<PAGE>
As Filed with the Securities and Exchange Commission on January 27, 1999
Registration No. 333-71149
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
under
the Securities Act of 1933
--------------
INLAND STEEL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 5050 36-3425828
(State of other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------
George A. Ranney, Jr.
President
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
(312) 346-0300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------
Copy to:
Philip J. Niehoff
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
(312) 701-7843
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable following the effectiveness of this
Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
--------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 25, 1999
To the Stockholders of Ryerson Tull, Inc.:
We will hold a meeting of stockholders of Ryerson Tull, Inc. on Thursday,
February 25, 1999 at 2:00 p.m. Chicago time, at 30 West Monroe Street, 13th
Floor, Chicago, Illinois. The purpose of the meeting is:
1. to vote on the merger agreement and the merger of RT Merger Sub, Inc.
and Ryerson Tull. Information concerning the merger is set forth in the
accompanying proxy statement/prospectus and in the merger agreement, a
copy of which is attached as Annex A.
2. to transact such other business related to matters incidental to the
approval of the merger agreement and the merger as may properly come
before the meeting or any adjournments or postponements of the meeting.
The close of business on Monday, January 4, 1999 was the record date for the
meeting. Only holders of Ryerson Tull class A common stock and Ryerson Tull
class B common stock at the close of business on the record date are entitled
to notice of, and to vote at, the meeting. A complete list of stockholders as
of the record date will be available for inspection at our offices in Chicago,
Illinois, during normal business hours upon written demand by you or your agent
or attorney beginning two business days after the date of this notice and
continuing through the meeting. You or your agent or attorney may, upon written
notice and subject to Section 220 of the Delaware General Corporation Law, copy
the list of stockholders during regular business hours during the inspection
period at your expense. If your Ryerson Tull class A common stock is registered
in the name of a brokerage firm or trustee and you plan to attend the meeting,
you must obtain from the firm or trustee a letter, account statement or other
evidence of your beneficial ownership of those shares of Ryerson Tull class A
common stock in order to be admitted to the meeting.
The merger agreement and the merger must be approved by at least a majority
of the votes entitled to be cast by the outstanding shares of Ryerson Tull
class A common stock and the outstanding shares of Ryerson Tull class B common
stock, voting together as a single class. Inland controls 96% of the voting
power in Ryerson Tull eligible to vote on the merger. Inland intends to vote in
favor of the merger agreement and the merger, and therefore the merger will be
approved.
Whether or not you plan to attend the meeting in person, please sign and
return the enclosed proxy to ensure that your shares of Ryerson Tull class A
common stock will be represented at the meeting if you are unable to attend. If
you attend the meeting and wish to vote in person, you may withdraw your proxy
and vote in person.
By Order of the Board of Directors,
GEORGE A. RANNEY, JR.
Corporate Secretary
<PAGE>
RYERSON TULL, INC.
Proxy Statement
-----------------
INLAND STEEL INDUSTRIES, INC.
Up to 4,313,166 Shares of Common Stock
Prospectus
This proxy statement/prospectus relates to a merger in which you will receive
0.61 shares of Inland common stock for each share of Ryerson Tull class A
common stock that you own on the date of the merger. After the merger, the
holders of Ryerson Tull class A common stock will own approximately 13% of the
outstanding shares of Inland common stock.
The Ryerson Tull Board of Directors is furnishing this proxy
statement/prospectus to you in connection with its solicitation of proxies for
use at a meeting of Ryerson Tull stockholders to be held on Thursday, February
25, 1999 to approve the merger. The Independent Directors Committee and the
Ryerson Tull Board of Directors advise and recommend that you approve the
merger. Inland controls 96% of the voting power in Ryerson Tull eligible to
vote on the merger. Inland intends to vote in favor of the merger, and
therefore the merger will be approved. This proxy statement/prospectus and the
accompanying form of proxy are first being mailed to you on or about January
27, 1999.
See "Risk Factors" on page 12 for a discussion of risks relevant to the
merger.
Shares of Inland common stock are traded on the New York Stock Exchange under
the symbol "IAD," and shares of Ryerson Tull class A common stock are traded on
the New York Stock Exchange under the symbol "RT."
Please do not send your Ryerson Tull class A common stock certificates with
the enclosed proxy.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the proxy statement/prospectus. Any representation to
the contrary is a criminal offense and should be reported immediately to the
Securities and Exchange Commission.
-----------------
The date of this proxy statement/prospectus is January 27, 1999
<PAGE>
This proxy statement/prospectus incorporates by reference important business
and financial information about both Inland and Ryerson Tull which is not
included in or delivered with this proxy statement/prospectus.
You can obtain any of the documents incorporated by reference in this
document through Inland or Ryerson Tull, as the case may be, or from the
Securities and Exchange Commission through the Securities and Exchange
Commission's web site at www.sec.gov. Documents incorporated by reference are
available from the companies without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by reference as an
exhibit in this proxy statement/prospectus. You can obtain documents
incorporated by reference in this proxy statement/prospectus by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
<TABLE>
<CAPTION>
Inland Ryerson Tull
------ ------------
<S> <C>
Marc R. Jeske Lily L. May
Assistant General Counsel Controller
Inland Steel Industries, Inc. Ryerson Tull, Inc.
30 West Monroe Street 2621 West 15th Place
Chicago, Illinois 60603 Chicago, Illinois 60608
Telephone (312) 899-3152 Telephone (773) 762-2121
</TABLE>
If you would like to request documents, please do so by February 18, 1999 to
receive them before the meeting. If you request any incorporated documents, we
will mail them to you by first class mail, or another equally prompt means,
within one business day after we receive your request.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY................................................................... 1
The Companies........................................................... 1
Inland Steel Industries, Inc.......................................... 1
Ryerson Tull, Inc..................................................... 1
What You Will Receive in the Merger..................................... 1
Material Federal Income Tax Considerations.............................. 1
Market Prices of Inland Common Stock and Ryerson Tull Class A Common
Stock on Important Dates............................................... 2
How You Will Benefit from the Merger.................................... 2
Ryerson Tull's Reason for the Merger.................................... 2
Inland's Reasons for the Merger......................................... 2
No Appraisal Rights..................................................... 2
Exchange of Stock Certificates.......................................... 2
Comparative Rights of Inland Stockholders and Ryerson Tull
Stockholders........................................................... 3
Comparative per Share Data.............................................. 4
The Meeting............................................................. 5
The Merger Agreement and the Merger .................................... 5
Recommendations of the Board of Directors............................. 5
Interests of Ryerson Tull Directors and Officers in the Merger that
are Different from Your Interests.................................... 5
Opinion of the Financial Advisor to the Independent Directors
Committee............................................................ 6
What We Need to Do to Complete the Merger............................. 6
Termination of the Merger Agreement................................... 6
Modifying or Amending the Merger Agreement............................ 7
Expenses.............................................................. 7
Management After the Merger............................................. 7
Name Change............................................................. 7
Selected Historical Financial Information of Inland..................... 8
Selected Historical Financial Information of Ryerson Tull............... 9
Pro Forma Financial Statements of Inland................................ 10
RISK FACTORS.............................................................. 12
Because the Exchange Ratio is Fixed, You May Not Receive a Premium at
the Time of the Merger................................................. 12
Inland's Liabilities, Which Did Not Affect You Before the Merger was
Announced, Now Affect You.............................................. 12
THE COMPANIES............................................................. 12
Inland Steel Industries, Inc............................................ 12
ISC/Ispat Transaction................................................. 13
Use of ISC/Ispat Transaction Proceeds................................. 15
Sale of Inland Engineered Materials Corporation....................... 15
Fourth Quarter Results................................................ 15
Ryerson Tull, Inc....................................................... 16
Purchase of Washington Specialty Metals............................... 16
Fourth Quarter Loss................................................... 16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE MEETING............................................................... 17
Purpose of the Meeting.................................................. 17
Date, Place and Time; Record Date....................................... 17
Your Voting Rights...................................................... 17
Giving and Revoking Your Proxy; Costs of Solicitation................... 18
No Appraisal Rights..................................................... 18
THE MERGER AGREEMENT AND THE MERGER ...................................... 18
General Description of the Merger....................................... 18
Background of the Merger................................................ 19
Independent Directors Committee Compensation............................ 26
Reasons for the Merger; Recommendations of the Board of Directors....... 26
How You Will Benefit from the Merger.................................. 26
Ryerson Tull's Reason for the Merger.................................. 26
Inland's Reasons for the Merger....................................... 26
Recommendation of the Independent Directors Committee to the Ryerson
Tull Board of Directors.............................................. 26
Recommendation of the Ryerson Tull Board of Directors................. 28
Opinion of the Financial Advisor to the Independent Directors
Committee.............................................................. 28
Transaction Overview.................................................. 30
Discounted Cash Flow Analysis......................................... 31
Historical Public Market Trading Value................................ 31
Valuation of Publicly Traded Comparable Companies..................... 32
Selected Precedent Ryerson Tull/Industry Acquisitions Analysis........ 32
Pro Forma Analysis of the Merger...................................... 32
Structure of the Merger................................................. 34
When the Merger Becomes Effective....................................... 34
Conversion of Stock, Stock Options and Other Awards..................... 34
Representations and Warranties.......................................... 35
Conditions to Completion of the Merger.................................. 36
Termination of the Merger Agreement..................................... 37
Expenses................................................................ 39
Modification or Amendment to the Merger Agreement....................... 39
Regulatory Requirements................................................. 39
Material Federal Income Tax Considerations.............................. 39
General............................................................... 40
Tax Treatment to Inland, Ryerson Tull and RT Merger Sub............... 40
Tax Treatment of Holders of Ryerson Tull Class A Common Stock......... 40
Accounting Treatment.................................................... 41
Interests of Certain Persons in the Merger.............................. 41
BUSINESS AND MANAGEMENT................................................... 42
Management and Operations After the Merger.............................. 42
Inland Board of Directors............................................. 42
Inland Management and Employees....................................... 43
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Market Prices and Dividend Information.................................. 43
Ownership of Inland Common Stock and Ryerson Tull Class A Common Stock.. 44
Inland Common Stock Treasury Shares..................................... 47
Name Change............................................................. 48
Management and Other Information........................................ 48
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 49
Guarantor Arrangements.................................................. 49
Support Services; Indemnification and Corporate Separateness............ 49
Tax Sharing Arrangements................................................ 50
Cross-License Agreement................................................. 50
Pensions................................................................ 51
COMPARATIVE RIGHTS OF INLAND STOCKHOLDERS AND RYERSON TULL STOCKHOLDERS... 51
Authorized Capital...................................................... 52
Inland Steel Industries, Inc.......................................... 52
Ryerson Tull, Inc..................................................... 53
Board of Directors...................................................... 54
Number of Directors; Removal; Filling Vacancies......................... 54
Honorary Directors of Inland............................................ 55
Independent Directors of Ryerson Tull................................... 55
No Stockholder Action by Written Consent; Meetings...................... 56
Advance Notice Provisions for Stockholder Proposals..................... 57
Advance Notice Provisions for Stockholder Nominations of Directors...... 57
Transactions with Interested Stockholders............................... 58
Amendment of Certain Provisions of Certificates of Incorporation and By-
Laws................................................................... 59
Rights Agreements....................................................... 59
Inland Rights Agreement............................................... 59
Ryerson Tull Rights Agreement......................................... 62
Sale of Assets.......................................................... 64
General Antitakeover Effects............................................ 65
Liability and Indemnification of Officers and Directors................. 65
ADDITIONAL INFORMATION.................................................... 67
Deadline for Stockholder Proposals Has Passed........................... 67
Legal Matters........................................................... 67
Experts................................................................. 67
Where You Can Find More Information..................................... 68
Forward-Looking Statements.............................................. 70
UNAUDITED PRO FORMA FINANCIAL INFORMATION................................. 71
ANNEXES:
A--Agreement and Plan of Merger........................................... A-1
B--Fairness Opinion of Morgan Stanley & Co. Incorporated.................. B-1
</TABLE>
iii
<PAGE>
SUMMARY
This summary highlights some of the information contained elsewhere or
incorporated by reference in this proxy statement/prospectus. It does not
contain all of the information that is important to you. You should carefully
read this entire proxy statement/prospectus and the other documents to which
this proxy statement/prospectus refers you before you vote.
The Companies
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
(312) 346-0300
Inland Steel Industries, Inc. is a holding company whose assets consist
primarily of the Ryerson Tull class B common stock, which represents
approximately 87% of the economic interest, and approximately 96% of the voting
power, in Ryerson Tull.
On July 16, 1998, Inland sold its other major subsidiary, Inland Steel
Company, to Ispat International N.V. Inland used the net proceeds from the
ISC/Ispat transaction, together with a portion of its cash, to repay
indebtedness, redeem preferred stock and repurchase shares of Inland common
stock. Inland agreed to indemnify Ispat for losses in connection with the
ISC/Ispat transaction,
subject, in most cases, to a maximum of $90 million in the aggregate. Inland
and its affiliates also are generally prohibited from engaging in activities
that compete with ISC's current operations through July 2003. See "The
Companies--Inland Steel Industries, Inc.--ISC/Ispat Transaction."
Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
(773) 762-2121
Ryerson Tull is the largest metals service center in the United States based
on sales revenue, with 1997 sales of $2.8 billion. Ryerson Tull has a current
U.S. market share of approximately 10%, based on its analysis of data prepared
by the Steel Service Center Institute. Ryerson Tull distributes and processes
metals and other materials throughout the continental United States and is
among the largest purchasers of steel in the United States.
What You Will Receive in the Merger
You will receive 0.61 shares of Inland common stock for each share of Ryerson
Tull class A common stock that you own on the date of the merger. Instead of
issuing fractional shares of Inland common stock, Inland will pay cash based on
an average of the closing prices per share of Inland common stock for ten New
York Stock Exchange trading days preceding the date of the merger.
Material Federal Income Tax Considerations
Because the merger should be treated as an exchange of Ryerson Tull class A
common stock for Inland common stock, you should not be taxed on the merger
except for any cash you receive in lieu of fractional shares. See "The Merger
Agreement and the Merger--Material Federal Income Tax Considerations."
<PAGE>
Market Prices of Inland Common Stock and Ryerson Tull Class A Common Stock on
Important Dates
Shares of Inland common stock are traded on the New York Stock Exchange under
the symbol "IAD," and shares of Ryerson Tull class A common stock are traded on
the New York Stock Exchange under the symbol "RT." The following table provides
the closing per share sales prices of Inland common stock and Ryerson Tull
class A common stock, as reported on the New York Stock Exchange Composite
Tape, on:
. March 16, 1998--the last business day before Inland announced its
original intent to merge with or acquire Ryerson Tull;
. October 14, 1998--the last business day before Inland and Ryerson Tull
announced the terms of the merger;
. October 27, 1998--the last business day before the merger agreement was
signed; and
. January 26, 1999.
<TABLE>
<CAPTION>
Inland Ryerson Tull
Common Class A
Date Stock Common Stock
---- ------ ------------
<S> <C> <C>
March 16, 1998 $23 3/8 $18 1/8
October 14, 1998 18 3/8 10 5/16
October 27, 1998 18 3/8 11 3/8
January 26, 1999 14 1/2 9
</TABLE>
How You Will Benefit from the Merger
You will benefit from the merger because the proposed merger:
. provides you with a larger, more active trading market for your
securities; and
. gives you more voice in matters submitted to stockholders by eliminating
the Ryerson Tull class B common stock.
Ryerson Tull's Reason for the Merger
Ryerson Tull believes that the merger will make it easier for the combined
company to use equity securities instead of cash to acquire other metals
distribution and processing companies. Although using equity securities to make
acquisitions will dilute your percentage ownership of the combined company, it
permits the combined company to use its cash for other purposes, including
paying operating expenses, reducing the combined company's need to borrow
money.
Inland's Reasons for the Merger
Inland believes that the combined company and its stockholders can benefit
from the merger because the proposed merger:
. simplifies Inland's financial reporting structure;
. produces a single, publicly traded entity with a consolidated stockholder
base which more accurately reflects the ownership structure and assets of
the combined company; and
. eliminates redundant costs.
No Appraisal Rights
You are not entitled to dissenters' or appraisal rights in connection with
the merger.
Exchange of Stock Certificates
Promptly after the merger, Harris Trust and Savings Bank will send you a
letter of transmittal for you to use in exchanging your Ryerson Tull class A
common stock certificates for Inland common stock certificates. You should not
send in your Ryerson Tull class A common stock
2
<PAGE>
certificates until you receive the letter of transmittal. See "The Merger
Agreement and
Comparative Rights of Inland Stockholders and Ryerson Tull Stockholders
Although Inland and Ryerson Tull are Delaware corporations and many of your
rights as a stockholder of Inland will be the the Merger--Conversion of Stock,
Stock Options and Other Awards."
same as your rights as a stockholder of Ryerson Tull class A common stock,
there are several important differences. The following table summarizes those
differences:
<TABLE>
<CAPTION>
Inland Ryerson Tull
-------------------------------- --------------------------------
<S> <C> <C>
Voting Rights Holders of Inland common stock Holders of Ryerson Tull class A
have one vote per share. common stock have one vote per
share, while holders of Ryerson
Tull class B common stock have
four votes per share.
Removal of Directors by Upon the vote of a majority of Only for "cause" upon the vote
Stockholders the shares of common stock. of at least 80% of the voting
power of Ryerson Tull's class A
common stock and class B common
stock voting together.
Independent Directors No. Yes, at least one-third of
Required directors must be "independent
directors." Affirmative vote of
a majority of independent
directors is required to approve
some transactions.
Sale of Assets Approval of not less than two- Approval of a majority of the
thirds of the voting power of voting power of Ryerson Tull's
outstanding capital stock outstanding capital stock
required to approve the sale of required to approve the sale of
all or substantially all of all or substantially all of
Inland's assets. Ryerson Tull's assets.
Classified Board of No. Yes, three classes, with one
Directors class elected each year.
</TABLE>
See "Comparative Rights of Inland Stockholders and Ryerson Tull
Stockholders."
3
<PAGE>
Comparative per Share Data
The following table summarizes certain (1) historical financial information,
(2) the historical information adjusted for the repurchase of Inland common
stock in the tender offer, the repurchase of Inland common stock in open market
purchases, adjustments related to the ISC/Ispat transaction, the redemption of
all outstanding shares of Inland series E preferred stock and the liquidation
of the ESOP notes and the subordinated voting note, and (3) unaudited pro forma
and equivalent pro forma financial information on a per share basis. The
unaudited pro forma financial data assumes that the merger was consummated
January 1, 1997, and gives effect to the merger as a purchase under generally
accepted accounting principles. The unaudited pro forma per share data for
Inland are based upon the number of outstanding shares of Inland common stock
adjusted to include the number of shares of Inland common stock that would be
issued in the merger. The unaudited equivalent pro forma per share data for
Ryerson Tull are based on the unaudited pro forma amounts per share for Inland
multiplied by the exchange ratio of 0.61.
The information set forth below is qualified in its entirety by reference to,
and should be read in conjunction with, the historical consolidated financial
data of Inland and Ryerson Tull incorporated by reference herein and the pro
forma condensed combined financial data of Inland and Ryerson Tull included
herein.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended
1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
Inland:
Income per share from continuing
operations:
Basic:
Historical............................ $ 0.79 $ 1.13
Historical, as adjusted............... 2.17 3.36
Pro forma............................. 2.08 3.26
Diluted:
Historical............................ 0.75 1.08
Historical, as adjusted............... 2.16 3.35
Pro forma............................. 2.07 3.25
Book value per share:
Historical............................ 26.57 17.27
Historical, as adjusted............... 26.73 24.62
Pro forma............................. 25.72 23.86
Cash dividends per share:
Historical............................ 0.15 0.20
Pro forma............................. 0.15 0.20
Ryerson Tull:
Income per share from continuing
operations:
Historical--basic and diluted......... $ 0.92 $ 1.60
Equivalent pro forma--basic........... 1.27 1.99
Equivalent pro forma--diluted......... 1.26 1.98
Book value per share:
Historical............................ 11.81 10.88
Equivalent pro forma.................. 15.69 14.55
Cash dividends per share:
Historical............................ -- --
Pro forma............................. -- --
</TABLE>
4
<PAGE>
The Meeting
The meeting will be held on Thursday, February 25, 1999 at 30 West Monroe
Street, 13th Floor, Chicago, Illinois, at 2:00 p.m. Chicago time. At the
meeting, you will be asked to consider and vote upon the merger.
Inland holds shares of Ryerson Tull which represent approximately 96% of the
voting power of Ryerson Tull. Inland intends to vote in favor of the merger,
and therefore the merger will be approved. Your approval is not necessary to
approve the merger.
The Merger Agreement and the Merger
Recommendations of the Board of Directors
Ryerson Tull's Board of Directors formed a special committee to consider the
proposed merger, negotiate with Inland and recommend to Ryerson Tull's Board of
Directors whether to accept or reject the terms of the merger. This special
committee is made up of the four independent directors of the Ryerson Tull
Board of Directors and is called the "Independent Directors Committee."
Both the Independent Directors Committee and the full Ryerson Tull Board of
Directors have determined that the merger is fair to, and in the best interests
of, Ryerson Tull and its stockholders, other than Inland. The Independent
Directors Committee unanimously approved the merger and recommended to the
Ryerson Tull Board of Directors that they:
. approve the merger; and
. recommend that Ryerson Tull's stockholders vote to approve the merger at
the meeting.
The Ryerson Tull Board of Directors unanimously approved the merger and
determined its advisability, and recommends that you vote to approve the merger
at the meeting. See "The Merger Agreement and the Merger--Background of the
Merger" and "The Merger Agreement and the Merger--Reasons for the Merger;
Recommendations of the Board of Directors."
Interests of Ryerson Tull Directors and Officers in the Merger that are
Different from Your Interests
Some of the members of the Ryerson Tull Board of Directors and some of
Ryerson Tull's executive officers have personal interests in the merger.
. Directors and officers of Ryerson Tull own shares of Ryerson Tull class A
common stock and Inland common stock.
. The directors of Ryerson Tull, other than Robert J. Darnall, will become
directors of Inland.
. Executive officers of Ryerson Tull will become executive officers of
Inland.
. The independent directors of Ryerson Tull will receive shares of Ryerson
Tull class A common stock for serving on the Independent Directors
Committee.
. The options to purchase Ryerson Tull class A common stock held by
officers of Ryerson Tull will become options to purchase Inland common
stock, subject to adjustment to reflect the exchange ratio.
5
<PAGE>
. Robert J. Darnall, James A. Henderson and Jean-Pierre Rosso, who are
currently Ryerson Tull directors, are also Inland directors.
These interests are described under "The Merger Agreement and the Merger--
Interests of Certain Persons in the Merger" and "Business and Management--
Management and Operations After the Merger."
The Independent Directors Committee and the full Ryerson Tull Board of
Directors were aware of these interests and considered them when they approved
the merger.
Opinion of the Financial Advisor to the Independent Directors Committee
Morgan Stanley & Co. Incorporated delivered to the Independent Directors
Committee its written opinion dated October 27, 1998, stating as of that date
and based upon the factors and assumptions described in their opinion that the
exchange ratio pursuant to the merger agreement is fair from a financial point
of view to holders of shares of Ryerson Tull class A common stock, other than
shares owned by Inland or any direct or indirect subsidiary of Inland. Their
opinion is attached to this proxy statement/prospectus as Annex B. You should
read it completely to understand the assumptions made, matters considered and
limitations of the review made by Morgan Stanley in providing their opinion.
What We Need to Do to Complete the Merger
The completion of the merger depends on the absence of any injunction or
legal restraint blocking the merger or government proceedings trying to block
the merger, and other conditions which are sure to be satisfied.
Inland and Ryerson Tull can decide to complete the merger even though
conditions have not been met. As of the date of this proxy
statement/prospectus, neither Inland nor Ryerson Tull expects that any
conditions will be waived. The approval of Inland's stockholders is not
required, and Inland is not seeking the approval of the merger from its
stockholders. See "The Merger Agreement and the Merger--Conditions to
Completion of the Merger."
Termination of the Merger Agreement
Inland and Ryerson Tull can agree to terminate the merger agreement at any
time without completing the merger, even if the Ryerson Tull stockholders have
approved it, but only if at least two-thirds of the Independent Directors
Committee agrees.
Also, either Inland or Ryerson Tull can, without the consent of the other,
terminate the merger agreement if:
. a court has prohibited the merger and no appeal is possible;
. the merger is not completed by March 31, 1999, unless the failure is due
to a violation of the merger agreement by the party that wants to
terminate the merger; or
. the other party breaches the merger agreement (and does not correct the
breach promptly) in a way that would entitle the party that wants to
terminate the merger to not complete the merger, if that party has not
materially breached the merger agreement.
6
<PAGE>
Two-thirds of the Independent Directors Committee must approve Ryerson Tull's
decision to terminate in the first and second cases above. In the last case,
only the Independent Directors Committee can decide to terminate the merger on
behalf of Ryerson Tull.
In addition, the Independent Directors Committee on behalf of Ryerson Tull
can terminate the merger agreement if they determine they can no longer
recommend the merger. See "The Merger Agreement and the Merger--Termination of
the Merger Agreement."
Modifying or Amending the Merger Agreement
Inland and Ryerson Tull can amend the merger agreement, and each can waive
its right to require the other to comply with the merger agreement, where the
law allows. However, neither may do so without the approval of the affected
stockholders after the Ryerson Tull stockholders approve the merger, if the
amendment or waiver reduces or changes the consideration that will be received
by holders of Ryerson Tull class A common stock. Both a majority of the Ryerson
Tull Board of Directors and at least two-thirds of the Independent Directors
Committee must approve any modification or amendment of the merger agreement.
Expenses
Inland and Ryerson Tull will each pay its own expenses, except that Inland
and Ryerson Tull will evenly divide the costs and expenses that they incur in
printing and mailing this document and the registration fees paid to the
Securities and Exchange Commission.
Management After the Merger
At the effective time of the merger, the Inland Board of Directors will be
made up of the directors who are currently on the Ryerson Tull Board of
Directors, other than Robert J. Darnall, and it is expected that the executive
officers of Ryerson Tull will become the executive officers of Inland following
the merger. A new director will also be appointed to the Inland Board of
Directors. See "Business and Management--Management and Operations After the
Merger."
Name Change
Shortly after the merger, Ryerson Tull will merge with Inland and Inland will
change its name to "Ryerson Tull, Inc." Following that merger, the shares of
Inland common stock will trade on the New York Stock Exchange under the symbol
"RT."
7
<PAGE>
Selected Historical Financial Information of Inland
The following table sets forth selected consolidated financial information of
Inland. On July 16, 1998, Inland filed a Current Report on Form 8-K with the
Securities and Exchange Commission which presents the results of ISC as results
from discontinued operations. Consolidated statement of operations information
for the years ended December 31, 1997, 1996 and 1995 has been derived from, and
should be read in conjunction with, the audited consolidated financial
statements and notes thereto appearing in the Form 8-K incorporated by
reference herein. The statement of operations data for the years ended December
31, 1994 and 1993 has been derived from other unaudited financial statements
that have been adjusted to reflect the results of ISC as results from
discontinued operations. Balance sheet information for each of the five years
has been derived from audited financial information which includes the assets
and liabilities of ISC.
The statement of operations data for the nine-month periods ended September
30, 1998 and 1997 and the balance sheet as of September 30, 1998 are derived
from unaudited consolidated interim financial statements appearing in Inland's
Quarterly Report on Form 10-Q for the nine months ended September 30, 1998
incorporated by reference herein. In the opinion of Inland, this data reflects
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the results of operations and financial condition for
such periods. Results for interim periods should not be considered as
indicative of results for any other periods or for the year.
<TABLE>
<CAPTION>
Inland Steel Industries, Inc.
--------------------------------------------------------------
For the nine
months ended
September 30, For the year ended December 31,
----------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $2,154.3 $2,117.3 $2,804.0 $2,407.9 $2,464.0 $2,211.2 $1,903.1
Income from continuing
operations............. 42.1 48.7 64.5 78.1 77.7 53.5 22.1
Basic income per common
share from continuing
operations............. 0.79 0.86 1.13 1.42 1.24 0.58 (0.28)
Diluted income per
common share from
continuing operations.. 0.75 0.81 1.08 1.34 1.18 0.54 (0.28)
Weighted average common
shares outstanding--
Basic.................. 45.4 48.9 48.9 48.8 47.3 43.1 35.5
Weighted average common
shares outstanding--
Diluted................ 48.3 52.1 51.9 51.8 50.5 46.6 35.5
Cash dividends per
common share........... $ 0.15 $ 0.15 $ 0.20 $ 0.20 $ 0.20 -- --
</TABLE>
<TABLE>
<CAPTION>
December 31,
September 30, --------------------------------------------
1998 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Total assets............ $1,488.7 $3,646.5 $3,541.6 $3,558.3 $3,353.4 $3,435.8
Long-term debt and
redeemable preferred
stock, less current
maturities............. 331.5 704.9 773.2 784.5 890.9 962.1
Stockholders' equity.... 618.5 900.1 789.0 748.6 509.2 397.6
</TABLE>
8
<PAGE>
Selected Historical Financial Information of Ryerson Tull
The following table sets forth selected consolidated financial information of
Ryerson Tull. Consolidated statement of operations information for the years
ended December 31, 1997, 1996 and 1995 has been derived from, and should be
read in conjunction with, the audited consolidated financial statements and
notes thereto appearing in Ryerson Tull's Annual Report on Form 10-K for the
year ended December 31, 1997 incorporated by reference herein. The statement of
operations data for the years ended December 31, 1994 and 1993 are derived from
other audited financial statements. Balance sheet information for each of the
five years has been derived from audited financial information.
The statement of operations data for the nine-month periods ended September
30, 1998 and 1997 and the balance sheet as of September 30, 1998 are derived
from unaudited consolidated interim financial statements appearing in Ryerson
Tull's Quarterly Report on Form 10-Q for the nine months ended September 30,
1998 incorporated by reference herein. In the opinion of Ryerson Tull, this
data reflects all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of operations and financial
condition for such periods. Results for interim periods should not be
considered as indicative of results for any other periods or for the year.
In the second quarter of 1996, Inland undertook a recapitalization involving
Ryerson Tull. As part of the recapitalization, Ryerson Tull exchanged existing
shares of Ryerson Tull common stock, all of which were owned by Inland, for
34,000,000 shares of Ryerson Tull class B common stock. Ryerson Tull also sold
5,200,000 shares of Ryerson Tull class A common stock in a public offering.
Ryerson Tull used a portion of its cash and the net proceeds of the offering to
pay a $445.9 million dividend to Inland.
<TABLE>
<CAPTION>
Ryerson Tull, Inc.
--------------------------------------------------------------
For the nine
months ended
September 30, For the year ended December 31,
----------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $2,128.8 $2,106.4 $2,789.5 $2,394.0 $2,450.1 $2,197.5 $1,893.3
Income from continuing
operations............. 36.3 47.0 62.8 63.3 88.5 53.3 26.7
Basic income per common
share from continuing
operations............. 0.92 1.20 1.60 1.72 2.60 1.57 0.79
Diluted income per
common share from
continuing operations.. 0.92 1.20 1.60 1.72 2.60 1.57 0.79
Weighted average common
shares outstanding--
Basic.................. 39.3 39.3 39.3 36.7 34.0 34.0 34.0
Weighted average common
shares outstanding--
Diluted................ 39.5 39.3 39.3 36.7 34.0 34.0 34.0
Cash dividends per
common share........... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
December 31,
September 30, ------------------------------------
1998 1997 1996 1995 1994 1993
------------- -------- ------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Total assets............... $1,274.7 $1,177.3 $932.2 $972.6 $891.3 $828.3
Long-term debt, less
current maturities........ 257.0 257.0 263.2 18.9 23.6 28.2
Stockholders' equity....... 464.6 427.5 364.4 668.5 580.0 526.7
</TABLE>
9
<PAGE>
Pro Forma Financial Statements of Inland
The following describes the effect of the merger on Inland's unaudited pro
forma income statements for the nine months ended September 30, 1998 and the
year ended December 31, 1997 and its unaudited pro forma balance sheet as of
September 30, 1998, based on the historical consolidated financial statements
of Inland and Ryerson Tull under the assumptions and reflecting the adjustments
described below.
Ryerson Tull is a majority-owned subsidiary which is fully consolidated into
the results of Inland. The pro forma adjustments reflect the elimination of the
minority interest and adjustments required for the application of purchase
accounting discussed below. The pro forma presentation also reflects the
ISC/Ispat transaction, the repurchase of Inland common stock in the tender
offer, the repurchase of Inland common stock in open market purchases,
adjustments related to the ISC/Ispat transaction, the redemption of all
outstanding shares of Inland series E preferred stock and the liquidation of
the ESOP notes and the subordinated voting note. The pro forma condensed
financial statements and the accompanying notes should be read in conjunction
with the historical financial statements and related notes of Inland and
Ryerson Tull, incorporated by reference herein.
The pro forma condensed consolidated financial statements are provided for
informational purposes only and do not purport to represent what Inland's
financial position and results of operations would actually have been had the
merger and other pro forma adjustments in fact occurred at the dates indicated.
The unaudited pro forma condensed consolidated statement of operations and
condensed consolidated balance sheet of Inland illustrate the estimated effects
of the merger as if that transaction had occurred for the statement of
operations presentation as of January 1, 1997, and for the balance sheet
presentation as of September 30, 1998. The entire unaudited pro forma financial
statements are set forth under "Unaudited Pro Forma Financial Information."
For financial accounting purposes, the acquisition of the minority interest
of Ryerson Tull will be accounted for using the purchase method of accounting.
Accordingly, Ryerson Tull's assets and liabilities, to the extent they relate
to the minority interest acquired, will be adjusted to reflect their fair
values. For the pro forma presentation, the entire adjustment was made to
property, plant & equipment. The application of the final purchase price will
therefore differ from that set forth herein once final asset and liability
valuations have been performed.
10
<PAGE>
<TABLE>
<CAPTION>
Inland Steel Industries, Inc.
