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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3/A
AMENDMENT NO. 2 TO TRANSACTION STATEMENT
UNDER SECTION 13(e) OF
THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 13e-3 THEREUNDER
THERMO OPTEK CORPORATION
(NAME OF ISSUER)
OPTEK ACQUISITION INC.
THERMO INSTRUMENT SYSTEMS INC.
THERMO ELECTRON CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
883582 10 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
SANDRA L. LAMBERT, SECRETARY
OPTEK ACQUISITION INC.
THERMO INSTRUMENT SYSTEMS INC.
THERMO ELECTRON CORPORATION
81 WYMAN STREET
P.O. BOX 9046
WALTHAM, MASSACHUSETTS 02454-9046
(781) 622-1000
(NAME, ADDRESS, AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
WITH COPIES TO:
<TABLE>
<S> <C>
SETH H. HOOGASIAN, GENERAL COUNSEL DAVID E. REDLICK, ESQ.
THERMO ELECTRON CORPORATION HALE AND DORR LLP
81 WYMAN STREET 60 STATE STREET
P.O. BOX 9046 BOSTON, MASSACHUSETTS 02109
WALTHAM, MASSACHUSETTS 02454-9046 (617) 526-6000
(781) 622-1000
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OR THE FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [X] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [ ]
Check the following box if this is a final amendment reporting the results of
the transaction. [ ]
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
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<S> <C>
$88,708,485 $17,742
</TABLE>
* Calculated, for the purposes of determining the filing fee only, in
accordance with Rule 0-11(b)(2) under the Securities Exchange Act of 1934,
as amended. Assumes the purchase of up to 5,913,899 shares of Common Stock,
par value $.01 per share, of Thermo Optek Corporation at $15.00 per share.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount previously paid: $17,742
Form or registration no.: Schedule 13E-3 (File No. 5-46331)
Filing party: Optek Acquisition Inc., Thermo Instrument Systems Inc., Thermo
Electron Corporation
Date filed: March 6, 2000
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SUMMARY TERM SHEET
This summary and the remainder of this Transaction Statement on Schedule
13E-3 include information describing the going private merger involving Thermo
Optek Corporation, how it affects you, what your rights are with respect to the
merger as a stockholder of Thermo Optek and the position of Thermo Instrument
Systems Inc. and Thermo Electron Corporation regarding the fairness of the terms
of the merger.
- - PURPOSE OF THE MERGER (PAGE 7).
- - On January 31, 2000, Thermo Electron announced that its Board of Directors had
authorized its management to proceed with a major reorganization of the
operations of Thermo Electron and its subsidiaries. As part of this
reorganization, Thermo Electron plans to acquire the public minority interest
in most of its subsidiaries that have minority investors, spin off its
separation technologies and fiber-based products business and its medical
products business and divest a variety of non-core businesses. The primary
goal of the reorganization is for Thermo Electron and each of its spun-off
subsidiaries to focus on its core business. The purpose of the merger is for
Thermo Instrument and Thermo Electron to acquire the minority public interest
in Thermo Optek as part of Thermo Electron's overall reorganization and to
provide Thermo Optek's stockholders with $15.00 in cash for each of their
shares of Thermo Optek common stock. Following the merger, Thermo Electron
plans to retain Thermo Optek as part of Thermo Electron's core instrument
business.
- - PRINCIPAL TERMS OF THE MERGER.
- - The Merger (page 25). Thermo Instrument and Thermo Electron plan to
contribute all of the shares of common stock of Thermo Optek owned by them to
Optek Acquisition in exchange for shares of common stock of Optek Acquisition.
As a result of this contribution, Optek Acquisition expects that it will own
at least 90% of Thermo Optek's outstanding shares. On May 11, 2000, or as soon
thereafter as possible, Thermo Instrument and Thermo Electron will cause Optek
Acquisition to merge with and into Thermo Optek in a "short-form" merger.
After the merger, Thermo Instrument will own 98% of Thermo Optek's common
stock and Thermo Electron will own 2% of Thermo Optek's common stock assuming
no options to acquire Thermo Optek common stock are exercised and no
outstanding Thermo Optek convertible debentures are converted prior to the
merger. Optek Acquisition does not intend to enter into a merger agreement
with Thermo Optek or to seek the approval of the directors of Thermo Optek for
the merger. Stockholders of Thermo Optek will not be entitled to vote their
shares with respect to the merger.
- - Merger Consideration (pages 7 and 25). The consideration in the merger will
be $15.00 per share in cash. This price is equal to a premium of approximately
6.67% over the last reported sale price of $14.0625 per share of Thermo Optek
common stock on the American Stock Exchange on the last trading date prior to
the announcement, on January 31, 2000, of our intention to take Thermo Optek
private. The last reported sale price of Thermo Optek common stock on the
American Stock Exchange on April 18, 2000 was $14.875 per share.
- - Affiliation of Thermo Optek, Optek Acquisition, Thermo Instrument and Thermo
Electron. As of January 28, 2000, Thermo Instrument owned 93.2% and Thermo
Electron owned 2.0% of the outstanding shares of common stock of Thermo Optek.
Thermo Instrument is a majority-owned subsidiary of Thermo Electron. Certain
officers and directors of Thermo Instrument and Thermo Electron are also
officers or directors of Thermo Optek.
- - Thermo Optek Shares Outstanding; Ownership by Optek Acquisition (page 5). As
of January 28, 2000, 51,055,798 shares of Thermo Optek common stock were
outstanding, options to purchase 2,898,138 shares of Thermo Optek common stock
were outstanding and 4,947,076 shares were issuable upon exercise of
conversion rights under Thermo Optek's outstanding 5% subordinated convertible
debentures due October 15, 2000. Thermo Instrument and Thermo Electron owned a
total of 48,592,424 shares of Thermo Optek common stock, or approximately
95.2% of the outstanding shares of Thermo Optek common stock, as of January
28, 2000. Of the shares owned by Thermo Instrument and Thermo Electron,
552,387 shares
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have been reserved for issuance pursuant to stock options granted by Thermo
Instrument and Thermo Electron under their respective stock option plans.
- - Payment for Shares (page 25). We will pay you for your shares of Thermo Optek
common stock promptly after the effective date of the merger. Instructions for
surrendering your stock certificates, together with a description of statutory
appraisal rights, will be set forth in a Notice of Merger and Appraisal Rights
and a Letter of Transmittal, which will be mailed to stockholders of record of
Thermo Optek on the date the merger becomes effective and should be read
carefully. Please do not submit your stock certificates before you have
received these documents. Sending us your stock certificates with a properly
signed Letter of Transmittal will waive your appraisal rights described below.
See Item 4 -- "Terms of the Transaction" in this Schedule 13E-3.
- - Other Possible Purchases of Thermo Optek Common Stock (page 6). If, before
the merger is effective, the aggregate ownership by Thermo Electron and its
subsidiaries, including Thermo Instrument, of the outstanding shares of Thermo
Optek common stock should fall below 90% because of the exercise of
outstanding options, the conversion of outstanding debentures or for any other
reason, Optek Acquisition intends to acquire additional shares of Thermo Optek
common stock on the open market or in privately negotiated transactions to the
extent required for the aggregate ownership of Thermo Optek common stock by
Thermo Electron and its subsidiaries to equal or exceed 90%. These purchases
would be made at market prices or privately negotiated prices at the time of
purchase, which may be higher or lower than the $15.00 per share price in the
merger. In addition, Thermo Electron may, in those circumstances, convert all
or a portion of the $8,455,000 principal amount of Thermo Optek debentures
that it holds into shares of Thermo Optek common stock and contribute those
shares to Optek Acquisition. The debentures held by Thermo Electron are
convertible into a total of 606,328 shares of Thermo Optek common stock at a
price of $13.9446 per share. See "Introduction."
- - Source of Funds (page 30). The total amount of funds expected to be required
by Optek Acquisition to pay the merger consideration for Thermo Optek common
stock in the merger, and to pay related fees and expenses, is estimated to be
approximately $38.3 million assuming no options to acquire Thermo Optek common
stock are exercised and no outstanding Thermo Optek convertible debentures are
converted prior to the merger. Optek Acquisition will obtain these funds from
Thermo Instrument as a loan or a capital contribution. Thermo Instrument
intends to borrow funds from Thermo Electron to fund this loan or capital
contribution. Thermo Electron has committed to provide any required financing
to Thermo Instrument. There are no conditions to the financing of the merger.
- - THERMO INSTRUMENT'S AND THERMO ELECTRON'S POSITION ON THE FAIRNESS OF THE
MERGER (PAGE 12).
- - Determination of the Special Committee of the Board of Directors of Thermo
Instrument and the Board of Directors of Thermo Electron. The board of
directors of Thermo Instrument, at a meeting held on January 20, 2000,
appointed Richard F. Syron and Polyvios C. Vintiadis, then directors of Thermo
Instrument, to act as a special committee of the board of directors of Thermo
Instrument with full authority to authorize and determine the terms of the
merger and to determine whether the merger is fair to the public stockholders
of Thermo Optek. The board of directors of Thermo Electron and the special
committee of the board of directors of Thermo Instrument have determined that
the terms of the merger are fair to the stockholders of Thermo Optek. In
considering the fairness from a financial point of view of the $15.00 per
share merger consideration, the board of directors of Thermo Electron and the
special committee of the board of directors of Thermo Instrument reviewed and
relied in part upon an analysis of the ranges of potential values of the
shares of Thermo Optek's common stock that resulted from the application of
several accepted valuation methodologies. This analysis, including the
selection of valuation methodologies, was prepared by J.P. Morgan Securities
Inc. and The Beacon Group Capital Services, LLC. J.P. Morgan and The Beacon
Group are the financial advisors to Thermo Instrument and Thermo Electron in
connection with the merger and the reorganization of Thermo Electron and its
subsidiaries described above. For a discussion of the factors that the board
of directors of Thermo Electron and the special committee of the board of
directors of Thermo Instrument considered in determining the fairness of the
merger and a summary of the financial analysis prepared by J.P. Morgan and The
Beacon Group, see
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"Special Factors -- Fairness of the Merger -- Factors Considered in
Determining Fairness" and "--Reports, Opinions, Appraisals and
Negotiations -- Preparer and Summary of the Report, Opinion or Appraisal."
- - Potential Conflicts of Interest. Thermo Instrument is the majority
stockholder of Thermo Optek. Thermo Electron is the majority stockholder of
Thermo Instrument. Some of the officers and directors of Thermo Instrument and
Thermo Electron are also officers or directors of Thermo Optek and own shares
of common stock of, or hold options to purchase shares of common stock of,
Thermo Electron, Thermo Instrument and/or Thermo Optek. As a result, there are
various actual or potential conflicts of interest in connection with the
merger.
- - Consequences of the Merger (page 9).
Completion of the merger will have the following consequences:
- - Thermo Instrument and Thermo Electron will have complete control over Thermo
Optek's business.
- - Thermo Instrument and Thermo Electron will own 100% of the equity interest in
Thermo Optek's business and will solely have the benefit or detriment of any
change in Thermo Optek's value.
- - The shares of Thermo Optek will no longer be listed on the American Stock
Exchange.
- - Thermo Optek will no longer be subject to the requirements of the Securities
Exchange Act of 1934, including requirements to file annual and other periodic
reports or to provide the type of going-private disclosure contained in this
Schedule 13E-3.
- - After the merger, each of your shares, subject to statutory appraisal rights,
will be converted into the right to receive $15.00 in cash, without interest.
- - Appraisal Rights (page 26).
- - You have a statutory right to dissent from the merger and demand payment of
the judicially appraised fair value of your Thermo Optek shares plus a fair
rate of interest, if any, from the date of the merger. This value may be more
or less than the $15.00 per share in cash consideration in the merger. The
statutory right of dissent is set out in Section 262 of the Delaware General
Corporation Law and is complicated. Any failure to comply with its terms will
result in an irrevocable loss of such right. Stockholders seeking to exercise
their statutory right of dissent are encouraged to seek advice from legal
counsel. See Item 4 -- "Terms of the Transaction -- Appraisal Rights" in this
Schedule 13E-3.
- - For More Information (page 22).
- - More information regarding Thermo Optek, Thermo Instrument and Thermo Electron
is available from their public filings with the Securities and Exchange
Commission. See Item 2 -- "Subject Company Information" and Item
3 -- "Identity and Background of Filing Person" in this Schedule 13E-3.
- - If you have any questions about the merger, please call the Corporate
Secretary of Thermo Instrument at (781) 622-1000.
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INTRODUCTION
This Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") is
being filed by (i) Thermo Instrument Systems Inc., a Delaware corporation
("Thermo Instrument"), (ii) Optek Acquisition Inc., a Delaware corporation and a
wholly-owned subsidiary of Thermo Instrument ("Optek Acquisition"), and (iii)
Thermo Electron Corporation, a Delaware corporation and the holder of a majority
of the outstanding capital stock of Thermo Instrument ("Thermo Electron"),
pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 13e-3 thereunder. This Schedule 13E-3 is being
filed in connection with a "short-form" merger (the "Merger") of Optek
Acquisition with and into Thermo Optek Corporation, a Delaware corporation (the
"Company" or "Thermo Optek"), pursuant to Section 253 of the Delaware General
Corporation Law ("DGCL"). The effective date (the "Effective Date") of the
Merger is expected to be May 11, 2000 or as soon thereafter as possible.
As of January 28, 2000, there were issued and outstanding 51,055,798 shares
of common stock, $.01 par value per share (the "Shares"), of the Company. As of
January 28, 2000, Thermo Instrument and Thermo Electron held a total of
48,592,424 Shares, or approximately 95.2% of the total Shares outstanding. Of
the Shares owned by Thermo Instrument and Thermo Electron, 552,387 Shares have
been reserved for issuance pursuant to stock options granted by Thermo
Instrument and Thermo Electron under their respective stock option plans. Thermo
Electron and Thermo Instrument intend to acquire the Shares that they do not
currently own through the Merger. Thermo Electron and Thermo Instrument intend
to contribute the Shares that they currently own to Optek Acquisition
immediately before the Effective Date in exchange for common stock of Optek
Acquisition.
Upon the consummation of the Merger, each outstanding Share (other than
Shares held by Optek Acquisition, the Company and stockholders of the Company
who properly exercise statutory appraisal rights under the DGCL) will be
automatically converted into the right to receive $15.00 per Share in cash (the
"Merger Price"), without interest, upon surrender of the certificate for such
Share to American Stock Transfer & Trust Company (the "Paying Agent").
Instructions with regard to the surrender of stock certificates, together with a
description of statutory appraisal rights, will be set forth in a Notice of
Merger and Appraisal Rights and a Letter of Transmittal, which documents will be
mailed to stockholders of record of Thermo Optek on the Effective Date and
should be read carefully.
Under the DGCL, no action is required by the Board of Directors or the
stockholders of the Company, other than Optek Acquisition, for the Merger to
become effective. The Company will be the surviving corporation in the Merger.
As a result of the Merger, Thermo Instrument and Thermo Electron will be the
only stockholders of the Company.
As of January 28, 2000, options to purchase an aggregate of 2,898,138
Shares (the "Options") were outstanding under the Company's Directors Stock
Option Plan, Equity Incentive Plan and Employees Equity Incentive Plan (the
"Plans"). The exercise prices of the outstanding Options range from $7.85 to
$16.88. It is possible that some of the Options will be exercised before the
Effective Date.
The Company also has outstanding $69 million principal amount of 5%
Subordinated Convertible Debentures due October 15, 2000 (the "Debentures"),
which in the aggregate are currently convertible into 4,947,076 Shares at a
conversion price of $13.9446 per Share. Thermo Electron holds $8,455,000
principal amount of the Debentures, which are currently convertible into a total
of 606,328 Shares. The Debentures will remain outstanding after the Merger. In
accordance with the terms of the Debentures, the Company will amend the Fiscal
Agency Agreement which governs the Debentures to provide that on and after the
Effective Date the Debentures shall no longer be convertible into Shares and
that from the Effective Date until the redemption of the Debentures, each
Debenture shall be convertible only into an amount of cash equal to the product
of the number of Shares into which such Debenture was convertible on the
Effective Date multiplied by the Merger Price. Although the holders of the
Debentures will be entitled to receive the benefit of the Merger Price without
exercising their conversion rights before the Effective Date, it is possible
that some or all of the Debentures will be converted before the Effective Date.
The Company has announced that it will not establish a redemption date for the
Debentures that is less than 90 days after the Effective Date.
