<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
------------------------
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
(Name of Subject Company)
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
150918 10 0
(CUSIP Number of Class of Securities)
Richard J. Lubasch, Esq.
Senior Vice President, General Counsel and Secretary
Cellular Communications International, Inc.
110 East 59(th) Street
New York, NY 10022
(212) 906-8480
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement).
With Copies to:
Thomas H. Kennedy, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
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<PAGE>
This Amendment No. 2 supplements and amends the Solicitation/Recommendation
Statement on Schedule 14D-9, dated December 17, 1998, as amended (the "Schedule
14D-9"), filed by Cellular Communications International, Inc., a Delaware
corporation (the "Company") relating to the tender offer by Kensington
Acquisition Sub, Inc., a Delaware corporation (the "Purchaser"), disclosed in a
Tender Offer Statement on Schedule 14D-1 dated December 17, 1998 (the "Schedule
14D-1"), to purchase all of the outstanding shares of common stock, par value
$.01 per share, of the Company (the "Shares"), including the Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement (the
"Rights Agreement") dated as of November 8, 1990, between the Company and
Continental Stock Transfer & Trust Company, as Rights Agent, at $65.75 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated December 17, 1998 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute the
"Offer"). Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Schedule 14D-9.
ITEM 8 ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented by adding
the following subsection (d) as set forth below:
(d) Litigation
PHYLLIS FREIMAN V. SIDNEY R. KNAFEL, ET AL. On December 28, 1998,
Phyllis Freiman, individually and on behalf of all other holders of Common
Stock and their successors in interest, filed a purported class action
complaint in the Delaware Court of Chancery (the "Court") against the
Company and each of the Company's directors. The complaint alleges, among
other things, that the defendants breached their fiduciary duties to the
Company and its stockholders by (i) entering into the Merger Agreement for
unfair and inadequate consideration, (ii) failing to disclose in the
Schedule 14D-9 or Schedule 14D-1 material information regarding CCIL's
projected earnings and/or prospects, (iii) omitting from the Schedule 14D-9
certain information regarding financial advisor Wasserstein Perella, (iv)
agreeing to certain termination provisions in the Merger Agreement, and (v)
entering into the Stockholders Agreement with Olivetti and Mannesman. The
plaintiff seeks as relief, among other things, (i) an order from the Court
(A) preliminarily and permanently enjoining the defendants from proceeding
with, consummating, or closing the proposed Transaction, or (B) rescinding
the proposed Transaction in the event that it is consummated and awarding
rescissory damages, (ii) compensatory monetary damages, interest, and (iii)
attorneys' fees and expenses. The defendants believe that the lawsuit is
without merit and intend to defend themselves vigorously. The foregoing
description is qualified in its entirety by reference to the full text of
the complaint which is filed herewith as Exhibit 9 and is incorporated
herein by reference.
FLORENCE MARCUS V. WILLIAM B. GINSBERG ET AL. On December 30, 1998,
Florence Marcus, individually and on behalf of all other holders of Common
Stock, filed a purported class action complaint in the Court against the
Company and each of the Company's directors. The complaint alleges, among
other things, that the defendants breached their fiduciary duties to the
Company and its stockholders by (i) entering into the Merger Agreement for
unfair consideration, (ii) failing to disclose in the Schedule 14D-9 or
Schedule 14D-1 material information regarding CCIL's projected earnings
and/or prospects, (iii) omitting from the 14D-9 certain information
regarding financial advisor Wasserstein Perella, (iv) agreeing to certain
termination provisions in the Merger Agreement, and (v) entering into the
Stockholders Agreement with Olivetti and Mannesman. The plaintiff seeks as
relief, among other things, (i) an order from the Court (A) enjoining the
defendants from proceeding with the Merger Agreement, and (B) rescinding, to
the extent already implemented, the Merger Agreement or any of the terms
thereof, and (ii) unspecified monetary damages and attorneys' fees and
expenses. The defendants believe that the lawsuit is without merit and
intend to defend themselves vigorously. The foregoing description is
qualified in its entirety by reference to the full text of the complaint
which is filed herewith as Exhibit 10 and is incorporated herein by
reference.
2
<PAGE>
ITEM 9 MATERIAL TO BE FILED AS EXHIBITS.
Item 9 of the Schedule 14D-9 is hereby amended and supplemented by adding
Exhibit 9 and Exhibit 10:
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ------------
<S> <C>
Exhibit 9 Complaint filed in action entitled PHYLLIS FREIMAN, INDIVIDUALLY AND ON BEHALF
OF ALL OTHER SHAREHOLDERS SIMILARLY SITUATED V. SIDNEY R. KNAFEL, ET AL.
