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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
JULY 14, 1997
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(JULY 8, 1997)
DETROIT DIESEL CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-12394 38-2772023
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(Commission File Number) (IRS Employer Identification No.)
13400 OUTER DRIVE WEST, DETROIT, MICHIGAN 48239-4001
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(Address of principal executive offices, including zip code)
313-592-5000
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(Registrant's telephone number, including area code)
This report contains 9 pages. The exhibit index is on page 5.
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TABLE OF CONTENTS
PAGE NO.
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ITEM 5 - OTHER EVENTS 3
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS 3
A) Not Applicable
B) Not Applicable
C) Exhibits
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ITEM 5 - OTHER EVENTS
Execution of Merger Agreement.
Detroit Diesel Corporation, a Delaware corporation ("Detroit Diesel"), OMC
Acquisition Corp., a Delaware corporation (the "Merger Sub") and a wholly-owned
subsidiary of Detroit Diesel, and Outboard Marine Corporation, a Delaware
corporation ("OMC"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of July 8, 1997. Pursuant to the terms of the Merger
Agreement, on or before July 15, 1997, Merger Sub will initiate a cash tender
offer to purchase 13,842,619 shares of Common Stock of OMC at a price of $16.00
per share (the "Offer"). In the event the Offer is consummated, a meeting of
OMC shareholders will be held to approve the Merger Agreement and the merger of
Merger Sub into OMC. In the merger, the outstanding shares of Common Stock of
OMC will be exchanged for an aggregate of 4,000,000 shares of Common Stock of
Detroit Diesel plus a variable amount of cash based on the closing price of the
Detroit Diesel Common Stock. Pursuant to the Merger Agreement, at the
effective time of the merger, each then issued and outstanding share of OMC
Common Stock, other than shares held by Detroit Diesel, Merger Sub and OMC and
shares to which appraisal rights have been properly exercised (the "Exchanged
Common Shares") will be converted into the right to receive (1) a fractional
share of Detroit Diesel Common Stock equal to 4,000,000 divided by the number
of Exchanged Common Shares (the "Exchange Ratio") plus (2) a cash payment equal
to (i) $16.00 minus (ii) the product of the Exchange Ratio multiplied by
$25.00, plus (3) in the event the average closing price on the New York Stock
Exchange for Detroit Diesel Common Shares for the 20 consecutive trading days
ending on the fifth trading day prior to the closing date of the merger (the
"DDC Closing Date Price") is less than $25.00, then an additional cash payment
equal to the product of the Exchange Ratio multiplied by the lesser of (i)
$25.00 minus the DDC Closing Date Price or (ii) $6.00.
As of June 30, 1997, there were 20,205,515 shares of OMC Common Stock
outstanding, excluding shares issuable upon (I) the exercise of options to
purchase an aggregate of approximately 1.4 million shares of OMC Common Stock
and (ii) the conversion of outstanding convertible debt instruments.
The joint press release of OMC and Detroit Diesel issued on July 9, 1997
announcing the Merger Agreement is attached as an exhibit hereto. Detroit
Diesel issued a press release on July 10, 1997 to provide further details on
the transaction, a copy of which is also attached as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
(A) Not Applicable.
(B) Not Applicable.
(C) Exhibits.
The exhibits listed in the accompanying Exhibit Index is filed as part of this
Current Report on Form 8-K.
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SIGNATURES
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 hereunto duly authorized.
DETROIT DIESEL CORPORATION
Date: July 14, 1997 By: /s/ John F. Farmer
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John F. Farmer
Its: Vice President and General Counsel
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EXHIBIT INDEX
The following constitutes the exhibits of the Current Report on Form 8-K of
Detroit Diesel Corporation on July 14, 1997.
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ------- ------- ---------
99.1 Joint press release dated July 9, 1997 of OMC and Detroit 6
Diesel Corporation.
99.2 Detroit Diesel press release dated July 10, 1997, announcing 8
additional details of the Detroit Diesel/OMC transaction.
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EXHIBIT 99.1
R-1234
Contact: Suzanne Truskowski
Manager, Public Affairs
Detroit Diesel Corporation
Phone: 313.592.7642
Fax: 313.592.5058
FOR IMMEDIATE RELEASE
DETROIT DIESEL CORPORATION ANNOUNCES TENDER OFFER
TO ACQUIRE OUTBOARD MARINE CORPORATION
DETROIT, MI and WAUKEGAN, IL, July 9, 1997 -- Detroit Diesel Corporation
(NYSE: DDC) and Outboard Marine Corporation (NYSE: OM), today jointly
announced the signing of a definitive agreement and plan of merger under
which DDC will acquire Outboard Marine Corporation (OMC). Detroit
Diesel will shortly commence a two-step transaction to acquire the
outstanding common shares of OMC for $16 per share. The transaction's
two steps are first: a tender offer for approximately 67% on a fully
diluted basis of the outstanding OMC shares in cash; then, in step two,
to purchase the remaining shares for a combination of cash and 4 million
shares of DDC common stock. The aggregate value of the transaction is
approximately $500 million, including the assumption of OMC's existing
debt of approximately $180 million. In addition to the equity offering,
DDC's acquisition will be financed through a newly established credit
facility.