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If, because of the exercise of Options, the conversion of the Debentures or
for any other reason, Optek Acquisition owns, or determines that it might on the
Effective Date own, less than 90% of the then outstanding Shares, Optek
Acquisition may make open market or privately negotiated purchases of Shares to
the extent necessary for Optek Acquisition to own at least 90% of the
outstanding Shares on the Effective Date. Any such open market or privately
negotiated purchases by Optek Acquisition would be made at market prices or
privately negotiated prices at the time of purchase, which may be higher or
lower than the Merger Price. In addition, Thermo Electron may convert all or a
portion of the Debentures it holds into Shares before the Effective Date and
contribute such Shares to Optek Acquisition.
This Schedule 13E-3 and the documents incorporated by reference in this
Schedule 13E-3 include certain forward-looking statements. These statements
appear throughout this Schedule 13E-3 and include statements regarding the
intent, belief or current expectations of Thermo Instrument and Thermo Electron
and their Boards of Directors, including statements concerning Thermo
Instrument's and Thermo Electron's strategies following completion of the
Merger. Such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties. Actual results may differ materially from
those described in such forward-looking statements as a result of various
factors.
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SPECIAL FACTORS
PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE MERGER
PURPOSES
On January 31, 2000, Thermo Electron announced that its Board of Directors
had authorized its management to proceed with a major reorganization of the
operations of Thermo Electron and its subsidiaries. As part of this
reorganization, Thermo Electron plans to acquire the public minority interest in
most of its subsidiaries that have minority investors, spin off its separation
technologies and fiber-based products business and its medical products business
and divest a variety of non-core businesses. The primary goal of the
reorganization is for Thermo Electron and each of its spun-off subsidiaries to
focus on their respective core businesses. The purpose of the Merger is to
enable Thermo Electron and Thermo Instrument to acquire all of the outstanding
equity interest in the Company as part of Thermo Electron's overall
reorganization and to provide the Merger Price of $15.00 per Share in cash to
the stockholders of the Company other than Thermo Electron and Thermo Instrument
(the "Public Stockholders"). Following the Merger, Thermo Electron plans to
retain Thermo Optek as part of Thermo Electron's core instrument business.
The reorganization and the Merger reflect a significant change in Thermo
Electron's strategic plan, both in terms of Thermo Electron's business focus and
operating structure.
- Until Thermo Electron adopted the reorganization plan, Thermo Electron
had historically operated a diversified group of businesses, including
the instruments business. If Thermo Electron completes all aspects of the
reorganization, Thermo Electron will focus primarily on a variety of
segments in the instruments business. Some of the businesses that Thermo
Electron currently conducts through Thermo Instrument would be central to
this new focus.
- Thermo Electron has historically pursued a strategy of offering minority
interests in certain of its subsidiaries to the public. Certain of these
subsidiaries, in turn, pursued the same strategy. Thermo Electron's Board
of Directors and management has reevaluated the benefits and detriments
of this corporate structure and concluded that Thermo Electron would
benefit if it reorganized its instrument businesses under a single parent
company without minority interests.
The Merger and the reorganization are part of this change in Thermo Electron's
strategic plan. Thermo Electron is taking these actions at this time because of
a determination by Thermo Electron's Board of Directors and management that
Thermo Electron was not achieving many of the business benefits that it sought
from its prior strategy, Thermo Electron's evaluation of the capital market's
reaction to its former strategy and changes in Thermo Electron's management.
ALTERNATIVES
Thermo Instrument, Thermo Electron and Optek Acquisition believe that
effecting the transaction by way of a short-form merger with Optek Acquisition
under Section 253 of the DGCL is the quickest and most cost effective way for
Thermo Instrument to acquire the outstanding public minority equity interest in
the Company. Thermo Instrument, Thermo Electron and Optek Acquisition considered
and rejected the alternative of a long-form merger because of the cost and delay
of obtaining the approvals of the Company's Board of Directors and of the Public
Stockholders. Thermo Instrument, Thermo Electron and Optek Acquisition also
rejected the alternative of a tender offer as it entailed additional costs and a
subsequent short-form merger would in all likelihood still be required.
REASONS
In determining whether to effect the Merger, the Board of Directors of
Thermo Electron and the Special Committee of the Board of Directors of Thermo
Instrument that was appointed on January 20, 2000 (the "Instrument Special
Committee") considered several factors, including the financial performance and
profitability of the Company and the potential benefits to the Company's
business if the Company were to
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become part of a larger business unit. The Board of Directors of Thermo Electron
and the Instrument Special Committee also considered the following factors:
- the prospect of achieving greater marketing, operating and
administrative efficiency as a result of the Company's operations
being conducted in a more coordinated manner with Thermo Electron's
other instruments subsidiaries;
- the reduction in the amount of public information available to
competitors about the Company's businesses that would result from the
termination of the Company's obligations under the reporting
requirements of the Securities and Exchange Commission (the
"Commission");
- the elimination of additional burdens on management associated with
public reporting and other tasks resulting from the Company's public
company status, including, for example, the dedication of time by and
resources of the Company's management and Board of Directors to
stockholder and analyst inquiries and investor and public relations;
- the decrease in costs, particularly those associated with being a
public company (for example, as a privately-held entity, the Company
would no longer be required to file quarterly, annual or other
periodic reports with the Commission or publish and distribute to its
stockholders annual reports and proxy statements), that the Board of
Directors of Thermo Electron and the Instrument Special Committee
anticipate could result in savings of approximately $450,000 per year,
including fees for an audit by an independent accounting firm and
legal fees;
- the greater flexibility that the Company's management would have to
focus on long-term business goals, as opposed to quarterly earnings,
as a non-reporting company, particularly in light of the potential
volatility in the Company's quarterly earnings; and
- recent public capital market trends affecting small-cap companies,
including perceived lack of interest by institutional investors in
companies with a limited public float.
The Board of Directors of Thermo Electron and the Instrument Special
Committee also considered the advantages and disadvantages of the following
alternatives to acquiring the minority stockholder interest in the Company:
- a sale of their equity interests in the Company; and
- leaving the Company as a majority-owned, public subsidiary.
The first alternative, selling their equity interests in the Company, was
briefly considered. It was not an alternative that was pursued at length, given
that Thermo Electron and Thermo Instrument did not want to sell their equity
interests in the Company, but rather intended to retain the Company as a part of
Thermo Electron's core instruments business.
In the view of the Board of Directors of Thermo Electron and the Instrument
Special Committee, the principal advantage of having the Company as a
majority-owned, public subsidiary of Thermo Instrument was the ability of Thermo
Instrument to invest the cash that would be required to buy the minority
stockholder interest in the Company for other purposes. The disadvantages of
leaving the Company as a majority-owned, public subsidiary which were considered
by the Board of Directors of Thermo Electron and the Instrument Special
Committee included the inability to achieve many of the benefits of taking the
Company private discussed above. The Board of Directors of Thermo Electron and
the Instrument Special Committee concluded that the advantages of leaving the
Company as a majority-owned, public subsidiary of Thermo Instrument were
significantly outweighed by the disadvantages of doing so, and accordingly that
alternative was rejected.
The Board of Directors of Thermo Electron and the Instrument Special
Committee also considered the relatively low volume of trading in the Shares and
considered that the Merger would result in immediate, enhanced liquidity for the
Public Stockholders. The Board of Directors of Thermo Electron and the
Instrument Special Committee considered trends in the price of the Shares in the
past twelve months and
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during the period between the Company's initial public offering and the
announcement of Thermo Instrument's intention to take the Company private.
In addition, the Board of Directors of Thermo Electron considered the fact
that the acquisition by Thermo Instrument of the Public Stockholders' interest
in the Company would advance the goal of its corporate reorganization and
resolved not to object if Thermo Instrument determined to take the Company
private by way of the Merger at a purchase price of $15.00 per Share.
Thermo Instrument and Thermo Electron have determined to effect the Merger
at this time as part of the larger reorganization of Thermo Electron and its
subsidiaries. The Company's stock price was not a significant factor in the
timing of Thermo Instrument's or Thermo Electron's decision to propose the
Merger.
This Rule 13e-3 transaction is structured as a short-form merger under
Section 253 of the DGCL. This form of merger allows the Public Stockholders to
receive cash for their Shares quickly and allows the Company to become a
wholly-owned subsidiary of Thermo Electron and Thermo Instrument without any
action by the Board of Directors of the Company or the Public Stockholders.
EFFECTS
GENERAL. Upon completion of the Merger, Thermo Instrument and Thermo
Electron will have complete control over the conduct of the Company's business
and will have a 100% interest in the net book value and net earnings of the
Company. Once the Merger is completed, the Public Stockholders will no longer be
able to benefit from a sale of the Company to a third party. In addition, Thermo
Instrument and Thermo Electron will receive the benefit of complete control over
any future increases in the value of the Company and will bear the complete risk
of any losses incurred in the operation of the Company and any decrease in the
value of the Company. Thermo Instrument's and Thermo Electron's ownership of the
Company prior to the Merger aggregated approximately 95.2%. Upon completion of
the Merger, Thermo Instrument's and Thermo Electron's interest in the Company's
net book value of $348,344,000 on January 1, 2000 and net earnings of
$39,440,000 for the fiscal year ended January 1, 2000 will increase from
approximately 95.2% to 100% of those amounts.
STOCKHOLDERS. Upon completion of the Merger, the Public Stockholders would
no longer have any interest in, and would not be stockholders of, the Company
and therefore would not participate in the Company's future earnings and
potential growth and would no longer bear the risk of any decreases in the value
of the Company. In addition, the Public Stockholders would not share in any
distribution of proceeds after any sales of businesses of the Company, whether
contemplated at the time of the Merger or thereafter. See Item 6(c) -- "Purposes
of the Transaction and Plans or Proposals -- Plans." All of the Public
Stockholders' other incidents of stock ownership, such as the rights to vote on
certain corporate decisions, to elect directors, to receive distributions upon
the liquidation of the Company and to receive appraisal rights upon certain
mergers or consolidations of the Company (unless such appraisal rights are
perfected in connection with the Merger), as well as the benefit of potential
increases in the value of a Public Stockholder's holdings in the Company based
on any improvements in the Company's future performance, will be extinguished
upon completion of the Merger.
Upon completion of the Merger, the Public Stockholders will also not bear
the risks of potential decreases in the value of their holdings in the Company
based on any downturns in the Company's future performance. Instead, the Public
Stockholders will have liquidity in the form of the Merger Price in place of an
ongoing equity interest in the Company in the form of the Shares. In summary, if
the Merger is completed, the Public Stockholders will have no ongoing rights as
stockholders of the Company (other than statutory appraisal rights in the case
of Public Stockholders who are entitled to and perfect such rights under
Delaware law).
THE SHARES. If the Merger is consummated, public trading of the Shares
will cease. Thermo Instrument and Thermo Electron intend to have the Shares
delisted from the American Stock Exchange ("AMEX") promptly following the
Effective Date. Thermo Instrument and Thermo Electron also intend to deregister
the Shares under the Exchange Act. As a result, the Company will no longer be
required under the federal
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securities laws to file reports with the Commission and will no longer be
subject to the proxy rules under the Exchange Act.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing banks to
extend credit on the collateral of such securities. Following the Merger, the
Shares will no longer constitute "margin securities" for purposes of the margin
regulations of the Federal Reserve Board and will no longer be eligible to serve
as collateral for loans made by banks.
TREATMENT OF THE COMPANY OPTIONS. The Company has outstanding Options to
purchase 2,898,138 Shares. On the Effective Date, each outstanding Option under
the Plans which has not yet vested will be assumed by Thermo Electron and
converted into options to acquire shares of Thermo Electron as provided below.
In the case of vested Options, the holder of the Option will be given the choice
of having such Option assumed by Thermo Electron or receiving cash from Thermo
Instrument in an amount equal to the number of vested Shares multiplied by the
difference between the Merger Price and the exercise price per Share of such
Option. Each Option assumed by Thermo Electron will continue to have, and be
subject to, the same terms and conditions as were applicable to the Option
immediately prior to the Effective Date, except that:
- each Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Thermo
Electron common stock equal to the product of the number of Shares
that were issuable upon exercise of such Option immediately prior to
the Effective Date multiplied by the Exchange Ratio (as defined
below), rounded down to the nearest whole number of shares of Thermo
Electron common stock, and
- the per share exercise price for the shares of Thermo Electron common
stock issuable upon exercise of such assumed Option will be equal to
the quotient determined by dividing the exercise price per Share at
which such Option was exercisable immediately prior to the Effective
Date by the Exchange Ratio, rounded up to the nearest whole cent. The
"Exchange Ratio" is a fraction, the numerator of which is the Merger
Price and the denominator of which is the closing price of Thermo
Electron common stock on the day immediately preceding the Effective
Date as reported on the consolidated transactions tape.
On the Effective Date, each outstanding Option to purchase Shares (each an
"ESPP Stock Option") under the Company's Employees' Stock Purchase Plan (the
"ESPP") will also be assumed by Thermo Electron. Each ESPP Stock Option so
assumed by Thermo Electron will continue to have, and be subject to, the same
terms and conditions as set forth in the ESPP immediately prior to the Effective
Date, except that:
- the assumed ESPP Stock Option shall be exercisable (or will become
exercisable in accordance with its terms) for that number of whole
shares of Thermo Electron common stock equal to the product of the
number of Shares that were issuable upon exercise of such ESPP Stock
Option immediately prior to the Effective Date multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of
Thermo Electron common stock;
- the purchase price per share of Thermo Electron common stock shall be
the lower of (a) 85% of (x) the per Share market value of the Shares on
the grant date of the ESPP Stock Option divided by (y) the Exchange
Ratio, with the resulting price rounded up to the nearest whole cent,
and (b) 85% of the market value of Thermo Electron common stock as of
the exercise date of the ESPP Stock Option; and
- the $25,000 limit under Section 9.2(i) of the ESPP shall be applied by
taking into account Thermo Electron's assumption of the ESPP Stock
Options in accordance with Section 423(b)(8) of the Internal Revenue
Code of 1986, as amended (the "Code"), and applicable regulations
thereunder.
DEFERRED COMPENSATION PLAN FOR DIRECTORS. On the Effective Date, the
Company's deferred compensation plan for directors (the "Deferred Compensation
Plan") will terminate, and the Company will distribute to each participant the
sum in cash equal to the balance of stock units credited to his deferred
compensation account under the Deferred Compensation Plan as of the Effective
Date multiplied by the Merger Price.
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Based on the units accumulated on January 1, 2000, Dr. Stephen R. Levy will
receive $48,484 for his units and Mr. Robert A. McCabe will receive $11,859 for
his units.
THE DEBENTURES. The Company has outstanding $69 million principal amount
of Debentures, which in the aggregate are convertible into 4,947,076 Shares. On
and after the Effective Date, the Debentures will remain outstanding. In
accordance with the terms of the Debentures, the Company will amend the Fiscal
Agency Agreement which governs the Debentures to provide that on and after the
Effective Date the Debentures shall no longer be convertible into Shares and
that on and after the Effective Date until the redemption of the Debentures,
each Debenture shall be convertible only into an amount of cash equal to the
product of the number of Shares into which such Debenture was convertible on the
Effective Date multiplied by the Merger Price. Although the holders of the
Debentures will be entitled to receive the benefit of the Merger Price without
exercising their conversion rights before the Effective Date, it is possible
that some or all of the Debentures will be converted before the Effective Date.
The Company has announced that it will not establish a redemption date for the
Debentures that is sooner than 90 days after the Effective Date.
The aggregate amount of cash that the outstanding Debentures will be
convertible into following the completion of the Merger is $74.2 million,
assuming that no outstanding Debentures are converted into Shares before the
Effective Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. The following is a
general summary of the material U.S. federal income tax consequences of the
Merger to beneficial owners of Shares. This summary is based upon the provisions
of the Code, applicable treasury regulations thereunder, judicial decisions and
current administrative rulings as in effect on the date of this Schedule 13E-3.
The discussion does not address all aspects of U.S. federal income taxation that
may be relevant to particular taxpayers in light of their personal circumstances
or to taxpayers subject to special treatment under the Code (for example, life
insurance companies, foreign corporations, foreign partnerships, foreign estates
or trusts, or individuals who are not citizens or residents of the United States
and beneficial owners whose Shares were acquired pursuant to the exercise of
warrants, employee stock options or otherwise as compensation or upon conversion
of the Debentures) and does not address any aspect of state, local, foreign or
other taxation.
