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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ X ] Definitive Proxy Statement Commission Only (as Permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
240.14a-11(c) or 240.14a-12
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Echlin Inc.
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
SPX Corporation
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
- -------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11:
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting was paid previously. Identify the previous filing
by registration statement number, or the Form of Schedule and
the date of its filing:
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SPX CORPORATION
Solicitation Statement
to Call a Special Meeting of Shareholders
of
ECHLIN INC.
SPX Corporation, a Delaware corporation ("SPX"), is asking you to
help it call a special meeting of shareholders (a "Special Meeting")
of Echlin Inc., a Connecticut corporation (the "Company"), for the
purpose of voting to remove the current members of the Board of
Directors of the Company and replace them with SPX's nominees.
On February 17, 1998, SPX delivered a letter to the Company
containing a proposal for a strategic business combination of the
Company with SPX (the "Proposed Business Combination"), in which
shareholders of the Company would receive for each of their shares of
common stock, par value $1.00, of the Company ("Shares") (together
with the associated preferred stock purchase right (the "Rights")),
the amount of $12.00 net in cash and 0.4796 share of SPX's common
stock, par value $10.00 ("SPX Common Stock") (the "Consideration").
The SPX Common Stock component had a value of $36.00, and the total
Consideration had a value of $48.00, based on the $75-1/16 closing
price on the New York Stock Exchange of a share of SPX Common Stock on
February 13, 1998, the last trading date preceding the date of the
public announcement of the Proposed Business Combination, and the SPX
Common Stock component had a value of $36.12, and the total
Consideration had a value of $48.12, based on the $75-5/16 closing
price on the New York Stock Exchange of a share of SPX Common Stock on
March 5, 1998, the last trading date preceding the date of this
Solicitation Statement. At the time the Proposed Business Combination
is consummated, the transaction may have a market value that is
greater or less than either of those two amounts depending upon the
market price of a share of SPX Common Stock at such time. At a total
value of $48.12, the Consideration represents a 24% premium over the
$38-7/8 price at which a Share closed on the New York Stock Exchange
on February 13, 1998, and a 32% premium over the average trading price
at which a Share closed on the New York Stock Exchange during the 30
trading days preceding February 17, 1998, the date of the public
announcement of the Proposed Business Combination. Immediately
following the consummation of the Proposed Business Combination and
after giving effect to the issuance of the SPX Common Stock in the
transaction, shareholders of the Company (other than SPX) would own
approximately 70% of the then outstanding shares of SPX Common Stock.
SPX believes that the Proposed Business Combination would be
advantageous to the shareholders of both companies. See "The Proposed
Business Combination, the Exchange Offer and the Merger." The Company,
however, in past meetings and correspondence with SPX, has
consistently advised SPX that the Company and its Board of Directors
have no interest in pursuing discussions with SPX.
The Company has Rights outstanding, issued pursuant to a Rights
Agreement dated as of June 30, 1989, between the Company and The
Connecticut Bank and Trust Company, N.A., as rights agent (the "Rights
Agreement"), which purports to prevent SPX from consummating the
Proposed Business Combination without the approval of the Company's
Board of Directors. Likewise, Sections 840-845 of the Connecticut
Business Corporation Act (the "Connecticut Business Act") governing
business combinations (the "Business Combination Statutes") present
certain obstacles to the consummation of the Proposed Business
Combination absent Board approval. See "Reason to Call a Special
Meeting."
Consequently, SPX is asking its fellow shareholders to join SPX
in executing written demands upon the Company that a special meeting
be called and held ("Demands") in order to remove the entire Board of
Directors of the Company and elect SPX's nominees to the Board in
their place. SPX expects that if SPX's nominees are elected, they will
act to facilitate the consummation of the Proposed Business
Combination, subject to their fiduciary duties as directors of the
Company and the general statutory standards applicable to any person
serving as a director of a Connecticut corporation as required by
Section 756 of the Connecticut Business Act. In particular, the
provisions of Section 756(d) of the Connecticut Business Act require
directors of a Connecticut corporation, when considering a business
combination such as a plan of merger or share exchange, to consider
the interests of constituencies other than shareholders, including
creditors, customers, suppliers, employees and the communities in
which any office or other facility of the corporation is located.
SPX's three nominees who are also executive officers of SPX, if
elected to the Company's Board of Directors, may find themselves faced
with a potential conflict of interest due to their current positions
with SPX. If that occurs, such directors will act in compliance with
law, including the aforementioned provisions of the Connecticut
Business Act and the provisions of the Connecticut Business Act
relating to directors' conflicting interest transactions.
Under applicable law, the Special Meeting must be held if holders
of outstanding Shares representing in the aggregate at least 35% of
all the votes entitled to be cast on any issue proposed to be
considered at the Special Meeting demand in writing that a special
meeting of shareholders be held. According to a shareholder list
provided to SPX by the Company, as of February 17, 1998, the Company
had 63,248,939 Shares outstanding. SPX owns 1,150,150 Shares, or
approximately 1.82% of the outstanding Shares.
This Solicitation Statement and the GOLD DEMAND CARD are first
being mailed or furnished to the Company's shareholders on or about
March 6, 1998.
AT THIS TIME SPX IS SOLICITING YOUR WRITTEN DEMAND THAT A SPECIAL
MEETING OF SHAREHOLDERS BE CALLED AND HELD. SPX IS NOT SOLICITING YOUR
PROXY TO VOTE ON THE REMOVAL OF THE EXISTING DIRECTORS OR THE ELECTION
OF SPX'S NOMINEES IN THEIR PLACE. ONCE THE SPECIAL MEETING HAS BEEN
CALLED, YOU WILL BE SENT SEPARATE PROXY MATERIALS URGING YOU TO TAKE
SUCH ACTION. THOSE PROXY MATERIALS WILL CONTAIN SIGNIFICANTLY MORE
DETAILED INFORMATION CONCERNING THE PROPOSED BUSINESS COMBINATION,
INCLUDING RELEVANT PRO FORMA FINANCIAL INFORMATION.
IMPORTANT NOTE: If you hold your shares in the name of one or
more brokerage firms, banks or nominees, only they can exercise the
right with respect to your Shares to make a written demand that the
Special Meeting be called and held, and only upon receipt of your
specific instructions. Accordingly, it is critical that you promptly
sign and date the GOLD DEMAND CARD and mail it in the envelope
provided by your broker, bank, or nominee so that they can exercise
the right to make a Demand on your behalf.
A registration statement relating to the securities of SPX to be
issued in connection with the Exchange Offer has been filed with the
Securities and Exchange Commission but has not yet become effective.
Such securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This
Solicitation Statement shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state.
SUMMARY
-------
The information below is qualified in its entirety by the more
detailed information appearing elsewhere in this Solicitation
Statement, including any documents incorporated in this Solicitation
Statement by reference. SPX urges you to read this entire Solicitation
Statement carefully. Certain capitalized terms used in this Summary
are defined elsewhere in this Solicitation Statement. The information
below and elsewhere in this Solicitation Statement includes
forward-looking statements, including all statements about the
operations and expected benefits of the Proposed Business Combination,
and is subject to risks, uncertainties and other factors which could
cause actual results to differ materially from future results
expressed or implied by such forward-looking statements.
SPX.
SPX is a global provider of Vehicle Service Solutions to
franchised dealers of motor vehicle manufacturers and independent
service locations, Service Support to vehicle manufacturers, and
Vehicle Components to the worldwide motor vehicle industry. SPX is
comprised of two business segments. The Service Solutions segment
includes operations that primarily design, manufacture and market a
wide range of specialty service tools, equipment and services to the
global motor vehicle industry. Major customers are franchised dealers
of motor vehicle manufacturers, aftermarket vehicle service facilities
and independent distributors. Vehicle Components includes operations
that primarily design, manufacture and market transmission and
steering components for light and heavy duty vehicle markets,
principally in North America and Europe. Major customers of this
segment include vehicle manufacturers, other component manufacturers
and the aftermarket. SPX's corporate headquarters is located at 700
Terrace Point Drive, Muskegon, MI 49443-3301, telephone number (616)
724-5000.
SPX Common Stock trades on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol "SPW." On March 5, 1998,
the last trading day before the date of this Solicitation Statement,
the closing price of a share of SPX Common Stock was $75-5/16.
The Proposed Business Combination.
