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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE TO/A
(RULE 14d-100)
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1) of
the Securities Exchange Act of 1934
(Amendment No. 1)
SODEXHO MARRIOTT SERVICES, INC.
(Name of Subject Company)
SMS ACQUISITION CORP.
SODEXHO ALLIANCE, S.A.
(Names of Filing Persons-Offerors)
Common Stock, par value $1.00 per share
Rights to Purchase Series A Junior Participating Preferred Stock
(Title of Class of Securities)
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833793 10 2
(CUSIP Number of Class of Securities)
Bernard Carton
Sodexho Alliance, S.A.
3, avenue Newton
78180 Montigny-le-Bretonneux, France
Telephone: 011-331-3085-7304
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Filing Persons)
Copies to:
Paul R. Kingsley, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[X] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer. [ ]
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This Amendment No. 1 amends and supplements the Tender Offer Statement and
Schedule 13E-3 Transaction Statement on Schedule TO filed with the Securities
and Exchange Commission on May 17, 2001 (the "Schedule TO") by Sodexho Alliance,
S.A., a French corporation ("Sodexho"), and SMS Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Sodexho ("Purchaser"). The Schedule
TO relates to the offer by Purchaser to purchase all outstanding shares of
Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a
Delaware corporation ("SMS"), together with the associated preferred stock
purchase rights issued pursuant to the Rights Agreement dated as of October 8,
1993, as amended, between SMS and The Bank of New York, as Rights Agent
(collectively, the "Shares"), other than Shares already owned by Sodexho and its
subsidiaries, at $32.00 per Share net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 17, 2001
(the "Offer to Purchase") and in the related Letter of Transmittal, copies of
which are attached to the Schedule TO as Exhibits (a)(1) and (a)(2),
respectively (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Capitalized terms used and not defined
herein shall have the meanings ascribed to such terms in the Schedule TO.
Schedule TO Items 1 through 9, 11, 12 and 13.
(1) The first paragraph appearing in the Offer to Purchase under "Special
Factors-Background of the Offer-Recent Contacts and Negotiations" is amended and
restated in its entirety to read as follows:
"In April 2000, Sodexho management began to consider various
alternatives with respect to its investment in SMS. In October 2000,
Sodexho retained Goldman Sachs International ("Goldman Sachs") as its
financial advisor in connection with the consideration of these
alternatives. Throughout October, November and December of 2000,
Sodexho, together with representatives of Goldman Sachs and Davis Polk
& Wardwell ("Davis Polk"), legal counsel to Sodexho, evaluated several
options. One option was to make an offer for all publicly-held Shares,
with the goal of acquiring 100% of SMS. Sodexho management preferred
this option because it gave Sodexho full access to SMS's cash flow and
simplified the Sodexho group structure. Another option was to seek to
appoint a majority of the SMS Board through Sodexho's voting power as
stockholder, while either maintaining its existing stake in SMS or, if
necessary, increasing it above 50% through public market or privately
negotiated transactions. Sodexho management ultimately rejected this
option because Sodexho was satisfied with SMS's management and
strategy, and thus did not need control of the SMS Board in order to
effect a change in strategy, and acquisition of a simple majority of
the SMS Board or the outstanding Shares would not accomplish the
financial results and structural simplification of a 100% bid. Sodexho
did not consider selling its stake in SMS because maintaining and
enhancing a strong presence in the United States is an important part
of Sodexho's global strategy. In January 2001, Sodexho management
decided to recommend to the Sodexho board of directors that Sodexho
should pursue an offer for all Shares held by the public. Sodexho's
reasons for pursuing an offer are discussed under "Special
Factors-Purpose and Structure of the Offer and the Merger; Reasons of
Sodexho for the Offer and the Merger"."