A stockholder whose Shares are converted, pursuant to the Merger, into a
right to receive cash will recognize gain or loss equal to the difference
between (i) the amount of cash that such stockholder receives in the Merger and
(ii) such stockholder's adjusted tax basis in such Shares, assuming that such
stockholder is not deemed to own additional Shares following the Merger pursuant
to constructive ownership rules under Section 318 of the Code. Such gain or loss
will be capital gain or loss, and generally will be long-term capital gain or
loss if at the Effective Date the stockholder's holding period for the Shares is
more than one year. Holders of Shares should be aware that the Paying Agent will
be required in certain cases to withhold and remit to the United States Treasury
31% of amounts payable in the Merger to any stockholder that (i) has provided
either an incorrect tax identification number or no number at all, (ii) is
subject to backup withholding by the Internal Revenue Service for failure to
report the receipt of interest or dividend income properly, or (iii) has failed
to certify to the Paying Agent that such stockholder is not subject to backup
withholding or that such stockholder is an "Exempt Recipient." Backup
withholding is not an additional tax, but rather may be credited against the
taxpayer's tax liability for the year.
In general, cash received by Public Stockholders who exercise statutory
appraisal rights ("Dissenting Stockholders") in respect of appraisal rights will
result in the recognition of gain or loss to the Dissenting Stockholder. Any
such Dissenting Stockholder should consult with its tax advisor for a full
understanding of the tax consequences of the receipt of cash in respect of
appraisal rights pursuant to the Merger.
None of Thermo Instrument, Thermo Electron or the Company expects to
recognize any gain, loss or income by reason of the Merger.
EACH BENEFICIAL OWNER OF SHARES IS URGED TO CONSULT SUCH BENEFICIAL OWNER'S
TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH BENEFICIAL OWNER OF THE
MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
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FAIRNESS OF THE MERGER
FAIRNESS
Because Thermo Instrument and Thermo Electron together currently own a
majority of the Shares, Thermo Electron, Thermo Instrument and Optek Acquisition
are deemed "affiliates" of the Company under Rule 12b-2 of the Exchange Act.
Accordingly, in compliance with Rule 13e-3 under the Exchange Act, the Board of
Directors of Thermo Electron and the Instrument Special Committee have
considered the fairness of the Merger to the Public Stockholders.
The Board of Directors of Thermo Instrument, at a meeting held on January
20, 2000, appointed Richard F. Syron and Polyvios C. Vintiadis, directors of
Thermo Instrument, to act as the Instrument Special Committee with full
authority to authorize and determine the terms of the Merger and to determine
whether the Merger is fair to the Public Stockholders. Effective March 7, 2000,
Dr. Syron resigned from the Board of Directors of Thermo Instrument. Neither Dr.
Syron nor Mr. Vintiadis is an officer or director of the Company or owns Shares
or options to purchase Shares. Dr. Syron is the chief executive officer and the
Chairman of the Board of Directors of Thermo Electron. On January 22, 2000 and
January 29, 2000, the Instrument Special Committee held meetings at which the
proposed plan to acquire the minority stockholder interest in the Company
through the Merger was presented and discussed. On January 29, 2000, the
Instrument Special Committee unanimously resolved to take the Company private by
having Thermo Instrument acquire for cash, through the Merger, all of the Shares
held by the Public Stockholders at a purchase price of $15.00 per Share.
On January 18, 2000 and January 28, 2000, the Board of Directors of Thermo
Electron held special meetings at which Thermo Electron's management presented
the proposal for Thermo Instrument to acquire all of the Shares that Thermo
Electron and its subsidiaries did not already own as part of the proposed
corporate reorganization of Thermo Electron and certain of its subsidiaries. The
Board of Directors of Thermo Electron considered all of the factors relating to
the Merger referred to above under "Purposes, Alternatives, Reasons and Effects
of the Merger -- Reasons" that were considered by the Instrument Special
Committee. The Board of Directors of Thermo Electron also discussed the fact
that the acquisition by Thermo Instrument of the minority stockholder interest
in the Company would advance the goal of Thermo Electron's proposed corporate
reorganization. After consideration of these factors, the members of the Board
of Directors of Thermo Electron, other than those members indicated below who
did not participate in the voting, unanimously resolved that Thermo Electron
would not object if Thermo Instrument determined to take the Company private
through Thermo Instrument's acquisition for cash through the Merger of all of
the Shares held by the Public Stockholders at a purchase price of $15.00 per
Share.
The Board of Directors of Thermo Electron and the Instrument Special
Committee determined that the Merger is fair to the Public Stockholders. Messrs.
George N. Hatsopoulos, John N. Hatsopoulos and Robert McCabe, then members of
the Thermo Electron Board of Directors, were excused from the discussions of the
terms of the Merger and from voting on the Merger because they are or were
directors of the Company or hold Shares or options to purchase Shares. Of the
members of the Thermo Electron Board of Directors entitled to vote on the
Merger, no member of the Board of Directors of Thermo Electron or the Instrument
Special Committee abstained from the votes by which the Board of Directors of
Thermo Electron and the Instrument Special Committee unanimously concluded that
the Merger is fair to the Public Stockholders.
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<PAGE> 13
FACTORS CONSIDERED IN DETERMINING FAIRNESS
In reaching their determinations that the terms of the Merger are fair to
the Public Stockholders, the Board of Directors of Thermo Electron and the
Instrument Special Committee considered the factors set forth in this Section
captioned " -- Fairness of the Merger," which constitute all of the material
factors considered by the Board of Directors of Thermo Electron and the
Instrument Special Committee in making their determinations. The Board of
Directors of Thermo Electron and the Instrument Special Committee determined
that each of the following factors supported their belief that the Merger is
fair to the Public Stockholders:
- Financial analysis. In considering the fairness of the Merger from a
financial point of view to the Company's stockholders, including the
Public Stockholders, the Board of Directors of Thermo Electron and the
Instrument Special Committee reviewed and relied in part upon an
analysis of the ranges of potential values of the Shares that result
from the application of several accepted valuation methodologies. This
financial analysis, including the selection of valuation
methodologies, was prepared by J.P. Morgan Securities Inc. ("J.P.
Morgan") and The Beacon Group Capital Services, LLC ("The Beacon
Group" and together with J.P. Morgan, the "Advisors") to assist the
Board of Directors of Thermo Electron and the Instrument Special
Committee with their evaluation of the Merger. Thermo Electron
retained J.P. Morgan and The Beacon Group as its financial advisors
for the purpose of advising Thermo Electron in connection with its
strategic alternatives, including advising the Board of Directors of
Thermo Electron and the Instrument Special Committee in connection
with the acquisition of the minority interest in the Company. The
financial analyses undertaken by the Advisors included an analysis
based upon public trading multiples, comparable buy-out transactions
and discounted cash flows. The analysis of trading multiples of
companies engaged in businesses which the Advisors judged to be
analogous to the Company's business indicated an estimated range of
equity values for the Shares of approximately $12.00 to $15.75 per
Share. The analysis of other buyout transactions indicated an
estimated range of equity values for the Shares of between $13.75 and
$16.75 per Share. The analysis based upon discounted cash flows
indicated an estimated range of equity values for the Shares of
between $13.50 and $16.50 per Share. The Board of Directors of Thermo
Electron and the Instrument Special Committee considered the
comparable buy-out transactions and discounted cash flow methodologies
used by the Advisors to be analogous to a determination of the
Company's going concern value. See "Special Factors -- Reports,
Opinions, Appraisals and Negotiations -- Preparer and Summary of the
Report, Opinion or Appraisal."
- Information concerning the financial performance, condition, business
operations and prospects of the Company. The Board of Directors of
Thermo Electron and the Instrument Special Committee believed the
Merger Price to be attractive in light of the Company's current
financial performance, profitability and growth prospects. In
addition, the Merger would shift the risk of the future financial
performance of the Company from the Public Stockholders, who do not
have the power to control decisions made as to the Company's business,
entirely to Thermo Electron and Thermo Instrument, who do have the
power to control the Company's business and who have the resources to
manage and bear the risks inherent in the business over the long term.
- The premium reflected in the Merger Price of $15.00 per Share. The
Board of Directors of Thermo Electron and the Instrument Special
Committee considered the current and historical trading prices of the
Shares. The market price of the Shares was $13.50 on June 7, 1996, the
date of the Company's initial public offering, and was $14.0625 on
January 28, 2000, the trading date immediately prior to Thermo
Instrument's announcement of its intention to take the Company
private. The Merger Price represented a premium of approximately 6.67%
over the closing price of $14.0625 on January 28, 2000 and a premium
of approximately 26% over the average closing price of $11.91 for the
30 trading days preceding the announcement. The Merger also would
eliminate the exposure of the Public Stockholders to any future or
continued declines in the price of the Shares. See "Special Factors --
Purposes, Alternatives, Reasons and Effect of the Merger--Effects."
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<PAGE> 14
- The market price and relative lack of liquidity for the Shares and the
liquidity that will be realized by the Public Stockholders from the
Merger. The Board of Directors of Thermo Electron and the Instrument
Special Committee believed that the liquidity that would result from
the Merger would be beneficial to the Public Stockholders because
Thermo Instrument's and Thermo Electron's combined significant
ownership of Shares (1) results in a relatively small public float
that necessarily limits the amount of trading in the Shares and (2)
decreases the likelihood that a proposal to acquire the Shares would
be made by an independent entity without the consent of Thermo
Instrument and Thermo Electron.
- Thermo Electron's and Thermo Instrument's determination to retain
their majority ownership of the Company and not to seek a third-party
buyer for the Company. Thermo Instrument and Thermo Electron intend
to retain their majority holdings in the Company, which foreclosed the
opportunity to consider an alternative transaction with a third party
purchaser of the Company or otherwise provide liquidity to the Public
Stockholders. Accordingly, it is unlikely that finding a third party
buyer for the Company was a realistic option for the Public
Stockholders. Neither Thermo Instrument nor Thermo Electron had
solicited or received an offer for the Company from a third party in
the prior two years.
Procedural Fairness. The Board of Directors of Thermo Electron and the
Instrument Special Committee also determined that the Merger is procedurally
fair to the Public Stockholders. In making such determination, the Board of
Directors of Thermo Electron and the Instrument Special Committee considered the
following factors:
- Outside Advisors. In determining the Merger Price, the Board of
Directors of Thermo Electron and the Instrument Special Committee
relied in part upon an analysis prepared by the Advisors of the ranges
of potential values of the Shares that resulted from the application
of several accepted valuation methodologies. See "Special
Factors -- Reports, Opinions, Appraisals and Negotiations."
- Appraisal Rights. Public Stockholders who believe that the terms of
the Merger are not fair can pursue appraisal rights in the Merger
under state law.
Certain Negative Considerations. The Board of Directors of Thermo Electron
and the Instrument Special Committee also considered the following factors, each
of which they considered negative, in their deliberations concerning the
fairness of the terms of the Merger and its procedural fairness:
- Termination of participation in future growth of the
Company. Following the successful completion of the Merger, the
Public Stockholders would cease to participate in the future earnings
or growth, if any, of the Company or benefit from increases, if any,
in the value of their holdings in the Company.
- Conflicts of Interest. The financial interests of Thermo Electron and
Thermo Instrument are adverse as to the Merger Price to the financial
interests of the Public Stockholders. In addition, officers and
directors of the Company have actual or potential conflicts of
interest in connection with the Merger.
- No Public Stockholder Approval. The Public Stockholders will not have
an opportunity to vote on the Merger.
- No Unaffiliated Representative or Independent Director Approval. The
majority of the members of the Board of Directors of the Company who
are not employees of the Company have not retained an unaffiliated
representative to act solely on behalf of the Public Stockholders for
the purpose of negotiating the terms of the Merger or preparing a
report concerning the fairness of the Merger. In addition, such
majority of the independent members of the Company's Board of
Directors have not approved the Merger.
Other Factors. The Board of Directors of Thermo Electron and the
Instrument Special Committee did not consider the net book value of the Company
as a relevant factor in assessing the Company's value and, accordingly, did not
evaluate the fairness of the Merger Price in relation to the Company's net book
value. The
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Company's net book value at January 1, 2000 was approximately $348 million which
would have yielded a per Share valuation for the Company of $6.83. The Board of
Directors of Thermo Electron and the Instrument Special Committee relied in part
upon valuation methodologies selected by the Advisors for the purpose of their
financial analysis. The Board of Directors of Thermo Electron and the Instrument
Special Committee noted that the Advisors did not employ net book value in their
financial analysis. Moreover, the Board of Directors of Thermo Electron and the
Instrument Special Committee did not believe that an analysis based upon net
book value was appropriate for an instruments business. The Board of Directors
of Thermo Electron and the Instrument Special Committee believed that net book
value is a valuation methodology more typically used in the banking, utilities,
real estate and financial services industries.
The Board of Directors of Thermo Electron and the Instrument Special
Committee also did not consider "shopping" the Company to prospective buyers.
Shopping the Company would not only entail substantial time delays and
allocation of management's time and energy, but would also disrupt and
discourage the Company's employees and create uncertainty among the Company's
customers and suppliers. Furthermore, Thermo Instrument and Thermo Electron do
not intend to sell the Company, but rather intend to continue to operate the
Company as part of Thermo Electron's core instruments business, which precluded
the Board of Directors of the Company from "shopping" the Company. Consequently,
the Board of Directors of Thermo Electron and the Instrument Special Committee
considered but gave little weight to the determination not to "shop" the
Company, in light of there being other methods of valuing the Company available
to them, such as the discounted cash flow information provided to Thermo
Electron by the Advisors, upon which a determination of the fairness of the
Merger Price could be based.
The Board of Directors of Thermo Electron and the Instrument Special
Committee did not consider the Merger Price as compared to any implied
liquidation value because it was not contemplated that the Company be
liquidated, whether or not the Merger was completed. See Item 6(c) -- "Purposes
of the Transaction and Plans or Proposals -- Plans."
Recent Purchases of Shares by Thermo Instrument and Thermo Electron. See
Schedule II for information on purchases of Shares by Thermo Instrument, Thermo
Electron and the Company during the past two years.
Conclusions of the Board of Directors of Thermo Electron and the Instrument
Special Committee. The Board of Directors of Thermo Electron and the Instrument
Special Committee concluded that, given the performance of the Shares between
the Company's initial public offering and the announcement of Thermo
Instrument's intention to take the Company private, the uncertainties
surrounding the Company's future growth prospects and the limited trading market
for the Shares, the Merger would result in a fair treatment of the Public
Stockholders. In determining that the Merger is fair to the Public Stockholders,
the Board of Directors of Thermo Electron and the Instrument Special Committee
considered the above factors as a whole and did not assign specific or relative
weights to them, other than that the Merger Price of $15.00 per Share in cash
was considered the most important factor. Notwithstanding the considerations set
out in this section under the heading "-- Certain Negative Considerations," the
Board of Directors of Thermo Electron and the Instrument Special Committee
believe that the Merger is procedurally fair to the Public Stockholders.
In making the determination as to fairness, the Board of Directors of
Thermo Electron and the Instrument Special Committee also had access to the
projections prepared by the Company's management with respect to the period from
October 3, 1999 through January 1, 2000 and the fiscal year ending December 30,
2000 (the "2000 Projections"). See "-- Reports, Opinions, Appraisals and
Negotiations -- Preparer and Summary of the Report, Opinion or
Appraisal -- Certain Projected Financial Data."
APPROVAL OF SECURITY HOLDERS
Because the Merger is being effected as a short-form merger under Section
253 of the DGCL, it does not require approval by the Company's stockholders
(other than approval by the directors and stockholders of Optek Acquisition).
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UNAFFILIATED REPRESENTATIVE
The majority of the Company's directors who are not employed by the Company
have not retained a representative to act on behalf of the Public Stockholders.
APPROVAL OF DIRECTORS OF THE COMPANY
Because the Merger is being effected as a short-form merger under Section
253 of the DGCL, it does not require approval by the Board of Directors of the
Company.
OTHER OFFERS
No other firm offers have been made in the last two years for (a) any
merger or consolidation of the Company with or into another company; (b) any
sale or transfer of all or any substantial part of the Company's assets; or (c)
any purchase of the Company's securities that would enable the holder to
exercise control of the Company.
REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
PREPARER AND SUMMARY OF THE REPORT, OPINION OR APPRAISAL
Thermo Electron retained J.P. Morgan and The Beacon Group as its exclusive
financial advisors for the purpose of advising Thermo Electron in connection
with its strategic alternatives, including advising Thermo Electron and Thermo
Instrument in connection with the acquisition of the minority interest in the
Company. The Advisors presented an analysis of the ranges of potential values of
the Shares that resulted from the application of several accepted valuation
methodologies to the Board of Directors of Thermo Electron on January 18, 2000
and January 28, 2000 and to the Instrument Special Committee on January 22, 2000
and January 29, 2000. This financial analysis, including the selection of
valuation methodologies, was prepared by the Advisors to assist the Board of
Directors of Thermo Electron and the Instrument Special Committee with their
evaluation of the Merger. At the January 28, 2000 meeting of the Board of
Directors of Thermo Electron and the January 29, 2000 meeting of the Instrument
Special Committee, the Advisors also orally delivered their opinion (the
"Opinion"), subsequently confirmed in a written opinion dated January 29, 2000,
that, as of such date and based upon and subject to the various factors,
assumptions and limitations set forth in their opinion, the consideration of
$15.00 net per Share in cash to be paid pursuant to the Merger was fair from a
financial point of view to Thermo Instrument and Thermo Electron.
