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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-82035
[LOGO OF AK STEEL APPEARS HERE] [LOGO OF ARMCO APPEARS HERE]
SUPPLEMENT
TO
JOINT PROXY STATEMENT/PROSPECTUS
Pursuant to the provisions of its merger agreement with Armco Inc., AK Steel
Holding Corporation has increased the exchange ratio for the merger to .3829 of
a share of AK Holding common stock for each share of Armco common stock. As a
result of this increase, upon the effectiveness of the merger, each share of
Armco common stock will be converted into the right to receive a fraction of a
share of AK Holding common stock having a market value of $7.50, based upon AK
Holding's average closing price of $19.59 during the ten trading-day period
that ended on September 21, 1999. This supplement to the joint proxy
statement/prospectus, which was dated August 27, 1999, describes AK Holding's
decision to increase the exchange ratio, and clarifies certain information
contained in the joint proxy statement/prospectus.
The date of the special meetings for AK Holding and Armco stockholders is
unchanged. Stockholders of record of AK Holding and Armco as of August 25, 1999
are entitled to attend and vote at their respective meetings. The dates, times
and places of the meetings are as follows:
For AK Holding stockholders: For Armco stockholders:
September 29, 1999 September 29, 1999
10:00 a.m., local time 10:00 a.m., local time
Hotel duPont One Oxford Centre
11th & Market Streets 301 Grant Street
Wilmington, Delaware Pittsburgh, Pennsylvania
We have enclosed another proxy card with this supplement. If you have
previously voted and do not wish to change your vote, your previous proxy will
be voted as you directed and you do not need to send in a new proxy card. If
you have not previously voted, or if you wish to revoke or change your vote,
please complete, date, sign and return the enclosed proxy card.
This supplement to the joint proxy statement/prospectus was first mailed to
stockholders on September 22, 1999.
/s/ Richard M. Wardrop, Jr. /s/ James F. Will
Richard M. Wardrop, Jr., James F. Will,
Chairman and Chief Executive Officer Chairman, President and
AK Steel Holding Corporation Chief Executive Officer
Armco Inc.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the AK Holding common stock or
preferred stock to be issued in the merger or determined that this document
is accurate or adequate. Any representation to the contrary is a criminal
offense.
September 22, 1999
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INTRODUCTION
Except as otherwise indicated in this supplement, the information contained
in the joint proxy statement/prospectus, dated August 27, 1999, previously
mailed to you continues to apply. To the extent information in this supplement
differs from or conflicts with information contained in the joint proxy
statement/prospectus, this supplement supersedes and replaces the information
in the joint proxy statement/prospectus. If you need another copy of the joint
proxy statement/prospectus, please call our proxy solicitors, Innisfree M&A
Incorporated, (212) 750-5833 (call collect) or (888) 750-5834 (call toll-
free).
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What has changed in the merger agreement?
A: Nothing. The merger agreement contemplated that, if the average closing
price of AK Holding common stock was less than $22.00 for the ten trading days
ending on September 21, 1999, Armco could notify AK Holding of its election to
call off the merger. The effectiveness of that notice was subject, however, to
AK Holding's right to increase the exchange ratio so that holders of Armco
common stock would receive a fraction of a share of AK Holding common stock
having a market value of $7.50 per share of Armco common stock, based on the
average closing price during the same ten trading-day period. The average
closing price of AK Holding common stock during that period was $19.59. Had AK
Holding not increased the exchange ratio, the fraction of a share of AK
Holding common stock to which holders of Armco common stock would have been
entitled upon consummation of the merger would have had a market value of
$6.68, based on that average closing price.
Q: How many AK Holding shares will be issued?
A: Based upon the 108,662,797 shares of Armco common stock outstanding on
August 25, 1999 (the record date for both the Armco and AK Holding stockholder
meetings), as a result of the increase in the exchange ratio, approximately
41,607,000 shares of AK Holding common stock will be issued to Armco common
stockholders as a consequence of the merger. Had the exchange ratio not been
increased, approximately 37,043,000 shares of AK Holding common stock would
have been issued.
Q: Has the record date or meeting date for the Armco and AK Holding special
meetings changed?
A: No. The record date for both of the Armco and AK Holding special
meetings continues to be August 25, 1999, and the meeting date for both of the
Armco and AK Holding special meetings continues to be September 29, 1999.
Q: What do I need to do now?
A: First, carefully read this document. If you already have delivered a
properly executed proxy, you do not need to do anything unless you wish to
change your vote. If you have not already delivered a properly executed proxy,
or wish to change your vote, please complete, sign and date the enclosed proxy
card and return it in the accompanying prepaid envelope to ensure that your
shares will be represented at the appropriate special meeting.
Q: What do I do if I previously voted and now want to change my vote?
