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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
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ARCO CHEMICAL COMPANY
(NAME OF SUBJECT COMPANY)
ARCO CHEMICAL COMPANY
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON SHARES, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
001920 10 7
(CUSIP NUMBER OF CLASS SECURITIES)
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Robert J. Millstone, Esq.
Vice President and General Counsel
ARCO Chemical Company
3801 West Chester Pike
Newtown Square, Pennsylvania 19073
(610) 359-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
This Amendment No. 3 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 filed by ARCO
Chemical Company, a Delaware corporation (the "Company"), on June 25, 1998
(and amended by filings made on July 1, 1998 and July 6, 1998) (as
previously amended, the "Schedule 14D-9") in connection with the offer (the
"Offer") by Lyondell Acquisition Corporation, a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of Lyondell Petrochemical
Corporation, a Delaware corporation ("Lyondell"), to purchase for cash all
of the outstanding shares of Common Stock, par value $1.00 per share, of
the Company. The Offer was made pursuant to the terms of an Agreement and
Plan of Merger, dated as of June 18, 1998, between the Company, Lyondell
and Purchaser. All capitalized terms used but not defined herein shall have
the meanings set forth with respect to such terms in the Schedule 14D-9.
Item 4 THE SOLICITATION OR RECOMMENDATION
The following sentence should be added to "Background," as the
last sentence of the paragraph immediately prior to the paragraph beginning
"On May 15, 1998," (p. 19):
In light of the bid process conducted by ARCO and Salomon Smith
Barney, the Company did not separately solicit potential bidders for
the sale of the Company.
Factors (a), (b), (e), (i) and (j) of the "Reasons for the
Recommendation of the Board of Directors" are hereby amended to read in
their entirety as follows:
(a) the industry in which the Company operates and the financial
condition and historical results of operations and cash flows of the
Company, including the Board's general familiarity with the
considerations summarized under the captions "RISK FACTORS--Industry
Cyclicality and Overcapacity; Intense Competition; Raw Material Prices
and Availability; MTBE Legislative Risks; Operating Hazards;
Environmental Considerations; and Foreign Operations, Country Risks
and Exchange Rate Fluctuations" of the prospectus included in the
Registration Statement on Form S-3 filed by the Company with the
Commission on June 3, 1998 (the "Prospectus") (such information being
incorporated herein by reference);
(b) the strategic plans of the Company and the prospects of the
Company as an independent entity, taking into account the
considerations referred to in clause (a) above, general economic
uncertainties (including in Asia), the risk that the Company might not
achieve its forecasted results of operations and uncertainties
regarding the valuation that would be accorded the Shares in the
equity markets over the ensuing years;
(e) possible alternatives to the Offer and the Merger, including,
without limitation, the Public Offering/Repurchase Transaction that
had been the subject of discussion or action during the preceding
months. The Public Offering/Repurchase Transaction contemplated that,
simultaneously with a secondary offering by ARCO of approximately 24
million Shares, the Company would repurchase from ARCO, at the
offering price, up to $850 million of additional Shares to the extent
necessary to reduce ARCO's interest in the Company to 50%. The Public
Offering/Repurchase Transaction was approved by a Special Committee of
the Board and the Board after considering a variety of factors
including the increased leverage that would be incurred to finance the
transaction, the expanded public float that would result from ARCO's
secondary offering and other factors which are described under the
captions "RISK FACTORS--Significant Increase in Leverage; Potential
Impact on Capital Expenditures and Dividends; and Tax Treatment of
Dividends" and "SELLING STOCKHOLDER; STOCK REPURCHASE" in the
Prospectus (such information being incorporated herein by reference).
The Board was also cognizant that management had proposed and ARCO had
rejected a leveraged recapitalization involving a self tender offer
for all of the Shares held by the Company's public stockholders, the
repurchase of a portion of the Shares held by ARCO and an equity
investment by an institutional investor; and that ARCO had determined
it did not wish to continue on as a greater than 50% owner of the
Company;
(i) ARCO's view, reflected in a letter (set forth as an Exhibit
hereto and incorporated herein by reference), dated June 17, 1998,
from Mike R. Bowlin, Chairman and Chief Executive Officer of ARCO, to
the Board of Directors, that the achievement of the Company's recent
long-range plan is subject to significant risks and uncertainties and,
given such risks and uncertainties and the added uncertainties in the
equity markets, the Offer will allow stockholders to achieve greater
value; ARCO's determination in light of the foregoing that a sale of
the Company on the proposed terms is in the best interests of all of
the Company's stockholders; its expressed desire and recommendation
that the Board of Directors approve the Merger Agreement; and its
commitment under the Tender and Voting Agreement to tender its Shares
pursuant to the Offer;
(j) the financial and other terms and conditions of the Offer,
including the all-cash nature of the consideration being offered and
the likelihood of the waiting period under the HSR Act expiring or
being terminated without a request for further information from
antitrust regulators, and the likelihood that the consummation of the
Offer would occur as promptly after the execution of the Merger
Agreement as permitted by the federal securities laws;
The penultimate paragraph of "Reasons for the Recommendation of
the Board of Directors" is hereby amended to read in its entirety as
follows:
The Board's decision was based on the totality of information
considered by it. The Board of Directors did not assign relative
weights to the factors considered by it, determine that any one factor
was of primary importance or identify the individual factors that
supported its decision or those that failed to support its decision.
Item 9. MATERIALS TO BE FILED AS EXHIBITS
49. Letter, dated June 17, 1998, from Mike R. Bowlin, Chairman and
Chief Executive Officer of ARCO, to the Board of Directors of the
Company incorporated herein by reference.
50. "RISK FACTORS--Industry Cyclicality and Overcapacity; Intense
Competition; Raw Material Prices and Availability; MTBE Legislative
Risks; Operating Hazards; Environmental Considerations; and Foreign
Operations, Country Risks and Exchange and Exchange Rate Fluctuations"
and "SELLING STOCKHOLDER; STOCK REPURCHASE" in the Registration
Statement on Form S-3 filed by the Company with the Commission on June
3, 1998 and incorporated herein by reference.
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.
By: /s/ Robert J. Millstone
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Name: Robert J. Millstone
Title: Vice President and
General Counsel
Dated: July 15, 1998
EXHIBIT 99.49
[ATLANTIC RICHFIELD COMPANY LETTERHEAD]
June 17,1998
To the ARCO Chemical Company Board of Directors
ARCO Chemical Company
3801 West Chester Pike
Newtown Square, PA 19073-2387
Dear ARCO Chemical Company Directors:
ARCO will be presenting to your Board on Thursday, June 18, a transaction
in which Lyondell Petrochemical Company will make a tender offer for all of
ARCO Chemical Company's outstanding Common Stock.
I want you to know that ARCO is strongly in favor of this transaction. We
have carefully reviewed and reflected on ARCO Chemical Company's recent
long range plan. While it is a good plan, we believe that there are
significant risks and uncertainties in achieving the LRP. Given the risks
in the plan and the added uncertainties in the equity markets, I believe
that greater value will be realized by the shareholders in accepting the
Lyondell proposal.
This is not a reflection on ARCO Chemical management. They've done a very
good job. This is simply our view of how to achieve the highest shareholder
value.
We have greatly enjoyed our association with ARCO Chemical Company, its
directors, management and employees, and I thank you for your excellent
service.
Sincerely,
Mike R. Bowlin
Chairman and Chief Executive Officer