THE ADVISORS' FINANCIAL ANALYSIS AND RELATED OPINION WAS PROVIDED TO THE
BOARD OF DIRECTORS OF THERMO ELECTRON AND THE INSTRUMENT SPECIAL COMMITTEE. THE
OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE CONSIDERATION FROM A FINANCIAL
POINT OF VIEW TO THERMO ELECTRON AND TO THERMO INSTRUMENT (AND NOT TO THE PUBLIC
STOCKHOLDERS) AND DOES NOT CONSTITUTE A RECOMMENDATION AS TO WHETHER OR NOT
PUBLIC STOCKHOLDERS SHOULD EXERCISE THEIR APPRAISAL RIGHTS.
The Advisors' Opinion is addressed only to the fairness of the Merger Price
from a financial point of view to Thermo Electron and Thermo Instrument. The
Advisors were not retained to, and were not expected to, render any opinion as
to the fairness of the Merger Price to the Public Stockholders and the Opinion
does not address the fairness of the Merger Price to the Public Stockholders.
Accordingly, Public Stockholders should be aware that Thermo Electron, Thermo
Instrument and the Advisors:
- do not intend for the Advisors to have any liability to the Public
Stockholders in connection with their Opinion as the Opinion does not
address the fairness of the Merger Price to the Public Stockholders, and
- are not authorizing the Public Stockholders to rely upon the Opinion in
evaluating (i) whether the Merger Price is fair to the Public
Stockholders or (ii) whether or not to exercise their statutory right of
appraisal.
If a court were to determine that the Advisors could be held liable to the
Public Stockholders on the basis of their Opinion under the federal securities
laws or state law notwithstanding the express language and scope of
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<PAGE> 17
the Opinion, the terms of the Advisors' engagement and the intention of Thermo
Electron, Thermo Instrument and the Advisors, Thermo Electron and Thermo
Instrument would not be able to release the Advisors from such liability. In
such circumstances, the Advisors may be entitled to be indemnified by Thermo
Electron for any such liability. Any holding by a court that the Advisors are
not liable to the Public Stockholders in connection with their Opinion would not
have any effect on the responsibilities of Thermo Electron and Thermo Instrument
under the federal securities laws.
In conducting their financial analysis and rendering their Opinion, the
Advisors reviewed, among other things:
- the audited financial statements of the Company, Thermo Instrument and
Thermo Electron for the fiscal year ended January 2, 1999;
- the unaudited financial statements of the Company, Thermo Instrument
and Thermo Electron for the period ended October 2, 1999;
- current and historical market prices of the Shares;
- certain publicly available information concerning the business of the
Company and of certain other companies engaged in businesses deemed by
the Advisors to be comparable to those of the Company;
- the reported market prices for securities of certain other companies
deemed by the Advisors to be comparable to the Company;
- publicly available terms of certain transactions involving companies
deemed by the Advisors to be comparable to the Company and the
consideration paid for such companies;
- the terms of other business combinations deemed relevant by the
Advisors;
- the 2000 Projections; and
- certain agreements with respect to outstanding indebtedness or
obligations of the Company, Thermo Instrument and Thermo Electron.
The Advisors also held discussions with certain members of the management
of the Company, Thermo Instrument and Thermo Electron with respect to certain
aspects of the Merger, the past and current business operations of the Company,
the financial condition and future prospects and operations of the Company and
certain other matters believed necessary or appropriate to the Advisors'
inquiry. In addition, the Advisors reviewed such other financial studies and
analyses and considered such other information as the Advisors deemed
appropriate for the purposes of their financial analysis and Opinion. No
limitations were placed upon the scope of the Advisors' investigation or
valuation methodologies by Thermo Instrument or Thermo Electron.
The Advisors relied upon and assumed, without independent verification, the
accuracy and completeness of all information that was publicly available or that
was furnished to, or discussed with, the Advisors by Thermo Instrument, Thermo
Electron and the Company or otherwise reviewed by the Advisors, and the Advisors
have not assumed any responsibility or liability therefor. The Advisors also
assumed that there have been no material changes in the Company's condition,
results of operations, business or prospects since the date of the most recent
financial statements made available to the Advisors. The Advisors have not
conducted, and did not assume any responsibility for conducting, any valuation,
appraisal or physical inspection of any of the Company's assets or liabilities
(contingent or otherwise), nor have any valuations or appraisals been provided
to the Advisors. In relying on the financial analyses, projections and estimates
provided to, or discussed with, the Advisors, the Advisors have assumed that
they have been reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by management as to the expected
future financial performance of the Company.
The 2000 Projections used by the Advisors were prepared by management of
the Company. None of the Company, Thermo Instrument or Thermo Electron publicly
discloses internal management projections of the
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<PAGE> 18
type used by the Advisors in connection with the Advisors' analysis of the
Merger, and such projections were not prepared with a view toward public
disclosure. The 2000 Projections and the additional projections prepared by the
Advisors were based on numerous variables and assumptions that are inherently
uncertain and may be beyond the control of the management of the Company, Thermo
Electron and Thermo Instrument, including, without limitation, factors related
to general economic and competitive conditions and prevailing interest rates.
Accordingly, actual results could vary significantly from those set forth in
such projections. See "-- Certain Projected Financial Data."
The Advisors' financial analysis and Opinion are necessarily based on
economic, market and other conditions as in effect on, and the information made
available to the Advisors as of, the date of their Opinion. Subsequent
developments may affect the financial analysis and the conclusions in the
Opinion, and the Advisors do not have any obligation to update, revise or
reaffirm their financial analysis or Opinion.
In accordance with customary investment banking practice, the Advisors
employed generally accepted valuation methods in conducting their financial
analysis and reaching their Opinion. The following is a summary of the material
financial analyses undertaken by the Advisors with respect to the Company and
presented to the Board of Directors of Thermo Electron and the Instrument
Special Committee:
Public Trading Multiples. Using publicly available information, the
Advisors compared selected financial data of the Company with similar data
for selected publicly traded companies engaged in businesses which the
Advisors judged to be analogous to the Company's business. The companies
selected by the Advisors were BioRad Laboratories, Inc., Varian, Inc. and
PerkinElmer, Inc. These companies were selected, among other reasons,
because they compete in similar industries with fairly similar competitive
dynamics and growth potential. For each comparable company, publicly
available financial performance through the most recent last twelve months
was measured. In addition, the Advisors derived estimates of sales,
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
earnings before interest and taxes ("EBIT") and net income for the year
ending December 31, 2000 for each comparable company from the Institutional
Brokers Estimates System.
The Advisors applied a range of multiples derived from such analysis to the
Company's estimated (based on the 2000 Projections) sales, EBITDA, EBIT and
net income for fiscal years 1999 and 2000, and arrived at an estimated
range of equity values for the Shares of between $12.00 and $15.75 per
Share.
Selected Transaction Analysis. Using publicly available information, the
Advisors examined 16 selected transactions in which companies engaged in
businesses which the Advisors judged to be analogous to the Company's were
acquired within the last four years. Specifically, the Advisors reviewed
the following transactions (indicated as target/acquiror): CEM
Corporation/Investor Group, Environmental Systems Corp./TSI Incorporated,
Instron Corporation/Kirtland Capital Partners, PerkinElmer,
Inc. -- Instrument Division/EG&G Inc., Inframetrics, Inc./FLIR Systems,
Inc., General Scanning Inc./Lumonics Inc., Granville-Phillips Co./Helix
Technology Corporation, Coburn Optical Industries Inc./Gerber Optical,
Applied Intelligent Systems/ElectroScientific Industries, Inc., Tinsley
Laboratories, Inc./ Silicon Valley Group Inc., PerSeptive Biosystems
Inc./Perkin-Elmer Corp., Numar Corp./Halliburton Co., Wyko Corp./Veeco
Instruments, EquiMed Inc.-Opthalmology/Physician Resource Group Inc., TA
Instruments, Inc./Waters Corp. and Met One Inc./Pacific Scientific Co. The
Advisors applied a range of multiples derived from such analysis to the
Company's estimated (based on the 2000 Projections) sales, EBITDA, EBIT and
net income for fiscal year 1999, and arrived at an estimated range of
equity values for the Shares of between $13.75 and $16.75 per Share.
No company or transaction used in the comparable public trading multiple
analysis or the selected transaction analysis is identical to the Company or the
Merger. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the Company and other factors that
could affect the public trading value of the companies to which they are being
compared. In evaluating the comparable companies, the Advisors made judgments
and assumptions with regard to industry performance, general business, economic,
market, and financial conditions and other matters, many of which are beyond the
control of the Company.
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<PAGE> 19
Discounted Cash Flow Analysis. The Advisors conducted a discounted cash
flow analysis for the purpose of determining the fully diluted equity value
per Share. The Advisors calculated the unlevered free cash flows that the
Company is expected to generate during fiscal years 2000 through 2004 based
upon financial projections prepared by the Advisors after discussions with
the management of the Company, Thermo Instrument and Thermo Electron. The
Advisors also calculated a range of terminal asset values of the Company at
the end of the 5-year period ending 2004 by applying a perpetual growth
rate ranging from 2.0% to 3.0% to the unlevered free cash flow of the
Company during the final year of the 5-year period. The unlevered free cash
flows and the range of terminal asset values were then discounted to
present values using a range of discount rates from 9.5% to 10.5%, which
were chosen by the Advisors based upon an analysis of the Company's
weighted average cost of capital. The present value of the unlevered free
cash flows and the range of terminal asset values were then adjusted for
the Company's estimated 1999 fiscal year-end excess cash, option exercise
proceeds and total debt. Based on this analysis, the Advisors calculated an
estimated range of equity values of between $13.50 and $16.50 per Share.
Historical Common Stock Performance. The Advisors conducted a historical
analysis of the trading price of the Shares over the 52-week period prior
to the date of their Opinion. During the 52-week period, based on trading
prices on AMEX, the Company's Shares achieved a high trading price of
$16.875 on January 24, 2000 and a low trading price of $7.625 on October
11, 1999 and October 18, 1999. On January 11, 2000, the closing price of
the Shares was $10.25 and on January 25, 2000 the closing price of the
Shares was $15.375.
The summary set forth above does not purport to be, and is not, a complete
description of the financial analyses or data undertaken or presented by the
Advisors. The summary of the Advisors' Opinion set forth in this Schedule 13E-3
is qualified in its entirety by reference to the full text of the written
Opinion. The full text of the Advisors' written Opinion, which sets forth among
other things the assumptions made, procedures followed, matters considered and
limitations on the scope of the review undertaken by J.P. Morgan and The Beacon
Group in conducting their financial analysis and in rendering their Opinion, is
attached as Exhibit (c) to this Schedule 13E-3. The written Opinion should be
read carefully and in its entirety. A copy of the Advisors' written Opinion will
be made available for inspection and copying at the principal office of Thermo
Electron during its regular business hours upon request from any record holder
of the Shares or a representative of such person designated as such in writing.
Requests to have the Opinion made available should be directed to the Corporate
Secretary of Thermo Electron at the address set forth under Item 3 -- "Identity
and Background of Filing Persons -- Thermo Electron."
The preparation of the financial analysis and the related fairness Opinion
is a complex process and is not necessarily susceptible to partial analysis or
summary description. In arriving at their Opinion, the Advisors considered the
results of all of their analyses as a whole and did not attribute any particular
weight to any analysis or factor considered by them. The Advisors believe that
the summary set forth above and their analyses must be considered as a whole and
that selecting portions thereof, without considering all of their analyses,
could create an incomplete view of the processes underlying their analyses and
Opinion. In addition, the Advisors may have given various analyses and factors
more or less weight than other analyses and factors, and may have deemed various
assumptions more or less probable than other assumptions so that the ranges of
valuation resulting from any particular financial analysis described should not
be taken as the Advisors' view of the actual value of the Company. The Advisors
based their analyses on assumptions that they deemed reasonable, including
assumptions concerning general business and economic conditions and
industry-specific factors. The other principal assumptions upon which the
Advisors based their analyses are set forth above under the description of each
such analysis. The Advisors' analyses are not necessarily indicative of actual
values or actual future results that might be achieved, which values may be
higher or lower than those indicated. Moreover, the Advisors' analyses are not
and do not purport to be appraisals or otherwise reflective of the prices at
which businesses actually could be bought or sold.
As described above, the Advisors' financial analysis and Opinion was only
one of many factors considered by the Board of Directors of Thermo Electron and
the Instrument Special Committee in their determination that the terms of the
Merger are fair to the Public Stockholders and should not be viewed as
determinative of
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<PAGE> 20
the views of the Board of Directors of Thermo Electron and the Instrument
Special Committee with respect to the value of the Company.
J.P. Morgan and The Beacon Group advised the Board of Directors of Thermo
Electron and the Instrument Special Committee in connection with the Merger in
part because the Advisors had been retained to advise Thermo Electron in
connection with the overall reorganization of Thermo Electron and its
subsidiaries. The Board of Directors of Thermo Electron and the Instrument
Special Committee also considered J.P. Morgan's and The Beacon Group's
experience and expertise. J.P. Morgan is an international corporate and
investment bank and The Beacon Group is a nationally recognized private
investment banking firm. As part of their investment banking businesses, J.P.
Morgan and The Beacon Group are regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions, investments for
passive and control purposes, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
J.P. Morgan has advised the Board of Directors of Thermo Electron and the
Instrument Special Committee that, in the ordinary course of its business, it or
its affiliates may actively trade the debt and/or equity securities of the
Company, Thermo Instrument, Thermo Electron and their affiliates for their own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short term position in such securities.
In October 1999, Thermo Electron engaged The Beacon Group as its financial
advisor in connection with Thermo Electron's proposed acquisition of the
outstanding shares held by public stockholders in certain of its subsidiaries.
Thermo Electron paid The Beacon Group $500,000 in fees for services rendered
pursuant to that engagement in connection with the acquisition of the
outstanding publicly-held shares of common stock of ThermoTrex Corporation and
ThermoLase Corporation.
As noted above, J.P. Morgan and The Beacon Group have acted as financial
advisors to Thermo Electron for the purpose of advising Thermo Electron in
connection with its strategic alternatives, including the proposed
reorganization of Thermo Electron and its subsidiaries. As part of the proposed
reorganization, it is contemplated that Thermo Electron will acquire the
publicly-held minority interest in Thermo Instrument and that J.P. Morgan and
The Beacon Group will act as financial advisors to Thermo Electron in connection
with such acquisition.
Pursuant to a letter agreement among Thermo Electron and J.P. Morgan and
The Beacon Group, dated January 17, 2000, Thermo Electron has agreed to pay each
of J.P. Morgan and The Beacon Group a fee of $500,000 for its services in
connection with the Merger. In addition, J.P. Morgan and The Beacon Group will
be reimbursed for expenses incurred in connection with these transactions. The
letter agreement also relates to the overall proposed reorganization of Thermo
Electron and provides for separate fees for services with respect to other
elements of Thermo Electron's reorganization. These other fees include a minimum
retainer for each of J.P. Morgan and The Beacon Group of $1.25 million, and the
engagement letter provides for substantial additional compensation if some or
all of the other elements of Thermo Electron's reorganization are completed.
Thermo Electron has agreed to indemnify J.P. Morgan and The Beacon Group and
their affiliates against certain liabilities, including liabilities under the
federal securities laws, in connection with their engagement.
CERTAIN PROJECTED FINANCIAL DATA.
The Company does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data, cash
flows or balance sheet and financial position information. However, Thermo
Electron made the 2000 Projections available to the Advisors, the Board of
Directors of Thermo Electron and the Instrument Special Committee.
The following summary of the 2000 Projections is included in this Schedule
13E-3 because the 2000 Projections were made available to the Advisors, the
Board of Directors of Thermo Electron and the Instrument Special Committee. The
2000 Projections do not reflect any of the effects of the Merger or other
changes that may in the future be deemed appropriate concerning the Company and
its assets, business, operations, properties, policies, corporate structure,
capitalization and management in light of the circumstances then existing.
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<PAGE> 21
Thermo Instrument and Thermo Electron believe that the assumptions upon which
the 2000 Projections are based were reasonable at the time the 2000 Projections
were prepared, given the information known by management of the Company at such
time.
