-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UAsIM16oDfFaiui+CwuqWf5cuTlVeuXXzbHTGX5uC2ftEZbKN59GqFBuHDPMFZqp AvzzUhodZtpIWUb2hj9bdA== 0000950157-99-000302.txt : 19990607 0000950157-99-000302.hdr.sgml : 19990607 ACCESSION NUMBER: 0000950157-99-000302 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990531 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITCO CORP CENTRAL INDEX KEY: 0000107889 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 131870000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04654 FILM NUMBER: 99640580 BUSINESS ADDRESS: STREET 1: ONE AMERICAN WAY CITY: GREENWICH STATE: CT ZIP: 06831 BUSINESS PHONE: 2035522000 MAIL ADDRESS: STREET 1: ONE AMERICAN LANE CITY: GREENWICH STATE: CT ZIP: 06831 FORMER COMPANY: FORMER CONFORMED NAME: WITCO CHEMICAL CORP DATE OF NAME CHANGE: 19851117 FORMER COMPANY: FORMER CONFORMED NAME: WITCO CHEMICAL CO INC DATE OF NAME CHANGE: 19681203 8-K 1 CURRENT REPORT ============================================================================= SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 --------------------------- Date of Report (Date of earliest event reported): May 31, 1999 WITCO CORPORATION (Exact name of registrant as specified in its charter) --------------------------- Delaware 001-4654 13-187000 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification Number) --------------------------- One American Lane Greenwich, Connecticut 06831-2559 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (203) 552-2000 N/A (Former name or former address, if changed since last report) ============================================================================= ITEM 5. OTHER EVENTS Witco Corporation, a Delaware corporation ("Witco"), Crompton & Knowles Corporation, a Massachusetts corporation ("Crompton") and Park Merger Co., a Delaware corporation and wholly owned subsidiary of Crompton ("Newco"), have entered into an Agreement and Plan of Reorganization, dated as of May 31, 1999 (the "Merger Agreement"). The Merger Agreement provides for, among other things: (a) the merger of Crompton with and into Newco (the "First Step Merger"), to be immediately followed by (b) the merger of Witco with and into Newco (the "Second Step Merger," and, with the First Step Merger, the "Merger"). The name of the combined company will be "C & K Witco Corporation" and its headquarters will remain in the State of Connecticut. Vincent A. Calarco, Chairman, President and Chief Executive Officer of Crompton, will be the President and Chief Executive Officer of the combined company. E. Gary Cook, Chairman, President and Chief Executive Officer of Witco will be the Chairman of the Board of the combined company. The board of directors of the combined company will consist of seven directors appointed by Crompton and seven directors appointed by Witco. The Merger is expected to be (a) accounted for under the "purchase" method of accounting and (b) a "reorganization" under the Internal Revenue Code of 1986, as amended. At the effective time of the First Step Merger, (a) each share of common stock, par value $.10 per share, of Crompton ("Crompton Common Stock") outstanding immediately prior to the effective time of the First Step Merger will be converted into one share of common stock, par value $.01 per share of Newco ("Newco Common Stock"), and (b) all rights with respect to Crompton Common Stock pursuant to stock options outstanding at such effective time, whether or not then exercisable, shall be converted into and become rights with respect to Newco Common Stock on otherwise similar terms. At the effective time of the Second Step Merger, (a) each share of common stock, par value $5.00 per share, of Witco ("Witco Common Stock") outstanding immediately prior to the effective time of the Second Step Merger will be converted into the right to receive 0.9242 shares (the "Exchange Ratio") of Newco Common Stock and (b) all rights with respect to Witco Common Stock pursuant to stock options outstanding at such effective time, whether or not then exercisable, shall be converted into and shall become rights with respect to Newco Common Stock on otherwise substantially similar terms, adjusted to reflect the Exchange Ratio. Consummation of the Merger is subject to a number of conditions, including (a) the adoption of the Merger Agreement by the stockholders entitled to vote thereon of each of Crompton and Witco, (b) receipt of all requisite governmental approvals and (c) certain other customary conditions. Each of the