----------------------------------------------------------------
Pre-merger Merger
Pro Forma Historical, Pro Forma
Historical Adjustments (a) as adjusted Adjustments (a) Pro Forma
---------- --------------- ----------- --------------- ---------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data
(nine months ended
September 30, 1998)
Net sales............... $2,154.3 $ -- $2,154.3 $ -- $2,154.3
Income from continuing
operations............. 42.1 5.3 (b) 47.4 4.9(g) 52.3
Earnings per share from
continuing operations:
Basic................. $ 0.79 -- $ 2.17 -- $ 2.08
Diluted............... 0.75 -- 2.16 -- 2.07
Consolidated Income
Statement Data
(year ended December
31, 1997)
Net sales............... $2,804.0 $ -- $2,804.0 $ -- $2,804.0
Income from continuing
operations............. 64.5 8.4 (b) 72.9 8.4(g) 81.3
Earnings per share from
continuing operations:
Basic................. $ 1.13 -- $ 3.36 -- $ 3.26
Diluted............... 1.08 -- 3.35 -- 3.25
Consolidated Balance
Sheet Data
(as of September 30,
1998)
Total assets............ $1,488.7 $(126.1)(c) $1,362.6 $ (1.3)(h) $1,361.3
Total current
liabilities............ 313.5 (18.8)(d) 294.7 -- 294.7
Total long-term
liabilities............ 493.6 (74.5)(e) 419.1 -- 419.1
Total stockholders'
equity................. 618.5 (32.8)(f) 585.7 61.8(i) 647.5
</TABLE>
- --------
(a) Detailed explanations of the pre-merger and merger pro forma adjustments
may be found under "Unaudited Pro Forma Financial Information."
(b) To reflect an increase in income from continuing operations due to the
after-tax impact of reduced interest expense.
(c) To reflect a reduction in cash due to termination of the ESOP, adjustments
related to the ISC/Ispat transaction and Inland common stock repurchases,
$124.2, and a reduction of a receivable as a result of the ISC/Ispat
transaction adjustment, $1.9.
(d) To reflect a decrease in current liabilities related to income taxes
payable, $4.9, accrued salaries and wages, $1.6, the ESOP interest payable,
$0.8, and the current portion of the ESOP notes payable, $11.5.
(e) To reflect a decrease in the long-term debt due to repayment of the ESOP
notes.
(f) To reflect a decrease in stockholders' equity due to the termination of
ESOP, $39.3, net favorable adjustments related to the ISC/Ispat
transaction, $15.6, and the repurchase of Inland common stock, $9.1.
(g) To reflect the elimination of the previously recorded minority interest.
(h) To reflect an estimated adjustment related to the application of purchase
accounting.
(i) To reflect the issuance of additional shares of Inland common stock as a
result of the merger.
11
<PAGE>
RISK FACTORS
Holders of Ryerson Tull class A common stock should consider carefully the
factors set forth below as well as the other information contained in this
proxy statement/prospectus.
Because the Exchange Ratio is Fixed, You May Not Receive a Premium at the Time
of the Merger
The merger agreement does not permit the parties to terminate the merger or
adjust the exchange ratio just because the market value of a share of Ryerson
Tull class A common stock is other than the market value of 0.61 shares of
Inland common stock. Although this exchange ratio reflected a premium to be
paid to holders of Ryerson Tull class A common stock as of October 14, 1998,
the last day before Inland and Ryerson Tull announced the terms of the merger,
the market value of a share of Ryerson Tull class A common stock could be equal
to or greater than the market value of 0.61 shares of Inland common stock at
the effective time of the merger.
Inland's Liabilities, Which Did Not Affect You Before the Merger was Announced,
Now Affect You
Inland has agreed to indemnify Ispat for various losses, should they arise,
in connection with the ISC/Ispat transaction. These obligations may adversely
affect the value of the Inland common stock you receive in the merger. While
Inland's indemnification obligation for most of the losses is limited to $90
million in the aggregate, some of Inland's indemnification obligations are not
limited. At present, as a subsidiary of Inland, Ryerson Tull generally is not
responsible for the liabilities of Inland, unless Ryerson Tull expressly agrees
to be responsible. Prior to the signing of the merger agreement, the value of
your investment in Ryerson Tull was not, therefore, generally affected by the
nature or amount of Inland's liabilities. As a stockholder of Inland, the value
of your investment will be affected directly by Inland's liabilities and
indirectly by Ryerson Tull's liabilities.
THE COMPANIES
Inland Steel Industries, Inc.
Inland is a holding company whose principal asset is 100% of the outstanding
shares of the Ryerson Tull class B common stock. The Ryerson Tull class B
common stock represents approximately 87% of the economic interest, and
approximately 96% of the voting power, in Ryerson Tull. Ryerson Tull represents
99% of the consolidated operating revenues, the consolidated operating income
and the operating assets of Inland. For a brief description of Ryerson Tull's
business, see "--Ryerson Tull, Inc." below. Inland also holds cash and a note
receivable from Ryerson Tull. Inland is also the sole stockholder of Inland
International, Inc., through which Inland conducts its international
operations.
Additional information concerning Inland and its subsidiaries is included in
the Inland documents filed with the Securities and Exchange Commission and
incorporated herein by reference. See "Additional Information--Where You Can
Find More Information."
12
<PAGE>
ISC/Ispat Transaction
On July 16, 1998, ISC, a wholly owned subsidiary of Inland that constituted
the steel manufacturing and related operations segment of Inland's consolidated
operations, merged into a subsidiary of Ispat in the ISC/Ispat transaction
pursuant to an agreement and plan of merger dated as of May 27, 1998 and became
a wholly owned subsidiary of Ispat. Pursuant to the merger, Inland received
approximately $1.1 billion in cash in exchange for the outstanding common stock
and preferred stock of ISC and in connection with the repayment of intercompany
debt of ISC held by Inland. As a result of certain post-closing balance sheet
and net worth adjustments agreed upon by the parties under the ISC/Ispat merger
agreement, Inland's after-tax gain on the transaction is expected to be reduced
by approximately $4 million.
Pursuant to the ISC/Ispat merger agreement, Inland agreed to indemnify Ispat
for losses, if they should arise, exceeding certain minimum amounts in
connection with breaches of representations and warranties contained in the
ISC/Ispat merger agreement and for expenditures and losses, if they should
arise, relating to certain environmental liabilities exceeding, in most
instances, minimum amounts. The maximum liability for which Inland can be
responsible with respect to such obligations is $90 million in the aggregate.
There are also certain other covenant commitments made by Inland contained in
the ISC/Ispat merger agreement which are not subject to a maximum amount. In
general, Ispat must make indemnification claims with respect to breaches of
representations and warranties prior to March 31, 2000; however, claims
relating to breaches of representations and warranties related to tax matters
and certain organizational matters must be made within 90 days after the
expiration of the applicable statute of limitations, and claims with respect to
breaches of representations and warranties related to environmental matters
must be made prior to July 16, 2003. Ispat has advised Inland of certain
environmental expenses which Ispat has incurred, but they are below the minimum
indemnification thresholds of the ISC/Ispat merger agreement and Inland has not
made any indemnification payments to Ispat. Inland has purchased environmental
insurance with coverage up to $90 million payable directly to Ispat and ISC.
The insurance is expected to cover substantially the same environmental matters
for which Inland has agreed to indemnify Ispat.
As part of the ISC/Ispat transaction, the Inland Steel Industries Pension
Plan (the "ISC Pension Plan"), in which employees of both ISC and Inland
participated, was transferred to ISC. Inland's remaining employees that
formerly had participated in the ISC Pension Plan became participants in
Ryerson Tull's pension plan. The ISC Pension Plan has unfunded benefit
liabilities on a termination basis, as determined by the Pension Benefit
Guaranty Corporation, an agency of the U.S. government. As a condition to
completing the ISC/Ispat transaction, Ispat, ISC, Ryerson Tull and Inland
entered into an agreement with the Pension Benefit Guaranty Corporation to
provide certain financial commitments to reduce the underfunding of the ISC
Pension Plan and to secure ISC Pension Plan unfunded benefit liabilities on a
termination basis. These requirements include a Ryerson Tull guaranty of $50
million, for five years, of the obligations of Ispat and ISC to the Pension
Benefit Guaranty Corporation in the event of a distress or involuntary
termination of the ISC Pension Plan. The guaranty is included in the $90
million limit on Inland's indemnification obligations.
The ISC/Ispat merger agreement prohibits Inland and its material subsidiaries
from entering into or permitting the sale of all or substantially all the
assets of Inland or any of its
13
<PAGE>
material subsidiaries, any acquisition of a majority of the capital stock of
Inland or any of its material subsidiaries by any person, or any merger,
consolidation, reorganization, spin-off, split-up, recapitalization or similar
transaction involving Inland or any of its material subsidiaries, or paying or
declaring any extraordinary dividend (other than the distribution by Inland of
the proceeds of the ISC/Ispat transaction) without the written consent of
Ispat, except where, subject to certain conditions, the net worth of Inland or
any successor to Inland after any such transaction would be equal to or greater
than the net worth of Inland prior to such transaction. Inland has committed to
use its reasonable efforts to ensure that any counterparty to any transaction
referred to in the preceding sentence expressly assumes Inland's
indemnification obligations under the ISC/Ispat merger agreement. The merger
between Ryerson Tull and RT Merger Sub will neither violate any of the
prohibitions nor trigger any of the commitments set forth in this provision of
the ISC/Ispat merger agreement, and Ispat's approval is therefore not required
in connection with the merger.
Inland has agreed that, prior to July 16, 2003, it will not engage in the
manufacture, processing, sale, marketing or distribution of steel products or
any other business conducted by ISC as of the date of the ISC/Ispat merger
agreement anywhere in the world that competes in any material respect with the
business conducted by ISC as of the date of the ISC/Ispat merger agreement. The
ISC/Ispat merger agreement does not, however, restrict Inland's ability to own
or conduct its other existing businesses, including the steel service,
distribution and material processing businesses conducted by Ryerson Tull, or
from expanding such businesses, so long as no such expansion includes, directly
or through the ownership of an equity interest in any person, any business
engaged in steel manufacturing or steel manufacturing assets, except that
Inland may acquire an interest in any business (the "Acquired Business") some
or all of the operations of which would otherwise violate the foregoing
provisions (the "Competing Operations"), so long as the annual revenues
attributed to the Competing Operations do not exceed 20% of the annual revenues
of the Acquired Business or, if they do, the acquiring entity divests itself of
the Competing Operations as soon as practicable, but no later than 12 months
after such acquisition.
Inland agreed under the ISC/Ispat merger agreement to remove the word
"Inland" from its name by November 16, 1998 (since extended as described below)
and to discontinue use of the red diamond logo by January 16, 1999, while Ispat
agreed not to unreasonably withhold its consent to a reasonable extension of
such deadlines if Inland commenced actions reasonably calculated to change its
name and to discontinue its use of the red diamond logo as promptly as
practicable. Inasmuch as Inland has announced its intention to merge Ryerson
Tull into Inland promptly after the effective time of the merger and to change
Inland's name to "Ryerson Tull, Inc." in that merger, Ispat has agreed to
extend the deadline for the change of name. Inland and Ryerson Tull are phasing
out their use of the red diamond logo and have requested an extension of the
January 16 deadline from Ispat. Neither Inland nor Ryerson Tull anticipate that
Ispat will object to a reasonable extension of the deadline.
On November 1, 1998, Robert J. Darnall, Inland's Chairman, President and
Chief Executive Officer, resigned the positions of President and Chief
Executive Officer. On December 17, 1998, Ispat announced that Mr. Darnall had
been appointed as President and Chief Executive Officer of Ispat North America
Inc.
14
<PAGE>
Use of ISC/Ispat Transaction Proceeds
On July 17, 1998, Inland used $56.3 million of the proceeds of the ISC/Ispat
transaction to redeem 1,145,394 shares of its series E ESOP convertible
preferred stock, at a price per share of $48.946 plus accrued and unpaid
dividends (these shares were held in an employee stock ownership plan for the
benefit of employees remaining with ISC following the completion of the
ISC/Ispat transaction).
On July 20, 1998, Inland commenced a tender offer to repurchase a portion of
its outstanding shares. On August 5, 1998, Greenway Partners, L.P. and related
parties filed suit in the Delaware Chancery Court seeking to enjoin Inland from
consummating the tender offer. Greenway alleged that, given the number of
shares of Inland common stock that it owned, the size of the tender offer and
the terms of the Inland rights agreement, Greenway was coerced into tendering
its shares of Inland common stock in the tender offer or risk being declared an
"adverse person" by Inland's Board of Directors, which would trigger the
separation of the rights under Inland's rights agreement. The court denied
Greenway's request for a temporary restraining order, and Greenway tendered all
of its Inland common stock into the offer. Greenway has reserved its rights to
seek appropriate remedies, including rescission of the purchase of its
approximately 2.9 million shares of Inland common stock or damages. It is
unclear what measure of damages, if any, the court would apply in the case. If
Greenway is successful in its suit, Inland does not anticipate that other
stockholders who participated in the tender offer would be entitled to
rescission or damages. On August 24, 1998, Inland purchased approximately 26.5
million shares of Inland common stock at a price of $30.00 per share, $794.5
million in total, pursuant to the tender offer.
On August 3, 1998, Inland used approximately $114 million to prepay its
10.23% subordinated voting notes held by Nippon Steel Corporation.
Through October 2, 1998, Inland repurchased approximately 1.8 million shares
of Inland common stock for an aggregate of $35.1 million under stock repurchase
programs.
On November 9, 1998, Inland redeemed the remaining 1.8 million shares of
series E ESOP convertible preferred stock at a price of $48.946 per share plus
accrued and unpaid dividends for an aggregate of $90.9 million. On November 10,
1998, the related ESOP notes were repaid with $63.4 million from the ESOP trust
(representing the proceeds from the redemption of series E ESOP convertible
preferred stock that had not been allocated to participants' accounts) and
$39.7 million from Inland.
Sale of Inland Engineered Materials Corporation
On November 17, 1998, Inland sold Inland Engineered Materials Corporation, a
wholly owned subsidiary of Inland whose subsidiaries produced metal powders,
powdered metal components and electrical device components, for approximately
$29 million in cash.
Fourth Quarter Results
On January 25, 1999, Inland reported net income of $11.1 million, or $0.46
per diluted share, for the fourth quarter of 1998, compared to net income of
$17.7 million, or $0.30 per diluted share, for the fourth quarter of 1997.
Inland earned $5.6 million, or $0.22 per diluted share, from continuing
operations and recognized an extraordinary after-tax loss of $10.1 million from
the redemption of its ESOP notes. For the fourth quarter of 1998, Inland
reported net sales of $628.5 million, compared to net sales of $686.7 million
for the fourth quarter of
15
<PAGE>
1997. For 1998, net income totaled $550.9 million, or $13.02 per diluted share,
and Inland earned $47.7 million, or $0.99 per diluted share, from continuing
operations and $13.8 million, or $0.33 per diluted share, from discontinued
operations. Inland's 1998 net income included a $510.8 million after-tax gain
from the sale of ISC and an extraordinary after-tax loss of $21.4 million from
prepaying its 10.23% subordinated voting notes and repaying the ESOP notes.
Ryerson Tull, Inc.
Ryerson Tull is the sole stockholder of Ryerson and Tull. Ryerson Tull has a
single business segment, which is comprised of Ryerson and Tull, leading steel
service, distribution and materials processing organizations. Ryerson Tull also
owns 50% of Ryerson de Mexico, a joint venture general line metals service
center and processor with facilities in Mexico.
Ryerson Tull conducts its materials distribution operations in the United
States through its operating subsidiaries, Ryerson and Tull, and in Mexico
through Ryerson de Mexico, and is organized into five business units along
regional and product lines. Ryerson Tull is the largest metals service center
in the United States based on sales revenue, with 1997 sales of $2.8 billion.
Ryerson Tull has a current U.S. market share of approximately 10%, based on its
analysis of data prepared by the Steel Service Center Institute. Ryerson Tull
distributes and processes metals and other materials throughout the continental
United States, and is among the largest purchasers of steel in the United
States. In 1996, Ryerson Tull completed an initial public offering of its class
A common stock at $16.00 per share representing approximately 13% of the post-
offering economic interest in and approximately 4% of the post-offering voting
power in Ryerson Tull.
From time to time, Ryerson Tull considers making strategic acquisitions of
companies, businesses or assets that it believes complement its operations. As
of the date of this proxy statement/prospectus, Ryerson Tull does not have any
binding agreement, commitment or understanding relating to any such
acquisitions, except as described below.
Additional information concerning Ryerson Tull and its subsidiaries is
included in the Ryerson Tull documents filed with the Securities and Exchange
Commission and incorporated herein by reference. See "Additional Information--
Where You Can Find More Information."
Purchase of Washington Specialty Metals
On January 7, 1999, Ryerson Tull announced that it had signed a definitive
agreement to purchase Washington Specialty Metals Corporation and Washington
Specialty Metals, Inc., metals service centers specializing in stainless steel,
for approximately $70 million in cash. Both companies, with combined 1998 sales
of approximately $140 million, are wholly owned subsidiaries of Bethlehem Steel
Corporation. Subject to regulatory clearances and certain closing conditions,
the transaction is expected to close on January 31, 1999.
Fourth Quarter Loss
On January 25, 1999, Ryerson Tull reported a net loss of $1.4 million, or
$0.03 per share, for the fourth quarter of 1998, compared to net income of
$15.8 million, or $0.40 per share, for the fourth quarter of 1997, after one-
time gains recorded in the fourth quarter of 1997, due to a decline in metal
prices and a slow-down in overall market demand. Ryerson Tull's average selling
price for the quarter was 5.7% below the year-ago quarter and 2.2% below the
third quarter. Net sales declined 8.7% on a 3.2% decline in tons shipped.
Ryerson Tull's net income
16
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was $35.0 million, or $0.89 per share, for 1998, compared to $62.8 million, or
$1.60 per share, in 1997, after one-time gains recorded in 1997. For 1998, net
sales declined 1.3% on a 2.9% increase in tons shipped. Market share in the
fourth quarter of 1998 was an estimated 10.0%, based on data from the Steel
Service Center Institute. Market share for 1998 was an estimated 10.1%,
compared to 10.2% for 1997.
THE MEETING
Purpose of the Meeting
At the meeting, you will be asked to consider and vote upon:
. a proposal to approve the merger; and
. such other business related to matters incidental to the approval of the
merger as may properly be brought before the meeting.
The Ryerson Tull Board of Directors is not aware, as of the date of mailing
of this proxy statement/prospectus, of any other matters that may properly come
before the meeting. If any such other matters properly come before the meeting,
or any adjournment or postponement thereof, the persons named in the Ryerson
Tull proxy intend to vote proxies in accordance with their best judgment on any
such matters.
The Independent Directors Committee, which was created to consider the
proposed merger, negotiate with Inland and recommend to the full Ryerson Tull
Board of Directors whether to accept or reject the merger, after careful
consideration, unanimously recommended to the Ryerson Tull Board of Directors
that the merger be approved by the stockholders of Ryerson Tull. The entire
Ryerson Tull Board of Directors also carefully reviewed and considered the
terms and conditions of the merger and, after receipt of the Independent
Directors Committee's recommendation, concluded that the merger is in the best
interests of Ryerson Tull and its stockholders. Accordingly, by a unanimous
vote of the directors, the Ryerson Tull Board of Directors has approved the
merger and determined its advisability, and recommends that you vote to approve
the merger.
Date, Place and Time; Record Date
The meeting is scheduled to be held on Thursday, February 25, 1999 at 2:00
p.m. Chicago time, at 30 West Monroe Street, 13th Floor, Chicago, Illinois.
Holders of record of Ryerson Tull class A common stock and Ryerson Tull class B
common stock at the close of business on Monday, January 4, 1999 will be
entitled to notice of and to vote at the meeting. As of the record date,
5,345,187 shares of Ryerson Tull class A common stock were issued and
outstanding, and 34,000,000 shares of Ryerson Tull class B common stock were
issued and outstanding.
The meeting may be adjourned or postponed to another date or place for proper
purposes (including, without limitation, for the purpose of soliciting
additional proxies).
Your Voting Rights
Each stockholder of record on the record date is entitled to one vote for
each share of Ryerson Tull class A common stock and four votes for each share
of Ryerson Tull class B common stock held on each matter submitted to a vote at
the meeting. A majority of the outstanding shares of Ryerson Tull class A
common stock and Ryerson Tull class B common stock entitled to vote on a
matter, counted together as a single class, represented in person or by
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proxy, constitutes a quorum for consideration of such matters at the meeting.
If a quorum is present, the affirmative vote of at least a majority of the
votes entitled to be cast by the outstanding shares of Ryerson Tull class A
common stock and Ryerson Tull class B common stock, voting together as a single
class, is required to approve the merger. Abstentions will therefore have the
effect of votes against the merger. Inland controls 96% of the voting power of
Ryerson Tull. Inland intends to vote in favor of the merger, and therefore the
merger will be approved.
Giving and Revoking Your Proxy; Costs of Solicitation
Any holder of shares of Ryerson Tull class A common stock or Ryerson Tull
class B common stock may vote such stockholder's shares either in person or by
duly authorized proxy. The giving of a proxy by a Ryerson Tull stockholder will
not affect such stockholder's right to vote such shares if the stockholder
attends the meeting and desires to vote in person. Prior to the voting of a
proxy, such proxy may be revoked by the stockholder by delivering written
notice of revocation to the Corporate Secretary of Ryerson Tull, by executing a
subsequently dated proxy or by voting in person at the meeting. All shares
represented by effective proxies on the enclosed form of proxy received by
Ryerson Tull will be voted at the meeting in accordance with the terms of such
proxies. If no instructions are given, the proxies will be voted FOR the
approval of the merger.
Ryerson Tull will bear the cost of the solicitation of proxies for the
meeting, except that Ryerson Tull and Inland will share equally expenses
incurred in connection with the printing and filing of this proxy
statement/prospectus. Certain officers, directors, employees and agents of
Ryerson Tull may solicit proxies by correspondence, telephone, facsimile or
other electronic means, or in person, but without extra compensation. Ryerson
Tull will pay to banks, brokers, nominees and other fiduciaries their
reasonable charges and expenses incurred in forwarding the proxy soliciting
material to their principals.
No Appraisal Rights
Holders of Ryerson Tull class A common stock are not entitled to dissenters'
or appraisal rights in connection with the merger.
THE MERGER AGREEMENT AND THE MERGER
The following is a summary of the material terms of the merger agreement and
is qualified in its entirety by reference to the merger agreement. A copy of
the merger agreement is attached as Annex A to this proxy statement/prospectus
and is incorporated herein by reference.
General Description of the Merger
The merger agreement provides that, at the effective time of the merger, RT
Merger Sub will merge with and into Ryerson Tull, with Ryerson Tull continuing
in existence as the surviving corporation. Each share of Ryerson Tull class A
common stock issued and outstanding at the effective time of the merger (other
than shares owned by Inland or any direct or indirect subsidiary of Inland,
which will be canceled in the merger) will be converted into 0.61 shares of
Inland common stock. All of the outstanding shares of Ryerson Tull class B
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common stock will be canceled in the merger. Upon consummation of the merger,
Ryerson Tull will be a wholly owned subsidiary of Inland, market trading of
Ryerson Tull class A common stock will cease and Ryerson Tull will take steps
to terminate the registration of Ryerson Tull class A common stock under the
Securities Exchange Act of 1934. After such termination, Ryerson Tull will no
longer be subject to the reporting requirements of the Securities Exchange Act
of 1934.
Background of the Merger
On March 17, 1998, Inland announced that it had signed a binding letter
agreement with Ispat pursuant to which Ispat would acquire ISC, a wholly owned
subsidiary of Inland that constituted the steel manufacturing and related
operations segment of Inland's consolidated operations, with Inland receiving
approximately $1.1 billion in cash in exchange for the outstanding common stock
and preferred stock of ISC and in repayment of intercompany debt of ISC held by
Inland. See "The Companies--Inland Steel Industries, Inc.--ISC/Ispat
Transaction." Inland stated that it intended to distribute a significant
portion of the net proceeds from the sale of ISC to its stockholders and also
announced that it was considering a plan to combine Inland and Ryerson Tull
into one entity subsequent to the closing of the ISC/Ispat transaction.
On May 27, 1998, Inland announced that it had signed a definitive agreement
with Ispat. Inland also reaffirmed its intention to return a significant
portion of the net proceeds from the sale to the Inland stockholders through a
Dutch auction tender offer for Inland common stock soon after the closing of
the ISC/Ispat transaction. Inland again indicated that, following completion of
the tender offer, it intended to seek to combine Inland and Ryerson Tull.
On May 27, 1998, representatives of Inland advised the Ryerson Tull Board of
Directors that, following consummation of the tender offer, Inland intended to
propose a combination of Inland with Ryerson Tull. The representatives of
Inland indicated at such meeting that Inland contemplated that when it made
such a proposal after completion of its tender offer, Ryerson Tull's Board of
Directors would form the Independent Directors Committee to negotiate such
proposal on Ryerson Tull's behalf and that members of the Ryerson Tull Board of
Directors who were also members of the Inland Board of Directors or who were
employees of Inland and its subsidiaries (including Ryerson Tull) would not
participate in the Ryerson Tull Board of Directors' deliberations regarding
such proposal. The representatives of Inland further suggested that, in the
interests of both companies' stockholders, the Independent Directors Committee
should be formed immediately in anticipation of the receipt of a proposal from
Inland to enable the Independent Directors Committee to select independent
financial and legal advisors to assist the Independent Directors Committee in
evaluating and negotiating a transaction with Inland and to allow such advisors
to begin their due diligence investigation and evaluation of both Inland and
Ryerson Tull. Following discussion of such matters by the Ryerson Tull Board of
Directors, the Ryerson Tull Board of Directors formed the Independent Directors
Committee, comprised of the four independent directors of the Ryerson Tull
Board of Directors (Messrs. Donald S. Perkins, who had served on the Board of
Directors of Inland and its predecessor from 1967 to 1997, Richard G. Cline,
Jerry K. Pearlman, and Ronald L. Thompson), to select advisors and to negotiate
the terms of any proposed transaction. Mr. Perkins was designated as the
Chairman of the Independent Directors Committee.
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Shortly after May 27, 1998, the Independent Directors Committee retained
independent legal counsel and began the process of selecting an independent
financial advisor in connection with its evaluation and negotiation of a
possible transaction with Inland. On June 17, 1998, the Independent Directors
Committee decided to retain Morgan Stanley as its independent financial
advisor.
On July 16, 1998, the ISC/Ispat transaction was consummated. As a result,
Inland's primary business became metals distribution and processing, conducted
through Ryerson Tull, its majority-owned subsidiary, and its principal assets
are the shares of the Ryerson Tull class B common stock that it currently
holds, cash and other miscellaneous assets.
On July 20, 1998, Inland commenced a Dutch auction tender offer for shares of
Inland common stock and once again stated that it was considering combining
Inland and Ryerson Tull through a merger of Ryerson Tull into Inland or a
wholly owned subsidiary of Inland. Inland stated it expected that any such
transaction would be negotiated with the independent directors of Ryerson Tull
or a committee of such directors. At such time, however, the Inland Board of
Directors had not yet determined the form or any terms of any merger between
Inland and Ryerson Tull.
On July 22, 1998, the Independent Directors Committee held an organizational
meeting with its financial and legal advisors to discuss the combination
proposal that was expected to be forthcoming from Inland. Shortly thereafter,
the financial and legal advisors began their due diligence review of both
Ryerson Tull and Inland. On August 12, 1998, representatives of Morgan Stanley
and the legal advisors to the Independent Directors Committee met with senior
management of Ryerson Tull to conduct due diligence on Ryerson Tull. Subsequent
to this meeting, representatives of Morgan Stanley and the legal advisors to
the Independent Directors Committee had numerous discussions with Ryerson Tull
senior management regarding the initial due diligence findings, including
Ryerson Tull's business conditions and projected operating results.
On August 14, 1998, the Inland tender offer was completed. Inland announced
that pursuant to the tender offer it would purchase 26,484,526 shares of Inland
common stock from its stockholders at a price of $30 per share.
On August 26, 1998, Inland announced that its Board of Directors had
authorized the purchase of up to 2.35 million shares of Inland common stock,
representing approximately 10% of the outstanding shares, in open market or
private transactions. Inland stated that some cash proceeds from the ISC/Ispat
transaction remained available following completion of the tender offer and
that it believed that its then current market price was less than the fair
value of the Inland common stock (on August 25, 1998, the day prior to such
announcement, the closing price of the Inland common stock was $24.5625 per
share), making Inland's purchase of its shares a good investment for Inland
stockholders. Inland also announced that it was actively considering a
combination proposal with Ryerson Tull pursuant to which holders of shares of
Ryerson Tull class A common stock would receive Inland common stock. Inland
further stated that the timing and substance of any such proposal was dependent
upon a number of factors, including the relative values of Inland and Ryerson
Tull stock prices in the public market and the requirement that the exchange
ratio should be fair to stockholders of both Inland and Ryerson Tull.
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On September 9, 1998, counsel and the financial advisors to the Independent
Directors Committee and Inland met to discuss Inland's perspectives on a
potential transaction, including Inland's view of an appropriate exchange ratio
for such a combination. Inland's representatives stated that Inland was not
prepared to make a formal proposal at that time.
At a special meeting of the Inland Board of Directors on September 23, 1998,
the Inland Board of Directors determined to seek to merge with Ryerson Tull.
The Inland Board of Directors believed that a combination of Inland and Ryerson
Tull would be beneficial for the combined corporation and its stockholders for
the following reasons:
. it would simplify Inland's financial reporting structure;
. it would produce a single, publicly traded entity with a consolidated
stockholder base which more accurately reflects the ownership structure
and assets of the combined corporation;
. it would create a single class of equity useful for the acquisition of
other metals distribution and processing companies;
. it would enhance the capital structure of Ryerson Tull; and
. it would eliminate redundant costs.
The Inland Board of Directors approved a proposal to acquire all of the
outstanding publicly held shares of Ryerson Tull class A common stock in a
merger transaction, pursuant to which the Ryerson Tull stockholders (other than
Inland and its subsidiaries) would receive 0.54 of a share of Inland common
stock for each share of Ryerson Tull class A common stock (the "Proposal"). In
making the Proposal, the Inland Board of Directors analyzed the value of the
net assets represented by the publicly traded Ryerson Tull class A common stock
on the one hand as compared to the value of the net assets represented by the
Inland common stock on the other hand. The Inland Board of Directors believed
that a fair exchange ratio should reflect the relative contributions of the
holders of publicly held Ryerson Tull class A common stock and the holders of
Inland common stock to the combined companies to be formed by the merger. The
Inland Board of Directors believed that an exchange ratio of 0.54 represented a
premium to the Ryerson Tull stockholders (other than Inland) based on the
relative contributions to the combined companies of their 13% ownership
interest in Ryerson Tull compared to Inland's 87% ownership interest in Ryerson
Tull plus the substantial cash and other assets owned by Inland. On September
22, 1998, the day prior to the announcement of the Proposal, the closing price
of the Inland common stock was $19.375 per share, and the closing price of the
Ryerson Tull class A common stock was $12.50 per share.
Later that day, Mr. Robert J. Darnall, the Chairman, President and Chief
Executive Officer of Inland, delivered to Mr. Donald S. Perkins, the Chairman
of the Independent Directors Committee, a letter on behalf of the Inland Board
of Directors, the text of which follows:
Dear Don:
The Board of Directors of Inland Steel Industries, Inc. ("ISI") has
authorized me to extend an offer pursuant to which ISI would acquire all of the
outstanding shares of common stock of Ryerson Tull, Inc. ("Ryerson Tull") that
ISI does not now own, directly or indirectly. This transaction would be
effected by means of a merger between Ryerson Tull and ISI or a wholly owned
subsidiary of ISI in which stockholders of Ryerson Tull (other than ISI and its
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subsidiaries) would receive 0.54 of a share of Common Stock, par value $1.00
per share, of ISI for each whole share of Class A Common Stock, par value $1.00
per share, of Ryerson Tull held.
We understand that this offer will be considered by the special committee of
independent directors of Ryerson Tull. ISI is prepared to negotiate the
proposed transaction with the Ryerson Tull special committee and expects that
the final terms of any merger agreement between our two companies will be
subject to the approval of the special committee.
Members of senior management of ISI and our advisors would be pleased to
discuss this proposal with you or your representatives. Please let me know at
your earliest convenience how you wish to proceed.
Sincerely,
/s/ Robert J. Darnall
Robert J. Darnall
Chairman, President and Chief
Executive Officer
Also on September 23, 1998, Inland issued a press release stating that it had
offered to acquire, in a merger, all of the outstanding publicly held shares of
Ryerson Tull class A common stock pursuant to the terms of the Proposal.
Separately, Inland also announced that as of such date it had repurchased
approximately 1.4 million shares of Inland common stock pursuant to its
previously announced plan to repurchase up to 2.35 million shares of its common
stock. Inland also reported that, in addition to this prior authorization, the
Inland Board of Directors had authorized a further repurchase of up to an
additional 2.5 million shares of Inland common stock.
The Independent Directors Committee met on September 23, 1998 to discuss its
initial reaction to the Proposal and issued a press release stating that the
Independent Directors Committee was preparing to negotiate the terms of the
Proposal.
After the September 23, 1998 public announcement of the Proposal, three
lawsuits were filed by certain Ryerson Tull stockholders in the Delaware Court
of Chancery against Inland, Ryerson Tull and certain directors of Inland and
Ryerson Tull. These lawsuits are purported class actions on behalf of all
Ryerson Tull stockholders and allege that the Proposal is unfair and inadequate
because, among other things, the intrinsic value of the Ryerson Tull class A
common stock is allegedly materially in excess of the Proposal's exchange
ratio. The lawsuits also allege that Inland breached its duty of loyalty to
Ryerson Tull stockholders by using its control of Ryerson Tull to seek to force
Ryerson Tull stockholders to exchange their equity interest in Ryerson Tull for
unfair consideration. The lawsuits seek to enjoin consummation of the Proposal
or, in the alternative, request rescission and monetary damages.
On September 24, 1998, representatives of Morgan Stanley and the legal
advisors to the Independent Directors Committee met with Inland senior
management to conduct due diligence. Subsequent to this meeting,
representatives of Morgan Stanley and the legal advisors to the Independent
Directors Committee had numerous discussions with Inland senior management to
review the initial due diligence findings.