Exhibit 10 Complaint filed in action entitled FLORENCE MARCUS, INDIVIDUALLY AND ON BEHALF
OF ALL OTHER SHAREHOLDERS SIMILARLY SITUATED V. WILLIAM B. GINSBERG ET AL.
</TABLE>
INDEX TO EXHIBITS
The Index to Exhibits of the Schedule 14D-9 is hereby amended and
supplemented by adding Exhibit 9 and Exhibit 10:
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ------------
<S> <C>
Exhibit 9 Complaint filed in action entitled PHYLLIS FREIMAN, INDIVIDUALLY AND ON BEHALF
OF ALL OTHER SHAREHOLDERS SIMILARLY SITUATED V. SIDNEY R. KNAFEL, ET AL.
Exhibit 10 Complaint filed in action entitled FLORENCE MARCUS, INDIVIDUALLY AND ON BEHALF
OF ALL OTHER SHAREHOLDERS SIMILARLY SITUATED V. WILLIAM B. GINSBERG ET AL.
</TABLE>
3
<PAGE>
SIGNATURES
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.
<TABLE>
<S> <C>
Dated: January 8, 1999
CELLULAR COMMUNICATIONS
INTERNATIONAL, INC.
/s/ RICHARD J. LUBASCH
------------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice-President, General
Counsel
</TABLE>
4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ------------
<S> <C>
Exhibit 9 Complaint filed in action entitled PHYLLIS FREIMAN, INDIVIDUALLY AND ON BEHALF
OF ALL OTHER SHAREHOLDERS SIMILARLY SITUATED V. SIDNEY R. KNAFEL, ET AL.
Exhibit 10 Complaint filed in action entitled FLORENCE MARCUS, INDIVIDUALLY AND ON BEHALF
OF ALL OTHER SHAREHOLDERS SIMILARLY SITUATED V. WILLIAM B. GINSBERG ET AL.
</TABLE>
5
<PAGE>
Exhibit 9
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ---------------------------------------x
:
PHYLLIS FREIMAN, :
:
Plaintiff, :
v. :
:
SIDNEY R. KNAFEL, DEL MINTZ, ALAN J. : C.A. No. 16866
PATRICOF, WILLIAM B. GINSBERG, :
J. BARCLAY KNAPP, WARREN POTASH, and :
CELLULAR COMMUNICATIONS :
INTERNATIONAL, INC., :
:
Defendants. :
:
- ---------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff alleges upon information and belief, except for paragraph 1
hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of the common stock of Cellular
Communications International, Inc., ("CCIL" or the "Company") since prior to the
transaction herein complained of and continuously to date.
2. Defendant CCIL is a corporation duly organized and existing under the
laws of the State of Delaware. The Company acquires ownership interests in
overseas cellular telephone systems in partnership with other companies.
3. Defendant William B. Ginsberg is President, Chief Executive Officer and
a Director of CCIL.
<PAGE>
4. Defendant J. Barclay Knapp is Chief Operating Officer and a Director of
CCIL.
5. Defendants Sidney R. Knafel, Del Mintz, Alan J. Patricof and Warren
Potash are Directors of CCIL.
6. The Individual Defendants are in a fiduciary relationship with
Plaintiff and the other public stockholders of CCIL and owe them the highest
obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action on her own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
common stockholders of the Company (except the defendants herein and any person,
firm, trust, corporation, or other entity related to or affiliated with any of
the defendants) and their successors in interests, who are or will be threatened
with injury arising from defendants' actions as more fully described herein.
8. This action is properly maintainable as a class action because:
(a) The class is so numerous that joinder of all members is
impracticable. As of April 14, 1998, there were approximately 16,516,970 shares
of CCIL common stock outstanding owned by hundreds, if not thousands, of record
and beneficial holders;
(b) There are questions of law and fact which are common to the
class including, INTER ALIA, the following: (i) whether defendants have breached
their fiduciary and other common
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<PAGE>
law duties owed by them to plaintiff and the members of the class; and (ii)
whether the class is entitled to injunctive relief or damages as a result of the
wrongful conduct committed by defendants.
(c) Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The claims
of the plaintiff are typical of the claims of other members of the class and
plaintiff has the same interests as the other members of the class. Plaintiff
will fairly and adequately represent the class.
(d) Defendants have acted in a manner which affects plaintiff and
all members of the class alike, thereby making appropriate injunctive relief
and/or corresponding declaratory relief with respect to the class as a whole.
