<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(e) OF
THE SECURITIES EXCHANGE ACT OF 1934
THERMOQUEST CORPORATION
(NAME OF ISSUER)
TMQ 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)
883655 10 2
(CUSIP NUMBER OF CLASS OF SECURITIES)
SANDRA L. LAMBERT, SECRETARY
TMQ 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 NEIL H. ARONSON, ESQ.
THERMO ELECTRON CORPORATION MINTZ, LEVIN, COHN, FERRIS, GLOVSKY
81 WYMAN STREET AND POPEO, PC
P.O. BOX 9046 ONE FINANCIAL CENTER
WALTHAM, MASSACHUSETTS 02454-9046 BOSTON, MASSACHUSETTS 02111
(781) 622-1000 (617) 542-6000
</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.
<TABLE>
<S> <C> <C>
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.
</TABLE>
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
- ---------------------- --------------------
<S> <C>
$140,546,599 $28,109
</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 8,267,447 shares of Common Stock, par value $.01 per
share, of ThermoQuest Corporation at $17.00 per share.
[ ] 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: N/A
Form or registration no.: N/A
Filing party: N/A
Date filed: N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SUMMARY TERM SHEET
This summary and the remainder of this Transaction Statement on Schedule
13E-3 include information describing the going private merger involving
ThermoQuest Corporation, how it affects you, what your rights are with respect
to the merger as a stockholder of ThermoQuest Corporation 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).
- - The Merger. 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 ThermoQuest as part of Thermo Electron's overall reorganization and to
provide ThermoQuest's stockholders with $17.00 in cash for each of their
shares of ThermoQuest common stock. Following the merger, Thermo Electron
plans to retain ThermoQuest as part of Thermo Electron's core instrument
business.
PRINCIPAL TERMS OF THE MERGER.
- - The Merger (page 23). Thermo Instrument and Thermo Electron plan to
contribute all of the shares of common stock of ThermoQuest owned by them to
Quest Acquisition in exchange for shares of common stock of Quest Acquisition.
As a result of this contribution, Quest Acquisition expects that it will own
at least 90% of ThermoQuest's outstanding shares. On April 4, 2000, or as soon
thereafter as possible, Thermo Instrument and Thermo Electron will cause Quest
Acquisition to merge with and into ThermoQuest in a "short-form" merger. After
the merger, Thermo Instrument will own 99.7% of ThermoQuest's common stock and
Thermo Electron will own 0.3% of ThermoQuest's common stock, assuming no
options to acquire ThermoQuest's common stock are exercised and no outstanding
ThermoQuest convertible debentures are converted prior to the merger. Quest
Acquisition does not intend to enter into a merger agreement with ThermoQuest
or to seek the approval of the directors of ThermoQuest for the merger.
Stockholders of ThermoQuest will not be entitled to vote their shares with
respect to the merger.
- - Merger Consideration (pages 7 and 21). The consideration in the merger will
be $17.00 per share in cash. This price is equal to a premium of approximately
36% over the last reported sale price of $12.50 per share of ThermoQuest
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 ThermoQuest
private. The last reported sale price of ThermoQuest common stock on the
American Stock Exchange on March 2, 2000, the day prior to the date of this
Schedule 13E-3, was $16.50 per share.
- - Affiliation of ThermoQuest, Quest Acquisition, Thermo Instrument and Thermo
Electron. As of January 28, 2000, Thermo Instrument owned 90.3% and Thermo
Electron owned 0.3% of the outstanding shares of common stock of ThermoQuest.
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 ThermoQuest.
- - ThermoQuest Shares Outstanding; Ownership by Thermo Electron and Thermo
Instrument (pages 5 and 23). As of January 28, 2000, 50,397,707 shares of
ThermoQuest common stock were outstanding. In addition, as of January 28,
2000, options to purchase 3,110,925 shares of ThermoQuest common stock were
outstanding. As of January 28, 2000, 3,698,848 shares of ThermoQuest common
stock were issuable upon the exercise of conversion rights under ThermoQuest's
outstanding 5% subordinated convertible debentures due August 15, 2000. Thermo
Instrument and Thermo Electron owned a total of 45,680,535 shares of
ThermoQuest common stock, or approximately 90.6% of the outstanding shares of
ThermoQuest common stock, as of January 28, 2000. Of the Shares owned by
Thermo Electron and Thermo Instrument, 439,350
2
<PAGE> 3
Shares have been reserved for issuance under stock options granted by Thermo
Electron and Thermo Instrument under their respective stock option plans.
- - Payment for Shares (page 24). We will pay you for your shares of ThermoQuest
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
ThermoQuest 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 ThermoQuest 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
ThermoQuest common stock should fall below 90% because of the exercise of
outstanding options, the conversion of outstanding debentures or for any other
reason, Quest Acquisition intends to acquire additional shares of ThermoQuest
common stock on the open market or in privately negotiated transactions to the
extent required for the aggregate ownership of ThermoQuest 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 $17.00 per share price in the
merger. In addition, Thermo Electron may, in those circumstances, convert all
or a portion of the $300,000 principal amount of ThermoQuest debentures that
it holds into shares of ThermoQuest common stock and contribute those shares
to Quest Acquisition. The debentures held by Thermo Electron are convertible
into a total of 18,182 shares of ThermoQuest common stock at a price of $16.50
per share. See "Introduction."
- - Source of Funds (page 28). The total amount of funds expected to be required
by Quest Acquisition to pay the merger consideration for ThermoQuest common
stock in the merger, and to pay related fees and expenses, is estimated to be
approximately $82 million, assuming no options to acquire ThermoQuest's common
stock are exercised and no outstanding ThermoQuest convertible debentures are
converted prior to the merger. Quest 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.
- - Determination of the Special Committee of the Board of Directors of Thermo
Instrument and the Board of Directors of Thermo Electron (pages 11 to
14). 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 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 ThermoQuest. 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
ThermoQuest. In considering the fairness from a financial point of view of the
$17.00 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 range of
potential values of the shares of ThermoQuest 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 "Special Factors --
3
<PAGE> 4
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 ThermoQuest. 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 ThermoQuest and own shares
of common stock, or hold options to purchase shares of common stock of Thermo
Electron, Thermo Instrument and/or ThermoQuest. As a result, there are various
actual or potential conflicts of interest in connection with the merger.
CONSEQUENCES OF THE MERGER (PAGE 8).
Completion of the merger will have the following consequences:
- Thermo Instrument and Thermo Electron will have complete control over
ThermoQuest's business.
- Thermo Instrument and Thermo Electron will own 100% of the equity
interest in ThermoQuest's business and will solely have the benefit or
detriment of any change in ThermoQuest's value.
- The shares of ThermoQuest will no longer be listed on the American Stock
Exchange.
- ThermoQuest 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 $17.00 in cash,
without interest.
APPRAISAL RIGHTS (PAGE 24).
- - You have a statutory right to dissent from the merger and demand payment of
the judicially appraised fair value of your ThermoQuest shares plus a fair
rate of interest, if any, from the date of the merger. This value may be more
or less than the $17.00 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(d) "-- Terms of the Transaction -- Appraisal Rights" in
this Schedule 13E-3.
FOR MORE INFORMATION (PAGES 21 AND 22).
- - More information regarding ThermoQuest, 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 contact the Corporate
Secretary of Thermo Instrument at (781) 622-1000.
4
<PAGE> 5
INTRODUCTION
This Rule 13e-3 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) TMQ Acquisition Inc., a Delaware
corporation and a wholly-owned subsidiary of Thermo Instrument ("Quest
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
Quest Acquisition with and into ThermoQuest Corporation, a Delaware corporation
(the "Company" or "ThermoQuest"), pursuant to Section 253 of the Delaware
General Corporation Law ("DGCL"). The effective date (the "Effective Date") of
the Merger is expected to be April 4, 2000 or as soon thereafter as possible.
