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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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CONNING CORPORATION
(NAME OF SUBJECT COMPANY)
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CONNING CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
208215 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
MATTHEW P. MCCAULEY, ESQ.
CONNING CORPORATION
700 MARKET STREET, SUITE H-26
ST. LOUIS, MO 63101
(314) 444-0644
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
WITH COPIES TO:
<TABLE>
<S> <C>
THOMAS L. FAIRFIELD, ESQ. ALLEN I. ISAACSON, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
399 PARK AVENUE ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10022-4697 NEW YORK, NEW YORK 10004-1980
(212) 318-6000 (212) 859-8000
</TABLE>
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION.
NAME AND ADDRESS.
The name of the subject company is Conning Corporation, a Missouri
corporation ("Conning"). The address of the principal executive offices of
Conning is 700 Market Street, St. Louis, Missouri 63101, and its telephone
number is (314) 444-0498.
SECURITIES.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement (the "Statement") relates is the common
stock, par value $.01 per share (the "Shares"), of Conning. As of March 3, 2000,
there were 13,753,359 Shares issued and outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
NAME AND ADDRESS.
The name, business address and business telephone number of Conning, which
is the subject company and the person filing this Statement, are set forth in
Item 1 above.
TENDER OFFER.
This Statement relates to the tender offer by CC Merger Sub Inc., a
Missouri corporation ("Purchaser") and an indirect, wholly owned subsidiary of
Metropolitan Life Insurance Company, a New York life insurance company
("MetLife"), to purchase all outstanding Shares at a purchase price of $12.50
per Share, net to the seller in cash (less any required withholding taxes),
without interest, on the terms and subject to the conditions set forth in the
Offer to Purchase, dated March 20, 2000 (the "Offer to Purchase"), and in the
related Letter of Transmittal (the "Letter of Transmittal," which, together with
the Offer to Purchase, as they may be amended or supplemented from time to time,
constitute the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2)
herewith, respectively, and are incorporated herein by reference in their
entirety. MetLife and its affiliates already own approximately 60.4% of the
outstanding Shares. The Offer is described in a Tender Offer Statement on
Schedule TO (which includes the information required to be reported under Rule
13e-3), dated March 20, 2000 (the "Schedule TO"), which was filed with the
Securities and Exchange Commission on March 20, 2000.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of March 9, 2000 (the "Merger Agreement"), by and among MetLife, Purchaser
and Conning. Following the consummation of the Offer and the satisfaction or
waiver of certain conditions, Conning will merge with Purchaser (the "Merger").
Conning will continue as the surviving corporation. In the Merger, each
outstanding Share that is not controlled by MetLife (other than Shares held by
stockholders who perfect and do not withdraw or otherwise lose their appraisal
rights under Missouri law) will be converted into the right to receive the
merger consideration, which will be $12.50 per Share, net in cash (less any
required withholding taxes), or any higher price paid per Share in the Offer. A
copy of the Merger Agreement is filed as Exhibit (e)(1) herewith and is
incorporated herein by reference in its entirety.
The Schedule TO states that the principal executive offices of MetLife and
Purchaser are located at One Madison Avenue, New York, New York 10010.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
CONFLICTS OF INTEREST.
Except as described or referred to in this Item 3, there exists on the date
hereof no material agreement, arrangement or understanding and no actual or
potential conflict of interest between Conning or its affiliates and either (i)
Conning, its executive officers, directors or affiliates or (ii) Purchaser,
MetLife or any of their respective executive officers, directors or affiliates.
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1. CERTAIN ARRANGEMENTS BETWEEN CONNING AND ITS EXECUTIVE OFFICERS,
DIRECTORS AND AFFILIATES.
Proxy Statement Disclosures. Certain contracts, agreements, arrangements
and understandings between Conning and its executive officers, directors and
affiliates are described on pages 2-13 of Conning's "Proxy Statement Relating to
the Annual Meeting of the Company's Shareholders to be Held on May 11, 1999"
(the "1999 Proxy Statement") in the sections, "Election of Directors,"
"Compensation Committee Report on Executive Compensation," "Compensation
Committee Interlocks and Insider Participation," and "Executive Compensation,"
and in Items 10 through 13, inclusive, of Conning's Form 10-K for the year ended
December 31, 1999 (the "Form 10-K"). The 1999 Proxy Statement is filed herewith
as Exhibits (e)(2) and is incorporated herein by reference. Items 10 through 13,
inclusive, of the Form 10-K are filed herewith as Exhibit (e)(3) and are
incorporated herein by reference. The information incorporated by reference is
considered to be a part of this Statement, except for any information that is
superseded by information included directly in this Statement.
