SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2 TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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RED ROOF INNS, INC.
(Name of Subject Company)
RED ROOF INNS, INC.
(Name of Person(s) Filing Statement)
Common Stock, par value $.01 per share
(Title of Class of Securities)
757005103
(CUSIP Number of Class of Securities)
Alan L. Tallis, Esq.
Executive Vice President, Development,
General Counsel and Secretary
Red Roof Inns, Inc.
4355 Davidson Road
Hilliard, Ohio 43026
(614) 876-3201
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
With a Copy to:
Jeffrey W. Tindell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
This Amendment supplements and amends as Amendment No. 2 to the
Solicitation/Recommendation Statement on Schedule 14D-9, originally filed
on July 16, 1999 and as previously amended (as amended, the "Schedule 14D-
9"), by Red Roof Inns, Inc., a Delaware corporation (the "Company"),
relating to the tender offer (the "Offer") by RRI Acquisition Corp., a
Delaware corporation ("Purchaser"), and an indirect, wholly owned
subsidiary of Accor S.A., a corporation organized under the laws of France
("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1, dated
July 16, 1999, to purchase all of the outstanding shares of common stock,
par value $0.01 per share (the "Shares"), of the Company, at a price of
$22.75 per Share, net to the seller in cash (subject to applicable
withholding), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated July 16, 1999 of Parent and Purchaser and the
related Letter of Transmittal. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Item 4(b) is hereby amended by replacing the third sentence of
the third to last paragraph under the caption "Background" with
the following:
"The Company Board was also informed by Morgan Stanley of the
discussions that Morgan Stanley had held with several other third
parties, including the Other Party, and that while the Other
Party was given the opportunity to provide the Company with an
attractive offer, to date, it had only provided the Company with
a non-binding preliminary indication of interest which indicated
a price lower than the Offer Price and which was subject to
numerous conditions, including, among other things, the
completion of due diligence. Accordingly, Morgan Stanley advised
the Company Board that neither the preliminary indication of
interest put forth by the Other Party nor any of the discussions
that Morgan Stanley had held with other third parties were likely
to lead to a transaction more attractive than the Offer and the
Merger."
(b) Item 4(b) is hereby amended by replacing the last paragraph under
the caption "Reasons for the Transaction; Factors Considered by
the Company Board" with the following:
"In receiving the advice of Morgan Stanley and in approving
the Merger and the Merger Agreement and in determining whether to
recommend that the Company's stockholders (i) accept the Offer,
(ii) tender their Shares pursuant to the Offer, and (iii) approve
the Merger and approve and adopt the Merger Agreement, the
Company Board, including the independent members of the Board,
was aware of the potential conflicts of interest that could exist
due to Morgan Stanley's role as the Company's financial advisor
and as an affiliate of the MS Entities, the largest beneficial
holders of Shares. Accordingly, upon the recommendation of the
independent members of the Company Board, the Company Board
engaged CIBC World Markets to serve as the Company's independent
financial advisor and to render a fairness opinion."
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
(a) Item 5 is hereby amended by replacing the last paragraph under
the caption "Morgan Stanley & Co. Incorporated" with the
following:
"Morgan Stanley has provided certain investment banking
services to the Company from time to time for which it has
received customary compensation. Morgan Stanley has also in the
past provided financial advisory and financing services to Parent
unrelated to the Offer and the Merger and has received fees for
the rendering of such services. Morgan Stanley is an affiliate
of the MS Entities which own in the aggregate 18,400,000 Shares
or approximately 68.3% of the total issued and outstanding Shares
and such affiliates have four of the nine seats on the Company
Board. In addition, Morgan Stanley may from time to time effect
transactions and hold positions in securities of the Company and
Parent.
In approving the Company's decision to engage Morgan Stanley
to serve as the Company's financial advisor, the independent
members of the Company Board were aware of the potential
conflicts of interest that could exist due to Morgan Stanley's
role as the Company's financial advisor and as an affiliate of
the MS Entities. Nevertheless, because of Morgan Stanley's
reputation as an internationally recognized investment banking
firm that has substantial experience in the lodging and real
estate industries and in transactions similar to the Offer and
the Merger, the independent members of the Company Board
unanimously recommended and approved the retention of Morgan
Stanley as the Company's financial advisor.
In receiving the advice of Morgan Stanley and in approving
the Merger and the Merger Agreement and in determining whether to
recommend that the Company's stockholders (i) accept the Offer,
(ii) tender their Shares pursuant to the Offer, and (iii) approve
the Merger and approve and adopt the Merger Agreement, the
Company Board was aware of the potential conflicts of interest
that could exist due to Morgan Stanley's role as the Company's
financial advisor and as an affiliate of the MS Entities, the
largest beneficial holders of Shares. Accordingly, upon the
recommendation of the independent members of the Company Board,
the Company Board engaged CIBC World Markets to serve as the
Company's independent financial advisor and to render a fairness
opinion."
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.
Dated: August 9, 1999 RED ROOF INNS, INC.
By: /s/ David L. Rea
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Name: David L. Rea
Title: Executive Vice President, Chief
Financial Officer and Treasurer