As of January 28, 2000, there were issued and outstanding 50,397,707 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
45,680,535 Shares, or approximately 90.6% of the total Shares outstanding. Of
the Shares owned by Thermo Electron and Thermo Instrument, 439,350 Shares have
been reserved for issuance under stock options granted by Thermo Electron and
Thermo Instrument 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
their Shares that they currently own to Quest Acquisition immediately before the
Effective Date in exchange for common stock of Quest Acquisition.
Upon the consummation of the Merger, each outstanding Share (other than
Shares held by Quest 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 $17.00 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 ThermoQuest 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 Quest 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 3,110,925
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 $9.44 to
$17.20. It is possible that some of the Options will be exercised before the
Effective Date.
The Company also has outstanding $61 million principal amount of 5%
Subordinated Convertible Debentures due August 15, 2000 (the "Debentures"),
which in the aggregate are currently convertible into 3,698,848 Shares at a
conversion price of $16.50 per Share. Thermo Electron holds $300,000 principal
amount of the Debentures, which are currently convertible into a total of 18,182
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 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.
5
<PAGE> 6
If, because of the exercise of Options, the conversion of the Debentures or
for any other reason, Quest Acquisition owns, or determines that it might on the
Effective Date own, less than 90% of the then outstanding Shares, Quest
Acquisition may make open market or privately negotiated purchases of Shares to
the extent necessary for Quest Acquisition to own at least 90% of the
outstanding Shares on the Effective Date. Any such open market or privately
negotiated purchases by Quest 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 Quest 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.
6
<PAGE> 7
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 its core business. 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 $17.00 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
ThermoQuest as part of Thermo Electron's core instrument business.
ALTERNATIVES
Thermo Instrument, Thermo Electron and Quest Acquisition believe that
effecting the transaction by way of a short-form merger with Quest 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 Quest 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 Quest 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 which 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 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 Thermo Electron Board of
Directors 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;
7
<PAGE> 8
- 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 certain
alternatives to acquiring the minority stockholder interest in the Company,
including:
- 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 did not want to sell, and did not want Thermo Instrument to
sell, its equity interest 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 Electron and Thermo Instrument was
the ability of Thermo Instrument to invest for other purposes the cash that
would otherwise be required to buy the minority stockholder interest in the
Company. 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 Electron and 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 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 proposed 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 $17.00 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 Electron's or Thermo Instrument'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. 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
8
<PAGE> 9
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 90.6%. Upon completion of the
Merger, Thermo Instrument's and Thermo Electron's interest in the Company's net
book value of $445,744,000 on January 1, 2000 and net earnings of $45,749,000
for the fiscal year ended January 1, 2000, will increase from approximately
90.6% 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. Once 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 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 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 3,110,925 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 common stock 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
9
<PAGE> 10
- 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 for shares of Thermo
Electron;
- 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, and applicable regulations.
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. Based on the units accumulated on January
1, 2000, Dr. Michael Porter will receive $48,746 for his units and Mr. Frank
Jungers will receive $45,066 for his units.
DEBENTURES. The Company has outstanding $61 million principal amount of
Debentures, which in the aggregate are convertible into 3,698,848 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 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. The aggregate
amount of cash that the outstanding Debentures will be convertible into
following the completion of the Merger is $62.9 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 Internal Revenue Code of 1986, as amended (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.
10
<PAGE> 11
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.
FAIRNESS OF THE MERGER
FAIRNESS
Because Thermo Instrument and Thermo Electron together currently own a
majority of the Shares, Thermo Electron, Thermo Instrument and Quest 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. Neither Mr. Syron nor Mr.
Vintiadis is an officer or director of the Company or owns Shares or options to
purchase Shares. Mr. Syron is the Chief Executive Officer and a director of
Thermo Electron.
The Board of Directors of Thermo Electron and the Instrument Special
Committee determined that the Merger is fair to the Public Stockholders. 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; however, Messrs. George N.
Hatsopoulos and Frank Jungers, members of the Thermo Electron Board of
Directors, were excused from discussions of the terms of the Merger and from
voting to approve the Merger because they are directors of the Company or hold
Shares or options to purchase Shares.
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
11
<PAGE> 12
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 Thermo
Electron and Thermo Instrument 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 $14.50
to $17.25 per Share. The analysis of other buyout transactions indicated
an estimated range of equity values for the Shares of between $15.50 and
$19.25 per Share. The analysis based upon discounted cash flows indicated
an estimated range of equity values for the Shares of between $16.00 and
$19.25 per Share. 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. 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 had declined from $15.00 on March 19, 1996, the date of the
Company's initial public offering, to $12.50 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 36% over the closing price of $12.50 on January 28, 2000 and a
premium of 58% over the average closing price of $10.73 for the 30
trading days preceding the announcement. The Merger 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 Effects of the Merger -- Effects."
- 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.
12
<PAGE> 13
- 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:
- 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 Company's net book value at January 1, 2000 was approximately
$445,744,000, which would have yielded a per Share valuation for the Company of
$8.84. 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
13
<PAGE> 14
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.
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, THERMO ELECTRON AND THE
COMPANY. 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 $17.00 per Share in cash
was considered the most important factor.
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 Quest Acquisition).
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.
14
<PAGE> 15
REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
PREPARER AND SUMMARY OF THE REPORT, OPINION OR APPRAISAL. Thermo Electron
retained the Advisors 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 $17.00 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.
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 Thermo Instrument, Thermo Electron and the Company with respect to certain
aspects of the Merger. In addition, the Advisors held discussions with certain
members of the management of Thermo Instrument, Thermo Electron and the Company
with respect to certain aspects of 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
15
<PAGE> 16
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 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 Agilent Technologies Inc., Waters
Corp., PerkinElmer, Inc. and Varian, 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 ended 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 trading values for the Shares of approximately $14.50
to $17.25 per Share.
- SELECTED TRANSACTION ANALYSIS. Using publicly available information, the
Advisors examined eleven 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): TSI
Incorporated/Investor Group,
16
<PAGE> 17
Environmental Systems Corp./TSI Incorporated, Instron Corp./Kirtland Capital
Partners, Perkin-Elmer, Inc., -Instrument Division/EG&G Inc., Granville-Phillips
Co./Helix Technology Corporation, PerSeptive Biosystems Inc./Perkin-Elmer Corp.,
Life Products Group/ThermoQuest Corp., John Chatillon & Sons, Lloyd/Ametek
Inc., TA Instruments, Inc./Waters Corp., Micromass Limited/ Waters Corp.
and Amicon Inc.-National Medical Care Unit/Millipore Corp. 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 $15.50 and $19.25 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.
- 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 $16.00 and $19.25 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 the American Stock Exchange, the Shares achieved a high trading
price of $13.375 on March 11, 1999 and a low trading price of $9.375 on
December 13, 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
$11.625.
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 the Advisors 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 the 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
17
<PAGE> 18
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 the views of the Board of Directors of Thermo Electron and the
Instrument Special Committee with respect to the value of the Company.
The Advisors 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 the Advisors' 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, the Advisors 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 Thermo Electron and Thermo Instrument 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 the Advisors,
dated January 17, 2000, Thermo Electron has agreed to pay each of the Advisors a
fee of $500,000 for its services in connection with the Merger. In addition, the
Advisors 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 the Advisors of $1.25 million, and
the engagement letter provides for substantial additional compensation if some
or all of the other elements of Thermo
18
<PAGE> 19
Electron's reorganization are completed. Thermo Electron has agreed to indemnify
the Advisors 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 following summary of the 2000 Projections is included in this Schedule
13E-3 because the 2000 Projections were made available to the Advisors. 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.
