<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
AMENDMENT NO. 1
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
LIBERTY TECHNOLOGIES, INC.
(Name of Subject Company)
LIBERTY TECHNOLOGIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
531281103
(CUSIP Number of Class of Securities)
-----------------------------------
R. NIM EVATT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
555 NORTH LANE
LEE PARK
CONSHOHOCKEN, PENNSYLVANIA 19428
(610) 834-0330
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications on Behalf of the Person(s)
Filing Statement)
-----------------------------------
WITH A COPY TO:
JAMES D. ROSENER, ESQ.
PEPPER HAMILTON LLP
1235 WESTLAKES DRIVE
SUITE 400
BERWYN, PENNSYLVANIA 19312
(610) 640-7817
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
INTRODUCTION
Liberty Technologies, Inc. (the "Company") hereby amends and
supplements its Solicitation/Recommendation Statement on Schedule 14D-9,
originally filed on August 14, 1998 (as amended, the "Schedule 14D-9"), with
respect to an offer by LTI Merger, Inc. ("Purchaser"), a wholly owned
subsidiary of Crane Co. ("Crane") to purchase all of the outstanding shares of
Common Stock, $.01 par value per share (the "Shares") of the Company.
Capitalized terms not defined herein have the meanings assigned thereto in the
Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Item 4(b) of the Schedule 14D-9 is hereby amended and restated as follows:
Item 4. The Solicitation or Recommendation
(b) Background; Reasons for the Recommendation of the Board of Directors
The Company, founded in 1984, develops, manufactures, markets and sells
diagnostic and condition monitoring systems and provides related services to
customers in the worldwide power, process and industrial markets. In November
1996 and in connection with its press release announcing its results of
operations for the nine months ended September 30, 1996, the Company announced
that it would commence a review of possible strategic alternatives for all of
its businesses. In December 1996, as part of that review of strategic
alternatives, the Company's Board of Directors conducted a review of each of
the Company's businesses (i) to assess strategic alternatives for each such
business, (ii) to identify areas of business focus to preserve financial and
human resource capital available to the Company, (iii) to evaluate each
business areas's opportunities and threats, and (iv) to assess the financial
strength and liquidity needs of the Company. That review identified the need
for greater focus by management on specific product business niches and, in
particular, three market areas --(1) condition monitoring products and related
services, (2) digital radiography using the Company's RADView product line, and
(3) international power and process industries through strategic alliances.
In October 1997, the Company concluded the sale of the Company's
nondestructive testing and evaluation services business (the "NDE Business") to
a newly formed subsidiary of General Electric Company ("GE"). At the time, the
Company believed that a sale of the NDE Business would generate capital to be
used in the development of the Company's product businesses. The Company used a
portion of the net proceeds from the sale of the NDE Business to repay all of
its outstanding debt.
After the sale of the NDE Business, the Company continued to experience
operating losses in the fourth quarter of 1997. In addition, the Company's
actual operating performance did not achieve the Company's internal
projections. During this period, the Company Board continued to
2
<PAGE>
review possible strategic alternatives for the Company and its businesses, but
did not yet decide to sell the Company.
During late February and early March 1998, Mr. David P. Kollock, a
financial advisor to Crane based in Philadelphia, met with Mr. Roland K.
Bullard, II a director of Company, Messrs. Anthony Moffa and Richard Tuft,
non-management founders of the Company with substantial holdings of shares of
Company Common Stock, and Mr. Richard Difieux, a director of the Company, each
of whom indicated interest in discussing a possible transaction with Crane. On
March 10, Mr. Kollock and Mr. R.S. Evans, Chairman and Chief Executive Officer
of Crane, met with Mr. Stephen Wells, a director and substantial shareholder of
the Company, who also expressed interest in a possible transaction.
On March 18, 1998, the Company entered into a confidentiality agreement
with Crane regarding certain information that would be provided by the Company
to Crane during the course of Crane's due diligence review of the Company in
connection with a possible negotiated transaction with the Company. On March
19, the Company management made presentations to Crane and Crane began
preliminary due diligence. On April 2 and 3, Crane conducted a more detailed
due diligence review of the Company.