The 2000 Projections were not prepared with a view toward public disclosure
or compliance with published guidelines of the Commission or the American
Institute of Certified Public Accountants regarding forward-looking information
or generally accepted accounting principles. Neither the Company's independent
auditors, nor any other independent accountants, have compiled, examined or
performed any procedures with respect to the prospective financial information
contained in the 2000 Projections nor have they expressed any opinion or given
any form of assurance on such information or its achievability, and they assume
no responsibility for, and disclaim any association with, such prospective
financial information. Furthermore, the 2000 Projections necessarily make
numerous assumptions, many of which are beyond the control of Thermo Instrument
and Thermo Electron and may prove not to have been, or may no longer be,
accurate. Additionally, this information, except as otherwise indicated, does
not reflect revised prospects for the Company's businesses, changes in general
business and economic conditions, or any other transaction or event that has
occurred or that may occur and that was not anticipated at the time such
information was prepared. Accordingly, such information is not necessarily
indicative of current values or future performance, which may be significantly
more favorable or less favorable than as set forth below, and should not be
regarded as a representation that they will be achieved.
THE 2000 PROJECTIONS ARE NOT GUARANTEES OF PERFORMANCE. THEY INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE FINANCIAL RESULTS AND STOCKHOLDER
VALUE OF THE COMPANY MAY MATERIALLY DIFFER FROM THOSE EXPRESSED IN THE 2000
PROJECTIONS. MANY OF THE FACTORS THAT WILL DETERMINE THESE RESULTS AND VALUES
ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT. STOCKHOLDERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE 2000 PROJECTIONS. THERE CAN BE NO
ASSURANCE THAT THE 2000 PROJECTIONS WILL BE REALIZED OR THAT THE COMPANY'S
FUTURE FINANCIAL RESULTS WILL NOT MATERIALLY VARY FROM THE 2000 PROJECTIONS. THE
COMPANY DOES NOT INTEND TO UPDATE OR REVISE THE 2000 PROJECTIONS.
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<PAGE> 22
The following are the 2000 Projections:
2000 PROJECTIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PROJECTED Q4 PROJECTED PROJECTED
1999 1999 2000
------------ --------- ---------
<S> <C> <C> <C>
SELECTED INCOME STATEMENT DATA:
Revenues.................................................... $120,603 $448,489 $471,344
-------- -------- --------
Costs and Operating Expenses:
Cost of Revenues.......................................... 62,626 238,140 249,640
Selling, general, and administrative expenses............. 29,345 113,158 118,830
Research and development expenses......................... 7,358 28,016 28,297
Restructuring costs....................................... 183 1,281 39
-------- -------- --------
99,512 380,595 396,806
-------- -------- --------
Operating Income............................................ 21,091 67,894 74,538
Interest Income............................................. 670 2,551 2,181
Interest Expense............................................ (1,272) (5,017) (4,299)
Other Expense............................................... -- (37) --
-------- -------- --------
Income Before Provision for Income Taxes.................... 20,489 65,391 72,420
Provision for Income Taxes.................................. 8,384 26,289 29,795
-------- -------- --------
Net Income.................................................. $ 12,105 $ 39,102 $ 42,625
======== ======== ========
SELECTED BALANCE SHEET DATA:
Accounts Receivable, Net.................................... $100,143 $100,143 $104,488
Inventories................................................. 65,560 65,560 61,858
Prepaid Income Taxes and Other Current Assets............... 19,006 19,006 18,832
-------- -------- --------
Total Current Assets Excluding Cash and Investments......... 184,709 184,709 185,178
Property, Plant and Equipment:
Balance, beginning of period.............................. 59,395 62,894 60,153
Additions................................................. 2,837 10,034 11,052
Depreciation expense...................................... (2,210) (9,016) (10,469)
Sales..................................................... 131 (3,759) 1
-------- -------- --------
Balance, end of period.................................... 60,153 60,153 60,737
Cost in Excess of Net Assets of Acquired Companies.......... 226,597 226,597 219,044
</TABLE>
TRANSACTION STATEMENT
ITEM 1. SUMMARY TERM SHEET
See the section above captioned "Summary Term Sheet."
ITEM 2. SUBJECT COMPANY INFORMATION
(a) Name and Address. The name of the Company is Thermo Optek Corporation.
The principal executive offices of the Company are located at 8 East Forge
Parkway, Franklin, Massachusetts 02038, and its telephone number is (781)
622-1000.
The Company is subject to the disclosure requirements of the Exchange Act
and in accordance therewith is required to file reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Such reports, proxy statements and other
information are available for inspection at the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549 and should also be
available for inspection at the regional offices of the Commission located at 7
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be
obtained at prescribed rates from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site
that contains
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<PAGE> 23
reports, proxy and information statements and other information regarding
registrations that file electronically with the Commission at
http://www.sec.gov. In addition, certain material filed by the Company may also
be available for inspection at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006-1881.
(b) Securities. The exact title of the class of equity securities subject
to the Merger is: Common Stock, par value $0.01 per share, of the Company. As of
January 28, 2000, there were 51,055,798 Shares outstanding and Options to
purchase 2,898,138 Shares outstanding. The Company also has outstanding $69
million principal amount of Debentures, which in the aggregate are currently
convertible into 4,947,076 Shares at a conversion price of $13.9446 per Share.
(c) Trading Market and Price. The Shares are listed on the AMEX under the
symbol "TOC." The following table sets forth the high and low sales prices per
Share for each of the indicated periods on the AMEX, as reported in publicly
available sources.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year Ended January 2, 1999:
First Quarter..................................... $17 5/8 $12 1/2
Second Quarter.................................... 18 5/16 13 3/4
Third Quarter..................................... 14 5/8 7 3/16
Fourth Quarter.................................... 11 3/8 7 5/8
Fiscal Year Ended January 1, 2000:
First Quarter..................................... 12 3/4 8 1/8
Second Quarter.................................... 10 7/16 8
Third Quarter..................................... 10 3/8 7 7/8
Fourth Quarter.................................... 12 3/8 7 5/8
Fiscal Year Ending December 30, 2000:
First Quarter..................................... 16 7/8 10 1/8
Second Quarter (through April 13, 2000)........... 14 7/8 14 5/8
</TABLE>
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THEIR SHARES.
(d) Dividends. The Company has never declared or paid any dividends in
respect of the Shares.
(e) Prior Public Offerings. Neither the Company nor any affiliate filing
this Schedule 13E-3 has made an underwritten public offering of the Shares for
cash during the past three years that was registered under the Securities Act of
1933 or exempt from registration thereunder pursuant to Regulation A.
(f) Prior Stock Purchases. Neither the Company nor any affiliate of the
Company has purchased any Shares during the past two years, except as described
in Schedule II.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS
OPTEK ACQUISITION
(a) Name and Address. Optek Acquisition is a newly organized corporation
that will be owned by Thermo Electron and Thermo Instrument and was formed for
the purpose of effecting the Merger. Optek Acquisition's principal executive
offices are located at 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts
02454-9046, and its telephone number is (781) 622-1000.
(b) Business Background of Entity. Optek Acquisition has been formed for
the sole purpose of merging with and into the Company. Optek Acquisition is
organized under the laws of the State of Delaware.
(c) Business and Background of Natural Persons. The name, business
address, position with Optek Acquisition, principal occupation, five-year
employment history and citizenship of each of the directors and executive
officers of Optek Acquisition, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth on Schedule I hereto. During the last
five years, none of Optek Acquisition or, to the best knowledge of Optek
Acquisition, any of the persons listed in Schedule I to this Schedule 13E-3 has
been convicted in a criminal
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<PAGE> 24
proceeding (excluding traffic violations or similar misdemeanors). During the
last five years, none of Optek Acquisition or, to the best knowledge of Optek
Acquisition, any of the persons listed in Schedule I to this Schedule 13E-3 was
a party to any civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
THERMO INSTRUMENT
(a) Name and Address. Thermo Instrument, a Delaware corporation, owns a
majority of the outstanding Shares and is a majority-owned subsidiary of Thermo
Electron. The principal executive offices of Thermo Instrument are located at 81
Wyman Street, P.O. Box 9046, Waltham, Massachusetts, 02454-9046, and its
telephone number is (781) 622-1000.
(b) Business Background of Entity. Thermo Instrument is a global leader in
the development, manufacture and sale of measurement and detection instruments
used in virtually every industry to monitor, collect, and analyze data that
provides knowledge for the user. For example, Thermo Instrument's powerful
analysis technologies help researchers sift through data to make the discoveries
that will fight disease or prolong life; allow manufacturers to fabricate
ever-smaller components required to increase the speed and quality of
communications; or monitor and control industrial processes on-line to ensure
that critical quality standards are met efficiently and safely.
Thermo Instrument's common stock is listed on the AMEX under the symbol
"THI." Thermo Instrument is subject to the disclosure requirements of the
Exchange Act and in accordance therewith is required to file reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information are available for inspection and copying at prescribed rates at the
offices of the Commission and the American Stock Exchange as described above in
Item 2(a) -- "Subject Company Information -- Name and Address."
(c) Business and Background of Natural Persons. The name, business
address, position with Thermo Instrument, principal occupation, five-year
employment history and citizenship of each of the directors and executive
officers of Thermo Instrument, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth in Schedule I hereto. During the last
five years, none of Thermo Instrument or, to the best knowledge of Thermo
Instrument, any of the persons listed in Schedule I to this Schedule 13E-3 has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, none of Thermo Instrument or, to the
best knowledge of Thermo Instrument, any of the persons listed in Schedule I to
this Schedule 13E-3 was a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
THERMO ELECTRON
(a) Name and Address. Thermo Electron, a Delaware corporation, owns the
majority of the outstanding capital stock of Thermo Instrument, the majority
owner of the Company, and directly owns a minority interest in the Company. The
principal executive offices of Thermo Electron are located at 81 Wyman Street,
P.O. Box 9046, Waltham, Massachusetts 02454-9046, and its telephone number is
(781) 622-1000.
(b) Business Background of Entity. Thermo Electron is a global leader in
the development, manufacture and sale of measurement and detection instruments
used in virtually every industry to monitor, collect, and analyze data that
provides knowledge for the user. For example, Thermo Electron's powerful
analysis technologies help researchers sift through data to make the discoveries
that will fight disease or prolong life; allow manufacturers to fabricate
ever-smaller components required to increase the speed and quality of
communications; or monitor and control industrial processes on-line to ensure
that critical quality standards are met efficiently and safely. Thermo Electron
also operates electric power generation facilities.
24
<PAGE> 25
Thermo Electron's common stock is listed on the New York Stock Exchange
under the symbol "TMO." Thermo Electron is subject to the disclosure
requirements of the Exchange Act and in accordance therewith is required to file
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Such reports, proxy
statements and other information are available for inspection and copying at
prescribed rates at the offices of the Commission as described above in Item
2(a) -- "Subject Company Information -- Name and Address" and at the office of
the New York Stock Exchange, 30 Broad Street, New York, New York 10005.
(c) Business and Background of Natural Persons. The name, business
address, position with Thermo Electron, principal occupation, five-year
employment history and citizenship of each of the directors and executive
officers of Thermo Electron, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth in Schedule I hereto. During the last
five years, none of Thermo Electron or, to the best knowledge of Thermo
Electron, any of the persons listed in Schedule I to this Schedule 13E-3 has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, none of Thermo Electron or, to the
best knowledge of Thermo Electron, any of the persons listed in Schedule I to
this Schedule 13E-3 was a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
ITEM 4. TERMS OF THE TRANSACTION
(a) Material Terms. Prior to the Effective Date, Thermo Instrument plans
to contribute 47,563,564 Shares and Thermo Electron plans to contribute
1,028,860 Shares to Optek Acquisition, representing in the aggregate
approximately 95.2% of the outstanding Shares on January 28, 2000, in exchange
for common stock of Optek Acquisition. As a result of such contributions, on the
Effective Date, Thermo Instrument expects to own 98% of the outstanding shares
of common stock of Optek Acquisition and Thermo Electron expects to own 2% of
the outstanding shares of common stock of Optek Acquisition, assuming no Options
are exercised and no Debentures are converted. On the Effective Date, Thermo
Instrument and Thermo Electron will cause Optek Acquisition to merge with and
into the Company pursuant to Section 253 of the DGCL, with the Company to be the
surviving corporation. To so merge, the Board of Directors and the stockholders
of Optek Acquisition will approve the Merger and Optek Acquisition will file a
Certificate of Ownership and Merger with the Secretary of State of Delaware.
Upon the Effective Date:
- each Share issued and outstanding immediately prior to the Effective
Date (other than Shares owned by Optek Acquisition or the Company and
Shares held by Public Stockholders, if any, who properly exercise
their dissenters' statutory appraisal rights under the DGCL) will be
cancelled and extinguished and be converted into and become a right to
receive the Merger Price; and
- each share of Optek Acquisition's capital stock issued and outstanding
immediately prior to the Effective Date shall be converted into one
validly issued, fully paid and nonassessable share of the common stock
of the Company as the surviving corporation of the Merger. As a result
of the Merger, Thermo Instrument and Thermo Electron will own all of
the outstanding equity interests in the Company.
Under the DGCL, because Optek Acquisition will hold at least 90% of the
outstanding Shares, Optek Acquisition will have the power to effect the Merger
without a vote of the Company's Board of Directors or the Public Stockholders.
Optek Acquisition intends to take all necessary and appropriate action to cause
the Merger to become effective on the Effective Date, without a meeting or
consent of the Company's Board of Directors or the Public Stockholders. The
Merger Price will be $15.00 in cash per Share. The reasons for the Merger are
set out in "Special Factors -- Purposes, Alternatives, Reasons and Effects of
the Merger -- Purposes," "-- Alternatives" and "-- Reasons." Certain federal
income tax consequences of the Merger are set out in "Special
Factors -- Purposes, Alternatives, Reasons and Effects of the
Merger -- Effects -- Certain Federal Income Tax Consequences of the Merger."
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<PAGE> 26
Upon completion of the Merger, in order to receive the cash Merger Price of
$15.00 per Share, each stockholder or a duly authorized representative must (1)
deliver a Letter of Transmittal, appropriately completed and executed, to the
Shareholder Services Department of the Paying Agent, at 40 Wall Street, 46th
Floor, New York, New York, 10005, and (2) surrender such Shares by delivering
the stock certificate or certificates that, prior to the Merger, had evidenced
such Shares to the Paying Agent, as set forth in a Notice of Merger and
Appraisal Rights and Letter of Transmittal which will be mailed to stockholders
of record on the Effective Date. Stockholders are encouraged to read the Notice
of Merger and Appraisal Rights and Letter of Transmittal carefully when
received. Delivery of an executed Letter of Transmittal shall constitute a
waiver of statutory appraisal rights.
The Merger will be accounted for as the acquisition of a minority interest
by Thermo Instrument, using the purchase method of accounting.
For federal income tax purposes, the receipt of the cash consideration by
holders of the Shares pursuant to the Merger will be a taxable sale of the
holders' Shares. See "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects -- Certain Federal Income Tax Consequences of
the Merger."
(c) Different Terms. Stockholders of the Company will be treated as
described in Item 4(a) "--Terms of the Transaction -- Material Terms."
(d) Appraisal Rights. Under the DGCL, record holders of the Shares who
follow the procedures set forth in Section 262 will be entitled to have their
Shares appraised by the Court of Chancery of the State of Delaware and to
receive payment of the fair value of such shares together with a fair rate of
interest, if any, as determined by such court. The fair value as determined by
the Delaware court is exclusive of any element of value arising from the
accomplishment or expectation of the Merger. The following is a summary of
certain of the provisions of Section 262 of the DGCL and is qualified in its
entirety by reference to the full text of Section 262, a copy of which is
attached to this Schedule 13E-3 as Exhibit (f).
Notice of the Effective Date and the availability of appraisal rights under
Section 262 (the "Merger Notice") will be mailed to record holders of the Shares
and should be reviewed. Any Public Stockholder entitled to appraisal rights will
have the right, within 20 days after the date of mailing of the Merger Notice,
to demand in writing from the Company an appraisal of his or her Shares. Such
demand will be sufficient if it reasonably informs the Company of the identity
of the stockholder and that the stockholder intends to demand an appraisal of
the fair value of his or her Shares. Failure to make such a timely demand would
foreclose a stockholder's right to appraisal.
Only a holder of record of Shares is entitled to assert appraisal rights
for the Shares registered in that holder's name. A demand for appraisal should
be executed by or on behalf of the holder of record fully and correctly, as the
holder's name appears on the stock certificates. Holders of Shares who hold
their shares in brokerage accounts or other nominee forms and wish to exercise
appraisal rights should consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such nominee. All written
demands for appraisal of Shares should be sent or delivered to Sandra L.
Lambert, Secretary, Thermo Optek Corporation, c/o Thermo Electron Corporation,
81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-9046.