parties has also agreed to pay a fee of $30 million (the "Termination Fee") to the other party in the event that the Merger Agreement is terminated under certain circumstances relating to a competing transaction. In connection with the Merger Agreement, Witco and Crompton have also entered into cross stock option agreements, each dated May 31, 1999. Pursuant to the Witco stock option agreement, Witco granted to Crompton an irrevocable option to purchase, under circumstances in which the Termination Fee is payable by Witco, up to 11,471,159 shares of Witco Common Stock at a price, subject to certain adjustments, of $17.50 per share (the "Crompton Option"). Pursuant to the Crompton stock option agreement, Crompton granted to Witco an irrevocable option to purchase, under circumstances in which the Termination Fee is payable by Crompton up to 13,025,917 shares of Crompton Common Stock at a price, subject to certain adjustments, of $18.375 per share (the "Witco Option" and, with the Crompton Option, the "Options"). Each of the Options, if exercised by the grantee thereof, is intended to provide the grantee, before giving effect to the exercise of such Option, 19.9% of the total number of shares then issued and outstanding and is subject to a profit limitation of $30 million. Under certain circumstances, each of the parties may be required to repurchase the applicable Option or the shares acquired pursuant to the exercise of such Option. A copy of the joint press release of June 1, 1999, regarding the Merger is attached as Exhibit 99.1 hereto, and is hereby incorporated herein by reference. A copy of the presentation to investors, dated June 1, 1999, regarding the Merger and given jointly by Crompton and Witco is attached as Exhibit 99.2 hereto and is hereby incorporated herein by reference. The exhibits to this current report on Form 8-K contain forward looking statements with respect to the financial conditions, results of operations and businesses of each of Crompton and Witco and, assuming the consummation of the Merger, a combined Crompton/Witco, including statements relating to: (a) the cost savings and accretion to reported earnings that will be realized from the Merger; (b) the impact on revenues of the Merger; and (c) the restructuring charges expected to be incurred in connection with the Merger. These forward looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ from those contemplated by such forward looking statements include, among others, the following possibilities: (a) expected cost savings from the Merger cannot be fully realized or realized within this expected time-frame; (b) revenues following the Merger are lower than expected; (c) competitive pressure among companies in the chemical products industry increases significantly; (d) costs or difficulties related to the integration of the businesses of Crompton and Witco are greater than expected; (e) general economic conditions, either internationally or nationally or in the states in which the combined company will be doing business, are less favorable than expected; or (f) legislation or regulatory requirements or changes adversely affect the business in which the combined company would be engaged. 1 Such forward-looking statements speak only as of the date on which such statements were made, and Witco undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made to reflect the occurrence of unanticipated events. Item 7. Financial Statements and Exhibits. (a) Financial statements of businesses acquired. - Not Applicable (b) Pro forma financial information. - Not Applicable (c) Exhibits. 99.1 Joint press release, dated June 1, 1999, issued by Crompton & Knowles Corporation and Witco Corporation. 99.2 Investor Presentation Materials, dated June 1, 1999, regarding the Merger. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WITCO CORPORATION (Registrant) Date: June 4, 1999 By: /s/ Camillo DiFrancesco ----------------------- Name: Camillo DiFrancesco Title: Senior Vice President & Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Description of the Exhibit 99.1 Joint press release, dated June 1, 1999, issued by Crompton & Knowles Corporation and Witco Corporation. 99.2 Investor Presentation Materials, dated June 1, 1999, regarding the Merger. 