Autocam Announces Agreement on Merger Transaction
9 November 1999
Autocam Announces Agreement on Merger Transaction
KENTWOOD, Mich., Nov. 8 -- Kentwood, Michigan-based Autocam
Corporation announced today that it has signed a definitive
agreement to merge with Titan Acquisition Corporation, a corporation formed by
Aurora Capital Group ("Aurora").
Upon the consummation of the merger, the public shareholders of the
Company will receive $18.75 in cash for each share of the Company's common
stock. John C. Kennedy, President and Chief Executive Officer of the Company,
will retain 2,133,333 shares of the Company's common stock, which will be
valued at $18.75 per share in an exchange for equity in the surviving
corporation. The balance of his shares will be exchanged for $18.75 cash in
the merger. In addition, Aurora will refinance the Company's outstanding debt
of approximately $109 million, resulting in a total transaction value of
approximately $230 million. The transaction will be funded through equity
contributions by Aurora, the exchange of Mr. Kennedy's 2,133,333 shares and
the refinancing of the existing debt. The Company will continue to operate as
a separate company under its current name.
The merger was unanimously approved by the Company's Board of Directors
upon the recommendation of a previously established special committee of
independent directors (the "Special Committee"). This merger represents the
culmination of an extensive process undertaken by the Company to analyze the
possibilities to maximize shareholder value and to meet its need for capital
to fund acquisitions and working capital. Raymond James & Associates, Inc.
("Raymond James"), financial advisor to the Company, has delivered an opinion
that the cash consideration to be received by the Company's shareholders in
the merger is fair from a financial point of view to such holders.
"The Company believes that the transaction is in the best interests of our
shareholders and employees," Mr. Kennedy said. "We believe the Special
Committee conducted a comprehensive and inclusive process and feel this merger
will ensure that the shareholders receive a fair value for their investment,
and the Company's future growth objectives can be met."
Subsequent to the purchase of Frank & Pignard in 1998, the Company began
the process of exploring various equity and debt financing options in order to
strengthen its position as one of the world's largest precision machining
companies. None of these options proved available on commercially reasonable
terms. The Special Committee was established in June 1999 to explore
strategic alternatives, including affiliations with third parties or a sale of
the Company. Beginning in June 1999, Raymond James, at the direction of the
Special Committee and its independent legal counsel, contacted approximately
ninety parties thought to be potentially interested in a strategic
relationship with the Company. Those parties were requested to participate in
an auction process consisting of graduated phases of bidding and diligence
review. Approximately forty of these parties participated to some degree in
this process. One strategic party and eight financial parties submitted
formal indications of interest. The Special Committee reviewed all the
indications, focusing particularly on the bid price ranges and the perceived
ability to successfully complete a transaction. On that basis, Raymond James
was instructed to conduct additional diligence meetings with, and request
final bids from, five of the nine parties. The Special Committee further
instructed Raymond James to keep the process as open as possible for other
potential bidders.
In early September 1999, the Special Committee directed management to
negotiate exclusively with Aurora at $21 per share while Aurora conducted
additional diligence. The parties were ultimately unable to agree on certain
proposed provisions of a merger agreement. In addition, during this diligence
period, Aurora indicated it intended to lower its offer price. On that basis,
negotiations with Aurora were terminated. The Special Committee re-opened the
auction process and invited other participants to submit revised final bids.
Aurora and others submitted revised, lowered final bids.
Throughout the process, the Special Committee was informed of the
developments of the auction process, general market conditions and the
Company's recent performance, and received recommendations from its
independent legal counsel, Raymond James and the Company's management. The
Special Committee selected Aurora's revised offer after concluding that to do
so was in the best interests of the Company and its public shareholders. In
its process, the Special Committee evaluated a number of factors, including
the price, the form of consideration to be paid and the likelihood that the
transaction will be consummated.
The merger is expected to be completed early next year. It is subject to
approval by the holders of at least 90% of the Company's common shares
outstanding (thus requiring approval by holders of more than a majority of the
Company's shares held by persons other than Mr. Kennedy), the expiration of
the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and other customary conditions. Mr. Kennedy has
agreed to vote 60.2% of the Company's outstanding common shares in favor of
the proposed merger. A special meeting of the Company's shareholders will be
scheduled as soon as practical.
Aurora is a Los Angeles-based private investment firm that acquires and
builds companies in partnership with operating management. Aurora invests in
middle-market companies that can become more significant competitors in their
industries through internal growth and add-on acquisitions. Aurora has
binding commitments sufficient to fund the equity contribution necessary to
complete the merger. In addition, Aurora has financing commitments from
commercial lenders, subject to customary conditions, to provide the debt
financing required by the merger.
Autocam manufactures precision-machined parts primarily used in fuel,
power steering and braking systems for the transportation industry and
ophthalmic and cardiovascular medical devices. Autocam's common stock trades
on the Nasdaq National Market under the symbol "ACAM". For more information
on the Company, visit our Internet website at http://www.autocam.com .
This release may contain forward-looking statements relating to future
financial and other results. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements that are other than statements
of historical facts. Such forward-looking statements may be identified by the
use of the words "anticipates," "estimates," "expects," "intends," "plans,"
"predicts," "projects," and similar expressions. These cautionary statements
and any other cautionary statements that may accompany the forward-looking
statements expressly qualify all such statements. Forward-looking statements
involve risk and uncertainties that could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements.
This release is neither an offer to sell nor a solicitation of an offer to
buy the Company's securities, nor a solicitation of a proxy. Any such offer
or solicitation will only be made in compliance with applicable securities
law.