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On September 29, 1998, the Independent Directors Committee met to review the
preliminary valuation analysis of Morgan Stanley and the financial and legal
due diligence reports of Morgan Stanley and counsel to the Independent
Directors Committee. The Independent Directors Committee concluded that the
Proposal's exchange ratio of 0.54 shares of Inland common stock for each
outstanding publicly held share of Ryerson Tull class A common stock was not
adequate and decided to meet again on October 1, 1998 to further consider an
appropriate response to the Proposal.
The Independent Directors Committee met on October 1, 1998 to consider a
proposed response prepared by Morgan Stanley. After discussion and review of
additional materials provided by Morgan Stanley, the Independent Directors
Committee authorized Morgan Stanley to indicate to Inland that the Independent
Directors Committee would be willing to discuss (1) a cash offer price of
$17.50 per share of Ryerson Tull class A common stock or (2) a stock-for-stock
exchange ratio of 0.75 of a share of Inland common stock for each share of
Ryerson Tull class A common stock. On September 30, 1998, the day prior to the
Independent Directors Committee's authorization of the counterproposal, the
closing price of the Inland common stock was $21.75 per share, and the closing
price of the Ryerson Tull class A common stock was $13.1875 per share. The
Independent Directors Committee also directed Morgan Stanley to express the
Independent Directors Committee's view that, if Inland wanted to proceed with a
stock transaction, the Inland stock repurchase program should be halted in
order to ensure an investment grade rating for the surviving entity.
Representatives of Morgan Stanley communicated the Independent Directors
Committee's position to Inland representatives on October 1 and October 2,
1998.
On Friday, October 9, 1998, Inland representatives conveyed to Morgan Stanley
a revised proposal from Inland for a stock-for-stock merger at an exchange
ratio of 0.56 of a share of Inland common stock for each share of Ryerson Tull
class A common stock. This proposal reflected the then current market exchange
ratio of the Inland common stock to Ryerson Tull class A common stock. They
also indicated that Inland would not consider a cash offer for the Ryerson Tull
class A common stock. On October 8, 1998, the day prior to such offer by
Inland, the closing price of the Inland common stock was $17.9375 per share,
and the closing price of the Ryerson Tull class A common stock was $10.1875 per
share.
The Independent Directors Committee met on October 9, 1998 to discuss the
revised Inland proposal and concluded that it was not a meaningful increase
from its previous offer and was unacceptable. The Independent Directors
Committee authorized its Chairman, Mr. Perkins, to so inform Mr. Darnall.
On October 11, 1998, Mr. Perkins spoke with Mr. Darnall and relayed the
Independent Directors Committee's conclusion regarding Inland's revised
proposal. He also indicated that the Independent Directors Committee would
consider an exchange ratio of approximately 0.64, which would allow Ryerson
Tull public stockholders to maintain their current percentage ownership in
Ryerson Tull in the combined companies after the consummation of the merger.
On October 14, 1998, the Independent Directors Committee met with its
advisors. Mr. Darnall and Inland's financial and legal advisors later joined
the meeting and reviewed the negotiations to date. On October 13, 1998, the day
prior to such meeting, the closing price of
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the Inland common stock was $18.625 per share, and the closing price of the
Ryerson Tull class A common stock was $10.50 per share. Mr. Darnall presented a
revised proposal of either (1) an exchange ratio of 0.58 or (2) an exchange
ratio that would result in Ryerson Tull stockholders retaining their current
interest in the combined corporation after giving effect to Inland's announced
stock repurchase program of an aggregate total of 4.85 million shares of Inland
common stock.
After discussions in private, the Independent Directors Committee indicated
to the Inland representatives that it would consider an exchange ratio of 0.62
of a share of Inland common stock for each share of Ryerson Tull class A common
stock.
Mr. Darnall then presented a revised offer of an exchange ratio of 0.60. Mr.
Perkins indicated that an exchange ratio of 0.60 was not acceptable and
suggested that the meeting be adjourned.
On October 15, 1998, Mr. Perkins and Mr. Darnall conferred by telephone and
agreed that each could support an exchange ratio of 0.61, subject to:
. formal approval by the Independent Directors Committee, the Ryerson Tull
Board of Directors and the Inland Board of Directors;
. receipt by the Independent Directors Committee of a fairness opinion
from Morgan Stanley; and
. execution of a definitive merger agreement.
Later that same day, Inland and Ryerson Tull announced their agreement in
principle for a merger in which each publicly held share of Ryerson Tull class
A common stock would be exchanged for shares of Inland common stock at the
exchange ratio, subject to final approval by the Independent Directors
Committee, receipt by the Independent Directors Committee of a written opinion
from Morgan Stanley to the effect that the exchange ratio was fair to the
holders of shares of the Ryerson Tull class A common stock (other than Inland
or any direct or indirect subsidiary of Inland) from a financial point of view,
approval by the Boards of Directors of Inland and Ryerson Tull and agreement on
the terms of a definitive merger agreement. Inland and Ryerson Tull also
announced that Inland would discontinue its previously announced stock
repurchase programs. On October 14, 1998, the day prior to the announcement of
the exchange ratio, the closing price of the Inland common stock was $18.375
per share, and the closing price of the Ryerson Tull class A common stock was
$10.3125 per share.
During the period from October 13, 1998 to October 20, 1998, representatives
of Inland and the Independent Directors Committee discussed the possible terms
of a merger agreement between Inland and Ryerson Tull.
On October 20, 1998, the Independent Directors Committee held a meeting with
representatives of Morgan Stanley and its legal counsel. At that meeting, legal
counsel reviewed the terms of a draft merger agreement with the Independent
Directors Committee. Representatives of Morgan Stanley also rendered an oral
opinion that, as of October 20, 1998 and based upon the factors and assumptions
set forth in such opinion, the exchange ratio pursuant to the merger agreement
was fair from a financial point of view to the holders of shares of the Ryerson
Tull class A common stock (other than shares owned by Inland or any
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direct or indirect subsidiary of Inland). This opinion was confirmed in writing
by Morgan Stanley as of October 27, 1998. See "--Opinion of the Financial
Advisor to the Independent Directors Committee."
After discussion, the Independent Directors Committee determined, subject to
the satisfactory resolution of several open issues, that the terms of the
merger were fair to, and in the best interests of, the public holders of shares
of the Ryerson Tull class A common stock and authorized and approved the
proposed merger. The Independent Directors Committee unanimously adopted
resolutions to recommend to the Ryerson Tull Board of Directors that, subject
to the satisfactory resolution of the outstanding issues, it approve and adopt
the merger and to recommend to the Ryerson Tull stockholders that they vote to
approve and adopt the merger.
At a meeting of the Ryerson Tull Board of Directors later that day, Mr.
Perkins presented the recommendation of the Independent Directors Committee
that the Ryerson Tull Board of Directors approve the merger. After full
discussion, the Ryerson Tull Board of Directors unanimously determined that the
merger was fair to, and in the best interests of, Ryerson Tull and its
stockholders (other than Inland or any direct or indirect subsidiary of Inland)
and adopted resolutions to approve and adopt the merger agreement, to declare
its advisability and to recommend that Ryerson Tull's stockholders vote to
approve and adopt the merger agreement.
Later that day, the Inland Board of Directors met and, after consultation
with its financial and legal advisors, unanimously determined, subject to the
satisfactory resolution of certain outstanding issues, that the merger was fair
to, and in the best interests of, Inland and its stockholders, and adopted
resolutions to approve and adopt the merger agreement, to declare its
advisability and to authorize senior management of Inland to negotiate and
resolve the remaining outstanding issues.
During the period from October 20, 1998 through October 27, 1998, legal
advisors for the Independent Directors Committee and Inland continued
negotiations and eventually reached agreement on the terms of a definitive
merger agreement.
On October 27, 1998, the Independent Directors Committee held a meeting to
review the proposed resolution of the open issues in the merger agreement.
Following a review of the open issues and their proposed resolution by legal
counsel, the Independent Directors Committee approved the terms of the
definitive merger agreement. Representatives of Morgan Stanley reaffirmed their
oral opinion that, as of such date, the exchange ratio was fair to the holders
of shares of the Ryerson Tull class A common stock (other than Inland or any
direct or indirect subsidiary of Inland) from a financial point of view. Morgan
Stanley then reviewed the definitive merger agreement and rendered a written
opinion which confirmed their oral opinion. The merger agreement was then
executed by representatives of Ryerson Tull, Inland and RT Merger Sub.
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On October 27, 1998, Inland and Ryerson Tull issued a joint press release
stating that Inland and Ryerson Tull had formally approved a definitive merger
agreement pursuant to which Inland would acquire all of the publicly held
shares of the Ryerson Tull class A common stock at the exchange ratio.
Independent Directors Committee Compensation
At the effective time of the merger, Ryerson Tull will pay the chairman of
the Independent Directors Committee 2,000 shares of Ryerson Tull class A common
stock and each other member of the Independent Directors Committee 1,000 shares
of Ryerson Tull class A common stock for their services in connection with the
evaluation of the proposed merger.
Reasons for the Merger; Recommendations of the Board of Directors
How You Will Benefit from the Merger
You will benefit from the merger because the proposed merger:
. provides you with a larger, more active trading market for your
securities; and
. gives you more voice in matters submitted to stockholders by eliminating
the Ryerson Tull class B common stock.
Ryerson Tull's Reason for the Merger
Ryerson Tull believes that the merger will make it easier for the combined
company to use equity securities instead of cash to acquire other metals
distribution and processing companies. Although using equity securities to make
acquisitions will dilute your percentage ownership of the combined company, it
permits the combined company to use its cash for other purposes, including
paying operating expenses, reducing the combined company's need to borrow
money.
Inland's Reasons for the Merger
Inland believes that the combined corporation and its stockholders can
benefit from the merger because the proposed merger:
. simplifies Inland's financial reporting structure;
. produces a single, publicly traded entity with a consolidated
stockholder base which more accurately reflects the ownership structure
and assets of the combined company; and
. eliminates redundant costs, which Inland expects to be approximately $1
million per year after the merger is completed.
Recommendation of the Independent Directors Committee to the Ryerson Tull Board
of Directors
As described above, the Independent Directors Committee engaged in a full
investigation of the proposed merger with the assistance of independent counsel
and independent financial advisors. After such evaluation, the Independent
Directors Committee unanimously approved the merger agreement and recommended
to the full Ryerson Tull Board of Directors that the Ryerson Tull Board of
Directors (1) approve and adopt the merger agreement and (2) recommend to
Ryerson Tull's stockholders that they approve the merger agreement.
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In reaching its decision to approve the merger agreement and recommend its
approval to the Ryerson Tull Board of Directors, the Independent Directors
Committee considered the following factors:
. the presentations by, and the advice and views of, Morgan Stanley and
the opinion of Morgan Stanley, dated as of October 27, 1998, to the
effect that the exchange ratio pursuant to the merger agreement was fair
from a financial point of view to the holders of Ryerson Tull class A
common stock (other than Inland or any direct or indirect subsidiary of
Inland);
. the terms of the merger agreement, including the parties' respective
representations, warranties and covenants and the conditions to their
respective obligations, including a provision whereby the Independent
Directors Committee can terminate the merger agreement if the
Independent Directors Committee determines, in good faith, after
consultation with Morgan Stanley and its legal advisors, that the
Independent Directors Committee's fiduciary obligations under applicable
law require it to withdraw its recommendation of the merger agreement
and the transactions contemplated thereby;
. the relative trading prices and volumes (as well as prospects for future
growth in value) of the Ryerson Tull class A common stock and Inland
common stock;
. the results of operations, financial condition, competitive position and
prospects of Ryerson Tull and Inland, both on a historical and future
basis and as separate and combined entities, including the implicit
earnings accretion to holders of the Ryerson Tull class A common stock;
. the relative intrinsic values of Inland common stock and the Ryerson
Tull class A common stock and the implied premium which the exchange
ratio represents thereto;
. the opportunity for the holders of Ryerson Tull class A common stock to
become stockholders of Inland and the percentage of Inland common stock
that would be held by such holders after the merger;
. the opportunity for Ryerson Tull and Inland to simplify their corporate
structure and reduce corporate overhead expenses;
. the combined financial condition of Ryerson Tull and Inland following
the merger; and
. the structure of the merger, which permits Ryerson Tull's stockholders
to exchange their Ryerson Tull class A common stock for Inland common
stock on a tax-free basis, except to the extent they receive cash in
lieu of fractional shares.
Although the Independent Directors Committee considered the fact that Ryerson
Tull stockholders who purchased shares of Ryerson Tull class A common stock in
the 1996 initial public offering did so at a price in excess of the market
price (as of the date of approval of the merger) of the Inland common stock
they will receive in the merger, that was not a significant factor in the
Independent Directors Committee decision. Given the cyclical nature of Ryerson
Tull's business, the fact that the 1996 initial public offering took place more
than two years earlier and the fact that the market price of Ryerson Tull class
A common stock was substantially below the 1996 initial public offering price
at all relevant times during the negotiations, the Independent Directors
Committee did not consider the 1996 initial public offering price to be a
useful indication of the value of Ryerson Tull class A common stock.
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Recommendation of the Ryerson Tull Board of Directors
After reviewing the Independent Directors Committee's findings and its own
evaluation, the Ryerson Tull Board of Directors believes that the terms of the
merger are fair to, and in the best interests of, Ryerson Tull and its
stockholders, including the holders of Ryerson Tull class A common stock.
Accordingly, the Ryerson Tull Board of Directors, by a unanimous vote, has
adopted the merger agreement, declared its advisability and recommends its
approval by Ryerson Tull's stockholders.
The Ryerson Tull Board of Directors, by a unanimous vote of the directors,
has adopted the merger agreement, declared its advisability, believes that the
terms of the merger are fair to Ryerson Tull's stockholders (other than Inland
or any direct or indirect subsidiary of Inland) and unanimously recommends that
the stockholders of Ryerson Tull vote for approval of the merger.
Opinion of the Financial Advisor to the Independent Directors Committee
In a letter agreement effective July 21, 1998, the Independent Directors
Committee engaged Morgan Stanley to provide a financial fairness opinion in
connection with the merger. Morgan Stanley was selected by the Independent
Directors Committee to provide this financial fairness opinion based upon
Morgan Stanley's qualifications, expertise and reputation. On October 20, 1998,
Morgan Stanley delivered to the Independent Directors Committee an oral opinion
that, on and as of the date of such opinion, and based on assumptions made and
factors considered as set forth in the opinion, the exchange ratio pursuant to
the merger agreement was fair from a financial point of view to holders of
Ryerson Tull class A common stock (other than Inland or any direct or indirect
subsidiary of Inland). This opinion was subsequently confirmed in a written
opinion dated October 27, 1998.
The full text of Morgan Stanley's opinion, which sets forth, among other
things, assumptions made, procedures followed, matters considered and
limitations on the review undertaken by Morgan Stanley in rendering its
opinion, is attached as Annex B to this proxy statement/prospectus and
incorporated herein by reference. Ryerson Tull stockholders are urged to, and
should, read Morgan Stanley's opinion carefully and in its entirety. Morgan
Stanley's opinion is directed to the Independent Directors Committee, addresses
only the fairness of the exchange ratio pursuant to the merger agreement from a
financial point of view to holders of Ryerson Tull class A common stock (other
than Inland or any direct or indirect subsidiary of Inland) and does not
address any other aspect of the merger or constitute a recommendation to any
holder of Ryerson Tull class A common stock as to how to vote at the meeting.
The following summary of Morgan Stanley's opinion is qualified in its entirety
by reference to the full text of Morgan Stanley's opinion attached as Annex B
to this proxy statement/prospectus.
In rendering its opinion, Morgan Stanley, among other things:
. reviewed certain publicly available financial statements and other
information of Ryerson Tull and Inland;
. reviewed certain internal financial statements and other financial and
operating data concerning Ryerson Tull and Inland prepared by the
managements of Ryerson Tull and Inland;
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. analyzed certain financial projections prepared by the management of
Ryerson Tull and a pro forma balance sheet prepared by the management of
Inland reflecting the ISC/Ispat transaction and the use of proceeds
therefrom;
. discussed the past and current operations and financial condition and
the prospects (including estimates of the reserves) of Ryerson Tull and
Inland with senior executives of Ryerson Tull and Inland;
. reviewed the reported prices and trading activity of Ryerson Tull class
A common stock and Inland common stock;
. compared the financial performance of Ryerson Tull and Inland and the
prices and trading activity of the Ryerson Tull class A common stock and
Inland common stock with that of certain other comparable publicly
traded companies and their securities;
. reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
. participated in discussions and negotiations among representatives of
Ryerson Tull and Inland and their financial and legal advisors;
. reviewed the merger agreement and certain related documents;
. reviewed legal due diligence summaries prepared by counsel to the
Independent Directors Committee; and
. performed such other analyses and considered such other factors as
Morgan Stanley has deemed appropriate.
In addition, in July 1998, Ryerson Tull provided financial projections to
Morgan Stanley, which are referred to in this proxy statement/prospectus as the
"Projections." Following a deterioration of the market for the types of steel
that Ryerson Tull typically purchases, early in September 1998, Ryerson Tull
provided revised projections to Morgan Stanley reflecting decreased results of
operations as a result of the deterioration, which are referred to in this
proxy statement/prospectus as the "Adjusted Projections."
As a matter of course, Ryerson Tull does not make public its internal
forecasts or projections with respect to its future financial performance. The
projections provided to Morgan Stanley were solely for the purpose of assisting
Morgan Stanley in rendering its opinion. The projections provided to Morgan
Stanley have been included in this proxy statement/prospectus for the limited
purpose of giving stockholders access to financial projections reviewed by
Morgan Stanley. Such projections were not prepared with a view to public
disclosure or in compliance with published guidelines of the Securities and
Exchange Commission or the American Institute of Certified Public Accountants
regarding projections. The prospective financial information included in this
proxy statement/prospectus has been prepared by, and is the responsibility of,
Ryerson Tull's management. PricewaterhouseCoopers LLP has neither examined nor
compiled the accompanying prospective financial information and, accordingly,
PricewaterhouseCoopers LLP does not express an opinion or any other form of
assurance with respect thereto. The PricewaterhouseCoopers LLP report
incorporated in this proxy statement/prospectus relates to Ryerson Tull's
historical financial information. It does not extend to the prospective
financial information and should not be read to do so.
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The projections involved numerous estimates and assumptions that Ryerson Tull
believed to be reasonable at the time the projections were made. However, due
to the continued deterioration of the market for the types of steel that
Ryerson Tull typically purchases since the date of the projections, Ryerson
Tull believes that the projections are no longer reliable. In addition,
projections are necessarily subject to uncertainties, many of which are beyond
the control of management. Because of these uncertainties, actual results will
differ from projections, and such differences could be material. Accordingly,
stockholders should not place undue reliance on the projections. Ryerson Tull
does not intend to update and make public the projections to reflect future
circumstances or events.
Ryerson Tull projected earnings per share in the Projections of $1.35 (which,
prior to Morgan Stanley's receipt of the Adjusted Projections, but based on
discussions with Ryerson Tull, was revised to $1.32) in 1998 and $1.59 in 1999.
In the Adjusted Projections, Ryerson Tull projected earnings per share of $1.32
in 1998 and $0.93 in 1999. The projected earnings per share were based on
approximately 39.5 million shares of Ryerson Tull common stock outstanding.
In rendering its opinion, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by it for the purposes of its opinion. In addition, Morgan Stanley
assumed that the financial projections were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performances of Ryerson Tull and Inland. Morgan Stanley did not make
any independent valuation or appraisal of the assets or liabilities of Ryerson
Tull and Inland nor was it furnished with any such appraisals; however, Morgan
Stanley did rely, with the Independent Directors Committee's consent and
without independent verification, upon Ryerson Tull's and Inland's assessments
of their reserves for purposes of its opinion. Morgan Stanley's opinion was
necessarily based on economic, market and other conditions as in effect on, and
the information made available to Morgan Stanley as of, the date thereof. In
arriving at its opinion, Morgan Stanley was not authorized to solicit, and did
not solicit, interest from any party with respect to the acquisition of Ryerson
Tull or any of the assets of Ryerson Tull.
The following is a brief summary of the material analyses performed by Morgan
Stanley in preparation of its opinion:
Transaction Overview
Morgan Stanley noted that, based on the exchange ratio and the number of
outstanding shares of Inland common stock, and based on a $19.25 price per
share valuation for Inland common stock (which was the closing price of Inland
common stock on October 16, 1998), the exchange ratio implied an equity value
of approximately $63 million for the Ryerson Tull class A common stock held by
the minority shareholders of Ryerson Tull in the merger transaction. Morgan
Stanley reviewed the relative value of the transaction, taking into account the
theoretical value of Inland, including an assessment of the assets, liabilities
and obligations of Inland. Morgan Stanley noted that the theoretical value of
Inland was approximately $24.63 per share of Inland common stock, representing
approximately a 28% premium to the closing price per share of Inland common
stock on October 16, 1998. Based on this analysis and the
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exchange ratio, the theoretical value of Ryerson Tull, including Inland's
ownership interest, was approximately $117 million more than its market value
on October 16, 1998. At the exchange ratio, holders of Ryerson Tull class A
common stock would receive approximately 3.3 million shares of Inland common
stock, representing 13.0% ownership of the pro forma entity.
Discounted Cash Flow Analysis
Morgan Stanley analyzed the Projections and performed a discounted cash flow
analysis of Ryerson Tull based on the Projections. Morgan Stanley discounted
the unlevered free cash flows of Ryerson Tull at a range of discount rates of
10.0% to 11.0%, representing an estimated weighted average cost of capital
range for Ryerson Tull, and terminal values based on a range of multiples of 6
to 7 times estimated 2002 earnings before interest, taxes, depreciation and
amortization ("EBITDA") to arrive at a range of present values for Ryerson
Tull. Such present values were then adjusted for Ryerson Tull's debt, net of
cash, to arrive at a net asset value. Based on this analysis, Morgan Stanley
calculated values representing Ryerson Tull's equity value ranging from
approximately $766 million to $968 million. On a per share of Ryerson Tull
class A common stock basis, Morgan Stanley calculated equity values ranging
from approximately $19 to $25.
Morgan Stanley also analyzed the Adjusted Projections. Morgan Stanley
performed a discounted cash flow analysis of Ryerson Tull based on the Adjusted
Projections. Morgan Stanley discounted the unlevered free cash flows of Ryerson
Tull at a range of discount rates of 10.0% to 11.0%, representing an estimated
weighted average cost of capital range for Ryerson Tull, and terminal values
based on a range of multiples of 6 to 7 times estimated 2002 EBITDA to arrive
at a range of present values of Ryerson Tull. Such present values were then
adjusted for Ryerson Tull's debt, net of cash, to arrive at a net asset value.
Based on this analysis, Morgan Stanley calculated values representing equity
value ranging from approximately $490 million to $651 million. On a per share
Ryerson Tull class A common stock basis, Morgan Stanley calculated equity
values ranging from approximately $12 to $17.
Historical Public Market Trading Value
Morgan Stanley reviewed the historical performance of Ryerson Tull class A
common stock and Inland common stock based on a historical analysis of closing
prices and trading volumes from June 10, 1996 through October 16, 1998 (the
last full trading day considered by Morgan Stanley prior to the delivery of its
opinion). Based on the latest 12 months of trading activity through October 16,
1998 ("LTM"), the closing price of the Ryerson Tull class A common stock ranged
from a low of $10.00 per share to a high of $23.00. The Ryerson Tull class A
common stock closed at a price of $11.25 per share on October 16, 1998. Morgan
Stanley also reviewed the relative trading levels of Ryerson Tull class A
common stock to Inland common stock since the announcement of the ISC/Ispat
transaction on March 17, 1998. For the period March 17, 1998 to October 16,
1998, the closing price of the Inland common stock ranged from a low of
$17.9375 per share to a high of $30.4375. For the period March 17, 1998 to
October 16, 1998 and the one month prior to October 16, 1998, the relative
trading levels were 0.71 and 0.60, respectively.
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Valuation of Publicly Traded Comparable Companies
Morgan Stanley reviewed the current valuation of publicly traded companies
which provide services comparable to Ryerson Tull such as steel service,
distribution and materials processing. Morgan Stanley reviewed measures of
valuation including historical and projected price to earnings ratios,
historical and projected price to cash flow ratios and historical and projected
aggregate value to EBITDA ratios. Based on this analysis, Morgan Stanley
calculated values representing equity value ranging from approximately $462
million to $620 million. On a per share of Ryerson Tull class A common stock
basis, Morgan Stanley calculated equity values ranging from approximately $12
to $16.
Selected Precedent Ryerson Tull/Industry Acquisitions Analysis
Using publicly available information and through discussion with management
of Ryerson Tull, Morgan Stanley reviewed recent precedent transactions
involving Ryerson Tull and companies which provide services comparable to those
of Ryerson Tull such as steel service, distribution and materials processing.
The companies which were selected for inclusion in Morgan Stanley's analysis
provide services which Morgan Stanley believes are comparable to those provided
by Ryerson Tull. Morgan Stanley reviewed publicly available financial
information including the aggregate value to the LTM EBITDA. Morgan Stanley
observed an aggregate value to LTM EBITDA range of approximately 5 to 6 times
for the precedent transactions. Based on this analysis, Morgan Stanley
calculated values representing equity value ranging from approximately $340
million to $501 million. On a per share of Ryerson Tull class A common stock
basis, Morgan Stanley calculated equity values ranging from approximately $9 to
$13.
Pro Forma Analysis of the Merger
Morgan Stanley analyzed the pro forma impact of the merger on the balance
sheet of the combined entity as well as Ryerson Tull's earnings per share for
the fiscal years 1998 through 2002. Such analysis was based on actual balance
sheet information as of August 31, 1998, as well as earnings projections for
Ryerson Tull prepared by the management of Ryerson Tull and synergies expected
to be realized in the transaction. Morgan Stanley noted the pro forma balance
sheet implications of the merger, which provide the pro forma entity with a
potential investment grade capital structure. Based upon the Adjusted
Projections, Morgan Stanley noted that the merger would be accretive from an
earnings perspective to holders of Ryerson Tull class A common stock by 7.5%,
12.3%, 5.0%, 4.0% and 3.1% for the years 1998, 1999, 2000, 2001 and 2002,
respectively.
In connection with the review of the merger by the Independent Directors
Committee, Morgan Stanley performed a variety of financial and comparative
analyses for purposes of its opinion given in connection herewith. While the
foregoing summary describes the analyses and factors reviewed by Morgan Stanley
in connection with its opinion, it does not purport to be a complete
description of all the analyses performed by Morgan Stanley in arriving at its
opinion. The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In arriving
at its opinion, Morgan Stanley considered
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the results of all its analyses as a whole and did not attribute any particular
weight to any analysis or factor considered by it. Furthermore, selecting any
portion of its analyses, without considering all analyses, would create an
incomplete view of the process underlying Morgan Stanley's opinion. In
addition, Morgan Stanley may have given various analyses and factors more or
less weight than other analyses or factors, and may have deemed various
assumptions more or less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described above should not be
taken to be Morgan Stanley's view of the actual value of Ryerson Tull or
Inland. In performing its analyses, Morgan Stanley made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Ryerson Tull or
Inland. Any estimates contained herein are not necessarily indicative of future
results or actual values, which may be significantly more or less favorable
than those suggested by such estimates. The analyses performed were prepared
solely as part of Morgan Stanley's analysis of the fairness of the
consideration to be paid by Inland pursuant to the merger agreement from a
financial point of view to Ryerson Tull and were conducted in connection with
the delivery of Morgan Stanley's opinion. The analyses do not purport to be
appraisals or to reflect the prices at which Ryerson Tull or Inland might
actually be sold. Morgan Stanley did not recommend the consideration to be paid
by Inland or that any consideration to be paid by Inland constituted the only
appropriate consideration for the merger.
In addition, Morgan Stanley's opinion and presentation to the Independent
Directors Committee was one of the many factors taken into consideration by the
Ryerson Tull Board of Directors and the Independent Directors Committee in
making their determination to recommend approval of the merger. Consequently,
the Morgan Stanley analyses described above should not be viewed as
determinative of the opinion of the Ryerson Tull Board of Directors and the
Independent Directors Committee with respect to the exchange ratio in
connection with the merger. The exchange ratio pursuant to the merger agreement
was determined through arm's-length negotiations between Ryerson Tull and
Inland and was approved by the Ryerson Tull Board of Directors.
Ryerson Tull engaged Morgan Stanley to provide its opinion because of its
experience and expertise. Morgan Stanley is an internationally recognized
investment banking and advisory firm. Morgan Stanley, as part of its investment
banking business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the course of its market-making and other trading activities,
Morgan Stanley may, from time to time, have a long or short position in, and
buy and sell, securities of Ryerson Tull or Inland.
Ryerson Tull has paid Morgan Stanley a fee of $500,000 in connection with the
delivery of its opinion. In addition, Ryerson Tull has agreed to indemnify
Morgan Stanley and its affiliates, their respective directors, officers, agents
and employees and each person, if any, controlling Morgan Stanley or any of its
affiliates against certain liabilities and expenses, including liabilities
under federal securities laws, in connection with Morgan Stanley's engagement.
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Structure of the Merger
At the effective time of the merger, RT Merger Sub will merge with and into
Ryerson Tull, and the separate corporate existence of RT Merger Sub will end.
Ryerson Tull will be the surviving corporation in the merger and a wholly owned
subsidiary of Inland, and will continue to be a Delaware corporation after the
merger.
When the Merger Becomes Effective
RT Merger Sub and Ryerson Tull will execute and file with the Secretary of
State of the State of Delaware a certificate of merger on the first business
day on which the last of the closing conditions to the consummation of the
merger is fulfilled or waived or such other time and date as they may agree.
The merger will become effective at the time and on the date on which the
certificate of merger is filed with the Secretary of State of the State of
Delaware or such other time upon which the parties agree and specify in the
certificate of merger. Such time is the "effective time of the merger."
Conversion of Stock, Stock Options and Other Awards
At the effective time of the merger, each share of Ryerson Tull class A
common stock will be converted into 0.61 shares of Inland common stock. For
each share of Inland common stock that you receive in the merger, you will also
receive one associated preferred stock purchase right in accordance with the
Inland rights agreement. At the effective time of the merger, each share of
Ryerson Tull class B common stock will be canceled, and Ryerson Tull will
become a wholly owned subsidiary of Inland.
If, before the effective time of the merger, the issued and outstanding
shares of Inland common stock are changed into a different number of shares or
a different class of shares as a result of a stock split, reverse stock split,
stock dividend, spinoff, recapitalization, reclassification or other similar
transaction, an appropriate adjustment will be made to the number of shares of
Inland common stock which holders of shares of Ryerson Tull class A common
stock are to receive in the merger.
No fractional shares of Inland common stock will be issued as a result of the
merger. Instead of issuing fractional shares of Inland common stock, Inland
will pay cash in an amount equal to such fraction multiplied by the average of
the closing prices per share of Inland common stock on the New York Stock
Exchange as reported on the New York Stock Exchange Composite Tape for the ten
consecutive trading days ending on, and including, the second trading day
preceding the date on which the merger is closed.
Promptly after the effective time of the merger, Inland will deliver to
Harris Trust and Savings Bank, or another party reasonably satisfactory to
Ryerson Tull, for the benefit of the holders of Ryerson Tull class A common
stock, certificates representing the Inland common stock and cash in lieu of
any fractional shares to be issued and paid pursuant to the merger agreement in
exchange for outstanding Ryerson Tull class A common stock.
Promptly after the effective time of the merger, Harris Trust and Savings
Bank will mail a letter of transmittal to the holders of Ryerson Tull class A
common stock containing instructions with respect to the surrender of
certificates representing Ryerson Tull class A
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common stock. Ryerson Tull class A common stock certificates should not be
returned with the enclosed proxy or sent to Inland or Ryerson Tull, and should
not be forwarded to Harris Trust and Savings Bank unless and until a holder of
shares of Ryerson Tull class A common stock receives the letter of transmittal.
Until the certificates representing Ryerson Tull class A common stock are
surrendered for exchange after the effective time of the merger, holders of
such certificates will accrue, but will not be paid, dividends or other
distributions declared after the effective time of the merger with respect to
Inland common stock into which their shares have been converted. When such
certificates are surrendered, any unpaid dividends or other distributions will
be paid. No interest will be paid or accrued on the cash in lieu of fractional
shares, if any, and unpaid dividends and distributions, if any, payable to
holders of Ryerson Tull class A common stock certificates. None of Inland,
Ryerson Tull, RT Merger Sub or Harris Trust and Savings Bank, nor any other
person, will be liable to any former holder of Ryerson Tull class A common
stock for any amount delivered to a public official pursuant to any applicable
abandoned property, escheat or similar laws.
If a certificate for Ryerson Tull class A common stock has been lost, stolen
or destroyed, Harris Trust and Savings Bank will issue the consideration
properly payable in accordance with the merger agreement upon receipt of
appropriate evidence as to such loss, theft or destruction, appropriate
evidence as to the ownership of such certificate by the claimant and
appropriate and customary indemnification.
Each option to purchase Ryerson Tull class A common stock granted under
Ryerson Tull's 1996 Incentive Stock Plan that is outstanding and unexercised as
of the effective time of the merger will be converted automatically at the
effective time of the merger into, and will become, an option to purchase 0.61
shares of Inland common stock. After conversion, the exercise price of an
option will equal its pre-conversion exercise price divided by 0.61. Stock
appreciation rights and restricted stock outstanding under the 1996 Incentive
Stock Plan and stock units under the Ryerson Tull Directors Compensation Plan
will be similarly converted, and performance awards will be adjusted in an
appropriate and equitable manner by the Ryerson Tull Compensation Committee.
Converted options, restricted stock and other converted awards will continue to
be governed by the terms of the 1996 Incentive Stock Plan.
For a description of the Inland common stock and a description of the
differences between the rights of holders of Inland common stock and Ryerson
Tull class A common stock, see "Comparative Rights of Inland Stockholders and
Ryerson Tull Stockholders."