(e) The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with respect
to individual members of the Class, which would establish incompatible standards
of conduct for defendants, or adjudications with respect to individual members
of the Class which would, as a practical matter, be dispositive of the interests
of other members or substantially impair or impede their ability to protect
their interests.
SUBSTANTIVE ALLEGATIONS
9. CCIL's recent operating results have been exceptional. On August 13,
1998, CCIL issued a press release announcing its operating results for the
second quarter ended
-3-
<PAGE>
June 30, 1998. "Equity in net income (loss) of Omnitel [Omnitel-Sistemi
Radiocellulari Italiani S.p.A] for the second quarter increased to income of
$11,828,000 from a loss of $1,475,000. The change is due to the change in
Omnitel's share of OPI's [Omnitel Pronto Italia S.p.A.] net income (loss) to
income of $80,735,000 from a loss of $9,456,000. OPI's net income (loss) changed
to income of $115,393,000 from a loss of $16,529,000 as a result of a 137
percent increase in operating revenue with only a 94 percent increase in
operating expenses." CCIL's results for the third quarter ended September 30,
1998 were also impressive. According to a Company press release dated November
13, 1998 "Equity in net income of Omnitel for the third quarter increased to
$15,197,000 from $984,000. The increase is due to the increase in Omnitel's
equity in net income of OPI to $103,749,000 from $6,593,000. OPI's net income
increased to $148,276,000 from $9,392,000 as a result of a 147% increase in
operating revenues with only a 104% increase in operating expenses."
10. Commenting on CCIL's most recent results, defendant Ginsberg stated
"OPI has been able to achieve such excellent results due to the rapid growth of
its customer base and its low costs to acquire and service new subscribers.
After less than three years in operation, OPI announced that it had
approximately 5,000,000 subscribers at the end of the third quarter compared to
2,460,000 subscribers at the end of 1997. According to industry estimates, OPI's
incremental share of the
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<PAGE>
Italian wireless market continues to climb, with its total market share
approaching 28% at the end of the third quarter."
11. However, CCIL's extraordinary results have not been adequately
reflected in the market price of its common stock. Given CCIL's strong financial
performance, its prospects for future growth and expansion are substantial, and
the intrinsic value of CCIL is far greater than that reflected in the market
price of CCIL's common stock.
OLIVETTI AND MANNESMANN ACT TO ACQUIRE CCIL
12. On December 11, 1998, CCIL, Olivetti S.p.A. ("Olivetti") and
Mannesmann AG ("Mannesmann") accounted that they had entered into a definitive
merger agreement whereby Olivetti and Mannesmann will acquire, through
Kensington Acquisition Sub, Inc., all of the outstanding shares of CCIL in a
transaction valued at $1.4 billion. Under the terms of the transaction as
presently proposed, Olivetti and Mannesmann will commence a cash tender offer
for all of CCIL's outstanding common shares at a price of $65.75 per share. The
tender offer will be followed by a merger in which any untendered shares of CCIL
will be acquired for $65.75 in cash. The proposed acquisition price represents a
mere 6 percent premium over the closing price for CCIL stock the day before the
proposed transaction was announced.
13. CCIL's primary asset is an indirect stake of 10.3% in Omnitel-Pronto
Italia S.p.A. ("Omnitel"). Omnitel is Italy's second largest mobile phone
operator with over 5 million subscribers. Olivetti and Mannesmann, through their
joint venture Oliman Holding B.V., indirectly own 40% of Omnitel.
-5-
<PAGE>
Thus, Olivetti and Mannesmann's acquisition of CCIL will give them control of
Omnitel.
14. Reaction to the announcement of the proposed transaction has been
decidedly negative. On the day the proposed transaction was announced, CCIL
shares traded as high as $70 per share. CCIL shares traded at $67-1/8 on
December 23, 1998, well above the price contemplated by the proposed
transaction. Furthermore, shareholders have been sharply critical of the price.
On December 14, 1998, BLOOMBERG reported the following concerning a conference
call between management and investors:
Many shareholders suggested during the call they aren't likely to accept
the proposal.
"This just doesn't make sense," said Robert Gensler, whose T. Rowe Price
fund owns about 1.5 percent of CCI. "I am confused about the price. The
Growth is tremendous, and you are selling at very low multiples and a very
low price for subscriber."
Another investor, James Rasteh, a fund manager at the Sierra Global
Management hedge fund in New York, said before the call he won't sell his
CCI stock for less than $80.