Stock Options. The Merger Agreement provides that, prior to the effective
time of the Merger the Board of Directors of Conning (the "Conning Board") will
adopt a replacement award program under which replacement awards will be
substituted for all stock options outstanding immediately prior to the effective
time and all such stock options will be cancelled. Under the replacement award
program, all directors, officers and employees who hold stock options as of the
effective time of the Merger will receive either (i) a cash payment equal to the
product of (x) the total number of Shares subject to such option and (y) the
excess of $12.50 over the exercise price per Share subject to such option; or
(ii) a deferred payment. In the case of non-qualified options, the deferred
payment will be equal to the present value of the Stock Options, calculated
using a Black-Scholes formula. In the case of incentive stock options, the
deferred payment will equal the greater of (a) the Black-Scholes value of the
Stock Options and (b) the excess of $12.50 over the per share exercise price of
the Stock Option, plus an additional payment representing the value of the loss
of the favorable tax treatment of incentive stock options calculated based on
such excess. All deferred awards will bear interest. The replacement award
program is subject to change, provided that the program remains consistent with
its current terms or with any amendment to which Conning, MetLife and Purchaser
mutually agree.
Employment Agreement. Paul W. Kopsky, Jr. was recently appointed Chief
Financial Officer, effective March 16, 2000 replacing Fred M. Schpero who
resigned. The information regarding Mr. Kopsky's employment arrangements set
forth in "SPECIAL FACTORS -- Interests of Certain Persons" of the Offer to
Purchase is incorporated herein by reference.
Transitional Retention Bonus Program. Prior to the execution of the Merger
Agreement, Conning adopted a transitional retention bonus program for certain
selected employees at a cost of approximately $2.3 million. Recently, in
consultation with MetLife, a proposal was made to expand the program to include
other employees (including certain executive officers). This proposal is subject
to the approval of the Conning board of directors and, under the terms of the
Merger Agreement, the consent of MetLife. Conning estimates that the total cost
for the entire program, including both the program adopted prior to the
execution of the Merger Agreement and the expanded program, will be
approximately $10 to $13 million.
Severance Plan. In February 2000, Conning adopted a severance plan
covering all Conning employees, including executive officers. The severance plan
provides for compensation to any employee (a) whose job is eliminated or
significantly altered (as described in the plan) or (b) who does not accept a
requested transfer to a location more than a specified distance from the
previous location if the position at the previous location becomes unavailable.
The plan provides for payments to eligible employees equal to the greater of (a)
one week of base salary per year of service with a minimum of 10 weeks or (b) a
number of weeks of base salary according to the employee's job classification up
to a maximum of 52 weeks. The severance plan is subject to amendment or
termination by Conning at any time.
2. CERTAIN ARRANGEMENTS BETWEEN CONNING AND METLIFE.
The information set forth in the "INTRODUCTION," "SPECIAL
FACTORS -- Background of the Tender Offer and the Merger Agreement," "SPECIAL
FACTORS -- Purpose of, Alternative to, Reasons
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for, and Effects of the Tender Offer and the Merger," "SPECIAL
FACTORS -- Fairness of the Offer and the Merger," "SPECIAL FACTORS -- Reports,
Opinions and Appraisals," "SPECIAL FACTORS -- Interests of Certain Persons,"
"THE TENDER OFFER AND THE MERGER -- Information Concerning MetLife and
Purchaser," and "THE TENDER OFFER AND THE MERGER -- The Merger Agreement and the
Merger" of the Offer to Purchase is incorporated herein by reference.
3. INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER.
In considering the recommendations of the Conning Board and the Special
Committee (as defined and described below) with respect to the Offer, the
Merger, and the Merger Agreement and the fairness of the consideration to be
received in the Offer and the Merger, stockholders should be aware that certain
officers and directors of MetLife, Purchaser and Conning have interests in the
Offer and the Merger which are described below and which may present them with
certain potential conflicts of interest.
MetLife's Control of Conning. On January 6, 2000, MetLife acquired
indirect beneficial ownership of 8,304,995 Shares when it purchased from General
American Mutual Holding Company, a Missouri mutual insurance holding company
("General American Mutual"), all of the issued and outstanding shares of capital
stock of GenAmerica Corporation ("GenAmerica"). GenAmerica owns all of the
issued and outstanding shares of capital stock of General American Life
Insurance Company ("GALIC"), which owns all of the issued and outstanding shares
of capital stock of GenAm Holding Company, a Delaware corporation ("GenAm
Holding"), which is the record owner of the 8,304,995 Shares. Such number of
Shares represents approximately 60.4% of the outstanding Shares. Richard A.
Liddy, currently a member of the three-member Conning Board, also currently
serves as Senior Executive Vice-President of MetLife; as Chairman, President,
and Chief Executive Officer of GenAmerica; and as Chairman and Chief Executive
Officer of GALIC. Arthur C. Reeds, III, also a current member of the Conning
Board, resigned on March 9, 2000, from the positions of President and Chief
Executive Officer of Conning, which he had held since September 22, 1999. Mr.