Representations and Warranties
The merger agreement contains representations and warranties of Inland and RT
Merger Sub, on the one hand, and Ryerson Tull, on the other hand, as to, among
other things:
.the corporate organization and existence of each party and its
subsidiaries;
.the capitalization of each party;
.the corporate power and authority of each party to execute and deliver
the merger agreement and to consummate the transactions contemplated
thereby;
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.absence of any required governmental and third-party approvals other than
those specified in the merger agreement;
.the timely filing of required regulatory reports;
.each party's financial statements and filings with the Securities and
Exchange Commission;
.the absence of certain changes in each party's business since June 30,
1998;
.the absence of undisclosed liabilities;
.the absence of material legal proceedings and injunctions;
.the information supplied by each party for inclusion or incorporation by
reference in (1) filings made with the Securities and Exchange
Commission with respect to the merger and (2) this proxy
statement/prospectus; and
.each party's compliance with applicable law.
In addition, Ryerson Tull represents and warrants that:
.the Independent Directors Committee received a written opinion of Morgan
Stanley to the effect that the consideration to be received in the
merger is fair to the holders of Ryerson Tull class A common stock
(other than Inland, RT Merger Sub or any direct or indirect subsidiary
of Inland) from a financial point of view; and
.the execution of the merger agreement did not, and the completion of the
merger will not, result in a distribution or exercisability of the
Ryerson Tull series A preferred stock (as defined in "Comparative Rights
of Inland Stockholders and Ryerson Tull Stockholders--Rights
Agreements--Ryerson Tull Rights Agreement") issued pursuant to the
Ryerson Tull rights agreement.
Inland and RT Merger Sub represent and warrant:
.the authority to issue and deliver Inland common stock in connection with
the merger agreement and the merger;
.the absence of any business activity or operations on the part of RT
Merger Sub other than in connection with the transactions contemplated
by the merger agreement;
.Inland's ownership of Ryerson Tull class A common stock and Ryerson Tull
class B common stock; and
.Inland's authorization of the ISC/Ispat transaction.
Conditions to Completion of the Merger
Each party's obligation to effect the merger is subject to the satisfaction
at or prior to the effective time of the merger of the following conditions:
(1) the merger shall have been approved and adopted at the meeting by a
majority of the votes entitled to be cast by the holders of the shares of
Ryerson Tull class A common stock and Ryerson Tull class B common stock,
voting together as a single class, outstanding as of the record date (this
is assured because of Inland's ownership of all of the Ryerson Tull class
B common stock, representing 96% of the voting power of the two classed
combined, which Inland intends to vote in favor of the merger);
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(2) no statute, rule, regulation, executive order, decree, ruling or
injunction or other order of a court or governmental or regulatory agency
of competent jurisdiction shall have been issued directing that the
transactions contemplated by the merger agreement not be consummated;
(3) all governmental consents, orders and approvals legally required for
the consummation of the merger and the transactions contemplated by the
merger agreement shall have been obtained and be in effect at the
effective time of the merger, except where the failure to obtain any such
consent would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Inland or Ryerson Tull
(there are no such required consents, orders or approvals known to Inland
or Ryerson Tull); and
(4) the registration statement for the shares of Inland common stock to
be issued in the merger shall have become effective under the Securities
Act of 1933, and no stop order suspending effectiveness of the
registration statement shall have been issued, and no proceeding for that
purpose shall have been initiated or threatened by the Securities and
Exchange Commission.
In addition, the respective obligations of Inland and RT Merger Sub, on the
one hand, and Ryerson Tull, on the other hand, to effect the merger are subject
to the satisfaction at or prior to the effective time of the merger of the
following conditions, any or all of which may be waived in whole or in part by
Inland, RT Merger Sub or Ryerson Tull (with the concurrence of the Independent
Directors Committee), as the case may be, to the extent permitted by applicable
law:
(1) the representations and warranties of the other party shall be true
and correct when made and as of the effective time of the merger with the
same force and effect as though they had been made on and as of the
effective time of the merger (except for changes permitted by the merger
agreement and except to the extent they relate to a particular date),
except for such failures to be true and correct which, individually or in
the aggregate, are not reasonably likely to have a material adverse effect
on the party to which such representations and warranties apply;
(2) the other party shall have performed in all material respects all of
its obligations under the merger agreement; and
(3) Inland and RT Merger Sub, on the one hand, and Ryerson Tull, on the
other hand, shall have received at the effective time of the merger a
certificate dated the effective time of the merger and executed by the
President or a Vice President of the other party certifying to the
fulfillment of the conditions specified in the two immediately preceding
clauses.
As of the date of this proxy statement/prospectus, neither Inland nor Ryerson
Tull expects that any of these conditions will be waived.
Termination of the Merger Agreement
The merger agreement provides that the merger may be terminated at any time
before the effective time of the merger, even if the Ryerson Tull stockholders
have approved it:
.by mutual written consent of Inland, RT Merger Sub and Ryerson Tull with
approval by at least two-thirds of the members of the Independent
Directors Committee;
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.by any of Inland, RT Merger Sub or Ryerson Tull, with approval by at
least two-thirds of the members of the Independent Directors Committee
in the case of termination by Ryerson Tull, if:
(1) any court of competent jurisdiction in the United States or
other governmental body or regulatory authority shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the merger and such
order, decree, ruling or other action shall have become final and
nonappealable;
(2) the merger shall not have been completed by March 31, 1999,
except that the right to terminate the merger agreement pursuant to
this clause shall not be available to any party whose failure to
fulfill any of its obligations under the merger agreement results in
the failure of the merger to occur on or before such date; or
(3) the merger agreement and the merger shall have been voted on by
stockholders of Ryerson Tull at the meeting and the vote shall not
have been sufficient to satisfy the condition to the completion of the
merger;
.by either Inland or RT Merger Sub if:
(1) Ryerson Tull shall have failed to perform in any material
respect its obligations under the merger agreement to be performed by
Ryerson Tull, which failure to perform has not been cured within 30
days following receipt by Ryerson Tull of notice of such failure to
perform from Inland or RT Merger Sub; or
(2) the representations and warranties of Ryerson Tull contained in
the merger agreement shall not be true and correct when made or after
such time as certain conditions to the completion of the merger have
been satisfied and prior to the effective time of the merger (except
as permitted in the merger agreement and to the extent they relate to
a particular date), except for such failures to be true and correct
which, individually or in the aggregate, are not reasonably likely to
have a material adverse effect, except that such failure to be true
and correct has not been cured within 30 days following receipt by
Ryerson Tull of notice of such failure to be true and correct from
Inland or Ryerson Tull; or
.by the Independent Directors Committee on behalf of Ryerson Tull if:
(1) Inland or RT Merger Sub shall have failed to perform in any
material respect their obligations under the merger agreement to be
performed by Inland or RT Merger Sub, which failure to perform has not
been cured within 30 days following receipt by Inland of notice of
such failure to perform from Ryerson Tull;
(2) the representations and warranties of Inland or RT Merger Sub
contained in the merger agreement shall not be true and correct when
made or after such time as certain conditions to the completion of the
merger have been satisfied and prior to the effective time of the
merger (except as permitted in the merger agreement and to the extent
any such representation or warranty relates to a particular date),
except for such failures to be true and correct which, individually or
in the aggregate, are not reasonably likely to have a material adverse
effect, except that such failure to be true and correct has not been
cured within 30 days following receipt from Ryerson Tull by Inland or
RT Merger Sub, as the case may be, of notice of such failure to be
true and correct from Ryerson Tull; or
38
<PAGE>
(3) the Independent Directors Committee determines in good faith,
after consultation with Morgan Stanley and its legal counsel, that the
Independent Directors Committee's fiduciary obligations under
applicable law require it to withdraw its recommendation of the merger
agreement and the transactions contemplated thereby.
Expenses
Whether or not the merger is completed, each party will pay its own expenses
incident to preparing for, entering into and carrying out the merger agreement
and the completion of the transactions contemplated thereby, except that the
costs of printing, mailing and filing this proxy statement/prospectus will be
borne equally by Inland and Ryerson Tull.
Modification or Amendment to the Merger Agreement
Subject to the applicable provisions of, at any time prior to the effective
time of the merger, Inland, Ryerson Tull and RT Merger Sub may modify or amend
the merger agreement by written agreement, except that after approval of the
merger agreement by Ryerson Tull's stockholders no amendments will be made
which by law requires further approval by such stockholders without such
further approval. Any amendment or modification of the merger agreement will
require the consent of a majority of the Ryerson Tull Board of Directors and at
least two-thirds of the members of the Independent Directors Committee.
Regulatory Requirements
Except for the filing of the certificate of merger with the Secretary of
State of the State of Delaware after the approval and adoption of the merger
agreement pursuant to Delaware corporate law, and compliance with federal and
state securities laws, neither Inland nor Ryerson Tull is aware of any material
U.S. federal or state or foreign governmental regulatory requirement necessary
to be complied with or approval that must be obtained in connection with the
merger.
Material Federal Income Tax Considerations
The following is a summary description of the material U.S. federal income
tax consequences of the merger. To the extent this summary discusses matters of
law, it is based upon the opinion of Mayer, Brown & Platt. This summary is
based upon the current provisions of the Internal Revenue Code of 1986, its
legislative history, administrative pronouncements, judicial decisions and
Treasury regulations, all of which are subject to change, possibly with
retroactive effect. This summary does not purport to be a complete discussion
of all U.S. federal income tax considerations relating to the merger. This
summary does not address the tax consequences of the merger under state, local,
or non-U.S. tax laws. In addition, this summary may not apply, in whole or in
part, to particular categories of holders of Ryerson Tull class A common stock,
such as financial institutions, broker-dealers, life insurance companies, tax-
exempt organizations, investment companies, foreign taxpayers, individuals who
acquired Ryerson Tull class A common stock pursuant to employee stock options,
and other special status taxpayers. Finally, a tax ruling from the Internal
Revenue Service has not been requested. This summary is included for general
information only. All holders of Ryerson Tull class A common stock should
consult their tax advisors to determine the specific tax consequences of the
merger, including any state, local and non-U.S. tax consequences.
39
<PAGE>
General
In the opinion of Mayer, Brown & Platt, based on certain representations of
Inland and Ryerson Tull, and assuming that the merger takes place in accordance
with the merger agreement and as described by this proxy statement/prospectus,
the merger will be treated as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986. However, such opinion will
not be binding upon the Internal Revenue Service and no ruling from the
Internal Revenue Service will be sought with respect to the federal income tax
consequences of the merger. Therefore, there can be no assurance that the
Internal Revenue Service will not contest the conclusions expressed herein. The
discussion below assumes that the merger will be treated as described in the
first sentence of this paragraph.
Tax Treatment to Inland, Ryerson Tull and RT Merger Sub
No gain or loss will be recognized by Inland, Ryerson Tull and RT Merger Sub.
Tax Treatment of Holders of Ryerson Tull Class A Common Stock
No gain or loss will be recognized by a holder who receives shares of Inland
common stock (except for cash received in lieu of fractional shares) in
exchange for all of such holder's shares of Ryerson Tull class A common stock.
The tax basis of the shares of Inland common stock received by a holder in such
exchange (including any fractional share of Inland common stock deemed received
and subsequently sold or redeemed) will be equal to the basis of the Ryerson
Tull class A common stock exchanged therefor. The holding period of the Inland
common stock received in the exchange will include the holding period of shares
of Ryerson Tull class A common stock exchanged therefor, provided that such
shares were held as capital assets of the holder at the effective time of the
merger.
Holders who receive Inland common stock will be required to attach a
statement to their tax returns for the year of the merger that contains the
information in Treasury Regulation (S)1.368-3(b). Such statement must include
the stockholder's tax basis in the stockholder's Ryerson Tull class A common
stock and a description of the Inland common stock received.
A holder who holds Ryerson Tull class A common stock as a capital asset and
who receives in the merger, in exchange for such stock, Inland common stock and
cash in lieu of a fractional share interest in Inland common stock will be
treated as having received such fractional share of Inland common stock and
then as having received cash in redemption by Inland of the fractional share
interest. Under the Internal Revenue Service's present advance ruling position,
since the cash is being distributed in lieu of fractional shares solely for the
purpose of saving Inland the expense and inconvenience of issuing and
transferring fractional shares, and is not separately bargained-for
consideration, the cash received will be treated as having been received in
part or full payment in exchange for the fractional share of stock redeemed.
Accordingly, a holder will recognize capital gain or loss equal to the
difference between the basis of the fractional share of Inland common stock and
the cash received in the deemed redemption by Inland of such share. The capital
gain or loss so recognized generally will be long-term capital gain or loss if
the holding period for the fractional share interest exceeds one year. In the
case of individual holders of Ryerson Tull class A common stock, such long-term
capital gain will be taxed at a maximum rate of 20%.
40
<PAGE>
A successful Internal Revenue Service challenge to the reorganization status
of the merger would result in a holder of Ryerson Tull class A common stock
recognizing gain or loss with respect to each share of Ryerson Tull class A
common stock exchanged equal to the difference between the stockholder's basis
in such share and the fair market value, as of the effective time of the
merger, of the Inland common stock received in exchange therefor. In such
event, a stockholder's aggregate basis in the Inland stock so received would
equal its fair market value, and the stockholder's holding period for such
stock would begin the day after the merger.
Accounting Treatment
The merger will be accounted for as a purchase for financial reporting
purposes. Under the purchase method of accounting, the assets and liabilities
of Ryerson Tull as they relate to the minority interest will be recorded at
their fair values at the effective time of the merger, with the difference
between such fair value and the value of the consideration paid in the merger,
if any, allocated to goodwill.
Interests of Certain Persons in the Merger
In considering the recommendation of the Ryerson Tull Board of Directors with
respect to the merger, stockholders should be aware that some of the members of
the Ryerson Tull Board of Directors and some of Ryerson Tull's executive
officers have interests in the merger that are in addition to the interests of
stockholders of Ryerson Tull generally and that could potentially represent
conflicts of interest.
Directors and executive officers of Ryerson Tull (including any person who
served as a director or executive officer of Ryerson Tull at any time during
1998) beneficially owned as of December 31, 1998, approximately 10.0% of the
outstanding Ryerson Tull class A common stock and 1.0% of the outstanding
Inland common stock. Directors and executive officers of Inland owned as of
December 31, 1998, approximately 3.9% of the outstanding Ryerson Tull class A
common stock and 1.8% of the outstanding Inland common stock. All Ryerson Tull
class A common stock held by such directors and executive officers at the
effective time of the merger will, upon completion of the merger, along with
all other Ryerson Tull class A common stock, be converted into the right to
receive Inland common stock.
Ryerson Tull directors and officers have additional interests which are
different from your interests.
. The directors of Ryerson Tull, other than Robert J. Darnall, will become
directors of Inland.
. Executive officers of Ryerson Tull will become executive officers of
Inland.
. The independent directors of Ryerson Tull will receive shares of Ryerson
Tull class A common stock for serving on the Independent Directors
Committee.
. The options to purchase Ryerson Tull class A common stock held by
officers of Ryerson Tull will become, subject to adjustment to reflect
the exchange ratio, options to purchase Inland common stock.
. Robert J. Darnall, James A. Henderson and Jean-Pierre Rosso who are
currently Ryerson Tull directors, are also Inland directors.
41
<PAGE>
The full Ryerson Tull Board of Directors was aware of these interests and
considered them in adopting the merger agreement.
BUSINESS AND MANAGEMENT
Management and Operations After the Merger
Inland Board of Directors
At the effective time of the merger, the following persons will resign as
directors from the Inland Board of Directors:
A. Robert Abboud
Robert J. Darnall
Leo F. Mullin
Joshua I. Smith
Nancy H. Teeters
Arnold R. Weber
Upon the effectiveness of their resignations, James A. Henderson and Jean-
Pierre Rosso, the remaining Inland directors, will elect the following persons
as directors to the Inland Board of Directors, each to hold office until his or
her successor is elected and qualified or until his or her earlier resignation
or removal:
Jameson A. Baxter
Richard G. Cline
Neil S. Novich
Jerry S. Pearlman
Donald S. Perkins
Ronald L. Thompson
Ms. Baxter, age 55, has been President of Baxter Associates, Inc., a
management consulting and private investments firm, since 1986. She was also
Vice President and Principal of Regency Group, Inc., an investment banking
firm, from 1989 until 1992. She served as Vice President of The First Boston
Corporation, an investment banking firm, from 1975 to 1986, and held various
other positions at The First Boston Corporation since 1965. She is a director
of Avondale Financial Corp., Banta Corporation, and The Putnam Funds. Ms.
Baxter does not currently serve as a director of Ryerson Tull.
Additional information about such persons, other than Ms. Baxter, is
contained in Ryerson Tull's definitive proxy statement dated April 17, 1998,
which is incorporated by reference in this proxy statement/prospectus. See
"Additional Information--Where You Can Find More Information."
42
<PAGE>
Inland Management and Employees
Following the merger, the executive officers of Inland are expected to be:
<TABLE>
<CAPTION>
Name and Current Position Position After the Merger
------------------------- -------------------------
<S> <C>
Neil S. Novich, President and Chief Chairman, President and Chief Executive Officer
Executive Officer, Ryerson Tull
Jay M. Gratz, Vice President and Chief Vice President and Chief Financial Officer
Financial Officer, Ryerson Tull
Lily L. May, Controller, Ryerson Tull Controller
Terence R. Rogers, Director of Treasurer
Pensions and Risk Management, Inland
and Treasurer, Ryerson Tull
</TABLE>
Mr. Rogers, age 39, has been Director of Pensions and Risk Management of
Inland since December 1994 and Treasurer of Ryerson Tull since November 1998.
He was Director of Finance of Outboard Marine Corporation from 1991 to December
1994.
Additional information about such persons, other than Mr. Rogers, is
contained in Inland's and Ryerson Tull's respective Annual Reports on Form 10-K
for the year ended December 31, 1997, which are incorporated by reference in
this proxy statement/prospectus. See "Additional Information--Where You Can
Find More Information."
In connection with the ISC/Ispat transaction and the merger, approximately
35% of Inland's 71 executive officers and administrative staff will no longer
be employed by Inland, Ryerson Tull or ISC following the merger. It is not
anticipated that any Ryerson Tull employees will be laid off in connection with
the merger.
Market Prices and Dividend Information
Shares of Inland common stock are traded on the New York Stock Exchange under
the symbol "IAD," and shares of Ryerson Tull class A common stock are traded on
the New York Stock Exchange under the symbol "RT." The following table sets
forth, for the periods indicated, the range of high and low per share sales
prices for Inland common stock and Ryerson Tull class A common stock as
reported on the New York Stock Exchange, as well as information concerning
quarterly dividends declared on such shares.
<TABLE>
<CAPTION>
Shares of Inland Shares of Ryerson Tull
Common Stock Class A Common Stock
---------------------------- ----------------------------
High Low Dividends High Low Dividends
--------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter......... $21 $18 1/8 $0.05 $15 3/4 $13 5/8 --
Second Quarter........ 27 1/2 18 1/8 0.05 16 1/2 13 1/2 --
Third Quarter......... 27 3/8 20 0.05 17 1/2 15 3/8 --
Fourth Quarter........ 22 1/16 15 7/8 0.05 16 3/8 13 9/16 --
1998
First Quarter......... $29 1/2 $17 1/16 $0.05 $20 3/8 $13 1/8 --
Second Quarter........ 30 1/2 26 0.05 23 18 1/4 --
Third Quarter......... 29 3/4 17 7/8 0.05 20 13/16 12 1/2 --
Fourth Quarter........ 22 14 1/8 0.05 13 1/16 8 7/16 --
1999
First Quarter (through
January 26, 1999).... $19 13/16 $14 1/2 -- $12 $9 --
</TABLE>
43
<PAGE>
The following table provides the closing per share sales prices of Inland
common stock and Ryerson Tull class A common stock, as reported on the New York
Stock Exchange Composite Tape, on:
. March 16, 1998--the last business day before Inland announced its
original intent to merge with or acquire Ryerson Tull;
. October 14, 1998--the last business day before Inland and Ryerson Tull
announced the terms of the merger;
. October 27, 1998--the last business day before the merger agreement was
signed; and
. January 26, 1999--the last business day for which prices were available
before the date of this proxy statement/prospectus.
<TABLE>
<CAPTION>
Ryerson Tull
Inland Class A
Date Common Stock Common Stock
---- ------------ ------------
<S> <C> <C>
March 16, 1998.................................. $23 3/8 $18 1/8
October 14, 1998................................ 18 3/8 10 5/16
October 27, 1998................................ 18 3/8 11 3/8
January 26, 1999................................ 14 1/2 9
</TABLE>
Inland has paid quarterly cash dividends on the Inland common stock since
1995. No decision has been made with respect to whether Inland will continue to
pay dividends after completion of the merger.
Prior to June 21, 1996, Ryerson Tull was a wholly owned subsidiary of Inland.
Public trading of the shares of Ryerson Tull class A common stock began on June
21, 1996. Ryerson Tull has not paid a dividend on the Ryerson Tull class A
common stock since public trading of the shares of Ryerson Tull class A common
stock began.
Ownership of Inland Common Stock and Ryerson Tull Class A Common Stock
The following table sets forth certain information as of December 31, 1998,
except as otherwise noted, as to the beneficial ownership of Inland common
stock and Ryerson Tull class A common stock by the directors, the Chairman of
the Board and Chief Executive Officer and the four other most highly
compensated executive officers of Inland as of December 31, 1997, and by all
directors and persons serving as executive officers of Inland as a group; and
by the directors, the President and Chief Executive Officer and the four other
most highly compensated executive officers of Ryerson Tull as of December 31,
1997, and by all directors and persons serving as executive officers of Ryerson
Tull as a group (other than the individuals also serving as Inland directors or
executive officers); and by persons whom Inland or Ryerson Tull know
beneficially own in excess of 5% of a class of Inland voting stock. In
reviewing this table, you should be aware that:
. the post-merger estimates are based on the number of shares of Inland
common stock and Ryerson Tull class A common stock beneficially owned;
. Messrs. Darnall, Henderson and Rosso are directors of both Inland and
Ryerson Tull and Messrs. Gratz and Novich are executive officers of
Ryerson Tull; and
. Mr. Wiersbe has resigned as an executive officer of Inland and Mr. Lusted
has resigned as an executive officer of Ryerson Tull.
44
<PAGE>
<TABLE>
<CAPTION>
Estimated
Inland Ryerson Tull Estimated Percent of
Common Stock Class A Common Stock Number of Outstanding
--------------------- --------------------- Shares of Inland Inland
Number of Percent of Number of Percent of Common Stock Common Stock
Shares(1) Outstanding Shares(2) Outstanding Post-Merger Post-Merger
--------- ----------- --------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Inland Directors
A. Robert Abboud....... 2,719 * 1,000 * 3,329 *
Robert J. Darnall...... 138,921 * 11,754 * 146,091 *
James A. Henderson..... 3,351 * 4,380 * 6,023 *
Leo F. Mullin.......... 672 * 0 * 672 *
Jean-Pierre Rosso...... 691 * 8,052 * 5,603 *
Joshua I. Smith........ 1,786 * 0 * 1,786 *
Nancy H. Teeters....... 2,651 * 150 * 2,743 *
Arnold R. Weber........ 2,451 * 1,000 * 3,061 *
Named Inland Executive
Officers
Jay M. Gratz........... 103,900 * 3,061 * 105,767 *
Neil S. Novich......... 132 * 178,127 3.2 108,789 *
George A. Ranney, Jr... 57,802 * 500 * 58,107 *
Dale E. Wiersbe........ 67,420 * 1,000 * 68,030 *
All Inland Directors and
Executive Officers as a
Group (14 persons)..... 446,814 2.0 213,742 3.9 577,197 2.3
Ryerson Tull Directors
Richard G. Cline....... 0 * 6,276 * 3,828 *
Jerry S. Pearlman...... 5,000 * 11,949 * 12,289 *
Donald S. Perkins...... 4,046 * 9,380 * 9,768 *
Ronald L. Thompson..... 0 * 9,670 * 5,899 *
Named Ryerson Tull
Executive Officers
Carl G. Lusted......... 0 * 100,807 1.9 61,492 *
Stephen E. Makarewicz.. 2,097 * 62,115 1.2 39,987 *
Gary L. Niederpruem.... 2,043 * 55,621 1.0 35,972 *
All Ryerson Tull
Directors and Executive
Officers as a Group (19
persons)............... 270,908 1.2 633,441 10.8 657,307 2.6
Principal Stockholders
FMR Corp.(3)........... 2,657,640 12.2 599,400 11.2 3,023,274 12.1
82 Devonshire Street
Boston, Massachusetts
02109
Alfred D. Kingsley(4).. 1,828,544 8.4 360,100 6.7 2,048,205 8.2
Gary K. Duberstein
277 Park Avenue, 27th
Floor
New York, New York
10017
MacKay-Shields
Financial
Corporation(5)........ -- -- 323,860 6.1 197,555 *
9 West 57th Street
New York, New York
10019
Morgan Stanley
Dean Witter & Co.(6)
....................... 2,302,578 10.6 -- -- 2,302,578 9.2
1585 Broadway
New York, New York
10036
Northern Trust
Corporation(7)........ 1,104,753 5.1 -- -- 1,104,753 4.4
50 South LaSalle Street
Chicago, Illinois 60675
OZ Management,
L.L.C.(8)............. 2,563,000 11.7 -- -- 2,563,000 10.2
153 East 53rd Street,
44th Floor
New York, New York
10022
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Estimated
Inland Ryerson Tull Estimated Percent of
Common Stock Class A Common Stock Number of Outstanding
--------------------- --------------------- Shares of Inland Inland
Number of Percent of Number of Percent of Common Stock Common Stock
Shares(1) Outstanding Shares(2) Outstanding Post-Merger Post-Merger
--------- ----------- --------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
State Street Research &
Management
Company(9)............. -- -- 541,800 10.1 330,498 1.3
One Financial Center,
30th Floor
Boston, Massachusetts
02111
Vanguard/Windsor Funds,
Inc.(10).............. -- -- 1,450,500 27.1 884,805 3.5
100 Vanguard Boulevard
Malvern, Pennsylvania
19355
Wellington Management
Company, L.L.P.(10)... -- -- 1,451,700 27.2 885,537 3.5
75 State Street
Boston, Massachusetts
02109
</TABLE>
- --------
(1) Includes shares held jointly with other persons, as follows: Mr. Darnall--
290, Mrs. Teeters--2,651, Mr. Wiersbe--78, and all directors and executive
officers as a group--7,142; and shares that the following have the right to
acquire under options exercisable within 60 days after December 31, 1998:
Mr. Darnall--48,000, Mr. Ranney--48,000, Mr. Gratz--87,800, Mr. Wiersbe--
60,393, and all executive officers as a group--296,782.
(2) Includes shares that the following have the right to acquire under options
exercisable within 60 days after December 31, 1998: Mr. Novich--162,056,
Mr. Lusted--100,807, Mr. Makarewicz--57,482, Mr. Niederpruem--51,633, and
all executive officers of Ryerson Tull as a group--523,670; shares held
under restricted stock awards as follows: Mr. Darnall-- 3,654, Mr. Novich--
5,000, Mr. Gratz--1,461, Mr. Makarewicz--1,500, Mr. Niederpruem--1,500, and
all executive officers as a group--20,342; and deferred restricted shares
of Ryerson Tull class A common stock payable under the Ryerson Tull
Directors' Compensation Plan, as follows: Mr. Henderson--3,380, Mr.
Pearlman--7,949, Mr. Perkins--3,380, Mr. Thompson--7,670, and all directors
as a group 22,379.
(3) FMR Corp., on behalf of itself, Edward C. Johnson 3d, Abigail P. Johnson,
Fidelity Management & Research Company and Fidelity Value Fund, reported
sole voting power as to 144,111 shares and sole dispositive power as to
2,657,640 shares of Inland common stock as of October 13, 1998, and sole
dispositive power as to 599,400 shares of Ryerson Tull class A common stock
as of February 11, 1998.
(4) Mr. Kingsley, on behalf of himself and for a group including Gary K.
Duberstein, Greenway Partners, L.P., Greenbelt Corp., Greenhouse Partners,
L.P., Greenhut, L.L.C., Greenhut Overseas, L.L.C., Greensea Offshore, L.P.,
and Greentree Partners, L.P., reported sole voting and dispositive power as
to 10,358 shares and shared voting and dispositive power as to 1,818,186
shares of Inland common stock as of September 2, 1998, and shared voting
and dispositive power as to 360,100 shares of Ryerson Tull class A common
stock as of June 9, 1998.
(5) MacKay-Shields Financial Corporation reported shared voting and dispositive
power as of February 13, 1998.
(6) Morgan Stanley, on behalf of itself, Miller Anderson & Sherrerd, LLP and
MAS Funds Value Portfolio, reported shared voting power as to 1,947,078
shares and shared dispositive power as to 2,302,578 shares as of December
10, 1998.
(7) Northern Trust Corporation, on behalf of itself and its subsidiaries The
Northern Trust Company, Northern Trust Quantitative Advisors, Inc. and
Northern Trust Bank of Florida N.A., reported sole voting power as to
75,265 shares, shared voting power as to 30,666 shares and sole dispositive
power as to 1,104,653 shares as of November 10, 1998.
46
<PAGE>
(8) OZ Management, L.L.C., on behalf of itself and for a group including OZ
Master Fund, Ltd. and Ziff Asset Management, L.P., reported shared voting
and dispositive power as of July 29, 1998. Mr. Daniel S. Och is the
managing member of OZ Management, L.L.C., and may be deemed to control such
entities and therefore, indirectly, such shares of Inland common stock. The
number of shares and the related percentage of outstanding shares are based
on filings which pre-date and thus do not reflect reductions in share
ownership due to Inland's tender offer.
(9) State Street Research & Management Company reported sole voting power as to
13,800 shares and sole dispositive power as to 541,800 shares as of July 9,
1998.
(10) Vanguard/Windsor Funds, Inc. reported sole voting power and shared
dispositive power as to 1,450,500 shares. Wellington Management Company,
LLP, in its capacity as investment advisor to its clients, including
Vanguard/Windsor Funds, Inc., reported beneficial ownership of 1,200
shares with shared voting power and 1,451,700 shares with shared
dispositive power.
*Less than 1 percent.
- --------
Inland is the beneficial owner of 34,000,000 shares of Ryerson Tull class B
common stock, which represent approximately 87% of the economic interest, and
approximately 96% of the voting power, in Ryerson Tull.
Certain persons were also known to be the beneficial owners of more than 5%
of the outstanding shares of Inland series A $2.40 cumulative convertible
preferred stock. Such persons vote together with the holders of the Inland
common stock as a single class on each matter being submitted to holders of
Inland's voting securities, and none of the owners of the series A preferred
stock own shares of series A preferred stock having more than 1% of the
combined voting power of Inland's outstanding voting securities.
Inland Common Stock Treasury Shares
As of November 2, 1998, Inland held approximately 28.8 million shares of
Inland common stock in its treasury as a result of its repurchase of:
1. approximately 26.5 million shares for an aggregate of $794.5 million
in a tender offer for such shares; and
2. approximately 1.8 million shares for an aggregate of $35.1 million in
stock repurchase programs terminated on October 2, 1998.
Inland intends to deliver treasury shares to Ryerson Tull stockholders in the
merger. Following the merger and distribution of Inland common stock to you,
Inland will hold approximately 25.5 million shares of Inland common stock in
its treasury, representing 50.5% of the issued post-merger shares of Inland
common stock. Under the rules of the New York Stock Exchange, treasury shares
can be delivered in connection with acquisitions, such as the merger between
Inland and Ryerson Tull, and pursuant to employee benefits plans without a vote
of Inland's stockholders.
47
<PAGE>
Name Change
Shortly after the merger, Ryerson Tull will merge with Inland and Inland will
change its name to "Ryerson Tull, Inc." Following that merger, the shares of
Inland common stock will trade on the New York Stock Exchange under the symbol
"RT."
Management and Other Information
As a result of the ISC/Ispat transaction, each of Inland's executive
officers, including Mr. Gratz, became entitled to severance benefits under a
change of control agreement if Inland terminates his or her employment within
two years of the ISC/Ispat transaction, other than for "Cause," or if the
officer terminates his or her employment for "Good Reason." In lieu of payments
under his change of control agreement, Mr. Gratz and Inland amended his change
of control agreement to provide that Mr. Gratz would resign as Vice President
and Chief Financial Officer of Inland on November 30, 1998 and become employed
by Ryerson Tull. The amendment provides that Mr. Gratz is entitled to a change
of control agreement from Ryerson Tull but will not be entitled to severance
benefits under his existing agreement upon termination of employment with
Inland or Ryerson Tull.
Pursuant to his amended change of control agreement, Mr. Gratz is entitled:
. to receive cash of $29.625 per share less the exercise price in lieu of
shares of Inland common stock issuable upon exercise of options awarded
to him prior to the closing of the ISC/Ispat transaction ($579,312.50 in
the aggregate) at any time on or before November 6, 2001 (but not beyond
the original term of any such option);
. upon termination of his employment with Ryerson Tull, to receive life,
disability, accident and health insurance benefits and other employee
fringe benefits;
. upon the earlier of the date of his termination of employment with
Ryerson Tull or January 1, 2001, to receive a lump sum payment of all
non-qualified retirement benefits from Inland and Ryerson Tull,
calculated as if he had an additional three years of accrued benefits
and as if payments were then to start immediately without actuarial
reduction;
. to receive a retention bonus of $250,000 on January 1, 2000, provided
that he is employed by Ryerson Tull on that date or if his employment is
terminated prior to that date by reason of his death, disability or
involuntary termination by Ryerson Tull; and
. to be reimbursed for legal fees, expenses and excise taxes, if any,
incurred as a result of any payments received under the agreement.
Pursuant to the amended change of control agreement, Mr. Gratz received
$150,000 for agreeing not to become an employee of, or provide consulting or
other services to, certain competitors prior to November 6, 2000.
