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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ARDEN INDUSTRIAL PRODUCTS, INC.
(Name of Subject Company and Name of Person(s) Filing Statement)
COMMON SHARES, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
039780-10-1
(CUSIP Number of Class of Securities)
MR. MICHAEL J. LINDSETH
ARDEN INDUSTRIAL PRODUCTS, INC.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
560 OAK GROVE PARKWAY
VADNAIS HEIGHTS, MINNESOTA 55127
(612) 482-7400
(Name, address, and telephone number of person authorized to receive notices and
communication on behalf of person(s) filing statement)
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WITH COPY TO:
C. ROBERT BEATTIE, ESQ.
Doherty, Rumble & Butler Professional Association
3500 Fifth Street Towers
150 South Fifth Street
Minneapolis, Minnesota 55402-4235
(612) 340-5555
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ARDEN INDUSTRIAL PRODUCTS, INC.
SCHEDULE 14D-9
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Arden Industrial Products, Inc., a
Minnesota corporation (the "Company"), and the address of the principal
executive offices of the Company is 560 Oak Grove Parkway, Vadnais Heights,
Minnesota 55127. The title of the class of equity securities to which this
statement relates is common shares, par value $.01 per share.
ITEM 2. TENDER OFFER OF PURCHASER
This statement relates to a cash tender offer (the "Offer") by P O
Acquisition Corporation, a Minnesota corporation ("Purchaser") and a
wholly-owned subsidiary of Park-Ohio Industries, Inc., an Ohio corporation
("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1"), dated June 26, 1997, to purchase all of the outstanding
shares of the Company, par value $.01 per share (the "Shares") at a price of
$6.00, net to the seller in cash (the "Offer Price"), upon the terms and subject
to the conditions set forth in an Agreement and Plan of Merger, dated as of June
16, 1997 (the "Merger Agreement"), by and among Parent, Purchaser, and the
Company. The Offer is conditioned, among other things, upon there having been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Shares which would constitute at least 50.1% of the combined voting power of
the Shares (the "Minimum Condition").
A copy of the Merger Agreement is filed as Exhibit (c)-1 hereto and is
incorporated herein by reference in its entirety. Pursuant to the Merger
Agreement, following the consummation of the Offer and the satisfaction or
waiver of certain conditions, the Purchaser will be merged with and into the
Company (the "Merger") and the Company will continue as the surviving
corporation (the "Surviving Corporation"). Upon consummation of the Merger (the
"Effective Time"), each outstanding Share (other than Shares owned by the
Purchaser or by shareholders, if any, who are entitled to and who properly
exercise dissenters' rights under Minnesota law) will be converted into the
right to receive an amount in cash equal to the price per Share paid pursuant to
the Offer, without interest thereon. The Merger Agreement is summarized in Item
3 of this Statement. The Offer, the Merger, and the transactions contemplated
thereby are sometimes collectively referred to herein as the "Transaction."
Based on the information in the Offer to Purchase, the principal executive
offices of Parent and Purchaser are located at 23000 Euclid Avenue, Cleveland,
Ohio 44117.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described or referred to below, there exists on the date
hereof no material contract, agreement, arrangement or understanding and no
actual or potential conflict of interest between the Company or its affiliates
and (1) the Company's executive officers, directors or affiliates or (2) the
Parent, the Purchaser or the executive officers, directors or affiliates of the
Parent or the Purchaser.
ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its executive officers and directors are described under
the captions "Board of Directors and Committees," "Executive Compensation," and
"Certain Relationships and Transactions" in the Company's Proxy Statement dated
September 26, 1996 as well as the item captioned "Item 5. Other Events"
contained in, and the Exhibit to, the Company's Form 8-K dated November 11,
1996, each of which is hereby incorporated by reference and made a part hereof.
In addition, Parent is presently engaged in discussions with certain
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executive officers of the Company (including the Chairman and Senior Vice
President of Marketing, the President and Chief Executive Officer, and the Chief
Financial Officer) regarding the provision of services by such persons as
consultants to the Surviving Corporation after the Effective Time. No formal
consulting agreements have been entered into; however, it is anticipated that
such agreements will provide for the payment of fees for services performed and
agreements not-to-compete with Parent or the Surviving Corporation.
INDEMNIFICATION
The Merger Agreement provides that, following the Merger, the Articles of
Incorporation and Bylaws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in the
Articles of Incorporation and Bylaws of the Company, which provisions shall not
be amended, repealed, or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, or employees
of the Company, unless such modification is required by law. Subject to, and
pursuant to, the provisions of the Merger Agreement, the Company must, and after
the Effective Time the Surviving Corporation must, to the fullest extent
permitted under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless each present and former director, officer
and employee of the Company against any costs or expenses, judgments, fines,
losses, claims and liabilities in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to any action or
omission in such person's capacity as an officer, director or employee of the
Company for a period of six years after the Effective Time. In the event that
the Surviving Corporation lacks sufficient funds to indemnify any such party as
contemplated by the Merger Agreement, Parent shall be responsible for the
payment of, and shall pay, such deficiency. Subject to certain qualifications
set forth in the Merger Agreement, Parent shall use its best efforts to cause to
be maintained in effect for three years from the Effective Time the current
policies of directors' and officers' liability insurance maintained by the
Company.
THE MERGER AGREEMENT
Certain provisions of the Merger Agreement are summarized below. Such
description is qualified in its entirety by reference to the text of the Merger
Agreement, a copy of which is referenced as Exhibit (c)-1 hereto. The Merger
Agreement provides, in pertinent part, as follows:
THE OFFER. The Purchaser will commence the Offer and, upon the terms and
subject to prior satisfaction or waiver of the conditions of the Offer, the
Purchaser will purchase all Shares validly tendered pursuant to the Offer.
Without the written consent of the Company, the Purchaser will not decrease the
Offer Price, decrease the number of Shares sought in the Offer to an amount less
than 50.1% of the Shares, change the form of consideration to be paid pursuant
to the Offer, or amend any condition of the Offer in a manner adverse to the
holders of Shares. The Purchaser will, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as it is legally permitted to do so under
applicable law; provided, however, that the Purchaser may extend the period of
the Offer as is reasonably necessary to satisfy any unsatisfied conditions of
the Offer and that, if the Shares tendered and not withdrawn pursuant to the
Offer equal less than 90% of the outstanding Shares but more than 80% of the
outstanding Shares, the Purchaser may extend the Offer for a period not to
exceed ten (10) business days, notwithstanding that all conditions to the Offer
are satisfied as of such expiration date of the Offer.
THE MERGER. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions of the Merger Agreement, and
in accordance with Minnesota law, as soon as practicable following the Effective
Time, the Purchaser will be merged with and into the Company. As a result of the
Merger, the separate corporate existence of the Purchaser will cease and the
Company will continue as the Surviving Corporation.
