<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 17, 2000
Sheldahl, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Minnesota 0-45 41-0758073
--------- ---- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 Sheldahl Road
Northfield, Minnesota 55057
--------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 663-8000
<PAGE> 2
Item 5. Other Events
On October 26, 1999, Sheldahl, Inc., a Minnesota corporation (the
"Company"), announced it had retained USBancorp Piper Jaffray, Inc. as its
financial advisor to pursue and recommend various strategic alternatives
intended to maximize shareholder value. On February 17, 2000, the Company
announced that it was engaged in discussions with Molex Incorporated ("Molex")
regarding a potential acquisition of the Company by Molex.
Molex and Sheldahl have not reached an agreement in principle nor
entered into a definitive agreement, and no assurances have been given that an
agreement will be signed or a transaction consummated. Nevertheless, the Company
and Molex have discussed a proposal under which Molex would pay $7.75 per share
of common stock in cash for all outstanding equity interests in Shedahl not
currently owned by Molex. In addition, the Company and Molex have entered into
an agreement pursuant to which the Company will deal exclusively with Molex
through March 10, 2000 (the "Exclusivity Agreement").
Under the terms of the Exclusivity Agreement, the Company agreed that
until the earlier of (i) the execution of a definitive acquisition agreement,
and (ii) March 10, 2000, the Company and its representatives will not directly
or indirectly initiate or solicit proposals for the Company or any of its
divisions, negotiate with or provide any confidential data to any person
relating to a proposal or otherwise cooperate in any effort or attempt that is
reasonably likely to lead to a proposal or inquiry with respect thereto. In
addition, the Company agreed to cease any current discussions regarding any
proposals and to notify Molex in the event that any indication of interest or
proposal is received that the Company reasonably believes is bona fide and that
is or may lead to a proposal more favorable to the Company's shareholders than
the terms being discussed with Molex.
Also under the Exclusivity Agreement, under certain conditions, the
Company will be required to pay Molex a non-accountable expense reimbursement of
$750,000 in the event the Company (i) breaches (other than immaterially and
inadvertently) its obligations under the Exclusivity Agreement, (ii) fails to
accept an offer to enter into a definitive acquisition agreement provided by
Molex prior to March 11, 2000 on terms consistent with those being discussed
with Molex, or (iii) enters into an agreement or consummates an acquisition
within six months after February 17, 2000 with any person or entity that made a
proposal after February 17, 2000 and prior to March 11, 2000 provided that such
proposal has a value of not less than $7.50 per share and Molex has not advised
the Company that it is willing to consummate an acquisition of the Company at
less than $7.75.
The general terms and conditions which the Company and Molex have
discussed include payment of $7.75 per share net for each issued and outstanding
share of common stock of the Company, including shares of common stock issuable
upon conversion of all classes of preferred stock of the Company prior to
closing, and cash out of all outstanding in-the-money options and warrants. The
terms also include provisions regarding the Company's ability to solicit
interests following the execution of an acquisition agreement as well as an
obligation by the Company following the execution of an acquisition agreement to
pay a $3.5 million fee in the event a proposal is made by a third party and a
transaction is not concluded with Molex as a result of such proposal.
2
<PAGE> 3
In January 1998, Molex and Sheldahl formed Origin Modular Interconnect
Systems, LLC, a joint venture of the two companies to design, market and
assemble modular interconnect systems products for the automotive industry. The
joint venture is owned 60% by Molex and 40% by Sheldahl. Molex is currently the
Company's largest shareholder and was the lead investor in private placement
offerings by the Company in July 1998 and January 2000.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 99.1 Exclusive Letter Agreement between the Company and
Molex Incorporated dated February 17, 2000
Exhibit 99.2 General Terms and Conditions of Potential Transaction
Exhibit 99.3 Press Release
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sheldahl, Inc.
By /s/ Edward L. Lundstrom
------------------------------------
Edward L. Lundstrom, President and
Chief Executive Officer
Dated: February 17, 2000
4
<PAGE> 1
EXHIBIT 99.1
MOLEX INCORPORATED
2222 Wellington Court
Lisle, IL 60532-1682
February 17, 2000
PERSONAL & CONFIDENTIAL
Sheldahl, Inc.