On November 1, 1998, Ryerson Tull entered into a change of control agreement
with Mr. Gratz, which expires on December 31, 1999, but is automatically
extended for additional one-year periods unless Ryerson Tull gives notice prior
to June 30 of a year that it does not wish to extend this agreement for future
years or unless a change in control (as defined below) or certain other limited
events occur. The terms of the agreement are similar to those described for the
agreements defined as "Company Agreements" under the caption "Pension Benefits;
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Retirement and Termination Agreements--Employment and Change in Control
Agreements" in Ryerson Tull's proxy statement relating to its May 28, 1998
annual meeting which is incorporated herein by reference, except that Mr. Gratz
is entitled to:
. a lump-sum payment equal to three times (rather than two times) the sum
of (a) his current annual base salary plus (b) his average incentive
bonus paid for the five years preceding termination of employment;
. life, disability, accident and health insurance for a period of 36
months after termination of employment (rather than 24 months); and
. cash in lieu of three years of additional accrued benefits under Ryerson
Tull's pension plan (rather than two years).
Other information relating to the management, executive compensation, voting
securities, certain relationships and related transactions and other related
matters pertaining to Inland and Ryerson Tull is set forth in or incorporated
by reference in their respective Annual Reports on Form 10-K for the year ended
December 31, 1997. Such Annual Reports are incorporated by reference in this
proxy statement/prospectus. See "Additional Information--Where You Can Find
More Information."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Inland and Ryerson Tull (or certain of their respective subsidiaries) have
entered into a number of interrelated agreements with respect to their ongoing
relationships and certain transactions. Additional or modified arrangements and
transactions may be entered into by Inland, Ryerson Tull and their respective
subsidiaries. The following is a summary of certain past, current and
anticipated future arrangements and transactions between or among Inland,
Ryerson Tull and their respective affiliates.
Guarantor Arrangements
As a condition to completing the ISC/Ispat transaction, Ispat, ISC, Ryerson
Tull and Inland entered into an agreement with the Pension Benefit Guaranty
Corporation to provide certain financial commitments to reduce the underfunding
of the ISC Pension Plan and to secure ISC Pension Plan unfunded benefit
liabilities on a termination basis. These requirements include a Ryerson Tull
guaranty of $50 million, for five years, of the obligations of Ispat and ISC to
the Pension Benefit Guaranty Corporation in the event of a distress or
involuntary termination of the ISC Pension Plan. See "The Companies--Inland
Steel Industries, Inc.--ISC/Ispat Transaction."
A subsidiary of Ryerson Tull was the guarantor of $86,000,000 of the Inland
Steel Industries Thrift Plan ESOP notes which were issued in 1990. These notes
were paid in full on November 10, 1998. See "The Companies--Inland Steel
Industries, Inc.--Use of ISC/Ispat Transaction Proceeds."
Support Services; Indemnification and Corporate Separateness
During 1996, Ryerson Tull and Inland entered into a corporate separation
agreement relating to Inland's provision of support services to Ryerson Tull,
joint participation in a
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marketing program, indemnification by and between Ryerson Tull and Inland, and
the establishment of procedures to maintain separation between Ryerson Tull and
Inland. Specific distinguishable costs incurred by Inland in providing these
services to Ryerson Tull are charged to Ryerson Tull. In addition, other
support costs not specifically allocated to Inland or other Inland subsidiaries
are allocated to Ryerson Tull based upon the percentage of Inland consolidated
operating assets attributable to Ryerson Tull. The percentage of Inland
consolidated operating assets attributable to Ryerson Tull at December 31, 1997
was 33%. After the ISC/Ispat transaction, the percentage of Inland consolidated
operating assets attributable to Ryerson Tull is approximately 96%. The
corporate separation agreement will be terminated at the effective time of the
merger.
Tax Sharing Arrangements
In 1996, Ryerson Tull and Inland entered into a tax-sharing agreement that
provides that current and deferred federal income tax liability be determined
for each corporation in the Inland group on an individual basis. Under the
agreement, current federal tax liability for each corporation in the Inland
group, including Ryerson Tull, is paid to Inland, which in turn pays the
Internal Revenue Service. If Ryerson Tull is unable to use all of its allocated
tax attributes (net operating loss and tax credit carryforwards) in a given
year but other companies in the consolidated group are able to utilize them,
then Inland will transfer the tax attributes and pay Ryerson Tull for their
use. The agreement also contains state tax-sharing arrangements, similar to the
arrangements described above with respect to federal taxes, for those states in
which the consolidated group is charged state taxes on a unitary or combined
basis. During fiscal year 1998, $35 million of Ryerson Tull federal income tax
attributes in the form of net operating loss carryforwards were transferred to
the Inland consolidated group. Ryerson Tull was paid $12.3 million in cash ($35
million multiplied by a tax rate of 35%) by Inland for the use of these tax
attributes.
Cross-License Agreement
In 1996, Ryerson Tull and Inland entered into a cross-license agreement
pursuant to which Ryerson Tull licenses on a royalty-free basis its "Ryerson"
name and know-how for use by Inland and its affiliates outside North America
and pursuant to which Inland licenses on a royalty-free basis its "red diamond"
trademark for use by Ryerson Tull. Inland agreed under the ISC/Ispat merger
agreement to discontinue use of the red diamond logo by January 16, 1999, while
Ispat agreed not to unreasonably withhold its consent to a reasonable extension
of such deadline if Inland commenced actions reasonably calculated to
discontinue its use of the red diamond logo as promptly as practicable. Inland
and Ryerson Tull are phasing out their use of the red diamond logo and have
requested an extension of the January 16 deadline from Ispat. Neither Inland
nor Ryerson Tull anticipate that Ispat will object to a reasonable extension of
the deadline. The cross-license agreement requires each of Ryerson Tull and
Inland to reimburse the other for the reasonable costs incurred in providing
the respective license property pursuant to the agreement. No payments are
expected in 1998. The cross-license agreement will be terminated at the
effective time of the merger.
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Pensions
Effective April 30, 1996, that portion of the Inland Steel Industries Pension
Plan covering Ryerson Tull's current and former employees was separated and
became the Ryerson Tull Pension Plan. The Ryerson Tull Pension Plan assumed the
liabilities of the Inland Steel Industries Pension Plan attributable to current
and former Ryerson Tull employees and a corresponding percentage of the assets.
Due to this separation, Ryerson Tull's benefit obligation was remeasured and
Ryerson Tull recognized a $25.4 million decrease in its prepaid pension cost, a
$16.5 million reduction in reinvested earnings and an $8.9 million deferred tax
asset increase in 1996. Ryerson Tull's pension plan currently meets the minimum
funding requirements of the Employee Retirement Income Security Act of 1974.
Ryerson Tull's current policy is to continue to fund the plan to meet at least
these minimum funding standards. Although Ryerson Tull was not required to make
any pension plan contributions during 1997 and 1998, Ryerson Tull elected to
make voluntary cash contributions of $6.9 million and $6.0 million,
respectively, to enhance the plan's funded status.
Effective January 1, 1998, Ryerson Tull froze the benefits accrued under its
defined benefit pension plan for certain salaried employees and instituted a
new defined contribution plan. Salaried employees vested in their benefits
accrued under the defined benefit plan at December 31, 1997 (and those who
become vested in such benefits in the future) will be entitled to those
benefits upon retirement. Certain transition rules have been established for
those salaried employees meeting specified age and service requirements to
continue to accrue benefits for an additional five years under the defined
benefit plan. At December 31, 2002, these employees will become eligible to
participate fully in the defined contribution plan.
As part of the ISC/Ispat transaction, the ISC Pension Plan was transferred to
ISC, and Inland's remaining employees that had formerly participated in the ISC
Pension Plan became participants in the Ryerson Tull Pension Plan and the
proportionate assets and liabilities of the ISC Pension Plan related to such
participants were transferred to the Ryerson Tull Pension Plan. The ISC Pension
Plan has unfunded benefit liabilities on a termination basis for which Ispat,
ISC, Ryerson Tull and Inland entered into an agreement with the Pension Benefit
Guaranty Corporation to provide certain financial commitments to reduce the
underfunding of the ISC Pension Plan and to secure ISC Pension Plan unfunded
benefit liabilities on a termination basis. See "The Companies--Inland Steel
Industries, Inc.--ISC/Ispat Transaction."
COMPARATIVE RIGHTS OF INLAND STOCKHOLDERS AND
RYERSON TULL STOCKHOLDERS
The rights of Ryerson Tull stockholders are currently governed by Delaware
corporate law and Ryerson Tull's certificate of incorporation, by-laws and
rights agreement. Upon completion of the merger, Ryerson Tull stockholders will
become stockholders of Inland and their rights as Inland stockholders will be
governed by Delaware corporate law and Inland's certificate of incorporation,
by-laws and rights agreement. There are a number of differences between the
rights of Inland stockholders and Ryerson Tull stockholders. The following is a
brief summary of the material differences between the rights of Inland
stockholders and the rights of Ryerson Tull
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stockholders, and is qualified in its entirety by reference to the relevant
provisions of Delaware corporate law, Inland's certificate of incorporation,
by-laws and rights agreement and Ryerson Tull's certificate of incorporation,
by-laws and rights agreement, which are incorporated by reference as exhibits
to the registration statement.
Authorized Capital
Inland Steel Industries, Inc.
The total number of shares of all classes of stock that Inland is authorized
to issue is 115,000,000, of which 15,000,000 are preferred stock and
100,000,000 are common stock. On December 31, 1998, there were 82,249 shares of
series A preferred stock and 21,753,101 shares of Inland common stock
outstanding. Inland is not prohibited from issuing additional Inland common
stock or Inland preferred stock.
Each outstanding share of Inland common stock entitles the holder thereof to
one vote on each matter submitted to a vote at a meeting of stockholders.
Subject to any prior rights to receive dividends to which the holders of shares
of any series of Inland preferred stock may be entitled, the holders of Inland
common stock are entitled to receive dividends if, as and when from time to
time the Inland Board of Directors declares dividends payable from funds
legally available therefor. In the event of any dissolution, liquidation or
winding up of Inland, and subject to any amounts to which the holders of shares
of any series of Inland preferred stock may be entitled and to the repayment of
all of Inland's indebtedness, the holders of Inland common stock are entitled
to receive, pro rata, any remaining assets of Inland available for distribution
to its stockholders. The holders of Inland common stock do not have the right
to convert their Inland common stock into any other security under any
circumstances.
Series A preferred stock is the only series of Inland preferred stock
presently outstanding. Holders of the outstanding shares are entitled to
receive dividends at the rate of $2.40 per share per year and, upon any
liquidation, dissolution or winding up of Inland, whether voluntary or
involuntary, subject to the rights of the holders of any stock of Inland
ranking senior to the series A preferred stock and all of Inland's
indebtedness, $44.00 per share plus all dividends accumulated and unpaid
thereon. The shares of series A preferred stock are convertible into shares of
Inland common stock at a rate of one share of Inland common stock for one share
of series A preferred stock, subject to adjustments in certain events, and they
are redeemable at Inland's option at any time at $44.00 per share plus all
dividends accumulated and unpaid thereon to the date fixed for such redemption.
Inland may partially redeem its series A preferred stock even if dividends on
that series are in arrears, provided that cumulative dividends are paid in full
on the shares that are redeemed. Dividends paid on the series A preferred stock
and any other series of Inland preferred stock ranking on a parity with the
series A preferred stock as to dividends, if less than the full amount of
dividends accumulated and unpaid on each such series of Inland preferred stock,
must be paid on each such series of Inland preferred stock in proportion to the
aggregate amounts of dividends accumulated and unpaid on each such series. The
Inland Board of Directors has authorized Inland to make open market purchases
or redeem the outstanding shares of series A preferred stock as determined by
Inland's Chief Executive Officer. Inland's Chief Executive Officer has not yet
determined when to redeem the series A preferred stock.
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The holders of series A preferred stock vote together with the holders of
Inland common stock (and any other shares of capital stock or notes of Inland
entitled to vote at a meeting of stockholders) as one class, except as
otherwise provided by Delaware corporate law or the Inland certificate of
incorporation. The vote or consent of a majority of the outstanding shares of
series A preferred stock as a class, together with all other series of Inland
preferred stock ranking on a parity with the series A preferred stock either as
to dividends or upon liquidation and which are affected in such matter in
substantially the same manner as the series A preferred stock with respect to
the right to receive dividends or the right to receive distributions upon
liquidation, is required to authorize, create or issue any class of stock, or
any right to convert into or purchase any class of stock, ranking prior to the
series A preferred stock as to dividends or liquidation rights, or for any
merger or consolidation which would have a similar effect (with certain
exceptions).
Ryerson Tull, Inc.
The total number of shares of all classes of stock that Ryerson Tull is
authorized to issue is 150,000,000, of which 100,000,000 are class A common
stock, 34,000,000 are class B common stock and 16,000,000 are preferred stock.
On December 31, 1998, there were 5,345,187 shares of Ryerson Tull class A
common stock and 34,000,000 shares of Ryerson Tull class B common stock
outstanding. The holders of shares of Ryerson Tull class A common stock are
entitled to one vote per share and the holders of shares of Ryerson Tull class
B common stock are entitled to four votes per share on all matters to be voted
upon by stockholders of Ryerson Tull. Except as provided by law or by the
Ryerson Tull certificate of incorporation, neither the holders of shares of
Ryerson Tull class A common stock nor the holders of shares of Ryerson Tull
class B common stock are entitled to vote as a separate class on any matter to
be voted upon by Ryerson Tull stockholders.
The holders of Ryerson Tull class A common stock and the holders of Ryerson
Tull class B common stock are entitled to dividends if, as and when the Ryerson
Tull Board of Directors declares dividends payable out of funds legally
available therefor. The amount of any dividend or distribution of cash, stock
or other property of Ryerson Tull to be paid on each share of Ryerson Tull
class A common stock or Ryerson Tull class B common stock must be exactly
equal, except as described in the balance of this paragraph. Ryerson Tull may
not pay a dividend or make a distribution of Ryerson Tull class A common stock
or any security exercisable for or convertible into Ryerson Tull class A common
stock on or to shares of any class of Ryerson Tull's capital stock other than
Ryerson Tull class A common stock. If Ryerson Tull pays a dividend or makes a
distribution of Ryerson Tull class A common stock or Ryerson Tull class A
common stock equivalents, Ryerson Tull must simultaneously pay a dividend or
make a distribution of Ryerson Tull class B common stock or securities
exercisable for or convertible into Ryerson Tull class B common stock on or to
shares of Ryerson Tull class B common stock, and the number of shares of
Ryerson Tull class B common stock issued or covered by Ryerson Tull class B
common stock equivalents issued on each share of Ryerson Tull class B common
stock pursuant to such dividend or distribution must equal the number of shares
of Ryerson Tull class A common stock issued or covered by Ryerson Tull class A
common stock equivalents issued on each share of Ryerson Tull class A common
stock pursuant to such dividend or distribution. An identical restriction
exists on payment of a dividend of or distributing Ryerson Tull class B common
stock or Ryerson Tull class B common stock equivalents.
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In the event of any dissolution, liquidation or winding up of Ryerson Tull
and subject to any amounts to which the holders of shares of any series of
Ryerson Tull preferred stock may be entitled to receive, the holders of Ryerson
Tull class A common stock and Ryerson Tull class B common stock, counted
together as a single class, are entitled to receive, pro rata, any remaining
assets of Ryerson Tull available for distribution to its stockholders.
A holder of Ryerson Tull class B common stock has the right at any time to
convert, at the option of, and without payment to Ryerson Tull by, the
stockholder, any share or shares of Ryerson Tull class B common stock into any
equal number of shares of Ryerson Tull class A common stock. Each share of
Ryerson Tull class B common stock immediately and automatically converts into
one share of Ryerson Tull class A common stock upon the direct or indirect
occurrence of, among other things, Ryerson Tull consolidating with or merging
with and into any other corporation, partnership, association, joint venture,
joint-stock company, trust, or unincorporated organization (each a "Person")
(such a conversion will occur at the effective time of the merger) or Ryerson
Tull selling or otherwise transferring, in one or more related transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of Ryerson Tull to any individual or individuals or any Person or Persons. Each
share of Ryerson Tull class B common stock immediately and automatically
converts into one share of Ryerson Tull class A common stock upon transfer of
such share by the holder thereof to any individual or Person other than an
individual or Person owning 100% of such holder's capital stock or a wholly
owned direct or indirect subsidiary of such holder. The holders of shares of
Ryerson Tull class A common stock do not have any conversion rights with
respect to their shares of Ryerson Tull class A common stock.
Ryerson Tull may not issue any shares of Ryerson Tull class B common stock
after the date of the initial issuance of the shares of Ryerson Tull class B
common stock other than in the form of a dividend or distribution pursuant to a
stock dividend or division or split-up of the shares of Ryerson Tull class B
common stock subject to the restrictions set forth in the Ryerson Tull
certificate.
Board of Directors
The Inland by-laws provide that the entire Inland Board of Directors is
elected each year.
The Ryerson Tull by-laws provide that the Ryerson Tull Board of Directors is
divided into three classes of directors serving staggered three-year terms. As
a result, approximately one-third of the Ryerson Tull Board of Directors is
elected each year.
Number of Directors; Removal; Filling Vacancies
The Inland by-laws and the Ryerson Tull by-laws each provide that the number
of directors is fixed by the companies' respective Boards of Directors, subject
to the limits set forth in their respective by-laws. Their respective by-laws
further provide that vacancies and newly created directorships shall be filled
by a majority of directors then in office, even if less than a quorum.
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Neither the Inland certificate of incorporation nor the Inland by-laws
address removal of an Inland director. Under section 141(k) of Delaware
corporate law, any director or the entire Board of Directors of a corporation
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
The Ryerson Tull certificate of incorporation provides that any Ryerson Tull
director may be removed only for cause by the affirmative vote of the holders
of not less than 80% of the voting power represented by all the shares of stock
of Ryerson Tull outstanding and entitled to vote for the election of directors,
given at a duly called annual or special meeting of Ryerson Tull stockholders.
The Inland by-laws and the Ryerson Tull certificate of incorporation and by-
laws each provide that each director shall serve until the annual meeting of
stockholders in the year in which his or her term expires and his or her
successor is duly elected and qualified, subject to his or her prior death,
retirement, resignation or, in the case of Ryerson Tull, removal for cause.
Honorary Directors of Inland
The Inland by-laws provide that any person who has at any time been chief
executive officer of Inland (or of ISC prior to May 1, 1986) may, after
retirement or resignation from the Inland Board of Directors (or having retired
or resigned from the Board of Directors of ISC), be appointed by the Inland
Board of Directors as an honorary director for one or more year terms. Honorary
directors serve in an advisory capacity to the Inland Board of Directors, have
no vote and are not considered as directors for the purposes of determining a
quorum; however, honorary directors are reimbursed for their expenses in
attending meetings of the Inland Board of Directors, and if such honorary
directors are not at the time otherwise regularly employed by Inland or any
subsidiary, they receive such fees (which may include reimbursement of
expenses, if any) for attendance at each meeting of the Inland Board of
Directors as may be fixed from time to time by the Inland Board of Directors,
but they do not receive any other director's fees or any other compensation for
their services. As of the date of this proxy statement/prospectus, there were
no honorary directors.
The Ryerson Tull by-laws do not provide for honorary directors.
Independent Directors of Ryerson Tull
The Ryerson Tull certificate of incorporation provides that at least one-
third of the directors of Ryerson Tull must be "Independent Directors," which
are defined as individuals who are not, and who have not within the previous
twelve months been (1) officers or employees of Ryerson Tull, (2) officers,
directors or employees of Inland or any other subsidiaries or affiliates of
Inland or (3) owners of more than five percent of the outstanding common stock
of Inland or of any of the other subsidiaries or affiliates of Inland.
The Ryerson Tull certificate of incorporation further provides that:
. Ryerson Tull may not, without the affirmative vote of a majority of the
Ryerson Tull Board of Directors, including the affirmative vote of at
least two-thirds of the
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Independent Directors, engage in certain listed actions related to
bankruptcy proceedings;
. Ryerson Tull may not, without the affirmative vote of a majority of the
Ryerson Tull Board of Directors and the affirmative vote of at least
two-thirds of the Independent Directors, merge with and into, or
consolidate with, any other Person, unless the surviving entity is not
affiliated with Inland or has charter provisions comparable to
provisions of the Ryerson Tull certificate of incorporation related to
Independent Directors; and
. at the first regular meeting of the Ryerson Tull Board of Directors
following the end of a calendar quarter, the Independent Directors will
review any transaction entered into between Ryerson Tull or any
subsidiary and Inland or any of its affiliates, other than Ryerson Tull
or a subsidiary of Ryerson Tull, during the immediately preceding
calendar quarter where the amount involved exceeds $25 million, other
than transactions arising out of written agreements entered into prior
to the issuance of any shares of Ryerson Tull class A common stock, to
determine whether such transactions were on a basis at least as
favorable as that which would have been obtained from an unaffiliated
third party.
With respect to the last bullet point above, the Independent Directors will
report the findings of any such review to the Ryerson Tull Board of Directors
at the next meeting of the Ryerson Tull Board of Directors, which will then
take such action as it deems appropriate.
The Inland certificate of incorporation does not require Independent
Directors.
No Stockholder Action by Written Consent; Meetings
The Inland certificate of incorporation and Ryerson Tull certificate of
incorporation provide that any action required or permitted to be taken by the
stockholders of the corporations, whether voting as a single class or
otherwise, must be taken at a duly called annual or special meeting of such
holders and may not be taken by a consent in writing by any such holders,
except that the respective Boards of Directors at any time may by resolution
provide that the holders of Inland preferred stock or Ryerson Tull preferred
stock, or any series thereof, may take any action required or permitted to be
taken by such holders by consent in writing without a meeting. As of the date
of this proxy statement/prospectus, there is no Ryerson Tull preferred stock
issued.
The Inland by-laws and Ryerson Tull certificate of incorporation and by-laws
provide that, except as otherwise required by law, meetings of the stockholders
of the corporations may be called only by:
. the Board of Directors pursuant to a resolution approved by the
affirmative vote of the directors then in office;
. the Chairman of the Board of Directors;
. the Vice Chairman of the Board of Directors, if one is elected; or
. the President.
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Only those matters set forth in the notice of the meeting may be considered
or acted upon at such meeting, except as otherwise provided by law.
Advance Notice Provisions for Stockholder Proposals
Inland's by-laws and Ryerson Tull's by-laws require advance notice from
stockholders who want to bring matters, other than nominations for election as
a director, before an annual meeting of stockholders. A stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of Inland or Ryerson Tull, as the case may be:
. not less than 90 days prior to the annual meeting; or
. if less than 105 days' notice or prior public disclosure of the date of
an annual meeting is given or made to stockholders:
(a) in the case of Inland, a stockholder's notice must be received not
later than the close of business on the fifteenth day following the
day on which Inland mailed its annual meeting notice or such public
disclosure was made, whichever first occurs; and
(b) in the case of Ryerson Tull, a stockholder's notice must be received
not less than 90 days prior to the anniversary of the prior year's
annual meeting.
To be in proper form, a stockholder's notice must contain:
. a brief description of the business the stockholder desires to bring
before the annual meeting and the reasons for conducting the business at
the annual meeting;
. the stockholder's name and record address;
. the class and number of shares of capital stock that the stockholder
beneficially owns; and
. any material interest the stockholder has in such business.
Advance Notice Provisions for Stockholder Nominations of Directors
Inland's by-laws and Ryerson Tull's by-laws also require advance notice from
stockholders who want to nominate candidates for election as directors. A
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of Inland or Ryerson Tull, as the case may be:
. not less than 90 days prior to the annual meeting; or
. if less than 105 days' notice or prior public disclosure of the date of
an annual meeting is given or made to stockholders:
(a) in the case of Inland, a stockholder's notice must be received not
later than the close of business on the fifteenth day following the
day on which Inland mailed its annual meeting notice or such public
disclosure was made, whichever first occurs; and
(b) in the case of Ryerson Tull, a stockholder's notice must be received
not less than 90 days prior to the anniversary of the prior year's
annual meeting.
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To be in proper form, a stockholder's notice must contain:
. as to each person whom the stockholder proposes to nominate for election
or re-election as a director:
(a) the nominee's name, age, business address and residence address;
(b) the nominee's principal occupation or employment;
(c) the class and number of shares of capital stock that the nominee
beneficially owns;
(d) the nominee's signed consent to serve as a director of the
corporation if elected; and
(e) any other information relating to the nominee that is required to be
disclosed in solicitations for proxies for election of directors
pursuant to Securities and Exchange Commission rules; and
. as to the stockholder giving the notice:
(a) the stockholder's name and record address; and
(b) the class and number of shares of capital stock that the stockholder
beneficially owns.
Inland or Ryerson Tull, as the case may be, may require any proposed nominee
to furnish such other information as may reasonably be required to determine
the nominee's eligibility to serve as a director.
Transactions with Interested Stockholders
Both Inland and Ryerson Tull are governed by the provisions of section 203 of
Delaware corporate law. Section 203 prevents an "Interested Stockholder"
(defined for purposes of section 203 as a person beneficially owning 15% or
more of a corporation's voting stock) from engaging in a "Business Combination"
(as defined in section 203) with a Delaware corporation for three years
following the date such person became an Interested Stockholder unless:
. before such person became an Interested Stockholder, the Board of
Directors of the corporation approved the transaction in which the
Interested Stockholder became an Interested Stockholder;
. upon consummation of the transaction that resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested
Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding stock held
by directors who are also officers and employee stock ownership plans
that do not provide for confidential voting by plan participants); or
. following the transaction in which such person became an Interested
Stockholder, the Business Combination is (1) approved by the Board of
Directors of the corporation and (2) authorized at a meeting of
stockholders by the affirmative vote of the holders of 66 2/3% of the
outstanding voting stock of the corporation not owned by the Interested
Stockholder.
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Amendment of Certain Provisions of Certificates of Incorporation and By-Laws
The Ryerson Tull certificate of incorporation contains a provision requiring
the affirmative vote of a majority of the directors of the Ryerson Tull Board
of Directors to repeal, alter, change or amend the Ryerson Tull certificate of
incorporation or Ryerson Tull by-laws. The Ryerson Tull certificate of
incorporation and Ryerson Tull by-laws further require the affirmative vote of
a majority of the holders of the Ryerson Tull class A common stock and Ryerson
Tull class B common stock, voting together as a single class, to repeal, alter,
change or amend the Ryerson Tull certificate of incorporation; provided,
further, that the affirmative vote of at least 80% of the holders of the
Ryerson Tull class A common stock and Ryerson Tull class B common stock, voting
together as a single class, is required to amend certain provisions of the
Ryerson Tull certificate of incorporation and Ryerson Tull by-laws, including:
. the provisions therein relating to the number, term, removal and
classification of directors; the calling of meetings;
. votes for bankruptcy proceedings, merger or consolidation and review of
certain transactions by the independent directors;
. stockholder action and meetings; and
. the Ryerson Tull by-laws.
In order to amend the Ryerson Tull certificate of incorporation in a manner
that would materially affect the rights of holders of Ryerson Tull series A
junior participating preferred stock, the Ryerson Tull certificate of
incorporation requires that a majority of such holders, voting separately as a
class, approve such an amendment.
Rights Agreements
Inland Rights Agreement
On November 25, 1997, the Inland Board of Directors declared a dividend
distribution of one right for each outstanding share of Inland common stock to
stockholders of record at the close of business on December 17, 1997. The
Inland Board of Directors authorized the issuance of one Inland right for each
share of Inland common stock issued after the Inland record date and prior to
the earliest of the Inland Distribution Date (as defined below), or the
redemption, exchange or expiration of the Inland rights. Except as set forth
below and subject to adjustment as provided in the Inland rights agreement,
each Inland right entitles the registered holder to purchase from Inland one
one-hundredth of a share of series D junior participating preferred stock at a
purchase price of $80 per Inland right. The description and terms of the Inland
rights are set forth in the Inland rights agreement.
Upon payment of the dividend at the close of business on the Inland record
date, the Inland rights attached to all Inland common stock certificates
representing shares then outstanding, and no separate Inland rights
certificates were distributed. The Inland rights will separate from the shares
of Inland common stock upon the earliest of:
. 10 days following a public announcement that a person or group (an
"Inland Acquiring Person"), together with persons affiliated or
associated with it, has acquired, or obtained
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the right to acquire, beneficial ownership of 20% or more of the
outstanding shares of Inland common stock (the "Stock Acquisition
Date");
. 10 business days (or such later date as the Inland Board of Directors
shall determine) following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially
owning 20% or more of such outstanding shares of Inland common stock; or
. 10 business days following a determination by the Inland Board of
Directors that a person (an "Adverse Person"), alone or together with
its affiliates and associates, has become the beneficial owner of more
than 10% of the shares of Inland common stock and that:
(a) such beneficial ownership is intended to cause Inland to repurchase
the shares of Inland common stock beneficially owned by such person
or to cause pressure on Inland to take action or enter into
transactions intended to provide such person with short-term
financial gain under circumstances where the Inland Board of
Directors determines that the best long-term interests of Inland
would not be served by taking such action or entering into such
transactions at the time; or
(b) such beneficial ownership is causing or reasonably likely to cause a
material adverse impact on the business or prospects of Inland;
provided, however, that the Inland Board of Directors shall not declare
to be an Adverse Person any person which has reported or is required to
report its ownership of Inland common stock on Schedule 13G under the
Securities Exchange Act of 1934 or on Schedule 13D under the Securities
Exchange Act of 1934 which Schedule 13D does not state any intention to,
or reserve the right to, control or influence Inland or engage in
certain other actions, so long as such person neither reports nor is
required to report such ownership other than as described in this
proviso (the earliest of such dates, the "Inland Distribution Date").
The Inland rights will first become exercisable on the Inland Distribution
Date and will expire at the close of business on December 17, 2007, unless
earlier redeemed or exchanged by Inland as described below. Notwithstanding the
foregoing, the Inland rights will not be exercisable after the occurrence of an
Inland Triggering Event (described in the next paragraph) until Inland's right
of redemption has expired.
In the event that any person shall become (1) an Inland Acquiring Person
(except (a) pursuant to an offer for all outstanding shares of Inland common
stock which the independent directors determine to be fair to and otherwise in
the best interest of Inland and its stockholders after receiving advice from
one or more investment banking firms (a "Qualifying Offer") and (b) for certain
persons owning less than 25% of the outstanding shares of Inland common stock
who report their ownership on Schedule 13G under the Securities Exchange Act of
1934, or on Schedule 13D under the Securities Exchange Act of 1934, provided
that they do not state any intention to, or reserve the right to, control or
influence Inland and such persons certify that they became an Inland Acquiring
Person inadvertently and they agree that they will not acquire any additional
shares of Inland common stock) or (2) an Adverse Person (either such event is
referred to herein as an "Inland Triggering Event"), then the Inland rights
will "flip-in" and
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entitle each holder of an Inland right, except as provided below, to purchase,
upon exercise at the then-current Inland purchase price, that number of shares
of Inland common stock having a market value of two times such Inland purchase
price.
Any Inland rights beneficially owned at any time on or after the earlier of
the Distribution Date and the Stock Acquisition Date by an Inland Acquiring
Person, an Adverse Person or an affiliate or associate of an Inland Acquiring
Person or an Adverse Person (whether or not such ownership is subsequently
transferred) will become null and void upon the occurrence of an Inland
Triggering Event, and any holder of such Inland rights will have no right to
exercise such Inland rights.
In the event that, following an Inland Triggering Event, Inland is acquired
in a merger or other business combination in which shares of Inland common
stock do not remain outstanding or are changed (other than a merger following a
Qualifying Offer) or 50% of the assets or earning power of Inland and its
subsidiaries (taken as a whole) is sold or otherwise transferred to any person
other than Inland or any subsidiary of Inland) in one transaction or a series
of related transactions, the Inland rights will "flip-over" and entitle each
holder of an Inland right, except as provided in the preceding paragraph, to
purchase, upon exercise of the Inland right at the then-current Inland purchase
price, that number of shares of common stock of the acquiring company (or, in
certain circumstances, one of its affiliates) which at the time of such
transaction would have a market value of two times such Inland purchase price.
With certain exceptions, no adjustment in the Inland purchase price will be
required until cumulative adjustments require an adjustment of at least 1% of
the Inland purchase price.
At any time until the earlier of (1) fifteen days following the Stock
Acquisition Date and (2) December 17, 2007, Inland may redeem the Inland rights
in whole, but not in part, at a price of $0.01 per Inland right, subject to
adjustments.
Inland may, at its option, pay the redemption price in cash, shares of Inland
common stock (based on the current market price of shares of Inland common
stock at the time of redemption) or any other form of consideration deemed
appropriate by the Inland Board of Directors. Immediately upon the action of
Inland's Board of Directors ordering redemption of the Inland rights, the right
to exercise the Inland rights will terminate and the only right of the holders
of Inland rights will be to receive the applicable redemption price. In
addition, after an Inland Triggering Event, at the election of the Inland Board
of Directors, the outstanding Inland rights (other than those beneficially
owned by an Inland Acquiring Person, an Adverse Person or an affiliate or
associate of an Inland Acquiring Person or Adverse Person) may be exchanged, in
whole or in part, for shares of Inland common stock, or shares of preferred
stock of Inland having essentially the same value or economic rights as such
shares. Immediately upon the action of the Inland Board of Directors
authorizing any such exchange, and without any further action or any notice,
the Inland rights (other than Inland rights which are not subject to such
exchange) will terminate and such Inland rights will only entitle holders to
receive the shares issuable upon such exchange.
Until an Inland right is exercised, the holder thereof, as such, will have no
rights as a stockholder of Inland, including, without limitation, the right to
vote or to receive dividends.
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While the distribution of the Inland rights will not be taxable to stockholders
or to Inland, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Inland rights become exercisable for
shares of Inland common stock (or other consideration of Inland) or for common
stock of the acquiring company as set forth above.
The Inland rights have certain antitakeover effects. The Inland rights will
cause substantial dilution to a person or group that attempts to acquire Inland
on terms not approved by Inland's Board of Directors. The Inland rights should
not interfere with any merger or other business combination approved by the
Inland Board of Directors because the Inland Board of Directors may, subject to
the limitations discussed above, at its option, at any time until fifteen days
following the Stock Acquisition Date, redeem all, but not less than all, of the
then outstanding Inland rights at the applicable redemption price.
The foregoing summary description of the Inland rights does not purport to be
complete and is qualified in its entirety by reference to the Inland rights
agreement. Copies of the Inland rights agreement are available free of charge
from Inland.