At the Effective Time of the Merger (i) each issued and outstanding Share
(other than Shares that are held by shareholders exercising dissenters' rights
under Minnesota law) will be converted into the right to
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receive the price per Share paid pursuant to the Offer (the "Merger
Consideration"), and (ii) each issued and outstanding share of the Purchaser
will be converted into one share of common stock of the Surviving Corporation.
THE BOARD OF DIRECTORS OF THE COMPANY. Subject to compliance with
applicable law, promptly following the purchase by Purchaser of more than 50% of
the Shares pursuant to the Offer, the Company will, if requested by Parent, take
all actions necessary to cause persons designated by Parent to become directors
of the Company so that the total number of such persons equals the number of
directors, rounded up to the next whole number, which represents the product of
(a) the total number of directors on the Board of Directors multiplied by (b)
the percentage that the number of Shares accepted by Purchaser for payment bears
to the number of Shares outstanding at the time of such acceptance for payment;
provided that, prior to the Effective Time, the Company's Board of Directors
shall always have at least three members who are not officers, designees,
shareholders or affiliates of Parent and provided, further, that prior to the
Effective Time, the affirmative vote of a majority of the directors of the
Company who are not officers, designees, shareholders or affiliates of Parent
shall be required to take any action by the Company which, pursuant to the
Merger Agreement, must be taken by the Board of Directors of the Company.
SHAREHOLDERS' MEETING. After termination of the Offer, the Company will, if
required by applicable law and the Company's governing documents in order to
consummate the Merger, duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as promptly as practicable
for the purpose of considering and taking action upon the Merger and the
adoption of the Merger Agreement. The Merger Agreement also requires that the
Company, through its Board of Directors, will recommend the Transaction to its
shareholders and use reasonable efforts to solicit proxies from its shareholders
approving the transaction. The Merger Agreement further provides that the
Company will, if required by applicable law in order to consummate the Merger,
prepare and file with the Securities and Exchange Commission (the "Commission")
a proxy statement (the "Proxy Statement") relating to the Merger and the Merger
Agreement and use reasonable efforts to have the Proxy Statement cleared by the
Commission as promptly as practicable thereafter. In addition, the Company has
agreed to notify Parent and Purchaser of any comments from the Commission and
promptly respond thereto.
EFFECT OF MERGER. Following consummation of the Merger, (a) the Company
will be the Surviving Corporation, (b) the Articles of Incorporation, Bylaws and
directors of the Purchaser at the Effective Time will be the Articles of
Incorporation, Bylaws and directors of the Surviving Corporation, and (c) the
officers of the Company at the Effective Time will be the officers of the
Surviving Corporation until they resign or are replaced.
CONDITIONS OF CLOSING; TERMINATION. The closing of the Merger shall take
place on the later of the first business day following the date on which the
last of the conditions set forth in the Merger Agreement is fulfilled or waived
or July 25, 1997 (the "Closing Date"). The obligations of the Company, the
Purchaser and Parent to effect the Merger are subject to the satisfaction or
waiver, on or before the Closing Date, of certain conditions, including (a)the
acceptance and purchase by the Purchaser of Shares pursuant to the Offer, (b)
the adoption of the Merger Agreement by the shareholders of the Company or the
acquisition by Purchaser of 90% or more of the outstanding Shares, (c) the
expiration of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("H-S-R Act"), and (d) there being no
statute, rule, regulation, decree, injunction or other order of any nature of
any court or governmental authority which prevents or materially changes the
transactions contemplated by the Merger Agreement; provided, however, that in
the case of a decree, injunction or other order, the party invoking such
condition shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any decree,
injunction or other order.
The obligations of Purchaser and Parent to effect the Merger are subject to
the satisfaction or waiver of the following conditions on or before the Closing
Date: (a) the Company shall have performed in all material respects all
obligations and covenants required to be performed by it under the Merger
Agreement; (b) all necessary approvals of any governmental authority in
connection with the Merger shall have been obtained, except where the failure to
obtain such approval would not have a material adverse effect on the Company;
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(c) there shall not have been entered any order by any governmental authority in
any suit, action or proceeding which requires the payment of material damages by
Purchaser, Parent or the Company in connection with the Offer or the Merger or
prohibits or limits certain ownership or operating rights of Parent and/or its
subsidiaries; and (d) each of the representations and warranties of the Company
contained in the Merger Agreement shall be true and correct on the Closing Date
(unless they expressly relate to an earlier date).
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether prior to or after approval by the
shareholders of the Company, by the mutual written consent of the Board of
Directors of Parent and the Board of Directors of the Company. The Merger
Agreement may also be terminated as described below under the heading "Certain
Conditions of the Offer."
The Merger Agreement may be terminated by either of the Board of Directors
of Parent or the Board of Directors of the Company if (a) Purchaser or Parent
has not purchased Shares in accordance with the terms of the Offer on or prior
to September 23, 1997 (provided that the right to so terminate the Merger
Agreement shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or results in, the
failure of any such condition) or (b) any governmental authority shall have
issued an order, decree or ruling or taken any other action prohibiting the
transactions contemplated by the Merger Agreement and such action shall have
become final and non-appealable. The Merger Agreement may be terminated by the
Board of Directors of the Company if (a) prior to the purchase of Shares
pursuant to the Offer, the Board of Directors of the Company shall have taken a
Permitted Action (as defined below) and upon or prior to such termination, the
Company shall have paid Parent a termination fee of $1,500,000, (b) prior to the
purchase of Shares pursuant to the Offer, either of Purchaser or Parent shall
have failed in any material respect to perform or comply with any of its
material covenants and agreements contained in the Merger Agreement or shall
have breached in any material respect its representations and warranties
contained in the Merger Agreement (provided that such breach has not been cured
prior to termination), (c) Purchaser or Parent shall have terminated the Offer,
or the Offer shall have expired, without Purchaser purchasing any Shares
pursuant thereto (provided the Company is not then in material breach of the
Merger Agreement), (d) due to an occurrence that, if occurring after the
commencement of the Offer, would result in a failure to satisfy any of the
conditions set forth in Annex A to the Merger Agreement, as described below
under the heading "Certain Conditions of the Offer," Purchaser or Parent shall
have failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer (provided that the
Company is not then in material breach of the Merger Agreement) or (e) the
commitment from Parent's lenders to provide funds for Purchaser's acquisition of
Shares, as described in the Merger Agreement, shall have ceased to be in force
or replaced by a similar commitment in form and substance satisfactory to the
Company.
As used herein, the term "Permitted Action" means (a) a withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of the Merger Agreement, the Offer or the Merger in a manner
adverse to Purchaser and Parent or (b) an approval or recommendation, or entry
into an agreement, regarding an acquisition proposal of a type which the Board
of Directors of the Company is permitted to entertain pursuant to the Merger
Agreement and with respect to which the Board of Directors of the Company is
required to act on in order to comply with its fiduciary duties to the
shareholders of the Company.