The agreement, which is subject to customary conditions, provides
for the merger of a newly-formed subsidiary of Detroit Diesel with OMC
following the completion of the tender offer. The board of directors of
Outboard Marine has approved the offer and the merger.
Roger S. Penske, Chairman of Detroit Diesel said, "Our objective
is to further expand our worldwide marine capabilities beyond diesel
engines with the OMC enterprises. OMC, as a leading boat and marine
gasoline engine manufacturer, affords us the opportunity to enhance
skills and resources in new product development, manufacturing
processes, marketing, sales and distribution, and customer service. In
addition, we look forward to the prospect of further developing OMC's
proprietary FICHT(TM) fuel injection technology to optimize the
performance, fuel economy and emissions capability for the next
generation of marine and other engines. The DDC/OMC combination
represents an additional example of our commitment to generate long-term
earnings growth and maintain technology leadership for our
shareholders."
Referring to OMC's previously announced decision to explore
strategic alternatives in order to maximize shareholder value, Harry W.
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Bowman, Chairman of Outboard Marine Corporation, said, "We are very
pleased that our process has resulted in an agreement to team OMC with
Detroit Diesel, a company which has achieved great growth and excellent
performance in engineering, manufacturing and marketing its products.
With OMC's shareholders being offered the opportunity to participate in
DDC's future, along with the cash consideration being offered, we
believe this offer maximizes value for our current owners. The merger
also provides the opportunity for an optimistic future for our dealers,
their customers, and our employees. This is a very positive development
for OMC worldwide and the marine industry as well."
Timothy D. Leuliette, Vice Chairman of Detroit Diesel said, "With
OMC's leading market positions, and its recognized and respected brands
such as Johnson (R) and Evinrude (R), there are many opportunities to expand
our marine business and capitalize on synergies between DDC and OMC
operations. We will proceed with our tender offer shortly, subject to
normal regulatory approvals, and plan to close the subsequent merger
transaction within the next 90 days."
Combined net revenues for Detroit Diesel and Outboard Marine
Corporation in 1996 would have been $3.2 billion.
Outboard Marine Corporation is a leading global manufacturer and
marketer of marine engines and boats and related parts and accessories.
It is the second largest manufacturer of outboard engines in the world
and the second largest boat builder in the United States. Some of OMC's
products, including Johnson(R) and Evinrude(R) outboards, and Chris-Craft(R),
Grumman(R), Four Winns(R) and Stratos(R) boats, are among the most widely
recognized brands in the world. OMC manufactures products for world
markets in facilities located around the globe. Approximately 80% of
OMC sales are in North America, the world's largest market for marine
products.
Detroit Diesel Corporation is engaged in the design, manufacture,
sale and service of heavy-duty diesel and alternative fuel engines,
automotive diesel engines, and engine-related products, and provides
financing through Detroit Diesel Capital Corporation. The Company
offers a complete line of diesel engines from ten to 10,000 horsepower
for the on-highway truck; construction, mining and industrial;
automotive; coach and bus; marine; power generation; and military
markets. Detroit Diesel services these markets directly and through a
worldwide network of more than 2,500 authorized distributors and
dealers.
Detroit Diesel's major shareholder is a wholly-owned subsidiary
of Penske Corporation, a closely-held, diversified transportation
services company which conducts its business through a number of wholly-
or partially-owned companies, including Penske Truck Leasing Company,
Diesel Technology Company, AG Kuhnle, Kopp and Kausch, Penske
Automotive Group, Inc., Penske Auto Centers, Inc., Penske Motorsports,
Inc., and Penske Capital Partners. The Penske group of businesses has
annual revenues exceeding $6 billion and employs more than 25,000 around
the world.
###
Detroit Diesel Corporation's World Wide Web address is
http://www.detroitdiesel.com.
Outboard Marine Corporation World Wide Web address is
http://www.OMC-online.com
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EXHIBIT 99.2
R-1235 Contact: Dan McEnroe
Treasurer
313/592-7344
E-Mail Address: [email protected]
DETROIT DIESEL CORPORATION ANNOUNCES ADDITIONAL DETAILS TO OUTBOARD MARINE
CORPORATION TENDER OFFER
FOR IMMEDIATE RELEASE
DETROIT, MI, July 10, 1997 -- Yesterday, Detroit Diesel Corporation
(NYSE: DDC) and Outboard Marine Corporation (NYSE: OM) jointly announced the
signing of a definitive merger agreement under which DDC will acquire Outboard
Marine Corporation (OMC). Further details of the transaction are as follows:
OMC has 20,205,515 shares of common stock outstanding, which excludes
shares issuable upon exercise of options issued to employees and conversion of
outstanding convertible debt instruments.