1150 Sheldahl Road
Northfield, Minnesota
Attention: Edward L. Lundstrom, Chief Executive Officer
Gentlemen:
We appreciate the opportunity we have had to discuss with you a
potential transaction to acquire the remaining equity interests of Sheldahl,
Inc., a Minnesota corporation (the "Company") not currently owned by Molex
Incorporated ("Molex"). The general terms and conditions of the potential
transaction have been provided to us by you immediately prior to executing this
agreement (the "General Terms").
As we have discussed, the next phase of this process will involve
intensive effort as well as substantial expense on the part of Molex.
Accordingly, in order to induce Molex to proceed to the next phase of our
discussions and negotiations (including the drafting and negotiation of a
definitive acquisition agreement), and to continue its business, financial and
legal due diligence efforts, we are writing to confirm our understanding that,
from the date hereof and until the earlier of (i) the execution of a definitive
acquisition agreement and (ii) March 10, 2000: (A) none of the Company or any of
its subsidiaries or affiliates, nor any officers, directors, agents or
representatives (including any investment banking, legal or accounting firm
retained by the Company or any of its subsidiaries) of the Company or any of its
subsidiaries, in each case who have been informed or are otherwise aware of a
potential transaction with Molex, shall directly or indirectly (1) initiate,
solicit or seek, any inquiries or take any action to knowingly facilitate the
making or implementation of any proposal or offer (including any proposal or
offer to its stockholders) with respect to a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase of all or any substantial portion of the assets or any equities
securities of, the Company or any of its subsidiaries or divisions (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal"),
or (2) engage in any negotiations concerning, or provide any confidential
information or data to, any person relating to an Acquisition Proposal, or (3)
otherwise cooperate in any effort or attempt to make, implement or accept an
Acquisition Proposal or engage in any activity which is reasonably likely to
lead to an Acquisition Proposal or an inquiry with respect thereto; (B) the
Company and each of its subsidiaries, affiliates, officers, directors and
representatives, in each case who have been informed or are otherwise aware of a
potential transaction with Molex will cease any current discussions regarding
any Acquisition Proposal or similar transaction and (C) the Company will
promptly notify Molex in the event that it or any of its representatives or
agents receives any
<PAGE> 2
indication of interest or proposal concerning an Acquisition Proposal which the
Company reasonably believes is bona fide and that is or may lead to a proposal
that could be more favorable to the Company's stockholders than the transaction
contemplated by the General Terms, indicating the terms and conditions of any
proposed offers.
In addition, except as may be required by applicable law, rule,
regulation, order or decree upon receipt of the advice of outside counsel, or as
otherwise mutually agreed, each of the Company and Molex, on behalf of itself
and its directors, officers, affiliates, employees, advisors and
representatives, agrees to keep strictly confidential all terms of the proposed
transaction. Each party shall promptly notify the other party in the event that
it becomes aware of any breach of this agreement. Notwithstanding the foregoing,
nothing in this letter shall prevent the Company or its Board of Directors (or
in the case of (C) below, Molex or its board of directors) from (A) complying
with Rule 14e-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (B) issuing a "stop-look-and-listen" press release
in form and substance contemplated by Rule 14d-9(f) promulgated under the
Exchange Act in response to any publicly disclosed Acquisition Proposal or (C)
making any disclosure (i) which, upon receipt of advice of outside counsel, is
required by applicable law, rule, regulation, order or decree or (ii) pursuant
to the request or demand of any regulatory authority or NASDAQ; provided that
the Company or the Board of Directors shall consult with Molex prior to making
any such disclosure.