The Merger Agreement may be terminated by the Board of Directors of Parent
if (a) due to an occurrence that, if occurring after the commencement of the
Offer, would result in a failure to satisfy any of the conditions set forth in
Annex A to the Merger Agreement, as described below under the heading "Certain
Conditions of the Offer," Purchaser or Parent shall have failed to commence the
Offer on or prior to five business days following the date of the initial public
announcement of the Offer (provided that Parent and Purchaser are not then in
material breach of the Merger Agreement), (b) prior to the purchase of Shares
pursuant to the Offer, the Board of Directors of the Company shall have taken a
Permitted Action, (c) prior to the purchase of Shares pursuant to the Offer, it
shall have been publicly disclosed or Purchaser or Parent shall have learned
that any person, entity or group shall have acquired, or shall have been granted
any option, right or warrant to acquire, beneficial ownership of more than (i)
20% of any class or series of the capital stock
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of the Company or (ii) 10% of any class or series of the capital stock of the
Company and such person, entity or group shall have manifested an intent to
acquire additional Shares for any reason other than passive investment, (d)
Purchaser or Parent shall have terminated the Offer or the Offer shall have
expired without Purchaser or Parent purchasing any Shares thereunder (provided
that neither Purchaser nor Parent is then in material breach of the Merger
Agreement) or (e) the Company shall have failed in any material respect to
perform or comply with any of its material covenants and agreements contained in
the Merger Agreement.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Offer and provided that Purchaser shall not be obligated to accept for payment
any Shares until expiration of all applicable waiting periods under the H-S-R
Act, Purchaser shall not be required to accept for payment or pay for, and may
delay the acceptance for payment of or payment for, any tendered Shares, and
may, in its sole discretion, terminate or amend the Offer as to any Shares not
then paid for if (i) the Minimum Condition shall not have been satisfied or (ii)
at any time on or after June 23, 1997 (unless otherwise indicated below) and at
or before the time of payment for such Shares (whether or not Shares have been
accepted for payment or paid for pursuant to the Offer), any of the following
events shall occur:
a. there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or
in the over-the-counter market, (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States,
(iii) a commencement or escalation of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
governmental or regulatory authority on, or any other event which might
affect, the extension of credit by lending institutions, or (v) in the case
of any of the foregoing existing at the time of the commencement of the
Offer, in the reasonable judgment of the Purchaser, a material acceleration
or worsening thereof;
b. the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement or there shall have been a breach of any representation or
warranty on the part of the Company having a material adverse effect on the
Company or the Company's value to Parent or materially adversely affecting
(or materially delaying) the Offer or the Merger;
c. there shall have been instituted or pending any action, litigation,
proceeding, investigation or other application ("Action"), (including any
worsening of any existing Action) before any United States court or
governmental entity by any United States governmental entity (i)
challenging the acquisition by Parent or Purchaser of Shares, seeking to
restrain or prohibit the consummation of the Offer or the Merger, or obtain
any material damages in connection therewith, (ii) seeking to prohibit, or
impose any material limitations on, Parent's or Purchaser's ownership or
operation of all the Company's business or assets or to compel Parent or
Purchaser to dispose of or hold separate all or any portion of the
Company's business or assets as a result of the transactions contemplated
by the Offer or the Merger, which limitations would have a material adverse
effect with respect to the value of the Company to Parent, (iii) seeking to
make the acceptance for payment, purchase of, or payment for, some or all
of the Shares illegal or render Purchaser unable to, or result in a
material delay in, or materially restrict, the ability of Purchaser to
accept for payment, purchase or pay for some or all of the Shares, (iv)
seeking to impose material limitations on the ability of Parent or
Purchaser effectively to acquire or hold or to exercise full rights of
ownership of the Shares purchased by them on all matters properly presented
to the shareholders of the Company or (v) that is reasonably likely to have
a material adverse effect on the Company or the value of the Shares to
Parent or Purchaser as a result of the consummation of the transactions
contemplated by the Offer and the Merger;
d. any statute, rule, regulation, order or injunction shall have been
promulgated, enacted, entered, enforced or deemed applicable to the Offer
or the Merger, or any other action shall have been taken, proposed or
threatened, by any United States court or other governmental authority
other than the application to the Offer or the Merger of the waiting
periods under the H-S-R Act, that, directly or indirectly, can reasonably
be expected to result in any of the consequences referred to in clauses (i)
through (v) of subsection (c) above;
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e. a tender or exchange offer for some portion or all the Shares shall
have been commenced or publicly proposed to be made by another person
(including the Company), or it shall have been publicly disclosed that any
person, entity or "group," as defined in Section 13(d)(3) of the Exchange
Act (other than Parent or the Purchaser) shall have (i) become the
beneficial owner of more than 20% of the Shares, (ii) become the beneficial
owner of more than 10% of the Shares for any reason other than passive
investment or (iii) entered into an agreement with respect to an
Acquisition Proposal with or involving the Company;
f. any change shall have occurred in the financial condition,
properties, businesses or results of operations of the Company that is or
is reasonably likely to have a material adverse effect on the Company;
g. the Board of Directors of the Company (or a special committee
thereof) shall have amended, modified or withdrawn its recommendation of
the Offer or the Merger, or shall have failed to publicly reconfirm such
recommendation upon request by Parent or Purchaser, or shall have endorsed,
approved or recommended any other Acquisition Proposal, or shall have
resolved to do any of the foregoing;
h. the Merger Agreement shall have been terminated in accordance with
its terms or Parent or Purchaser shall have reached an agreement or
understanding in writing with the Company providing for termination or
amendment of the Offer or delay in payment for Shares;
i. any Action is instituted or pending by a non-governmental person
(or there shall be a worsening of an existing action) which, in the
reasonable judgment of Parent, has a reasonable likelihood of success, and
if successful on the merits, is more likely than not to have a material
adverse effect on the Company or the value of the Shares to Parent as a
result of the consummation of the transactions contemplated by the Offer
and the Merger; or
j. there has been any (i) release of hazardous substances in, on,
under or affecting any properties currently or formerly owned, operated or
leased by the Company in violation of, or as would be reasonably
anticipated to result in liability under, applicable environmental laws or
(ii) disposal of hazardous substances or any other substance in a manner
that has led to, or could reasonably be expected to lead to, a violation of
applicable environmental laws except, in either case, as disclosed in the
disclosure schedules which have been incorporated into the Merger Agreement
and except, in either case, for those which, individually or in the
aggregate, are not reasonably likely to have a material adverse effect on
the Company;
which, in the sole judgment of Parent and Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
the Purchaser) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances (including any action or inaction by Parent or the Purchaser)
giving rise to such condition or may be waived by Parent or the Purchaser, by
express and specific action to that effect, in whole or in part at any time and
from time to time in its sole discretion.