"It is ridiculous that management has accepted the offer as it's
horrendously low, based on the fair value and the multiples of the
competitors," he said.
15. On or about December 17, 1998, Defendants filed with the United States
Securities and Exchange Commission a Solicitation/Recommendation Statement on
14D-9 (the "14D-9") purportedly describing, INTER ALIA, the proposed
transaction, the history of the negotiations between the companies, the opinion
of CCIL's financial advisor and certain other purportedly relevant information.
The 14D-9 was apparently mailed to CCIL shareholders shortly thereafter.
-6-
<PAGE>
THE 14D-9 FAILS TO DISCLOSE MATERIAL INFORMATION
16. Neither the 14D-9 nor the Offer to Purchase on Schedule 14D-1 (the
"14D-1") provide any information regarding CCIL's projected earnings and/or
prospects, although Olivetti and Mannesmann certainly had access to confidential
information regarding the Company's business and prospects. This information is
vital to the ability of CCIL shareholders to properly evaluate the $65.75 per
share buy-out price. Indeed, in the section titled "Reasons for the Transaction;
Factors Considered by the Board," the 14D-9 explicitly states that the CCIL
Board considered "the expected trading prices [for CCIL's common stock] for the
foreseeable future" and "Omnitel's rapid growth in the past and the Company's
view of Omnitel's future," in recommending that CCIL shareholders tender their
shares. However, this information has not been shared in any fashion with CCIL
shareholders.
THE INCOMPLETE DESCRIPTION OF THE FINANCIAL ADVISOR'S ANALYSES
17. Attached to the 14D-9 is a letter dated December 14, 1998 from
Wasserstein Perella & Co. ("Wasserstein Perella") to CCIL's Board of Directors
(the "fairness opinion") opining that the proposed transaction is fair to CCIL
shareholders from a financial point of view. The fairness opinion recites a
litany of various documents relied on by Wasserstein Perella in rendering the
fairness opinion, including "certain internal financial and operating
information, including financial forecasts, analyses and projections prepared by
or on behalf of
-7-
<PAGE>
the Company." Yet none of this information is provided to shareholders or
accounted for in the fairness opinion.
18. Neither the 14D-9 nor the fairness opinion contains a discussion of
the various financial analyses presumably performed by Wasserstein Perella. The
14D-9 and the fairness opinion are silent with respect to what valuation
methodologies were employed by Wasserstein Perella in rendering its fairness
opinion so that shareholders cannot determine whether there was any deviation
from standardized investment banking practices. Accordingly, CCIL shareholders
cannot determine from these materials what the intrinsic value of the shares is
and why the proposed acquisition by Olivetti and Mannesmann is preferable to
alternatives or is fair.
19. Under the terms of the engagement letter between CCIL and Wasserstein
Perella, Wasserstein Perella is to be paid $2 million for rendering the fairness
opinion plus an additional $8 million that is wholly contingent on the proposed
transaction being consummated. The proposed fee structure undermines the
integrity of the fairness opinion on which CCIL shareholders are being asked to
rely.
20. In order to coerce CCIL stockholders into tendering their shares in
the tender offer and to prevent the Company from "shopping" for the best
possible transaction for the Company's shareholders, the Individual Defendants
have agreed to termination provisions that would render it prohibitively
expensive for anyone else to acquire the Company. The merger agreement provides
for the payment of $43 million to Olivetti and
-8-
<PAGE>
Mannesmann by the Company in case the merger agreement is terminated.
Additionally, the Merger Agreement grants Olivetti and Mannesmann the option to
purchase 4,338,133 newly issued shares (or up to 19.9% of the Company's
outstanding stock) at a price of $65.75 per share (the "Lockup Option").
21. The Lockup Option and termination provisions were intended solely to
discourage competing bidders and serve no legitimate purpose of the Company. The
Lockup Option and the termination fees constitute a breach of the Individual
Defendants' fiduciary duties in that the CCIL Board failed to obtain a
substantial benefit for CCIL stockholders in exchange for agreeing to these
provisions. These provisions are intended to be used to secure a final, best and
highest bid after a full auction. However, the proposed acquisition price
represents a mere 6 percent premium to the closing price of CCIL stock the day
before the proposed transaction was announced.
