SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
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Daisytek International Corporation
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(Name of Issuer)
Common Stock
(Title of Class of Securities)
234053 10 6
(CUSIP NUMBER)
Eminence Capital, LLC
200 Park Avenue
Suite 3300
New York, New York 10166
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
- with copies to -
Michael G. Tannenbaum, Esq.
Tannenbaum Helpern Syracuse & Hirschtritt
900 Third Avenue - 13th Floor
New York, New York 10022
(212) 508-6700
April 4, 2000
(Date of event which requires
filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box
[ ]
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CUSIP No. 234053 100 6 13D Page 2 of 5
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________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Eminence Capital, LLC
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
WC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF 1,003,600 shares
SHARES _________________________________________________________________
8 SHARED VOTING POWER
BENEFICIALLY
0 shares
OWNED BY
_________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,003,600 shares
PERSON _________________________________________________________________
10 SHARED DISPOSITIVE POWER
WITH
0 shares
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,003,600 shares
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8% of Common Stock
________________________________________________________________________________
14 TYPE OF REPORTING PERSON
OO
________________________________________________________________________________
Page 2 of 5 Pages
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CUSIP No. 234053 100 6
SCHEDULE 13D
Item 1. Security and Issuer.
Security: Common Stock
Issuer: Daisytek International Corporation (the "Issuer")
500 No. Central Expressway
Plano, TX 75074
Item 2. Identity and Background.
(a) Eminence Capital, LLC ("Eminence"). Mr. Ricky C. Sandler is the sole
member of Eminence.
(b) The address of Eminence and of Mr. Sandler is 200 Park Avenue, Suite
3300, New York, New York 10166.
(c) Eminence serves as an investment manager to domestic and off-shore
investment vehicles. Mr. Sandler is the managing member of Eminence.
(d) - (e) During the last five years, neither Eminence nor Mr. Sandler, to
the best of their knowledge, have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or have been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any of the foregoing was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) Eminence is a New York limited liability company. Mr. Sandler is a
citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
All of the shares of the Issuer were acquired through working capital of
the investment vehicles managed by Eminence.
Item 4. Purpose of Transaction
Eminence initially acquired the Issuer's shares for investment purposes.
However, Eminence is currently concerned with the decline in the value of the
Issuer's common stock and believes the Board of Directors of the Issuer (the
"Board") should consider all alternatives to maximizing shareholder value.
Page 3 of 6 Pages
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On September 23, 1999, PFSweb, Inc. ("PFSW"), a subsidiary of the Issuer,
filed a registration statement for an initial public offering (the "IPO") of
3,100,000 shares of common stock. At that time, the Issuer announced that upon
completion of the IPO the Issuer would own approximately 80% of the capital
stock of PFSW and would then distribute its ownership in PFSW common stock to
the Issuer's shareholders through a tax-free spin-off.
On October 21, 1999, United Stationers, Inc. ("United Stationers") proposed
to the Board that United Stationers acquire the Issuer in a transaction valued
at $20.00 per share. However, the Board rejected United Stationers' proposal and
stated that it intended to proceed with the spin-off of PFSW.
On October 29, 1999, Eminence delivered a letter to the Board in which
Eminence expressed concern that the planned IPO and the spin-off of PFSW would
not achieve the desired result of maximizing shareholder value and that
negotiating a transaction with United Stationers would provide greater value to
the Issuer's shareholders than the combined value of the Issuer's common stock
and the common stock of PFSW owned by the Issuer. A copy of Eminence's October
29, 1999 letter is attached as Exhibit A to this Schedule 13D and is
incorporated herein by reference.
In December 1999, PFSW completed the IPO and sold 3,565,000 shares of
common stock to the public at $17 per share. The Issuer, which currently owns
approximately 80% of the outstanding shares of PFSW's common stock, has
reaffirmed its plans to spin-off PFSW in the calendar year 2000.
On April 6, 2000, Eminence delivered a letter to the Board urging the Board
to consider all alternatives to maximize shareholder value, including foregoing
the distribution of PFSW shares and entering into negotiations with United
Stationers or any other potential acquiror of the Issuer. A copy of Eminence's
April 6, 2000 letter is attached as Exhibit B to this Schedule 13D and is
incorporated herein by reference.