If the Shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the Shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be executed by or on
behalf of all joint owners. An authorized agent, including one or more joint
owners, may execute a demand for appraisal on behalf of a holder of record;
however, the agent must identify the record owner or owners and expressly
disclose the fact that, in executing the demand, the agent is agent for such
owner or owners.
A record holder such as a broker holding Shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the Shares held
for one or more beneficial owners while not exercising such rights with respect
to the Shares held for other beneficial owners; in such case, the written demand
should set forth the number of shares as to which appraisal is sought and where
no number of shares is expressly mentioned the demand will be presumed to cover
all Shares held in the name of the record owner.
26
<PAGE> 27
Within 10 calendar days after the Effective Date, the Company, as the
surviving corporation in the Merger, must send a notice as to the effectiveness
of the Merger. Within 120 calendar days after the Effective Date, the Company,
or any stockholder entitled to appraisal rights under Section 262 and who has
complied with the foregoing procedures, may file a petition in the Delaware
Court of Chancery demanding a determination of the fair value of the Shares of
all such stockholders. The Company is not under any obligation, and has no
present intention, to file a petition with respect to the appraisal of the fair
value of the Shares. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to perfect their appraisal rights within the time
prescribed in Section 262.
Within 120 calendar days after the Effective Date, any stockholder of
record who has complied with the requirements for exercise of appraisal rights
will be entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of Shares with respect to which demands for
appraisal have been received and the aggregate number of holders of such Shares.
Such statement must be mailed within 10 calendar days after a written request
therefor has been received by the Company or within 10 calendar days after the
expiration of the period for the delivery of demands for appraisal, whichever is
later.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the stockholders
entitled to appraisal rights and will appraise the fair value of the Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. Holders considering seeking
appraisal should be aware that the fair value of their Shares as determined
under Section 262 could be more than, the same as or less than the amount per
Share that they would otherwise receive if they did not seek appraisal of their
Shares. The Delaware Supreme Court has stated that "proof of value by any
techniques or methods that are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in the
appraisal proceedings. In addition, Delaware courts have decided that the
statutory appraisal remedy, depending on factual circumstances, may or may not
be a dissenter's exclusive remedy. The Court will also determine the amount of
interest, if any, to be paid upon the amounts to be received by persons whose
Shares have been appraised. The costs of the action may be determined by the
Court and taxed upon the parties as the Court deems equitable. The Court may
also order that all or a portion of the expenses incurred by any holder of
Shares in connection with an appraisal, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts used in the
appraisal proceeding, be charged pro rata against the value of all the Shares
entitled to appraisal.
The Court may require stockholders who have demanded an appraisal and who
hold Shares represented by certificates to submit their certificates to the
Court for notation thereon of the pendency of the appraisal proceedings. If any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Date, be entitled to vote the Shares
subject to such demand for any purpose or be entitled to the payment of
dividends or other distributions on those shares (except dividends or other
distributions payable to holders of record of Shares as of a date prior to the
Effective Date).
If any stockholder who demands appraisal of Shares under Section 262 fails
to perfect, or effectively withdraws or loses, the right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the right
to receive the Merger Price, without interest. A stockholder will fail to
perfect, or effectively lose, the right to appraisal if no petition is filed
within 120 calendar days after the Effective Date. A stockholder may withdraw a
demand for appraisal by delivering to the Company a written withdrawal of the
demand for appraisal and acceptance of the Merger Price, except that any such
attempt to withdraw made more than 60 calendar days after the Effective Date
will require the written approval of the Company. Once a petition for appraisal
has been filed, such appraisal proceeding may not be dismissed as to any
stockholder without the approval of the Court.
For federal income tax purposes, stockholders who receive cash for their
Shares upon exercise of their statutory right of dissent will realize taxable
gain or loss. See "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects -- Certain Federal Income Tax Consequences of
the Merger."
27
<PAGE> 28
The foregoing summary does not purport to be a complete statement of the
procedures to be followed by stockholders desiring to exercise their appraisal
rights and is qualified in its entirety by express reference to the Section 262
of the DGCL, the full text of which is attached hereto as Exhibit (f).
STOCKHOLDERS ARE URGED TO READ EXHIBIT (F) IN ITS ENTIRETY SINCE FAILURE TO
COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF
APPRAISAL RIGHTS.
(e) Provision for Unaffiliated Security Holders. None of Thermo Electron,
Thermo Instrument or Optek Acquisition intends to grant unaffiliated
stockholders special access to the Company's records in connection with the
Merger. None of Thermo Electron, Thermo Instrument or Optek Acquisition intends
to obtain counsel to or appraisal services for unaffiliated stockholders of the
Company.
(f) Eligibility for Listing or Trading. Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(a)(1) Transactions. The following are all transactions that occurred
during the past two years between (i) Optek Acquisition, Thermo Instrument or
Thermo Electron or, to the best knowledge of Optek Acquisition, Thermo
Instrument and Thermo Electron, any of the persons listed on Schedule I and (ii)
the Company or any of its affiliates that are not natural persons where the
aggregate value of such transactions is more than one percent of the Company's
consolidated revenues for (1) the fiscal year in which the transaction occurred
or (2), with respect to the current year, the past portion of the current fiscal
year.
The Company has entered into a Tax Allocation Agreement with Thermo
Electron which outlines the terms under which the Company will be included in
Thermo Electron's consolidated Federal and state income tax returns. Under
current law, the Company will be included in such tax returns so long as Thermo
Electron owns at least 80% of the outstanding common stock of Thermo Instrument
and Thermo Instrument owns at least 80% of the outstanding Shares. In years in
which the Company has taxable income, it will pay to Thermo Electron amounts
comparable to the taxes the Company would have paid if it had filed its own
separate company tax returns. If Thermo Instrument's equity ownership of the
Company were to drop below 80%, the Company would file its own tax returns. In
1998 and 1999, the Company was assessed $11,500,000 and $11,353,000,
respectively, by Thermo Electron under the Tax Allocation Agreement. As of
January 1, 2000, the Company owed Thermo Electron $7,678,000 for amounts due
under the Tax Allocation Agreement.
On March 29, 1996, Thermo Instrument acquired a substantial portion of the
businesses constituting the Scientific Instruments Division of Fisons plc
("Fisons"), a wholly owned subsidiary of Rhone-Poulenc Rorer Inc. In August
1998, the Company agreed to acquire Gebruder Haake GmbH ("Haake"), a business
formerly part of Fisons, from Thermo Instrument for 2,075,342 Shares, valued at
$23,814,000 at the time of the transaction, and the assumption of $10,354,000 of
debt. The price was approved by the Boards of Directors of the Company and
Thermo Instrument.
To partially fund several acquisitions, in August 1997 the Company borrowed
$40,000,000 from Thermo Electron pursuant to a promissory note due August 1998
and bearing interest at the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter. This note was repaid in August
1998. The interest rate on the note at the time it was repaid was 5.73%.
The Company purchases and sells products and/or services in the ordinary
course of business with other subsidiaries of Thermo Electron. In 1998 and 1999,
the Company sold a total of $9,425,000 and $9,287,000, respectively, of products
and/or services to Thermo Electron subsidiaries.
The human resources committee of the Company's Board of Directors (the
"Committee") established a stock holding policy that required executive officers
of the Company to acquire and hold a minimum number of Shares. In order to
assist the executive officers in complying with the policy, the Committee also
adopted a stock holding assistance plan under which the Company could make
interest-free loans to the executive officers, to enable them to purchase Shares
in the open market. The stock holding policy and the stock holding assistance
plan were both subsequently amended to apply only to the chief executive
officer. In 1996, Earl R. Lewis, then the Company's Chief Executive Officer,
received a loan in the principal amount of $194,029 under this plan to purchase
15,000 Shares, of which amount of $155,223 was outstanding as of January 1,
2000. The
28
<PAGE> 29
loans are repayable upon the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise determined by the Committee.
(2) During the past two years, there have been no transactions between
Optek Acquisition, Thermo Instrument or Thermo Electron or, to the best
knowledge of Optek Acquisition, Thermo Instrument and Thermo Electron, any of
the persons listed on Schedule I hereto and any executive officer, director or
affiliate of Company that is a natural person where the aggregate value of the
transaction or series of similar transactions with such person exceeded $60,000.
(b) Significant Corporate Events. During the past two years there have
been no negotiations, transactions or material contacts between (i) Optek
Acquisition, Thermo Instrument or Thermo Electron or, to the best knowledge of
Optek Acquisition, Thermo Instrument and Thermo Electron, any of the persons
listed on Schedule I hereto and (ii) except as described above, the Company or
its affiliates concerning any merger, consolidation, acquisition, tender offer
for or other acquisition of any class of the Company's securities, election of
the Company's directors or sale or other transfer of a material amount of assets
of the Company, other than votes cast by Thermo Instrument for the election of
directors of the Company in the normal course.
(c) Negotiation or Contacts. During the past two years there have been no
negotiations or material contacts concerning the matters referred to in
paragraph (b) of this Item between (i) any affiliates of the Company or (ii) the
Company or any of its affiliates and any person not affiliated with the Company
who would have a direct interest in such matters.
(e) Agreements Involving the Subject Company's Securities. There are no
agreements, arrangements or understandings, whether or not legally enforceable,
between Optek Acquisition, Thermo Instrument or Thermo Electron or, to the best
knowledge of Optek Acquisition, Thermo Instrument and Thermo Electron, any of
the persons on Schedule I hereto and any other person with respect to any
securities of the Company.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
(b) Use of Securities Acquired. The securities acquired will be cancelled.
(c) Plans. It is currently expected that, following the consummation of
the Merger, the business and operations of the Company will, except as set forth
in this Schedule 13E-3, be conducted by the Company substantially as they are
currently being conducted. Thermo Instrument intends to continue to evaluate the
business and operations of the Company with a view to maximizing the Company's
potential. As such, it will take such actions as it deems appropriate under the
circumstances and market conditions then existing. Thermo Instrument intends to
cause the Company to terminate the registration of the Shares under Section
12(b) of the Exchange Act following the Merger, which would result in the
suspension of the Company's duty to file reports pursuant to the Exchange Act.
Thermo Instrument also intends to cause the Company to delist its Shares from
the AMEX following the Merger. For additional information see Item 4 -- "Terms
of the Transaction" and "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects."
Following Thermo Electron's reorganization, Thermo Electron plans to retain
the Company as part of Thermo Electron's core measurement and detection
instruments business. In connection with the reorganization of Thermo Electron
and its subsidiaries, Thermo Electron intends to evaluate ways in which its
instruments businesses, including the Company's business, can be more
effectively integrated and operated. Thermo Instrument and Thermo Electron do
not currently have any commitment or agreement for, and are not currently
negotiating, the sales of any of the Company's businesses. Additionally, Thermo
Electron and Thermo Instrument do not currently contemplate any material change
in the composition of the Company's current management, except that Thermo
Instrument intends to appoint a Board of Directors comprised solely of members
of the Company's and Thermo Instrument's management after the Merger.
In connection with its reorganization, Thermo Electron intends to acquire
all of the outstanding common stock of Thermo Instrument that it does not
currently own. If such transaction is completed, the Company will become an
indirect wholly-owned subsidiary of Thermo Electron.
29
<PAGE> 30
Except as otherwise described in this Schedule 13E-3, the Company has not,
and Optek Acquisition, Thermo Instrument and Thermo Electron have not, as of the
date of this Schedule 13E-3, approved any specific plans or proposals for:
- any extraordinary corporate transaction involving the Company after
the completion of the Merger;
- any sale or transfer of a material amount of assets currently held by
the Company after the completion of the Merger;
- any change in the Board of Directors or management of the Company;
- any material change in the Company's dividend rate or policy; or
- any other material change in the Company's corporate structure or
business.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
See the section above captioned "Special Factors -- Purposes, Alternatives,
Reasons and Effects of the Merger."
ITEM 8. FAIRNESS OF THE TRANSACTION
See the section above captioned "Special Factors -- Fairness of the
Merger."
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
See the section above captioned "Special Factors -- Reports, Opinions,
Appraisals and Negotiations."
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) Source of Funds. The total amount of funds required by Optek
Acquisition to pay the Merger Price to all Public Stockholders, and to pay
related fees and expenses, is estimated to be approximately $38.3 million. Optek
Acquisition will obtain the funds to pay the Merger Price to all Public
Stockholders from Thermo Instrument as a loan or a capital contribution. Thermo
Instrument will borrow funds from Thermo Electron to fund this loan or capital
contribution. Thermo Electron has committed to provide any required financing to
Thermo Instrument. The loan will be evidenced by an unsecured note due September
1, 2000 that will bear interest at a floating rate equal to the 30-day Dealer
Commercial Paper Rate ("DCP Rate") plus 150 basis points adjusted at the
beginning of each fiscal month of Thermo Instrument. The interest rate of the
note will be reduced to the DCP Rate plus 50 basis points to the extent of any
funds invested by Thermo Instrument's majority-owned subsidiaries in Thermo
Electron's cash management arrangement. Because Thermo Electron has committed to
provide the necessary financing for the Merger, Thermo Instrument has no
alternative financing arrangements. Thermo Instrument does not have any
arrangement with respect to the repayment of such loan.
(b) Conditions. There are no conditions to the financing of the merger.
(c) Expenses. The Advisors are acting as financial advisors to Thermo
Instrument and Thermo Electron in connection with the Merger. For a discussion
of the Advisor's fees, see "Special Factors -- Reports, Opinions, Appraisals and
Negotiations -- Preparer and Summary of the Report, Opinion or Appraisal."
The Paying Agent will receive reasonable and customary compensation for its
services and will be reimbursed for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities and expenses in connection
with the Merger, including certain liabilities under U.S. federal securities
laws.
None of Optek Acquisition, Thermo Instrument or Thermo Electron will pay
any fees or commissions to any broker or dealer in connection with the Merger.
Brokers, dealers, commercial banks and trust companies
30
<PAGE> 31
will, upon request, be reimbursed by Optek Acquisition for customary mailing and
handling expenses incurred by them in forwarding materials to their customers.
The following is an estimate of fees and expenses to be incurred by Optek
Acquisition in connection with the Merger:
<TABLE>
<S> <C>
Financial Advisors....................................... $1,000,000
Legal.................................................... 250,000
Printing................................................. 20,000
Filing................................................... 17,742
Paying Agent (including mailing)......................... 7,500
Miscellaneous............................................ 4,758
----------
$1,300,000
==========
</TABLE>
The Company will not pay any of the fees and expenses to be incurred by
Optek Acquisition in connection with the Merger.
(d) Borrowed Funds. See Item 4(a) -- "Source of Funds."
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) Securities Ownership. On the Effective Date, immediately prior to the
Merger, Optek Acquisition is expected to be the owner of 48,592,424 Shares,
representing 95.2% of the outstanding Shares. Because Thermo Instrument and
Thermo Electron own 100% of the equity interest in Optek Acquisition, and
because Thermo Electron has a controlling equity interest in Thermo Instrument,
each may also be deemed to be the beneficial owners of these Shares. In
addition, Thermo Electron owns $8.5 million principal amount of Debentures,
which are currently convertible into 606,328 Shares. Details regarding the
ownership of Shares by the persons named on Schedule I to this Schedule 13E-3
are set out thereon.
(b) Securities Transactions. Thermo Instrument and Thermo Electron will
contribute the Shares held by them to Optek Acquisition prior to the Effective
Date. None of the Shares referred to in the preceding paragraph were acquired in
the past 60 days.
ITEM 12. THE SOLICITATION OR RECOMMENDATION
Not applicable.
ITEM 13. FINANCIAL STATEMENTS
(a) Financial Information. The audited consolidated financial statements
of the Company as of and for the fiscal years ended January 1, 2000 and January
2, 1999 are incorporated herein by reference to the Consolidated Financial
Statements of the Company included as Exhibit 13 to the Company's Annual Report
on Form 10-K for its fiscal year ended January 1, 2000 (the "Form 10-K").
The Form 10-K is available for inspection at the Commission's public
reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549 and
should also be available for inspection at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies may be obtained at prescribed rates from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. In addition, the Form
10-K may also be available for inspection at the offices of the American Stock
Exchange, 86 Trinity Place, New York, NY 10006-1881.
(b) Pro Forma Information. Not applicable.
31
<PAGE> 32
(c) Summary Information. Set forth below is certain selected consolidated
financial information with respect to the Company and its subsidiaries excerpted
or derived from the audited consolidated financial statements contained in the
Form 10-K. More comprehensive financial information is included in the Form 10-K
and in other documents filed by the Company with the Commission, and the
following financial information is qualified in its entirety by reference to the
Form 10-K and other documents and all of the financial information (including
any related notes) contained therein or incorporated therein by reference.