22. Additionally, certain Company insiders and other large shareholders,
who collectively own 2.36 million shares, or 11.7% of the outstanding common
stock, have entered into a "Stockholders Agreement" with Olivetti and
Mannesmann. Pursuant to the Stockholders Agreement, these stockholders have
agreed to tender their shares, and have granted Olivetti and Mannesmann an
irrevocable proxy to vote their shares in favor of the merger and other
transactions contemplated by the merger agreement and against any proposed
acquisition or merger of the Company with another party. As structured, the
Stockholders Agreement
-9-
<PAGE>
penalizes any competing buyout proposal which would enhance or maximize
shareholder value.
THE INDIVIDUAL DEFENDANTS FAILED
TO ACT IN AN INFORMED MANNER AND
TO MAXIMIZE SHAREHOLDER VALUE
23. By entering into the agreement with Olivetti and Mannesmann, the CCIL
Board has initiated a process to sell the Company which imposes heightened
fiduciary responsibilities and requires enhanced scrutiny by the Court. However,
the terms of the proposed transaction were not the result of an auction process
or active market check; they were arrived at without a full and thorough
investigation by the Individual Defendants; and they are intrinsically unfair
and inadequate from the standpoint of the CCIL shareholders.
24. The Individual Defendants failed to make an informed decision, as no
market check of the Company's value was obtained. In agreeing to the merger, the
Individual Defendants failed to properly inform themselves of CCIL's highest
transactional value.
25. The Individual Defendants have violated the fiduciary duties owed to
the public shareholders of CCIL. The Individual Defendants' agreement to the
terms of the transaction, its timing, and the failure to auction the Company and
invite other bidders, and defendants' failure to provide a market check
demonstrate a clear absence of the exercise of due care and of loyalty to CCIL's
public shareholders.
26. The Individual Defendants' fiduciary obligations under these
circumstances require them to:
-10-
<PAGE>
(a) Undertake an appropriate evaluation of CCIL's net worth as a
merger/acquisition candidate; and
(b) Engage in a meaningful auction with third parties in an attempt
to obtain the best value for CCIL's public shareholders.
27. The Individual Defendants have breached their fiduciary duties by
reason of the acts and transactions complained of herein, including their
decision to merge with Olivetti and Mannesmann without making the requisite
effort to obtain the best offer possible.
28. Plaintiff and other members of the Class have been and will be damaged
in that they have not and will not receive their fair proportion of the value of
CCIL's assets and business, and will be prevented from obtaining fair and
adequate consideration for their shares of CCIL common stock.
29. The consideration to be paid to class members in the proposed merger
is unfair and inadequate because, among other things:
(a) The intrinsic value of CCIL's common stock is materially in
excess of the amount offered for those securities in the merger giving due
consideration to the anticipated operating results, net asset value, cash flow,
and profitability of the Company;
(b) The merger price does not offer an adequate premium to CCIL
shareholders in that CCIL shares traded as high as $65.50 within the past 30
days and since Olivetti and
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<PAGE>
Mannesmann will be obtaining control of the Omnitel as a result of the
transaction;
(c) The merger price is not the result of an appropriate
consideration of the value of CCIL because the CCIL Board approved the proposed
merger without undertaking steps to accurately ascertain CCIL's value through
open bidding or at least a "market check mechanism"; and
(d) By entering into the agreement with Olivetti and Mannesmann, the
Individual Defendants have allowed the price of CCIL stock to be capped, thereby
depriving plaintiff and the Class of the opportunity to realize any increase in
the value of CCIL stock.
30. By reason of the foregoing, each member of the Class will suffer
irreparable injury and damages absent injunctive relief by this Court.
31. Plaintiff and other members of the Class have no adequate remedy at
law. WHEREFORE, plaintiff and members of the Class demand judgment against
defendants as follows:
a. Declaring that this action is properly maintainable as a class
action and certifying plaintiff as the representative of the
Class;
b. Preliminarily and permanently enjoining defendants and their
counsel, agents, employees and all persons acting under, in
concert with, or for them, from proceeding with, consummating,
or closing the proposed transaction;
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<PAGE>
c. In the event that the proposed transaction is consummated,
rescinding it and setting it aside, or awarding rescissory
damages to the Class;
d. Awarding compensatory damages arising from the proposed
transaction against defendants, individually and severally, in
the amount to be determined at trial, together with
pre-judgment and post-judgment interest at the maximum rate
allowable by law;
e. Awarding plaintiff her costs and disbursements and reasonable
allowances for fees of plaintiff's counsel and experts and
reimbursement of expenses; and
f. Granting plaintiff and the Class such other and further relief
as the Court may deem just and proper.