Eminence intends to use its position as a significant shareholder to
influence the Board and management. In that regard, Eminence plans to
communicate its views to the Board and management with respect to the best
alternatives available to enhance shareholder value. Eminence may also take any
and all actions that it believes are appropriate to maximize shareholder value,
including, without limitation, communicating with other shareholders and other
interested parties. Eminence may acquire additional shares of the Issuer's
common stock or dispose of any of the Issuer's shares.
Eminence will continue to evaluate the business and business prospects of
the Issuer, and its present and future interest in, and intentions with respect
to, the Issuer, and in connection therewith may from time to time consult with
management and other shareholders of the Issuer.
Other than as described above, Eminence does not have any plans or
proposals which would
Page 4 of 6 Pages
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result in any of the following:
a. the acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
b. an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
c. a sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
d. any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors or to fill any vacancies on the board;
e. any material change in the present capitalization or dividend policy
of the Issuer;
f. any other material change in the Issuer's business or corporate
structure;
g. changes in the Issuer's charter, by-laws or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the Issuer by any person;
h. causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted
in an interdealer quotation system of a registered national securities
association;
i. causing a class of securities of the Issuer to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Act;
or
j. any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) - (b) As the holder of sole voting and investment authority over
the shares owned by its advisory clients, Eminence may be deemed, for
purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, to be the beneficial owner of the aggregate amount of 1,003,600
shares representing approximately 5.8% of the outstanding shares of the
Issuer (based upon 17,326,321 shares outstanding as of February 7, 2000, as
reported on the latest 10-Q of the Issuer). Eminence disclaims any economic
interest or beneficial ownership of the shares covered by this Statement.
As the controlling person of Eminence, Mr. Sandler may also be deemed the
beneficial owner of such shares. Mr. Sandler disclaims any economic
interest or beneficial ownership of shares controlled by Eminence.
Page 4 of 5 Pages
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(c)
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Date Amount of Securities Price/Share Type
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3/28/00 50,000 17.8750 Open-market purchase
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3/29/00 120,000 15.6458 Open-market purchase
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3/29/00 20,000 16.5625 Open-market purchase
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3/30/00 20,000 15.8125 Open-market purchase
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3/30/00 25,000 15.7500 Open-market purchase
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3/31/00 5,000 15.3750 Open-market purchase
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3/31/00 77,100 14.4496 Open-market purchase
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4/4/00 100,000 13.5625 Open-market purchase
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4/4/00 60,000 13.6650 Open-market purchase
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(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
Not applicable.
Item 7. Material to be Filed as Exhibits
Exhibit A. Letter dated October 29, 1999 from Eminence to the Board.
Exhibit B. Letter dated April 6, 2000 from Eminence to the Board.
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.
Dated: April _______, 2000
EMINENCE CAPITAL, LLC
By: Ricky C. Sandler, Managing Member
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Page 5 of 5 Pages
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October 29, 1999
Mr. Mark Layton
Daisytek International
500 North Central Expressway
Plano, TX 75074
Re: Daisytek International
Dear Mr. Layton:
Eminence Capital, LLC owns in excess of 500,000 shares of Daisytek International
("DZTK" or the "Company") and, as such, takes a keen interest in the Company and
recent developments surrounding the Company. In particular, we are very
concerned by the recent actions taken by you and the rest of the board of
directors in response to United Stationers' ("USTR") proposal to acquire the
Company. The board of directors of DZTK owes a fiduciary duty to its
shareholders and therefore our opinion should be very important to you.
We believe USTR's all-cash offer to buy all of the outstanding shares of DZTK at
$20, a 50% premium to its then current trading price, is something that you and
the rest of the board must pursue. In our view, the board of DZTK has failed its
fiduciary obligation in this regard. For the board to not even negotiate with a
credible buyer who makes such an attractive initial offer, but rather to adopt a
poison pill directly in response thereto, is a fragrant violation of your
fiduciary duties to all of DZTK's shareholders. You should be aware that we
intend to hold you and the rest of the board responsible for any shareholder
value destroyed or not realized as a result of these actions.