A: If you are an AK Holding stockholder, you can change your vote by
. sending a written notice of revocation of your previous vote to the
corporate secretary of AK Holding, and either
. sending a later-dated, signed proxy card before the special
meeting, or
. attending the meeting in person and voting.
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If you are an Armco stockholder, you can change your vote by either
. sending a later-dated, signed proxy card before the special meeting,
or
. attending the meeting in person and voting.
Q: Who should I call with questions?
A: Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
(212) 750-5833 (call collect)
(888) 750-5834 (CALL TOLL-FREE)
BACKGROUND
Section 2.1(c) of the merger agreement provides that, if the average closing
price of AK Holding common stock during the ten consecutive trading days ending
on the sixth trading day prior to the date of the Armco stockholders' meeting
is less than $22.00, Armco has the right to terminate the merger agreement.
However, the merger agreement also provides that an election by Armco to
terminate the merger agreement under those circumstances is ineffective if, no
later than 5:00 p.m. on the third business day prior to the date of the Armco
stockholders' meeting, AK Holding elects to increase the exchange ratio so that
the product of the exchange ratio, as so increased, and the average closing
price of AK Holding's common stock during that ten trading-day period will
equal $7.50. The sixth trading day prior to the date of the Armco stockholders'
meeting was September 21, 1999. The average closing price of AK Holding common
stock for the ten trading days ending on September 21, 1999 was $19.59.
On September 22, 1999, Armco notified AK Holding that it was exercising its
right to terminate the merger agreement, subject to AK Holding's right to
increase the exchange ratio, so that, when multiplied by AK Holding's average
closing price of $19.59 during the same ten trading-day period, the fraction of
a share of AK Holding common stock to be received by holders of Armco common
stock would have a market value of $7.50.
On September 22, 1999, following receipt of Armco's notice of termination,
AK Holding notified Armco that it would increase the exchange ratio to .3829,
so that holders of Armco common stock would receive a fraction of a share of AK
Holding common stock representing $7.50 per share of Armco common stock, based
on AK Holding's average closing price of $19.59 during the ten trading day
period that ended on September 21, 1999. As a result of that increase, Armco's
notice of termination is ineffective and the exchange ratio is fixed at .3829
regardless of any changes in the market price of AK Holding common stock after
September 21, 1999. The closing price of AK Holding common stock on September
21, 1999 was $18 3/8.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
Armco
The Armco board of directors has previously recommended that Armco
stockholders vote for the adoption of the merger agreement. As a result of the
increase in the exchange ratio in accordance with the terms of the merger
agreement, that recommendation remains unchanged.
AK Holding
At a meeting held on September 16, 1999, the board of directors of AK
Holding appointed a special committee to act in place of the board in
connection with any adjustment to the exchange ratio. On September 22, 1999,
following receipt of Armco's notice of termination, the special committee
determined to increase the exchange ratio from .3409 to .3829 in order to
provide holders of Armco common stock with a fraction of a share of AK Holding
common stock equivalent to $7.50 for each share of Armco common stock
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they own based on the average closing price of AK Holding common stock during
the ten trading days ended September 21, 1999. The special committee further
determined that this action was fair and in the best interests of AK Holding
and its stockholders.
In reaching its decision to increase the exchange ratio, the special
committee considered a number of factors, including:
. changes in the market prices of AK Holding and Armco common stock
since the date of the merger agreement;
. prevailing market, economic and business conditions in general and
in the carbon and specialty steel industries in particular;
. the extent of the initial dilution and subsequent reduced accretion
in earnings of AK Holding that would result from the increased
number of shares to be issued in the merger;
. other opportunities available to AK Holding;
. whether the proposed merger, after giving effect to the increase in
the exchange ratio, continues to be in the best interests of AK
Holding; and
. the opinion of Credit Suisse First Boston, dated September 22, 1999,
delivered to the board of directors of AK Holding to the effect
that, as of such date and based upon and subject to certain matters
stated in such opinion, the common stock merger consideration
contemplated by the merger agreement was fair to AK Holding from a
financial point of view.
The AK Holding board of directors has previously recommended that AK Holding
stockholders vote for approval of the issuance of AK Holding common stock
pursuant to the merger agreement. Notwithstanding the increase in the exchange
ratio, that recommendation remains unchanged.
