As filed with the Securities and Exchange Commission on July 30, 1999
UNITED STATES 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):
July 27, 1999
COOPER TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-4329 34-4297750
(State or other (Commission (I.R.S. employer
jurisdiction of File Number) identification no.)
incorporation)
Lima and Western Avenues, Findlay, Ohio 45840
(Address of principal executive offices)
(Zip Code)
(419) 423-1321
(Registrant's telephone number, including area code)
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Item 5. Other Events.
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On July 27, 1999, Cooper Tire & Rubber Company ("Cooper") announced that it
signed a definitive merger agreement to acquire The Standard Products Company
("Standard Products"). Standard Products' outstanding shares will be valued
at $36.50 per share or approximately $584.4 million. In addition, Cooper will
assume Standard Products' outstanding debt which was approximately $173
million at June 30, 1999.
Under the merger agreement, Standard Products' stock will be exchanged for
$36.50 in cash or the equivalent value of Cooper stock, subject to a collar
arrangement. The exchange ratio will be determined based on the average
closing price of Cooper stock for the twenty trading days ending five days
prior to the merger's closing date. Under the formula, if the price of Cooper
stock rises, the exchange ratio will be reduced, but not below 1.472 Cooper
shares for each Standard Products share. Further, if the price of Cooper
stock falls, the exchange ratio will increase, but not above 1.825 Cooper
shares for each Standard Products share.
The merger agreement calls for holders of approximately 45% of Standard
Products' outstanding shares to receive stock and 55% to receive cash,
resulting in a tax-free transaction to those Standard Products' shareholders
who receive Cooper stock. If, however, the mean of the high and low price for
Cooper shares on the closing date falls below $18, the entire purchase price
will be paid in cash at $36.50 per Standard Products share.
Cooper has tentatively identified approximately $24 million of synergies that
it expects will arise from the transaction. The anticipated synergies are
currently expected to be achieved as follows:
Year Amount
---- -----------
2000 $ 9 million
2001 12 million
2002 2 million
2003 1 million
----------
Total $24 million
It is also estimated that the synergies can be attributed to savings and
incremental income achieved in the following areas in the following
approximate amounts:
Amount
------------
General & administrative $ 8.2 million
Manufacturing/R&D 8.1 million
Purchasing 4.7 million
Incremental sales volume and other 3.0 million
------------
Total $24.0 million
Additionally, approximately $6 million to $10 million of other synergies have
been targeted. And, another $5 million to $6 million of unexplored synergies
are believed to be available. These additional synergies may not be fully
realized, or realized at all, and their timing is undetermined.
The above estimates are based on Cooper's current assessment of the results
expected from the transaction, but may differ based on a number of factors as
discussed below.
(continued)
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Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 regarding expectations for
future financial performance, including with respect to the proposed merger,
which involve uncertainty and risk. It is possible Cooper's future financial
performance and the results of the proposed merger may differ from
expectations due to a variety of factors including, but not limited to:
changes in economic and business conditions in the world, increased
competitive activity, achieving sales levels to fulfill revenue expectations,
consolidation among its competitors and customers, technology advancements,
unexpected costs and charges, fluctuations in raw material and energy prices,
changes in interest and foreign exchange rates, regulatory and other
approvals, the cyclical nature of the automotive industry, risks associated
with integrating the operations of Standard Products and the failure to
achieve or delay in achieving synergies or savings anticipated in the merger,
failure to satisfy the closing conditions of the pending merger and the
failure to complete the merger, and other unanticipated events and conditions.
It is not possible to foresee or identify such factors. Any forward-looking
statements in this report are based on certain assumptions and analysis made
by Cooper in light of its experience and perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate in the circumstances. Prospective investors are cautioned
that any such statements are not a guarantee of future performance and actual
results or developments may differ materially from those projected. Cooper
makes no commitment to update any forward-looking statement included herein,
or to disclose any facts, events or circumstances that may affect the accuracy
of any forward-looking statement.
Item 7. Financial Statements and Exhibits.
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(c) The following exhibit is filed as part of this report:
Cooper's press release dated July 27, 1999 announcing its acquisition
of Standard Products
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, Cooper
has duly caused this Current Report on Form 8-K to be signed on its behalf by
the undersigned thereunto duly authorized.
COOPER TIRE & RUBBER COMPANY
By: /S/ Eileen B. White
----------------------
Corporate Controller
(Principal Accounting Officer)
July 30, 1999
- -------------
(Date)
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INDEX TO EXHIBITS
DESCRIPTION
Item 7.(c)
Cooper's press release dated July 27, 1999 announcing its acquisition
of Standard Products
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COMPANY CONTACT: PHILIP G. WEAVER FOR IMMEDIATE RELEASE
419-424-4320 JULY 27, 1999
COOPER TIRE & RUBBER COMPANY TO ACQUIRE
THE STANDARD PRODUCTS COMPANY
FINDLAY, OHIO, JULY 27, 1999 - COOPER TIRE & RUBBER COMPANY (NYSE:CTB) today
announced that it has signed a definitive merger agreement to acquire The
Standard Products Company (NYSE: SPD). The combination will make Cooper North
America's largest manufacturer of automotive sealing systems, a core product
in its engineered products group, and will also significantly expand the
company's global presence, a key element in its strategic growth plan. On a
combined basis, the company expects to generate approximately $3.2 billion in
annual revenues in its first full year of operation, of which approximately
half will come from tire operations and half from engineered products.
Management expects to realize significant synergies and anticipates the
transaction will be accretive to earnings within the year 2000 and fully
accretive in 2001 and beyond.