Reeds has been replaced in those capacities by James L. Lipscomb. However, Mr.
Reeds continues to serve on the Conning Board. As a result of the foregoing,
MetLife may be deemed to control Conning.
Stock and Option Ownership of Conning Directors and Executive
Officers. The information set forth in "SPECIAL FACTORS -- Interests of Certain
Persons -- Beneficial Ownership of Shares" of the Offer to Purchase is
incorporated herein by reference.
Special Committee. On January 21, 2000, the Conning Board established a
special committee of the Conning Board, composed of John A. Fibiger, Conning's
sole independent director (the "Special Committee"), to consider, evaluate, and
negotiate with MetLife with respect to the proposal made by MetLife on January
14, 2000, to acquire for $10.50 per Share, in cash, all of the outstanding
Shares not currently controlled by MetLife. Mr. Fibiger, who has no affiliation
with Purchaser or MetLife except as a director of Conning, will receive $25,000
as compensation for services rendered in connection with his consideration,
evaluation and negotiation of the Offer and the Merger.
Indemnification. Conning's Restated Articles of Incorporation, as amended,
provide that Conning shall indemnify its directors and officers, to the maximum
extent permitted by law, against any claim, liability or expense incurred as a
result of such persons' service as director or officer, as the case may be, or
any other service provided by such persons on behalf of Conning or at the
request of Conning. Directors and officers of Conning are provided with
directors' and officers' liability insurance coverage under the policy
maintained by MetLife. Conning's Restated Articles of Incorporation, as amended,
are filed herewith as Exhibit (e)(4) and incorporated herein by reference.
The Merger Agreement also provides for the indemnification of Conning's
directors and officers, and a summary of those provisions is set forth in "THE
TENDER OFFER AND THE MERGER -- The Merger Agreement and the
Merger -- Indemnification; Directors' and Officers' Insurance" of the Offer to
Purchase and is incorporated herein by reference.
The Special Committee and the Conning Board were aware of these actual and
potential conflicts of interest and considered them along with the other matters
described below in Item 4, "The Solicitation or Recommendation -- Reasons for
the Recommendation."
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Recommendation.
Recommendation of the Special Committee. At a meeting held on March 9,
2000, the Special Committee (i) determined that the Offer and the Merger, both
as contemplated by the Merger Agreement, are fair to, advisable and in the best
interests of Conning and its stockholders; (ii) approved, and recommended that
the Conning Board approve, the Offer and the Merger; and (iii) recommended, and
recommended that the Conning Board recommend, acceptance of the Offer and, if
necessary, approval of the Merger Agreement by the stockholders of Conning.
Recommendation of the Conning Board. At a meeting held on March 9, 2000,
after hearing the Special Committee's recommendation, the Conning Board, by
unanimous vote of all directors other than Mr. Liddy, who abstained from voting,
and based on, among other things, the recommendation of the Special Committee,
(i) determined that the Offer and the Merger are fair to, advisable and in the
best interests of Conning and its stockholders; (ii) approved the Offer and the
Merger Agreement and the transactions contemplated thereby; and (iii)
recommended acceptance of the Offer and approval of the Merger Agreement by
Conning stockholders. ACCORDINGLY, THE CONNING BOARD RECOMMENDS THAT THE
STOCKHOLDERS OF CONNING ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER AND, IF NECESSARY, APPROVE THE MERGER AGREEMENT.
A letter to the stockholders of Conning, a letter to brokers, dealers,
commercial banks, trust companies, and other nominees, and a letter to clients
for use by brokers, dealers, commercial banks, trust companies, and other
nominees communicating the Conning Board's recommendation, and a press release
announcing the Offer and the Merger, are filed herewith as Exhibits (a)(3),
(a)(4), (a)(5), and (a)(6), respectively, and are incorporated herein by
reference.
The Conning Board's recommendation is based in part on the oral opinion
delivered by Salomon Smith Barney Inc. ("Salomon Smith Barney") to the Special
Committee on March 2, 2000 (which opinion was confirmed in writing on March 9,
2000), to the effect that, as of those dates and based on and subject to the
matters described in the opinion, the price per share of $12.50 to be received
in the Offer and the Merger, taken together, by Conning stockholders other than
MetLife and its affiliates, was fair, from a financial point of view, to such
stockholders. The full text of the written opinion, which sets forth the
assumptions made, the procedures followed, the matters considered and the
limitations on the review undertaken by Salomon Smith Barney, is attached hereto
as Annex A and filed herewith as Exhibit (a)(7) and is incorporated herein by
reference.
Reasons for the Recommendation.
Background of the Offer and the Merger. The information set forth in
"SPECIAL FACTORS -- Background of the Tender Offer and the Merger Agreement" of
the Offer to Purchase is incorporated herein by reference.
