FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 1994
THE VALSPAR CORPORATION
Delaware 1-3011 36-2443580
(State or other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
1101 Third Street South, Minneapolis, Minnesota 55415
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612)332-7371
Not applicable
(Former name or former address, if changed, since last report)
Item 2. Acquisition or Disposition of Assets.
On February 18, 1994, McWhorter, Inc., a California corporation and
a wholly-owned subsidiary of the Company, acquired substantially all of the
assets (the "Acquisition") of the Resin Products Division (the "Resin
Products Division") of Cargill, Incorporated, a Delaware corporation
("Cargill"). Immediately after the Acquisition, McWhorter, Inc. was merged
into McWhorter Technologies, Inc., a Delaware corporation ("McWhorter"),
with the surviving Delaware corporation remaining a wholly-owned subsidiary
of the Company. Pursuant to a Consent Order dated September 30, 1993 (the
"Consent Order") among the Company, McWhorter and the Federal Trade
Commission (the "FTC"), the Company will effect a distribution (the
"Distribution") of 100% of the outstanding shares of the Common Stock of
McWhorter to the holders of Common Stock of the Company on a date (the
"Distribution Date") expected to be in late April or May, 1994. Each
Valspar stockholder will receive one (1) share of McWhorter Common Stock,
with associated preferred stock purchase rights, for every two (2) shares of
Valspar Common Stock held on the record date, April 15, 1994. It is
expected that application will be made to list the McWhorter Common Stock on
the New York Stock Exchange.
In the Acquisition, McWhorter acquired from Cargill, for
approximately $76 million in cash, substantially all of the assets,
consisting primarily of inventory and fixed assets but excluding accounts
receivable, of the Resin Products Division (the "Acquisition"). Prior to
the Acquisition, the Resin Products Division was the second largest solvent-
based surface coatings resin producer in the United States, while McWhorter
was the third largest. The Resin Products Division generated in excess of
$200 million of sales during Cargill's most recent fiscal year ended May 31,
1993 and approximately $94 million during the five months ended October 31,
1993. McWhorter acquired, as part of the Acquisition, five resin
manufacturing plants located in Carpentersville, Illinois; Chicago Heights,
Illinois; Forest Park, Georgia; Ennis, Texas; and Lynwood, California. The
Sale and Purchase of Assets Agreement dated as of May 19, 1993, as
subsequently amended (the "Purchase Agreement") contains extensive
provisions dealing with the assumption by McWhorter or retention by Cargill
of environmental obligations in connection with the assets acquired from the
Resin Products Division. The Purchase Agreement also provides that, for
matters other than those directly related to environmental laws, McWhorter
and Cargill will each indemnify the other for any damages resulting from the
breach of any of its representations and warranties and for any claims
asserted that relate to the period of time during which such party holds or
has held the Resin Products Division's assets, subject to certain
limitations.
The general terms and conditions of the proposed Distribution are
set forth in a Distribution Agreement dated as of February 18, 1994 (the
"Distribution Agreement") and related agreements entered into between
Valspar and McWhorter. The Distribution Agreement provides, among other
things, for the transfer on the Distribution Date to Valspar of all assets
of McWhorter located at facilities in Los Angeles, California; Rockford,
Illinois; Kankakee, Illinois; and Garland, Texas (the "Conveyed Assets") and
the assumption by Valspar of substantially all related liabilities.
McWhorter has agreed to indemnify Valspar and each of Valspar's directors,
officers, employees, agents and affiliates with respect to liabilities
related to the operation of the properties retained by McWhorter and Valspar
has agreed to indemnify McWhorter and each of McWhorter's directors,
officers, employees, agents and affiliates with respect to liabilities
related to the Conveyed Assets and certain retained liabilities.
The Consent Order contains restrictions on the relationship between
Valspar and McWhorter following the Distribution. Thus, except for certain
matters provided for in the Distribution Agreement and other agreements
designed to provide an orderly transition of Valspar and McWhorter to the
status of two separate independent companies, it is expected that Valspar
and McWhorter will cease to have any material contractual or other material
relationship with each other following the Distribution. Such agreements
relate to matters including the cross-licensing of certain technology, the
joint defense of certain environmental matters, certain tolling
arrangements, a raw materials purchasing cooperative, a tax sharing agreement
and certain property leases.
The $76 million cash purchase price in the Acquisition and the
initial operating capital to be available to McWhorter following the
Distribution were derived from payment of an intercompany
receivable due from Valspar and bank financing. The receivable related to
previous intercompany transactions, principally the Company's practice of
periodically sweeping McWhorter's cash surpluses for consolidated cash
management purposes. Valspar paid cash to McWhorter in the full amount of
the $44 million receivable immediately prior to the Acquisition, and
McWhorter used the proceeds of such payment as purchase price consideration
for the Acquisition. Also, McWhorter has entered into a revolving credit
agreement with a group of banks led by Wachovia Bank of Georgia, N.A., which
provides a $60 million unsecured revolving credit facility (the "Credit
Facility") which was used to finance approximately $31 million of the
purchase price paid in the Acquisition. The balance of the Credit Facility
is available to finance the working capital needs of McWhorter.
Prior to the Distribution, each holder of Valspar Common Stock will
receive an Information Statement/Prospectus including additional information
about McWhorter and the Distribution.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
It is currently impracticable to provide the required
financial statements of the acquired business.
Pursuant to paragraph (a)(4) of Item 7 of Form 8-K, such
financial information will be filed by amendment not
later than 60 days after the due date of this report on
Form 8-K.
(b) Pro Forma Financial Information.
It is currently impracticable to provide the
required pro forma financial information.
Pursuant to paragraph (b)(2) of Item 7 of Form 8-K,
such financial information will be filed by
amendment not later than 60 days after the due
date of this report on Form 8-K.
(c) Exhibits.
*10.1 Form of Distribution Agreement
*10.2 Form of Environmental Matters Agreement
*10.3 Form of Technology License Agreement
*10.4 Form of Tax Sharing Agreement
**10.5 Master Tolling Agreement
*10.6 Sale and Purchase of Assets Agreement between
Cargill, Incorporated and McWhorter, Inc.
dated as of May 19, 1993, as subsequently
modified and amended
*10.7 Agreement Containing Consent Order executed as
of September 30, 1993 by the Federal Trade
Commission, The Valspar Corporation and
McWhorter, Inc.
**10.8 $60,000,000 Credit Agreement dated as of
February 1, 1994 among McWhorter, Inc.,
McWhorter Technologies, Inc., the Banks
listed therein and Wachovia Bank of
Georgia, N.A., as Agent
_________________________
* Incorporated by reference to Exhibits 10.1, 10.3, 10.4, 10.5, 10.12
and 10.13, respectively, to the Registration Statement on Form 10
of McWhorter Resins, Inc. (subsequently known as McWhorter
Technologies, Inc.) filed on December 3, 1993.
** Incorporated by reference to Exhibits 10.5 and 10.13, respectively,
to the Registration Statement on Form S-1 of McWhorter
Technologies, Inc. (File No. 33-75726).
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.
THE VALSPAR CORPORATION
By_______________________________________
Printed Name: Rolf Engh
Title: General Counsel and Secretary
Date: March 7, 1994
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