The selected financial information of the Company presented below as of and
for the fiscal years ended January 1, 2000, January 2, 1999, January 3, 1998,
December 28, 1996 and December 30, 1995 has been derived from the Company's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
1999(a) 1998(b) 1997(c) 1996(d) 1995
------- ------- ------- ------- ----
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................................................... $453,870 $447,301 $512,464 $446,583 $212,152
Income Before Extraordinary Item........................... 39,440 33,583 41,310 27,263 16,009
Net Income................................................. 39,440 33,863 41,310 27,263 16,009
Earnings per Share:
Basic.................................................... .77 .66 .82 .56 .36
Diluted.................................................. .74 .63 .77 .55 .36
Weighted Average Shares:
Basic.................................................... 51,112 51,639 50,669 48,564 45,000
Diluted.................................................. 56,145 57,420 57,261 55,130 45,000
BALANCE SHEET DATA (AT END OF PERIOD):
Working Capital............................................ $ 73,780 $ 97,791 $ 67,592 $ 40,150 $144,541
Total Assets............................................... 568,129 561,668 580,536 616,316 432,882
Long-term Obligations...................................... 84 71,761 81,400 96,778 101,079
Shareholders' Investment................................... 348,344 327,051 288,293 266,139 220,988
OTHER DATA:
Book Value per Share....................................... $ 6.83 $ 6.37 $ 5.58
Cash Dividends............................................. -- -- -- -- --
Ratio of Earnings to Fixed Charges (e)..................... 8.67x 6.45x 6.29x
</TABLE>
- ---------------
(a) Includes restructuring and unusual costs of $1.0 million, the repurchase of
$2.5 million principal amount of 5% subordinated convertible debentures due
October 2000 and the reclassification as short-term obligations of the 5%
subordinated convertible debentures due October 2000.
(b) Includes restructuring and related costs of $10.1 million and an
extraordinary gain of $0.3 million, net of taxes, related to the Company's
purchase of $6.7 million principal amount of 5% subordinated convertible
debentures.
(c) Includes the acquisition of Spectronic Instruments, Inc., effective March
1997 and the distribution of Thermo Vision Corporation in December 1997.
(d) Includes the acquisitions of Gebruder Haake GmbH, VG Systems, VG Elemental,
and ARL Applied Research Laboratories, effective March 1996, and the net
proceeds from the Company's initial public offering in June and July 1996.
(e) For purposes of computing the ratios of earnings to fixed charges,
"earnings" represent income before taxes and minority interest, plus fixed
charges. "Fixed charges" consist of interest on indebtedness and
amortization of debt expense and one-third of rental expense, which is
deemed to be the interest component of such rental expense.
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<PAGE> 33
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) Solicitations or Recommendations. There are no persons or classes of
persons who are directly or indirectly employed, retained, or to be compensated
to make solicitations or recommendations in connection with the Merger.
(b) Employees and Corporate Assets. No employees or corporate assets of
the Company will be used by Optek Acquisition, Thermo Instrument or Thermo
Electron in connection with the Merger.
ITEM 15. ADDITIONAL INFORMATION.
None
ITEM 16. EXHIBITS
(a)* Letter from Earl R. Lewis, Chief Executive Officer and President of
Thermo Instrument
(b)* Letter Agreement dated March 1, 2000 between Thermo Electron and
Thermo Instrument
(c)* Opinion of J.P. Morgan Securities Inc. and The Beacon Group Capital
Services, LLC
(f)* Delaware General Corporation Law Section 262
- ---------------
* previously filed
33
<PAGE> 34
SIGNATURES
After due inquiry and to the best of his knowledge and belief, each of the
undersigned certifies that the information set forth in this Amendment No. 2 to
Schedule 13E-3/A is true, complete and correct.
<TABLE>
<S> <C>
THERMO INSTRUMENT SYSTEMS INC.
Dated: April 20, 2000 By: /s/ Earl R. Lewis
-----------------------------------------------------
Name: Earl R. Lewis
Title: President and Chief Executive Officer
OPTEK ACQUISITION INC.
Dated: April 20, 2000 By: /s/ Earl R. Lewis
-----------------------------------------------------
Name: Earl R. Lewis
Title: President
THERMO ELECTRON CORPORATION
Dated: April 20, 2000 By: /s/ Theo Melas-Kyriazi
-----------------------------------------------------
Name: Theo Melas-Kyriazi
Title: Vice President and Chief Financial Officer
</TABLE>
34
<PAGE> 35
SCHEDULE I
THERMO ELECTRON
The name, business address, position with Thermo Electron, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of Thermo Electron, together with the
names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted, are set forth
below. Unless otherwise indicated, each occupation set forth refers to Thermo
Electron, each individual is a United States citizen and each individual's
business address is 81 Wyman Street, Waltham, Massachusetts 02454. Unless
otherwise indicated, to the knowledge of Thermo Electron, Thermo Instrument and
Optek Acquisition, no director or executive officer of Thermo Electron
beneficially owns any Shares (or rights to acquire Shares). Unless otherwise
indicated, to the knowledge of Thermo Electron, Thermo Instrument and Optek
Acquisition, no director or executive officer of Thermo Electron has been
convicted in a criminal proceeding during the last five years (excluding traffic
violations or similar misdemeanors) and no director or executive officer of
Thermo Electron was a party to any judicial or administrative proceeding during
the last five years (except for any matters that were dismissed without sanction
or settlement) that resulted in a judgement, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws. Mr. John N. Hatsopoulos resigned from the Board of Directors of
Thermo Electron effective February 21, 2000. Dr. George N. Hatsopoulos retired
from the Board of Directors effective March 31, 2000.
SAMUEL W. BODMAN................... Mr. Bodman, 61, has been a director of
Thermo Electron since May 1999. Since
1988, Mr. Bodman has served as the
chairman and chief executive officer of
Cabot Corporation, a manufacturer of
specialty chemicals and materials located
at 75 State Street, Boston, MA 02109. Mr.
Bodman is also a director of Cabot
Corporation, John Hancock Financial
Services, Inc., Security Capital Group
Incorporated and Westvaco Corporation.
PETER O. CRISP..................... Mr. Crisp, 67, has been a director of
Thermo Electron since 1974. Mr. Crisp was
a general partner of Venrock Associates,
a venture capital investment firm located
at 30 Rockefeller Plaza, New York, NY
10112, for more than five years until his
retirement in September 1997. He has been
the vice chairman of Rockefeller
Financial Services, Inc. since December
1997. Mr. Crisp is also a director of
American Superconductor Corporation,
Evans & Sutherland Computer Corporation,
Thermedics Inc., ThermoTrex Corporation
and United States Trust Corporation.
ELIAS P. GYFTOPOULOS............... Dr. Gyftopoulos, 72, has been a director
of Thermo Electron since 1976. Dr.
Gyftopoulos is Professor Emeritus of the
Massachusetts Institute of Technology,
where he was the Ford Professor of
Mechanical Engineering and of Nuclear
Engineering for more than 20 years until
his retirement in 1996. Dr. Gyftopoulos
is also a director of Thermo BioAnalysis
Corporation, Thermo Cardiosystems Inc.,
ThermoLase Corporation, ThermoRetec
Corporation and Trex Medical Corporation.
FRANK JUNGERS...................... Mr. Jungers, 73, has been a director of
Thermo Electron since 1978. Mr. Jungers
has been a consultant on business and
energy matters since 1977. His business
address is
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<PAGE> 36
822 N.W. Murray Boulevard, Suite 242,
Portland, OR 97229. Mr. Jungers is also a
director of The AES Corporation,
Donaldson, Lufkin & Jenrette, Inc.,
Statia Terminals Group N.V., Thermo
Ecotek Corporation and ThermoQuest
Corporation.
ROBERT A. MCCABE................... Mr. McCabe, 65, has been a director of
Thermo Electron since 1962. He has been
the chairman of Pilot Capital Corporation
located at 444 Madison Avenue, Suite
2103, New York, NY 10022, which is
engaged in private investments, since
1998. Mr. McCabe was the president of
Pilot Capital Corporation from 1987 to
1998. Mr. McCabe is also a director of
Atlantic Bank & Trust Company, Burns
International Services Corporation,
Church & Dwight Company and Thermo Optek
Corporation.
HUTHAM S. OLAYAN................... Ms. Olayan, 46, has been a director of
Thermo Electron since 1987. She has
served since 1995 as president and a
director of Olayan America Corporation, a
member of the Olayan Group, and as
president and a director of Competrol
Real Estate Limited, another member of
the Olayan Group, from 1986 until its
merger into Olayan America Corporation in
1997. The surviving company which is
located at 505 Park Avenue, Suite 1100,
New York, NY 10022, is engaged in private
investments, including real estate, and
advisory services. Ms. Olayan is also a
director of Trex Medical Corporation. Ms.
Olayan is a citizen of Saudi Arabia.
ROBERT W. O'LEARY.................. Mr. O'Leary, 56, has been a director of
Thermo Electron since June 1998. He has
been the president and chairman of
Premier, Inc., a strategic alliance of
not-for-profit health care and hospital
systems located at 12225 El Camino Real,
San Diego, CA 92130, since 1995.
RICHARD F. SYRON................... Dr. Syron, 56, has been a director of
Thermo Electron since September 1997, its
president and chief executive officer
since June 1999 and chairman of the board
since January 2000. From April 1994 until
May 1999, Dr. Syron was the chairman and
chief executive officer of the American
Stock Exchange Inc. located at 86 Trinity
Place, New York, NY 10006-1881. Dr. Syron
is also a director of Dreyfus
Corporation, John Hancock Financial
Services, Inc., and Thermo Fibertek Inc.
ROGER D. WELLINGTON................ Mr. Wellington, 73, has been a director
of Thermo Electron since 1986. Mr.
Wellington serves as the president and
chief executive officer of Wellington
Consultants, Inc. and Wellington
Associates Inc., international business
consulting firms he founded in 1994 and
1989, respectively, each of which is
located at P.O. Box 8186, 5555 Gulf of
Mexico Drive, Unit 302, Longboat Key, FL
34228. Mr. Wellington is also a director
of Photoelectron Corporation and Thermo
Fibergen Inc.
36
<PAGE> 37
BRIAN D. HOLT...................... Mr. Holt, 51, became the chief operating
officer, energy and environment, of
Thermo Electron in September 1998. Mr.
Holt has been the president and chief
executive officer of Thermo Ecotek
Corporation, a majority-owned subsidiary
of Thermo Electron located at 245 Winter
Street, Waltham, MA 02451, that is
involved in clean-power resources, clean
fuels, and naturally derived products for
protecting crops since February 1994.
From March 1996 to September 1998, he was
a vice president of Thermo Electron. Mr.
Holt is also a director of The Randers
Killam Group, Inc., Thermo Ecotek
Corporation, ThermoRetec Corporation and
Thermo TerraTech Inc.
JOHN T. KEISER..................... Mr. Keiser, 64, became chief operating
officer, biomedical, of Thermo Electron
in September 1998 and was a vice
president from April 1997 until his
promotion. Mr. Keiser has been the
president and chief executive officer of
Thermedics Inc., a manufacturer of
biomedical products, product
quality-assurance systems and security
devices, since March 1998 and December
1998, respectively, and served as a
senior vice president of Thermedics Inc.
from 1994 until his promotion to
president. He has also been the president
of Thermo Electron's wholly owned
biomedical group, a manufacturer of
medical equipment and instruments, since
1994. Mr. Keiser is a director of Metrika
Systems Corporation, Thermedics Inc.,
Thermo Cardiosystems Inc., ThermoLase
Corporation, ThermoTrex Corporation and
Trex Medical Corporation.
EARL R. LEWIS...................... Mr. Lewis, 56, became chief operating
officer, measurement and detection, of
Thermo Electron in September 1998, and
served as senior vice president of Thermo
Electron from June 1998 to September 1998
and vice president from September 1996 to
June 1998. Mr. Lewis has been president
and chief executive officer of Thermo
Instrument Systems Inc., a manufacturer
of measurement and detection instruments,
since March 1997 and January 1998,
respectively, and was chief operating
officer from January 1996 to January
1998. Prior to that time, he was
executive vice president of Thermo
Instrument Systems Inc. from January 1996
to March 1997 and senior vice president
from January 1994 to January 1996. Mr.
Lewis served as chief executive officer
of Thermo Optek Corporation, a
majority-owned subsidiary of Thermo
Instrument Systems Inc. and a
manufacturer of analytical instruments
that measure energy and light for
purposes of materials analysis,
characterization and preparation, from
its inception in August 1995 to January
1998. Mr. Lewis has been President of
Optek Acquisition since March 2000. Mr.
Lewis is a director of FLIR Systems Inc.,
Metrika Systems Corporation, SpectRx
Inc., Spectra-Physics Lasers, Inc.,
Thermo BioAnalysis Corporation, Thermo
Instrument Systems Inc., Thermo Optek
Corporation and ThermoQuest Corporation.
37
<PAGE> 38
THEO MELAS-KYRIAZI................. Mr. Melas-Kyriazi, 40, has been a vice
president, of Thermo Electron since March
1998 and its chief financial officer
since January 1999. Prior to his
appointment as a vice president of Thermo
Electron, Mr. Melas-Kyriazi served as
president and chief executive officer of
ThermoSpectra Corporation, a subsidiary
of Thermo Instrument that develops,
manufactures, and markets precision
imaging, inspection, measurement, and
temperature-control instrumentation, from
its inception in August 1994 until March
1998. He is a director of ThermoRetec
Corporation. Mr. Melas-Kyriazi is a
citizen of Greece.
WILLIAM A. RAINVILLE............... Mr. Rainville, 58, became chief operating
officer, recycling and resource recovery,
of Thermo Electron in September 1998. Mr.
Rainville was a senior vice president of
Thermo Electron from March 1993 to
September 1998, and a vice president of
Thermo Electron from 1986 to 1993. He has
been president and chief executive
officer of Thermo Fibertek Inc., a
majority-owned subsidiary of Thermo
Electron located at 245 Winter Street,
Waltham, MA 02451 that develops and
manufactures equipment and products for
the papermaking and paper-recycling
industries, since its inception in 1991.
Mr. Rainville is also a director of
Thermo Ecotek Corporation, Thermo
Fibergen Inc., Thermo Fibertek Inc.,
ThermoRetec Corporation and Thermo
TerraTech Inc.
Stock Ownership. The following table sets forth the beneficial ownership
of common stock of the Company, as well as the common stock of Thermo Instrument
and Thermo Electron, as of January 31, 2000, with respect to each director and
executive officer of Thermo Electron. No director or executive officer of Thermo
Electron beneficially owns any shares of capital stock of Optek Acquisition. The
directors and executive officers of Thermo Electron disclaim beneficial
ownership of the shares of common stock beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
THERMO THERMO
ELECTRON INSTRUMENT THERMO OPTEK
NAME(1) CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
- ------- -------------- --------------- --------------
<S> <C> <C> <C>
Samuel W. Bodman..................................... 27,599 0 0
Peter O. Crisp....................................... 121,767 3,009 0
Elias P. Gyftopoulos................................. 91,399 88,842 0
Brian D. Holt........................................ 322,941 999 6,000
Frank Jungers........................................ 171,021 26,412 0
John T. Keiser....................................... 331,636 155,211 0
Earl R. Lewis........................................ 215,477 436,499 252,000
Robert A. McCabe..................................... 66,326 46,846 70,961
Theo Melas-Kyriazi................................... 458,532 182,715 40,000
Hutham S. Olayan..................................... 49,568 3,009 0
Robert W. O'Leary.................................... 43,830 666 0
William A. Rainville................................. 361,499 19,065 15,000
Richard F. Syron..................................... 1,074,006 0 0
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
THERMO THERMO
ELECTRON INSTRUMENT THERMO OPTEK
NAME(1) CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
- ------- -------------- --------------- --------------
<S> <C> <C> <C>
Roger D. Wellington.................................. 55,795 6,759 0
All directors and current executive officers as a
group (14 persons)................................. 3,391,396 970,032 383,961
</TABLE>
- ---------------
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) Shares of the Common Stock of Thermo Electron beneficially owned by Mr.
Bodman, Mr. Crisp, Dr. Gyftopoulos, Mr. Holt, Mr. Jungers, Mr. Keiser, Mr.
Lewis, Mr. McCabe, Mr. Melas-Kyriazi, Ms. Olayan, Mr. O'Leary, Mr.
Rainville, Dr. Syron, Mr. Wellington and all directors and current executive
officers as a group include 26,000, 25,596, 27,442, 284,948, 24,673,
263,230, 212,278, 27,442, 384,361, 27,442, 27,000, 294,630, 1,011,000,
24,673 and 2,660,715 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 2000
through the exercise of stock options. Shares beneficially owned by Mr.