Ryerson Tull Rights Agreement
On June 10, 1996, the Ryerson Tull Board of Directors declared a dividend
distribution of one right for each outstanding share of Ryerson Tull class A
common stock and Ryerson Tull class B common stock to stockholders of record at
the close of business on June 13, 1996. The Ryerson Tull Board of Directors
authorized the issuance of one Ryerson Tull right for each share of Ryerson
Tull class A common stock and Ryerson Tull class B common stock issued after
the Ryerson Tull record date and prior to the earliest of the Ryerson Tull
Distribution Date (as defined below), the redemption, exchange or expiration of
the Ryerson Tull rights. Except as set forth below and subject to adjustment as
provided in the Ryerson Tull rights agreement, each Ryerson Tull right entitles
the registered holder to purchase from Ryerson Tull one one-hundredth of a
share of series A junior participating preferred stock at a purchase price of
$95 per Ryerson Tull right. The description and terms of the Ryerson Tull
rights are set forth in the Ryerson Tull rights agreement.
Upon payment of the dividend at the close of business on the Ryerson Tull
record date, the Ryerson Tull rights attached to all Ryerson Tull class A
common stock and Ryerson Tull class B common stock certificates representing
shares then outstanding, and no separate Ryerson Tull rights certificates were
distributed. The Ryerson Tull rights will separate from the shares of Ryerson
Tull class A common stock and Ryerson Tull class B common stock upon the
earliest of (1) 10 days following a public announcement that a person or group
(a "Ryerson Tull Acquiring Person"), together with persons affiliated or
associated with it, has acquired, or obtained the right to acquire, beneficial
ownership of 10% or more of the voting power of Ryerson Tull (the "Shares
Acquisition Date") or (2) 15 business days (or such later date as the Ryerson
Tull Board of Directors shall determine) following the commencement of a tender
offer or exchange offer that would result in a person or group beneficially
owning 10% or more of the voting power of Ryerson Tull (the earliest of such
dates, the "Ryerson Tull Distribution Date").
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The Ryerson Tull rights will first become exercisable on the Ryerson Tull
Distribution Date and will expire at the close of business on June 13, 2006,
unless earlier redeemed or exchanged by Ryerson Tull as described below.
Notwithstanding the foregoing, the Ryerson Tull rights will not be exercisable
after the occurrence of a Ryerson Tull Triggering Event (defined below) until
Ryerson Tull's right of redemption has expired.
In the event that any person shall become a Ryerson Tull Acquiring Person
(except (1) an acquisition of capital stock by Ryerson Tull which, by reducing
the number of shares outstanding, increases the proportionate voting power of
shares beneficially owned by such Person to 10% or more of the voting power of
Ryerson Tull, (2) a sale by Inland and its affiliates and associates of shares
of Ryerson Tull class B common stock which, by reducing the aggregate number of
votes of Ryerson Tull class A common stock and Ryerson Tull class B common
stock, voting together as a single class, outstanding, increases the
proportionate voting power of shares beneficially owned by such Person to 10%
or more of the voting power of Ryerson Tull, or (3) the acquisition by such
Person of newly issued capital stock directly from Ryerson Tull (such event is
referred to herein as a "Ryerson Tull Triggering Event"), then the Ryerson Tull
rights will "flip-in" and entitle each holder of a Ryerson Tull right, except
as provided below, to purchase, upon exercise at the then-current Ryerson Tull
Purchase Price, that number of shares of Ryerson Tull class A common stock
having a market value of two times such Ryerson Tull Purchase Price.
Any Ryerson Tull rights beneficially owned at any time on or after the
earlier of the Ryerson Tull Distribution Date and the Share Acquisition Date by
a Ryerson Tull Acquiring Person or an affiliate or associate of a Ryerson Tull
Acquiring Person (whether or not such ownership is subsequently transferred)
will become null and void upon the occurrence of a Ryerson Tull Triggering
Event, and any holder of such Ryerson Tull rights will have no right to
exercise such Ryerson Tull rights.
In the event that, following a Ryerson Tull Triggering Event, Ryerson Tull is
acquired in a merger or other business combination in which Ryerson Tull class
A common stock or Ryerson Tull class B common stock does not remain outstanding
or is changed or 50% of the assets or earning power of Ryerson Tull and its
subsidiaries (taken as a whole) is sold or otherwise transferred to any person
other than Ryerson Tull (or any subsidiary of Ryerson Tull) in one transaction
or a series of related transactions, the Ryerson Tull rights will "flip-over"
and entitle each holder of a Ryerson Tull right, except as provided in the
preceding paragraph, to purchase, upon exercise of the Ryerson Tull right at
the then-current Ryerson Tull purchase price, that number of shares of common
stock of the acquiring company (or, in certain circumstances, one of its
affiliates) which at the time of such transaction would have a market value of
two times such Ryerson Tull purchase price. With certain exceptions, no
adjustment in the Ryerson Tull purchase price will be required until cumulative
adjustments require an adjustment of at least 1% of the Ryerson Tull purchase
price.
At any time prior to the Share Acquisition Date, Ryerson Tull may redeem the
Ryerson Tull rights in whole, but not in part, at a price of $0.01 per Ryerson
Tull right, subject to adjustments. Ryerson Tull may, at its option, pay the
redemption price in cash, Ryerson Tull class A common stock (based on the
current per share market price of Ryerson Tull class A
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common stock at the time of redemption) or any other form of consideration
deemed appropriate by the Ryerson Tull Board of Directors. Immediately upon the
action of Ryerson Tull's Board of Directors ordering redemption of the Ryerson
Tull rights, the right to exercise the Ryerson Tull rights will terminate and
the only right of the holders of Ryerson Tull rights will be to receive the
applicable redemption price. In addition, after a Ryerson Tull Triggering
Event, at the election of the Ryerson Tull Board of Directors, the outstanding
Ryerson Tull rights (other than those beneficially owned by a Ryerson Tull
Acquiring Person or an affiliate or associate of a Ryerson Tull Acquiring
Person) may be exchanged, in whole or in part, for Ryerson Tull class A common
stock, or shares of preferred stock of Ryerson Tull having essentially the same
value or economic rights as such shares. Immediately upon the action of the
Ryerson Tull Board of Directors authorizing any such exchange, and without any
further action or any notice, the Ryerson Tull rights (other than Ryerson Tull
rights which are not subject to such exchange) will terminate and such Ryerson
Tull rights will only entitle holders to receive the shares issuable upon such
exchange.
Until a Ryerson Tull right is exercised, the holder thereof, as such, will
have no rights as a stockholder of Ryerson Tull, including, without limitation,
the right to vote or to receive dividends. While the distribution of the
Ryerson Tull rights will not be taxable to stockholders or to Ryerson Tull,
stockholders may, depending upon the circumstances, recognize taxable income in
the event that the Ryerson Tull rights become exercisable for Ryerson Tull
class A common stock (or other consideration) of Ryerson Tull or for common
stock of the acquiring company as set forth above.
The Ryerson Tull rights have certain antitakeover effects. The Ryerson Tull
rights will cause substantial dilution to a person or group that attempts to
acquire Ryerson Tull on terms not approved by Ryerson Tull's Board of
Directors. The Ryerson Tull rights should not interfere with any merger or
other business combination approved by the Ryerson Tull Board of Directors
because the Ryerson Tull Board of Directors may, subject to the limitations
discussed above, at its option, at any time until fifteen days following the
Share Acquisition Date, redeem all, but not less than all, of the then
outstanding Ryerson Tull rights at the applicable redemption price.
The foregoing summary description of the Ryerson Tull rights does not purport
to be complete and is qualified in its entirety by reference to the Ryerson
Tull rights agreement. Copies of the Ryerson Tull rights agreement are
available free of charge from Ryerson Tull.
Sale of Assets
The Inland certificate of incorporation authorizes the Inland Board of
Directors to sell, assign, transfer, convey and otherwise dispose of a part of
the property, assets and effects of Inland, less than the whole or
substantially the whole thereof, on such terms and conditions as the Inland
Board of Directors deems advisable, without the approval of the Inland
stockholders. Inland's certificate of incorporation further authorizes the
Inland Board of Directors to sell, assign, transfer, convey and otherwise
dispose of the whole, or substantially the whole, of the property, assets,
effects, franchises and goodwill of Inland on such terms and conditions as the
Inland Board of Directors deems advisable but only with the approval of the
holders of not less
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than two-thirds of the voting power represented by all the shares of stock
outstanding and entitled to be cast on the matter, but in any event not less
than the amount required by law.
The Ryerson Tull certificate of incorporation contains no provisions
governing the sale of all or substantially all of its property and assets, but
Delaware corporate law requires the approval by holders of a majority of the
outstanding stock entitled to vote thereon.
General Antitakeover Effects
The foregoing Inland and Ryerson Tull "antitakeover" provisions and, in the
case of Inland, the Inland rights issued pursuant to the Inland rights
agreement, together with Inland's approximately 87% ownership of Ryerson Tull
before the merger, may impede or, in the case of Ryerson Tull before the
merger, prevent takeovers that in some circumstances might be beneficial to
Inland and Ryerson Tull stockholders. Such provisions, Inland rights, Ryerson
Tull rights and ownership position would not impede or prohibit most takeovers
approved by existing directors, and such provisions, Inland rights and Ryerson
Tull rights are designed to enhance or have the effect of enhancing the ability
of the Inland Board of Directors, the Ryerson Tull Board of Directors and,
ultimately, the stockholders to negotiate with potential acquirors from the
strongest position. Such provisions, Inland rights, Ryerson Tull rights and
ownership position do, however, have the overall effect of making it more
difficult in the case of Inland and virtually impossible in the case of Ryerson
Tull (except by gaining control of Inland), without the approval of the
directors thereof, to acquire and exercise control over Inland and Ryerson Tull
and to remove incumbent officers and directors, providing such officers and
directors with enhanced ability to retain their positions. Such provisions
might also limit opportunities for stockholder participation in certain types
of transactions, even though such transactions might be favored by a majority
of the stockholders.
Liability and Indemnification of Officers and Directors
Section 145 of Delaware corporate law empowers corporations to indemnify,
subject to the standards set forth therein, any person in connection with any
action, suit or proceeding brought or threatened by reason of the fact that he
or she is or was serving as a director, officer, employee or agent of the
corporation or is or was serving as such with respect to another corporation at
the request of such corporation. Delaware corporate law also provides that
corporations may purchase indemnification insurance on behalf of any such
director, officer, employee or agent. The Inland certificate of incorporation
and by-laws and the Ryerson Tull certificate of incorporation and by-laws each
provide for the indemnification by Inland or Ryerson Tull, as the case may be,
of each person who was or is made a party or is threatened to be made a party
to or is involved in or called as a witness in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, and any appeal
therefrom (referred to as a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is, was or had
agreed to become a director of the corporation or is, was or had agreed to
become an officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, shall be indemnified and held harmless
by the corporation to the fullest extent permitted under
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Delaware corporate law, as the same now exists or may hereafter be amended,
reasonably incurred or suffered by such person in connection therewith;
provided, that, except as explicitly provided herein, prior to a Change in
Control (as defined in the next paragraph), a person seeking indemnity in
connection with a proceeding (or part thereof) initiated by such person against
the corporation or any director, officer, employee or agent of the corporation
shall not be entitled thereto unless the corporation has joined in or consented
to such proceeding (or part thereof).
A "Change in Control" shall be deemed to have occurred if (1) any "Person"
(as this term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934) is or becomes (except in a transaction approved in advance by the
Board of Directors of the corporation) the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of
securities of the corporation representing 20% or more of the combined voting
power of the corporation's then-outstanding securities or (2) during any period
of two consecutive years, individuals who, at the beginning of such period,
constitute the Board of Directors of the corporation cease for any reason to
constitute at least a majority thereof unless the election of each director who
was not a director at the beginning of the period was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.
Inland maintains liability insurance coverage (the "policy") for not only its
directors and officers, but also the directors and officers of its
subsidiaries, including Ryerson Tull. The policy offers coverage on a "claims
made" basis for claims made against such directors and officers. Inland is not
insured under the insurance policy for its liability; instead, it is insured
only to the extent that it indemnifies directors and officers.
The policy offers two types of coverage: Side A coverage and Side B coverage,
both of which are subject to certain exclusions described below. Side A
coverage provides coverage for actions, suits or proceedings against directors
and officers by reason of their employment to the extent that Inland cannot
legally indemnify directors and officers or is financially incapable of doing
so. Side B coverage reimburses Inland for all nonexcluded expenses greater than
$2 million in any action, suit or proceeding against directors and officers by
reason of their positions to the extent that Inland can legally indemnify the
officers and directors and is financially capable of doing so.
In cases in which both Inland and its directors have been named as
defendants, after Inland pays the deductible, if any, a special endorsement
would require the insurers to pay 100% of the defense costs in securities
cases, 80% of defense costs in all other cases, and 80% of judgments and
settlements in securities cases, with Inland assuming the remaining costs in
such cases. Coverage of judgments and settlements in non-securities cases where
Inland and its directors and officers are named defendants, as well as the
costs in any case where Inland is not named as a defendant, are covered by the
base policy. In addition, the policy provides for investigative costs up to
$250,000 for derivative suits where any director or officer is later named a
defendant.
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Certain standard exclusions apply to coverage under the policy, including:
. Employee Retirement Income Security Act of 1974 claims (such claims are
covered under a separate policy);
. pollution claims not brought via a shareholder derivative suit or in the
event that Inland is incapable of indemnifying the directors and
officers due to financial impairment;
. certain claims by Inland or another director or officer brought against
a director or officer;
. bodily injury and property damage claims; and
. certain "public policy" violations.
Section 102(b)(7) of Delaware corporate law permits Delaware corporations to
include in their certificates of incorporation a provision eliminating or
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty of care as a
director. The Inland certificate of incorporation and the Ryerson Tull
certificate of incorporation contain provisions that eliminate the personal
liability of the officers and directors of Inland and Ryerson Tull in these
circumstances.
ADDITIONAL INFORMATION
Deadline for Stockholder Proposals Has Passed
The deadline for stockholders to submit proposals for consideration for
inclusion in Inland's proxy statement and form of proxy relating to the annual
meeting of stockholders to be held in 1999 passed on December 18, 1998.
Proposals not included in a proxy statement for an annual meeting must comply
with an advance notice procedure set forth in the Inland by-laws in order to be
properly brought before that annual meeting of stockholders. See "Comparative
Rights of Inland Stockholders and Ryerson Tull Stockholders--Advance Notice
Provisions for Stockholder Proposals and Stockholder Nominations of Directors."
Legal Matters
The validity of the securities to be issued in the merger has been passed
upon for Inland by Mayer, Brown & Platt. George A. Ranney, Jr., President of
Inland, is a partner in Mayer, Brown & Platt and holds 9,802 shares of Inland
common stock and options to acquire an additional 48,000 shares of Inland
common stock.
Experts
The consolidated financial statements incorporated in this proxy
statement/prospectus by reference to Inland's Current Report on Form 8-K dated
July 16, 1998, as amended by Amendment No. 1 on Form 8-K/A and the consolidated
financial statements of Ryerson Tull, incorporated in this proxy
statement/prospectus by reference to Ryerson Tull's Annual Report on Form 10-K
for the year ended December 31, 1997, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent public accountants, given
on the
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authority of said firm as experts in auditing and accounting. Representatives
of PricewaterhouseCoopers LLP will be present at the meeting to respond to
appropriate questions of stockholders and to make a statement if they so
desire.
Where You Can Find More Information
Inland has filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933 that registers the distribution of
the shares of Inland common stock to be issued to Ryerson Tull stockholders in
connection with the merger. The registration statement, including the attached
exhibits and schedules, contains additional relevant information about Inland
and Inland common stock. The rules and regulations of the Securities and
Exchange Commission allow Inland and Ryerson Tull to omit certain information
included in the registration statement from this proxy statement/prospectus.
In addition, Inland and Ryerson Tull file reports, proxy statements and other
information with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. You may read and copy this information at the following
locations of the Securities and Exchange Commission:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
1-800-SEC-0330 Chicago, Illinois 60661-
2511
You may also obtain copies of this information by mail from the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
The Securities and Exchange Commission also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, like Inland and Ryerson Tull, that file electronically with the
Securities and Exchange Commission. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
Inland and Ryerson Tull at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Securities and Exchange Commission allows Inland and Ryerson Tull to
"incorporate by reference" information into this proxy statement/prospectus.
This means that the companies can disclose important information to you by
referring you to another document filed separately with the Securities and
Exchange Commission. The information incorporated by reference is considered to
be a part of this proxy statement/prospectus, except for any information that
is superseded by information that is included directly in this document.
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This proxy statement/prospectus incorporates by reference the documents
listed below that Inland and Ryerson Tull have previously filed with the
Securities and Exchange Commission. They contain important information about
Inland and Ryerson Tull and their financial condition.
<TABLE>
<CAPTION>
Inland's Filings with the Commission Period
------------------------------------ ------------------------------------
<S> <C>
Annual Report on Form 10-K............ Year ended December 31, 1997, as
filed March 30, 1998, as amended by
the Form 10-K/A filed April 20, 1998
Quarterly Report on Form 10-Q......... Quarter ended March 31, 1998, as
filed May 13, 1998
Quarterly Report on Form 10-Q......... Quarter ended June 30, 1998, as
filed August 14, 1998
Quarterly Report on Form 10-Q......... Quarter ended September 30, 1998, as
filed November 16, 1998
Current Reports on Form 8-K........... Filed:
. July 20, 1998 (dated as of July
16, 1998), as amended by the
Form 8-K/A filed July 31, 1998
. August 10, 1998 (dated as of
August 6, 1998)
. October 1, 1998 (dated as of
September 23, 1998)
. January 27, 1999 (dated as of
January 25, 1999)
The description of Inland common stock
included in the Inland registration
statement filed on Form S-3 on
September 25, 1995, including any
amendment or report filed with the
Securities and Exchange Commission for
the purpose of updating such
description
The description of Inland series D
junior participating preferred stock
included in the Inland amended
registration statement filed on Form
8-A/A on January 15, 1999, including
any amendment or report filed with the
Securities and Exchange Commission for
the purpose of updating such
description
<CAPTION>
Ryerson Tull's Filings with the
Commission Period
------------------------------- ------------------------------------
<S> <C>
Annual Report on Form 10-K............ Year ended December 31, 1997, as
filed March 30, 1998
Quarterly Report on Form 10-Q......... Quarter ended March 31, 1998, as
filed May 13, 1998
Quarterly Report on Form 10-Q......... Quarter ended June 30, 1998, as
filed August 14, 1998
Quarterly Report on Form 10-Q......... Quarter ended September 30, 1998, as
filed November 16, 1998
Current Report on Form 8-K............ Filed January 27, 1999 (dated as of
January 25, 1999)
The description of Ryerson Tull class
A common stock set forth in the
Ryerson Tull registration statement
filed on Form S-1 on June 11, 1996,
including any amendment or report
filed with the Securities and Exchange
Commission for the purpose of updating
such description
</TABLE>
69
<PAGE>
Inland and Ryerson Tull incorporate by reference additional documents that
either company may file with the Securities and Exchange Commission between the
date of this proxy statement/prospectus and the date of the meeting. These
documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements.
Inland has supplied all information contained or incorporated by reference in
this proxy statement/prospectus relating to Inland, as well as all pro forma
financial information, and Ryerson Tull has supplied all such information
relating to Ryerson Tull.
You can obtain any of the documents incorporated by reference in this
document through Inland or Ryerson Tull, as the case may be, or from the
Securities and Exchange Commission through the Securities and Exchange
Commission's web site at the address described above. Documents incorporated by
reference are available from the companies without charge, excluding any
exhibits to those documents unless the exhibit is specifically incorporated by
reference as an exhibit in this proxy statement/prospectus. You can obtain
documents incorporated by reference in this proxy statement/prospectus by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
<TABLE>
<CAPTION>
Inland Ryerson Tull
------ ------------
<S> <C>
Marc R. Jeske Lily L. May
Assistant General Counsel Controller
Inland Steel Industries, Inc. Ryerson Tull, Inc.
30 West Monroe Street 2621 West 15th Place
Chicago, Illinois 60603 Chicago, Illinois 60608
Telephone (312) 899-3152 Telephone (773) 762-2121
</TABLE>
If you would like to request documents, please do so by, February 18, 1999 to
receive them before the meeting. If you request any incorporated documents, we
will mail them to you by first class mail, or another equally prompt means,
within one business day after we receive your request.
Neither Inland nor Ryerson Tull has authorized anyone to give any information
or make any representation about the merger, Inland or Ryerson Tull that is
different from, or in addition to, that contained in this proxy
statement/prospectus or in any of the materials that we've incorporated into
this document. Therefore, if anyone does give you information of this sort, you
should not rely on it. If you are in a jurisdiction where offers to exchange or
sell, or solicitations of offers to exchange or purchase, the securities
offered by this document or the solicitation of proxies is unlawful, or if you
are a person to whom it is unlawful to direct these types of activities, then
the offer presented in this document does not extend to you. The information
contained in this document speaks only as of the date of this document unless
the information specifically indicates that another date applies.
Forward-Looking Statements
This proxy statement/prospectus, including information included or
incorporated by reference herein, contains certain forward-looking statements
with respect to the financial condition, results of operations, plans,
objectives, future performance and business of each of
70
<PAGE>
Inland and Ryerson Tull, as well as certain information relating to the merger,
including, without limitation, statements preceded by, followed by or that
include the words "believes," "expects," "anticipates," "estimates" or similar
expressions. These forward-looking statements involve certain risks and
uncertainties. Actual results may differ materially from those contemplated by
such forward-looking statements due to, among others, the following factors:
. competitive pressures among steel service centers may increase
significantly;
. costs or difficulties related to the integration of the business of
Inland and Ryerson Tull may be greater than expected;
. general economic or business conditions, either nationally or in the
states in which Inland or Ryerson Tull is doing business, may be less
favorable than expected resulting in, among other things, a reduced
demand for steel;
. legislative or regulatory changes may adversely affect the business in
which Inland or Ryerson Tull is engaged;
. technological changes, including "Year 2000" data systems compliance
issues, may be more difficult or expensive than anticipated; and
. changes may occur in the securities markets.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following describes the effect of the merger on Inland's unaudited pro
forma income statements for the nine months ended September 30, 1998, and the
year ended December 31, 1997 and its unaudited pro forma balance sheet as of
September 30, 1998, based on the historical consolidated financial statements
of Inland and Ryerson Tull under the assumptions and adjustments described
below.
Ryerson Tull is a majority-owned subsidiary which is fully consolidated into
the results of Inland. The pro forma adjustments reflect the elimination of the
minority interest and adjustments required for the application of purchase
accounting discussed below. The pro forma presentation also reflects the
ISC/Ispat transaction, the repurchase of Inland common stock in the tender
offer, the repurchase of Inland common stock in open market purchases,
adjustments related to the ISC/Ispat transaction, the redemption of all
outstanding shares of Inland series E preferred stock and the liquidation of
the ESOP notes and the subordinated voting note. The pro forma condensed
financial statements and the accompanying notes should be read in conjunction
with the historical financial statements and related notes of Inland and
Ryerson Tull, incorporated by reference herein.
The pro forma condensed consolidated financial statements are provided for
informational purposes only and do not purport to represent what Inland's
financial position and results of operations would actually have been had the
merger and other pro forma adjustments in fact occurred at the dates indicated.
The following unaudited pro forma condensed consolidated statement of
operations and condensed consolidated balance sheet of Inland illustrate the
71
<PAGE>
estimated effects of the merger as if that transaction had occurred for the
statements of operations as of January 1, 1997 and for the balance sheet
presentation as of September 30, 1998.
For financial accounting purposes, the acquisition of the minority interest
of Ryerson Tull will be accounted for using the purchase method of accounting.
Accordingly, Ryerson Tull's assets and liabilities, to the extent they relate
to the minority interest acquired, will be adjusted to reflect their fair
values. For the pro forma presentation, the entire adjustment was made to
property, plant and equipment. The application of the final purchase price will
therefore differ from that set forth herein once final asset and liability
valuations have been performed.
72
<PAGE>
INLAND STEEL INDUSTRIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1998
(Unaudited)
(in millions)
<TABLE>
<CAPTION>
Pre-merger Merger
Pro Forma Historical, Pro Forma
Historical Adjustments as adjusted Adjustments Pro Forma
---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ 158.0 $(144.0)(a) $ 14.0 $ -- $ 14.0
Other current assets.. 841.4 (1.9)(b) 839.5 -- 839.5
-------- ------- -------- ------ --------
Total current
assets............. 999.4 (145.9) 853.5 -- 853.5
Non-current assets...... 489.3 19.8 (c) 509.1 (1.3)(k) 507.8
-------- ------- -------- ------ --------
Total assets........ $1,488.7 $(126.1) $1,362.6 (1.3) $1,361.3
======== ======= ======== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities..... $ 313.5 $ (18.8)(d) $ 294.7 $ -- $ 294.7
Long-term debt.......... 331.5 (74.5)(e) 257.0 -- 257.0
Other non-current
liabilities............ 162.1 -- 162.1 -- 162.1
-------- ------- -------- ------ --------
Total liabilities... 807.1 (93.3) 713.8 -- 713.8
-------- ------- -------- ------ --------
Minority interest....... 63.1 -- 63.1 (63.1)(l) --
Stockholders' equity:
Preferred stock ($1
par value)........... 1.9 (1.8)(f) 0.1 -- 0.1
Common stock ($1 par
value)............... 50.6 -- 50.6 -- 50.6
Capital in excess of
par value............ 981.0 (86.6)(g) 894.4 (36.0)(m) 858.4
Retained earnings..... 483.6 1.4 (h) 485.0 -- 485.0
Unearned
compensation--ESOP... (63.3) 63.3 (i) -- -- --
Treasury stock, at
cost................. (835.3) (9.1)(j) (844.4) 97.8 (m) (746.6)
-------- ------- -------- ------ --------
Total stockholders'
equity............. 618.5 (32.8) 585.7 61.8 647.5
-------- ------- -------- ------ --------
Total liabilities
and stockholders'
equity............. $1,488.7 $(126.1) $1,362.6 $ (1.3) $1,361.3
======== ======= ======== ====== ========
</TABLE>
73
<PAGE>
INLAND STEEL INDUSTRIES, INC.
PRO FORMA CONSOLIDATED INCOME STATEMENT
Year-to-date September 30, 1998
(Unaudited)
(in millions, except per share data)
<TABLE>
<CAPTION>
Pre-merger Merger
Pro Forma Historical, Pro Forma
Historical Adjustments as adjusted Adjustments Pro Forma
---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............... $2,154.3 $ -- $2,154.3 $ -- $2,154.3
Operating costs and
expenses
Cost of goods sold.... 1,887.1 -- 1,887.1 -- 1,887.1
Selling, general and
administrative....... 148.0 -- 148.0 -- 148.0
Depreciation.......... 22.4 -- 22.4 -- 22.4
-------- ------ -------- ----- --------
Total............... 2,057.5 -- 2,057.5 -- 2,057.5
-------- ------ -------- ----- --------
Operating profit........ 96.8 -- 96.8 -- 96.8
General corporate
expense, net of income
items.................. (8.7) -- (8.7) -- (8.7)
Interest and other
expense on debt........ 27.4 (8.9)(n) 18.5 -- 18.5
-------- ------ -------- ----- --------
Income before income
taxes.................. 78.1 8.9 87.0 -- 87.0
Provision for income
taxes.................. 31.1 3.6 (o) 34.7 -- 34.7
-------- ------ -------- ----- --------
Income before minority
interest............... 47.0 5.3 52.3 -- 52.3
Minority interest in
Ryerson Tull, Inc...... 4.9 -- 4.9 (4.9)(s) --
-------- ------ -------- ----- --------
Income from continuing
operations............. 42.1 5.3 47.4 4.9 52.3
Dividends on preferred
stock.................. 6.2 (6.0)(p) 0.2 -- 0.2
-------- ------ -------- ----- --------
Net income from
continuing operations
available to common
stockholders........... $ 35.9 $ 11.3 $ 47.2 $ 4.9 $ 52.1
======== ====== ======== ===== ========
Earnings per share from
continuing operations:
Basic................. $ 0.79 -- $ 2.17 -- $ 2.08
Diluted............... $ 0.75 -- $ 2.16 -- $ 2.07
Average shares of common
stock outstanding...... 45.4 (23.6)(q) 21.8 3.3(t) 25.1
Average shares of common
stock outstanding plus
dilutive effect of
stock options and
conversions............ 48.3 (26.4)(r) 21.9 3.3(t) 25.2
</TABLE>
74
<PAGE>
INLAND STEEL INDUSTRIES, INC.
PRO FORMA CONSOLIDATED INCOME STATEMENT
Year ended December 31, 1997
(Unaudited)
(in millions, except per share data)
<TABLE>
<CAPTION>
Pre-merger Merger
Pro Forma Historical, Pro Forma
Historical Adjustments as adjusted Adjustments Pro Forma
---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales............... $2,804.0 $ -- $2,804.0 $ -- $2,804.0
-------- ------ -------- ----- --------
Operating costs and
expenses
Cost of goods sold.... 2,457.0 -- 2,457.0 -- 2,457.0
Selling, general and
administrative....... 180.6 -- 180.6 -- 180.6
Depreciation.......... 24.4 -- 24.4 -- 24.4
-------- ------ -------- ----- --------
Total............... 2,662.0 -- 2,662.0 -- 2,662.0
-------- ------ -------- ----- --------
Operating profit........ 142.0 -- 142.0 -- 142.0
General corporate
expense, net of income
items.................. (17.9) -- (17.9) -- (17.9)
Interest and other
expense on debt........ 40.4 (13.8)(n) 26.6 -- 26.6
-------- ------ -------- ----- --------
Income before income
taxes.................. 119.5 13.8 133.3 -- 133.3
Provision for income
taxes.................. 46.6 5.4 (o) 52.0 -- 52.0
-------- ------ -------- ----- --------
Income before minority
interest............... 72.9 8.4 81.3 -- 81.3
Minority interest in
Ryerson Tull, Inc...... 8.4 -- 8.4 (8.4)(s) --
-------- ------ -------- ----- --------
Income from continuing
operations............. 64.5 8.4 72.9 8.4 81.3
Dividends on preferred
stock.................. 9.1 (8.9)(p) 0.2 -- 0.2
-------- ------ -------- ----- --------
Net income from
continuing operations
available to common
stockholders........... $ 55.4 $ 17.3 $ 72.7 $ 8.4 $ 81.1
======== ====== ======== ===== ========
Earnings per share from
continuing operations:
Basic................. $ 1.13 -- $ 3.36 -- $ 3.26
Diluted............... $ 1.08 -- $ 3.35 -- $ 3.25
Average shares of common
stock outstanding...... 48.9 (27.2)(q) 21.7 3.3(t) 25.0
Average shares of common
stock outstanding plus
dilutive effect of
stock options and
conversions............ 51.9 (30.1)(r) 21.8 3.3(t) 25.1
</TABLE>
75
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(a) To reflect the redemption of series E preferred stock and the repayment of
related debt discussed below, $130.6, the payment for Inland common stock
repurchased pursuant to a stock repurchase program, $9.1, and payment
related to the ISC/Ispat transaction final purchase price adjustment, $4.3.
(b) To reflect a decrease in a receivable from Ispat as a result of the final
purchase price adjustment related to the ISC/Ispat transaction.
(c) To reflect an increase in the deferred tax asset as a result of an
adjustment in the estimate of taxes related to the ISC/Ispat transaction.
(d) To reflect a decrease in (i) income taxes payable related to (1) an ESOP
prepayment penalty, $2.9, and (2) a reduction in the gain related to the
ISC/Ispat transaction, $2.0, (ii) accrued salaries and wages, $1.6, (iii)
the ESOP interest payable, $0.8, and (iv) the current portion of the ESOP
notes payable, $11.5.
(e) To reflect a decrease in the long-term portion of the ESOP notes payable
due to their repayment.
(f) To reflect the redemption of 1,809,328 shares of series E preferred stock
held by employees at the termination of the ESOP.
(g) To reflect the elimination of the capital in excess of par value related to
the redeemed series E preferred stock.
(h) To reflect an after-tax loss on the repayment of the ESOP notes, $11.6, the
favorable tax adjustment of $19.8 described in (c), the after-tax reduction
in the gain on the ISC/Ispat transaction as a result of the final purchase
price adjustment, $4.2, and dividends paid on the series E preferred stock
due at redemption, $2.6.
(i) To reflect the elimination of the unearned compensation expense related to
the ESOP as a result of the termination of the ESOP.
(j) To reflect the increase in treasury stock as a result of the purchase of
418,300 shares of Inland common stock pursuant to a stock repurchase
program.
(k) To reflect an estimated adjustment related to the application of purchase
accounting.
(l) To reflect the elimination of the minority interest as a result of the
merger.
(m) To reflect the issuance of additional shares from treasury stock at an
average $30 per share and the impact on capital in excess of par for the
value between the average treasury stock value and $18.96, the average
market value from October 14, 1998 through October 20, 1998.
(n) To reflect the elimination of interest on the subordinated voting note and
the ESOP notes as if each had been redeemed at the beginning of the period.
(o) To reflect the estimated tax related to (n).
(p) To reflect the elimination of the dividend associated with the redemption
of all shares of series E preferred stock as if such shares had not been
outstanding at any time during the period.
(q) To reflect the purchase of Inland common stock pursuant to the tender offer
and subsequent additional share repurchases as if each had been completed
at the beginning of the period.
(r) To reflect the additional effect on dilutive securities to share purchase
in (p).
(s) To reflect the elimination of the previously recorded minority interest.
(t) To reflect the conversion of Ryerson Tull class A common stock into 0.61
shares of Inland common stock.
76
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INLAND STEEL INDUSTRIES, INC.,
RT MERGER SUB, INC.
AND
RYERSON TULL, INC.