Dated: December 28, 1998
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:
---------------------------------------
Kevin Gross, Esquire (Del. Bar No. 209)
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
10 East 40th Street
New York, NY 10016
(212) 779-1414
<PAGE>
Exhibit 10
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ---------------------------------------x
: Civil Action No./6870
FLORENCE MARCUS, :
:
Plaintiff, :
:
v. :
:
WILLIAM B. GINSBERG; SIDNEY R. :
KNAFEL; DEL MINTZ; J. BARCLAY :
KNAPP; ALAN J. PATRICOF; :
WARREN POTASH; and CULLULAR :
COMMUNICATIONS INTERNATIONAL, :
INC., :
:
Defendants. :
- ---------------------------------------x
COMPLAINT
Plaintiff, Florence Marcus, by her attorneys, alleges upon information
and belief, except as to paragraph 1 which is alleged upon personal knowledge,
as follows:
THE PARTIES
1. Plaintiff is the owner of shares of common stock of Cellular
Communications International, Inc. ("CCIL" or the "Company") and has been the
owner of such shares continuously since prior to the wrongs complained of
herein.
2. CCIL is a corporation duly existing and organized under the laws of the
state of Delaware. The Company owns and operates cellular telephone systems in
various markets. CCIL is also involved in joint ventures to pursue opportunities
in wireless communications businesses outside of the United States.
<PAGE>
3. Defendant William B. Ginsberg ("Ginsberg") is and at all times relevant
hereto has been President, Chief Executive Officer, and Chairman of the Board of
CCIL.
4. Defendants Sidney R. Knafel, Del Mintz, J. Barclay Knapp, Alan J.
Patricof, and Warren Potash are and at all times relevant hereto have been
directors of CCIL.
5. The Individual Defendants are in a fiduciary relationship with
plaintiff and the other public stockholders of CCIL, and owe plaintiff and the
other members of the class the highest obligations of good faith, fair dealing,
due care, loyalty and full and candid disclosure.
CLASS ACTION ALLEGATIONS
6. Plaintiff brings this action on her own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of herself
and all other holders of CCIL common stock (the "Class"). Excluded from Class
are defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants.
7. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable. As of December 12, 1998, there were approximately 16.7 million
shares of CCIL common stock outstanding, owned beneficially by thousands of
holders.
(b) there are questions of law and fact which are common to the
Class including, INTER ALIA, the following:
(i) whether plaintiff and the other members of the Class
would be irreparably damaged were the transactions complained of herein
consummated; and
(ii) whether defendants have breached their fiduciary
and other common law duties owed by them to plaintiff and the other members of
the Class.
-2-
<PAGE>
(c) Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. Plaintiff's
claims are typical of the claims of the other members of the Class and plaintiff
has the same interests as the other members of the Class. Accordingly, plaintiff
is an adequate representative of the Class and will fairly and adequately
protect the interests of the Class.
(d) Defendants have acted on grounds generally applicable to the
Class with respect to the matters complained of herein, thereby making
appropriate the relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
8. On August 13, 1998, CCIL issued a press release announcing its
operating results for the second quarter ended June 30, 1998, which reads as
follows:
Equity in net income (loss) of Omnitel [Omnitel-Sistemi
Radiocellulari Italiani S.p.A.] for the second quarter
increased to income of $11,828,000 from a loss of $1,475,000.
The change is due to the change in Omnitel's share of OPI's
[Omnitel Pronto Italia S.p.A.] net income (loss) to income of
$80,735,000 from a loss of $9,456,000. OPI's net income (loss)
changed to income of $115,393,000 from a loss of $13,529,000
as a result of a 137 percent increase in operating revenues
with only a 94 percent increase in operated expenses.
9. CCIL's results for the third quarter ended September 30, 1998 were also
impressive. According the Company's November 13, 1998 press release:
Equity in net income of Omnitel for the third quarter
increased to $15,197,000 from $984,000. The increase is due to
the increase in Omnitel's equity in net income of OPI to
$103,749,000 from $6,593,000. OPI's net income increased to
$148,276,000 from $9,392,000 as a result of a 147% increase in
operating revenues with only a 104% increase in operating
expense.
10. Commenting on CCIL's most recent results, defendant Ginsberg stated:
OPI has been able to achieve such excellent results due to the
rapid growth of its customer base and its low costs to acquire
and service new subscribers. After less than three years in
operation, OPI announced that it had
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approximately 5,000,000 subscribers at the end of 1997.
According to industry estimates, OPI's incremental share of
the Italian wireless market continues to climb, with its total
market share approaching 28% at the end of the third quarter.