Factors Considered by the Special Committee. In reaching its decision to
make the recommendations set forth above, the Special Committee considered a
number of factors, including the following, which generally supported a
recommendation in favor of the Offer:
(i) MetLife's statement in its letter, dated January 14, 2000, to the
Conning Board, that, in addition to its proposed acquisition of all of the
outstanding Conning shares not currently controlled by Metlife for $10.50
per Share in cash, it intends to terminate certain business relationships
MetLife and its affiliates have with Conning, the fact that MetLife has
begun the process of doing so, and the prospective effect of the
termination of such relationships on Conning's revenues, cash flow and
earnings.
(ii) Conning's business and earnings prospects, near- and long-term
business risks, the competitive business environment in which Conning
operates and business and valuation trends in Conning's industry.
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(iii) The change in Conning's position in the asset management industry
as a consequence of MetLife's acquisition of GenAmerica, and thus Conning's
affiliation and significant business relationships with MetLife and their
possible impact on the attractiveness of Conning relative to its
competitors.
(iv) The historical market prices and recent trading activity of the
Shares, including the fact that the offer of $12.50 per Share represents
(a) a premium of approximately 30.7% over the $9.5625 per Share closing
price on January 14, 2000, the last trading day prior to the announcement
of MetLife's initial offer of $10.50 per Share on January 18, 2000, and (b)
a premium of approximately 48.1% over the $8.4375 per Share closing price
on December 16, 1999, one month prior to the announcement of MetLife's
initial offer.
(v) The history of the negotiations between the Special Committee and
its representatives and MetLife and its representatives, including the
facts that (x) the negotiations resulted in an increase in the price at
which MetLife and Purchaser would offer to acquire Conning's outstanding
Shares from $10.50 per Share to $12.50 per Share; and (y) the Special
Committee's belief that MetLife would not further increase the Offer Price
and, accordingly, the $12.50 per Share price was, in the view of the
Special Committee, the highest price that could be obtained from MetLife.
(vi) The fact that MetLife owns a sufficient number of Shares to control
any disposition of Conning and has indicated that it does not have any
current plans to sell any Shares it beneficially owns, which made pursuit
of other possible business combinations impracticable.
(vii) The structure of the transaction, which is designed, among other
things, to result in the receipt by Conning stockholders, other than
MetLife and its affiliates, of the consideration to be paid in the Offer
and the Merger at the earliest practicable time, and the fact that the per
Share consideration to be paid in the Offer and the Merger is the same.
(viii) The written opinion of Salomon Smith Barney, dated March 9, 2000,
to the effect that, as of that date and based on and subject to the matters
described in the opinion, the price per share of $12.50 to be received in
the Offer and the Merger, taken together, by Conning stockholders, other
than MetLife and its affiliates, was fair, from a financial point of view,
to such stockholders, and the analyses that Salomon Smith Barney presented
to the Special Committee in connection therewith. The full text of the
opinion, which sets forth the assumptions made, the procedures followed,
the matters considered and the limitations on the review undertaken by
Salomon Smith Barney, is attached hereto as Annex A and filed herewith as
Exhibit (a)(7) and is incorporated herein by reference. Salomon Smith
Barney's written presentation of the financial analyses on which its
opinion was based, and which was presented to the Special Committee on
March 2, 2000, is filed as Exhibit (c)(3) to the Schedule TO and is
incorporated herein by reference.
(ix) The terms of the Merger Agreement, including that (a) the
conditions to the Offer may not be changed in any manner that is materially
adverse to Conning stockholders without the consent of the Special
Committee; (b) the recommendation of the Special Committee may be
withdrawn, modified or amended to the extent the Special Committee believes
that, based upon the advice of its counsel and financial advisor, it is
necessary to do so in the exercise of its fiduciary duties; (c) the Offer
is not subject to any financing condition; and (d) the other conditions to
the Offer and the Merger are of a limited nature.
(x) The likelihood that the Offer and the Merger would be consummated,
based in part on the financial resources of MetLife.
(xi) The availability under the General and Business Corporation Law of
the State of Missouri of dissenters' rights, pursuant to which the
stockholders of Conning may have the fair value of their Shares judicially
determined in connection with the Merger, if they so desire.
In addition to the factors listed above, the Special Committee considered
the fact that the consummation of the Offer and the Merger would eliminate the
opportunity of the stockholders of Conning other than MetLife and its affiliates
to participate in any potential future growth of the value of Conning, but
believed
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that this loss of opportunity, which is accompanied with a loss of risk inherent
in ownership, was appropriately reflected by the price of $12.50 per Share to be
paid in the Offer and Merger.