DATED AS OF OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS.................................................................. A-4
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING....................................... A-4
1.1 The Merger......................................................... A-4
1.2 Effective Time..................................................... A-4
1.3 Closing............................................................ A-5
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION...... A-5
2.1 Certificate of Incorporation....................................... A-5
2.2 Bylaws............................................................. A-5
ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION AND PARENT............ A-5
3.1 Directors.......................................................... A-5
3.2 Officers........................................................... A-5
ARTICLE IV
CONVERSION OF SHARES...................................................... A-5
4.1 Conversion of Shares............................................... A-5
4.2 Exchange of Certificates Representing Company Common Stock......... A-6
4.3 Stock Options...................................................... A-8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. A-9
5.1 Corporate Organization and Qualification........................... A-9
5.2 Capitalization..................................................... A-10
5.3 Authority Relative to This Agreement............................... A-10
5.4 Consents and Approvals; No Violation............................... A-10
5.5 SEC Reports; Financial Statements.................................. A-11
5.6 Absence of Certain Changes or Events............................... A-11
5.7 Undisclosed Liabilities............................................ A-11
5.8 Litigation......................................................... A-12
5.9 Form S-4; Proxy Statement/Prospectus............................... A-12
5.10 Compliance with Applicable Laws................................... A-12
5.11 Opinion of Financial Advisor...................................... A-13
5.12 Stockholder Rights Plan........................................... A-13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................... A-13
6.1 Corporate Organization and Qualification........................... A-13
6.2 Capitalization..................................................... A-13
6.3 Authority Relative to This Agreement............................... A-13
6.4 Consents and Approvals; No Violation............................... A-14
6.5 SEC Reports; Financial Statements.................................. A-14
6.6 Absence of Certain Changes or Events............................... A-15
6.7 Undisclosed Liabilities............................................ A-15
6.8 Litigation......................................................... A-15
6.9 Form S-4; Proxy Statement/Prospectus............................... A-15
6.10 Compliance with Applicable Laws................................... A-16
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.11 Issuance of Parent Common Stock.................................... A-16
6.12 Interim Operations of Merger Sub................................... A-16
6.13 Ownership of Shares................................................ A-16
6.14 ISC/Ispat Transaction.............................................. A-16
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS........................................ A-16
7.1 Stockholder Approval................................................ A-16
7.2 Form S-4; Proxy Statement/Prospectus................................ A-17
7.3 All Reasonable Efforts.............................................. A-18
7.4 Access to Company Information....................................... A-18
7.5 Access to Parent Information........................................ A-18
7.6 Publicity........................................................... A-19
7.7 Indemnification of Directors and Officers........................... A-19
7.8 NYSE Listing........................................................ A-20
7.9 Conduct of Business of the Company.................................. A-20
7.10 Conduct of Business of Parent...................................... A-20
7.11 Conduct of Business of Merger Sub.................................. A-21
7.12 Company Capital Stock.............................................. A-21
ARTICLE VIII
CONDITIONS................................................................. A-21
8.1 Condition to Each Party's Obligations............................... A-21
8.2 Additional Conditions to the Obligations of Parent and Merger Sub... A-21
8.3 Additional Conditions to the Obligations of the Company............. A-22
ARTICLE IX
TERMINATION................................................................ A-22
9.1 Termination by Mutual Consent....................................... A-22
9.2 Termination by Parent, Merger Sub or the Company.................... A-22
9.3 Termination by Parent or Merger Sub................................. A-23
9.4 Termination by the Company.......................................... A-23
9.5 Effect of Termination............................................... A-24
ARTICLE X
MISCELLANEOUS AND GENERAL.................................................. A-24
10.1 Payment of Expenses................................................. A-24
10.2 Survival of Representations and Warranties.......................... A-24
10.3 Modification or Amendment........................................... A-24
10.4 Waiver of Conditions................................................ A-24
10.5 Counterparts........................................................ A-24
10.6 Governing Law....................................................... A-25
10.7 Notices............................................................. A-25
10.8 Entire Agreement; Assignment........................................ A-26
10.9 Parties in Interest................................................. A-26
10.10 Certain Definitions................................................ A-26
10.11 Obligation of Parent............................................... A-26
10.12 Validity........................................................... A-27
10.13 Captions........................................................... A-27
</TABLE>
A-3
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 27, 1998,
by and among Inland Steel Industries, Inc., a Delaware corporation ("Parent"),
RT Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and Ryerson Tull, Inc., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, the Boards of Directors of Parent and Merger Sub each have determined
that it is in the best interests of their respective stockholders for Merger
Sub to merge with and into the Company upon the terms and subject to the
conditions of this Agreement; and
WHEREAS, the Board of Directors of the Company, based upon the unanimous
recommendation of a special committee of Independent Directors (as defined in
Section 10.10 herein) of the Company (the "Special Committee"), has determined
that it is in the best interests of the Company's stockholders (other than
Parent, Merger Sub and their affiliates) for Merger Sub to merge with and into
the Company upon the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 The Merger. Subject to the terms and conditions of this Agreement and the
Delaware General Corporation Law (the "DGCL"), at the Effective Time (as
defined in Section 1.2), the Company and Merger Sub shall consummate a merger
(the "Merger") in which (a) Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall thereupon
cease, (b) the Company shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Delaware,
and (c) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The corporation surviving the Merger is sometimes hereinafter referred
to as the "Surviving Corporation." The Merger shall have the effects set forth
in the DGCL.
1.2 Effective Time. Subject to the terms and conditions of this Agreement,
Parent, Merger Sub and the Company will cause an appropriate Certificate of
Merger (the "Certificate of Merger") to be executed and filed on the Closing
Date (as defined in Section 1.3) (or on such other date as the parties may
agree) with the Secretary of State of the State of Delaware as provided in the
DGCL. The Merger shall become effective at the time and on the date on which
the Certificate of Merger has been duly filed with the Secretary of State of
the State of Delaware or such other time as is agreed upon by the parties and
specified in the Certificate of Merger, and such time is hereinafter referred
to as the "Effective Time."
A-4
<PAGE>
1.3 Closing. The closing of the Merger (the "Closing") shall take place (a) at
the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois) in Chicago,
Illinois at 10:00 a.m. local time on the first business day on which the last
of the conditions set forth in Article VIII hereof shall have been fulfilled or
waived in accordance with this Agreement or (b) at such other place, time and
date as the parties may agree (the "Closing Date").
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation.
2.2 Bylaws. The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation.
ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION AND PARENT
3.1 Directors.
(a) The directors of the Company at the Effective Time shall, from and after
the Effective Time, be the directors of the Surviving Corporation until their
successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(b) The following individuals shall resign as directors of Parent as of the
Effective Time: Messrs. A. Robert Abboud, Leo F. Mullin, Joshua I. Smith and
Arnold R. Weber and Ms. Nancy H. Teeters. Parent shall use all reasonable
efforts to cause the following individuals to be appointed directors of Parent
as of the Effective Time and, from and after the Effective Time, to be
directors of Parent until their successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with Parent's Certificate of Incorporation and Bylaws: Messrs. Richard G.
Cline, Neil S. Novich, Jerry K. Pearlman, Donald S. Perkins and Ronald L.
Thompson.
3.2 Officers. The officers of the Company at the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation until
their successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
ARTICLE IV
CONVERSION OF SHARES
4.1 Conversion of Shares.
(a) At the Effective Time, each share (collectively, the "Shares") of Class A
Common Stock, par value $1.00 per share, of the Company (the "Company Common
Stock") issued and outstanding
A-5
<PAGE>
immediately prior to the Effective Time (other than Shares to be cancelled
pursuant to Section 4.1(c) hereof) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive 0.61 validly issued, fully paid and nonassessable shares of the common
stock, par value $1.00 per share ("Parent Common Stock"), of Parent (the
"Exchange Ratio").
(b) Holders of Shares shall also have the right to receive, together with each
share of Parent Common Stock issued in the Merger, one associated preferred
stock purchase right (a "Right") in accordance with the Rights Agreement, dated
as of November 25, 1997, between Parent and Harris Trust and Savings Bank (the
"Parent Rights Agreement"). References herein to the shares of Parent Common
Stock issuable in the Merger shall also be deemed to include the associated
Rights.
(c) At the Effective Time, each Share and each share of the Company's Class B
Common Stock, par value $1.00 per share (the "Company Class B Common Stock"),
issued and outstanding and owned by Parent, Merger Sub or any direct or
indirect subsidiary of Parent (collectively, the "Parent Companies") or any of
the Company's direct or indirect wholly owned subsidiaries and all treasury
shares held by the Company immediately prior to the Effective Time shall cease
to be outstanding, be cancelled and retired without payment of any
consideration therefor and cease to exist.
(d) At the Effective Time, each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
(e) On and after the Effective Time, holders of certificates which immediately
prior to the Effective Time represented outstanding Shares (the "Certificates")
shall cease to have any rights as stockholders of the Company, except the right
to receive the consideration set forth in this Article IV (the "Merger
Consideration") for each Share held by them.
(f) In the event that, between the date of this Agreement and the Effective
Time, the issued and outstanding shares of Parent Common Stock shall have been
changed into a different number of shares or a different class of shares as a
result of a stock split, reverse stock split, stock dividend, spinoff,
recapitalization, reclassification or other similar transaction with a record
date within such period, the Exchange Ratio shall be appropriately adjusted.
(g) No fractional shares of Parent Common Stock shall be issued pursuant
hereto. In lieu of any such fractional share of Parent Common Stock, Parent
shall pay to each holder of Shares who otherwise would be entitled to receive a
fractional share of Parent Common Stock an amount in cash determined by
multiplying (i) the average (without rounding) of the closing prices per share
of Parent Common Stock on the New York Stock Exchange (the "NYSE") as reported
on the NYSE Composite Tape for the ten (10) consecutive NYSE trading days
ending on and including the second NYSE trading day immediately preceding the
Closing Date (the "Average Parent Share Price") by (ii) the fractional interest
in a share of Parent Common Stock to which such holder would otherwise be
entitled.
4.2 Exchange of Certificates Representing Company Common Stock.
(a) Immediately following the Effective Time, Parent shall deliver, in trust,
to an exchange agent selected by Parent, which shall be Parent's transfer agent
or such other party reasonably satisfactory
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to the Company (the "Exchange Agent"), for the benefit of the holders of
Shares, certificates representing an aggregate number of shares of Parent
Common Stock and cash in lieu of fractional shares (such cash and certificates
for shares of Parent Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund") to
be issued and paid pursuant to this Section 4.2 in exchange for outstanding
Shares.
(b) Promptly after the Effective Time, Parent shall cause the Exchange Agent to
mail to each holder of record of a Certificate or Certificates (other than
holders of Certificates representing Shares referred to in Section 4.1(c)) (i)
a letter of transmittal which shall specify that delivery of such Certificates
shall be deemed to have occurred, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock and cash in lieu of fractional shares. Upon surrender to the
Exchange Agent of a Certificate for cancellation together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Parent Common Stock and (y) a check representing the amount of cash in lieu of
fractional shares, if any, which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article IV, after giving effect to any required withholding tax, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, payable to holders of Certificates. If any
certificate for Parent Common Stock is to be issued in a name other than that
in which the Certificate representing the Shares surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of issuance of certificates for such Parent
Common Stock in a name other than the registered holder of the Certificate
surrendered, or shall establish to the reasonable satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(c) Notwithstanding any other provision of this Agreement, no dividends on
Parent Common Stock shall be paid with respect to any shares of Company Common
Stock represented by a Certificate until such Certificate is surrendered for
exchange as provided herein. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of Parent
Common Stock and not paid, less the amount of any withholding taxes which may
be required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock, less the amount of any
withholding taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for the Merger Consideration pursuant to this Article IV.
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(e) Any portion of the Exchange Fund (including the proceeds of any investments
thereof and any certificates representing shares of Parent Common Stock) that
remains unclaimed by holders of Shares six (6) months after the Effective Time
shall be delivered to the Surviving Corporation. Any holders of Shares who have
not theretofore complied with this Article IV shall thereafter look only to the
Surviving Corporation for the Merger Consideration deliverable in respect of
each Share such holder holds, as determined pursuant to this Agreement, without
any interest thereon.
(f) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Shares for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar laws.
(g) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock and cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Parent Common Stock as provided in this Section 4.2,
deliverable in respect thereof pursuant to this Agreement.
4.3 Stock Options.
(a) After the Effective Time, each option (an "Option") which has been granted
under the Company's stock plans, which plans are set forth on Schedule 4.3(a)
hereto (collectively, the "Option Plans"), and is outstanding at the Effective
Time, whether or not then exercisable, shall be assumed by Parent, shall be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under the respective Option, that number of shares of Parent
Common Stock equal to the product of (i) that number of Shares the holder of
the Option would have been entitled to receive had such holder exercised the
Option in full immediately prior to the Effective Time (not taking into account
whether the Option was in fact exercisable at such time) and (ii) the Exchange
Ratio, and shall have an exercise price equal to the quotient of (i) the
exercise price of the Option immediately prior to the Effective Time divided by
(ii) the Exchange Ratio. As soon as practicable after the Effective Time,
Parent shall deliver to each holder of an Option an appropriate notice setting
forth the holder's right to acquire shares of the Parent Common Stock, and the
Option agreements of each holder shall be deemed to be appropriately amended so
that the Options shall represent rights to acquire shares of the Parent Common
Stock on the same terms and conditions as contained in the outstanding Options.
(b) After the Effective Time, each stock appreciation right (an "SAR") which
has been granted under the Company's Option Plans and is outstanding at the
Effective Time, whether or not then exercisable or payable, shall be assumed by
Parent, shall be deemed to constitute a stock appreciation right, on the same
terms and conditions as were applicable under the respective SAR, with respect
to that number of shares of Parent Common Stock equal to the product of (i)
that number of Shares subject to the SAR immediately prior to the Effective
Time (not taking into account whether the SAR was in fact exercisable at such
time) and (ii) the Exchange Ratio, and shall have a date of grant fair market
value equal to the quotient of (i) the date of grant fair market value of the
SAR
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immediately prior to the Effective Time divided by (ii) the Exchange Ratio. As
soon as practicable after the Effective Time, Parent shall deliver to each
holder of an SAR an appropriate notice setting forth the holder's right to
participate in the appreciation in value of shares of the Parent Common Stock,
and the SAR agreements of each holder shall be deemed to be appropriately
amended so that the SARs shall represent rights to participation in the
appreciation in value of shares of the Parent Common Stock on the same terms
and conditions as contained in the outstanding SARs.
(c) Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Parent Common Stock for delivery upon exercise
of the Options and SARs assumed in accordance with Sections 4.3(a) and 4.3(b).
(d) Each Share which has been granted as a restricted stock award under the
Option Plans and which is outstanding as of the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted as of the Effective Time into the right to receive 0.61 validly
issued, fully paid and nonassessable shares of Parent Common Stock (with the
value of any fractional share payable in cash), and shall continue to be
contingent on such holder's continuing employment with Parent or the Surviving
Corporation (as the case may be following consummation of the Merger) and such
additional terms and conditions in effect with respect to the particular grant
as of the Effective Time; provided that for purposes of vesting, the holder of
the restricted stock award shall be credited with years of employment at the
Company prior to the Effective Time whether such holder is employed by Parent
or the Surviving Corporation after the Effective Time.
(e) Each Share which is allocated as a stock unit to a director's account under
the Ryerson Tull Directors' Compensation Plan (the "Directors' Plan") as of the
Effective Time shall, by virtue of the Merger and without any action on the
part of the director, be converted, as of the Effective Time, into a stock unit
which, subject to the provisions of the Directors' Plan, gives the director the
right to receive 0.61 validly issued, fully paid and nonassessable shares of
Parent Common Stock, and shall continue to be subject to the terms and
conditions in effect under the Directors' Plan as of the Effective Time.
(f) Each performance award outstanding as of the Effective Time shall be
adjusted by the Committee (as defined in the Ryerson Tull 1996 Incentive Stock
Plan in effect as of the Effective Time) as may be determined to be appropriate
and equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided that the number of shares subject to any award
shall be a whole number.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that:
5.1 Corporate Organization and Qualification. Each of the Company and its
Significant Subsidiaries (as hereinafter defined in Section 10.10) (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) is qualified and in good
standing as a foreign corporation in each jurisdiction where the properties
owned, leased
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or operated, or the business conducted, by it require such qualification and
(iii) has all requisite power and authority to own its properties and to carry
on its business as it is now being conducted, except where failure to so
qualify, be in good standing or have such power and authority would not,
individually or in the aggregate, have a Company Material Adverse Effect (as
hereinafter defined in Section 10.10).
5.2 Capitalization. The authorized capital stock of the Company consists of (i)
100,000,000 shares of Company Common Stock, of which, as of October 19, 1998,
5,345,745 shares were issued and 5,345,187 shares were outstanding, (ii)
34,000,000 shares of Company Class B Common Stock, of which, as of the date
hereof, all shares were issued and outstanding, and (iii) 16,000,000 shares of
preferred stock, par value $1.00 per share, of which, as of the date hereof, no
shares were issued and outstanding. All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. As of October 19, 1998, 1,858,146 Shares were reserved
for issuance upon exercise of outstanding Options pursuant to the Option Plans.
Except as authorized pursuant to the plans referred to on Schedule 4.3(a),
there are not as of the date hereof any outstanding or authorized options,
warrants, calls, rights (including preemptive rights), commitments or any other
agreements of any character to which the Company is a party, or by which it may
be bound, requiring it to issue, transfer, sell, purchase, redeem or acquire
any shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of the Company.
5.3 Authority Relative to This Agreement. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than the approval of this Agreement and the Merger by the Stockholders
of the Company in accordance with Section 251 of the DGCL, the Company's
Restated Certificate of Incorporation and Section 8.1(a) hereof). In accordance
with Section 3 of Article VI of the Company's Restated Certificate of
Incorporation, this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
affirmative vote of at least two-thirds of the Independent Directors (as
defined in Section 10.10). This Agreement has been duly and validly executed
and delivered by the Company and, assuming this Agreement constitutes the valid
and binding agreement of Parent and Merger Sub, constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement hereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
5.4 Consents and Approvals; No Violation. Neither the execution and delivery of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the Restated Certificate of Incorporation or Bylaws of the
Company; (b) require of the Company or its subsidiaries any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority,
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except (i) pursuant to the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder, (ii) filings with the NYSE or other national securities
exchange upon which shares of the Company Common Stock are listed, (iii) the
filing of the Certificate of Merger pursuant to the DGCL or (iv) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not, individually or in the aggregate, have
a Company Material Adverse Effect; (c) result in a violation or breach of, or
constitute a default under any of the terms, conditions or provisions of any
note, license, agreement or other instrument or obligation by which the Company
or any of its Significant Subsidiaries may be bound, except for such
violations, breaches and defaults as to which requisite waivers or consents
have been obtained or which would not, individually or in the aggregate, have a
Company Material Adverse Effect; or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
subsidiaries, except for violations which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
5.5 SEC Reports; Financial Statements.
(a) The Company has filed all periodic and other reports required to be filed
by it since January 1, 1997 with the Securities and Exchange Commission (the
"SEC") pursuant to the federal securities laws and the SEC rules and
regulations thereunder, all of which as of their respective dates complied in
all material respects with all applicable requirements of the Exchange Act
(collectively, the "Company SEC Reports"). None of the Company SEC Reports,
including, without limitation, any financial statements or schedules included
therein, as of their respective dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including the related notes thereto)
of the Company included in the Company SEC Reports complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a basis consistent
with prior periods (except as otherwise noted therein) and present fairly the
consolidated financial position of the Company and its consolidated
subsidiaries as of their respective dates, and the consolidated results of
their operations and cash flows for the periods presented therein (subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments).
5.6 Absence of Certain Changes or Events. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or as contemplated by
this Agreement, since June 30, 1998, the business of the Company has been
carried on only in the ordinary and usual course, and the Company has not
suffered any Company Material Adverse Effect.
5.7 Undisclosed Liabilities. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, or as contemplated by this
Agreement, there are no liabilities or obligations of the Company or its
subsidiaries of any kind whatsoever, whether accrued, contingent, absolute or
otherwise, that would be required by generally accepted accounting principles
to be reflected on a consolidated balance sheet of the Company, other than
liabilities or obligations (i) incurred in the
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ordinary course of business consistent with past practice since June 30, 1998
or (ii) which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
5.8 Litigation. Except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement or for any litigation relating to the transactions
contemplated by this Agreement, (i) there are no actions, claims, suits,
proceedings or governmental investigations pending or, to the knowledge of the
Company, threatened against or involving or affecting the Company or any of its
subsidiaries which, individually or in the aggregate, are reasonably likely to
have a Company Material Adverse Effect and (ii) there are no judgments,
decrees, injunctions, rules or orders of any court or governmental or
regulatory authority applicable to the Company or any of its subsidiaries,
which, individually or in the aggregate, would have a Company Material Adverse
Effect.
5.9 Form S-4; Proxy Statement/Prospectus. None of the information to be
supplied by and relating to the Company for inclusion or incorporation by
reference in the Form S-4 or the Proxy Statement/Prospectus (as such terms are
hereinafter defined in Section 7.2) will, at the time of the effectiveness of
the Form S-4 and the mailing of the Proxy Statement/Prospectus and at the time
of the stockholder meeting of the Company in connection with the vote of such
stockholders with respect to the Merger and this Agreement (the "Stockholder
Meeting"), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event with
respect to the Company should occur and is required to be described in an
amendment of, or a supplement to, the Form S-4, such event shall be so
described, and the Company shall cooperate with Parent to promptly file such
amendment or supplement with the SEC and, as required by law, cause such
amendment or supplement to be disseminated to the stockholders of the Company.
With respect to the information relating to the Company, the Form S-4 and the
Proxy Statement/Prospectus will comply as to form in all material respects with
the requirements of the Securities Act and Exchange Act. For purposes of this
Section 5.9, any statement which is made or incorporated by reference in the
Form S-4 or the Proxy Statement/Prospectus shall be deemed modified or
superseded to the extent any later filed document incorporated by reference in
the Form S-4 or the Proxy Statement/Prospectus or any statement included in the
Form S-4 or the Proxy Statement/Prospectus modifies or supersedes such earlier
statement.
5.10 Compliance with Applicable Laws. The Company and its subsidiaries hold all
permits, licenses, variances, exemptions, orders, franchises and approvals of
all governmental or regulatory authorities necessary for the lawful conduct of
their respective businesses, except where the failure to so hold would not,
individually or in the aggregate, have a Company Material Adverse Effect (the
"Company Permits"). The Company and its subsidiaries are in compliance with the
terms of the Company Permits, except where the failure so to comply would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, the business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental or regulatory authorities,
except for possible violations which, individually or in the aggregate, would
not have a Company Material Adverse Effect.
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5.11 Opinion of Financial Advisor. The Special Committee has received the
written opinion (the "Fairness Opinion") of Morgan Stanley & Co., Incorporated
(the "Financial Advisor"), the Special Committee's financial advisor, to the
effect that the Exchange Ratio is fair to the holders of Shares (other than
Parent, Merger Sub or any direct or indirect subsidiary of Parent) from a
financial point of view.
5.12 Stockholder Rights Plan. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
preferred stock purchase rights (the "Rights") that were issued pursuant to the
Rights Agreement, dated as of June 10, 1996, between the Company and Harris
Trust and Savings Bank being distributed to stockholders or becoming
exercisable and, upon consummation of the Merger, the Rights will cease to be
outstanding.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Parent and Merger Sub represent and warrant, jointly and severally, to the
Company that:
6.1 Corporate Organization and Qualification. Each of Parent and Merger Sub (i)
is a corporation duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation, (ii) is qualified and
in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification, and (iii) has all requisite power and authority to own its
properties and to carry on its business as it is now being conducted, except
where the failure to so qualify, be in such good standing or have such power
and authority would not, individually or in the aggregate, have a Parent
Material Adverse Effect (as defined in Section 10.10).
6.2 Capitalization. The authorized capital stock of Parent and the number of
shares outstanding as of October 19, 1998 are set forth on Schedule 6.2 hereto.
All of the outstanding shares of capital stock of Parent have been duly
authorized and validly issued and are fully paid and nonassessable. As of
October 23, 1998, 1,686,021 shares of Parent Common Stock were reserved for
issuance upon exercise of outstanding options pursuant to Parent's stock option
plans. Except as disclosed in the Parent SEC Reports (as defined in Section
6.5), as set forth in this Agreement (including the Schedules hereto), or as
authorized pursuant to the Plans referred to on Schedule 6.2 attached hereto,
there are not as of the date hereof any outstanding or authorized options,
warrants, calls, rights (including preemptive rights), commitments or any other
agreements of any character to which Parent is a party, or by which it may be
bound, requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of Parent.
6.3 Authority Relative to This Agreement. Each of Parent and Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by the respective Boards of Directors of
Parent and Merger Sub, and no other corporate proceedings on the part of
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Parent or Merger Sub are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Sub and, assuming this
Agreement constitutes the valid and binding agreement of the Company,
constitutes the valid and binding agreement of each of Parent and Merger Sub,
enforceable against each of them in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).
6.4 Consents and Approvals; No Violation. Neither the execution and delivery of
this Agreement by Parent or Merger Sub nor the consummation by Parent or Merger
Sub of the transactions contemplated hereby will (a) conflict with or result in
any breach of any provision of the Certificate of Incorporation or the Bylaws,
respectively, of Parent or Merger Sub; (b) require of Parent or any of its
subsidiaries (other than the Company) any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except (i) pursuant to the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder,
(ii) filings with the NYSE or other national securities exchange upon which
shares of the Parent Common Stock are listed, (iii) the filing of the
Certificate of Merger pursuant to the DGCL, or (iv) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not, individually or in the aggregate, have a Parent
Material Adverse Effect; (c) result in a violation or breach of, or constitute
a default under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation by which Parent or any of
its subsidiaries (other than the Company) may be bound, except for such
violations, breaches and defaults as to which requisite waivers or consents
have been obtained or which would not, individually or in the aggregate, have a
Parent Material Adverse Effect; or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent or any of its
subsidiaries (other than the Company), except for violations which would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
6.5 SEC Reports; Financial Statements.
(a) Parent has filed all periodic and other reports required to be filed by it
since January 1, 1997 with the SEC pursuant to the federal securities laws and
the SEC rules and regulations thereunder, all of which as of their respective
dates complied in all material respects with all applicable requirements of the
Exchange Act (collectively, the "Parent SEC Reports"). None of the Parent SEC
Reports, including, without limitation, any financial statements or schedules
included therein, as of their respective dates, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made as to any information relating to the Company and its
subsidiaries included in the Parent SEC Reports.
(b) The consolidated financial statements (including the related notes thereto)
of Parent included in the Parent SEC Reports complied in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods (except as otherwise noted therein) and present fairly the
consolidated financial position of
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Parent and its consolidated subsidiaries as of their respective dates, and the
consolidated results of their operations and cash flows for the periods
presented therein (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments), except that no representation is
made as to any information relating to the Company and its subsidiaries
included in the consolidated financial statements of Parent.
6.6 Absence of Certain Changes or Events. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement or as contemplated by this
Agreement (including the Schedules hereto), since June 30, 1998, Parent
(excluding the Company and its subsidiaries) has not suffered any Parent
Material Adverse Effect.
6.7 Undisclosed Liabilities. Except as disclosed on Schedule 6.7 attached
hereto or in the Parent SEC Reports filed prior to the date of this Agreement,
or as contemplated by this Agreement, there are no liabilities or obligations
of Parent or its subsidiaries (other than of the Company and its subsidiaries)
of any kind whatsoever, whether accrued, contingent, absolute or otherwise,
that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of Parent, other than liabilities or
obligations (i) incurred in the ordinary course of business consistent with
past practice since June 30, 1998 or (ii) which would not, individually or in
the aggregate, have a Parent Material Adverse Effect.
6.8 Litigation. Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement or for any litigation relating to the transactions
contemplated by this Agreement, (i) there are no actions, claims, suits,
proceedings or governmental investigations pending or, to the knowledge of
Parent, threatened against or involving or affecting Parent or any of its
subsidiaries (other than relating to the Company and its subsidiaries) which,
individually or in the aggregate, are reasonably likely to have a Parent
Material Adverse Effect and (ii) there are no judgments, decrees, injunctions,
rules or orders of any court or governmental or regulatory authority applicable
to Parent or any of its subsidiaries (other than relating to the Company and
its subsidiaries), which, individually or in the aggregate, would have a Parent
Material Adverse Effect.
6.9 Form S-4; Proxy Statement/Prospectus. None of the information to be
supplied by Parent or Merger Sub for inclusion or incorporation by reference in
the Form S-4 or the Proxy Statement/Prospectus (except for information about
the Company furnished by the Company to Parent) will, at the time of the
effectiveness of the Form S-4 and mailing of the Proxy Statement/Prospectus and
at the time of the Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior
to the Effective Time any event with respect to Parent, its officers and
directors or any of its subsidiaries (other than the Company and its
subsidiaries) shall occur and is required to be described in an amendment of,
or a supplement to, the Form S-4 or the Proxy Statement/Prospectus, such event
shall be so described, and such amendment or supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the stockholders of the
Company. The Form S-4 and the Proxy Statement/Prospectus (except with respect
to information relating to the Company) will comply as to form in all material
respects with the provisions of the Securities Act and Exchange Act. For
purposes of this Section 6.9, any statement which is made or
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incorporated by reference in the Form S-4 or the Proxy Statement/Prospectus
shall be deemed modified or superseded to the extent any later filed document
incorporated by reference in the Form S-4 or the Proxy Statement/Prospectus or
any statement included in the Form S-4 or the Proxy Statement/Prospectus
modifies or supersedes such earlier statement.
6.10 Compliance with Applicable Laws. Parent and its subsidiaries (other than
the Company and its subsidiaries) hold all permits, licenses, variances,
exemptions, orders, franchises and approvals of all governmental or regulatory
authorities necessary for the lawful conduct of their respective businesses,
except where the failure to so hold would not, individually or in the
aggregate, have a Parent Material Adverse Effect (the "Parent Permits"). Parent
and its subsidiaries (other than the Company and its subsidiaries) are in
compliance with the terms of the Parent Permits, except where the failure so to
comply would not, individually or in the aggregate, have a Parent Material
Adverse Effect. Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement, the business of Parent (excluding the business of
the Company and its subsidiaries) is not being conducted in violation of any
law, ordinance or regulation of any governmental or regulatory authorities,
except for possible violations which, individually or in the aggregate, would
not have a Parent Material Adverse Effect.
6.11 Issuance of Parent Common Stock. The issuance and delivery by Parent of
shares of Parent Common Stock in connection with the Merger and this Agreement
have been duly and validly authorized by all necessary action on the part of
Parent. The shares of Parent Common Stock to be issued in connection with the
Merger and this Agreement, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable.
6.12 Interim Operations of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
6.13 Ownership of Shares. As of the date hereof, Parent owns all of the
outstanding shares of the Company Class B Common Stock.
6.14 ISC/Ispat Transaction. The Agreement and Plan of Merger, dated as of May
27, 1998, as amended on July 27, 1998, by and among Parent, Inland Steel
Company ("ISC"), Ispat International N.V. ("Ispat") and Inland Merger Sub,
Inc., pursuant to which Ispat acquired ISC, formerly a wholly-owned subsidiary
of Parent (the "ISC/Ispat Transaction"), and the consummation by Parent of the
transactions contemplated thereby were duly and validly authorized by all
requisite corporate proceedings on the part of Parent.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 Stockholder Approval.
(a) The Company shall submit this Agreement and the transactions contemplated
hereby for the approval of its stockholders at the Stockholder Meeting as
promptly as practicable and shall use all reasonable efforts to obtain
stockholder approval and adoption of this Agreement and the transactions
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contemplated hereby, such Stockholder Meeting to be held as soon as practicable
following the date hereof, and the Company shall, through its Board of
Directors, recommend to its stockholders approval of the transactions
contemplated by this Agreement, subject to the provisions of Section 7.1(b)
hereof.
(b) Notwithstanding the foregoing, the Special Committee or the Board of
Directors of the Company may at any time prior to the Effective Time withdraw,
modify or change any recommendation and declaration regarding this Agreement or
the Merger, or recommend and declare advisable any other offer or proposal, if
in the opinion of the Special Committee or the Board of Directors of the
Company after consultation with its counsel the failure to so withdraw, modify
or change its recommendation and declaration would be inconsistent with its
fiduciary duties to its stockholders under applicable law.
(c) From the date hereof to the Effective Time, Parent and Merger Sub shall not
sell or otherwise dispose of the Shares or the shares of the Company Class B
Common Stock owned by them. At the Stockholder Meeting, or any adjournment
thereof, Parent and Merger Sub shall vote the Shares and the shares of the
Company Class B Common Stock owned by them in favor of the Merger.
7.2 Form S-4; Proxy Statement/Prospectus.
(a) Parent and the Company shall promptly prepare and Parent shall file with
the SEC as soon as practicable a registration statement on Form S-4 (together
with all amendments, schedules and exhibits thereto, the "Form S-4") under the
Securities Act, with respect to the Parent Common Stock issuable in the Merger.
The respective parties will cause the Form S-4 to comply as to form in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. Parent shall use all
reasonable efforts, and the Company will cooperate with Parent, to have the
Form S-4 declared effective by the SEC as promptly as practicable. Parent shall
use all reasonable efforts to obtain, prior to the effective date of the Form
S-4, all necessary state securities laws or "blue sky" permits or approvals
required to carry out the transactions contemplated by this Agreement and will
pay all expenses incident thereto.
(b) The Form S-4 shall include as a part thereof a proxy statement/prospectus
(the "Proxy Statement/Prospectus") which will be mailed to the stockholders of
the Company as promptly as practicable after the effectiveness of the Form S-4.
The Company shall include in the Proxy Statement/Prospectus the recommendation
of the Board of Directors of the Company that stockholders of the Company vote
in favor of the approval of the Merger and the adoption of this Agreement.