4 EX-99.1 2 PRESS RELEASE EXHIBIT 99.1 CROMPTON & KNOWLES WITCO FOR IMMEDIATE RELEASE CROMPTON & KNOWLES AND WITCO TO MERGE, CREATING $3.2 BILLION SPECIALTY CHEMICAL COMPANY Merger of Equals Will Create C&K Witco STAMFORD AND GREENWICH, CT -- JUNE 1, 1999 - Crompton & Knowles Corporation (NYSE: CNK) and Witco Corporation (NYSE: WIT), two of the world's leading producers of specialty chemicals, today announced that their boards of directors have approved a definitive agreement for a tax-free, stock-for-stock merger of equals. The combined company, to be named C&K Witco Corporation, will be one of the world's largest specialty chemical companies with a total capitalization of approximately $3.9 billion. Headquartered in Connecticut, C&K Witco will have approximately 10,000 employees and hold global market leadership positions in additives, polymers and processing equipment, and specialty chemicals. Under the agreement each share of Crompton & Knowles common stock will be converted into one share of C&K Witco and each share of Witco common stock will be exchanged for 0.9242 shares of common stock of the new company. The combined company will be owned (on a fully diluted basis) approximately 55% by current shareholders of Crompton & Knowles and approximately 45% by current shareholders of Witco. The combination will be treated as a purchase for accounting purposes. "This merger is about focused growth, fit and scale," said Vincent A. Calarco, chairman, president and chief executive officer of Crompton & Knowles. "Both our companies are committed to the principle that specialty chemical companies succeed by being leaders in the business sectors in which they compete. The unique fit of our two companies in a broad range of customer and geographic markets will provide us with new opportunities for growth. At the same time, in a consolidating industry, size increases our strategic options and lowers our cost of capital." "Strategically, we are going to be able to do more together than we ever could have done apart," said E. Gary Cook, chairman, president and chief executive officer of Witco. "Crompton & Knowles has proven its ability to integrate acquisitions and provide solid returns to shareholders. Witco has demonstrated the ability to enhance growth potential through innovative solutions for our customers. Together, we will be not only more capital and cost efficient, but More... also more responsive to our customers' current and future needs. These benefits should lead to better performance and more attractive returns for our shareholders." MERGER BENEFITS "This merger is driven by its revenue growth potential, not merely its cost reduction potential," Calarco added. "The breadth and strength of our combined product platform will provide us with an excellent foundation for future expansion, both internal and external, once our business operations have been fully integrated." C&K Witco's portfolio of businesses will have enhanced market position. The Additives business will have almost $1.3 billion in sales, including a broad range of products to improve performance of plastics, rubber and lubricants. The Specialty Chemicals business, including crop protection, silicones, and industrial surfactants, will have sales of approximately $1.1 billion. The Polymers and Processing Equipment business will have almost $816 million in sales, including EPDM, urethanes and plastics processing equipment. C&K Witco expects to capitalize on numerous opportunities for revenue growth by offering more products to existing customers, by more quickly bringing new technologies to the marketplace and by achieving broader global reach. C&K Witco anticipates net merger savings ramping up to approximately $60 million per year by the second full year of combined operations. These savings are expected to result from increased purchasing power, the elimination of duplicative corporate and administrative programs and greater efficiencies in operations and business processes. C&K Witco will seek to minimize workforce effects of the merger through a combination of programs, including reduced hiring and attrition. As a result of the scale of the combined company, C&K Witco will have the flexibility to pursue a much more comprehensive range of strategic options. MANAGEMENT AND BOARD C&K Witco will be led by a management team with extensive experience in the specialty chemicals business and a trick record of success. E. Gary Cook, currently chairman, president and chief executive officer of Witco will serve as chairman of the board of C&K Witco, and Vincent A. Calarco, currently chairman, president and chief executive officer of Crompton & Knowles will serve as president and CEO of C&K Witco. In integrating the two companies, C&K