Factors Considered by the Conning Board. In making its decisions referred
to above, the Conning Board considered the following factors, which, in the view
of the Conning Board, when taken together, supported such decisions: (i) the
conclusions and recommendations of the Special Committee; (ii) the factors
referred to above as having been taken into account by the Special Committee,
including the receipt by the Special Committee of the opinion of Salomon Smith
Barney to the effect that, as of the date thereof and based on and subject to
the matters described therein, the price per Share of $12.50 to be received in
the Offer and the Merger, taken together, by Conning stockholders, other than
MetLife and its affiliates, was fair, from a financial point of view, to such
stockholders; (iii) the summary presentation of the financial analyses on which
Salomon Smith Barney's opinion was based that was given to the Conning Board by
Salomon Smith Barney at its meeting held on March 9, 2000; and (iv) the fact
that the $12.50 per Share to be received in the Offer and the Merger and the
other terms and conditions of the Merger Agreement were the result of arm's
length negotiations between the Special Committee and its representatives, on
the one hand, and MetLife and its representatives, on the other.
The members of the Conning Board, including the member of the Special
Committee, evaluated the Offer and the Merger in light of their knowledge of the
business, financial condition and prospects of Conning and after their receipt
of the advice of their financial and legal advisors. In light of the number and
variety of factors that the Conning Board and the Special Committee considered
in connection with their evaluations of the Offer and the Merger, neither the
Conning Board nor the Special Committee found it practicable to assign relative
weights to the foregoing factors, and, accordingly, neither the Conning Board
nor the Special Committee did so.
The Conning Board, including the member of the Special Committee, believes
that the Offer and the Merger are procedurally fair because of, among other
things: (i) the fact that the Special Committee consisted of an independent
director appointed to represent the interests of Conning stockholders other than
MetLife and its affiliates; (ii) the fact that the Special Committee retained
and was advised by independent legal counsel; (iii) the fact that the Special
Committee retained Salomon Smith Barney as its independent financial advisor to
assist it in evaluating the proposed consideration to be received in the Offer
and the Merger and received advice from Salomon Smith Barney; (iv) the process
of the deliberations pursuant to which the Special Committee evaluated the Offer
and the Merger and alternatives thereto; (v) the fact that the $12.50 per Share
to be received in the Offer and the Merger and the other terms and conditions of
the Merger Agreement resulted from extended arm's length negotiations between
the Special Committee and its representatives, on the one hand, and MetLife and
its representatives, on the other; and (vi) the availability of dissenters'
rights to the stockholders of Conning.
Opinion of the Special Committee's Financial Advisor. In connection with
Salomon Smith Barney's engagement, the Special Committee requested that Salomon
Smith Barney evaluate the fairness, from a financial point of view, to Conning
stockholders, other than MetLife and its affiliates, of the consideration to be
received by such holders pursuant to the Offer and the Merger, taken together.
On March 2, 2000, Salomon Smith Barney rendered to the Special Committee an oral
opinion (which opinion was confirmed in writing on March 9, 2000) to the effect
that, as of those dates and based on and subject to the matters described in the
opinion, the $12.50 per Share cash consideration to be received in the Offer and
the Merger, taken together, by Conning stockholders, other than MetLife and its
affiliates, was fair, from a financial point of view, to such stockholders.
Salomon Smith Barney also gave a summary presentation of the financial analyses
on which Salomon Smith Barney's opinion was based to the Conning Board at its
meeting held on March 9, 2000. A summary of Salomon Smith Barney's opinion and
the assumptions made, the procedures followed, the matters considered and the
limitations on the review undertaken by Salomon Smith Barney is set forth in
"SPECIAL FACTORS. Reports, Opinions and Appraisals -- Opinion of Salomon Smith
Barney" of the Offer to Purchase and is incorporated herein by reference.
The full text of Salomon Smith Barney's written opinion, dated March 9,
2000, to the Special Committee, which sets forth the assumptions made, the
procedures followed, the matters considered and the
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limitations on the review undertaken by Salomon Smith Barney, is attached hereto
as Annex A and filed herewith as Exhibit (a)(7) and is incorporated herein by
reference. Salomon Smith Barney's written presentation of the financial analyses
on which its opinion was based, and which was presented to the Special Committee
on March 2, 2000, is filed as Exhibit (c)(3) to the Schedule TO and is
incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ SALOMON SMITH
BARNEY'S WRITTEN OPINION CAREFULLY IN ITS ENTIRETY. THE OPINION OF SALOMON SMITH
BARNEY WAS ONLY ONE OF THE FACTORS TAKEN INTO CONSIDERATION BY THE SPECIAL
COMMITTEE IN MAKING ITS DETERMINATION TO RECOMMEND THAT THE CONNING BOARD OF
DIRECTORS APPROVE THE OFFER AND THE MERGER. SALOMON SMITH BARNEY'S OPINION IS
ADDRESSED TO THE SPECIAL COMMITTEE, RELATED ONLY TO THE FAIRNESS, FROM A
FINANCIAL POINT OF VIEW, OF THE $12.50 PER SHARE CASH CONSIDERATION TO BE
RECEIVED IN THE OFFER AND THE MERGER, TAKEN TOGETHER, BY CONNING STOCKHOLDERS,
OTHER THAN METLIFE AND ITS AFFILIATES, DOES NOT ADDRESS ANY OTHER ASPECT OF THE
PROPOSED OFFER OR MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER SUCH STOCKHOLDER SHOULD TENDER
SHARES IN THE OFFER, VOTE IN FAVOR OF THE MERGER OR AS TO ANY OTHER MATTER
RELATING TO THE OFFER OR THE MERGER.