At about the same time, the Company entered into a confidentiality
agreement with another potential acquiror who also began conducting a due
diligence review of the Company.
On April 21, 1998, April 23, 1998 and April 24, 1998 the Company Board met
to establish a committee to evaluate its alternatives with respect to the
interest expressed by the other potential acquiror in entering into a
transaction with the Company and to discuss such alternatives. During the month
of April 1998, Mr. Kollock had a number of discussions with Mr. Wells
concerning a possible transaction.
On April 29, 1998, the other potential acquiror delivered a non-binding
written indication of interest to the Company to purchase the Company at a
price equal to $5.50 per share payable in shares of this acquiror's common
stock, subject to, among other conditions, satisfactory due diligence. On May
5, 1998, Crane delivered a non-binding written indication of interest to the
Company to purchase the Company (excluding the Company's RADView business) at a
price equal to $4.25 per share payable in shares of Crane common stock or $4.50
per share in cash, subject to satisfactory due diligence, definitive
documentation and approval by the respective Boards of Directors of Crane and
the Company and the Company's shareholders, and the receipt of any necessary
governmental approvals. The Company advised Crane that the Company Board
decided to explore other possible alternatives.
On May 7, 1998, the Company Board met to discuss the terms and structure
of the non-binding written proposals it had recently received from Crane and
the other potential acquiror.
3
<PAGE>
On May 12, 1998, the Company issued a press release reporting financial
results for the quarter ended March 31, 1998 that reflected decreased revenues
and earnings as compared to the first quarter of 1997. The press release
further stated that the Company Board "is considering strategic alternatives to
enhance shareholder value, and that such alternatives may include the sale or
restructuring of all or part of the Company." On May 22, 1998, Mr. Evans
advised Mr. Wells that he was withdrawing Crane's May 5 proposal. At about the
same time, the other potential acquiror reduced its indicated price to $4.00
per share in cash. This other potential acquiror later withdrew its proposal
and made no further proposals.
On June 8, 1998, the Company issued a press release reporting "a
restructuring of the Company in an effort to reduce operating expenses and to
provide additional focus to their key accounts and markets."
On June 25, 1998, Mr. Evans and Mr. Kollock met with Mr. Wells to explore
renewal of Crane's interest in a possible transaction with the Company.
During the period from June 29 through July 1, 1998, Crane conducted
additional due diligence with respect to the Company.
On July 13, 1998 Crane submitted a revised non-binding written indication
of interest to purchase the Company at a price equal to $3.25 per share in
cash, to be structured as a tender offer with a subsequent merger to acquire
Shares not purchased in the tender offer.
On July 16, 1998, the Company Board met to discuss Crane's new proposal
and possible alternatives to this proposal. After this Board meeting and
following discussions among Mr. Wells and Mr. Evans and Mr. David Smith,
Crane's Chief Financial Officer on July 17, 1998, Crane agreed to increase the
purchase price to $3.50 per share.
Between July 22, 1998 and August 10, 1998, Crane and the Company and their
respective professional advisors negotiated the Merger Agreement, the Stock
Option Agreement, the form of Shareholder Agreement, and the First Amendment to
Amended and Restated Rights Plan.