OPINION OF AK HOLDING'S FINANCIAL ADVISOR
Credit Suisse First Boston has acted as financial advisor to AK Holding in
connection with the merger. In connection with Credit Suisse First Boston's
engagement, AK Holding requested that Credit Suisse First Boston evaluate the
fairness of the common stock merger consideration, from a financial point of
view, to AK Holding. On May 20, 1999, the date of execution of the merger
agreement, Credit Suisse First Boston delivered a written opinion to the AK
Holding board of directors, to the effect that, as of such date and based upon
and subject to certain matters stated in such opinion, the common stock merger
consideration contemplated by the merger agreement was fair to AK Holding from
a financial point of view. Credit Suisse First Boston confirmed this opinion by
delivery of a written opinion dated September 22, 1999, the date the special
committee determined to increase the exchange ratio. In connection with its
opinion dated September 22, 1999, Credit Suisse First Boston updated certain of
the analyses performed in connection with its opinion dated May 20, 1999 as
described under "THE MERGER--Opinion of AK Holding's Financial Advisor" in the
joint proxy statement/prospectus and reviewed the assumptions on which those
analyses were based and the factors considered in connection therewith.
The full text of Credit Suisse First Boston's written opinion dated
September 22, 1999 to the AK Holding board of directors, which describes the
procedures followed, assumptions made, matters considered and limitations on
the review undertaken, is appended to this document as Annex A and is
incorporated into this document by reference. Credit Suisse First Boston's
opinion is addressed to AK Holding's board of directors and relates only to the
fairness of the common stock merger consideration, from a financial point of
view, to AK Holding. The opinion does not address any other aspect of the
proposed merger or any related transaction and does not constitute a
recommendation to any stockholder as to any matter relating to the merger. The
foregoing summary of Credit Suisse First Boston's opinion is qualified in its
entirety by reference to the full text of the opinion.
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ARMCO REQUIRED VOTE
As stated on page 17 of the joint proxy statement/prospectus under the
caption "Required Vote," the affirmative vote of the holders of a majority of
the outstanding shares of Armco common stock and Class A preferred stock,
voting as a single class, is required to approve the merger agreement. The
required majority must be determined both inclusive and exclusive of shares
held by officers of Armco elected or appointed by the Armco board of directors.
Abstentions and broker non-votes will have the effect of a vote against the
merger. Broker non-votes are shares held by brokers or nominees that are
represented at a meeting but as to which the broker or nominee is not empowered
to vote on a particular proposal. Failure to vote will have the effect of a
vote against the merger.
AK HOLDING REQUIRED VOTE
As stated on page 19 of the joint proxy statement/prospectus under the
caption "Required Vote," under the rules of the NYSE, the proposed issuance of
shares of AK Holding common stock in connection with the merger must be
approved by the affirmative vote of a majority of votes cast on the proposal,
provided that the total number of votes cast represents a majority of the
outstanding shares of AK Holding common stock. Under NYSE requirements,
abstentions are counted as votes cast and, accordingly, will have the effect of
a vote against the share issuance. However, "broker non-votes" are not counted
as votes cast, and accordingly, will have the effect of a vote against the
share issuance only if, as a result of excluding those broker non-votes, a
majority of the outstanding shares of AK Holding common stock would not have
voted on the share issuance. Failure to return a signed proxy card or to attend
the AK Holding stockholders' meeting and vote in person will have the effect of
a vote against the share issuance only if, as a result of the exclusion of the
shares not voted, a quorum for the transaction of business at the AK Holding
stockholders' meeting would not be present. Approval does not require the
affirmative vote of a majority of the outstanding shares of AK Holding common
stock, as was incorrectly stated on the cover page and page 3 of the joint
proxy statement/prospectus.
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ANNEX A
[Logo Credit Suisse First Boston]
September 22, 1999
Board of Directors
AK Steel Holding Corporation
703 Curtis Street
Middletown, OH 45043
Members of the Board:
You have asked us to advise you with respect to the fairness to AK Steel
Holding Corporation ("AK Steel") from a financial point of view of the Common
Stock Merger Consideration (as defined below) set forth in the Agreement and
Plan of Merger, dated as of May 20, 1999 (the "Merger Agreement"), by and among
AK Steel, AK Steel Corporation, a wholly owned subsidiary of AK Steel
("Operating Company"), and Armco Inc. ("Armco"). The Merger Agreement provides
for, among other things, the merger of Armco with and into Operating Company
(the "Merger") pursuant to which each outstanding share of the common stock,
par value $0.01 per share, of Armco ("Armco Common Stock") will be converted
into the right to receive that number of shares of the common stock, par value
$0.01 per share, of AK Steel (the "AK Steel Common Stock") determined as
follows (the number of shares of AK Steel Common Stock into which shares of
Armco Common Stock will be so converted, the "Common Stock Exchange Ratio"):
(i) if the average of the per share closing prices of AK Steel Common Stock on
the New York Stock Exchange, Inc. during the ten consecutive trading day period
ending on the sixth trading day prior to Armco's stockholders' meeting in
respect of the Merger (the "Average Stock Price") is greater than $28.21, the
Common Stock Exchange Ratio will be $8.00 divided by the Average Stock Price;