NO SOLICITATION OF OTHER OFFERS. The Company has agreed that from and after
the date of the Merger Agreement until the Effective Time, it will not, nor will
it authorize any of its officers, directors, employees, agents or
representatives to, (a) solicit, initiate or knowingly encourage submission of
any Acquisition Proposal (as defined below), (b) enter into any agreement with
respect to an Acquisition Proposal, or (c) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to knowingly facilitate any inquiries or
the making of any proposal that constitutes or would reasonably be expected to
lead to, an Acquisition Proposal; provided, however, that: (y) the Company may
engage in discussions with, and provide information to a third party who,
without any solicitation from the Company or representatives of the Company,
seeks to engage in such discussions or requests such information if (i) the
Board of Directors of the Company determines that failing to do so would violate
its fiduciary duties to the Company's shareholders, (ii) the Company first
obtains an
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executed confidentiality agreement from such third party, and (iii) the
Acquisition Proposal would entitle the holders of Shares to receive aggregate
consideration in excess of $6.00 per Share; and (z) the Board of Directors of
the Company may take and disclose to the Company's shareholders a position with
regard to a tender offer or exchange offer and make such other disclosure in
connection therewith as may be required by law. The Company will immediately
notify Purchaser and Parent of any Acquisition Proposal, including the material
terms thereof and the identity of the offeror.
As used herein, the term "Acquisition Proposal" means any proposal or offer
from any person relating to (a) any acquisition or purchase of more than 10% of
either the capital stock of the Company or the assets of the Company, (b) any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 10% or more of the capital stock of the Company, or (c) any
merger, consolidation or business combination, involving the Company, other than
the transactions contemplated by the Merger Agreement.
STOCK OPTIONS. Prior to the Effective Time, the Company will take such
actions as may be necessary such that, at the Effective Time, each then
outstanding option to purchase Shares, whether or not then vested or
exercisable, shall be canceled and the holders thereof shall become entitled,
upon surrender to the Company, to receive an amount of cash equal to the product
of (a) the excess, if any, of the purchase price paid pursuant to the Offer over
the exercise price per Share provided for in such option and (b) the number of
Shares issuable pursuant to the unexercised portion of such option, less any
required withholding of taxes. Parent has agreed to advance funds to the Company
to the extent necessary to effect the cancellation of such options.
CONDUCT OF BUSINESS. The Merger Agreement also contains certain
restrictions as to the conduct of business by the Company pending the Merger, as
well as representations and warranties of each of the parties customary in
transactions of this kind. Subject to the requirements of applicable law, the
Merger Agreement may be amended at any time prior to the Effective Time by
action taken by the Company, Parent and the Purchaser.
RIGHTS OF DISSENTING SHAREHOLDERS. No dissenters' rights are available in
connection with the Offer. However, if the Merger is consummated, each
shareholder of the Company who complies with the procedural requirements
summarized below may demand payment of fair value for his or her Shares under
Section 302A.473 of the MBCA. To be entitled to payment, the dissenting
shareholder must not accept the Offer and must file, prior to the vote for the
Merger, a written notice of intent to demand payment of the fair value of the
Shares and must not vote in favor of the Merger. Any shareholder contemplating
the exercise of their dissenters' rights should review carefully the provisions
of Section 302A.471 and 302A.473 of the MBCA, particularly the procedural steps
required to perfect such rights. SUCH RIGHTS WILL BE LOST IF THE PROCEDURAL
REQUIREMENTS OF SECTION 302A.473 ARE NOT FULLY AND PRECISELY SATISFIED.
Shareholders of the Company who do not demand payment for their Shares as
provided above and in Section 302A.473 of the MBCA shall be deemed to have
assented to the Merger. A vote against the Merger, however, is not necessary to
entitle dissenting shareholders to require the Company to purchase their Shares.
Conversely, a vote against the Merger is not sufficient to protect the rights of
a shareholder as a dissenter without the concurrent compliance with the
procedural requirements under Minnesota law.
If the Purchaser acquires at least ninety percent (90%) of the Shares
pursuant to the Offering, no shareholder vote will be required to consummate the
Merger. In such event, no notice of intent to demand dissenter's rights will be
required.
If and when the Merger is approved by shareholders of the Company or
effected without a vote of shareholders and not abandoned by the Board of
Directors, the Company shall notify all shareholders who have dissented as
provided above (or shareholders who still hold Shares if the Merger is effected
without a vote of shareholders) of:
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i. the address to which demand for payment and Share certificates must
be sent to obtain payment and the date by which they must be
received;
ii. any restriction on transfer of uncertificated Shares that will apply
after the demand for payment is received;
iii. a form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents,
acquired the Shares, or an interest in them, and to demand payment;
and
iv. a copy of Sections 302A.471 and 302A.473 of the MBCA and a brief
description of the procedures to be followed to dissent and obtain
payment of fair values for Shares.
To receive the fair value of the Shares, a dissenting shareholder must
demand payment and deposit share certificates within 30 days after the notice
was given, but the dissenter retains all other rights of a shareholder until the
proposed action takes effect. Under Minnesota law, notice by mail is given by
the Company when deposited in the United States mail. A shareholder who fails to
make demand for payment and to deposit certificates will lose the right to
receive the fair value of the Shares notwithstanding the timely filing of the
first notice of intent to demand payment. After the Effective Time of the
resolutions, the Company shall remit to the dissenting shareholders who have
complied with the above-described procedures the amount the Company estimates to
be the fair value of such shareholder's Shares, plus interest.
If a dissenter believes that the amount remitted by the Company is less
than the fair value of the Shares, with interest, the shareholder may give
written notice to the Company of the dissenting shareholder's estimate of fair
value, with interest, within 30 days after the Company mails such remittance and
demand payment of the difference. UNLESS A SHAREHOLDER MAKES SUCH A DEMAND
WITHIN SUCH THIRTY-DAY PERIOD, THE SHAREHOLDER WILL BE ENTITLED ONLY TO THE
AMOUNT REMITTED BY THE COMPANY.
Within sixty days after the Company receives such a demand from a
shareholder, it will be required either to pay the shareholder the amount
demanded or agreed to after discussion between the shareholder and the Company
or to file in court a petition requesting that the court determine the fair
value of the Shares, with interest. All shareholders who have demanded payments
for their Shares, but have not reached agreement with the Company, will be made
parties to the proceeding. The court will then determine whether the
shareholders in question have fully complied with the provisions of Section
302A.473 and will determine the fair value of the Shares, taking into account
any and all factors the court finds relevant (including the recommendation of
any appraisers that may have been appointed by the Court), computed by any
method that the court, in its discretion, sees fit to use, whether or not used
by the Company or a shareholder. The costs and expenses of the court proceeding
will be assessed against the Company, except that the court may assess part or
all of those costs and expenses against a shareholder whose action in demanding
payment is found to be arbitrary, vexatious, or not in good faith.