SPX has proposed to enter into the Proposed Business Combination
with the Company pursuant to which the shareholders of the Company
would receive for each Share (together with the associated Right) the
Consideration in the amount of $12.00 net in cash and 0.4796 share of
SPX Common Stock. The Consideration had a total value of $48.00, based
on the $75-1/16 closing price on the New York Stock Exchange of a
share of SPX Common Stock on February 13, 1998, the last trading date
preceding the date of the public announcement of the Proposed Business
Combination, and a total value of $48.12, based on the $75-5/16
closing price on the New York Stock Exchange of a share of SPX Common
Stock on March 5, 1998, the last trading date preceding the date
of this Solicitation Statement. At the time the Proposed Business
Combination is consummated, the transaction may have a market value
that is greater or less than either of those two amounts depending
upon the market price of a share of SPX Common Stock at such time. At
a total value of $48.12, the Consideration represents a 24% premium
over the $38-7/8 price at which a Share closed on the New York Stock
Exchange on February 13, 1998, and a 32% premium over the average
trading price at which a Share closed on the New York Stock Exchange
during the 30 trading days preceding February 17, 1998, the date of
the public announcement of the Proposed Business Combination.
Immediately following the consummation of the Proposed Business
Combination and after giving effect to the issuance of SPX Common
Stock in the transaction, shareholders of the Company (other than SPX)
would own approximately 70% of the then outstanding shares of SPX
Common Stock.
At present, it is contemplated that the Proposed Business
Combination would be effected by means of (i) an exchange offer in
which SPX is offering to pay the Consideration in exchange for each
Share (together with the associated Right) validly tendered and not
properly withdrawn (the "Exchange Offer"), and (ii) a subsequent
merger of a subsidiary of SPX into the Company (the "Merger") in which
each Share (together with the associated Right) not purchased in the
Exchange Offer would be converted into the right to receive the
Consideration. The transaction would be taxable to exchanging
shareholders. The Exchange Offer is conditioned upon, among other
things, the amendment by the Company of the Rights Agreement to render
it inapplicable to the Proposed Business Combination, the Exchange
Offer and the Merger, and the inapplicability of the restrictions
contained in the Business Combination Statutes to the Proposed
Business Combination, the Exchange Offer and the Merger. The Merger
would be conditioned, among other things, on the consummation of the
Exchange Offer. See "The Proposed Business Combination, the Exchange
Offer and the Merger." SPX has filed exchange offer materials with the
Securities and Exchange Commission and will commence the Exchange
Offer as soon as the registration statement included in those
materials has become effective. With its letter to the Board of
Directors of the Company setting forth the Proposed Business
Combination, SPX delivered a proposed merger agreement to the Company
in contemplation of arriving at a negotiated transaction. That
agreement provides for a single-step "cash election" merger of the
Company into a subsidiary of SPX in which each outstanding Share would
be converted into the right to receive the Consideration (with
shareholders able, instead, to elect to receive all cash, in the
amount of $48.00 per Share, or all stock, in the amount of 0.6395
share of SPX Common Stock per Share, subject to proration) in a
partially tax-free reorganization.
The Merits of the Proposed Business Combination.
In SPX's letters to the Company, SPX set forth various benefits
of the Proposed Business Combination to the shareholders, customers,
suppliers, and employees of the Company and to the constituencies of
both companies. See "Background."
Demand for a Special Meeting.
SPX is asking the Company's shareholders to demand a Special
Meeting for the following purposes: (i) to repeal any provision of the
Company's By-Laws or amendment to the Company's By-Laws adopted by the
Board of Directors of the Company or any Committee thereof at any time
after April 3, 1997 (the date of the last set of By-Laws publicly
filed by the Company) and before the effectiveness of the last of the
proposals to be voted on at the Special Meeting; (ii) to vote upon a
proposal to remove all of the members of the Board of Directors of the
Company; (iii) to vote upon a proposal to amend the By-Laws of the
Company to fix the number of directors of the Company at five; and
(iv) to elect SPX's five nominees to the Board of Directors of the
Company.
Reasons for the Demand.
Despite repeated urgings by SPX to the Chief Executive Officer of
the Company and then directly to the Board of Directors of the
Company, the Company has steadfastly turned down requests by SPX to
meet with and make a presentation to the Company's Board of Directors
to discuss any and all aspects of a proposed business combination. The
Company has informed SPX that it and its Board of Directors have no
interest in pursuing a business combination.
In its February 17, 1998 letter to the Company's Board of
Directors, SPX reaffirmed its desire to enter into a negotiated
transaction with, rather than to effect a unilateral acquisition of,
the Company. However, if the Company's Board of Directors remains
adamant in its refusal to enter into discussions with SPX, the only
way that the Proposed Business Combination can proceed is for the
present members of the Board of Directors of the Company to be removed
and SPX's nominees to be elected in their place. See "Reason to Call a
Special Meeting." SPX expects that SPX's nominees, if elected as the
new Board of Directors, will act to facilitate the consummation of the
Proposed Business Combination, subject to their fiduciary duties as
directors of the Company and the general statutory standards
applicable to any person serving as a director of a Connecticut
corporation as required by Section 756 of the Connecticut Business
Act.
Proposed Shareholder Action.
SPX's Exchange Offer to the Company's shareholders and the merger
proposal to the Company are conditioned upon, and will not be effected
without, certain action being taken by the Company's Board of
Directors. If the current Board of Directors persists in its position
that it will not enter into a negotiated transaction with SPX, the
only way that SPX's Proposed Business Combination can be effected is
for the existing Board to be replaced with SPX's nominees.
Under applicable law, holders of outstanding Shares representing
in the aggregate at least 35% of all the votes entitled to be cast on
any issue proposed to be considered at the Special Meeting have the
right to demand that a Special Meeting be held. By signing and sending
the GOLD DEMAND CARD you are merely demanding that a Special Meeting
be called and held. Signing and sending the GOLD DEMAND CARD will NOT
give SPX the right to vote your Shares at the Special Meeting.
SPX is not asking in this solicitation that the Company's
shareholders remove the existing Board and replace it with its
nominees. Thus, the current Board members may still reverse their
position and determine to enter into discussions with the Company for
a negotiated transaction. HOWEVER, THE FAILURE TO SIGN AND RETURN THE
GOLD DEMAND CARD WILL HAVE THE SAME EFFECT AS OPPOSING THE CALL OF A
SPECIAL MEETING, IN WHICH EVENT THE PROPOSED BUSINESS COMBINATION WILL
NOT BE ABLE TO PROCEED.
Timing; Assistance.
We ask that you sign and date the GOLD DEMAND CARD and mail it in
the enclosed envelope as soon as possible and, preferably, before
March 31, 1998. If you have any questions or need assistance, please
call D.F. King & Co., Inc. at (212) 269-5550 (collect) or (800)
758-5378 (toll free).
PURPOSE OF THE SOLICITATION
---------------------------
SPX is soliciting Demands for the Company to call and hold a
Special Meeting. SPX has made a proposal for a business combination
with the Company, which SPX believes would provide exceptional value
to the Company's shareholders. See "The Proposed Business Combination,
the Exchange Offer and the Merger." The Proposed Business Combination,
the Exchange Offer and the Merger are conditioned upon, among other
things, the Board of Directors of the Company amending the Rights
Agreement so as to render it inapplicable to the Proposed Business
Combination, the Exchange Offer and the Merger, and the Board taking
such other action as may be necessary so that the restrictions
contained in the Business Combination Statutes are not applicable
thereto. See "Reason to Call a Special Meeting" and "The Proposed
Business Combination, the Exchange Offer and the Merger." The Company
has advised SPX that the Company and its Board have no interest in
pursuing discussions with SPX. Accordingly, if the Proposed Business
Combination is to proceed, the present members of the Company's Board
of Directors will have to be removed and new directors elected in
their place who will take all action necessary to facilitate the
consummation of the Proposed Business Combination, the Exchange Offer
and the Merger, subject to their fiduciary duties as directors of the
Company and the general statutory standards applicable to any person
serving as a director of a Connecticut corporation as required in
Section 756 of the Connecticut Business Act.
The purpose of this Solicitation Statement is to solicit Demands
from the shareholders of the Company holding outstanding Shares
representing in the aggregate at least 35% of all the votes entitled
to be cast on any issue proposed to be considered at the Special
Meeting, demanding that the Company call and hold a Special Meeting.