A description of certain of Salomon Smith Barney's relationships with
MetLife is set forth in "SPECIAL FACTORS. Reports, Opinions and
Appraisals -- Opinion of Salomon Smith Barney" of the Offer to Purchase and is
incorporated herein by reference.
INTENT TO TENDER.
To the best knowledge of Conning, after making reasonable inquiry, each of
Conning's executive officers, directors, affiliates, and subsidiaries currently
intends to tender pursuant to the Offer all Shares (other than Restricted Stock,
as defined in the Merger Agreement, or options to acquire Shares) held of record
or beneficially owned by them as of the date hereof.
ITEM 5. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
Salomon Smith Barney has acted as exclusive financial advisor to the
Special Committee in connection with the Offer and the Merger. Salomon Smith
Barney is an internationally recognized investment banking firm engaged in,
among other things, the valuation of businesses and their securities in
connection with mergers and acquisitions, restructurings, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. The Special Committee selected Salomon Smith
Barney to act as financial advisor to the Special Committee on the basis of
Salomon Smith Barney's international reputation and Salomon Smith Barney's
familiarity with Conning. A description of the terms of Salomon Smith Barney's
engagement is set forth in "SPECIAL FACTORS. Reports, Opinions and
Appraisals -- Opinion of Salomon Smith Barney" of the Offer to Purchase and is
incorporated herein by reference.
Except as set forth in this Item 5, neither Conning nor any person acting
on its behalf has employed, retained or compensated, or currently intends to
employ, retain or compensate, any person to make solicitations or
recommendations to the stockholders of Conning on its behalf with respect to the
Offer or the Merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The following transactions in the Shares were effected during the past 60
days by Conning or its executive officers, directors, affiliates and
subsidiaries:
Fred M. Schpero, who served as Conning's Chief Financial Officer until
March 15, 2000, purchased 16,000 Shares from Conning on March 13, 2000 pursuant
to the exercise of stock options, 10,000 of which were purchased at $5.33 per
Share and 6,000 of which were purchased at $7.00 per Share. On the same day, Mr.
Schpero sold 25,000 Shares at a price of $12.25 per Share and 26,046 Shares at a
price of $12.31 per Share in the over-the-counter market through brokers'
transactions.
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Thomas D. Sargent, Executive Vice President of Conning, sold 25,000 Shares
on March 14, 2000, 10,000 Shares on March 16, 2000 and 15,000 Shares on March
17, 2000, all at a price of $12.31 per share. These transactions were effected
in the over-the-counter market through brokers' transactions.
Except as set forth in this Item 6, no transactions in the Shares during
the past 60 days have been effected by Conning or, to the best of Conning's
knowledge, by any executive officer, director, affiliate, or subsidiary of
Conning.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Except as described or referred to in this Statement, no negotiation is
being undertaken or engaged in by Conning which relates to or would result in
(i) a tender offer or other acquisition of the Shares by Conning, any of its
subsidiaries or any other person, (ii) an extraordinary transaction, such as a
merger, reorganization, or liquidation, involving Conning or any of its
subsidiaries, (iii) a purchase, sale, or transfer of a material amount of assets
by Conning or any of its subsidiaries, or (iv) any material change in the
present dividend rate or policy, or indebtedness or capitalization of Conning.
Except as described or referred to in this Statement, there are no
transactions, Conning Board resolutions, agreements in principle, or signed
contracts entered into in response to the Offer that would relate to one or more
of the matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION.
The information contained in the Offer to Purchase filed as Exhibit (a)(1)
herewith is incorporated herein by reference.