Standard Products is one of the world's leading suppliers of sealing, plastic
trim and vibration control systems for the worldwide automotive original
equipment industry. This automotive business accounted for approximately 70%
of Standard Products' total 1998 revenues of $1.1 billion. In addition,
Standard Products' Holm Industries Inc. is the largest supplier of seals for
home and commercial refrigerators in North America, and Oliver Rubber Company
is a leading manufacturer of tread rubber and equipment for the truck retread
industry.
Basic Terms and Conditions
The Standard Products outstanding shares will be valued at $36.50 per share or
approximately $584.4 million. In addition, Cooper will assume Standard
Products' outstanding debt which was approximately $173 million at June 30,
1999. Initially, the purchase will be funded through an expansion of Cooper's
bank facilities and commercial paper program. Following the close of the
transaction, Cooper anticipates refinancing a portion of this debt in the
public term markets.
Under the agreement, Standard Products' stock will be exchanged for $36.50 in
cash or the equivalent value of Cooper stock, subject to a collar arrangement.
The exchange ratio will be determined based on the average closing price of
Cooper stock for the 20 trading days ending 5 days prior to the transaction's
closing date. Under the formula, if the price of Cooper stock rises, the
exchange ratio will be reduced, but not below 1.472 Cooper shares for each
Standard Products share. Further, if the price of Cooper stock falls, the
exchange ratio will increase, but not above 1.825 Cooper shares for each
Standard Products share.
The agreement calls for holders of approximately 45% of Standard Products'
outstanding shares to receive stock and 55% to receive cash, resulting in a
tax-free transaction to those Standard Products' shareholders who receive
Cooper stock. If, however, the average of the high and low price of Cooper
shares on the closing date falls below $18, the entire purchase price will be
paid in cash at $36.50 per Standard Products share.
Benefits of the Combined Company
"This acquisition is a tremendous opportunity and exactly what we planned with
our Cooper 21 strategy which we have been formulating over the past two
years," commented Patrick W. Rooney, Cooper Chairman and CEO. "Our Cooper 21
plan calls for our company to be a global player in both our tire and our
engineered products operations," said Thomas A Dattilo, Cooper's President and
(continued)
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COO. "The combined company will create the market leader in North and South
America for automotive sealing systems, as well as one of the leading
manufacturers in Europe. Standard Products' global footprint of 38 plants
and five technical centers in nine countries represents the very best
opportunity to achieve this objective while maximizing future returns to
shareholders, and also benefiting our customers worldwide," Dattilo concluded.
Standard Products Vice Chairman and CEO, Ronald L. Roudebush, who will be
joining Cooper's board of directors, echoed Cooper management's comments by
saying, "With our leading market positions, breadth of customers and global
footprint, in addition to strong technological capabilities, this is a match
which should be positive for customers, employees and stockholders. Together,
we will be a stronger competitor in the automotive arena where scale, size and
technical depth are increasingly critical for success."
Other Factors
The transaction has been approved by the board of directors of each company,
and is subject to the satisfaction of customary closing conditions, including
requirements of the Hart-Scott-Rodino Act and approval of the Standard
Products shareholders. Two of the largest individual shareholders of Standard
Products stock have executed agreements to vote their shares in favor of the
merger. The proration provisions of the agreement will assure the
approximately 45/55 stock/cash ratio. Completion of the purchase is expected
to take place during the fourth quarter.
Company Descriptions
The Standard Products Company, with 38 plants in nine countries, manufactures
sealing, trim and vibration control systems for the automotive original
equipment industry in North America, Europe and South America. Subsidiary
companies produce rubber and plastic sealing components for the refrigeration
industry in North America and tread rubber and equipment for the truck tire
retreading industry. Standard Products, with corporate headquarters in
Dearborn, Michigan, employs more than 10,000 worldwide. For more information
on Standard Products, visit their web site at: www.standardproducts.com.
Founded in 1914, Cooper Tire & Rubber Company is headquartered in Findlay,
Ohio and specializes in the manufacture and marketing of rubber products for
consumers. Products include automobile and truck tires, inner tubes,
vibration control products, hoses and hose assemblies and automotive sealing
systems. Cooper, with 10,700 employees, is the seventh largest tire
manufacturer worldwide and is a recognized leader in the replacement tire
market as a low-cost, high-quality producer. As an original equipment
supplier of engineered products to vehicle manufacturers, Cooper's expertise
in design, quality, delivery and technological innovation is well respected
throughout the world. For more information, visit the Cooper web site at:
www.coopertire.com.
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 regarding expectations for
future financial performance, including with respect to the proposed merger,
which involve uncertainty and risk. It is possible the company's future
financial performance and the results of the proposed merger may differ from
expectations due to a variety of factors including, but not limited to:
changes in economic and business conditions in the world, increased
competitive activity, achieving sales levels to fulfill revenue expectations,
consolidation among its competitors and customers, technology advancements,
unexpected costs and charges, fluctuations in raw material and energy prices,
(continued)
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changes in interest and foreign exchange rates, regulatory and other
approvals, the cyclical nature of the automotive industry, risks associated
with integrating the operations of Standard Products and the failure to
achieve synergies or savings anticipated in the merger, failure to satisfy the
closing conditions of the pending merger and the failure to complete the
merger, and other unanticipated events and conditions.
It is not possible to foresee or identify such factors. Any forward-looking
statements in this report are based on certain assumptions and analysis made
by the company in light of its experience and perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate in the circumstances. Prospective investors are cautioned
that any such statements are not a guarantee of future performance and actual
results or developments may differ materially from those projected. The
company makes no commitment to update any forward-looking statement included
herein, or to disclose any facts, events or circumstances that may affect the
accuracy of any forward-looking statement.
This release is neither an offer to sell nor a solicitation of an offer to buy
Cooper Tire & Rubber Company securities, nor a solicitation of a proxy. Any
such offer or solicitation will only be made in compliance with applicable
securities laws.
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