(ii) if the Average Stock Price is equal to or greater than $26.44 but less
than or equal to $28.21, the Common Stock Exchange Ratio will be fixed at
0.2836; (iii) if the Average Stock Price is equal to or greater than $22.00 but
less than $26.44, the Common Stock Exchange Ratio will be $7.50 divided by the
Average Stock Price; or (iv) if the Average Stock Price is less than $22.00,
the Common Stock Exchange Ratio will be fixed at 0.3409, subject to certain
termination and top-up provisions specified in the Merger Agreement. Based on
such provisions, AK Steel has informed us that the Common Stock Exchange Ratio
will be $7.50 divided by the Average Stock Price. The Merger Agreement further
provides that if the Merger does not qualify for pooling of interests treatment
in accordance with generally accepted accounting principles, then AK Steel will
have the right to cause up to 25% of the outstanding shares of Armco Common
Stock to be converted into the right to receive cash, in which case each
outstanding share of Armco Common Stock will be converted in the Merger into
the right to receive (i) cash in an amount equal to the product of (x) the Per
Share Value (as defined in the Merger Agreement) and (y) the percentage of the
shares of Armco Common Stock to be converted into cash (the "Cash Election
Percentage" and, such cash amount, the "Cash Consideration") and (ii) a
fraction of a share of AK Steel Common Stock equal to the product of (x) the
Common Stock Exchange Ratio and (y) one minus the Cash Election Percentage (the
Cash Consideration and the Common Stock Exchange Ratio being collectively
referred to as the "Common Stock Merger Consideration"). The Merger Agreement
also provides for the conversion in the Merger of each outstanding share of the
Class A Preferred Stock, no par value, of Armco (the "Class A Preferred Stock")
and Class B Preferred Stock, par value $1.00 per share, of Armco (the "Class B
Preferred Stock" and, together with the Class A Preferred Stock, the "Armco
Preferred Stock") into the right to receive, as more fully specified in the
Merger Agreement, cash, shares of AK Common Stock or shares of preferred stock,
par value $0.01 per share, of AK Steel (the "AK Steel Preferred Stock").
In arriving at our opinion, we have reviewed the Merger Agreement and certain
publicly available business and financial information relating to AK Steel and
Armco. We have also reviewed certain other information relating to AK Steel and
Armco, including financial forecasts, provided to or discussed with us by AK
Steel and Armco, and have met with the managements of AK Steel and Armco to
discuss the businesses and prospects of AK Steel and Armco. We have also
considered certain financial and stock market data of AK Steel and Armco, and
we have compared those data with similar data for other publicly held companies
in businesses similar to AK
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[Logo Credit Suisse First Boston]
Board of Directors
AK Steel Holding Corporation
September 22, 1999
Page 2
Steel and Armco, and we have considered, to the extent publicly available, the
financial terms of certain other business combinations and other transactions
which have recently been effected. We also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
such information being complete and accurate in all material respects. With
respect to the financial forecasts, we have been advised, and have assumed,
that such forecasts have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of AK Steel and
Armco as to the future financial performance of AK Steel and Armco and as to
Armco Financial Services Corporation and its direct and indirect subsidiaries
(including the current and future assets and liabilities and potential run-off
thereof) and the best currently available estimates and judgments of the
management of AK Steel as to the cost savings and other potential synergies
(including the amount, timing and achievability thereof) anticipated to result
from the Merger. We also have assumed, with your consent, that the Merger will
be treated as a tax-free reorganization for federal income tax purposes. We
have not been requested to make, and have not made, an independent evaluation
or appraisal of the assets or liabilities (contingent or otherwise) of AK Steel
or Armco, nor have we been furnished with any such evaluations or appraisals.
Our opinion is necessarily based upon information available to us, and
financial, economic, market and other conditions as they exist and can be
evaluated, on the date hereof. We are not expressing any opinion as to what the
value of the AK Steel Common Stock or AK Steel Preferred Stock actually will be
when issued pursuant to the Merger or the prices at which the AK Steel Common
Stock or AK Steel Preferred Stock will trade or otherwise be transferable
subsequent to the Merger.
We have acted as financial advisor to AK Steel in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger. We have in the past provided
financial services to AK Steel unrelated to the proposed Merger, for which
services we have received compensation. We also may participate in the
financing, if any, of certain transactions related to the Merger, for which
services we would receive additional compensation. In the ordinary course of
business, Credit Suisse First Boston and its affiliates may actively trade the
debt and equity securities of AK Steel and Armco for their own accounts and for
the accounts of customers and, accordingly, may at any time hold long or short
positions in such securities.
It is understood that this letter is for the information of the Board of
Directors of AK Steel in connection with its evaluation of the Merger, does not
constitute a recommendation to any stockholder as to how such stockholder
should vote with respect to any matter relating to the Merger, and 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 our prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Common Stock Merger Consideration is fair to AK Steel from a
financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
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