Thermo Instrument and Thermo Electron believe that the assumptions upon which
the 2000 Projections are based were reasonable at the time they 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.
19
<PAGE> 20
The following are the 2000 Projections:
2000 PROJECTIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PROJECTED
FOURTH QUARTER PROJECTED PROJECTED
1999 1999 2000
-------------- -------------- --------------
<S> <C> <C> <C>
SELECTED INCOME STATEMENT DATA:
Revenues.......................................... $118,433 $439,835 $464,561
-------- -------- --------
Costs and Operating Expenses:
Cost of Revenues................................ 62,739 231,755 238,182
Selling, general, and administrative expenses... 28,121 106,579 113,800
Research and development expenses............... 7,123 29,096 30,585
Restructuring costs............................. -- (326) --
Gain on sale of property........................ -- (1,604) --
-------- -------- --------
97,983 365,500 382,567
-------- -------- --------
Operating Income.................................. 20,450 74,335 81,994
Interest Income................................... 1,840 7,016 6,931
Interest Expense.................................. (1,214) (5,153) (3,548)
-------- -------- --------
Income Before Provision for Income Taxes.......... 21,076 76,198 85,377
Provision for Income Taxes........................ 8,430 31,204 35,007
-------- -------- --------
Net Income........................................ $ 12,646 $ 44,994 $ 50,370
======== ======== ========
SELECTED BALANCE SHEET DATA:
Accounts Receivable, Net.......................... $ 99,447 $ 99,447 $103,170
Inventories....................................... 69,165 69,165 66,295
Prepaid Income Taxes and Other Current Assets..... 15,698 15,698 16,008
-------- -------- --------
Total Current Assets Excluding Cash and
Investments..................................... 184,310 184,310 185,473
Property, Plant and Equipment:
Balance, beginning of period.................... 60,074 63,463 60,213
Additions....................................... 2,305 6,017 7,541
Depreciation expense............................ (2,167) (8,130) (8,960)
Other........................................... 1 (1,137) 1
-------- -------- --------
Balance, end of period.......................... 60,213 60,213 58,795
Cost in Excess of Net Assets of Acquired
Companies....................................... 240,356 240,356 233,196
</TABLE>
20
<PAGE> 21
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 ThermoQuest Corporation.
The principal executive offices of the Company are located at 2215 Grand Avenue
Parkway, Austin, Texas, 78727, 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 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 50,397,707 Shares and 3,110,925 Options
outstanding. The Company also has outstanding $61 million principal amount of
Debentures, which in the aggregate are currently convertible into 3,698,848
Shares at a conversion price of $16.50 per Share.
(c) TRADING MARKET AND PRICE. The Shares are listed on the American Stock
Exchange under the symbol "TMQ." The following table sets forth the high and low
sales prices per Share on the American Stock Exchange for each of the periods
indicated, as reported in publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended January 2, 1999
First Quarter............................................. $19 31/32 $ 13 1/2
Second Quarter............................................ 19 1/4 13 3/4
Third Quarter............................................. 14 1/2 6 7/16
Fourth Quarter............................................ 13 3/4 8 7/8
Fiscal Year Ended January 1, 2000
First Quarter............................................. 14 1/2 10
Second Quarter............................................ 13 5/16 10 1/2
Third Quarter............................................. 12 15/16 9 7/8
Fourth Quarter............................................ 11 1/4 9 3/8
Fiscal Year Ending December 30, 2000
First Quarter (through March 2, 2000)..................... 16 11/16 9 7/16
</TABLE>
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THEIR SHARES.
21
<PAGE> 22
(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
QUEST ACQUISITION
(a) NAME AND ADDRESS. Quest Acquisition is a newly organized corporation
to be owned by Thermo Electron and Thermo Instrument and was formed for the
purpose of effecting the Merger. Quest 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. Quest Acquisition has been formed for
the sole purpose of merging with and into the Company. Quest Acquisition is
organized under the laws of the State of Delaware.
(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The name, business
address, position with Quest Acquisition, principal occupation, five-year
employment history and citizenship of each of the directors and executive
officers of Quest 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 Quest Acquisition or, to the best knowledge of Quest
Acquisition, 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 Quest Acquisition or, to the
best knowledge of Quest 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 develops,
manufactures and markets measurement instruments used to monitor, collect and
analyze information. These systems are used for multiple applications in a range
of industries, including industrial processing, food and beverage production,
life sciences research, and medical diagnostics.
Thermo Instrument's common stock is listed on the American Stock Exchange 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
22
<PAGE> 23
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 and its subsidiaries
develop and manufacture a broad range of products that are sold worldwide.
Thermo Electron is a world leader in monitoring, analytical and biomedical
instrumentation; biomedical products including heart-assist devices,
respiratory-care equipment and mammography systems; and paper recycling and
papermaking equipment. Thermo Electron also develops alternative-energy systems
and clean fuels, provides a range of services including industrial outsourcing
and environmental-liability management, and conducts research and development in
advanced imaging, laser and electronic information-management technologies.
Thermo Electron performs its business through wholly-owned subsidiaries and
divisions, as well as majority owned subsidiaries that are partially owned by
public or private investors.
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 45,520,655 Shares and Thermo Electron plans to contribute 159,880
Shares to Quest Acquisition, representing in the aggregate approximately 90.6%
of the outstanding Shares on January 28, 2000, in exchange for common stock of
Quest Acquisition. As a result of such contributions, Thermo Instrument expects
to own 99.7% of the
23
<PAGE> 24
outstanding shares of common stock of Quest Acquisition and Thermo Electron
expects to own 0.3% of the outstanding shares of common stock of Quest
Acquisition, assuming no Options are exercised and no Debentures are converted.
On the Effective Date, Thermo Instrument and Thermo Electron will cause Quest
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 Quest Acquisition will approve the Merger
and Quest 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 Quest 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 Quest 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 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 Quest Acquisition will hold at least 90% of the
outstanding Shares, Quest Acquisition will have the power to effect the Merger
without a vote of the Company's Board of Directors or Public Stockholders. Quest
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 Public Stockholders. The Merger Price
payable to Public Stockholders is $17.00 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."
Upon completion of the Merger, in order to receive the cash Merger Price of
$17.00 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 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).
24
<PAGE> 25
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 the Corporate
Secretary, ThermoQuest 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.
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
25
<PAGE> 26
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 per Share, 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."
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 Delaware
Appraisal Statute, 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 Quest 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 Quest 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) Quest Acquisition, Thermo Instrument or
Thermo Electron or, to the best knowledge of Quest 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 is to 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
26
<PAGE> 27
owns at least 80% of the outstanding common stock of the Company. 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 $15,900,000 and $18,260,000 by Thermo
Electron under the Tax Allocation Agreement. As of January 1, 2000, the Company
owed Thermo Electron $6,760,000 for amounts due under the Tax Allocation
Agreement.
The Company purchases and sells other 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 $5,521,000 and $2,951,000, respectively,
of other products and/or services to Thermo Electron subsidiaries and purchased
a total of $10,256,000 and $9,554,000, respectively, of other products and/or
services from such companies.
STOCK HOLDING ASSISTANCE PLAN. 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 may make interest-free loans to 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, Dr. Richard W. K. Chapman received a
loan in the principal amount of $210,653 under this plan to purchase 15,000
Shares, of which amount of $168,522 was outstanding as of January 1, 2000. The
loan is 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 (i)
Quest Acquisition, Thermo Instrument or Thermo Electron or, to the best
knowledge of Quest Acquisition, Thermo Instrument and Thermo Electron, any of
the persons listed on Schedule I hereto and (ii) 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) Quest
Acquisition, Thermo Instrument or Thermo Electron or, to the best knowledge of
Quest Acquisition, Thermo Instrument and Thermo Electron, any of the persons
listed on the Schedule I hereto and (ii) 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) NEGOTIATIONS 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 Quest Acquisition, Thermo Instrument or Thermo Electron or, to the best
knowledge of Quest 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
27
<PAGE> 28
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 American Stock Exchange
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 and are not currently negotiating
for 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 currently intends to
acquire all of the outstanding common stock of Thermo Instrument that it does
not own. If this transaction is completed, the Company will become an indirect
wholly-owned subsidiary of Thermo Electron.