According to a shareholder list provided to SPX by the Company, as of
February 17, 1998, there were 63,248,939 Shares outstanding; based on
that number, Demands from holders of an aggregate of 22,137,129 Shares
would be required. SPX owns 1,150,150 Shares or 1.82% of the
outstanding Shares.
If SPX is successful in this solicitation, the Company will be
required to call and hold a Special Meeting at which the shareholders
will be asked (i) to repeal any provision of the Company's By-Laws or
amendment to the Company's By-Laws adopted by the Board of Directors
of the Company or any Committee thereof at any time after April 3,
1997 (the date of the last set of By-Laws publicly filed by the
Company) and before the effectiveness of the last of the proposals to
be voted on at the Special Meeting (the "By-Law Repeal Proposal");
(ii) to vote upon a proposal to remove all of the members of the Board
of Directors of the Company (the "Proposal to Remove the Directors");
(iii) to vote upon a proposal to amend the By-Laws of the Company to
fix the number of directors of the Company at five (the "Proposal to
Amend the By-Laws of the Company"); and (iv) to elect SPX's five
nominees (the "SPX Nominees") to the Board of Directors of the
Company.
BACKGROUND
----------
In February 1997, John B. Blystone, Chairman and Chief Executive
Officer of SPX, met with Trevor O. Jones, then Chairman and interim
President and Chief Executive Officer of the Company, to propose that
the two companies explore a business combination. Mr. Jones did not
follow up on this meeting. In November 1997, Mr. Blystone met for
several hours with Larry W. McCurdy, who had succeeded Mr. Jones as
President and Chief Executive Officer, to discuss a strategic merger
between the two companies, and on November 24, 1997, Patrick J.
O'Leary, SPX's Vice President - Finance and Chief Financial Officer,
met with Robert F. Tobey, the Company's Vice President - Corporate
Development. These discussions were not fruitful, and SPX was advised
that the Company had no interest in being acquired by SPX.
On December 12, 1997, Mr. Blystone wrote a letter to Mr. McCurdy
setting out the strategic rationale of a business combination of the
two companies and the benefits to the Company's shareholders of the
transaction. Although the letter stated that SPX anticipated a price
in the $40's range, Mr. Blystone advised Mr. McCurdy that SPX would be
willing to revise its thinking if the Company could identify greater
value in the transaction. Mr. Blystone, in his letter, further
suggested that the letter be shared with the Company's Board of
Directors and offered to meet with and make a presentation to the
Board about any and all aspects of the proposed transaction.
On December 17, 1997, Mr. Blystone received a letter from Mr.
McCurdy stating that Mr. McCurdy had shared Mr. Blystone's views with
the Company's Board of Directors, and that the Company's and the
Board's position remained that the Company had no interest in further
discussions with SPX.
On December 18, 1997, Mr. Blystone sent a letter to each member
of the Company's Board enclosing a copy of his December 12 letter and
reiterating the merits of a strategic combination. Mr. Blystone once
again offered to meet personally with and make a presentation to the
Company's Board of Directors.
On December 23, 1997, Mr. Blystone received a letter from Mr.
McCurdy advising that the Company's Board of Directors was of the
unanimous view that the Company did not have an interest in pursuing
discussions with SPX.
On January 6, 1998, SPX notified the Company that it was that day
filing a Premerger Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act")
seeking to acquire up to 100% of the voting securities of the Company
(the "HSR Filing").
On January 8, 1998, Mr. McCurdy wrote to Mr. Blystone
acknowledging receipt of notice of the HSR Filing and advising SPX
that the Company and its advisors stood ready to aggressively defend
its shareholders' interests.
On February 17, 1998, SPX sent the Board of Directors of the
Company a letter setting forth the Proposed Business Combination and
its merits and reaffirming its desire to enter into a negotiated
transaction.
On the same day, SPX filed with the Securities and Exchange
Commission Exchange Offer materials and preliminary solicitation
materials to solicit Demands that a Special Meeting be called and
held.
REASON TO CALL A SPECIAL MEETING
--------------------------------
The reason to demand that a Special Meeting be called and held is
simple. Unless the Board of Directors of the Company takes action to
remove certain obstacles, described below, to the Proposed Business
Combination, the Proposed Business Combination, the Exchange Offer and
the Merger will not proceed. Thus far, the present Board of Directors
of the Company has indicated that it has no interest in pursuing
discussions with SPX.
Rights Agreement. Under the Rights Agreement, if SPX were to
acquire beneficial ownership of 20% or more of the Shares, unless the
Rights are redeemed or invalidated or are otherwise inapplicable to
the Proposed Business Combination, each holder of record of a Right
(other than SPX) would, upon exercise of the Right, have the right to
purchase, at the exercise price of the Right, Shares having a value at
the time equal to twice the exercise price. As a result, the Rights
could make SPX's acquisition of the Company prohibitively expensive by
severely diluting SPX's equity interest and voting power.
The Rights Agreement provides that the Board of Directors may
redeem the Rights at any time prior to a person becoming an "Acquiring
Person." An Acquiring Person generally means a person who, together
with his or her Affiliates and Associates (each term as defined in the
Rights Agreement), beneficially owns 20% or more of the Shares
outstanding, subject to certain exceptions. Once a person has become
an Acquiring Person the Board of Directors may only redeem the Rights
if there are "Continuing Directors" in office and a majority of such
"Continuing Directors" concur in authorizing redemption of the Rights.
A "Continuing Director" means a director, while a member of the Board,
who either (A) was a member of the Board prior to an Acquiring Person
becoming such or (B) subsequently became a member of the Board, is not
an Acquiring Person or its Affiliate or Associate, representative or
nominee, and whose nomination for election or election to the Board
was recommended or approved by a majority of the Continuing Directors.
In any event, the Board of Directors may not redeem the Rights after
the tenth day following the day on which a person has become an
Acquiring Person.
The Board of Directors may amend the Rights Agreement prior to
the earlier of (i) the first date a public announcement is made that a
person has become an Acquiring Person, or (ii) the close of business
on the tenth business day (or such later date as the Board may
determine prior to such time as any person becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer
which would result in a person becoming an Acquiring Person). Neither
of those events has yet occurred. The commencement of the Exchange
Offer will result in the Board of Directors of the Company no longer
being able to amend the Rights Agreement after the end of the ten
business day period unless the Board of Directors takes action to
extend such period.
If elected to the Board of Directors of the Company, the SPX
Nominees intend to amend the Rights Agreement so that the Rights
Agreement will not be applicable to the Proposed Business Combination,
the Exchange Offer or the Merger, or, if the Rights Agreement can no
longer be amended, to cause the redemption of the Rights, in each case
subject to their fiduciary duties as directors of the Company and the
general statutory standards applicable to any person serving as a
director of a Connecticut corporation as required in Section 756 of
the Connecticut Business Act.
Business Combination Statutes. Pursuant to Section 844 of the
Business Combination Statutes, a corporation may not engage in any
business combination with an "Interested Shareholder" (defined as the
beneficial owner of 10% or more of the voting power of a company) for
five years following the date on which the Interested Shareholder
became such (the "Stock Acquisition Date") unless the acquisition
which resulted in the Interested Shareholder becoming such (the "10%
Acquisition"), or the business combination, is approved by the board
of directors and by a majority of the non-employee directors, of which
there shall be at least two, before the date of the 10% Acquisition.
Pursuant to Sections 841 and 842 of the Business Combination
Statutes, any business combination with an Interested Shareholder that
was not approved by the board of directors prior to the 10%
Acquisition must be approved by the board of directors, 80% of the
voting power and two-thirds of the voting power not controlled by the
Interested Shareholder or meet certain conditions regarding minimum
price and type of consideration.
On March 4, 1998, Raised Bill No. 5695 was introduced into the
Connecticut House of Representatives, which, if enacted, would (i)
amend the Connecticut Business Act to restrict the ability of
shareholders of a public company to remove directors, (ii) amend
Section 844 of the Business Combination Statutes to require the
approval of a majority of "continuing directors," rather than the
approval of the board of directors, and (iii) amend Section 842 of the
Business Combination Statutes to provide that the failure to obtain
approval of a majority of "continuing directors", rather than the
failure to obtain the approval of the board of directors, would
trigger the requirements of Section 842 discussed above.