Witco will adopt the best practices of each organization and management selections will be made based on the best qualifications for the position. The board of directors will consist of a total of 14 members, seven from each of the Boards of Directors of Crompton & Knowles and Witco. More... DIVIDEND It is anticipated that the C&K Witco Board will set a dividend consistent with its peer companies in the specialty chemical industry, "C&K Witco will strike an appropriate balance in our uses of cash," said Calarco. "Management is convinced that paying down debt and investing for growth are effective vehicles for increasing shareholder value." APPROVALS AND TIMING The merger is conditioned, among other things, upon the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the approvals of both companies' shareholders. The companies anticipate that the merger will be completed in the third quarter of 1999. Crompton & Knowles and Witco have entered into certain reciprocal option agreements, each granting to the other company the right to acquire, under certain circumstances, up to 19.9% of its outstanding common shares at a pre-announcement closing price per common share. The options would become exercisable by, and an additional fee would be paid to, either Crompton & Knowles or Witco in connection with the termination of the merger agreement, under certain circumstances. Crompton & Knowles Corporation and Witco Corporation are both global manufacturers of specialty chemicals providing high-value products for a wide range of customers. More... This press release contains statements that are not historical facts and are forward looking. Forward looking statements include, among others, statements relating to anticipated product plans, profitability, cost savings, revenue growth and strategic plans and goals. Such statements involve risks and uncertainties that could cause the company's results to differ materially from what is projected, including without limitation risks and uncertainties relating to: higher raw material costs or other expenses, increased competitive pricing pressure or other increases in competition, fluctuation in demand for the company's products, currency fluctuations and the outcome of pending or future litigation and claims including those related to environmental laws and regulations. In addition, the company's forward looking statements could be affected by general industry and market conditions and growth rates, general domestic and international economic conditions. Further information can be found in the companies' filings with the Securities and Exchange Commission. # # # CONTACTS FOR CROMPTON & KNOWLES: CONTACTS FOR WITCO: Robert Harwood MEDIA: Patricia McLean (203) 353-5437 (203) 552-2273 Gene Donati INVESTORS: Robert Bennett (Clark & Weinstock) (203) 552-2282 (212) 953-2550 EX-99.2 3 ANALYST PRESENTATION EXHIBIT 99.2 [Crompton & Knowles Logo] Witco June 1, 1999 [Crompton & Knowles Logo] Witco E. GARY COOK Chairman, President & Chief Executive Officer Witco The Specialty Chemicals Model Characteristics Benefiting Customers & Shareholders - -- Clear objectives & positioning - -- Scale & global reach - -- Market leadership - -- Technology leadership & innovation - -- Customer focus [Crompton & Knowles Logo] Witco The Benefits of Scale [bar graph showing Market Cap from less than 1.2 B and greater than 5B, and and P/E Ratio between 0 and 20] Source: CMR 5/10/99 -- Customer & supplier relationships -- Market liquidity -- Latitude in portfolio management -- Lower cost of capital -- Recruiting and retaining top talent [Crompton & Knowles Logo] Witco C&K Witco Management & Board Vincent A. Calarco President & Chief Executive Officer E. Gary Cook Chairman, Board of Directors 14 Member 7 members from C&K Board of Directors 7 members from Witco [Crompton & Knowles Logo] Witco [Crompton & Knowles Logo] Witco VINCENT A. CALARCO Chairman, President & Chief Executive Officer Crompton & Knowles Transaction Overview Enterprise Value $3.9 Billion Structure Merger of Equals Tax-free Exchange of Stock Purchase Accounting Share Exchange Ratio C&K 1 to 1 Witco 0.9242 to 1 Closing Target Third Quarter 1999 Ownership 55% by C&K Shareholders 45% by Witco Shareholders [Crompton & Knowles Logo] Witco Merger Benefits STOCK APPRECIATION POTENTIAL - -- Enhanced top-line growth - -- Immediately cash flow accretive - -- Cost savings - -- Strategic flexibility through scale - -- Reinforces world-class technology - -- Greater stock liquidity [Crompton & Knowles