Except as otherwise described in this Schedule 13E-3, the Company has not,
and Quest 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 OF THE MERGER
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 Quest
Acquisition to pay the Merger Price to all Public Stockholders, and to pay
related fees and expenses, is estimated to be approximately $82 million. Quest
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 (the "DCP Rate") plus 150
28
<PAGE> 29
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.
(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 Quest 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 will, upon request, be
reimbursed by Quest 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 Quest
Acquisition in connection with the Merger:
<TABLE>
<S> <C>
Financial Advisors.......................................... $1,000,000
Legal....................................................... 250,000
Printing.................................................... 20,000
Filing...................................................... 28,109
Paying Agent (including mailing)............................ 7,500
Miscellaneous............................................... 4,391
----------
$1,310,000
==========
</TABLE>
The Company will not pay any of the fees and expenses to be incurred by
Quest Acquisition in connection with the Merger.
(d) BORROWED FUNDS. See Item 10(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, Quest Acquisition is expected to be the owner of 45,680,535 Shares,
representing 90.6% of the outstanding Shares. Because Thermo Instrument and
Thermo Electron own 100% of the equity interest in Quest 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 $300,000 principal amount of Debentures which are
currently convertible into 18,182 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 outstanding Shares held by them to Quest 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.
29
<PAGE> 30
ITEM 13. FINANCIAL STATEMENTS
(a) FINANCIAL INFORMATION. The audited consolidated financial statements
of the Company as of and for the fiscal years ended January 2, 1999 and January
3, 1998 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 2, 1999 (the "Form 10-K"). The
unaudited consolidated financial statements of the Company for the three and
nine month fiscal periods ended October 2, 1999 and October 3, 1998 and as of
October 2, 1999 are incorporated herein by reference to Item 1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended October 2, 1999 (the "Form
10-Q", together with the Form 10-K, the "Company Reports").
The Company Reports 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 reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. In addition, the
Company Reports 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.
30
<PAGE> 31
(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 and the unaudited financial statements contained in the Form 10-Q. The
information as of October 3, 1998 is derived from the Company's Quarterly Report
on Form 10-Q for the quarter ended October 3, 1998. More comprehensive financial
information is included in the Company Reports 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 Company Reports and other
documents and all of the financial information (including any related notes)
contained therein or incorporated therein by reference.
The selected financial information presented below as of and for the fiscal
years ended January 2, 1999, January 3, 1998, December 28, 1996, December 30,
1995 and December 31, 1994 has been derived from the Company's Consolidated
Financial Statements, which have been audited by Arthur Andersen LLP. The
selected financial information as of and for the nine months ended October 2,
1999 and October 3, 1998 has not been audited. The results of operations for the
nine months ended October 2, 1999 are not necessarily indicative of results for
the entire year.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-------------------
OCT. 2, OCT. 3,
1999(A) 1998(B) 1998(C) 1997(D) 1996(E) 1995(F) 1994
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues........................... $321,402 $311,244 $433,684 $438,863 $313,793 $241,909 $223,396
Income Before Extraordinary Item... 32,348 26,385 38,085 41,805 28,023 21,002 18,526
Net Income......................... 32,348 26,385 38,378 41,805 28,023 21,002 18,526
Earnings per Share:
Basic............................ .64 .51 .75 .83 .59 .47 .41
Diluted.......................... .62 .50 .72 .80 .57 .47 .41
Weighted Average Shares:
Basic............................ 50,681 51,327 51,270 50,120 47,677 45,000 45,000
Diluted.......................... 54,853 56,276 56,041 55,891 53,697 45,000 45,000
BALANCE SHEET DATA (AT END OF
PERIOD):
Working Capital.................... $161,647 $195,069 $200,018 $156,410 $216,865 $166,902 $ 47,955
Total Assets....................... 634,593 634,521 643,242 595,626 535,070 428,042 306,284
Long-term Obligations.............. 5,304 82,185 74,204 88,080 104,593 106,456 11,322
Shareholders' Investment........... 438,151 407,346 417,001 370,779 303,014 227,740 211,633
OTHER DATA:
Book Value per Share............... $ 8.67 $ 7.92 $ 8.18 $ 7.24
Cash Dividends..................... -- -- -- -- -- -- --
RATIO OF EARNINGS TO FIXED
CHARGES(G)....................... 12.08x 8.28x 8.85x 7.29x
</TABLE>
- ---------------
(a) Reflects the reversal of previously established restructuring reserves of
$0.3 million, the purchase of $6.9 million principal amount of 5%
subordinated convertible debentures, and the reclassification as short-term
of the 5% subordinated convertible debentures due September 2000.
(b) Reflects restructuring costs of $4.6 million and conversion of $5.0 million
principal amount of 5% subordinated convertible debentures.
(c) Reflects restructuring costs of $4.6 million, an extraordinary gain of $0.3
million, net of taxes, related to the Company's purchase of $7.7 million
principal amount of 5% subordinated convertible debentures, and conversion
of $5.0 million principal amount of 5% subordinated convertible debentures.
(d) Reflects the acquisition of three business units within the Laboratory
Products Group of Life Sciences International PLC and Life Sciences'
Hypersil operation, effective March 12, 1997, the net proceeds of the
Company's issuance of common stock in March 1997, and conversion of $15.7
million principal amount of 5% subordinated convertible debentures.
(e) Reflects the acquisition of the Automass division of Analytical Technology,
Inc., effective January 1, 1996, CE Instruments and MassLab Instruments,
effective March 29, 1996, and the net proceeds of the Company's initial
public offering in March and April 1996.
(f) Reflects the issuance in August 1995 of $96.3 million principal amount of 5%
subordinated convertible debentures due 2000.
(g) 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.
31
<PAGE> 32
RECENTLY RELEASED FINANCIAL INFORMATION. The selected financial
information of the Company presented below for the three and twelve month
periods ended January 1, 2000 and January 2, 1999 were publicly released by the
Company on February 21, 2000. With the exception of the financial information
for the twelve months ended January 2, 1999, this financial information is not
audited and full financial statements reflecting such information have not yet
been filed with the Commission.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
--------------------------- ---------------------------
JAN. 1, 2000 JAN. 2, 1999 JAN. 1, 2000 JAN. 2, 1999
------------ ------------ ------------ ------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.......................................... $110,425 $122,440 $431,827 $433,684
-------- -------- -------- --------
Costs and Operating Expenses:
Cost of revenues................................ 57,369 64,140 226,385 225,357
Selling, general, and administrative expenses... 25,190 30,780 103,648 107,445
Research and development expenses............... 7,033 7,606 29,006 31,464
Restructuring costs............................. -- -- (326) 4,600
(Gain) loss on sale of property................. -- 32 (1,604) (1,275)
-------- -------- -------- --------
89,592 102,558 357,109 367,591
-------- -------- -------- --------
Operating Income.................................. 20,833 19,882 74,718 66,093
Interest Income................................... 2,069 1,721 7,245 6,204
Interest Expense.................................. (1,135) (1,432) (5,074) (6,634)
-------- -------- -------- --------
Income Before Provision for Income Taxes.......... 21,767 20,171 76,889 65,663
Provision for Income Taxes........................ 8,366 8,471 31,140 27,578
-------- -------- -------- --------
Income Before Extraordinary Item.................. 13,401 11,700 45,749 38,085
Extraordinary Item, Net of Provision for Income
Taxes of $172................................... -- 293 -- 293
-------- -------- -------- --------
Net Income........................................ $ 13,401 $ 11,993 $ 45,749 $ 38,378
======== ======== ======== ========
Earnings per Share:
Basic........................................... $ .27 $ .23 $ .90 $ .75
======== ======== ======== ========
Diluted......................................... $ .26 $ .23 $ .87 $ .72
======== ======== ======== ========
Weighted Average Shares:
Basic........................................... 50,487 51,099 50,633 51,270
======== ======== ======== ========
Diluted......................................... 54,221 55,338 54,695 56,041
======== ======== ======== ========
</TABLE>
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 Quest Acquisition, Thermo Instrument or Thermo
Electron in connection with the Merger.