The fair value of the Company's Shares means the fair value of the Shares
immediately before the Effective Time of the Merger. Under Section 302A.471, a
shareholder of the Company has no right at law or in equity to set aside the
consummation of the Merger, except if such consummation is fraudulent with
respect to such shareholder or the Company.
Any shareholder making a demand for payment for fair value may withdraw the
demand at any time prior to the determination of the fair value of the Shares by
filing written notice of such withdrawal with the Company.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
The Board of Directors of the Company was aware that certain officers and
directors of the Company have certain interests in the Transaction, including
those referred to below, that present actual or potential conflicts of interest
in connection with the Offer and considered such factors along with other
matters described in Item 4 under "Reasons for Recommendation."
9
<PAGE> 10
As of June 16, 1997, the executive officers and directors of the Company
owned an aggregate of 2,665,612 Shares and held options to purchase an aggregate
of 436,459 Shares (whether or not exercisable). On such date, the Shares owned
by executive officers and directors of the Company and the options held by such
persons (whether or not exercisable) together constituted approximately 38.1% of
the currently outstanding Shares (assuming no exercise of outstanding options).
If the Transaction is consummated, each outstanding option will be surrendered
and canceled in exchange for a cash payment equal to the number of Shares
subject to such option, multiplied by the Offer Price, less the aggregate
exercise price of such option and any applicable withholding of taxes.
The following table sets forth, as of June 16, 1997, the number of Shares
and options owned by each executive officer and director of the Company who owns
any Shares or options, and all executive officers and directors of the Company
as a group, pursuant to the Transaction. Other than the individuals named below,
no executive officer or director of the Company owns any Shares as of such date.
<TABLE>
<CAPTION>
SHARES OPTIONS* TOTAL %
--------- -------- --------- ----
<S> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE DIRECTORS:
- -------------------------------------
Larry A. Carlson.................................. 1,359,936 0 1,359,936 19.5%
Brian P. Carlson.................................. 1,302,151 0 1,302,151 18.6%
Mike Lindseth..................................... 0 350,000 350,000 4.8%
Ann Rolkler Jackson............................... 0 7,917 7,917 0.1%
David Koentopf.................................... 0 8,542 8,542 0.1%
Kim B. Erickson................................... 3,525 60,000 63,525 0.9%
Joseph Levesque................................... 0 10,000 10,000 0.1%
--------- ------- --------- ----
Total........................................... 2,665,612 436,459 3,102,071 41.8%
</TABLE>
- ---------------
* The Options referenced are all exercisable at a price of $3.75 per share,
except for 15,000 of Mr. Erickson's options which are exercisable at a price
of $4.88 per share.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors.
The Board of Directors has unanimously approved the Merger Agreement and
the transactions contemplated thereby and determined that each of the Offer and
the Merger is fair to, and in the best interests of, the shareholders of the
Company. In addition, a committee consisting of the three disinterested
directors of the Company, established pursuant to Section 302A.673, subdivision
1(d) of the MBCA, unanimously approved the Merger Agreement and the transactions
contemplated thereby and determined that the each of the Offer and the Merger is
fair to, and in the best interest of, the shareholders of the Company. The Board
of Directors recommends that all holders of Shares accept the Offer and tender
their Shares pursuant to the Offer.
(b) Background of the Transaction.
The Company was founded in 1972. The Company completed an initial public
offering of its shares in 1994.
The Company is an international distributor of specialty and standard
fasteners to the industrial market, offering its customers a broad line of
fastener products and a wide range of value-added services. These services
include innovative inventory management programs, engineering and design support
and continuous quality assurance programs, which enable the Company's customers
to lower their overall costs of purchasing, handling and designing fasteners,
and assembling their products. The Company distributes fasteners to
approximately 7,500 original equipment manufacturers and other industrial
manufacturers, assemblers and subassemblers that operate in a broad range of
industries, as well as to other distributors. The Company
10
<PAGE> 11
currently operates seven distribution centers in the Midwest and Southeast and
has approximately 380 employees.
Commencing in the summer of 1996, management and the Board of Directors of
the Company held a series of discussions concerning the strategic direction of
the Company and its business, including the possibility of seeking potential
strategic partners or acquisitions for or buyers of the Company. In September,
1996, the Company engaged the firm of Sampson and Associates, Inc. for the
purpose of assessing and advising the Company concerning a potential sale or
merger of the Company. In November, 1996 the Company hired Michael J. Lindseth
as its new chief executive officer. Over the course of the next several months,
under the guidance of Mr. Lindseth, the Company prepared a new 1997 operations
plan and a longer term plan to effect a turnaround of the Company's business.
In March, 1997, the Company was approached by two firms interested in a
potential business combination or acquisition of the Company including Parent.
On March 18, 1997, representatives of the Company and Parent met to discuss the
possibility of combining the Company with RB&W Corporation, a subsidiary of
Parent ("RB&W"). On March 19, 1997, the Company signed a confidentiality
Agreement in order to receive confidential information regarding RB&W. At that
time, Parent had already acquired approximately 320,000 shares of the Company's
common stock through open market purchases.
At a meeting of the Board of Directors of the Company held April 7, 1997,
the Board of Directors directed management to continue discussions with Parent
and other interested parties. The second party declined to proceed with further
discussions with the Company.
On April 15, 1997, the Company held a second meeting with Parent to further
discuss the possible merger of RB&W into the Company on a basis that would leave
Parent controlling approximately 70 percent of the issued and outstanding shares
of the surviving company after the merger. At that time the Company signed a
confidentiality agreement with Parent in order to provide Parent with
confidential information regarding the Company. At a meeting on April 21, 1997,
the Board of Directors of the Company considered Parent's proposal for a merger
of RB&W into the Company and declined to approve the merger on the basis that
its terms did not appear to adequately value the Company's business. The Company
subsequently informed the Parent that while the Company was interested in
pursuing the combination, certain significant concerns identified by the Board
of Directors of the Company needed to be addressed before proceeding to due
diligence review and documentation of the proposed merger. On April 30, 1997,
the Company received a letter from Parent which proposed that Parent acquire the
Company in a merger transaction for $42,000,000 in cash (assuming approximately
7,000,000 common shares) or $6.00 per share. The letter indicated the offer
would remain outstanding through the close of business on Monday, May 5, 1997.
Upon receipt of the letter the Company issued a press release announcing the
terms of the proposed merger.
Following issuance of the press release, the Company received inquiries
from several other potentially qualified parties interested in acquiring the
Company. In a meeting held on May 2, 1997, the Board of Directors of the Company
determined to consider all the Company's options with regard to an acquisition
or business combination including the proposal made by Parent. The Company then
engaged the firm of Dain Bosworth Incorporated ("Dain Bosworth") as its
financial adviser in connection with various strategic alternatives, including a
possible sale of the Company. On May 9, 1997, Dain Bosworth presented the Board
of Directors of the Company with a report regarding the Company's strategic
alternatives. Following the presentation, independent members of the Board of
Directors of the Company unanimously voted to pursue a sale of the Company,
provided that the terms of any such sale would be in the best interests of
shareholders. The Board of Directors of the Company directed Dain Bosworth to
approach potential strategic and financial buyers to solicit interest in a
possible sale transaction.