Logo] Witco Process to Completion Hart-Scott-Rodino File and Mail Proxy Shareholder Meetings & Vote THIRD QUARTER CLOSING [Crompton & Knowles Logo] Witco Crompton & Knowles [Pie Chart] Crop Protection 17% Colors 14% Polymers 19% Polymer Processing Equipment 22% Performance Chemicals 28% 1998 Sales $1.58 Billion* * Excludes: Ingredient Technology (sold 1/99) Joint-Venture of Gustafson Seed Treatment Joint-Venture of Paracril Nitrile Rubber Leading Market Positions EPDM #1 in N. America Castable Urethanes #1 Worldwide Rubber Chemicals #3 Worldwide Seed Fungicides #1 Worldwide Seed Treatment #1 in N. America Miticides #1 Worldwide Lubricant Additives #1 in Key Prod. Plastic Additives #1 in Key Prod. Polymerization Inhibitors #1 in Key Prod. Poly Extrusion Systems #1 Worldwide [Crompton & Knowles Logo] Witco Witco [Pie Chart] Performance Chemicals 42% Organo-silicones 27% Polymer Chemicals 31% 1998 Sales $1.58 Billion* *Excludes Oleochemicals and Derivatives Leading Market Positions Polymer Stabilizers #1 in N. America Lubricants #1 in N. America Aluminum Alkyl Catalysts #2 Worldwide Silanes #1 Worldwide Silicone Surf. & Catalysts #1 Worldwide Refined Products #2 Worldwide Agrigultural Surfactants #1 in N. America Oilfield Emulsions #2 in N. America Urethane Chemicals #1 in Key Prod. Metal Working Sulfonates #1 Worldwide [Crompton & Knowles Logo] Witco Introducing C & K Witco -- A leading $3.2 billion global specialty chemical company -- Business groupings: -- Additives -- Specialty chemicals -- Polymers & processing equipment -- International sales - 44% [Crompton & Knowles Logo] Witco C&K Witco Products Witco C&K [pie chart with showing breakdown of the following catergories but no numerical information] Polymers and Processing Equipment Specialty Chemicals Additives [Crompton & Knowles Logo] Witco C&K / Witco Overlapping End Use Markets [pie chart showing breadown of the following catergories but no numerical information] Market Overlap = 84% Rubber & Polymer Processing Elastomers & Urethanes Agriculture Lubricants Textiles Other [Crompton & Knowles Logo] Witco Expands International Presence International Sales - $1.4 Billion [pie chart showing the breadown of the following catergories but no numerical information] Europe North America Latin America Asia [Crompton & Knowles Logo] Witco Key Drivers for Top-Line Growth -- Value-added products with leadership positions -- Customer base overlap -- Enhanced customer offerings -- Leverage regional presence [Crompton & Knowles Logo] Witco Customer First Culture -- Small business values -- Entrepreneurial approach [Crompton & Knowles Logo] Witco Financial Goals -- EPS growth - 10% per year -- Credit rating - investment grade -- Free cash flow $150-$200 million in addition to divestiture proceeds -- Debt reduction -- Acquisitions -- Share repurchase -- Dividend consistent with peer group [Crompton & Knowles Logo] Witco Cost Savings Target: $60 Million [Crompton & Knowles Logo] Witco Financial Impact -- Additive to EPS in 2001 -- Assumes $1.60 in 1999, $1.75 in 2000 and $1.90 for 2001 for C&K stand alone -- $60 million of pre-tax savings -- Immediately accretive to cash flow per share -- Single digit cash flow accretive in 1999 -- Double digit cash flow accretive in 2000 [Crompton & Knowles Logo] Witco Aggressive Asset Management C&K - -- Operating cash flow of $385 million since 1996 Uniroyal merger -- Reduced debt by $400 million or 38% - -- Increased value of business portfolio with joint ventures and divestitures - -- 25% compounded annual return to shareholders over past 15 years Witco - -- Third and final year of restructuring -- $678 million in capital improvements -- 12 plants closed -- Employment reduced by 1535 -- Working capital reduced by 25% - -- Increased value of business portfolio with joint ventures, swaps, and divestitures [Crompton & Knowles Logo] Witco December 31, 1998 Pro Forma Balance Sheet Items Combined Total Debt $1.6 billion Total Equity $1.1 billion Total Debt/Total Market Cap 42% Total Debt/EBITDA 3.1 EBITDA/Interest Expense 4.2 [Crompton & Knowles Logo] Witco Winning Combination Creates A Leading Global Specialty Chemical Company With Strong Global Market Positions in Key Markets Led by A Winning Management Team [Crompton & Knowles Logo] Witco [Crompton & Knowles Logo] Witco [Crompton & Knowles Logo] Witco [Crompton & Knowles Logo] Witco CROMPTON & KNOWLES Witco [Crompton & Knowles Logo] Witco CROMPTON & KNOWLES Witco [Crompton & Knowles Logo] Witco -----END PRIVACY-ENHANCED MESSAGE-----