ITEM 15. ADDITIONAL INFORMATION
None.
32
<PAGE> 33
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
(a)(1) 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>
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 Statement is true,
complete and correct.
<TABLE>
<S> <C>
THERMO INSTRUMENT SYSTEMS INC.
Dated: March 3, 2000 By: /s/ Earl R. Lewis
-----------------------------------------------------
Name: Earl R. Lewis
Title: President and Chief Executive Officer
TMQ ACQUISITION INC.
Dated: March 3, 2000 By: /s/ Earl R. Lewis
-----------------------------------------------------
Name: Earl R. Lewis
Title: President
THERMO ELECTRON CORPORATION
Dated: March 3, 2000 By: /s/ Theo Melas-Kyriazi
-----------------------------------------------------
Name: Theo Melas-Kyriazi
Title: Vice President and Chief Financial Officer
</TABLE>
33
<PAGE> 34
SCHEDULE I
MEMBERS OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF THERMO, THERMO
ELECTRON, THERMO INSTRUMENT AND QUEST ACQUISITION
THERMO ELECTRON CORPORATION
Directors and Executive Officers of 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
Quest 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 Quest
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 and Thermo Instrument on February 21, 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, NovaCare
Inc., 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.
GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 73, has been a director of Thermo
Electron since he founded Thermo Electron in 1956.
He served as president, chief executive officer and
chairman of the board of Thermo Electron from 1956
until January 1997, June 1999 and January 2000,
respectively.
34
<PAGE> 35
Dr. Hatsopoulos is also a director of Photoelectron
Corporation, Thermedics Inc., Thermo Ecotek
Corporation, Thermo Fibertek Inc., Thermo
Instrument Systems Inc. and ThermoTrex 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 822 N.W. Murray
Boulevard, Suite 242, Portland, OR 97229. Mr.
Jungers is also a director of The AES Corporation,
Donaldson, Lufkin & Jenrette, Inc., Georgia-Pacific
Corporation, ONIX Systems 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. Mr. O'Leary is also a director
of Eco Soil Systems, Inc.
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., Thermedics Inc., Thermo
Fibertek Inc. and Thermo Instrument.
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.
35
<PAGE> 36
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., Thermedics Detection
Inc., Thermo Cardiosystems Inc., ThermoLase
Corporation, Thermo Sentron Inc., ThermoTrex
Corporation and Trex Medical Corporation.
PAUL F. KELLEHER Mr. Kelleher, 57, has been the senior vice
president, finance and administration, of Thermo
Electron since June 1997, and served as its vice
president, finance from 1987 until 1997. Mr.
Kelleher served as Thermo Electron's controller
from 1982 until January 1996. Mr. Kelleher is a
director of ThermoLase 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, 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 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 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
is a director of FLIR Systems Inc., Metrika Systems
Corporation, ONIX Systems Inc., SpectRx Inc.,
Spectra-Physics Lasers, Inc., Thermo BioAnalysis
Corporation, Thermo Instrument, Thermo Optek
Corporation and ThermoQuest.
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
36
<PAGE> 37
Corporation, a wholly-owned subsidiary of Thermo
Electron that develops, manufactures, and markets
precision imaging, inspection, measurement, and
temperature-control instrumentation for customers
in an array of industries 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 Quest 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 THERMOQUEST
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
George N. Hatsopoulos............................ 3,909,357 203,207 92,600
Brian D. Holt.................................... 322,941 999 6,000
Frank Jungers.................................... 171,021 26,412 48,650
John T. Keiser................................... 331,636 155,211 0
Paul F. Kelleher................................. 213,530 31,730 6,000
Earl R. Lewis.................................... 215,477 436,499 135,000
Robert A. McCabe................................. 66,326 46,846 0
Theo Melas-Kyriazi............................... 458,532 182,715 25,000
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
Roger D. Wellington.............................. 55,795 6,759 0
All directors and current executive officers as a
group (16 persons)............................. 7,514,283 1,204,969 328,250
</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.
37
<PAGE> 38
(2) Shares of the Common Stock of Thermo Electron beneficially owned by Mr.
Bodman, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. Holt, Mr.
Jungers, Mr. Keiser, Mr. Kelleher, 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, 25,448, 284,948, 24,673, 263,230, 179,359, 212,278, 27,442, 384,361,
27,442, 27,000, 294,630, 1,011,000, 24,673 and 2,865,522 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 Dr. G. Hatsopoulos, Mr. Kelleher, Mr.
Melas-Kyriazi and all directors and current executive officers as a group
include 2,266, 1,426, 1,071 and 4,763 shares, respectively, allocated to
their respective accounts maintained pursuant to Thermo Electron's employee
stock ownership plan (the "ESOP"), of which the trustees, who have
investment power over its assets, are executive officers of Thermo Electron.
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 Dr. Hatsopoulos include 144,437 shares held by his spouse, 311,708
shares held by a family trust of which his spouse is the trustee and 566,262
shares held by a family limited partnership indirectly controlled by Dr.
Hatsopoulos. Shares beneficially owned by Dr. Hatsopoulos also include
50,000 shares that a family trust, of which Dr. Hatsopoulos' spouse is the
trustee, has the right to acquire within 60 days of January 31, 2000 and
2,149,500 shares that a family limited partnership indirectly controlled by
Dr. Hatsopoulos has the right to acquire within 60 days of January 31, 2000
through the exercise of stock options. Dr. Hatsopoulos disclaims beneficial
interest in the shares owned by the family limited partnership except to the
extent of his pecuniary interest therein. 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. Except for Dr. G.
Hatsopoulos, who beneficially owned 2.46% of the Thermo Electron common
stock outstanding as of January 31, 2000, 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 4.71% 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, Dr. G. Hatsopoulos, Mr. Holt, Mr. Jungers, Mr.
Keiser, Mr. Kelleher, 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, 24,066, 999, 11,443,
71,311, 27,116, 409,081, 7,925, 163,687, 3,009, 666, 19,065, 3,009 and
902,159 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 Dr. G. Hatsopoulos,
Mr. Kelleher, Mr. Melas-Kyriazi and all directors and current executive
officers as a group include 598, 495, 468 and 1,561 shares, respectively,
allocated to accounts maintained pursuant to Thermo Instrument's 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 the Thermo Instrument's deferred compensation plan for
directors. Shares beneficially owned by Dr. G. Hatsopoulos include 26,773
shares held by his spouse and 117,187 shares that a family limited
partnership indirectly controlled by Dr. Hatsopoulos has the right to
acquire within 60 days of January 31, 2000 through the exercise of stock
options. Dr. Hatsopoulos disclaims beneficial interest in the shares owned
by the family limited partnership except to the extent of his pecuniary
interest therein. Shares beneficially owned by Mr. Lewis include 2,987
shares held by his spouse. No director or named 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 1.02% of the Thermo Instrument common
stock outstanding as of January 31, 2000.