During the period of May through early June, 1997, Dain Bosworth approached
a variety of potential acquirors for the Company and continued discussions with
Parent regarding Parent's $6.00 per Share cash offer. Only one other party
expressed significant interest in acquiring the Company. That party indicated it
would require a relatively lengthy process in order to complete its evaluation
of the Company and formulate a purchase offer.
11
<PAGE> 12
On June 2, 1997, officers of Parent and the Company met to further discuss
Parent's offer. On June 3, 1997 Parent forwarded a draft letter of intent with
respect to a proposed cash merger of the Company with Parent (or a wholly owned
subsidiary of Parent) under which shareholders of the Company would receive
$6.00 per Share in cash. The letter of intent requested the opportunity to
conduct additional due diligence prior to concluding a definitive merger
agreement.
The Board of Directors of the Company met on June 4, 1997 to consider
Parent's proposal. At the meeting representatives of Dain Bosworth presented an
update on discussions with other prospective acquirors noting that, while there
continued to be some interest on the part of others, no party was prepared to
make an offer at that time. Dain Bosworth also advised that it would likely be
able to give an opinion that a sale of the Company at $6.00 per Share would be
fair to the Company's shareholders from a financial point of view if the Board
of Directors desired to proceed with the sale of the Company at such a price.
The Board of Directors of the Company then authorized Mr. Lindseth to inform
Parent that, subject to the Directors' fiduciary obligation to consider an offer
at a higher price, that the Company was willing to proceed with a sale of the
Company to Parent at a price of $6.00 per Share. The Board of Directors also
instructed Mr. Lindseth to delay delivery of any further due diligence materials
to Parent until a definitive merger agreement had been prepared and executed.
Between the period of June 4 through June 13, 1997, the Company and Parent
negotiated the terms of a definitive agreement which was circulated to the
directors of the Company on June 13. During that period the Company continued to
have discussions with one other party with regard to its potential interest in
acquiring the Company, but was advised by that party that it required additional
information and time in order to determine whether the Company had the ability
to achieve certain significant financial goals in the future before making any
offer to acquire the Company for a price in excess of $6.00 per Share. That
party also indicated that any such offer, if made, would most likely involve
consideration other than cash.
On June 16, 1997, the Board of Directors met to consider the draft
definitive merger agreement negotiated with Parent. At the meeting the Board of
Directors received from Dain Bosworth an updated financial and valuation
analysis of the Company and the contemplated transaction, as well as the opinion
of Dain Bosworth that the consideration of $6.00 per Share in cash contemplated
by the merger agreement was fair to the shareholders of the Company from a
financial point of view. The Company subsequently received a written letter to
that effect from Dain Bosworth, a copy of which is attached hereto as Exhibit
(c)-2 and incorporated herein by reference. Having received Dain Bosworth's
opinion and discussed other avenues available to the Company, the Board of
Directors then proceeded to appoint a special committee of the disinterested
directors pursuant to Section 302A.673, subdivision (d) of the MBCA. That
committee unanimously approved the terms of a proposed cash tender offer by
Purchaser for all the outstanding shares of the Company's common stock at a
price of $6.00 per Share and the subsequent merger of the Company into Purchaser
for the purpose of concluding the transaction pursuant to the Merger Agreement.
The full Board of Directors of the Company then unanimously approved the same
action. The Merger Agreement was subsequently executed later in the day on June
16, 1997 and Parent commenced its final due diligence review of the Company. On
June 26, 1997, Purchaser commenced the Offer.
(c) Reason for Recommendation.
In recommending the Offer and Merger, the Board of Directors of the Company
considered a number of factors, including, but not limited to the following:
i. the terms and provisions of the Offer, the Merger and the Merger
Agreement, and the willingness of Parent to proceed expeditiously to
closing of the Transaction without the imposition of significant
conditions.
ii. discussions with management of the Company at Board of Directors'
meetings held on April 7, April 21, May 2, May 5, May 9, May 14, June 4,
June 9 and June 16 and at previous meetings of the Board of Directors
relating to the financial position, results of operation, business and
prospects of the Company, including the prospects of the Company if the
Company were to remain independent.
12
<PAGE> 13
iii. the results of the process undertaken by the Company in
conjunction with Dain Bosworth to identify and solicit proposals from third
parties to enter into a transaction with the Company.
iv. the views expressed by management of the Company that, based on
the process undertaken to identify and solicit proposals from third
parties, it was unlikely that any such parties would propose a transaction
which was more favorable to the Company's shareholders than that offered by
Parent within a reasonable period of time.
v. concerns expressed by management of the Company that activities
surrounding the proposed sale by the Company were impeding the Company's
ability to hire and retain personnel critical to implementation of its
turnaround program.
vi. the presentations to the Board of Directors made by Dain Bosworth
at its May 9, 1997 and June 16, 1997 meetings and the written opinion of
Dain Bosworth dated June 16, 1997 to the effect that, as of such date, and
based on the assumptions made, matters considered and the limits of review
set forth in such opinion, the $6.00 per share in cash to be received by
the holders of the Company's Shares in connection with the Offer and Merger
was fair to such holders from a financial point of view. A copy of the
written opinion of Dain Bosworth, which sets forth the assumptions made,
matters considered and certain limitations on the scope of review
undertaken by Dain Bosworth is filed as Exhibit (c)-2 hereto, incorporated
herein by reference and made a part hereof.
vii. the fact the Offer and Merger provide for a cash payment which
is supported by available financing.
viii. the fact the Merger Agreement permits the Board of Directors,
in the exercise of its fiduciary duty, to terminate the Merger Agreement in
favor of a superior alternative Acquisition Proposal, although such
termination would trigger the payment by the Company to Parent of a fee of
$1,500,000. The Board of Directors recognized that the consummation of the
Offer and the Merger will deprive current shareholders of the Company the
opportunity to participate in the future growth prospects of the Company
and, therefore, in reaching its conclusion to approve the Offer and the
Merger, based in part on the analysis provided by Dain Bosworth, concluded
that the historical results of operations of the Company and future
prospects of the Company were adequately reflected in the $6.00 price per
Share contemplated by the Offer and Merger. The Board of Directors also
noted that, although the Company has for some period of time been
identified as a potential acquisition candidate and that Dain Bosworth has
assisted the Company in identifying and contacting potential investors or
purchasers of the Company, no buyer other than Parent has expressed an
intention to make a proposal to purchase all of the Shares for cash on
terms as favorable to the Company and its shareholders as those contained
in the Offer and the Merger.