On July 30, 1998, the Company received a non-binding written indication of
interest from another potential acquiror to purchase the Company at a price
equal to $3.85 per share in cash, subject to, among other things, satisfactory
due diligence and the conclusion of definitive documentation. This potential
acquiror advised the Company that completion of such due diligence would take
up to two months. The Company Board met on July 30, 1998 to consider this
proposal. After extensive discussions, the Company Board concluded that this
potential acquiror's inclusion of such a time consuming due diligence period,
when balanced against the near completion of the Company's negotiations with
Crane, rendered the proposal by such potential acquiror too preliminary and
conditional. In the Company Board's view, the risk that Crane would no longer
continue its negotiations with the Company if the Company permitted this
potential acquiror to take two months to conclude its due diligence
investigation of the Company was both real and significant
4
<PAGE>
as there was no assurance that the Company and this potential acquiror would
successfully conclude a transaction. If this proved to be the case, then the
Company would not have concluded a transaction with either of Crane or this
potential acquiror and, in the Company Board's opinion, the Company's
bargaining position relative to other future potential acquirors would have
been significantly reduced; thereby presenting the risk that any other proposal
would be less advantageous to the Company and its shareholders than the terms
of the Crane proposal. Accordingly, the Company Board decided that, unless this
potential acquiror committed to complete its due diligence and negotiation of
definitive documentation within the time frame within which the Company
expected the Crane transaction to be finalized, it was in the Company's and its
shareholders' best interest to continue discussions with Crane and to not
pursue the proposal made by this potential acquiror. Company management
communicated this timing requirement to the potential acquiror. The potential
acquiror took no further action with respect to its proposal and in fact did
not proceed with due diligence. Thus the Company continued its discussions with
Crane.
On August 10, 1998, the Company Board authorized representatives of the
Company to execute the Merger Agreement, the Stock Option Agreement and the
First Amendment to Amended and Restated Rights Plan. On August 11, 1998, the
Merger Agreement, the Stock Option Agreement, the First Amendment to Amended
and Restated Rights Agreement and the Shareholder Agreements were executed and
delivered, and the transaction was announced publicly on the morning of August
12, 1998. The press release announcing the execution of the Merger Agreement
and the terms of the Offer and Merger is filed as Exhibit (a)(2) to this
Schedule 14D-9 and is incorporated herein by reference.
In approving the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement, the First Amendment to Amended and Restated Rights Agreement and the
transactions contemplated thereby, the Board considered a number of factors,
including:
1. The Company Board's view that a sale of the Company at this time is in
the best interest of the Company and its shareholders in light of: (a) the
Company's history of operating losses and net losses since 1994; (b) the
results of the second quarter ended June 30, 1998; (c) the Company's prospects
for the third quarter ending September 30, 1998 and thereafter; (d) the
Company's history of not achieving its internal projections and the Company
Board's uncertainty with respect to the achievability of the Company's current
short-term and long-term internal projections; (e) the Company Board's view
that additional equity, which would likely be dilutive to the Company's
existing shareholders, or a sale of assets would be necessary to sustain the
Company's independence; and (f) the recent current market price for the Company
Common Stock.
2. The terms and conditions of the Merger Agreement (including, without
limitation, the $3.50 per share cash amount to be paid by Crane), which the
Company Board views as favorable to the Company's shareholders.
3. The opinion of Legg Mason Wood Walker, Incorporated ("Legg Mason")
presented to the Company Board on August 10, 1998, to the effect that the
consideration to be paid to the Company's
5
<PAGE>
shareholders in the proposed acquisition by Crane pursuant to the Merger
Agreement and the related documents is fair from a financial point of view. In
considering such opinion, the Company Board and Special Committee (defined
below) of the Company Board were aware that upon delivery thereof, Legg Mason
became entitled to certain fees described in Item 5 below in connection with
its engagement by the Company.
4. The presentation of Legg Mason in connection with such opinion, as to
various financial and other considerations deemed relevant to the Board's
evaluation of the Offer and the Merger including (i) a review of the historical
financial performance of the Company; (ii) a review and analysis of the
historical and current market prices and trading patterns of the Shares; (iii)
the market price of the Shares in relation to the market prices and financial
data of other companies engaged in similar businesses as the Company; (iv) a
review and analysis of prices and premiums paid in, and other terms of, other
comparable recent acquisition transactions; (v) a discounted cash flow analysis
of the Company; and (vi) an analysis of the value of the Company in the event
of a liquidation of its assets.
5. The Company's shareholders will realize the entire value of the
purchase price without the risk of post-closing indemnification obligations.