(2) The twenty-sixth paragraph (beginning with "The Special Committee held
a telephonic meeting on the evening of April 25, 2001...") appearing in the
Offer to Purchase under "Special Factors-Background of the Offer-Recent Contacts
and Negotiations" is amended by adding the following after the second sentence
thereof:
"Although it did not discuss any specific analysis, UBS Warburg
indicated that, subject to the completion of its financial analysis,
it should be able to give the Special Committee its opinion that
$32.00 per Share would be fair to the SMS stockholders (other than
Sodexho and its affiliates) from a financial point of view."
(3) The twenty-ninth paragraph (beginning with "On April 29 and 30,
2001...") appearing in the Offer to Purchase under "Special Factors-Background
of the Offer-Recent Contacts and Negotiations" is amended and restated in its
entirety to read as follows:
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"On April 29 and 30, 2001, UBS Warburg provided the Special
Committee with copies of the written summary dated May 1, 2001 of its
financial analysis of Sodexho's proposal. This summary is discussed
under "Special Factors--Opinion of Financial Advisor."
(4) The following clauses appearing in the Offer to Purchase under "Special
Factors-Recommendation of the Special Committee and the SMS Board; Fairness of
the Offer and the Merger-Recommendation of the Special Committee and the SMS
Board" are amended as follows:
a. The first clause number (1) is replaced with the following:
"(1) determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to,
and in the best interests of, SMS and fair to, and in the best
interests of, SMS's unaffiliated stockholders;"
b. The second clause number (1) is replaced with the following:
"(1) determined that the Merger Agreement and the transactions
contemplated thereby are (i) fair to and in the best interests of
SMS's unaffiliated stockholders and (ii) fair to and in the best
interests of SMS;"
(5) The following factors appearing in the Offer to Purchase under "Special
Factors-Recommendation of the Special Committee and the SMS Board; Fairness of
the Offer and the Merger-Fairness of the Offer and the Merger-The Special
Committee" are amended as follows:
a. The following is added to the end of factor 1:
"The Special Committee believed that SMS's business was not expected
to grow at a level substantially in excess of historical levels of
growth and that a growth level below that of historical levels was
possible. The Special Committee acknowledged the recent loss of some
accounts in the education division, the slow growth in the first half
of fiscal 2001 in the corporate division, the potential unfavorable
short-term effect on earnings of the recent award of two military
contracts and the potential unfavorable effect in fiscal 2002 of the
renegotiation of the royalty payable to Sodexho for the use of the
Sodexho name."
b. The second sentence of factor 3 is replaced with the following:
"The Special Committee took into account Sodexho's statement in its
letter of January 24, 2001 that it has no interest in, and would not
consider, a sale of any portion of its ownership interest in SMS as
part of any alternative to its proposal. The Special Committee's
advisors confirmed this position in subsequent discussions with
Sodexho's advisors. The Special Committee also was aware that
Sodexho's intention to offer $27.00 per Share for the Shares it did
not already own had been made public in late January 2001 and that no
third party had indicated an interest in acquiring SMS or the Shares
not owned by Sodexho or its affiliates."
c. The following is added to the end of factor 6:
"The Special Committee considered that the limited number of
conditions to the Offer and the Merger, and the nature of those
conditions, make the consummation of the transactions more likely."
d. The following is added to the end of factor 7:
"In an appraisal action, a dissenting stockholder would have an
opportunity to attempt to demonstrate that the fair value of each
Share is greater than the price per Share being offered in the
transactions."