If elected to the Board of Directors of the Company, the SPX
Nominees intend to approve the Proposed Business Combination, the
Exchange Offer and the Merger or seek to take such other action so
that the restrictions contained in the Business Combination Statutes
will not be applicable thereto, subject to their fiduciary duties as
directors of the Company and the general statutory standards
applicable to any person serving as a director of a Connecticut
corporation as required in Section 756 of the Connecticut Business
Act.
Shareholders of the Company are urged to execute the GOLD DEMAND
CARD to demand that the Special Meeting be called and held. Making a
Demand and causing the Special Meeting to be called and held is not a
vote at the Special Meeting or a vote in favor of the Proposed
Business Combination. Shareholders will have the opportunity to vote
on the Proposal to Remove the Directors and the election of the SPX
Nominees at the Special Meeting. Moreover, shareholders will be able
to elect whether or not to tender their Shares into the Exchange
Offer; execution of a Demand does not constitute a tender of the
shareholder's Shares or obligate the shareholder to tender his or her
Shares in the Exchange Offer. However, the failure to obtain Demands
from holders of the requisite 35% of the outstanding Shares to call
the Special Meeting is a dispositive vote against the Proposed
Business Combination because without the Special Meeting, the
shareholders will not be able to override the Board's refusal to
negotiate with SPX and enter into the Proposed Business Combination.
THE FAILURE TO SIGN, DATE AND MAIL A GOLD DEMAND CARD HAS THE SAME
EFFECT AS OPPOSING THE DEMAND FOR A SPECIAL MEETING TO BE CALLED AND
HELD.
THE PROPOSED BUSINESS COMBINATION,
THE EXCHANGE OFFER AND THE MERGER
---------------------------------
By letter dated February 17, 1997 to the Company's Board of
Directors, SPX has proposed a business combination with the Company.
In the Proposed Business Combination, shareholders of the Company
would receive for each of their Shares (together with the associated
Right) Consideration in the amount of $12.00 net in cash and 0.4796
share of SPX Common Stock, for a total value of $48.00 based on the
$75-1/16 closing price on the New York Stock Exchange of a share of
SPX Common Stock on February 13, 1998, the last trading date preceding
the date of the public announcement of the Proposed Business
Combination, and a total value of $48.12 based on the $75-5/16 closing
price on the New York Stock Exchange of a share of SPX Common Stock on
March 5, 1998, the last trading date preceding the date of this
Solicitation Statement. At the time the Proposed Business Combination
is consummated, the transaction may have a market value that is
greater or less than either of those two amounts depending upon the
market price of a share of SPX Common Stock at such time. At a total
value of $48.12, the Consideration represents a 24% premium over the
$38-7/8 price at which a Share closed on the New York Stock Exchange
on February 13, 1998, and a 32% premium over the average trading price
at which a Share closed on the New York Stock Exchange during the 30
trading days preceding February 17, 1998, the date of the public
announcement of the Proposed Business Combination. Immediately
following the consummation of the Proposed Business Combination and
after giving effect to the issuance of the SPX Common Stock in the
transaction, shareholders of the Company (other than SPX) would own
approximately 70% of the then outstanding shares of SPX Common Stock.
The Proposed Business Combination would be effected by means of
(i) the Exchange Offer, in which SPX is offering to pay the
Consideration in exchange for each Share (together with the associated
Right) validly tendered and not withdrawn, and (ii) the Merger, in
which each Share (together with the associated Right) not purchased in
the Exchange Offer would be converted into the right to receive the
Consideration.
SPX has today filed Exchange Offer materials with the Securities
and Exchange Commission and intends to make the Exchange Offer as soon
as its registration statement has been declared effective by the
Securities and Exchange Commission.
The Exchange Offer will be conditioned, among other things, upon
the following:
The Minimum Condition. The number of Shares validly tendered and
not withdrawn before the expiration date of the Exchange Offer,
together with the Shares owned by SPX and its affiliates as of such
time, must represent at least 66-2/3% of the Shares outstanding on a
fully diluted basis (the "Minimum Condition"). According to a
shareholder list provided to SPX by the Company, as of February 17,
1998, there were 63,248,939 Shares outstanding. Based on publicly
available information, as of December 31, 1997, options to acquire
2,044,284 Shares were also outstanding. SPX owns 1,150,150 Shares. See
Schedule II. For purposes of the Exchange Offer, "fully-diluted basis"
assumes that all outstanding stock options are presently exercisable
and exercised.
Based on the foregoing and assuming no additional Shares have
been or will be issued after February 17, 1998 (other than Shares
issued pursuant to the exercise of the stock options referred to
above), and no options, warrants or rights exercisable for, or
securities convertible into, Shares have been or will be issued after
December 31, 1997, the Minimum Condition would be satisfied if at
least 42,378,666 Shares were validly tendered into and not withdrawn
from the Exchange Offer.
The Rights Condition. SPX must be satisfied, in its sole
discretion, that a Distribution Date has not occurred under the Rights
Agreement, and that the Rights have been invalidated or are otherwise
inapplicable to the Exchange Offer and the Merger (the "Rights
Condition"). See "Reason to Call a Special Meeting - Rights
Agreement."
The Business Combination Statutes Condition. SPX must be
satisfied, in its sole discretion, that the restrictions contained in
the Business Combination Statutes will not apply to the Proposed
Business Combination, the Exchange Offer, the Merger or any other
business combination to which SPX and the Company are directly or
indirectly parties (the "Business Combination Condition").
The Business Combination Condition may be satisfied if the Board
of Directors of the Company duly approved the Exchange Offer and the
Merger prior to consummation of the Exchange Offer, or if SPX, in its
sole discretion, were satisfied that the Business Combination Statutes
were invalid or their restrictions were otherwise inapplicable to SPX
in connection with the Exchange Offer and the Merger for any reason,
including, without limitation, those specified in the Business
Combination Statutes.
Financing Condition. SPX must have obtained, on terms
satisfactory to it in its sole discretion, sufficient financing to
enable the Exchange Offer and the Merger to be consummated. SPX
estimates that the total amount of financing that will be required to
pay the cash component of the Consideration in the Proposed Business
Combination, to refinance outstanding debt of SPX and of the Company,
to pay fees and expenses related to the Proposed Business Combination
and to provide working capital will be approximately $2.4 billion. SPX
has received a "highly confident" letter from Canadian Imperial Bank
of Commerce and its affiliate CIBC Oppenheimer Corp. ("CIBC
Oppenheimer"), dated February 13, 1998, in which the two entities
state that they are highly confident of their ability to raise the
financing in the credit markets in an amount sufficient to consummate
the acquisition of the Company, refinance existing debt of SPX and the
Company, pay fees and expenses related to the Proposed Business
Combination and provide working capital. SPX has not had access to,
and therefore has not been able to review, any of the documents
governing any indebtedness of the Company. Some or all of these
documents may contain provisions for acceleration of the Company's
indebtedness upon a change in control of the Company. In determining
the amount of financing necessary to effect the Proposed Business
Combination and in arranging for receipt of the "highly confident"
letter with respect thereto, SPX has assumed that all of the
indebtedness of the Company would need to be refinanced.
SPX Stockholder Approval Condition. Pursuant to the rules
promulgated by the New York Stock Exchange, approval by stockholders
of SPX is required prior to the issuance of additional shares of SPX
Common Stock if the number of shares to be issued is or will be equal
to 20% or more of the number of shares of SPX Common Stock outstanding
before the issuance of the additional shares. Since the number of
shares of SPX Common Stock that would be required to be issued in the
Exchange Offer exceeds such 20%, consummation of the Exchange Offer
will be conditioned upon receipt of the requisite approval by SPX's
stockholders of the issuance of the shares of SPX Common Stock in the
Exchange Offer and the Merger (the "SPX Stockholder Approval
Condition"). Under the rules of the New York Stock Exchange, assuming
there is a quorum present at the stockholders meeting at which the
matter is being considered (consisting of over 50% of the stock issued
and outstanding and entitled to be voted at the stockholders meeting),
the issuance of the additional shares must be approved by a majority
of the votes entitled to be cast by the holders of SPX Common Stock
that are present or represented by proxy at the stockholders meeting.
SPX has not commenced a solicitation of its stockholders to approve
the issuance of the shares in the Exchange Offer and the Merger and
does not intend to do so at least until the required number of Demands
have been received to call the Special Meeting.