38
<PAGE> 39
(4) Shares of the common stock of ThermoQuest beneficially owned by Dr. G.
Hatsopoulos, Mr. Holt, Mr. Jungers, Mr. Kelleher, Mr. Lewis, Mr.
Melas-Kyriazi, Mr. Rainville and all directors and current executive
officers as a group 2,600, 6,000, 45,000, 6,000, 125,000, 25,000, 15,000 and
314,600 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 Dr. G. Hatsopoulos
include 90,000 shares that a family limited partnership indirectly
controlled by Dr. Hatsopoulos has the right to acquire within 60 days of
January 31, 2000 through the exercise of stock options. Dr. Hatsopoulos
disclaims beneficial interest in the shares owned by the family limited
partnership except to the extent of his pecuniary interest therein. Shares
beneficially owned by Mr. Jungers and all directors and current executive
officers as a group include 2,650 shares allocated to Mr. Jungers' account
maintained pursuant to ThermoQuest's deferred compensation plan for
directors. No director or named executive officer beneficially owned more
than 1% of the ThermoQuest common stock outstanding as of January 31, 2000;
all directors and current executive officers as a group beneficially owned
less than 1% of the ThermoQuest 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
Quest 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 Quest
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.
GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 73, has been a director of Thermo
Instrument since 1986. He served as president,
chief executive officer and chairman of the board
of Thermo Electron from 1956 until January 1997,
June 1999 and January 2000, respectively. Dr.
Hatsopoulos is also a director of Photoelectron
Corporation, Thermedics Inc., Thermo Ecotek
Corporation, Thermo Electron, Thermo Fibertek Inc.
and ThermoTrex Corporation.
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 Corporation, a majority-owned
subsidiary of Thermo Instrument Systems that
manufactures analytical instruments that measure
energy and light for
39
<PAGE> 40
purposes of materials analysis, characterization
and preparation, from its inception in August 1995
to January 1998. Mr. Lewis is a director of FLIR
Systems Inc., Metrika Systems Corporation, ONIX
Systems Inc., SpectRx Inc., Spectra-Physics Lasers,
Inc., Thermo BioAnalysis Corporation, Thermo Optek
Corporation and ThermoQuest.
RICHARD F. SYRON Dr. Syron, 56, has been a director of Thermo
Instrument since June 1999. He has been the
president and chief executive officer of Thermo
Electron 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 Service, Inc., Thermedics
Inc., Thermo Fibertek and Thermo Electron.
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 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, a majority
owned subsidiary of Thermo Instrument since its
inception in June 1995. ThermoQuest 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, 60, has been executive vice president of
Thermo Instrument Systems 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, 43, has been a vice president of Thermo
Instrument since 1994. He has been president and
chief executive officer of ThermoSpectra
Corporation, a wholly owned subsidiary of Thermo
Instrument, that supplies precision imaging,
inspection, temperature control and test and
measurement instruments 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
40
<PAGE> 41
1995 to March 1998. Mr. Howe's business address is
8 East Forge Parkway, Franklin, MA 02038.
PAUL F. KELLEHER Mr. Kelleher, 57, has been the chief accounting
officer of Thermo Instrument since 1986. He has
been the senior vice president, finance and
administration, of Thermo Electron since June 1997,
and served as its vice president, finance from 1987
until 1997. Mr. Kelleher served as Thermo
Electron's controller from 1982 until January 1996.
Mr. Kelleher is a director of ThermoLase
Corporation.
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
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 wholly-owned
subsidiary of Thermo Electron that develops,
manufactures, and markets precision imaging,
inspection, measurement, and temperature-control
instrumentation for customers in an array of
industries 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 Quest
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 Quest Acquisition, all such persons disclaim beneficial ownership
of the shares of common stock beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
THERMO THERMO
INSTRUMENT ELECTRON THERMOQUEST
NAME(1) SYSTEMS INC.(2) CORPORATION(3) CORPORATION(4)
- ------- --------------- -------------- --------------
<S> <C> <C> <C>
Richard W. K. Chapman............................ 225,530 79,801 351,746
George N. Hatsopoulos............................ 203,207 3,909,357 92,600
Denis A. Helm.................................... 278,638 167,163 10,000
Barry S. Howe.................................... 303,290 71,655 90,000
Paul F. Kelleher................................. 31,730 213,530 6,000
Earl R. Lewis.................................... 436,499 215,477 135,000
Theo Melas-Kyriazi............................... 182,715 458,532 2,500
Richard F. Syron................................. 0 1,074,006 0
Polyvios C. Vintiadis............................ 17,597 2,500 0
All directors and current executive Officers as a
group (9 persons).............................. 1,679,206 6,192,021 687,846
</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 common stock of Thermo Instrument beneficially owned by Dr.
Chapman, Dr. G. Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Kelleher, Mr. Lewis,
Mr. Melas-Kyriazi, Mr. Vintiadis and all directors and current executive
officers as a group include 196,249, 24,066, 216,250, 273,156, 27,116,
409,081, 163,687, 11,745 and 1,321,350 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
41
<PAGE> 42
beneficially owned by Dr. G. Hatsopoulos, Mr. Kelleher, Mr. Melas-Kyriazi
and all directors and current executive officers as a group include 598,
495, 468 and 1,561 shares, respectively, allocated through January 31, 2000,
to their respective accounts maintained pursuant to Thermo Electron's
employee stock ownership plan, of which the trustees, who have investment
power over its assets, are executive officers of Thermo Electron (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 the
Deferred Compensation Plan. Shares beneficially owned by Dr. G. Hatsopoulos
include 26,773 shares held by his spouse and 117,187 shares that a family
limited partnership indirectly controlled by Dr. Hatsopoulos has the right
to acquire within 60 days of January 31, 2000 through the exercise of stock
options. Dr. Hatsopoulos disclaims beneficial interest in the shares owned
by the family limited partnership except to the extent of his pecuniary
interest therein. 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 named executive officer beneficially owned more than 1% of the
common stock of Thermo Instrument outstanding as of January 31, 2000; all
directors and current executive officers as a group beneficially owned 1.41%
of the common stock of Thermo Instrument outstanding as of such date.
(3) Shares of the common stock of Thermo Electron beneficially owned by Dr.
Chapman, Dr. G. Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Kelleher, Mr. Lewis,
Mr. Melas-Kyriazi, Dr. Syron and all directors and current executive
officers as a group include 76,248, 25,448, 99,816, 64,141, 179,359,
212,278, 384,361, 1,011,000 and 2,102,831 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 Dr. G.
Hatsopoulos, Mr. Kelleher, Mr. Melas-Kyriazi and all directors and current
executive officers as a group include 2,266, 1,426, 1,071 and 4,763 shares,
respectively, allocated through January 31, 2000, to their respective
accounts maintained pursuant to the ESOP. Shares beneficially owned by Dr.
Hatsopoulos include 144,437 shares held by his spouse, 311,708 shares held
by a family trust of which his spouse is the trustee and 566,262 shares held
by a family limited partnership indirectly controlled by Dr. Hatsopoulos.
Shares beneficially owned by Dr. Hatsopoulos also include 50,000 shares that
a family trust, of which Dr. Hatsopoulos' spouse is the trustee, has the
right to acquire within 60 days of January 31, 2000 and 2,149,500 shares
that a family limited partnership indirectly controlled by Dr. Hatsopoulos
has the right to acquire within 60 days of January 31, 2000 through the
exercise of stock options. Dr. Hatsopoulos disclaims beneficial interest in
the shares owned by the family limited partnership except to the extent of
his pecuniary interest therein. 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. Except for Dr. G.
Hatsopoulos, who beneficially owned 2.46% of the Thermo Electron common
stock outstanding as of January 31, 2000, no director or named executive
officer beneficially owned more than 1% of such common stock outstanding as
of January 31, 2000; all directors and current executive officers as a group
beneficially owned 3.91% of the Thermo Electron common stock outstanding as
of such date.