6. The Company Board's ability to withdraw or modify its approval or
recommendation of the Offer, the Merger and any of the other transactions
contemplated by the Merger Agreement if necessary for the Company Board to
comply with its fiduciary duties.
7. The Company Board's ability to approve and recommend a Superior
Proposal (as defined in the Merger Agreement) if necessary for the Company
Board to comply with its fiduciary duties.
8. Crane's ability to conclude the transaction expeditiously and without
any financing contingency.
9. Crane's agreement (i) to give to those of the Company's or any of its
subsidiaries' employees who remain in the employ of Crane or the Company after
completion of the Offer (collectively, the "Remaining Company Employees") full
credit for purposes of eligibility and vesting under all employee benefit plans
or arrangements maintained by Crane or any of its subsidiaries for such
Remaining Company Employees' service with the Company or any of its
subsidiaries to the same extent recognized by the Company immediately prior to
the consummation of the Offer, (ii) to provide the Remaining Company Employees
with benefits comparable to those provided by Crane or any of its subsidiaries
to similarly situated employees of Crane or any of its subsidiaries and (iii)
to honor the Company's existing severance policy and separate employees
severance agreements for a period of 18 months after the completion of the
Merger for those of the Company's or any of its subsidiaries' employees who do
not remain in the employ of the Crane or the Company after completion of the
Offer.
6
<PAGE>
10. The Company Board's view that the proposed acquisition will benefit
the Company's customers by, among other things, assuring the continued
availability of those Company products that are continued by Crane after the
acquisition and of related after-sales service.
11. The Company Board's view that it is unlikely that there will be,
within the foreseeable future, any offer to acquire the Company which is
superior to Crane's offer and which can be closed within the time frame of
Crane's proposed acquisition.
The foregoing discussion of factors considered and given weight by the
Company Board is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Offer and the
Merger, the Company Board did not find it practicable to, and did not, quantify
or otherwise assign relative weights to the specific factors considered in
reaching its determinations and recommendations. In addition, individual
members of the Company Board may have given different weights to different
factors in reaching their own respective determinations.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit (a)(3) - Opinion of Legg Mason dated August 10, 1998.*
Dated August 28, 1998
By: /s/ R. Nim Evatt
--------------------------------------------
Name: R. Nim Evatt
Title: President and Chief Executive Officer
- --------
*Amending the Opinion of Legg Mason dated August 10, 1998 previously filed as
Exhibit (a)(3) with the Company's Schedule 14D-9 dated August 14, 1998.
7
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit (a)(1)* Letter to Shareholders of the Company dated August 14, 1998.
Exhibit (a)(2)* Press Release issued by the Company on August 12, 1998.
Exhibit (a)(3)+ Opinion of Legg Mason dated August 10, 1998.
Exhibit (c)(1)* Agreement and Plan of Merger dated as of August 11, 1998
among Crane, Purchaser and the Company.
Exhibit (c)(2)* Pages 6 through 11 of the Company's Proxy Statement dated
May 1, 1998, relating to its annual meeting of shareholders.
Exhibit (c)(3)* Confidentiality Agreement dated March 18, 1998 between the
Company and Crane.
Exhibit (c)(4)* Stock Option Agreement dated as of August 11, 1998 between
the Company and Crane.
Exhibit (c)(5)* Form of Shareholder Agreement between Crane and certain
shareholders of the Company.
* Previously filed as an exhibit to the Company's Schedule 14D-9 filed on
August 14, 1998.
+ Filed herewith.
8
<PAGE>
[LEGG MASON LETTERHEAD]
August 10, 1998
The Board of Directors
Liberty Technologies, Inc.
555 North Lane, Lee Park
Conshohocken, PA 19428
Members of the Board:
We have been advised that Liberty Technologies, Inc. ("Liberty")
proposes to enter into an Agreement and Plan of Merger (the "Agreement") with
Crane Co. ("Purchaser"), a draft of which dated August 6, 1998 was reviewed by
us. Pursuant to the Agreement, Purchaser will make a tender offer to purchase
all the issued and outstanding capital stock of Liberty for a purchase price of
$3.50 per share in cash (the "Transaction"). The terms and conditions of the
Transaction are more fully set forth in the Agreement.