The timing of the consummation of the Exchange Offer and the
Merger will depend on a variety of factors and legal requirements, the
actions of the Board of Directors of the Company, and whether the
Minimum Condition, the Rights Condition, the Business Combination
Statutes Condition, the Financing Condition and the SPX Stockholder
Approval Condition are satisfied or (if permissible) waived. On
January 6, 1998, SPX made its HSR Filing under the HSR Act. The
waiting period under the HSR Act expired at 11:59 p.m. on February 5,
1998. Accordingly, satisfaction of the premerger notification and
waiting period requirements of the HSR Act is not a condition of
either the Exchange Offer or the Merger.
SPX reserves the right to amend the terms of the Exchange Offer
and/or the Merger (including amending the number of Shares to be
purchased in the Exchange Offer, the nature or amount of the
Consideration to be paid in the Exchange Offer and/or in the Merger,
and the surviving entity in the Merger) at any time, including upon
entering into a merger agreement with the Company. SPX further
reserves the right to negotiate and enter into a merger agreement with
the Company (and has delivered a draft of such a merger agreement with
its February 17, 1998 letter to the Board of Directors (See
"Background")) pursuant to which there would be no Exchange Offer but
rather a "single-step" merger in which the Shares would be converted
into the right to receive the Consideration, or all cash, in the
amount of $48.00 per Share, or all stock, in the amount of 0.6395
share of SPX Common Stock per Share, subject to proration, or cash and
SPX Common Stock in such other amounts as are negotiated between SPX
and the Company; provided that SPX does not presently intend to reduce
the aggregate amount of the consideration to be paid in respect of the
Shares from the amount of the Consideration proposed to be paid in the
Exchange Offer and the Merger, although the taking of certain actions
by the Company's current Board of Directors, such as an extraordinary
dividend, might lead SPX to reduce the amount of consideration to be
paid. SPX has repeatedly stated to the Company's Board and management,
including in its February 17, 1998 letter to the Board, that if the
Company is able to substantiate more value in the Company, SPX is
prepared to recognize such additional value in the context of a
negotiated transaction.
A registration statement relating to the shares of SPX Common
Stock to be issued in connection with the Exchange Offer has been
filed with the Securities and Exchange Commission but has not yet
become effective. Such securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement becomes
effective. This Solicitation Statement shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
In the February 17, 1998 press release announcing the Proposed
Business Combination and in certain slides utilized by SPX regarding
the Proposed Business Combination, copies of which were filed as
supplemental materials to the Preliminary Solicitation Materials of
SPX, certain cautions were given regarding the forward-looking
statements contained therein. To the extent these materials are deemed
issued in connection with the proposed Exchange Offer, it should be
noted that the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 do not apply to tender or exchange
offers.
SPECIAL MEETING PROPOSALS
-------------------------
If SPX is successful in its solicitation of Demands and a Special
Meeting is called and held, the following matters will be proposed for
action by the shareholders at the Special Meeting:
Repeal of By-Laws Adopted Subsequent to April 3, 1997. The By-Law
Repeal Proposal is designed to prevent the Board of Directors of the
Company or a Committee thereof from taking actions, by means of
amending the Company's By-Laws, to attempt to nullify the actions to
be voted on by the shareholders at the Special Meeting or to create
obstacles to the consummation of the Proposed Business Combination,
the Exchange Offer and the Merger. According to publicly available
information, the most recent version of the Company's By-Laws was
adopted on April 3, 1997 and no amendments subsequent to that date
have been publicly disclosed. If the Board of Directors of the Company
or any Committee thereof has adopted since April 3, 1997, or adopts
prior to the effectiveness of the proposals that are to be voted on at
the Special Meeting, any amendment to the Company's By-Laws, this
proposal would repeal such amendment. The purpose of this amendment is
to remove any existing undisclosed obstacles, and to prevent the Board
or any Committee thereof from creating new obstacles, to the
consummation of the Proposed Business Consummation, the Exchange Offer
and the Merger. Assuming there is a quorum (consisting of a majority
of the votes entitled to be cast on the matter (a "Quorum")) at the
Special Meeting, the By-Law Repeal Proposal will be adopted, and the
By-Laws and By-Law amendments covered thereby will be repealed, if the
number of votes cast in favor of adopting the proposal exceeds the
number of votes cast against such proposal.
Removal of Directors of the Company. Unless the Board of
Directors of the Company takes action to remove certain obstacles, the
Proposed Business Combination, the Exchange Offer and the Merger will
not proceed. Thus far, the current Board has shown no interest in
negotiating with SPX. Accordingly, SPX will propose that all of the
members of the Board (currently consisting of John F. Creamer, Richard
E. Dauch, Milton P. DeVane, John E. Echlin, Jr., Donald C. Jensen,
Trevor O. Jones, Larry W. McCurdy, William P. Nussbaum, and Jerome G.
Rivard) be removed from office. Under the Connecticut Business Act,
assuming there is a Quorum at the Special Meeting, any director may be
removed if the number of votes cast in favor of removing the director
exceeds the number of votes cast against removal.
Amendment of the By-Laws of the Company. The Company's By-Laws
currently provide that the Board shall consist of not less than three
members and not more than 12 members, with the exact number of
directors to be determined from time to time by a resolution of the
Board. According to publicly available information, the Company
currently has nine directors. At the Special Meeting, SPX will propose
that the By-Laws of the Company be amended to fix the number of
directors of the Company at five by replacing the first sentence of
Article II, Section 1, which currently provides that
"The Board of Directors shall consist of not less than three nor
more than twelve members, the number to be as the directors shall
from time to time direct.",
with the following sentence:
"The Board of Directors of the Corporation shall consist of five
members."
Assuming there is a Quorum at the Special Meeting, the By-Laws will be
amended if the number of votes cast in favor of amending the By-Laws
exceeds the number of votes cast against the amendment.
Election of SPX Nominees as Directors. SPX will propose at the
Special Meeting that the shareholders of the Company elect the
following persons, all of whom are nominees of SPX, to the Board of
Directors of the Company: Alan Schwartz, Sterling Professor of Yale
University Law School; James K. Ashford, a retired senior Tenneco
automotive executive; John B. Blystone, Chairman, President and Chief
Executive Officer of SPX; Patrick J. O'Leary, Chief Financial Officer
of SPX; and Christopher J. Kearney, Vice President, Secretary and
General Counsel of SPX. If the SPX Nominees are elected, SPX
anticipates that the SPX Nominees will act to facilitate the
consummation of the Proposed Business Combination, including the
actions with respect to the Rights Agreement and Business Combination
Statutes discussed above (see "Reason to Call a Special Meeting"),
subject to their fiduciary duties as directors of the Company and the
general statutory standards applicable to any person serving as a
director of a Connecticut corporation as required by Section 756 of
the Connecticut Business Act. Assuming there is a Quorum at the
Special Meeting, directors are elected by a plurality of the votes
cast by the shareholders entitled to vote at the Special Meeting.
Shareholders of the Company do not have cumulative voting rights.
Set forth below are the name, age, present principal occupation
and business experience for the past five years of each of the five
SPX Nominees. This information has been furnished to SPX by the
respective nominees. Each of the SPX Nominees has consented to serve
as a director. Each of the SPX Nominees is a U.S. citizen except for
Mr. O'Leary who is a dual citizen of the Irish Republic and the United
Kingdom; none of them owns any Shares. None of the corporations
referenced below is a parent or subsidiary of the Company.
James K. Ashford, 61 Mr. Ashford is currently retired. From
354 Rue de Caravelle 1993 through 1995 Mr. Ashford served as
Naples, Florida 33963 the President and CEO of AP Parts
International Inc., a manufacturer of
exhaust systems and aftermarket products.
Mr. Ashford retired in 1991 as President
and CEO of JI Case, a subsidiary of
Tenneco, Inc., a worldwide manufacturing
company.
John B. Blystone, 44 Since 1995, Mr. Blystone has served
700 Terrace Point Drive as the Chairman, President and CEO of SPX.
Muskegon, MI 49443 From 1994 - 1995, Mr. Blystone served as
the President and CEO of General Electric
Company's Nuovo Pignone Division, an
industrial company, and as the President
and CEO of General Electric Company's
Europe Power Pole Plus division of GE
Power Systems, an industrial company. From
1991 - 1994, Mr. Blystone served as Vice
President - General Manager of the GE
Superabrasives division of General
Electric Company, an industrial company.