ITEM 9. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase, dated March 20, 2000.*+
(a)(2) Form of Letter of Transmittal.*+
(a)(3) Letter from the President and Chief Executive Officer of
Conning to Conning's Stockholders, dated March 20, 2000.+
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies, and Other Nominees.*
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies, and Other Nominees to Clients.*
(a)(6) Text of joint press release issued by MetLife and Conning,
dated March 9, 2000.*
(a)(7) Opinion of Salomon Smith Barney Inc. dated March 9, 2000
(attached as Annex A hereto).+
(e)(1) Agreement and Plan of Merger, dated as of March 9, 2000,
among MetLife, Purchaser and Conning.*
(e)(2) Conning's Proxy Statement Relating to the Annual Meeting of
Shareholders to be Held on May 11, 1999 (incorporated by
reference to the Schedule 14A of Conning filed on May 1,
1999 (File No. 0-23183)).
(e)(3) Items 10 through 13 of the Form 10-K of Conning for the year
ended December 31, 1999 (incorporated by reference to the
Form 10-K of Conning, filed on March 17, 2000 (File No.
0-23183)).
(e)(4) Restated Articles of Incorporation of Conning, as amended
(incorporated by reference to Exhibit 3.1 of the Form 10-K
of Conning for the year ended December 31, 1997 (File No.
0-23183)).
</TABLE>
- ---------------
* Incorporated by reference to the Schedule TO filed by MetLife and Purchaser on
March 20, 2000.
+ Included in copies mailed to Conning's stockholders.
8
<PAGE> 10
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete, and
correct.
CONNING CORPORATION
By: /s/ JAMES L. LIPSCOMB
------------------------------------
Name: James L. Lipscomb
Title: President and Chief Executive
Officer
Dated: March 20, 2000
9
<PAGE> 1
[Conning Letterhead]
Conning Corporation
700 Market Street
St. Louis, MO 63101
March 20, 2000
Dear Stockholder:
On March 9, 2000, Conning Corporation ("Conning"), Metropolitan Life
Insurance Company, a New York life insurance company ("MetLife"), and CC Merger
Sub Inc., a Missouri corporation and an indirect wholly owned subsidiary of
MetLife ("Purchaser"), entered into a merger agreement providing for the
acquisition of all of the common stock of Conning not already controlled by
MetLife at $12.50 per share, net to the seller in cash (less any required
withholding taxes), without interest thereon.
Purchaser has today commenced a cash tender offer for all shares of Conning
common stock, other than shares controlled by MetLife, at a price of $12.50 per
share, net to the seller in cash (less any required withholding taxes), without
interest thereon. The merger agreement provides that, following the tender
offer, Purchaser will merge with and into Conning and any remaining shares of
common stock of Conning not already controlled by MetLife will be converted into
the right to receive $12.50 per share in cash, or any higher price paid per
share in the tender offer, without interest.
At a meeting on March 9, 2000, your Board of Directors (the "Board"), by
unanimous vote of all directors other than Mr. Richard A. Liddy (who abstained
from voting because of his positions as an officer of MetLife and of a MetLife
subsidiary), based on, among other things, the recommendation of a Special
Committee comprised of Conning's sole independent director, (i) determined that
the tender offer and the merger are fair to, advisable and in the best interests
of Conning and its stockholders; (ii) approved the tender offer and the merger
agreement and the transactions contemplated thereby; and (iii) recommended
acceptance of the tender offer and approval of the merger agreement by Conning's
stockholders.
In arriving at its recommendation, the Board gave careful consideration to
the factors described in the enclosed tender offer materials and Conning's
Solicitation/Recommendation Statement on Schedule 14D-9. Included as Annex A to
the Schedule 14D-9 is the written opinion, dated March 9, 2000, of Salomon Smith
Barney Inc., the Special Committee's financial advisor, to the effect that, as
of that date and based on and subject to the matters described in the opinion,
the price per share of $12.50 to be received by the holders of shares of Conning
common stock, other than MetLife and its affiliates, in the tender offer and the
merger, was fair, from a financial point of view, to those holders.
Enclosed for your consideration are copies of the tender offer materials
and Conning's Solicitation/ Recommendation Statement on Schedule 14D-9, which
are being filed today with the Securities and Exchange Commission. These
documents should be read carefully.
Sincerely,
James L. Lipscomb signature
James L. Lipscomb
President and Chief Executive Officer
<PAGE> 1
Salomon Smith Barney
- --------------------
A member of Citigroup [logo]
March 9, 2000
Special Committee of the Board of Directors
Conning Corporation
700 Market Street
St. Louis, Missouri 63101
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock, par value $0.01 per share (the "Common
Stock"), of Conning Corporation (the "Company"), other than Metropolitan Life
Insurance Company ("Parent" or "MetLife") and its affiliates, of the
consideration to be received by such stockholders (the "Non-MetLife
Stockholders") in the proposed acquisition by Parent of the outstanding shares
of Common Stock owned by the Non-MetLife Stockholders (the "Proposed
Transaction") pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") to be entered into by and among Parent, CC Merger Sub Inc.