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(6) The last sentence of the first paragraph of factor 2 appearing in the
Offer to Purchase under "Special Factors-Recommendation of the Special Committee
and the SMS Board; Fairness of the Offer and the Merger-Fairness of the Offer
and the Merger-The Special Committee" is amended and restated in its entirety to
read as follows:
"The Special Committee discussed with its financial advisors whether,
in comparing the premiums represented by the Offer Price with premiums
paid in comparable transactions, it would be more appropriate to
compare the proposed transaction with transactions in which a
controlling stockholder acquires from the public the remaining
interest in a company rather than transactions in which a buyer
acquires a controlling interest in a company. The Special Committee
believed that, due to Sodexho's approximately 47% ownership of SMS's
common stock and the expiration on March 27, 2001 of the restriction
on Sodexho's ability to acquire a 50% or greater ownership interest in
SMS, Sodexho's right to appoint three of SMS's eight directors, and
Sodexho's statement in its letter of January 24, 2001 that it would
not consider a sale of its interest in SMS, it might be more
appropriate to compare the proposed transaction with transactions in
which a controlling stockholder acquires from the public the remaining
interest in a company."
(7) Factor 8 appearing in the Offer to Purchase under "Special
Factors-Recommendation of the Special Committee and the SMS Board; Fairness of
the Offer and the Merger-Fairness of the Offer and the Merger-The Special
Committee" is amended and restated in its entirety to read as follows:
"8. Possible Conflicts of Interest. The Special Committee also
took into account the possible conflicts of interest of certain
directors and members of management of SMS discussed below under
"Special Factors-Interests of Certain Persons in the Offer and the
Merger." In that regard, the Special Committee did not consider the
views of SMS management with respect to the treatment in the proposed
transaction of stock options and other compensation issues until after
the $32.00 per Share price had been agreed upon. In addition, the
Special Committee and its representatives did not discuss the
substance of the negotiations with the other directors or SMS
management until the Special Committee's final report to the SMS Board
on May 1, 2001."
(8) The following sentence is inserted as a new paragraph after the first
clause (3) appearing in the Offer to Purchase under "Special
Factors-Recommendation of the Special Committee and the SMS Board; Fairness of
the Offer and the Merger-Fairness of the Offer and the Merger-The SMS Board":
"The SMS Board did not independently analyze each of the factors
referred to in clause (2) above. Instead, the SMS Board expressly
adopted the analysis of the Special Committee and its conclusions."
(9) The following paragraph is inserted before the penultimate
paragraph appearing in the Offer to Purchase under "Special
Factors-Recommendation of the Special Committee and the SMS Board; Fairness of
the Offer and the Merger-Fairness of the Offer and the Merger-The SMS Board":
"The Special Committee did not consider the net book value of the
Shares in determining whether to accept Sodexho's offer of $32.00 per
Share. The Special Committee noted that, due to SMS's accumulated
deficit, the Shares have a negative net book value. The Special
Committee did evaluate SMS as a going concern through various analyses
performed by UBS Warburg, including in particular the discounted cash
flow analysis prepared by UBS Warburg in connection with its fairness
opinion, which takes into account financial forecasts, SMS's weighted
average cost of capital and other qualitative factors. See "Special
Factors-Opinion of Financial Advisor- Discounted Cash Flow Analysis."
(10) The last paragraph appearing in the Offer to Purchase under "Special
Factors-Opinion of Financial Advisor-Premiums Paid Analysis" is amended and
restated in its entirety to read as follows:
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"UBS Warburg also observed that purchase price per share premiums
were generally lower in transactions in which the target was acquired
in a minority squeeze-out. UBS Warburg did not, however, separately
analyze purchase price per share premiums in minority squeeze-out
transactions."
(11) The fourth sentence of the first paragraph appearing in the Offer to
Purchase under "Special Factors-Opinion of Financial Advisor-Discounted Cash
Flow Analysis" is amended and restated in its entirety to read as follows:
"UBS Warburg noted that a substantial portion of SMS's debt is
guaranteed by Sodexho, which likely reduces SMS's weighted average
cost of capital."