(4) Shares of the common stock of ThermoQuest, beneficially owned by Dr.
Chapman, Dr. G. Hatsopoulos, Mr. Helm, Mr. Howe, Mr. Kelleher, Mr. Lewis,
Mr. Melas-Kyriazi and all directors and current executive officers as a
group include 325,000, 2,600, 10,000, 90,000, 6,000, 125,000, 2,500, and
651,100 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 Dr. Hatsopoulos include 90,000 shares
that a family limited partnership indirectly controlled by Dr. Hatsopoulos
has the right to acquire within 60 days of January 31, 2000 through the
exercise of stock options. Dr. Hatsopoulos disclaims beneficial interest in
the shares owned by the family limited partnership except to the extent of
his pecuniary interest therein. No director or named executive officer
beneficially owned more than 1% of the common stock of ThermoQuest
outstanding as of January 31, 2000; all directors and current executive
officers as a group beneficially owned 1.36% of such common stock
outstanding as of such date.
42
<PAGE> 43
QUEST ACQUISITION
Director and Executive Officer of Quest Acquisition
The name, business address, position with Quest Acquisition, present
principal occupation or employment and five-year employment history of the sole
director and executive officer of Quest Acquisition, together with the names,
principal businesses and addresses of any corporations or other organizations in
which such principal occupation is conducted, are set forth below. Except as
otherwise indicated, each occupation set forth refers to Quest Acquisition. The
sole director and executive officer of Quest Acquisition is a United States
citizen whose business address is 81 Wyman Street, Waltham, Massachusetts 02454.
To the knowledge of Thermo Electron, Thermo Instrument and Quest Acquisition,
the sole director and executive officer of Quest Acquisition does not
beneficially own any Shares (or rights to acquire Shares). To the knowledge of
Thermo Electron, Thermo Instrument and Quest Acquisition, the sole director and
executive officer of Quest Acquisition has not been convicted in a criminal
proceeding during the last five years (excluding traffic violations or similar
misdemeanors) and has not been 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 him 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.
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 Corporation, a majority-owned
subsidiary of Thermo Instrument Systems that
manufactures 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 is a director of FLIR Systems Inc., Metrika
Systems Corporation, ONIX Systems Inc., SpectRx
Inc., Spectra-Physics Lasers, Inc., Thermo
BioAnalysis Corporation, Thermo Optek Corporation
and ThermoQuest.
STOCK OWNERSHIP. The stock ownership of the sole director and executive
officer of Quest Acquisition in each of Thermo Electron, Thermo Instrument and
ThermoQuest is set out above under "Thermo Electron -- Stock Ownership."
43
<PAGE> 44
SCHEDULE II
INFORMATION CONCERNING TRANSACTIONS IN THE
COMMON STOCK OF THE COMPANY
The following sets forth information with respect to purchases of common
stock by ThermoQuest, Quest Acquisition, Thermo Instrument and Thermo Electron
during the past two years.
<TABLE>
<CAPTION>
RANGE OF PRICES AVERAGE PURCHASE
NUMBER OF PAID PER SHARE PRICE PER SHARE
SHARES PURCHASED DURING QUARTER PAID DURING
QUARTER/YEAR PURCHASER DURING QUARTER ($)(1) QUARTER($)(1)
- ---------------- ----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
3rd Quarter 1998 ThermoQuest 67,000 9.4688- 9.7324 9.6134
3rd Quarter 1998 Thermo Instrument 525,200 6.5- 8.75 7.2170
3rd Quarter 1998 Thermo Electron 101,600 9.125- 10.1265 9.5886
4th Quarter 1998 ThermoQuest 502,600 9.3125- 10.5 9.5646
1st Quarter 1999 ThermoQuest 389,900 10.0- 13.25 12.1810
2nd Quarter 1999 ThermoQuest 15,000 11.0- 11.875 11.1429
4th Quarter 1999 ThermoQuest 184,100 10.5- 10.875 10.8195
</TABLE>
- ---------------
(1) Prices per share of common stock of ThermoQuest are net of commissions paid
by the respective purchasers.
There were no transactions in the common stock effected during the past 60
days by Quest Acquisition, Thermo Instrument, Thermo Electron or, to the best
knowledge of Quest Acquisition, Thermo Instrument and Thermo Electron, the
directors and executive officers of any of Quest Acquisition, Thermo Instrument
or Thermo Electron.
44
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
(a)(1) 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>
<PAGE> 1
EXHIBIT (a)(1)
LETTER FROM EARL R. LEWIS, CHIEF EXECUTIVE OFFICER AND PRESIDENT
OF THERMO INSTRUMENT.
THERMO INSTRUMENT SYSTEMS INC.
81 Wyman Street
P.O. Box 9046
Waltham, Massachusetts 02454-9046
Dear ThermoQuest Corporation Stockholder:
On January 31, 2000, Thermo Electron Corporation and Thermo Instrument
Systems Inc. announced our intent to take ThermoQuest Corporation (the
"Company") private through a so called "short-form" merger. The purposes of this
letter and the Schedule 13e-3 Transaction Statement that accompanies this letter
are to:
- tell you more about the merger,
- explain why Thermo Electron and Thermo Instrument think that the $17.00
per share that you will receive in the merger is fair consideration for
your shares and
- let you know about your rights for an appraisal hearing under Delaware
law.
Neither you nor the Company's Board of Directors are being asked to approve
the merger. Under Delaware law, Thermo Electron and Thermo Instrument alone own
a sufficient number of shares to cause the merger to occur. After the merger,
Thermo Electron and Thermo Instrument will be the only shareholders of the
Company. In the merger, which we hope will occur on April 4, 2000 or as soon
thereafter as possible, you will receive $17.00 in cash. If you do not believe
that $17.00 is a fair price for your shares, you can follow the procedures
described in the Schedule 13E-3 Transaction Statement and exercise appraisal
rights under Delaware law. YOU SHOULD READ THE SCHEDULE 13E-3 TRANSACTION
STATEMENT CAREFULLY BEFORE DECIDING WHETHER TO ACCEPT $17.00 PER SHARE OR TO
HAVE A DELAWARE COURT DETERMINE THE FAIR VALUE OF YOUR SHARES. The amount
determined by such court may be higher or lower than $17.00 per share.
Stockholders of record on the date the merger becomes effective will be
mailed a Notice of Merger and Appraisal Rights and a Letter of Transmittal.
Stockholders receiving such documents should carefully read them. Detailed
instructions for surrendering your stock certificates, together with a detailed
description of statutory appraisal rights, will be set forth in the Notice of
Merger and Appraisal Rights and the Letter of Transmittal. Please do not submit
your stock certificates before you have received these documents.
After the merger, the Company will not be publicly traded and will not be
listed on the American Stock Exchange. The Company also will not be required to
file reports with the Securities and Exchange Commission. In addition, the
merger will have federal income tax consequences for you, and you should consult
with your tax advisor in order to understand fully how the merger will affect
you.
Sincerely,
Earl Lewis
President and Chief Executive Officer,
Thermo Instrument Systems Inc.
<PAGE> 1
EXHIBIT (b)
LETTER AGREEMENT DATED MARCH 1, 2000 BETWEEN
THERMO ELECTRON AND THERMO INSTRUMENT
March 1, 2000
Thermo Instrument Systems Inc.