Mr. Blystone is a director of SPX and of
Worthington Industries.
Christopher J. Kearney, 42 Since 1997, Mr. Kearney has served as
700 Terrace Point Drive the Vice-President, Secretary and General
Muskegon, MI 49443 Counsel of SPX. From 1995 - 1997, Mr.
Kearney served as the Senior Vice
President, Secretary and General Counsel
of Grimes Aerospace Co., a manufacturer of
aircraft lighting, engine systems and
electronic systems. From 1988 - 1995, Mr.
Kearney served as Division General Counsel
for General Electric Company, an
industrial company.
Patrick J. O'Leary, 40 Since 1996, Mr. O'Leary has served as
700 Terrace Point Drive Chief Financial Officer of SPX. From 1994
Muskegon, MI 49443 - 1996, Mr. O'Leary served as the Chief
Financial Officer of Carlisle Plastics
Inc., a manufacturer of plastic consumer
products. From 1988 - 1994 Mr. O'Leary was
a Partner in the accounting firm, Deloitte
& Touche LLP.
Alan Schwartz, 57 Since 1987, Mr. Schwartz has served as
Yale Law School Sterling Professor of Law at Yale Law
127 Wall Street School. Mr. Schwartz is a director of
New Haven, CT 06511 Cleveland Cliffs, Inc.
Each SPX Nominee, other than the three executive officers of SPX,
will receive $25,000 from SPX for his services as a nominee for
election as a director of the Company, and, if elected, as a director
of the Company, and each SPX Nominee will be reimbursed his reasonable
out-of-pocket expenses incurred in the performance of his service as a
nominee and, if elected, as a director of the Company. SPX has agreed
to indemnify each SPX Nominee from and against any losses, claims,
charges, liabilities, costs or expenses (including reasonable legal
fees and expenses) arising out of any claim, action, suit or
proceeding to which the SPX Nominee is or is threatened to be made a
party (i) by reason of his being a nominee and a "participant in a
solicitation" (as defined in the Securities Exchange Act of 1934) or
(ii) arising out of or in connection with his service as a Company
director. SPX may, but is not obligated to, obtain insurance policies
covering any portion of such indemnification.
SPX does not expect that any of the SPX Nominees will be unable
to stand for election if the Special Meeting is held, but, in the
event that any vacancy in the slate of SPX Nominees should occur, SPX
will name a substitute nominee. In addition, SPX reserves the right
(i) to nominate additional nominees to fill any director positions
created by the Board of Directors of the Company prior to or at the
Special Meeting and (ii) to nominate substitute or additional persons
if the Company makes or announces any changes to its By-Laws or takes
or announces any other action that has, or if consummated would have,
the effect of disqualifying any or all of the SPX Nominees.
If the Special Meeting is called, shareholders of the Company
will be furnished proxy materials relating to the foregoing proposals.
These proxy materials will contain significantly more detailed
information concerning the Proposed Business Combination, including
relevant pro forma financial information.
DEMAND PROCEDURES
-----------------
Under the Connecticut Business Act and the Company's By-Laws, a
special meeting of the Company's shareholders may be called by one or
more holders of Shares representing in the aggregate at least 35% of
all the votes entitled to be cast on any issue proposed to be
considered at the Special Meeting. According to the Company's By-Laws,
each holder of Shares is entitled to one vote per Share held.
According to a shareholder list provided to SPX by the Company, as of
February 17, 1998, there were 63,248,939 Shares outstanding. Based on
such number and the fact that SPX owns 1,150,150 Shares, Demands from
holders of an aggregate of at least 20,986,979 Shares in addition to
SPX will be required to call the Special Meeting. The By-Laws of the
Company provide that, upon written request of the requisite holders,
the President of the Company shall call a Special Meeting. Following
receipt of the requisite Demands, SPX will deliver the Demands to the
Secretary of the Company and request that officer forthwith to cause
appropriate notice of the Special Meeting to be given to the Company's
shareholders entitled thereto.
Under the Connecticut Business Act, a company's by-laws may fix
or provide the manner of fixing the record date for one or more voting
groups in order to determine, among other things, the shareholders
entitled to demand a special meeting (the "Demand Record Date"). The
Connecticut Business Act provides that, if not otherwise fixed by the
by-laws or the board of directors, the record date for determining
shareholders entitled to demand a special meeting is the date the
first shareholder signs the demand. On February 17, 1998, SPX
delivered its written Demand to the Secretary of the Company.
Accordingly, SPX believes that the Demand Record Date is February 17,
1998.
You may revoke a previously executed Demand at any time before
the delivery of Demands from holders of Shares representing in the
aggregate the requisite 35% vote to the Secretary of the Company by
delivering a written notice of revocation to SPX, care of D.F. King &
Co., Inc. ("D.F. King"), 77 Water Street, 20th Floor, New York, New
York 10005. Although such a revocation is also effective if delivered
to the Secretary of the Company or to such other recipient as the
Company may designate as its agent, SPX requests that either the
original or photostatic copies of all revocations be mailed or faxed
to SPX, care of D.F. King, so that SPX will be aware of all
revocations and can more accurately determine if and when enough
Demands have been received from requisite holders.
Under the Connecticut Business Act, the Connecticut Superior
Court may summarily order a special meeting to be held if notice of
the special meeting is not given within 30 days after the date the
demand is delivered to the corporation's secretary or if the special
meeting is not held in accordance with the notice. Moreover, a
corporation must notify shareholders of the date, time and place of
the special meeting no fewer than ten nor more than 60 days before the
meeting date. The Demands contain a request that the Special Meeting
be scheduled 35 days after delivery of the Demands so as to provide
shareholders the opportunity to vote on the Special Meeting proposals
in a reasonably prompt timeframe.
BY EXECUTING THE GOLD DEMAND CARD AND RETURNING IT TO SPX, YOU
ARE NOT COMMITTING TO CAST ANY VOTE IN FAVOR OF OR AGAINST, NOR ARE
YOU GRANTING ANY PROXY TO VOTE ON, ANY OF THE PROPOSALS TO BE BROUGHT
BEFORE THE SPECIAL MEETING. MOREOVER, EXECUTION AND DELIVERY OF THE
GOLD DEMAND CARD WILL NOT OBLIGATE YOU IN ANY WAY TO SELL YOUR SHARES
PURSUANT TO THE EXCHANGE OFFER OR ANY OTHER OFFER.
SOLICITATION OF DEMANDS
-----------------------
This solicitation of Demands is being made by SPX. Demands may be
solicited by mail, facsimile, telephone, telegraph, the internet, in
person and by advertisements. Solicitations may be made by certain
directors, officers and employees of SPX, none of whom will receive
additional compensation for such solicitation.
SPX has retained D.F. King for solicitation and advisory services
in connection with this solicitation, for which D.F. King will receive
a fee not to exceed $50,000, together with reimbursement for its
reasonable out-of-pocket expenses. SPX has also agreed to indemnify
D.F. King against certain liabilities and expenses, including
liabilities and expenses under federal securities laws. D.F. King will
solicit Demands from individuals, brokers, banks, bank nominees and
other institutional holders. SPX is requesting banks, brokerage houses
and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the Shares they
hold of record. SPX will reimburse these record holders for their
reasonable out-of-pocket expenses in so doing.
CIBC Oppenheimer is acting as financial advisor to SPX in
connection with the Proposed Business Combination, and will act as
Dealer Manager of the Exchange Offer, for which services SPX has paid
a fee of $500,000 and has agreed to pay additional fees, up to a
maximum of $8,500,000 in the aggregate (in addition to any fees which
may be paid to it in connection with arranging or participating in the
financing of the transaction), a substantial portion of which is
contingent upon the consummation of the Proposed Business Combination.
SPX has also agreed to reimburse CIBC Oppenheimer for its reasonable
out-of-pocket expenses, including reasonable legal fees up to a
specified maximum, and to indemnify CIBC Oppenheimer and certain
related persons against certain liabilities and certain expenses in
connection with its engagement, including certain liabilities under
the federal securities laws. In connection with CIBC Oppenheimer's
engagement as financial advisor, officers and employees of CIBC
Oppenheimer may communicate in person, by telephone or otherwise with
a limited number of institutions, brokers or other persons who are
shareholders of the Company for the purpose of assisting in the
solicitation of Demands for the Special Meeting. In addition, CIBC
Oppenheimer, together with CIBC, has issued a "highly confident"
letter regarding the financing of the Proposed Business Combination.