While we support management's initial decision to deliver shareholder value
through a spin-off of PFSweb, we believe that an all cash acquisition of DZTK is
the best way to maximize shareholder value. We urge the board to consider the
following issues in its analysis:
1) USTR suggested in its press release dated October 21, 1999 that there
is room for a higher price than $20 per share. Any analysis of
potential options without even knowing what the highest price USTR
would be willing to pay is at best uninformed and at worst a serious
violation of the Board's responsibilities and obligations to its
shareholders.
<PAGE>
2) The time value of money. If shareholders must wait a year to receive
the potential and uncertain benefits of the spin-off of PFSweb, that
"value", whatever it is, must be discounted.
3) The need to discount significantly any analysis that relies on
opinions as to future stock market prices. Markets are inherently
unpredictable and the opinion of an investment bank as to the likely
trading prices of PFSweb and DZTK at some later date entails at best,
numerous risks and uncertainties. As goes the old cliche: a bird in
the hand is worth two in the bush.
4) There are numerous companies that have adopted the strategy DZTK is
attempting by issuing shares in their internet-related subsidiaries.
Many, maybe even a majority of the companies, have been disappointed
because of the failure of the separated companies to trade, in the
aggregate, much better than the value of the combined companies.
5) Finally, the board should consider the recent valuations of
internet-related companies with some longer-term perspective. As
previously stated, markets are unpredictable and they are often
irrational for short periods of time. In the long run, however, stock
prices are almost always rational. Therefore, if the market's recent
fascination with internet companies should wane, the long term value
of PFSweb may be less than you or your bankers believe.
We are not asking the board to accept USTR's current offer. We are, however,
very concerned by the board's apparent failure to explore an all-cash merger
with USTR. That offer would appear to us to be superior to the current spin-off
plan. We view ourselves as sophisticated long term investors and we believe a
cash merger at $21-$24 per share (a price we suspect USTR is willing to pay) is
superior to owning a separate interest in both PFSweb and DZTK in both the short
and long term.
We welcome the opportunity to discuss these issues at greater length with you so
feel free to contact us. We can be reached at 212 808-3590. Thank you for your
time.
Sincerely,
Ricky Sandler
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April 6, 2000
Mr. Mark Layton
Daisytek International
500 North Central Expressway
Plano, TX 75074
Dear Mr. Layton:
As a large shareholder of Daisytek International ("DZTK or the "Company"), we
are concerned with the precipitous drop in the stock price of DZTK. We think it
is crucial for the Board of DZTK to immediately consider all alternatives to
maximize shareholder value.
In our letter to you and the other Daisytek Board members dated October 29th,
1999, we expressed concern that the planned IPO and subsequent spin-off of
PFSWeb, Inc. ("PFSW") would not necessarily achieve the desired result of
maximizing shareholder value for Daisytek shareholders. We expressed our concern
that the then current market fascination and potentially unsustainable
valuations with internet related issues should be considered from a longer term
perspective. Recent market events have shown this concern to be valid. Further,
we felt that negotiating a transaction with United Stationers ("USTR") at a
price of $20 per share or higher would provide a greater value to shareholders
then the combined value of two separately traded stocks following the IPO of
PFSW.
USTR's opening offer of $20 per share now exceeds DZTK's share price by 50%.
USTR's offer is still substantially above today's market value even when
factoring in a premium to the IPO price to buy-out the PFSW minority
shareholders. As a result, we urge the Board to consider all alternatives to
maximize shareholder value including foregoing the distribution of PFSW shares
and entering into negotiations with USTR or any other potential buyer to sell
the Company.
Once again, we are not asking the Board to accept USTR's $20 cash offer. Rather,
we believe the Board has a fiduciary responsibility to explore all alternatives
to maximize shareholder value including a possible sale to USTR for $20 or
higher.
We welcome the opportunity to further discuss these issues with you. Thank you
for your consideration.
Sincerely,
Ricky Sandler
cc. The Board of Directors of Daisytek International