Melas-Kyriazi and all directors and current executive officers as a group
include 1,071 shares allocated to Mr. Melas-Kyriazi's account maintained
pursuant to the Thermo Electron's employee stock ownership plan (the
"ESOP"). Shares beneficially owned by Mr. Bodman, Mr. Crisp, Dr.
Gyftopoulos, Mr. Jungers, Mr. McCabe, Ms. Olayan, Mr. O'Leary, Dr. Syron,
Mr. Wellington and all directors and current executive officers as a group
include 1,599, 49,277, 1,378, 80,427, 34,725, 19,876, 3,830, 2,506, 26,342
and 219,960 shares, respectively, allocated to accounts maintained pursuant
to Thermo Electron's deferred compensation plan for directors. Shares
beneficially owned by Ms. Olayan do not include 6,150,000 shares owned by
Crescent Holding GmbH, a member of the Olayan Group. Crescent Holding GmbH
is indirectly controlled by Suliman S. Olayan, Ms. Olayan's father. Ms.
Olayan disclaims beneficial ownership of the shares owned by Crescent
Holding GmbH. No director or current executive officer beneficially owned
more than 1% of the Thermo Electron common stock outstanding as of such
date; all directors and current executive officers as a group beneficially
owned 2.16% of the Thermo Electron common stock outstanding as of January
31, 2000.
(3) Shares of the common stock of Thermo Instrument beneficially owned by Mr.
Crisp, Dr. Gyftopoulos, Mr. Holt, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr.
McCabe, Mr. Melas-Kyriazi, Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr.
Wellington and all directors and current executive officers as a group
include 3,009, 40,586, 999, 11,443, 71,311, 409,081, 7,925, 163,687, 3,009,
666, 19,065, 3,009 and 733,790 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January 31,
2000 through the exercise of stock options. Shares beneficially owned by Mr.
Melas-Kyriazi and all directors and current executive officers as a group
include 468 shares allocated to Mr. Melas-Kyriazi's account maintained
pursuant to the ESOP. Shares beneficially owned by Mr. Jungers, Mr. McCabe
and all directors and current executive officers as a group include 13,563,
8,908 and 22,471 shares, respectively, allocated to their respective
accounts maintained pursuant to Thermo Instrument's deferred compensation
plan for directors. Shares beneficially owned by Mr. Lewis include 2,987
shares held by his spouse. No director or current executive officer
beneficially owned more than 1% of the Thermo Instrument common stock
outstanding as of January 31, 2000; all directors and current executive
officers as a group beneficially owned less than 1% of the Thermo Instrument
common stock outstanding as of January 31, 2000.
(4) Shares of the common stock of Thermo Optek beneficially owned by Mr. Holt,
Mr. Lewis, Mr. McCabe, Mr. Melas-Kyriazi, Mr. Rainville and all directors
and current executive officers as a group include 6,000, 225,000, 45,000,
40,000, 15,000 and 331,000 shares, respectively, that such person or members
of the group have the right to acquire within 60 days of January 31, 2000,
through the exercise of stock options. Shares beneficially owned by Mr.
Lewis include 2,500 shares held by his spouse. Shares beneficially owned by
Mr. McCabe include 5,000 shares held by a trust of which he and members of
his family are trustees, 7,171 shares issuable upon conversion of $100,000
in principal amount of the 5% convertible
39
<PAGE> 40
subordinated debentures due 2000 issued by Thermo Optek and 790 shares
allocated to Mr. McCabe's account maintained pursuant to the Deferred
Compensation Plan. No director or current executive officer beneficially
owned more than 1% of the Thermo Optek common stock outstanding as of
January 31, 2000; all directors and current executive officers as a group
beneficially owned less than 1% of the Thermo Optek common stock outstanding
as of January 31, 2000.
THERMO INSTRUMENT
The name, business address, position with Thermo Instrument, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of Thermo Instrument, together with the
names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted, are set forth
below. Unless otherwise indicated, each occupation set forth refers to Thermo
Instrument, each individual is a United States citizen and each individual's
business address is 81 Wyman Street, Waltham, Massachusetts 02454. Unless
otherwise indicated, to the knowledge of Thermo Electron, Thermo Instrument and
Optek Acquisition, no director or executive officer of Thermo Instrument
beneficially owns any Shares (or rights to acquire Shares). Unless otherwise
indicated, to the knowledge of Thermo Electron, Thermo Instrument and Optek
Acquisition, no director or executive officer of Thermo Instrument has been
convicted in a criminal proceeding during the last five years (excluding traffic
violations or similar misdemeanors) and no director or executive officer of
Thermo Instrument was a party to any judicial or administrative proceeding
during the last five years (except for any matters that were dismissed without
sanction or settlement) that resulted in a judgement, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws. Arvin H. Smith, John N. Hatsopoulos and
Richard F. Syron resigned from the Board of Directors of Thermo Instrument
effective February 15, 2000, February 21, 2000 and March 7, 2000, respectively.
George N. Hatsopoulos retired from the Board of Directors of Thermo Instrument
effective March 31, 2000.
EARL R. LEWIS....................... Mr. Lewis, 56, has been a director and
the chief executive officer of Thermo
Instrument since January 1998, and has
been president of Thermo Instrument
since March 1997. He was chief
operating officer of Thermo Instrument
from January 1996 to January 1998.
Prior to that time, he was executive
vice president of Thermo Instrument
from January 1996 to March 1997 and
senior vice president from January 1994
to January 1996. Mr. Lewis has been the
chief operating officer, measurement
and detection, of Thermo Electron since
September 1998. Prior to his
appointment as chief operating officer,
Mr. Lewis served as senior vice
president of Thermo Electron from June
1998 to September 1998 and vice
president from September 1996 to June
1998. Mr. Lewis served as chief
executive officer of Thermo Optek from
its inception in August 1995 to January
1998. Mr. Lewis has been President of
Optek Acquisition since March 2000. Mr.
Lewis is a director of FLIR Systems
Inc., Metrika Systems Corporation,
SpectRx Inc., Spectra-Physics Lasers,
Inc., Thermo BioAnalysis Corporation,
Thermo Optek and ThermoQuest
Corporation.
POLYVIOS C. VINTIADIS............... Mr. Vintiadis, 64, has been a director
of Thermo Instrument since July 1993.
Mr. Vintiadis has been the chairman and
chief executive officer of Towermarc
40
<PAGE> 41
Corporation, a real estate development
company located at Two Sound View
Drive, Greenwich, CT 06830, since 1984.
Mr. Vintiadis is also a director of
Spectra-Physics Lasers, Inc. and Thermo
TerraTech Inc.
RICHARD W.K. CHAPMAN................ Dr. Chapman, 54, has been senior vice
president of Thermo Instrument since
July 1998 and was a vice president of
Thermo Instrument from 1992 until July
1998. He has been the chief executive
officer, president and a director of
ThermoQuest Corporation, a majority
owned subsidiary of Thermo Instrument
since its inception in June 1995.
ThermoQuest Corporation develops and
distributes mass spectrometers, liquid
chromatographs, gas chromatographs, and
multi-instrument combinations of these
products for the pharmaceutical,
environmental, and industrial
marketplaces and is located at 2215
Grand Avenue Parkway, Austin, TX
78728-3812.
DENIS A. HELM....................... Mr. Helm, 61, has been executive vice
president of Thermo Instrument since
January 1999, and was a senior vice
president from 1994 to 1998. From 1981
to 1998, Mr. Helm also served as
president of Thermo Instrument's Thermo
Environmental Instruments Inc.
subsidiary, a manufacturer of
instruments and systems for detecting
and monitoring environmental
pollutants. Mr. Helm also served as
chief executive officer of Metrika
Systems Corporation, a majority-owned
subsidiary of Thermo Instrument from
November 1996 until February 1998. Mr.
Helm's business address is 8 East Forge
Parkway, Franklin, MA 02038. Mr. Helm
is also a director of Metrika Systems
Corporation.
BARRY S. HOWE....................... Mr. Howe, 44, has been a vice president
of Thermo Instrument since 1994. He has
been president and chief executive
officer of ThermoSpectra Corporation, a
subsidiary of Thermo Instrument that
develops, manufactures, and markets
precision imaging, inspection,
measurement, and temperature-control
instrumentation, since March 1998 and
was appointed president, chief
executive officer and a director of
Thermo Optek Corporation, a
majority-owned subsidiary of Thermo
Instrument in October 1999. Thermo
Optek is a manufacturer of analytical
instruments that measure energy and
light for purposes of materials
analysis, characterization and
preparation. Mr. Howe also served as
president and chief executive officer
of Thermo BioAnalysis Corporation from
February 1995 to March 1998. Mr. Howe's
business address is 8 East Forge
Parkway, Franklin, MA 02038.
THEO MELAS-KYRIAZI.................. Mr. Melas-Kyriazi, 40, has been the
chief financial officer of Thermo
Instrument since January 1999. He has
been a vice president of Thermo
Electron since
41
<PAGE> 42
March 1998 and its chief financial
officer since January 1999. Prior to
his appointment as a vice president at
Thermo Electron, Mr. Melas-Kyriazi
served as president and chief executive
officer of ThermoSpectra Corporation, a
subsidiary of Thermo Instrument that
develops, manufactures, and markets
precision imaging, inspection,
measurement, and temperature-control
instrumentation, from its inception
until March 1998. He is a director of
ThermoRetec Corporation. Mr.
Melas-Kyriazi is a citizen of Greece.
Stock Ownership. The following table sets forth the beneficial ownership
of common stock of the Company, as well as the common stock of Thermo Instrument
and Thermo Electron, as of January 31, 2000, with respect to each director and
executive officer of Thermo Instrument. No director or executive officer of
Thermo Instrument beneficially owns any shares of capital stock of Optek
Acquisition. While certain directors and executive officers of Thermo Instrument
are also directors and executive officers of Thermo Electron or its subsidiaries
other than the Purchaser, all such persons disclaim beneficial ownership of the
shares of common stock beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
THERMO THERMO THERMO
INSTRUMENT ELECTRON OPTEK
NAME(1) SYSTEMS INC.(2) CORPORATION(3) CORPORATION(4)
- ------- ---------------- -------------- --------------
<S> <C> <C> <C>
Richard W.K. Chapman................................. 225,530 79,801 15,500
Denis A. Helm........................................ 278,638 167,163 15,200
Barry S. Howe........................................ 303,290 71,655 25,000
Earl R. Lewis........................................ 436,499 215,477 252,000
Theo Melas-Kyriazi................................... 182,715 458,532 40,000
Polyvios C. Vintiadis................................ 17,597 2,500 0
All directors and current executive officers as a
group (6 persons).................................. 1,444,269 995,128 347,700
</TABLE>
- ---------------
(1) Except as reflected in the footnotes to this table, shares of the common
stock beneficially owned consist of shares owned by the indicated person or
by that person for the benefit of minor children, and all share ownership
includes sole voting and investment power.
(2) Shares of the Thermo Instrument common stock beneficially owned by Dr.
Chapman, Mr. Helm, Mr. Howe, Mr. Lewis, Mr. Melas-Kyriazi, Mr. Vintiadis and
all directors and current executive officers as a group include 196,249,
216,250, 273,156, 409,081, 163,687, 11,745 and 1,270,168 shares,
respectively, that such person or group had the right to acquire within 60
days of January 31, 2000, through the exercise of stock options. Shares
beneficially owned by Mr. Melas-Kyriazi and all directors and current
executive officers as a group include 468 shares, allocated through January
31, 2000, to Mr. Melas-Kyriazi's account maintained pursuant to Thermo
Electron's employee stock ownership plan (the "ESOP"). Shares beneficially
owned by Mr. Vintiadis and all directors and current executive officers as a
group include 5,590 shares, allocated through January 1, 2000, to Mr.
Vintiadis' account maintained under Thermo Instrument's deferred
compensation plan for directors. Shares beneficially owned by Mr. Helm
include a total of 5,264 shares held in custodial accounts for the benefit
of four minor children. Shares beneficially owned by Mr. Howe include 374
shares held in custodial accounts for the benefit of his minor children.
Shares beneficially owned by Mr. Lewis include 2,987 shares held by his
spouse. No director or current executive officer beneficially owned more
than 1% of the Thermo Instrument common stock outstanding as of January 31,
2000; all directors and current executive officers as a group beneficially
owned 1.21% of the Thermo Instrument common stock outstanding as of such
date.
(3) Shares of the common stock of Thermo Electron beneficially owned by Dr.
Chapman, Mr. Helm, Mr. Howe, Mr. Lewis, Mr. Melas-Kyriazi and all directors
and current executive officers as a group include 76,428, 99,816, 64,141,
212,278, 384,361 and 837,024 shares, respectively, that such person or group
had the right to acquire within 60 days of January 31, 2000, through the
exercise of stock options.
42
<PAGE> 43
Shares beneficially owned by Mr. Melas-Kyriazi and all directors and current
executive officers as a group include 1,071 shares, allocated through
January 31, 2000, to Mr. Melas-Kyriazi's account maintained pursuant to the
ESOP. Shares beneficially owned by Mr. Helm include 8,100 shares held in
custodial accounts for the benefit of his minor children. Shares
beneficially owned by Mr. Howe include 200 shares held in custodial accounts
for the benefit of his minor children. No director or current executive
officer beneficially owned more than 1% of such Thermo Electron common stock
outstanding as of January 31, 2000; all directors and current executive
officers as a group beneficially owned less than 1% of the Thermo Electron
common stock outstanding as of such date.
(4) Shares of the common stock of Thermo Optek beneficially owned by Dr.
Chapman, Mr. Helm, Mr. Howe, Mr. Lewis, Mr. Melas-Kyriazi and all directors
and current executive officers as a group include 15,000, 15,000, 15,000,
225,000, 40,000 and 310,000 shares, respectively, that such person or group
had the right to acquire within 60 days of January 31, 2000, through the
exercise of stock options. Shares beneficially owned by Mr. Lewis include
2,500 shares held by his spouse. No director or current executive officer
beneficially owned more than 1% of the common stock of Thermo Optek
outstanding as of January 31, 1999; and directors and current executive
officers as a group beneficially owned less than 1% of Thermo Optek common
stock outstanding as of such date.
OPTEK ACQUISITION
DIRECTORS AND EXECUTIVE OFFICERS OF OPTEK ACQUISITION
Earl R. Lewis is the sole director and executive officer of Optek
Acquisition. Information regarding Mr. Lewis is set forth above under "--Thermo
Electron Corporation --Directors and Executive Officers of Thermo Electron."
43
<PAGE> 44
SCHEDULE II
INFORMATION CONCERNING TRANSACTIONS IN THE SHARES
The following sets forth information with respect to purchases of Shares by
Thermo Optek, Optek Acquisition, Thermo Instrument and Thermo Electron during
the past two years.
<TABLE>
<CAPTION>
NUMBER OF SHARES RANGE OF PRICES PAID AVERAGE PURCHASE PRICE
PURCHASED PER SHARE DURING PER SHARE PAID DURING
QUARTER/YEAR PURCHASER DURING QUARTER QUARTER($)(1) QUARTER($)(1)
------------ ---------------------- ---------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
3rd Quarter 1998..... Thermo Optek 135,900 $9.0625 - $ 9.3125 $ 9.2194
3rd Quarter 1998..... Thermo Instrument 504,600 7.3125 - 7.8125 7.5262
3rd Quarter 1998..... Thermo Electron 298,800 7.375 - 14.4375 13.3591
4th Quarter 1998..... Thermo Optek 342,000 7.625 - 10.0 9.2295
1st Quarter 1999..... Thermo Optek 214,500 8.125 - 12.75 10.0151
2nd Quarter 1999..... Thermo Optek 19,800 8.875 - 9.875 9.1237
4th Quarter 1999..... Thermo Optek 80,400 9.875 - 9.875 9.875
</TABLE>
- ---------------
(1) Prices per Share are net of commissions paid by the respective purchasers.
There were no transactions in the Shares effected during the past 60 days
by Optek Acquisition, Thermo Instrument, Thermo Electron or, to the best
knowledge of Optek Acquisition, Thermo Instrument and Thermo Electron, the
directors and executive officers of any of Optek Acquisition, Thermo Instrument
or Thermo Electron.
44
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
(a)* Letter from Earl R. Lewis, Chief Executive Officer and
President of Thermo Instrument
(b)* Letter Agreement dated March 1, 2000 between Thermo Electron
and Thermo Instrument
(c)* Opinion of J.P. Morgan Securities Inc. and The Beacon Group
Capital Services, LLC
(f)* Delaware General Corporation Law Section 262
</TABLE>
- ---------------
* previously filed