See "The Proposed Business Combination, the Exchange Offer and the
Merger - Financing Condition." CIBC Oppenheimer will not receive any
fee for or in connection with such solicitation activities or for the
issuance of such letter apart from the fees which it is otherwise
entitled to receive as described above.
The entire expense of soliciting Demands is being borne by SPX.
SPX does not currently intend to seek reimbursement of the costs of
this solicitation from the Company. Costs of this solicitation of
Demands, including the fees referred to above, are expected to be
approximately $2,000,000 (exclusive of costs represented by salaries
and wages of regular officers and employees) of which approximately
$1,150,000 have been incurred to date.
ADDITIONAL INFORMATION
----------------------
As of the date of this Solicitation Statement, SPX owns 1,150,150
Shares. For more detailed information regarding the directors and
executive officers and other representatives of SPX and SPX's Share
ownership, see Schedules I and II, respectively, to this Solicitation
Statement.
Schedule III to this Solicitation Statement contains an excerpt
from the Company's Preliminary Revocation Solicitation Materials dated
February 24, 1998 regarding Shares held by the Company's management
and certain beneficial owners. The information concerning the Company
contained in this Solicitation Statement and the Schedules attached
hereto has been taken from, or is based upon, publicly available
information, and SPX takes no responsibility for the accuracy or
completeness thereof. SPX has not to date had access to the books and
records of the Company.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
---------------------------------------------
The Company's Proxy Statement dated November 14, 1997 for its
1997 Annual Meeting indicates that proposals of shareholders intended
to be presented by such shareholders at the Company's 1998 Annual
Meeting must be received by the Secretary of the Company no later than
July 17, 1998 in order to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
March 6, 1998 SPX CORPORATION
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF SPX
AND OTHER REPRESENTATIVES OF SPX
Set forth in the tables below are the present principal
occupation or employment, and the name, principal business and address
of any corporation or organization in which such employment is carried
on, for (1) each of the directors and executive officers of SPX and
(2) certain employees and other representatives of SPX who may also
solicit Demands from the shareholders of the Company. The principal
business address of SPX is 700 Terrace Point Drive, Muskegon, Michigan
49443-3301. Unless otherwise indicated, the principal business address
for each individual listed below is the address of his or her
employer. Except as otherwise provided in this Solicitation Statement
(including the Schedules hereto), neither SPX nor any of the other
participants in this Solicitation, including the SPX Nominees detailed
on Schedule II hereto, (i) directly or indirectly owns any Shares or
any other securities of the Company, (ii) was in the past ten years
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (iii) was within the past year a party to
any contracts, arrangements or understandings with any person with
respect to any securities of the Company, including but not limited to
joint ventures, loan or option arrangements, puts or calls, guarantees
against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies.
Directors of SPX
----------------
Present Principal
Name Occupation or Employment
- ----------------------- --------------------------------------------------
John B. Blystone Chairman, President and Chief Executive Officer
SPX
J. Kermit Campbell Chief Executive Officer
The Prince Group
Supply products and services to manufacturing
firms
2721 Nelson Road
Traverse City, MI 49686
Sarah R. Coffin Vice President, Specialty Group Manager
H.B. Fuller Company
Manufacturer of adhesives, sealants, coatings
and paints
1210 County Road "E" West
Arden Hills, MN 55112
Frank A. Ehmann Partner
RCS Healthcare Partners, L.P.
Leveraged buyout fund
390 Sabal Palm Lane
Vero Beach, FL 32963
Edward D. Hopkins Retired
Charles E. Johnson II Private Investor
474 E. Circle Drive
North Muskegon, MI 49445
Ronald L. Kerber Exec. Vice-President and Chief Technology Officer
Whirlpool Corporation
Manufacturer of major home appliances
2000 M63
Benton Harbor, MI 49022-2692
Peter H. Merlin Partner
Gardner, Carton & Douglas
Law Firm
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
David P. Williams President and Chief Operating Officer
The Budd Company
Manufacturer of automobile and truck body
components
3155 West Big Beaver Road
Box 2601
Troy, MI 48084
Executive Officers of SPX (Other than SPX Nominees)
---------------------------------------------------
Present Principal
Name Occupation or Employment
- ----------------------- --------------------------------------------------
Drew T. Ladau Vice President, Business Development
SPX
Stephen A. Lison Vice President, Human Resources
SPX
Thomas J. Riordan President, Service Solutions
SPX
Other Representatives
of SPX Who May Also Solicit Demands
-----------------------------------
Present Principal
Name Occupation or Employment
- ----------------------- --------------------------------------------------
Tina L. Betlejewski Manager, Corporate Communications
SPX
Charles A. Bowman Director, Corporate Finance
SPX
Kenneth C. Dow Corporate Controller
SPX
David M. Garrity Senior Analyst - Executive Director
CIBC Oppenheimer Corp. - New York
Investment Banking Firm
One World Financial Center, 38th Floor
New York, NY 10281
Roger C. Kahn Managing Director
CIBC Oppenheimer Corp. - New York
Investment Banking Firm
One World Financial Center, 38th Floor
New York, NY 10281
Jonathan B. Lamont Analyst
CIBC Oppenheimer Corp. - Chicago
Investment Banking Firm
200 West Madison, Suite #2300
Chicago, IL 60606
Stuart A. Taylor II Managing Director
CIBC Oppenheimer Corp.- Chicago
Investment Banking Firm
200 West Madison, Suite #2300
Chicago, IL 60606
J. Michael Whitted Director
CIBC Oppenheimer Corp. - Chicago
Investment Banking Firm
200 West Madison, Suite #2300
Chicago, IL 60606
CIBC Oppenheimer Corp. does not admit or deny that any of its
directors, officers or employees is a "participant" as defined in
Schedule 14A promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or that such
Schedule 14A requires the disclosure of certain information concerning
such persons.
In the normal course of its business, CIBC Oppenheimer regularly
buys and sells Shares for its own account and for the accounts of its
customers, which transactions may result from time to time in CIBC
Oppenheimer and its associates having a net "long" or net "short"
position in Shares or option contracts with other derivatives in or
relating to Shares. As of March 5, 1998, CIBC Oppenheimer had no
positions in Shares.
SCHEDULE II
SHARES HELD BY SPX
Daily-Weighted
Number of Average
Transaction Date Shares Acquired Price per Share
---------------- --------------- ---------------
12/18/97 54,000 35.4877
12/19/97 114,000 34.9047
12/22/97 240,000 36.0210
12/23/97 8,000 35.7500
01/05/98 20,000 36.8191
01/06/98 33,800 37.1444
02/06/98 76,200 37.1443
02/09/98 160,700 37.8080
02/10/98 7,400 38.9730
02/11/98 146,500 38.4826
02/12/98 87,250 38.8041
02/13/98 202,300 38.9359
--------
TOTAL 1,150,150
Funds used by SPX to purchase the Shares were drawn from SPX's
existing revolving credit facility.
SCHEDULE III
SHARE OWNERSHIP OF THE COMPANY
MANAGEMENT OF CERTAIN BENEFICIAL OWNERS
The following is an excerpt from the Company's Preliminary Revocation
Solicitation Materials dated February 24, 1998. Although SPX does not have
any knowledge that would indicate that any information contained in such
excerpt is inaccurate or incomplete, SPX does not take any responsibility
for the accuracy or completeness of such information.
"The following shareholders are beneficial owners of more than five
percent (5%) of the shares of Common Stock as of _____ __, 1998. The
Company has no other class of equity security outstanding:
The following table sets forth information as to the only persons
known to the Company to be the beneficial owner of more than five
percent of the Company's Common Stock:
Certain Beneficial Owners
-------------------------
Name and Address Amount and Nature of Percentage of Class
of Beneficial Owner Beneficial Ownership Beneficially Owned
------------------- -------------------- ------------------
Scudder Kemper 4,579,317 (1) _____ %
Investments, Inc.
Two International Place
Boston, MA 02110-4103
McKay-Shields Financial 4,349,380 (2) _____ %
Corporation Investment
Advisors
9 West 57th Street
New York, NY 10019
The Capital Group 3,582,400 (3) _____ %
Companies, Inc.