("Purchaser") and the Company. As more fully described in the Merger Agreement,
Purchaser will make a cash tender offer (the "Offer") to acquire all the issued
and outstanding shares of Common Stock not owned by Parent or its subsidiaries
for $12.50 per share (the "Offer Price"). We understand that consummation of the
Offer will be conditioned upon the tender of a number of shares of Common Stock
that, when aggregated with the number of shares of Common Stock currently owned
by Parent and its affiliates, represents at least two-thirds of the total number
of outstanding shares of Common Stock. We also understand that, following the
Offer, Purchaser would be merged with and into the Company and each outstanding
share of Common Stock not beneficially owned by Parent and its affiliates would
be converted into the right to receive the Offer Price.
In arriving at our opinion, we reviewed a draft of the Merger Agreement dated
March 7, 2000 and held discussions with certain senior officers, directors and
other representatives and advisors of the Company concerning the businesses,
operations and prospects of the Company. We examined certain publicly available
business and financial information relating to the Company as well as certain
financial forecasts and other information and data for the Company which were
provided to or otherwise discussed with us by the management of the Company. We
reviewed the financial terms of the Proposed Transaction as set forth in the
Merger Agreement in relation to, among other things: current and historical
market prices and trading volumes of the Common Stock; the historical and
projected earnings and other operating data of the Company; and the
capitalization and financial condition of the Company. We considered, to the
extent publicly available, the financial terms of certain other similar
transactions recently effected which we considered relevant in evaluating the
Proposed Transaction and analyzed certain financial, stock market and other
publicly available information relating to the businesses of other companies
whose operations we considered relevant in evaluating those of the Company. In
addition to the foregoing, we conducted such other analyses and examinations and
considered such other information and financial, economic and market criteria as
we deemed appropriate in arriving at our opinion.
<PAGE> 2
Special Committee of the Board of Directors
Conning Corporation
March 9, 2000
Page 2
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the management of the Company that such forecasts and other
information and data were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of the Company as
to the future financial performance of the Company.
We have not made or been provided with an independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of the Company nor have we
made any physical inspection of the properties or assets of the Company.
Representatives of the Company have advised us, and we have assumed, that the
final terms of the Merger Agreement will not vary materially from those set
forth in the draft reviewed by us. We have further assumed that the Proposed
Transaction will be consummated in accordance with the terms of the Merger
Agreement without waiver of any of the conditions precedent to the Proposed
Transaction contained in the Agreement. We note that Parent and its affiliates
hold approximately 61% of the outstanding Common Stock, and Parent has indicated
that it is not interested, under any circumstances, in selling its interest in
the Company. Accordingly, we were not requested to, and we did not, solicit
third party indications of interest in the possible acquisition of all or a part
of the Company, nor were we requested to consider, and our opinion does not
address, the relative merits of the Proposed Transaction as compared to any
alternative business strategies that might exist for the Company or the effect
of any other transaction in which the Company might engage. In addition, we
understand that Parent has stated its intention to terminate certain business
relationships it and its affiliates have with the Company, and has begun the
process of doing so. In arriving at our opinion, we have taken into account the
prospective effect on the Company's revenues, cash flow and earnings of such
termination of business and other potential loss of business derived from the
Company's relationship with Parent and its affiliates. Our opinion is
necessarily based upon information available to us, and financial, stock market
and other conditions and circumstances existing and disclosed to us, as of the
date hereof.
Salomon Smith Barney Inc. has acted as financial advisor to the Special
Committee of the Board of Directors of the Company (the "Special Committee")
reviewing the Proposed Transaction, and in connection with it doing so, will
receive a fee for such services, a significant portion of which is contingent
upon the consummation of the Proposed Transaction. We have in the past provided
and are currently providing investment banking services to Parent unrelated to
the Proposed Transaction, for which services we will receive compensation. In
particular, we anticipate that Salomon Smith Barney Inc. will have a significant
role in MetLife's upcoming initial public offering. In the ordinary course of
our business, we and our affiliates may actively trade or hold the securities of
the Company and Parent for our own account or for the account of our customers
and, accordingly, may at any time hold a long or short position in such
securities. In addition, we and our affiliates (including Citigroup Inc. and its
affiliates) may maintain relationships with the Company, Parent and their
respective affiliates.
<PAGE> 3
Special Committee of the Board of Directors
Conning Corporation
March 9, 2000
Page 3
Our advisory services and the opinion expressed herein are provided for the
information of the Special Committee in its evaluation of the Proposed
Transaction, and our opinion is not intended to be and does not constitute a
recommendation to any Non-MetLife Stockholder as to whether such holder should
tender shares of Common Stock in the Offer. This letter may be attached in its
entirety as an exhibit to the Company's Schedule 14D-9 relating to the Offer.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the Offer Price is fair, from a financial
point of view, to the Non-MetLife Stockholders.
Very truly yours,
/s/ Salomon Smith Barney