The Company shall promptly pay Molex $750,000 in cash as a
non-accountable expense reimbursement upon the first to occur of any of the
following: (1) in the event there is a breach by the Company of its obligations
set forth in preceding paragraphs (other than an inadvertent immaterial breach);
(2) in the event Molex has prior to March 11, 2000 furnished the Company with an
offer to enter into a definitive agreement on terms consistent with the General
Terms which offer the Company does not accept; or (3) in the event that the
Company enters into an agreement with respect to an Acquisition Proposal or
consummates an Acquisition Proposal within six months after the date of this
letter with any person or entity that made a Takeover Proposal Interest on or
after the date hereof and prior to March 11, 2000, provided that (x) such
Acquisition Proposal provides for consideration to be received by holders of the
Company's Common Stock with a value of not less than $7.50 per share and (y)
Molex has not advised the Company in writing prior to March 11, 2000 that it
would only be willing to consider a potential transaction to acquire the
remaining equity interests of the Company at a price per share for each issued
and outstanding share of Common Stock of the Company less than $7.75. The term
"Takeover Proposal Interest" shall mean any expression of interest, proposal or
offer received by the Company or any of the Company's representatives regarding
an Acquisition Proposal or the possibility or consideration of making an
Acquisition Proposal.
This agreement is not an offer by Molex to enter into a transaction
with the Company or any of its stockholders or affiliates and does not create
any binding obligation on Molex to propose, offer or enter into an agreement
with respect to any Acquisition Proposal. Any determination as to whether Molex
will make any offer or pursue any potential transaction shall remain within
Molex's sole discretion. This agreement does not modify, amend or supersede any
other agreement between the Company and Molex except to the extent, if any, as
expressly provided herein, including the Agreement Relating to Sheldahl dated
November 18, 1998 between the Company and Molex.
-2-
<PAGE> 3
Notwithstanding anything herein to the contrary, in the event, prior to
March 11, 2000 and subject to extension by mutual agreement of the parties,
Molex and the Company have not entered into a definitive agreement on terms
consistent with the terms and conditions provided by the Company to Molex, the
Company shall be free to take any action otherwise prohibited in the second
paragraph of this agreement.
The Company represents and warrants to Molex that it has taken all
action necessary so that the execution of this agreement and an announcement
thereof will not result in the occurrence of a "Distribution Date" as such term
is defined in the Company's Rights Agreement dated as of June 16, 1996, as
amended.
If you are in agreement with the foregoing, please indicate your
acceptance by signing below and returning an executed copy of this letter to us.
Very truly yours,
MOLEX INCORPORATED
By: /s/ Frederick A. Krehbiel
---------------------------------------
Name: Frederick A. Krehbiel
--------------------------------------
Title: Chairman and Chief Executive Officer
--------------------------------------
Acknowledged and agreed to this
17th day of February, 2000.
SHELDAHL, INC.
By: /s/ Edward L. Lundstrom
------------------------------------------
Name: Edward L. Lundstrom
---------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
-3-
<PAGE> 1
EXHIBIT 99.2
CONFIDENTIAL
TERMS AND CONDITIONS
1. $7.75 per share net for each issued and outstanding share of common
stock of the Company as of the closing (including shares of common
stock issued as dividends on preferred stock to closing and assuming
conversion of all classes of preferred stock into common stock prior to
closing).
2. Cash out of all options, without regard to installment exercise
provisions, (including shares to be purchased through the closing date
under the Employee Stock Purchase Plan) and warrants by payment of the
difference, if any, between $7.75 per share for each share of common
stock subject to an option or warrant less the exercise price for such
option or warrant. All "out-of-the-money" options and warrants would be
terminated or exercisable for the cash consideration per share payable
pursuant to the Acquisition Agreement.
3. Following execution of an Acquisition Agreement, the Company will
refrain from soliciting third party interests in the Company but, upon
request, may furnish information to third parties who have indicated
they desire to make a superior proposal and may entertain alternative
superior proposals and discussions with such parties. The Company shall
advise Molex of the existence and status of any such superior proposal.
4. Following execution of an Acquisition Agreement, Molex to be paid $3.5
million in the event a proposal is made by a third party and the
transaction is not concluded with Molex as a result of such proposal.
5. Final Acquisition Agreement subject to approval by Board of Directors
of the Company and Molex and receipt of necessary governmental
approvals.
6. Acquisition Agreement to include representations, warranties, covenants
and conditions consistent with other public company transactions.
<PAGE> 1
EXHIBIT 99.3
FOR IMMEDIATE RELEASE Contacts: Jill Burchill
Chief Financial Officer
February 17, 2000 507/663-8294
Sheldahl, Inc. [email protected]
1150 Sheldahl Road
Northfield, MN 55057 Jennifer Weichert
Weichert Financial Relations, Inc.
