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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9/A
(AMENDMENT NO. 2)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(9) OF THE
SECURITIES EXCHANGE ACT OF 1934
DR PEPPER/SEVEN-UP COMPANIES, INC.
(Name of Subject Company)
DR PEPPER/SEVEN-UP COMPANIES, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
256131 30 1
(CUSIP Number of Class of Securities)
NELSON A. BANGS
VICE PRESIDENT, GENERAL
COUNSEL & SECRETARY
DR PEPPER/SEVEN-UP COMPANIES, INC.
8144 WALNUT HILL LANE
DALLAS, TEXAS 75231-4372
(214) 360-7000
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
COPY TO:
Andrew M. Baker
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
(214) 953-6735
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This Amendment No. 2 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9, dated February 1, 1995 as amended by Amendment No.
1 dated February 13, 1995 (as amended, the "Schedule 14D-9"), relating to the
offer by DP/SU Acquisition Inc., a Delaware corporation (the "Purchaser") and an
indirect wholly owned subsidiary of Cadbury Schweppes plc, an English company
(the "Parent"), to purchase all of the Company's issued and outstanding shares
of common stock, par value $.01 per share, and the associated preferred stock
purchase rights (collectively, the "Shares") of Dr Pepper/Seven-Up Companies,
Inc. (the "Company") at a price of $33.00 per Share, net to the seller in cash.
Terms used herein without definition shall have the meanings ascribed to such
terms in the aforementioned Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4 of the Schedule 14D-9 is hereby amended and supplemented as follows:
(b) Background of the Offer; Reasons for the Recommendation.
OPINIONS OF FINANCIAL ADVISORS
The Schedule 14D-9 included the full text of the opinions delivered by BT
Securities Corporation ("BT") and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), the Company's financial advisors, to the Board of Directors
of the Company and the Special Committee. The Schedule 14D-9 also summarized,
under the caption "Opinions of Financial Advisors," among other things, certain
of the financial analyses performed by BT and DLJ in arriving at their opinions
and making their presentation to the Board of Directors at the meeting at which
the Board approved the Tender Offer, the Merger and the Merger Agreement (the
"January 25 Board Meeting"). The financial analyses summarized in the Schedule
14D-9 included a "Comparable Company's Analysis," a "Comparable Acquisitions
Multiples Analysis," a "Discounted Cash Flow Analysis" and an "Acquisitions
Premiums Analysis." Following the summary description of these analyses, the
Schedule 14D-9 stated that these analyses, taken together, indicated a
hypothetical range of per Share values for the Company of between $26.02 and
$36.19.
To supplement the information provided in the Schedule 14D-9 with respect to
the hypothetical range of per Share values for the Company under the analyses
performed by BT and DLJ, the following paragraph sets forth for each of the four
analyses described in the Schedule 14D-9 the hypothetical range of per Share
values indicated by each such analyses. The following information is a further
summary of the analysis performed by BT and DLJ in connection with delivering
their fairness opinions to the Board and the Special Committee.
The Comparable Companies Analysis described in the Schedule 14D-9 indicated
a hypothetical range of per Share values for the Company of between $28.51 and
$35.64. The Comparable Acquisitions Multiples Analysis described in the Schedule
14D-9 indicated a hypothetical range of per Share values for the Company of
between $26.02 and $35.60. The Discounted Cash Flow Analysis described in the
Schedule 14D-9 indicated a hypothetical range of per Share values for the
Company of between $26.88 and $36.19. The Acquisitions Premiums Analysis
described in the Schedule 14D-9 indicated a hypothetical range of per Share
values for the Company of between $29.00 and $35.00.
The $33.00 price share being offered by Purchaser in the Tender Offer and
Merger indicates a valuation at 13.7 times the Company's 1994 earnings before
interest, tax, depreciation and amortization ("EBITDA"). In their presentation
to the Board of Directors at the January 25 Board Meeting, BT and DLJ advised
the Board that in selected beverage company precedent transaction indicated
values ranged from 11.0 times EBITDA to 17.2 times EBITDA, with an average
(excluding the high and low multiples) of 11.9 times EBITDA. BT and DLJ also
advised the Board that in selected consumer products precedent transactions
indicated values ranged from 11.2 times EBITDA to 19.9 times EBITDA, with an
average (excluding the high and low multiples) of 14.7 times EBITDA.
Reference is made to the full summary of the analyses undertaken by the
Company's financial advisors and the text of the opinions rendered by BT and
DLJ, each as contained in the Schedule 14D-9. The information contained herein
is not a complete summary of such analyses or opinions and should be read in
conjunction with the description of such matters contained in the Schedule
14D-9.
The acquisition of the Company by Parent and Purchaser pursuant to the
Tender Offer and Merger will provide Parent with the opportunity to realize
substantial operating synergies, which may result in the realization by Parent
of significant cost savings in operating the combined companies. In addition,
as a result of the acquisition, Parent may benefit from the utilization over
time of the federal income tax loss carryfowards of the Company and its
subsidiaries, which totalled approximately $270 million as of December 31, 1993.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented as follows:
SETTLEMENT OF LITIGATION
As previously described in the Schedule 14D-9, the Company and certain of
its directors are defendants in certain purported stockholder class action
lawsuits in which the plaintiffs have alleged, among other things, violations by
the defendant directors of their fiduciary duties to the Company's stockholders.