(12) The information appearing in the Offer to Purchase under "Special
Factors-Position of Sodexho and the Purchaser Regarding Fairness of the Offer
and the Merger" is amended and restated in its entirety to read as follows:
"Sodexho and the Purchaser believe that the Offer and the Merger
are fair to and in the best interests of SMS's unaffiliated
stockholders. Sodexho and the Purchaser base their belief on the
following factors:
o the $32.00 per Share offer price represents a premium of
28.6% over the closing price per Share of $24.875 on January
24, 2001, the last trading day before public announcement of
Sodexho's initial proposal to SMS, and a premium of 44% and
71% over the average closing prices per Share for the 30-day
and 180-day periods prior to January 24, 2001, respectively;
o the Offer and the Merger will each provide consideration to
the stockholders entirely in cash;
o the Offer and the Merger and the other terms and conditions
of the Merger Agreement were the result of extensive
negotiations between the Special Committee and Sodexho and
their respective financial and legal advisors;
o the Special Committee and the SMS Board concluded that each
of the Offer and the Merger is fair to and in the best
interests of SMS's unaffiliated stockholders, which
conclusions Sodexho and the Purchaser each expressly adopts;
o the Special Committee received an opinion from UBS Warburg
that the $32.00 per Share in cash to be received by the
holders of Shares (other than Sodexho and its affiliates) in
the Offer and the Merger is fair from a financial point of
view to such holders; and
o the financial performance of SMS.
Sodexho and the Purchaser did not find it practicable to assign,
nor did they assign, relative weights to the individual factors
considered in reaching their conclusions as to fairness. Sodexho and
the Purchaser did not deem net book value to be a relevant indicator
of the value of Shares because the Shares have a negative book value
due to SMS's accumulated deficit. In addition, Sodexho and the
Purchaser did not deem liquidation value to be a relevant indicator of
the value of Shares because neither SMS nor Sodexho considered
liquidation of SMS to be a viable course of action in order to realize
the value of the SMS business. Sodexho and the Purchaser, together
with Goldman Sachs, did evaluate SMS as a going concern using a
variety of customary methodologies as summarized under "Special
Factors-Goldman Sachs Reports."
Although Goldman Sachs generally acted as financial advisor to
Sodexho in this transaction and, in particular, advised Sodexho on
negotiating strategies and assisted Sodexho in its negotiations with
the Special Committee and its financial advisor, UBS Warburg, Goldman
Sachs was not asked to and did not deliver an opinion as to the
fairness from a financial point of view to SMS's stockholders or any
other person of the $32.00 per Share to be received by the
stockholders of SMS.
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Sodexho and the Purchaser believe that the Offer and the Merger
are procedurally fair to SMS's unaffiliated stockholders based on the
following factors:
o the fact that the Special Committee consisted of independent
directors appointed to represent the interests of SMS's
stockholders (other than Sodexho and its affiliates);
o the fact that the Special Committee retained and was advised
by its own independent legal counsel;
o the fact that the Special Committee retained and was advised
by UBS Warburg, as its independent financial advisor, to
assist it in evaluating a potential transaction with
Sodexho;
o the nature of the deliberations pursuant to which the
Special Committee evaluated the Offer and the Merger and the
alternatives thereto; and
o the fact that the Offer Price resulted from extensive
bargaining between representatives of the Special Committee,
on the one hand, and representatives of Sodexho, on the
other."
(13) The section "Special Factors-Purpose and Structure of the Offer and
the Merger; Reasons of Sodexho for the Offer and the Merger" of the Offer to
Purchase is amended by adding the following at the end thereof:
"The Purchaser is a special vehicle formed by Sodexho for the
sole purpose of facilitating Sodexho's acquisition of Shares in the
Offer and the Merger. The Purchaser's purpose and reasons for the
Offer and the Merger are thus the same as Sodexho's."
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Signatures
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
SODEXHO ALLIANCE, S.A.
By: /s/ Bernard Carton
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Name: Bernard Carton
Title: Senior Vice President and Chief
Financial Officer
Date: June 5, 2001
SMS ACQUISITION CORP.
By: /s/ Denis Robin
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Name: Denis Robin
Title: President
Date: June 5, 2001
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