11. However, CCIL's excellent results have not been adequately reflected
in the market price of its common stock. Given CCIL's strong financial
performance, its prospects for future growth and expansion are substantial, and
the intrinsic value of CCIL is far greater than that reflected in the market
price of CCIL's common stock.
12. On or about December 11, 1998, CCIL, Olivetti S.p.A. ("Olivetti"), and
Mannesmann AG ("Mannesmann") announced that they had signed a definitive merger
agreement (the "Merger Agreement") for Olivetti and Mannesmannn to acquire all
of the outstanding common stock of CCIL.
13. Under the terms of the Merger Agreement, Olivetti and Mannesmann will
commence, on or before December 18, 1998, a tender offer for all CCIL common
shares for $65.75 per share. Following the consummation of the tender offer,
Olivetti and Mannesmann will acquire through a merger of CCIL shares not
purchased in the tender offer for the same price.
14. The Board of Directors of each of the three companies has approved the
tender offer and related transactions.
15. At the close of trading on December 11, 1998, the day the Merger
Agreement was announced, CCIL common stock was trading at $66.25 per share. As
of December 16, 1998, CCIL common stock was trading at $66.625 per share. Thus,
the price at which the Individual Defendants have agreed to sell the Company is
less than the Company's current market value.
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16. Moreover, CCIL's only asset is its indirect 10.3% stake in Omnitel.
Based on the tender offer price for CCIL shares, the Merger Agreement values
Omnitel at only $15.4 billion, or about half of what analysts estimate Omnitel
is worth.
17. Olivetti and Mannesmann, through their joint venture Oliman Holding
B.V., indirectly owns 40% of Omnitel. Thus, the acquisition by Olivetti and
Mannesmann of CCIL will give them control of Omnitel.
18. Reaction to the announcement of the proposed transaction has been
decidedly negative. On December 14, 1998, BLOOMBERG reported the following
concerning a conference call between management and investors:
Many shareholders suggested during the call they aren't likely
to accept the proposal.
"This just doesn't make sense," said Robert Gensler, whose T.
Rowe Price fund owns about 1.5 percent of CCIL. "I am confused
about the price. The growth is tremendous, and you are selling
at very low multiples and a very low price per subscriber."
Another investor, James Rasteh, a fund manager at the Sierra
Global Management hedge fund in New York, said before the call
he won't sell his CCIL stock for less than $80.
"It is ridiculous that management has accepted the offer as
it's horrendously low, based on the fair value and the
multiples of the competitors," he said.
19. On or about December 17, 1998, defendants filed with the Securities
and Exchange Commission a Solicitation/Recommendation Statement on 14D-9 (the
"14D-9") purportedly describing, inter ALIA, the proposed transaction, the
history of the negotiations between the companies, the opinion of CCIL's
financial advisor and certain other purportedly relevant information. The 14D-9
was apparently mailed to CCIL shareholders shortly thereafter.
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THE 14D-9 FAILS TO DISCLOSE MATERIAL INFORMATION
20. Neither the 14D-9 nor the Offer to Purchase on Schedule 14D-1 (the
"14D-1") provide any information regarding CCIL's projected earnings and/or
prospects, although Olivetti and Mannesmann certainly have and had access to
confidential information regarding the Company's business and prospects. This
information is vital to the ability of CCIL shareholders to properly evaluate
the $65.75 per share buy-out price. Indeed, in the section titled "Reasons for
the Transaction; Factors Considered by the Board," the 14D-9 explicitly states
that the CCIL Board considered "the expected trading prices [for CCIL's common
stock] for the foreseeable future" and "Omnitel's rapid growth in the past and
the Company's view of Omnitel's future," in recommending that CCIL shareholders
tender their shares. However, this information has not been shared in any
fashion with CCIL shareholders.
THE INCOMPLETE DESCRIPTION OF THE FINANCIAL ADVISOR'S ANALYSIS
21. Attached to the 14D-9 is a letter dated December 14, 1998 from
Wasserstein Perella & Co. ("Wasserstein Perella") to CCIL's Board of Directors
(the "fairness opinion") opining that the proposed transaction is fair to CCIL
shareholders from a financial point of view. The fairness opinion recites a
litany of various documents relied on by Wasserstein Perella in rendering the
fairness opinion, including "certain internal financial and operating
information, including financial forecasts, analyses and projections prepared by
or on behalf of the Company." Yet none of this information is provided to
shareholders or accounted for in the fairness opinion.
