 3
business. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
Evercore Group Inc. has acted as financial advisor to the Board of
Directors of the Company in connection with this transaction and has received a
fee for its services.
This opinion is for the use and benefit of the Board of Directors of the
Company. This opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company as to whether to accept the
Consideration offered to the shareholders in the Offer.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the Consideration offered by
the Bidder to the shareholders of the Company pursuant to the Offer is
inadequate to such shareholders.
Very truly yours,
EVERCORE GROUP INC.
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EXHIBIT 113
[JP MORGAN LETTERHEAD]
November 11, 1997
The Board of Directors
Pennzoil Company
P.O. Box 2967
Houston, Texas 77252-2967
Attention: Mr. James L. Pate
Chairman and Chief Executive Officer
Ladies and Gentlemen:
Reference is made to our opinion, dated as of October 14, 1997 (the "Opinion"),
to the Board of Directors of Pennzoil Company (the "Company"). Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Opinion.
On the basis of and subject to the matters set forth in the Opinion, we hereby
confirm that it is our opinion as of the date hereof that the consideration
proposed to be paid to the holders of the Shares pursuant to the Amended Offer
is inadequate, from a financial point of view, to such Holders.
This letter is provided for the benefit of the Board of Directors of the
Company in connection with and for the purposes of its evaluation of the
Amended Offer. This letter does not constitute a recommendation to any
shareholder of the Company as to whether such shareholder should tender Shares
in the Amended Offer. This letter may not be disclosed, referred to or
communicated (in whole or in part) to any third party for any purpose whatsoever
except with our prior written consent in each instance. This letter may be
reproduced in full in an Amendment to the Solicitation/Recommendation Statement
on Schedule 14D-9 to be filed by the Company with the Commission.
Very truly yours,
J.P. MORGAN SECURITIES INC.