The plaintiffs in In Re: Dr Pepper/Seven-Up Companies, Inc. Shareholders
Litigation, Civil Action No. 13109 (the "Consolidated Action"), which represents
the consolidation of eight purported class action lawsuits filed in the Court of
Chancery of the State of Delaware (the "Delaware Court"), as represented by
plaintiffs' counsel, have entered into a Memorandum of Understanding, dated
February 21, 1995 (the "Memorandum of Understanding"), with the defendants
(through their counsel) pursuant to
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which the Consolidated Action will be settled. The settlement contemplated by
the Memorandum of Understanding will not be effective unless, among other
things, the plaintiffs in Sarnoff v. Dr Pepper/Seven-Up Companies, Inc., et al,
Civil Action No. 94-11313-B (the "Sarnoff Action"), a purported class action
lawsuit filed in the District Court for the 44th Judicial District of Texas in
Dallas County, Texas (the "Texas Court"), execute the appropriate documentation
necessary to have the action pending before the Texas Court non-suited and
refiled with the Delaware Court, at which time the refiled Sarnoff Action will
be consolidated with and become part of the Consolidated Action. The proposed
settlement is subject to, among other things, approval of the Delaware Court.
The Memorandum of Understanding provides for a settlement of the
Consolidated Action (which will include the refiled Sarnoff Action) on the
following general terms: (i) the certification of the Consolidated Action, as
class actions under the rules of the Delaware Court, which class would consist
of all holders of common stock of the Company (other than the defendants) on and
between September 1, 1993 and the effective date of the Merger; (ii) the
complete discharge, settlement and release of, and an injunction barring, all
claims, rights, causes of action, suits, matters and issues, whether known or
unknown, that have been, could have been, or in the future might be asserted in
the Consolidated Action or in any court or proceeding (including but not limited
to any claims arising under federal or state law relating to alleged fraud,
breach of any duty, negligence or otherwise) by or on behalf of plaintiffs or
any member of the class, whether individual, class derivative, representative,
legal, equitable or any other type or in any other capacity against the
defendants or any of their associates, affiliates, subsidiaries, present or
former officers, directors, employees, attorneys, accountants, financial
advisors or other advisors or agents, heirs, executors, personal
representatives, estates, administrators, and successors and assigns (in each
case, in each and every capacity) (the "Defendants"), which have arisen, arise
now or hereafter rise out of or relate in any way to the Tender Offer, the
Merger, the Merger Agreement, the Rights Agreement, the Stockholders Agreement
or any of the transactions or events described in the complaints in the
Consolidated Action or any disclosures related thereto (collectively, the
"Settled Claims") (subject to certain limited exceptions); (iii) the Defendants
in each such action have denied, and continue to deny, that any of them have
committed or have threatened to commit any violations of law or breaches of duty
to the plaintiffs or any members of the class; (iv) the Defendants in the
actions are entering into the Memorandum of Understanding, and will be entering
into proposed settlement documentation, solely because the proposed settlement
would eliminate the burden and expense of further litigation and would
facilitate the consummation of the Tender Offer and the Merger, which they
believe to be in the best interest of the Company and all of its stockholders;
and (v) subject to the order of the Delaware Court, pending final determination
of whether the settlement provided for by the Memorandum of Understanding should
be approved, the plaintiffs and all members of the class, or any of them, are
barred and enjoined from commencing or prosecuting any action asserting any
Settled Claims, either directly, representatively, derivatively or in any other
capacity against any of the Defendants. In addition, this amendment to the
Schedule 14D-9, including the supplemental information set forth in item 4
above, is being filed with the Securities and Exchange Commission and mailed to
stockholders of the Company pursuant to the terms of the settlement provided for
in the Memorandum of Understanding. In addition, the parties have agreed in the
Memorandum of Understanding that plaintiffs' counsel in the Consolidated Action
will apply to the Delaware Court for an aggregate award of attorneys' fees and
expenses in an amount not to exceed $690,000, which Defendants have agreed not
to oppose.
RIGHTS AGREEMENT AMENDMENT
Immediately prior to the execution of the Merger Agreement, the Company
amended the Rights Agreement (the "Amendment"). The Amendment provides that (A)
none of the execution or delivery of the Merger Agreement or the Stockholders
Agreement or the making of the Offer will cause (i) the Rights to become
exercisable under the Rights Agreement, (ii) Parent or Purchaser or any of their
affiliates to be deemed an Acquiring Person (as defined in the Rights Agreement)
or (iii) the Stock Acquisition Date (as defined in the Rights Agreement) to
occur upon any such event, (B) none of the acceptance for payment or payment for
Shares by Purchaser pursuant to the Offer or the consummation of the Merger will
cause (i) the Rights to become exercisable under the Rights Agreement or (ii)
Parent or Purchaser or any of their affiliates to be deemed an Acquiring Person
or (iii) the Stock Acquisition Date to occur upon any such event, and (C) the
Expiration Date (as defined in the Rights Agreement) shall occur no later than
immediately prior to the purchase of shares pursuant to the Offer; provided,
however, that if the Merger Agreement is terminated in accordance with its
terms, the Board may rescind its approval of the Offer as a Permitted Offer (as
defined in the Rights Agreement) or further amend the Rights Agreement so that
clauses (B) and (C) above will not be the case.
The foregoing description of the Amendment is a summary only and is
qualified in its entirety by reference to the form thereof filed as Exhibit 13
to the Schedule 14D-9 and incorporated herein by reference in its entirety. The
Rights Agreement has been filed as Exhibit 12 to the Schedule 14D-9 and is
incorporated herein by reference in its entirety.
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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.
February 21, 1995
DR PEPPER/SEVEN-UP COMPANIES, INC.
By: /S/ NELSON A. BANGS
..................................
Nelson A. Bangs
Vice President, General Counsel
and Secretary
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