22. Neither the 14D-9 nor the fairness opinion contains a discussion of
the various financial analyses presumably performed by Wasserstein
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Perella. The 14D-9 and the fairness opinion are silent with respect to what
valuation methodologies were employed by Wasserstein Perella in rendering its
fairness opinion so that shareholders cannot determine whether there was any
deviation from standardized investment banking practices. Accordingly, CCIL
shareholders cannot determine from these materials what the intrinsic value of
the shares is and why the proposed acquisition by Olivetti and Mannesmann is
preferable to alternatives or is fair.
23. Under the terms of the engagement letter between CCIL and Wasserstein
Parella, Wasserstein Perella is to be paid $2 million for rendering the fairness
opinion plus an additional $8 million that is wholly contingent on the proposed
transaction being consummated. The proposed fee structure undermines the
integrity of the fairness opinion on which CCIL shareholders are being asked to
rely.
24. In order to coerce CCIL stockholders into tendering their shares in
the tender offer and to prevent the Company from "shopping" for the best
possible transaction for the Company's shareholders, the Individual Defendants
have agreed to termination provisions that would render it prohibitively
expensive for anyone else to acquire the Company. The merger agreement provides
for the payment of $43 million to Olivetti and Mannesmann by the Company in case
the merger agreement is terminated. Additionally, the Merger Agreement grants
Olivetti and Mannesmann the option to purchase $4,338,133 newly issued shares
(or up to 19.9%) of the Company's outstanding stock at a price of $65.75 per
share (the "Lockup Option").
25. The Lockup Option and termination provisions were intended solely to
discourage competing bidders and serve no legitimate purpose of the Company. The
Lockup Option and the termination fee constitute a breach of the Individual
Defendants' fiduciary duties in that the CCIL Board failed to obtain a
meaningful benefit for CCIL stockholders in
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exchange for agreeing to these provisions. These provisions customarily are
intended to secure a final, best and highest bid after a full auction. However,
the proposed acquisition price represents a mere 6 percent premium to the
closing price of CCIL stock the day before the proposed transaction was
announced.
26. Additionally, certain Company insiders and other large shareholders,
who collectively own 2.36 million shares, or 11.7% of the Company's outstanding
common stock, have entered into a "Stockholders Agreement" with Olivetti and
Mannesmann. Pursuant to the Stockholders Agreement, these stockholders have
agreed to tender their shares, and have granted Olivetti and Mannesmann an
irrevocable proxy to vote their shares in favor of the merger and other
transactions contemplated by the merger agreement and against any proposed
acquisition or merger of the Company with another party. As structured, the
Stockholders Agreement penalizes any competing buyout proposal which would
enhance or maximize shareholder value.
27. The Individual Defendants were and are under a duty:
(a) to fully inform themselves of CCIL's market value before taking,
or agreeing to refrain from taking, action;
(b) to act in the interests of the equity owners;
(c) to maximize shareholder value;
(d) to obtain the best financial and other terms when the Company's
independent existence will be materially altered by a transaction;
(e) to be completely candid to CCIL's public shareholders.
28. By the acts, transactions and courses of conduct alleged herein,
defendants, in breach of their fiduciary duties to plaintiff and the other
members of the Class, are attempting
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unfairly to deprive plaintiff and other members of the Class of the true value
of their investment in CCIL without full disclosure of all material facts.
29. As a result of the actions of defendants, plaintiff and the other
members of the Class have been and will be damaged in that they have not and
will not receive their fair proportion of the value of CCIL's assets and
businesses and will be denied material information essential to evaluate the
tender offer and related transactions.
30. Unless enjoined by this Court, the defendants will continue to breach
their fiduciary duties owed to plaintiff and the other members of the Class, and
may consummate the proposed transaction which will exclude the Class from its
fair proportionate share of CCIL's valuable assets and businesses, to the
irreparable harm of the Class.
31. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment and preliminary and permanent
relief, including injunctive relieve, in her factor and in favor of the Class
and against defendants as follows:
A. Declaring that this action is properly maintanable as a class
action
B. Enjoining defendants from proceeding with the merger
agreement;
C. Rescinding, to the extent already implemented, the merger
agreement or any of the terms thereof;
D. Awarding plaintiff and the Class appropriate damages;
E. Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys' and experts' fees; and
F. Granting such other and further relief as this Court may deem
just and proper.
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ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:
---------------------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 18899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
SCHIFFRIN CRAIG & BARROWAY, LLP
Marc A. Topaz
Gregory M. Castaldo
Three Bols Plaza East
Suite 400
Bala Cynwyd, PA 19004
(810) 667-7706