Considering these factors, the Board of Directors determined that the
acceptance of the Offer and the tender of the Shares pursuant to the Offer and
the approval and adoption of the Merger and the Merger Agreement would be in the
best interest of the Company's shareholders.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Pursuant to a letter agreement dated May 2, 1997, the Company engaged Dain
Bosworth to act as its financial advisor in connection with various financial
and strategic alternatives, including, but not limited to, (i) the possible sale
of all or a portion of the Company, (ii) the response to an unsolicited offer
from the Parent, and (iii) the issuance by Dain Bosworth of the opinion attached
as Exhibit (c)-2 hereto. Pursuant to the terms of the letter agreement, the
Company has agreed to pay Dain Bosworth (i) $200,000 plus additional amounts if
the total value of the Transaction exceeded $6.00 per share and (ii)
compensation related to the issuance of the opinion of Dain Bosworth which
amounts to $100,000 plus $25,000 for each separate updated confirmation or
affirmation of such opinion. The Company has also agreed to reimburse Dain
Bosworth for reasonable out-of-pocket expenses, including attorneys' fees, and
to indemnify Dain Bosworth against certain liabilities, including certain
liabilities under the federal securities laws.
13
<PAGE> 14
Sampson and Associates will also receive a fee of $250,000 under the terms
of its contract with the Company on the completion of the Transaction.
Except as described herein, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Transaction.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) In April 1997, the Company took various actions relating to stock
options for certain employees and directors of the Company. First, the Company
amended its November 1996 employment agreement with Michael J. Lindseth, the
Company's Chief Executive Officer, to provide that in the event, during the
tenure of Mr. Lindseth's employment with the Company and on or prior to November
5, 1997, of a sale of all or substantially all of the assets of the Company or a
change in the beneficial ownership of at least a majority of the Company's
Common Stock, Mr. Lindseth would vest on an accelerated basis in an additional
150,000 of his options to purchase Common Stock of the Company, instead of
75,000 of such options. Mr. Lindseth currently is vested in 50,000 of his
350,000 options. The Company also amended the exercise price applicable to Mr.
Lindseth's options to $3.75 per share.
Second, the Company amended the exercise price applicable to Common Stock
purchase options previously granted under the Company's 1993 Stock Option Plan
(the "Plan") on a formula basis to certain of the Company's non-employee
directors, namely Joseph Levesque (10,000 options), David Koentopf (8,542
options) and Ann Rockler Jackson (7,917 options). The new exercise price for
such options is $3.75 per share. The remaining provisions of the options are
unchanged.
Third, the Company granted 219,500 Common Stock purchase options under the
Plan at $3.75 per share to an aggregate of 62 employees, including 30,000
options to Kim Erickson, the Company's Chief Financial Officer. Further, the
Company granted an additional 67,000 options under the Plan at $3.75 per share
to eleven employees, including 15,000 options to Mr. Erickson, in replacement of
a like number of options previously granted at higher exercise prices. All of
the new and replacement options are intended to qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended. The
options will vest at a rate of 25% per each full year of service to the Company
from and after the date of grant, and are exercisable, once vested, for 10 years
from and after the date of grant. However, in the event that during the tenure
of an employee's employment with the Company, there is a sale of all or
substantially all of the assets of the Company or a change in the beneficial
ownership of at least a majority of the Company's Common Stock, the employee's
options will fully vest.
Except as specifically described above, no transactions in or related to
the Shares have been effected during the past 60 days by the Company or, to the
best of the Company's knowledge, by any executive officer, director, affiliate,
or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules, or regulations, all of the Company's
executive officers, directors, and affiliates who own Shares presently intend to
tender such Shares to the Purchaser pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY
(a) Except as otherwise set forth herein, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i) an
extraordinary transaction such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
(b) Except as set forth herein, there are no transactions, Board of
Directors resolutions, agreements in principle or signed contracts in response
to the Offer that relate to or would result in one or more of the events
referred to in Item 7(a) above.
14
<PAGE> 15
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
None.
ITEM 9. MATERIAL REQUIRED TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ ----------------------------------------------------------------------------
<S> <C>
(a)-1 Letter to Shareholders, dated June 26, 1997.
(a)-2 Text of press release issued by Park-Ohio Industries, Inc. and Arden
Industrial Products, Inc., dated June 27, 1997 (filed as Exhibit (a)-7 to
the Schedule 14D-1 of P O Acquisition Corporation and Park-Ohio Industrial
Products, Inc. filed with the Securities and Exchange Commission on June 26,
1997 (the "Schedule 14D-1") and incorporated herein by reference).
(a)-3 Offer to Purchase, dated June 26, 1997 (filed as Exhibit (a)-1 to the
Schedule 14D-1 and incorporated herein by reference).
(c)-1 Agreement and Plan of Merger, dated as of June 16, 1997, among P O
Acquisition Corporation, Park-Ohio Industries, Inc., and Arden Industrial
Products, Inc. (filed as Exhibit (c)-1 to the Schedule 14D-1 and
incorporated herein by reference).
(c)-2 Opinion of Dain Bosworth Incorporated, dated June 16, 1997.
(c)-3 Employment Letter Agreement with Michael J. Lindseth, dated as of November
6, 1996 (filed as Exhibit 10.1 to the Company's Form 8-K Current Report
dated November 11, 1996 and incorporated herein by reference).
</TABLE>
SIGNATURE
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.
ARDEN INDUSTRIAL PRODUCTS, INC.
By: /s/ Michael J. Lindseth
----------------------------------
President and Chief Executive
Officer
15
<PAGE> 1
Exhibit (a)-1
June 26, 1997
To the Shareholders of
Arden Industrial Products, Inc.:
We are pleased to inform you that on June 16, 1997, Arden Industrial
Products, Inc. (the "Company") entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Park-Ohio Industries, Inc. ("Park-Ohio") and P O
Acquisition Corporation (the "Purchaser"), a wholly-owned subsidiary of
Park-Ohio, pursuant to which Purchaser has today commenced a tender offer (the
"Offer") to purchase all of the outstanding common shares, $.01 par value per
share (the "Shares"), of the Company for $6.00 per Share in cash. Under the
Merger Agreement, following the Offer, Purchaser will be merged (the "Merger")
with and into the Company and all Shares not purchased in the Offer (other than
Shares held by Park-Ohio, Purchaser or the Company, or Shares held by dissenting
shareholders, if any) will be converted into the right to receive $6.00 per
Share in cash.
Your Board of Directors has unanimously approved the Merger Agreement, the
Offer and the Merger and has determined that the Offer and the Merger are fair
to and in the best interests of the Company's shareholders. The Board
unanimously recommends that the Company's shareholders accept the Offer and
tender their Shares in the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Dain Bosworth Incorporated, the
Company's financial advisor, dated June 16, 1997, that, as of such date, the
$6.00 per Share in cash to be received by the holders of Shares in the Offer and
the Merger was fair to such holders from a financial point of view.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated June 26, 1997, of Purchaser, together
with related materials, including a Letter of Transmittal to be used for
tendering your Shares. These documents set forth the terms and conditions of the
Offer and the Merger and provide instructions as to how to tender your Shares.