333 South Hope Street
Los Angeles, California
90071
- --------
(1) Scudder Kemper Investments, Inc., has sole voting power with
respect to 969,650 shares, shares voting power with respect to
3,358,544, sole dispositive power with respect to 4,549,973 and shares
dispositive power with respect to 29,344 shares as reported on
Schedule 13G filed with the Securities and Exchange Commission on
February 12, 1998.
(2) McKay-Shields Financial Corporation, Investment Advisors, has
shared voting and shared dispositive power with respect to 4,349,380
shares as reported on Schedule 13F filed with the Securities and
Exchange Commission on February 13, 1998.
(3) The Capital Group Companies, Inc., through its wholly-owned
subsidiaries, including Capital Research and Management Company
(acting as an investment advisor), has sole voting power with respect
to 491,400 shares and sole dispositive power with respect to 3,582,400
as reported on Schedule 13G filed with the Securities and Exchange
Commission on February 10, 1998.
The following table sets forth information with respect to
beneficial ownership as of _______ __, 1998 by the Company's current
directors, the Company's "named executive officers" for 1997 fiscal
year, the Company's chief executive officer, the Company's "named
executive officers" for the 1998 fiscal year and by all directors and
current executive officers as a group, together with the percentage of
the outstanding shares of Common Stock which such ownership
represents. Unless otherwise indicated, the beneficial ownership
consists of sole voting and investment power with respect to the
shares indicated, except to the extent that authority is shared by
spouses under applicable law.
Directors and Executive Officers
Name and Address Amount and Nature of Percentage of Class
of Beneficial Owner Beneficial Ownership Beneficially Owned
------------------- -------------------- ------------------
John F. Creamer, Jr. 21,750 shares *
Richard E. Dauch 1,142 shares *
Milton P. DeVane 13,600 shares *
John E. Echlin, Jr. (1) 634,392 shares 1.00%
Donald C. Jensen (2) 9,050 shares *
Trevor O. Jones (3) 118,350 shares *
Jon P. Leckerling (4) 34,589 shares *
Milton J. Makoski (5) 41,395 shares *
Larry W. McCurdy (6) 108,000 shares *
William P. Nusbaum 3,000 shares *
Joseph A. Onorato (7) 40,880 shares *
Jerome G. Rivard 6,800 shares *
Edward D. Toole (8) 27,264 shares *
- --------
*Less than 1 percent of class
(1) Includes 125,200 shares held in an irrevocable charitable
foundation of which Mr. Echlin is a trustee with shared voting rights
over such shares and 61,907 shares owned by Mrs. John E. Echlin, Jr.
(2) Shares held indirectly by the Donald C. Jensen Revocable
Living Trust dated September 6, 1990.
(3) Includes 100,000 shares exerciseable currently or within 60
days of _____, 1998 under the Echlin Inc. 1992 Executive Stock Option
Plan.
(4) Includes 29,029 shares either exercisable currently or within
60 days of _____, 1998 under the Echlin Inc. 1992 Executive Stock
Option Plan or credited to Mr. Leckerling's account in the Echlin
Incentive Savings and Investment Plan as of August 31, 1997.
(5) Includes 35,045 shares either exercisable currently or within
60 days of _____, 1998 under the Echlin Inc. 1992 Executive Stock
Option Plan or credited to Mr. Makoski's account in the Echlin
Incentive Savings and Investment Plan as of August 31, 1997.
(6) Includes 100,000 shares either exerciseable currently or
within 60 days of _____, 1998 under the Echlin Inc. 1992 Executive
Stock Option Plan.
(7) Includes 32,780 shares either exercisable currently or within
60 days of _____, 1998 under the Echlin Inc. 1992 Executive Stock
Option Plan or credited to Mr. Onorato's account in the Echlin
Incentive Savings and Investment Plan as of August 31, 1997.
(8) Includes 22,914 shares either exercisable currently or within
60 days of _____, 1998 under the Echlin Inc. 1992 Executive Stock
Option Plan or credited to Mr. Toole's account in the Echlin Incentive
Savings and Investment Plan as of August 31, 1997.
As of November 5, 1997, the directors and twelve executive
officers of the Company (including the Named Executive Officers other
than Mr. Mancheski who is neither a director nor executive officer of
the Company ) as a group owned beneficially 999,929 shares of Common
Stock or 1.58 percent thereof. Such shares include 278,770 shares
either exercisable currently or within 60 days of November 5, 1997
under the Echlin Inc. 1992 Executive Stock Option Plan and the Echlin
Inc. 1996 Non-Executive Director Stock Option Plan or, with respect to
officers of the Company, held in their respective accounts in the
Echlin Incentive Savings and Investment Plan as of August 31, 1997."
IMPORTANT
Your action is important. No matter how many Shares you own,
please join SPX in demanding that the Special Meeting be called and
held by:
1. SIGNING the enclosed GOLD DEMAND CARD,
2. DATING the enclosed GOLD DEMAND CARD, and
3. MAILING the enclosed GOLD DEMAND CARD TODAY in the envelope
provided (no postage is required if mailed in the United
States).
If you hold your Shares in the name of one or more brokerage
firms, banks, nominees or other institution, only they can exercise
the right with respect to your Shares to make a written demand that
the Special Meeting be called and held, and only upon receipt of your
specific instructions. Accordingly, it is critical that you promptly
sign and date the GOLD DEMAND CARD and mail it in the envelope
provided by your broker, bank or other nominee so that they can
exercise the right to make a Demand on your behalf.
If you have any questions or require any additional information
concerning this Solicitation Statement, please contact D.F. King at
the address set forth below.
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Call Toll Free (800) 758-5378
Banks and Brokers Call (212) 269-5550 (Collect)
DEMAND TO CALL A SPECIAL MEETING
OF SHAREHOLDERS
OF
ECHLIN INC.
THIS REVOCABLE DEMAND AND REQUEST IS SOLICITED
BY
SPX CORPORATION
To the President and Secretary of Echlin Inc.:
The undersigned is a shareholder of common stock, par value $1.00
per share (the "Shares"), of Echlin Inc., a Connecticut corporation
(the "Company"). Pursuant to Article I, Section 3 of the Company's
By-Laws and Section 696 of the Connecticut Business Corporation Act,
the undersigned hereby requests and demands that the President of the
Company call a special meeting of the shareholders of the Company (a
"Special Meeting") for the purposes described below, fix the date,
time and place of the Special Meeting and give notice of the Special
Meeting (together with a description of the purposes for which the
Special Meeting is being called) to shareholders of the Company
entitled to vote thereat.
A. To repeal any provision of the Company's By-Laws or
amendments thereto adopted by the Company's Board of Directors or
any Committee thereof subsequent to April 3, 1997 and prior to
the effectiveness of the last of the proposals to be voted on at
the Special Meeting.
B. To consider and vote upon a proposal to remove all of the
directors of the Company.
C. To consider and vote upon a proposal to amend the By-Laws
of the Company to fix the number of directors of the Company at
five.
D. To consider and vote upon a proposal to elect five
persons nominated by SPX Corporation to the Board of Directors of
the Company.
The undersigned further requests that the Special Meeting be held
35 days after such date as the Company has received demands to call a
Special Meeting for the purposes listed above from shareholders who,
in the aggregate, hold at least 35% of the Company's outstanding
Shares, unless such 35th day is not a business day in Connecticut, in
which case it is requested that the Special Meeting be called for the
first such business day after such 35th day.
The undersigned hereby authorizes SPX Corporation or any agent
thereof to collect and deliver this demand to the Company.
This demand supersedes, and the undersigned hereby revokes, any
earlier dated revocation which the undersigned may have submitted to
SPX Corporation, the Company or any designee of either.
Dated:________________ __, 1998
_______________________________
(Signature)
_______________________________
(Signature, if held jointly)
Title: ________________________
Please sign exactly as your
Shares are registered. When
Shares are held by joint
tenants, both should sign. When
signing as an attorney-in-fact,
executor, administrator,
trustee or guardian, give full
title as such. If a
corporation, sign in full
corporate name by president or
other authorized officer. If a
partnership, sign in
partnership name by authorized
person. This demand will
represent all Shares held in
all capacities.
PLEASE SIGN, DATE AND MAIL IN THE ENCLOSED ENVELOPE PROMPTLY.