(c) Each of Parent and the Company shall furnish all information concerning it
required to be included in the Form S-4. Parent agrees that the Form S-4 and
each amendment or supplement thereto at the time it is filed or becomes
effective, and at the time that the Proxy Statement/Prospectus which forms a
part thereof is mailed to the stockholders of the Company, will not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to the extent that any such untrue
statement of a material fact or omission to state a material fact was made by
Parent
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in reliance upon and in conformity with written information concerning the
Company furnished to Parent by the Company for use in the Form S-4. The Company
agrees that the information provided by it for inclusion in the Form S-4 and
each amendment or supplement thereto, at the time it is filed or becomes
effective, and at the time that the Proxy Statement/Prospectus which forms a
part thereof is mailed to the stockholders of the Company, will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(d) No amendment or supplement to the Form S-4 will be made without the
approval of each of the Company and Parent, which approval will not be
unreasonably withheld or delayed. Parent will advise the Company promptly after
it receives (i) notice that the Form S-4 or any amendment thereto has become
effective, (ii) the issuance of any stop order with respect to the Form S-4,
(iii) the suspension of the qualification of the Parent Common Stock to be
issued in the Merger for offering or sale in any jurisdiction, (iv) any request
by the SEC or the NYSE for amendment of the Form S-4, or (v) any comments or
requests for additional information received from the SEC with respect to the
Form S-4.
7.3 All Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals, to effect all necessary registrations, filings
and submissions and to lift any injunction or other legal bar to the Merger
(and, in such case, to proceed with the Merger as expeditiously as possible)
subject to the requisite vote of the stockholders of the Company.
7.4 Access to Company Information. Upon reasonable notice, the Company shall
(and shall cause each of its wholly owned subsidiaries to and use its best
efforts to cause its other subsidiaries to) afford to officers, employees,
counsel, accountants and other authorized representatives of Parent (the
"Parent Representatives"), in order to evaluate the transactions contemplated
by this Agreement, reasonable access during normal business hours throughout
the period prior to the Effective Time to its properties, books and records
and, during such period, shall (and shall cause each of its subsidiaries to)
furnish promptly to the Parent Representatives all information concerning its
business, properties and personnel as may reasonably be requested. Parent
agrees that it will, and will cause the Parent Representatives to, keep all
such information confidential (except as required by law and except for
information (i) which is or becomes generally available to the public, (ii)
which was available to Parent on a nonconfidential basis prior to disclosure to
Parent, or (iii) which becomes available to Parent on a nonconfidential basis
from a source other than the Company) and will not, and will cause the Parent
Representatives not to, use any information obtained pursuant to this Section
7.4 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement.
7.5 Access to Parent Information. Upon reasonable notice, Parent shall (and
shall cause each of its wholly owned subsidiaries to and use its best efforts
to cause its other subsidiaries, other than the Company, to) afford to
officers, employees, counsel, accountants and other authorized representatives
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of the Company (the "Company Representatives"), in order to evaluate the
transactions contemplated by this Agreement, reasonable access during normal
business hours throughout the period prior to the Effective Time to its
properties, books and records and, during such period, shall (and shall cause
each of its subsidiaries to) furnish promptly to the Company Representatives
all information concerning its business, properties and personnel as may
reasonably be requested. The Company agrees that it will, and will cause the
Company Representatives to, keep all such information confidential (except as
required by law and except for information (i) which is or becomes generally
available to the public, (ii) which was available to the Company on a
nonconfidential basis prior to disclosure to the Company, or (iii) which
becomes available to the Company on a nonconfidential basis from a source other
than the Parent) and will not, and will cause the Company Representatives not
to, use any information obtained pursuant to this Section 7.5 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement.
7.6 Publicity. The parties will consult with each other and will mutually agree
upon any press releases or public announcements pertaining to the Merger and
shall not issue any such press releases or make any such public announcements
prior to such consultation and agreement, except as may be required by
applicable law or by obligations pursuant to any listing agreement with any
national securities exchange, in which case the party proposing to issue such
press release or make such public announcement shall use all reasonable efforts
to consult in good faith with the other party before issuing any such press
releases or making any such public announcements.
7.7 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall maintain for the greater of
six years or any applicable statute of limitations, director and officer
liability insurance for the benefit of the directors and officers of Parent
with respect to actions and omissions occurring prior to the Effective Time to
the extent available; provided that policies with third party insurers of a
similar or better A.M. Best rating and of at least the same coverage containing
terms and conditions that are no less advantageous to the insureds may be
substituted therefor. In the event any claim is made against present directors
or officers of Parent or Merger Sub that is covered, in whole or in part, or
potentially so covered by insurance, the Surviving Corporation and Parent shall
do nothing that would forfeit, jeopardize, restrict or limit the insurance
coverage available for that claim until the final disposition of that claim.
All rights to indemnification and advancement of expenses now existing in favor
of the present directors or officers of Parent and its respective subsidiaries
as provided in their respective certificates or articles of incorporation or
by-laws or otherwise in effect on the date hereof shall remain in effect after
the Merger, and the Certificate of Incorporation and Bylaws of Parent shall not
be amended to reduce or limit the rights of indemnity and to advancement of
expenses of the present directors or officers of Parent, or the ability of
Parent to indemnify them, nor to hinder, delay or make more difficult the
exercise of such rights of indemnity or the ability to indemnify.
(b) From and after the Effective Time, Parent shall maintain or cause the
Surviving Corporation to maintain for the greater of six years or any
applicable statute of limitations, director and officer liability insurance for
the benefit of the directors and officers of the Company with respect to
actions and omissions occurring prior to the Effective Time to the extent
available; provided that policies
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with third party insurers of a similar or better A.M. Best rating and of at
least the same coverage containing terms and conditions that are no less
advantageous to the insureds may be substituted therefor. In the event any
claim is made against present directors or officers of the Company that is
covered, in whole or in part, or potentially so covered by insurance, the
Surviving Corporation and Parent shall do nothing that would forfeit,
jeopardize, restrict or limit the insurance coverage available for that claim
until the final disposition of that claim. All rights to indemnification and
advancement of expenses now existing in favor of the present directors or
officers of the Company as provided in the Company's Restated Certificate of
Incorporation or by-laws or otherwise in effect on the date hereof shall remain
in effect after the Merger. The Certificate of Incorporation and Bylaws of the
Surviving Corporation shall not be amended to reduce or limit the rights of
indemnity and to advancement of expenses of the present directors or officers
of the Company, or the ability of the Surviving Corporation to indemnify them,
nor hinder, delay or make more difficult the exercise of such rights of
indemnity or the ability to indemnify, with respect to matters occurring prior
to the Effective Time.
(c) This Section 7.7 shall survive the consummation of the Merger. The
provisions of this Section 7.7 are intended to be for the benefit of, and shall
be enforceable by, the present directors or officers of Parent and the Company,
as the case may be. If Parent or the Company or any of their respective
successors or assigns (i) consolidates with or merges into any other
corporation or entity and is not the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties or assets to any individual, corporation or any other
entity, in each such case, proper provision shall be made so that the
successors and assigns of Parent or the Company, as the case may be, shall
assume the respective obligations of Parent or the Company, as the case may be,
set forth in this Section 7.7.
7.8 NYSE Listing. Parent shall promptly prepare and submit to the NYSE, or such
other national securities exchange on which shares of Parent Common Stock are
listed, a listing application covering the shares of Parent Common Stock
issuable in the Merger, and shall use all reasonable efforts to obtain, prior
to the Effective Time, approval for listing of such Parent Common Stock,
subject to official notice of issuance.
7.9 Conduct of Business of the Company. Except as disclosed in the Company SEC
Reports, during the period of time from the date of this Agreement to the
Effective Time, the Company and each of its subsidiaries shall conduct their
respective businesses only in, and none of the Company or any of its
subsidiaries shall take any action except in, the ordinary and usual course and
in accordance with the terms of this Agreement.
7.10 Conduct of Business of Parent. Except as disclosed on Schedule 7.10
attached hereto, during the period of time from the date of this Agreement to
the Effective Time, Parent shall not (i) declare or pay any dividend or make
any other distribution with respect to its capital stock (other than regular
quarterly dividends of $.05 per share consistent with past practice) or
repurchase any shares of its capital stock; (ii) issue or agree to issue any
shares of, or options, warrants or other rights to acquire, its capital stock;
(iii) materially increase the aggregate compensation, severance payments and
other benefits payable to its officers collectively; or (iv) adopt, enter into,
amend or modify any employee benefit plan of Parent in a manner materially
adverse to Parent.
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7.11 Conduct of Business of Merger Sub. During the period of time from the date
of this Agreement to the Effective Time, Merger Sub shall not engage in any
activities of any nature except as provided in or contemplated by this
Agreement.
7.12 Company Capital Stock. The Company will not, nor shall Parent or Merger
Sub cause the Company to, split, combine, subdivide or reclassify any shares of
the Company's capital stock prior to the Effective Time or declare a stock
dividend or other stock distribution in Company Common Stock or Company Class B
Common Stock with a record date prior to the Effective Time.
ARTICLE VIII
CONDITIONS
8.1 Condition to Each Party's Obligations. The respective obligations of each
party to effect the Merger are subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
duly approved and adopted at the Stockholder Meeting by the holders of a
majority of the votes entitled to be cast by holders of shares of Company
Common Stock and Company Class B Common Stock, voting together as a single
class, outstanding as of the record date.
(b) Injunction. There shall not be in effect any statute, rule, regulation,
executive order, decree, ruling or injunction or other order of a court or
governmental or regulatory agency of competent jurisdiction directing that
the transactions contemplated herein not be consummated; provided, however,
that prior to invoking this condition each party shall use all reasonable
efforts to have any such decree, ruling, injunction or order vacated.
(c) Governmental Filings and Consents. All governmental consents, orders
and approvals legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in effect
at the Effective Time, except where the failure to obtain any such consent
would not, individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect or Company Material Adverse Effect.
(d) Form S-4. The Form S-4 shall have become effective under the Securities
Act, and no stop order suspending effectiveness of the Form S-4 shall have
been issued, and no proceeding for that purpose shall have been initiated
or threatened by the SEC.
8.2 Additional Conditions to the Obligations of Parent and Merger Sub. The
respective obligations of Parent and Merger Sub to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived in whole or in part by Parent or
Merger Sub, as the case may be, to the extent permitted by applicable law.
(a) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be true and correct (without
regard to any qualification as to materiality or Company Material Adverse
Effect contained therein) when made and as of the Effective Time with the
same force and effect as though the same had been made on and as of the
Effective Time (except for changes permitted by this Agreement and except
to the extent
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they relate to a particular date), except for such failures to be true and
correct which, individually or in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect.
(b) Performance. The Company shall have performed in all material respects
all of its obligations under this Agreement theretofore to be performed.
(c) Officer's Certificate. Parent and Merger Sub shall have received at the
Effective Time a certificate dated the Effective Time and executed by the
President or a Vice President of the Company certifying to the fulfillment
of the conditions specified in Sections 8.2(a) and (b) hereof.
8.3 Additional Conditions to the Obligations of the Company. The obligation of
the Company to effect the Merger is subject to the satisfaction at or prior to
the Effective Time of the following conditions, any and all of which may be
waived in whole or in part by the Company (with the concurrence of the Special
Committee) to the extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub set forth in this Agreement shall be true and correct
(without regard to any qualification as to materiality or Parent Material
Adverse Effect contained therein) when made and as of the Effective Time
with the same force and effect as though the same had been made on and as
of the Effective Time (except for changes permitted by this Agreement and
except to the extent they relate to a particular date), except for such
failures to be true and correct which, individually or in the aggregate,
are not reasonably likely to have a Parent Material Adverse Effect.
(b) Performance. Parent and Merger Sub shall have performed in all material
respects all of their respective obligations under this Agreement
theretofore to be performed.
(c) Officer's Certificate. The Company shall have received at the Effective
Time a certificate dated the Effective Time and executed by the President
or a Vice President of each of Parent and Merger Sub certifying to the
fulfillment of the conditions specified in Sections 8.3(a) and (b) hereof.
(d) NYSE Listing Approval. The Parent Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, or such other
national securities exchange on which shares of Parent Common Stock are
listed, subject to official notice of issuance.
ARTICLE IX
TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of the stockholders of the Company, by the mutual written
consent of all of the parties (with the concurrence of no less than two-thirds
of the Independent Directors).
9.2 Termination by Parent, Merger Sub or the Company. This Agreement may be
terminated and the Merger may be abandoned by any of the Parent, Merger Sub or
the Company (with the concurrence of no less than two-thirds of the Independent
Directors in the case of termination by the
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Company), before or after the approval by stockholders of the Company, if (a)
any court of competent jurisdiction in the United States or other governmental
body or regulatory authority shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and nonappealable, (b) the Merger shall not have been
consummated by March 31, 1999, provided that the right to terminate this
Agreement pursuant to this Section 9.2(b) shall not be available to any party
whose failure to fulfill any of its obligations under this Agreement results in
the failure of the Merger to occur on or before such date or (c) this Agreement
and the Merger shall have been voted on by stockholders of the Company at the
Stockholder Meeting and the vote shall not have been sufficient to satisfy the
condition set forth in Section 8.1(a).
9.3 Termination by Parent or Merger Sub. This Agreement may be terminated by
Parent or Merger Sub and the Merger may be abandoned prior to the Effective
Time, before or after the approval by stockholders of the Company, if (a) the
Company shall have failed to perform in any material respect its obligations
under this Agreement theretofore to be performed by the Company, which failure
to perform has not been cured within 30 days following receipt by the Company
of notice of such failure to perform from Parent or Merger Sub or (b) the
representations and warranties of the Company contained in this Agreement shall
not be true and correct (without regard to any qualification as to materiality
or Company Material Adverse Effect contained therein) when made or after such
time as all conditions to Closing have been satisfied other than the conditions
set forth in Section 8.2 and prior to the Effective Time (except for changes
permitted by this Agreement and except to the extent they relate to a
particular date), except for such failures to be true and correct which,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect, provided that such failure to be true and correct has
not been cured within 30 days following receipt by the Company of notice of
such failure to be true and correct from Parent or Merger Sub.
9.4 Termination by the Company.
(a) This Agreement may be terminated by the Special Committee on behalf of the
Company and the Merger may be abandoned prior to the Effective Time, before or
after the approval by stockholders of the Company, if (i) Merger Sub or Parent
shall have failed to perform in any material respect their obligations under
this Agreement theretofore to be performed by Parent or Merger Sub, which
failure to perform has not been cured within 30 days following receipt by
Parent of notice of such failure to perform from the Company or (ii) the
representations and warranties of Parent and Merger Sub contained in this
Agreement shall not be true and correct (without regard to any qualification as
to materiality or Parent Material Adverse Effect contained therein) when made
or after such time as all conditions to Closing have been satisfied other than
the conditions set forth in Section 8.3 and prior to the Effective Time (except
for changes permitted by this Agreement and except to the extent they relate to
a particular date), except for such failures to be true and correct which,
individually or in the aggregate, are not reasonably likely to have a Parent
Material Adverse Effect, provided that such failure to be true and correct has
not been cured within 30 days following receipt from the Company by Parent or
Merger Sub, as the case may be, of notice of such failure to be true and
correct from the Company.
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(b) This Agreement may be terminated by the Special Committee on behalf of the
Company and the Merger may be abandoned prior to the Effective Time, before or
after the approval by stockholders of the Company, if the Special Committee
determines in good faith, after consultation with its Financial Advisor and
outside counsel to the Special Committee, that the Special Committee's
fiduciary obligations under applicable law require it to withdraw its
recommendation of this Agreement and the transactions contemplated hereby.
9.5 Effect of Termination. In the event of the termination and abandonment of
this Agreement pursuant to Article IX, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its affiliates, directors, officers or stockholders, other than the
provisions of this Section 9.5 and the provisions of Sections 7.6, 7.7, 10.1
and 10.2 and the last sentence of Sections 7.4 and 7.5. Nothing contained in
this Section 9.5 shall relieve any party from liability for any breach of this
Agreement.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses. Whether or not the Merger shall be consummated, each
party hereto shall pay its own expenses incident to preparing for, entering
into and carrying out this Agreement and the consummation of the transactions
contemplated hereby; provided, however, that the costs of printing, mailing and
filing the Proxy Statement/Prospectus shall be borne equally by the Company and
Parent.
10.2 Survival of Representations and Warranties. The representations and
warranties made herein shall not survive beyond the earlier of termination of
this Agreement or the Effective Time. This Section 10.2 shall not limit any
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time, including, without limitation, the
covenants and agreements set forth in Section 7.7 hereof.
10.3 Modification or Amendment. Subject to the applicable provisions of the
DGCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of this Agreement by the stockholders of the Company no amendment
shall be made which by law requires further approval by such stockholders
without such further approval. Notwithstanding the foregoing, any amendment or
modification of this Agreement shall require the consent of a majority of the
Board of Directors of the Company and no less than two-thirds of the
Independent Directors.
10.4 Waiver of Conditions. The conditions to each of the parties' obligations
to consummate the Merger are for the sole benefit of such party and may be
waived by such party in whole or in part to the extent permitted by applicable
law; provided, however, that the waiver of any conditions by the Company shall
require the consent of the Special Committee.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
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10.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
10.7 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other parties shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile transmission (with a confirming copy sent by overnight courier), as
follows:
(a) If to the Company, to
Neil S. Novich
President and Chief Executive Officer
Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
(773) 762-2121 (telephone)
(773) 762-4248 (telecopier)
with a copy to:
Donald S. Perkins
Chairman of the Special Committee
of the Board of Directors of Ryerson Tull, Inc.
and
Thomas A. Cole, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
(312) 853-7000 (telephone)
(312) 853-7036 (telecopier)
(b) If to Parent or Merger Sub, to
George A. Ranney, Jr.
Vice President and General Counsel
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
(312) 346-0300 (telephone)
(312) 899-3921 (telecopier)
with a copy to
Charles W. Mulaney, Jr., Esq.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700 (telephone)
(312) 407-0411 (telecopier)
A-25
<PAGE>
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 Entire Agreement; Assignment. This Agreement (a) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter
hereof and (b) shall not be assigned by operation of law or otherwise.
10.9 Parties in Interest. This Agreement shall be binding upon and inure solely
to the benefit of the parties hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right of
stockholders of the Company to receive the consideration payable in the Merger
pursuant to Article IV hereof is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement; provided, however, that the provisions of Section 7.7
shall inure to the benefit of and be enforceable by the present directors and
officers of Parent and the Company, as the case may be.
10.10 Certain Definitions. As used herein:
(a) "Significant Subsidiary" shall have the meaning ascribed to it under Rule
1-02 of Regulation S-X of the SEC.
(b) "subsidiary" shall mean, except as otherwise noted, when used with
reference to any entity, any corporation or other entity a majority of the
outstanding voting securities or interests of which are owned directly or
indirectly by such former entity.
(c) "Company Material Adverse Effect" shall mean any adverse change (other than
any change resulting from or arising out of the transactions contemplated by
this Agreement or the announcement thereof) in the financial condition,
business, properties or results of operations of the Company and its
subsidiaries (to the extent owned by the Company) which is material to the
Company and its subsidiaries (to the extent owned by the Company) taken as a
whole.
(d) "Parent Material Adverse Effect" shall mean any adverse change in the
financial condition, business, properties or results of operation of Parent and
its subsidiaries (to the extent owned by Parent), other than with respect to
the Company and its subsidiaries, which is material to Parent and its
subsidiaries (including the Company and its subsidiaries) taken as a whole.
(e) "Independent Directors" shall mean directors of the Company who are not,
and who have not within the previous twelve months been: (i) officers or
employees of the Company; (ii) officers, directors or employees of Parent or
any other subsidiaries or affiliates of Parent; or (iii) owners of more than
five percent of the outstanding common stock of Parent or any other
subsidiaries or affiliates of Parent.
10.11 Obligation of Parent. Whenever this Agreement requires Merger Sub to take
any action, such requirement shall be deemed to include an undertaking on the
part of Parent to use its best efforts to cause Merger Sub to take such action.
A-26
<PAGE>
10.12 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
10.13 Captions. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first
above written.
Inland Steel Industries, Inc.
By: /s/ Robert J. Darnall
--------------------------------
Name: Robert J. Darnall
Title: President and Chief
Executive Officer
RT Merger Sub, Inc.
By: /s/ George A. Ranney, Jr.
--------------------------------
Name: George A. Ranney, Jr.
Title: President
Ryerson Tull, Inc.
By: /s/ Neil S. Novich
--------------------------------
Name: Neil S. Novich
Title: President and Chief
Executive Officer
A-27
<PAGE>
ANNEX B
October 27, 1998
Special Committee of the Board of Directors
Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
Gentlemen:
We understand that Ryerson Tull, Inc. ("Target" or the "Company"), RT Merger
Sub, Inc., a direct wholly-owned subsidiary of Parent ("Merger Sub"), and
Inland Steel Industries, Inc. ("Parent") have entered into an Agreement and
Plan of Merger, dated as of October 27, 1998 (the "Merger Agreement"), which
provides, among other things, for the merger of Merger Sub with and into the
Company (the "Merger"). Pursuant to the Merger, Target will become a wholly-
owned subsidiary of Parent and each issued and outstanding share of Class A
Common Stock, par value $1.00 per share of the Company (the "Company Class A
Stock"), other than shares held by Parent, Merger Sub or any direct or
indirect subsidiary of Parent, shall be converted into the right to receive
0.61 shares (the "Exchange Ratio") of Parent common stock, par value $1.00 per
share (the "Parent Common Stock") (the "Consideration"). We also understand
that Parent and its subsidiaries and affiliates currently own 34,000,000
shares of the Company's Class B Common Stock, par value $1.00 per share (the
"Company Class B Stock"), which represents approximately 86.4% of the total
outstanding shares of Company Class A Stock and Company Class B Stock. The
terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
The Special Committee of the Board of Directors has asked for our opinion as
to whether the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to holders of shares of Company Class A Stock (other
than shares owned by Parent, Merger Sub or any direct or indirect subsidiary
of Parent).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company and Parent, respectively;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company and Parent, respectively, prepared by
the management of the Company and Parent, respectively;
(iii) analyzed certain financial projections prepared by the managements of
the Company and Parent, respectively;
(iv) discussed the past and current operations and financial condition and
the prospects (including estimates of the reserves) of the Company and
Parent, respectively, with senior executives of the Company and Parent,
respectively;
(v) reviewed the reported prices and trading activity for the Company Class
A Stock and Parent Common Stock;
<PAGE>
(vi) compared the financial performance of the Company and Parent,
respectively and the prices and trading activity of the Company Class A
Stock and Parent Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of the Company and Parent, respectively, and their financial and legal
advisors;
(ix) reviewed the Merger Agreement and certain related documents;
(x) reviewed legal due diligence summaries prepared by Sidley & Austin,
counsel to the Special Committee of the Board of Directors; and
(xi) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the 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 and
Parent. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company or Parent, nor have we been furnished with any
such appraisals; however, we have relied, with the Special Committee of the
Board of Director's consent and without independent verification, upon the
Company's and Parent's assessments of their reserves for purposes of this
opinion. 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.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Company
or any of the assets of the Company.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company in connection with this transaction and will receive a
fee for our services.
It is understood that this letter is for the information of the Special
Committee of the Board of Directors of the Company and may not be used for any
other purpose without our prior written consent, except that this opinion may
be included in its entirety in any filing made by the Company with the
Securities and Exchange Commission or any regulatory authority in connection
with the Merger. In addition, we express no opinion or recommendation as to how
the holders of Company Class A Stock should vote at the stockholders' meeting
held in connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to holders of shares of Company Class A Stock (other than Parent,
Merger Sub or any direct or indirect subsidiary of Parent).
Very truly yours,
Morgan Stanley & Co. Incorporated
/s/ T. Sands Thompson
By: _________________________________
T. Sands Thompson
Vice President
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
(a) The General Corporation Law of Delaware (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes Inland to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any of
the rights to which those indemnified may be entitled under any by-laws,
agreement, vote of stockholders or otherwise.
(b) Article Thirteen of the Certificate of Incorporation of Inland permits, and
Article VI of the By-Laws of Inland provides for, indemnification of directors,
officers, employees and agents to the full extent permitted by law.
(c) Inland maintains directors' and officers' liability insurance coverage for
its directors and officers and those of its subsidiaries and for certain other
executive employees. This coverage insures such persons against certain losses
that may be incurred by them in their respective capacities as directors,
officers or employees, with respect to which they may or may not be indemnified
under the provisions of the Certificate of Incorporation or By-Laws of Inland
or otherwise.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
See Index to Exhibits included herewith which is incorporated by reference
herein.
(b) Financial Statement Schedules:
Not Applicable.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of
II-1
<PAGE>
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering;
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(5) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other Items of the applicable form;
(6) That every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof;
(7) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of
II-2
<PAGE>
receipt of such request, and to send the incorporated documents by first-
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request; and
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement
when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Inland Steel
Industries, Inc. has duly caused this Amendment No. 1 to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Chicago, Illinois, on January 27, 1999.
Inland Steel Industries, Inc.
/s/ George A. Ranney, Jr.
By: _________________________________
George A. Ranney, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities indicated on January 27, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
/s/ George A. Ranney, Jr. President (Principal
____________________________________ Executive Officer)
George A. Ranney, Jr.
/s/ Vicki L. Avril Vice President, Chief
____________________________________ Financial Officer and
Vicki L. Avril Controller (Principal
Financial Officer and
Principal Accounting
Officer)
A. Robert Abboud Director
Robert J. Darnall Director
James A. Henderson Director
/s/ George A. Ranney,
Leo F. Mullin Director Jr.
By: ___________________________
Jean-Pierre Rosso Director George A. Ranney, Jr.
Attorney-in-Fact
Joshua I. Smith Director
Nancy H. Teeters Director
Arnold R. Weber Director
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Document Description Number
------- -------------------- ----------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of October 27,
1998, between Inland, RT Merger Sub and Ryerson Tull.
(Included as Annex A to the Proxy Statement/Prospectus
included herein.)
[Inland hereby agrees to provide a copy of any
Schedule to the Agreement and Plan of Merger to the
Commission upon request.]
3.(i)(A) Certificate of Incorporation, as amended, of Inland.
(Filed as Exhibit 3.(i) to Inland's Annual Report on
Form 10-K for the year ended December 31, 1995, and
incorporated by reference herein.)
3.(ii)(A) By-Laws, as amended, of Inland. (Filed as Exhibit
3.(ii) to Inland's Annual Report on Form 10-K for the
year ended December 31, 1997, and incorporated by
reference herein.)
3.(i)(B) Restated Certificate of Incorporation of Ryerson Tull.
(Filed as Exhibit 3.1 to Ryerson Tull's Registration
Statement on Form S-1 (File No. 333-3235), and
incorporated by reference herein.)
3.(ii)(B) By-Laws of Ryerson Tull. (Filed as Exhibit 3.2 to
Ryerson Tull's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, and incorporated by
reference herein.)
4.A Certificate of Designations, Preferences and Rights of
Series A $2.40 Cumulative Convertible Preferred Stock
of Inland. (Filed as part of Exhibit B to the
definitive Proxy Statement of ISC dated March 21,
1996, that was furnished to stockholders in connection
with the annual meeting held April 23, 1986, and
incorporated by reference herein.)
4.B Certificate of Designation, Preferences and Rights of
Series D Junior Participating Preferred Stock of
Inland. (Filed as Exhibit 4-D to Inland's Annual
Report on Form 10-K for the fiscal year ended December
31, 1987, and incorporated by reference herein.)
4.C Rights Agreement, dated as of November 25, 1997,
between Inland and Harris Trust and Savings Bank, as
Rights Agent, as amended and restated. (Filed as
Exhibit 4.1 to Inland's amended Registration Statement
on Form 8-A/A filed on January 15, 1999, and
incorporated by reference herein.)
4.D Indenture, dated as of July 1, 1996, between Ryerson
Tull and The Bank of New York. (Filed as Exhibit 4.1
to Ryerson Tull's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, and incorporated by
reference herein.)
4.E Specimen of 8 1/2% Notes due July 15, 2001. (Filed as
Exhibit 4.2 to Ryerson Tull's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, and
incorporated by reference herein.)
4.F Specimen of 9 1/8% Notes due July 15, 2006. (Filed as
Exhibit 4.3 to Ryerson Tull's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, and
incorporated by reference herein.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Document Description Number
------- -------------------- ----------
<C> <S> <C>
4.G Rights Agreement between Ryerson Tull and Harris Trust
and Savings Bank, as Rights Agent, dated as of June 10,
1996. (Filed as Exhibit 4.4 to Ryerson Tull's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996,
and incorporated by reference herein.)
[Inland and Ryerson Tull hereby agree to provide a copy
of any other agreement relating to long-term debt at the
request of the Commission.]
5.1 Opinion of Mayer, Brown & Platt..........................
8.1 Tax opinion of Mayer, Brown & Platt......................
23.1 Consent of PricewaterhouseCoopers LLP (Inland)...........
23.2 Consent of PricewaterhouseCoopers LLP (Ryerson Tull).....
23.3 Consent of Mayer, Brown & Platt. (Included in Exhibits
5.1 and 8.1 hereto.)
23.4 Consent of Morgan Stanley & Co. Incorporated. (Included
in Annex B to the Proxy Statement/Prospectus included
herein.)
24.1 Power of Attorney of certain directors and officers of *
Inland...................................................
99.1 Form of Proxy Card....................................... *
99.2 Opinion of Morgan Stanley & Co. Incorporated. (Included
as Annex B to the Proxy Statement/Prospectus included
herein.)
99.3 Consents of Persons to be Named as Directors of Inland... *
</TABLE>
- --------
* previously filed
<PAGE>
EXHIBIT 5.1
January 26, 1999
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
Re: Merger of RT Merger Sub, Inc., a wholly owned subsidiary of Inland
Steel Industries, Inc., with and into Ryerson Tull, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Inland Steel Industries, Inc., a
Delaware corporation ("Inland"), in connection with the corporate proceedings
taken and to be taken relating to the merger of RT Merger Sub, Inc., a wholly
owned subsidiary of Inland, with and into Ryerson Tull, Inc. ("Ryerson Tull"),
with Ryerson Tull being the surviving corporation (the "Merger"), and conversion
of each share of Ryerson Tull Class A Common Stock, par value $1.00 per share
(including the associated preferred stock purchase rights issued pursuant to the
Rights Agreement, dated as of June 10, 1996, between Ryerson Tull and Harris
Trust and Savings Bank, as the Rights Agent), issued and outstanding at the
effective time of the Merger into 0.61 shares of common stock, par value $1.00
per share, of Inland ("Inland Common Stock") (including the associated preferred
stock purchase rights issued pursuant to the Rights Agreement, dated as of
November 25, 1997, between Inland and Harris Trust and Savings Bank, as the
Rights Agent, as amended). We have also participated in the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of a registration statement on Form S-4 (the "Registration
Statement") relating to the Merger. In this connection, we have examined such
corporate and other records, instruments, certificates and documents as we
considered necessary to enable us to express this opinion.
Based on the foregoing, it is our opinion that the shares of Inland Common
Stock have been duly and validly authorized by all necessary action on the part
of Inland and when issued pursuant to the terms of the Agreement and Plan of
Merger, dated October 27, 1998, will be validly issued, fully paid and
non-assessable by Inland.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the captions "The Merger Agreement
and the Merger -- Material Federal Income Tax Considerations" and "Additional
Information -- Legal Matters" therein.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 8.1
MAYER, BROWN & PLATT
January 26, 1999
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
Re: Inland Steel Industries, Inc. -- Registration No. 333-71149
Ladies and Gentlemen:
We have acted as special counsel to Inland Steel Industries, Inc., a
Delaware corporation ("Inland"), in connection with the corporate proceedings
taken and to be taken relating to the merger of RT Merger Sub, Inc., a wholly
owned subsidiary of Inland, with and into Ryerson Tull, Inc. ("Ryerson Tull"),
with Ryerson Tull being the surviving corporation (the "Merger"), and conversion
of each share of Ryerson Tull Class A Common Stock, par value $1.00 per share
(including the associated preferred stock purchase rights issued pursuant to the
Rights Agreement, dated as of June 10, 1996, between Ryerson Tull and Harris
Trust and Savings Bank, as the Rights Agent), issued and outstanding at the
effective time of the Merger into 0.61 shares of common stock, par value $1.00
per share, of Inland (including the associated preferred stock purchase rights
issued pursuant to the Rights Agreement, dated as of November 25, 1997, between
Inland and Harris Trust and Savings Bank, as the Rights Agent, as amended). We
have also participated in the preparation and filing with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, of a
registration statement on Form S-4 (Registration No. 333-71149) (the
"Registration Statement") relating to the Merger. In connection therewith, we
have prepared the discussion set forth under the caption "The Merger Agreement
and the Merger -- Material Federal Income Tax Considerations" (the "Discussion")
in the Proxy Statement/Prospectus (the "Proxy Statement/Prospectus") that is
part of the Registration Statement filed by Inland with the Securities and
Exchange Commission.
In rendering our opinion, we have examined the Agreement and Plan of Merger
by and among Inland, RT Merger Sub, Inc. and Ryerson Tull dated as of October
27, 1998 included as Annex A to the Proxy Statement/Prospectus (the "Merger
Agreement"), and have assumed that the Merger will take place in accordance with
the Merger Agreement. We hereby confirm our opinion as set forth in the
Discussion, which contains the material United States federal income tax
consequences of the Merger.
This opinion is based on current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the Treasury regulations promulgated thereunder,
the interpretation of the Code and such regulations by the courts and the
Internal Revenue Service, as they are in effect and exist at the date of this
opinion. It should be noted that laws, regulations, judicial decisions and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change that is made after
the date hereof in any of the foregoing bases for our opinion could adversely
affect our conclusion.
<PAGE>
Inland Steel Industries, Inc.
January 26, 1999
Page 2
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the captions "The Merger Agreement
and the Merger -- Material Federal Income Tax Considerations" and "Additional
Information -- Legal Matters" therein.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
Exhibit 23.1
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Inland Steel
Industries, Inc. of our report dated February 18, 1998, except as to Note 1,
which is as of July 16, 1998, which appears on page F-2 of the Inland Steel
Industries, Inc. Form 8-K dated July 20, 1998. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Chicago, Illinois
January 26, 1999
<PAGE>
Exhibit 23.2
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Inland Steel
Industries, Inc. of our report dated February 18, 1998 appearing on page 7 of
Exhibit 99, "Financial Information," of the Ryerson Tull, Inc. Annual Report on
Form 10-K for the year ended December 31, 1997. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears on page 12 of such Annual Report on Form 10-K. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Chicago, Illinois
January 26, 1999