We urge you to read the enclosed materials carefully.
Sincerely,
Michael J. Lindseth
President and Chief Executive Officer
<PAGE> 1
Exhibit (c)2
[DAIN BOSWORTH LOGO] CORPORATE FINANCE DEPARTMENT
INVESTMENT SERVICES
---------------
INVESTMENT BANKING
June 16, 1997
The Board of Directors
Arden Industrial Products, Inc.
560 Oak Grove Parkway
Vadnais Heights, Minnesota 55127
Ladies and Gentlemen:
You have requested our opinion, as of the date hereof, as to the fairness, from
a financial point of view, to the stockholders of Arden Industrial Products,
Inc. ("Arden" or the "Company") of the consideration to be received in
connection with transactions contemplated by an Agreement and Plan of Merger
dated June 16, 1997 (the "Agreement") between the Company, Park-Ohio Industries,
Inc. ("Park-Ohio"), and a wholly-owned subsidiary of Park-Ohio ("Merger Sub").
The Agreement provides for a cash tender offer by Merger Sub for all of the
issued and outstanding shares of common stock of the Company (the "Common
Stock") at a price of $6.00 per share (the "Offer") and for a subsequent merger
of Merger Sub with and into the Company pursuant to which each outstanding share
of Common Stock (other than shares that are owned by Park-Ohio, Merger Sub or
any other wholly-owned subsidiary of Park-Ohio or shares held by dissenting
shareholders who perfect their dissenter rights under Minnesota law) will be
converted into the right to receive $6.00 in cash (the "Merger"). In addition,
pursuant to the Agreement, each outstanding option to purchase a share of Common
Stock shall be converted into the right to receive cash equal to the difference
between $6.00 and the exercise price for such option. Also, the Agreement
contains various other terms and conditions, including a requirement that
Arden's stockholders approve the Merger if Merger Sub does not acquire
sufficient Common Stock in the Offer to effect a short form merger in the state
of Minnesota.
Dain Bosworth Incorporated ("Dain Bosworth"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements, and valuations for estate, corporate, and other
purposes. In the ordinary course of business, Dain Bosworth has published
research materials on Arden and other companies that distribute industrial
products. Also, Dain Bosworth has acted as a market maker in the equity
securities of Arden and such other companies and, accordingly, periodically may
have positions in such securities. In May 1997, Dain Bosworth was retained as
the Company's financial advisor with respect to (i) an analysis of strategic
alternatives and (ii) any transaction arising from such analysis of
alternatives. Dain Bosworth's duties as financial advisor to the Company
included assisting Arden in identifying and contacting parties that might be
interested in purchasing the Company. Dain Bosworth will receive a fee for its
services, a portion of which is contingent upon the consummation of the Merger,
and will be indemnified against certain liabilities that may arise from
activities related to our engagement.
- --------------------------------------------------------------------------------
Dain Bosworth Plaza (612) 371-2800 Dain Bosworth
60 South Sixth Street Fax (612) 371 2763 Member NYSE/SIPC
P.O.Box 1160 An Interra Financial Company
Minneapolis, MN 55440-1160
<PAGE> 2
The Board of Directors
Arden Industrial Products, Inc.
Page 2
In connection with this opinion, we have, among other things, reviewed (i) the
Agreement; (ii) certain historical financial information for the Company and
Park-Ohio; (iii) certain projected financial information for the Company
furnished by the management of Arden; and (iv) certain publicly available data
relative to the Company and Park-Ohio. We visited the Company's offices and made
inquiries of the management of the Company regarding the past and current
business operations, financial condition, and future prospects for the Company.
In addition, we have held discussions with the senior management of the Company
and Park-Ohio to understand the reasons for completing the Offer and the Merger.
We have compared financial information on Arden to similar information for
certain companies deemed comparable to the Company and have reviewed stock
market information on such companies that have publicly traded securities. Also,
we have reviewed, to the extent publicly available, the financial terms of
certain acquisition transactions involving companies operating businesses deemed
similar to that of the Company and analyzed the general economic outlook for
companies that distribute industrial products.
In conducting our review and in rendering our opinion, we have assumed and
relied upon the accuracy, completeness and fairness of the financial and other
information provided to us or publicly available and we have not assumed any
responsibility for independent verification of such information. It is
understood that we were retained by the Board of Directors of the Company, and
that the Board of Directors has not looked to us for independent verification
with respect to the financial and other information provided to us or publicly
available. We have further relied upon the assurances of the management of the
Company that it is not aware of any facts that would make the information
supplied to us, or publicly available, inaccurate or misleading. With respect to
the financial projections for the Company, management of the Company has
represented that such projections have been reasonably prepared on a basis
reflecting management's best currently available estimates and judgment as to
the future financial performance of the Company.
We did not make an independent appraisal of the assets or the liabilities of the
Company, and we do not express an opinion regarding the liquidation value or
solvency of the Company. In addition, we do not express any opinion as to the
prices at which shares of the Company's common stock may trade following the
date of this opinion, at the closing date for the Merger, or at any later time
in the future if the Merger is not consummated. Our opinion as expressed herein
is limited to the fairness to the stockholders of Arden, from a financial point
of view, of the $6.00 per share cash consideration to be received by
stockholders of the Company pursuant to the Offer and the Merger, and it does
not address the Company's underlying business decision to proceed with the
Merger. Our opinion is based upon general market, economic, financial, monetary
and other conditions as they exist and can be evaluated, and the information
available to us, as of the date hereof.
It is understood that this opinion is solely for the information of the Board of
Directors of the Company, may not be relied upon by any third party and is not a
recommendation as to how any stockholder should vote at the meeting that could
be held to vote upon the Merger. Also, this opinion may not be reproduced,
quoted, published or otherwise used or referred to in any manner, nor shall any
public reference to Dain Bosworth be made, without our prior written consent,
except that the Company may include this letter in proxy statements or similar
DAIN BOSWORTH INCORPORATED
<PAGE> 3
The Board of Directors
Arden Industrial Products, Inc.
Page 3
documents distributed to shareholders and in filings with the Securities and
Exchange Commission, provided that any such disclosure shall first be submitted
to Dain Bosworth for its approval.
Based upon and subject to the foregoing, and other matters that we considered
relevant, it is our opinion that, as of the date hereof, the $6.00 per share
cash consideration to be received by stockholders of the Company pursuant to the
Offer and the Merger is fair to the stockholders of Arden Industrial Products,
Inc. from a financial point of view.
Very truly yours,
/s/ Dain Bosworth Incorporated
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DAIN BOSWORTH INCORPORATED
DAIN BOSWORTH INCORPORATED