You have requested our opinion, as investment bankers (the "Opinion"),
as to the fairness to the shareholders of Liberty from a financial point of
view, of the consideration to be received by the shareholders of Liberty in the
Transaction. We have not participated in negotiations or otherwise advised the
Board of Directors of Liberty in connection with the Transaction and have not
acted on behalf of Liberty in connection with any other transaction or proposed
transaction. We will receive a fee for providing this Opinion.
In arriving at our Opinion set forth below, we have, among other
things: (i) reviewed the Agreement; (ii) reviewed certain audited and unaudited
financial statements of Liberty; (iii) reviewed certain internal information,
primarily financial in nature, concerning Liberty prepared by management of
Liberty; (iv) discussed the past and current operations and financial condition
and prospects of Liberty with management of Liberty; (v) reviewed forecast
financial statements of Liberty prepared and furnished to us by the management
of Liberty; (vi) reviewed certain publicly available financial and stock market
data relating to selected public companies that we considered relevant to our
analysis; (vii) reviewed certain publicly available information concerning the
terms of selected merger and acquisition transactions that we considered
relevant to our inquiry; and (viii) conducted such other financial studies,
analyses and investigations and considered such information as we deemed
appropriate.
In connection with our review, we have assumed and relied upon the
accuracy and completeness of all financial and other information supplied to us
by Liberty, and all publicly available information, and we have not
independently verified such information. We also have relied upon the
management of Liberty for the financial projections (and the assumptions and
bases therein) provided to us for Liberty, and we have assumed that such
projections were
<PAGE>
Liberty Technologies, Inc.
Page 2
prepared on bases reflecting the best currently available estimates and
judgment of management as to the future operating performance of Liberty.
Liberty does not publicly disclose internal management projections of the type
provided to Legg Mason. Such projections were not prepared with the expectation
of public disclosure. The projections were based on numerous variables and
assumptions that are inherently uncertain, including without limitation,
factors related to general economic and competitive conditions. Accordingly,
actual results could vary significantly from those set forth in such
projections.
We have not been requested to make, and we have not made, an
independent appraisal or evaluation of the assets, properties, facilities or
liabilities of Liberty and we have not been furnished with any such appraisals
or evaluations.
Our Opinion is necessarily based on share prices and economic and other
conditions and circumstances as in effect on, and the information made
available to us as of August 10, 1998. It is understood that subsequent
developments may affect the conclusions reached in the Opinion and that we do
not have any obligation to update, revise or reaffirm our Opinion. In arriving
at our Opinion, we were not authorized to solicit, and did not solicit, third
party indications of interest from any party with respect to an acquisition of
Liberty, its assets, or any part thereof. Our Opinion does not address nor
should it be construed to address the relative merits of the Transaction or any
alternative business strategies that may be available to Liberty. We have
assumed that the Transaction described above will be consummated on the terms
and conditions described in the form of the Agreement reviewed by us.
It is understood that this letter is directed to Liberty's Board of
Directors and does not constitute a recommendation either of the Transaction or
to any shareholder of Liberty as to how such shareholder should vote on or
otherwise respond to the Transaction. This letter is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
proxy statement, or in any other document used in connection with the offering
or sale of securities, nor shall this letter be used for any other purposes,
without the prior written consent of Legg Mason Wood Walker, Incorporated,
provided that this Opinion may be included in its entirety in any filing made
by Liberty with the Securities and Exchange Commission with respect to the
Transaction.
Based upon and subject to the foregoing, we are of the opinion that,
as of August 10, 1998, the consideration to be reviewed by the shareholders of
Liberty in the Transaction is fair, from a financial point of view, to such
shareholders.
Very truly yours,
/s/ Legg Mason Wood Walker, Incorporated
LEGG MASON WOOD WALKER, INCORPORATED