81 Wyman Street
Waltham, MA 02454
Attn: Earl R. Lewis
Dear Earl:
Reference is made to Thermo Instrument's proposed acquisitions of the
minority interest investment in each of its majority owned subsidiaries,
ThermoQuest Corporation, Thermo Optek Corporation, Thermo BioAnalysis
Corporation, Metrika System Corporation and ONIX Systems Inc. In connection with
those transactions, Thermo Electron Corporation intends to loan Thermo
Instrument up to $400,000,000 for the acquisition of such interests in each of
ThermoQuest Corporation, Thermo Optek Corporation, Thermo BioAnalysis
Corporation, Metrika System Corporation and ONIX Systems Inc. This loan will be
available at an interest rate equal to the 30-day Dealer Commercial Paper Rate
plus 150 basis points, set at the beginning of each month, provided such rate
shall be reduced to the Dealer Commercial Paper 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. Interest will be due and
payable on a monthly basis and the loan will be payable in full on September 1,
2000. If these terms are acceptable to you, please sign the letter as indicated
below to evidence your acceptance of the terms.
Sincerely,
THERMO ELECTRON CORPORATION
/s/ THEO MELAS-KYRIAZI
Theo Melas-Kyriazi
Vice President and Chief Financial
Officer
ACCEPTED AND AGREED TO:
THERMO INSTRUMENT SYSTEMS INC.
/s/ EARL R. LEWIS
- --------------------------------------
Earl R. Lewis
President and CEO
<PAGE> 1
EXHIBIT (c)
OPINION OF J.P. MORGAN SECURITIES INC. AND
THE BEACON GROUP CAPITAL SERVICES, LLC
THE FOLLOWING OPINION OF J.P. MORGAN SECURITIES INC. AND THE BEACON GROUP
CAPITAL SERVICES, LLC DOES NOT ADDRESS THE FAIRNESS OF THE MERGER TO THE PUBLIC
STOCKHOLDERS, AND IT SHOULD NOT BE RELIED UPON FOR SUCH PURPOSE.
January 29, 2000
Board of Directors
Thermo Electron Corporation
81 Wyman Street
Post Office Box 9046
Waltham, MA 02454-0946
Attention: Dr. Richard Syron
Chairman and Chief Executive Officer
Board of Directors
Thermo Instrument Systems Inc.
81 Wyman Street
Post Office Box 9046
Waltham, MA 02454-0946
Attention: Mr. Earl R. Lewis
President and Chief Executive Officer
Ladies and Gentlemen:
J.P. Morgan Securities Inc. ("J.P. Morgan") and The Beacon Group Capital
Services, LLC (collectively "we", "us" and "our") understand that Thermo
Instrument Systems Inc. ("Thermo Instrument"), a subsidiary of Thermo Electron
Corporation ("Thermo Electron"), proposes to acquire all of the outstanding
common stock, par value $.01 per share, (the "Shares") of ThermoQuest
Corporation (the "Company") not currently held by Thermo Electron or its
subsidiaries from the holders thereof at a purchase price of $17.00 per Share,
net to the seller in cash (the "Consideration"), pursuant to the merger (the
"Merger") of TMQ Acquisition Inc. (the "Purchaser"), a wholly-owned subsidiary
of Thermo Instrument, with and into the Company. You have requested our joint
opinion as to the fairness, from a financial point of view, to Thermo Instrument
and to Thermo Electron of the Consideration proposed to be paid pursuant to the
Merger.
In arriving at our opinion, we have reviewed (i) certain publicly available
information concerning the business of the Company and of certain other
companies engaged in businesses deemed by us to be comparable to those of the
Company; (ii) the reported market prices of the securities of certain other
companies deemed by us to be comparable to the Company; (iii) publicly available
terms of certain transactions involving companies deemed by us to be comparable
to the Company and the consideration paid for such companies; (iv) current and
historical market prices of the Shares; (v) the audited financial statements of
Thermo Instrument, Thermo Electron and the Company for the fiscal year ended
January 2, 1999 and the unaudited financial statements of Thermo Instrument,
Thermo Electron and the Company for the period ended October 2, 1999; (vi)
certain agreements with respect to outstanding indebtedness or obligations of
Thermo Instrument, Thermo Electron and the Company; (vii) the terms of other
business
<PAGE> 2
combinations that we deemed relevant; and (viii) projections for the period from
October 3, 1999 through January 1, 2000 and for fiscal 2000 prepared by the
Company in November 1999 (the "2000 Projections").
In addition, we have held discussions with certain members of the
managements of Thermo Instrument, Thermo Electron and the Company 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 we believed necessary or appropriate to our
inquiry. We have reviewed such other financial studies and analyses and
considered such other information as we deemed appropriate for the purposes of
this opinion.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or was furnished to, or discussed with, us, by Thermo Instrument,
Thermo Electron or the Company or was otherwise reviewed by us, and we have not
assumed any responsibility or liability therefor. We have also assumed that
there have been no material changes in the Company's financial condition,
results of operations, business or prospects since the date of the most recent
financial statements made available to us. We have not conducted, and we have
not assumed any responsibility for conducting, any valuation, appraisal or
physical inspection of any assets or liabilities (contingent or otherwise), nor
have any such valuations or appraisals been provided to us. In relying on the
financial analyses, projections and estimates provided to, or discussed with,
us, we 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. We have relied as
to all legal matters relevant to rendering our opinion upon the advice of
counsel.
Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof. It should be understood that subsequent developments may affect the
conclusions in this opinion and that we do not have any obligation to update,
revise or reaffirm this opinion.
We have acted as financial advisors to Thermo Instrument and Thermo
Electron with respect to the proposed Merger and will receive a fee from Thermo
Electron for our services. We have also 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 of Thermo Electron,
it is contemplated that Thermo Electron will acquire the publicly-held minority
interest in Thermo Instrument. We will receive separate fees for services with
respect to other elements of Thermo Electron's reorganization, including acting
as financial advisors to Thermo Electron in connection with the acquisition of
the publicly-held minority interest in Thermo Instrument. These other fees
include a minimum retainer for each of us and additional compensation if some or
all of the other elements of Thermo Electron's reorganization are completed. In
the ordinary course of their businesses, J.P. Morgan and its affiliates may
actively trade the debt and equity securities of Thermo Instrument, Thermo
Electron or the Company and their affiliates for their own account or for the
accounts of customers and, accordingly, they may at any time hold long or short
positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the Consideration to be paid pursuant to the Merger is fair,
from a financial point of view, to Thermo Instrument and to Thermo Electron.
This letter is provided to the Boards of Directors of Thermo Instrument and
Thermo Electron in connection with and for the purposes of their evaluation of
the Merger. This opinion does not address the fairness of the Consideration to
the public minority stockholders nor does it constitute a recommendation to any
stockholder of the Company as to whether such stockholder should exercise their
statutory appraisal rights. This opinion may not be disclosed, referred to, or
communicated (in whole or in part) to any third party for any purpose whatsoever
except with our prior written consent in each instance. We hereby consent to the
filing of this opinion as an exhibit to the Transaction Statement on Schedule
13E-3 to be filed by Thermo
<PAGE> 3
Instrument, Thermo Electron and certain of their subsidiaries and to the
provision of this opinion to persons who request it as contemplated by the
Schedule 13E-3.
Very truly yours,
J.P. MORGAN SECURITIES INC.
/s/ J.P. MORGAN SECURITIES INC.
- ---------------------------------------------------------
THE BEACON GROUP CAPITAL SERVICES, LLC
/s/ THE BEACON GROUP CAPITAL SERVICES, LLC
- ---------------------------------------------------------
<PAGE> 1
EXHIBIT (f)
DELAWARE GENERAL CORPORATION LAW
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to sec.251
(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or sec.264 of
this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
<PAGE> 2
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
<PAGE> 3
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger 'or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed, by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by or more publications at least
week before the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by publication shall be
approved by the Court, and the costs thereof shall be borne by the surviving or
resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
<PAGE> 4
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
339, L. '98, eff. 7-1-98.)