OMC Acquisition Corp., a wholly-owned subsidiary of DDC, will initiate a
cash tender offer to purchase 13,842,619 shares of common stock of OMC at a
price of $16.00 per share.
In the event the tender offer is consummated, the second part of the
transaction will be the merger of the DDC subsidiary into OMC pursuant to which
the outstanding shares of common stock of OMC will be exchanged for an
aggregate of 4,000,000 shares of common stock of DDC plus a variable amount of
cash based on the closing price of the DDC common stock. In the merger, each
share of then issued and outstanding OMC common stock (the "Exchanged Common
Shares"), shall be converted into the right to receive (1) a fractional share
of DDC common stock equal to 4,000,000 divided by the number of Exchanged
Common Shares (the "Exchange Ratio") plus (2) a cash payment equal to (i)
$16.00 minus (ii) the product of the Exchange Ratio times $25.00, plus (3) in
the event the average closing price on the New York Stock Exchange for DDC
common stock for the 20 consecutive trading days ending on the fifth trading
day prior to the closing date of the merger (the "DDC Closing Date Price") is
less than $25.00, then an additional cash payment equal to the product of the
Exchange Ratio multiplied by the lesser of (i) $25.00 minus the DDC Closing
Date Price or (ii) $6.00.
Assuming the issuance of no additional shares of common stock by OMC prior
to the merger, at the effective time of the merger, the holders of the
6,362,896 Exchanged Common Shares of OMC common stock would receive a
combination of 4,000,000 shares of DDC common stock and cash. Assuming a
$25.00 DDC Closing Date Price, OMC shareholders in the merger would thus
receive $16.00 of value per OMC share, which value is comprised of 0.6286
shares of DDC common stock for each share of OMC common stock and $0.28 in
cash.
The above conversion formula provides that should the DDC Closing Date
Price be less than $25.00, additional cash consideration will be paid to the
holders of the Exchanged Common Shares to maintain the total $16.00 per share
value subject to a minimum value of $19.00 per share of DDC common stock. If
the DDC Closing Date Price exceeds $25.00 per share of DDC common stock, the
Exchange Ratio would remain the same.
Additional details will be available in the tender offer documents to be
filed with the Securities and Exchange Commission in connection with this
transaction.
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Outboard Marine Corporation is a leading global manufacturer and marketer
of marine engines and boats and related parts and accessories. It is the
second largest manufacturer of outboard engines in the world and the second
largest boat builder in the United States. Some of OMC's products, including
Johnson(R) and Evinrude(R) outboards, and Chris*Craft(R), Grumman(R), Four
Winns(R), and Stratos(R) boats, are among the most widely recognized brands in
the world. OMC manufactures products for world markets in facilities located
around the globe. Approximately 80% of OMC sales are in North America, the
world's largest market for marine products.
Detroit Diesel Corporation is engaged in the design, manufacture, sale and
service of heavy-duty diesel and alternative fuel engines, automotive diesel
engines, and engine-related products and provides financing through Detroit
Diesel Capital Corporation. The Company offers a complete line of diesel
engines from ten to 10,000 horsepower for the on-highway truck; construction,
mining and industrial; automotive; coach and bus; marine; power generation; and
military markets. Detroit Diesel services these markets directly and through a
worldwide network of more than 2,500 authorized distributors and dealers.
Detroit Diesel's major shareholder is a wholly-owned subsidiary of Penske
Corporation, a closely-held, diversified transportation services company which
conducts its business through a number of wholly- or partially-owned companies,
including Penske Truck Leasing Company, Diesel Technology Company, AG Kuhnle,
Kopp and Kausch, Penske Automotive Group, Inc., Penske Auto Centers, Inc.,
Penske Motorsports, Inc., and Penske Capital Partners. The Penske group of
businesses has annual revenues exceeding $6 billion and employs more than
25,000 around the world.
This news release may include projections, forecasts and other
forward-looking statements about the Company, the industry in which it competes
and the markets it serves. The achievement of such projections is subject to
certain risks and uncertainties, fully detailed in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
###
For Media Only: For a complimentary facsimile copy of Detroit Diesel
Corporation's recent press releases call "Company News on Call" at
1-800-758-5804 ext. 239425.
Detroit Diesel Corporation's World Wide Web address is
http://www.detroitdiesel.com
Outboard Marine Corporation's World Wide Web address is
http://WWW.OMC-online.com
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