612/839-9871
[email protected]
SHELDAHL, INC. ANNOUNCES PRELIMINARY
DISCUSSIONS WITH MOLEX INCORPORATED
Northfield, MN, February 17, 2000 - Sheldahl, Inc. (Nasdaq: SHEL) announced
today that it is currently engaged in discussions with Molex Incorporated
(Nasdaq: MOLX) regarding a potential acquisition by Molex. Molex, currently
Sheldahl's largest shareholder, has discussed a proposal under which Molex would
pay $7.75 per share of common stock in cash for all outstanding equity interests
in Sheldahl not currently owned by Molex.
Molex and Sheldahl have not reached an agreement in principle, nor entered into
a definitive agreement, and no assurances are given as to whether an agreement
will be signed or a transaction consummated. However, Sheldahl and Molex have
entered into an agreement, pursuant to which Sheldahl will deal exclusively with
Molex through March 10, 2000 with Sheldahl responsible for expenses in the event
Sheldahl enters into an agreement to complete or completes a business
combination transaction within 6 months after March 10, 2000.
The proposal by Molex and its terms are subject to customary conditions,
including, among others, reaching agreement on price and structure, negotiation
of a definitive acquisition agreement, completion of satisfactory due diligence
investigation, absence of a material adverse effect and regulatory and other
approvals. Preliminary terms and conditions, along with a copy of the executed
exclusivity agreement will be included in an 8-K filing by Sheldahl with the
SEC.
In January 1998, Molex and Sheldahl formed Origin Modular Interconnect Systems,
L.L.C., a joint venture of the two companies to design, market and assemble
modular interconnect systems products for the automotive industry. The joint
venture is owned 60% by Molex and 40% by Sheldahl. Molex also was the lead
investor in private placement offerings by Sheldahl in July 1998 and January
2000.
-more-
<PAGE> 2
SHELDAHL, INC. ANNOUNCES PRELIMINARY
DISCUSSIONS WITH MOLEX INCORPORATED
February 17, 2000
Page Two.
Sheldahl is a leading producer of high-density substrates, high-quality flexible
printed circuitry, and flexible laminates primarily for sale to the automotive
electronics and data communications markets. The Company, which is headquartered
in Northfield, Minnesota, has operations in Northfield; Longmont, Colorado;
Detroit, Michigan; South Dakota; Toronto, Ontario, Canada; and Chihuahua, Chih.,
Mexico. Its sales offices are located in Hong Kong, China; Singapore; and Mainz,
Germany. As of January 31, 2000, Sheldahl employed approximately 870 people.
Sheldahl's common stock trades on the Nasdaq National Market tier of the Nasdaq
Stock Market under the symbol: SHEL. In its' fiscal year ended August 27, 1999,
Sheldahl reported revenues of $122.1 million. Sheldahl news and information can
be found on the World Wide Web at http://www.sheldahl.com.
Molex Incorporated is a 61 year-old manufacturer of electronic, electrical and
fiber optic interconnection products and systems, switches and application
tooling. Based in Lisle, Illinois, Molex operates 50 manufacturing facilities in
21 countries and employs approximately 15,900 people. Molex common stock
(Nasdaq: MOLX, MOLXA) is included in the S&P 500 Index and is listed as part of
the S&P 500 Electrical Equipment Industry Group.
The discussion above contains statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements by their nature
involve substantial risks and uncertainties as described by Sheldahl's periodic
filings. Actual results may differ materially depending on a variety of factors,
including but not limited to the following: Molex and Sheldahl not entering into
an agreement with respect to a transaction; or any such transaction not being
consummated. Additional information with respect to the risks and uncertainties
faced by Sheldahl may be found in, and the prior discussion is qualified in its
entirety by, the Risk Factors contained in the Company's filings with the
Securities and Exchange Commission, including Sheldahl's Annual Report, Form
10-K for the fiscal year ended August 27, 1999, Forms 10-Q for the quarters
ended November 27, 1998; February 26, 1999 and May 28, 1999, and other SEC
filings.
Sheldahl does not undertake any obligation to update any such factors or to
publicly announce developments or events relating to the matters described
herein.
