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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /_/
Filed by a Party other than the Registrant /x/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/x/ Soliciting Material Pursuant to
Section 240.14a-11(c)
or Section 240.14a-12
/_/ Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
Wallace Computer Services, Inc.
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(Name of Registrant as Specified In Its Charter)
Moore Corporation Limited
FRDK, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/x/ Fee paid previously with preliminary materials.
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/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MOORE CORPORATION LIMITED
PRESENTATION TO WALLACE SHAREHOLDERS
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SEPTEMBER 1995
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MOORE CORPORATION LIMITED
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THE WALLACE ACQUISITION OFFER
- Moore Corporation's all cash offer for 100% of the outstanding shares of
Wallace Computer Services, Inc. stands at $56 per share. This offer
corresponds to an enterprise valuation of approximately $1.3 billion.
- The offer represents a 27% premium to Wallace's closing stock price
immediately prior to the offer and a 42% premium to Wallace's average share
price for the 30 trading days prior to the offer.
- Moore's offer is fully-financed. Funds are available from Moore's existing
cash balance and the announced $1.1 billion bank financing with The Bank of
Nova Scotia.
- The waiting period under the Hart-Scott-Rodino Act in connection with the
acquisition of Wallace has expired without further inquiry by the U.S.
Department of Justice. Moore can thus proceed with its offer having satisfied
the pre-clearance requirements under the U.S. anti-trust laws.
- Moore has publicly reiterated its willingness to meet with Wallace management
in the hopes of negotiating a friendly transaction. A prolonged proxy contest
could diminish the value of Wallace and prove disruptive to customers and
employees.
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MOORE CORPORATION LIMITED
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HISTORY OF THE ACQUISITION OFFER
- After unsuccessfully attempting to establish a dialogue regarding a business
combination between Moore and Wallace, on July 30, 1995 Moore announced that
it was commencing a tender offer for all outstanding shares of Wallace at $56
per share in cash.
- In late February 1995, Mr. Braun wrote to Mr. Cronin to request a meeting
to discuss the merits of a business combination involving Wallace and
Moore.
- In March 1995, Wallace's Board considered Mr. Braun's letter request.
Thereafter, Mr. Cronin told Mr. Braun that Wallace was not for sale.
- On July 18, 1995 Wallace filed a Form 8-K with the SEC disclosing: i) an
amendment to Wallace's bylaws making a takeover more difficult; and ii) a
lucrative "golden parachute" employment agreement between Wallace and Mr.
Cronin.
- On August 2, 1995, Moore formally commenced its tender offer for Wallace.
- On August 3, 1995, Moore obtained the commitment of The Bank of Nova Scotia
for a $1.1 billion financing facility to finance the Wallace tender offer.
- On August 15, 1995, Wallace announced that its Board had rejected Moore's
offer and stated its belief that its shareholders would be best served by
Wallace remaining as an independent entity. On the same day, Wallace
announced results for its fiscal year ending July 31, 1995, which were
substantially in-line with our expectations.
- On August 17, 1995, the waiting period under the Hart-Scott-Rodino Act
expired without further inquiry by the U.S. Department of Justice.
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MOORE CORPORATION LIMITED
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HISTORY OF THE ACQUISITION OFFER (CONT'D)
- Subsequent to the announcement of the tender offer for Wallace, Moore and its
financial advisors attempted to arrange a meeting to discuss the proposed
transaction with the management of Wallace. The suggested meeting was
rejected by Wallace.
- On September 11, Wallace released a letter to its shareholders strongly
recommending that shareholders not tender their shares.
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MOORE CORPORATION LIMITED
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RECENT WALLACE TRADING HISTORY
WALLACE COMPUTER SERVICES, INC.
PRICE AND VOLUME
FROM 1/3/95 TO 9/19/95
[GRAPH]
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MOORE CORPORATION LIMITED
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DISCUSSION OF MOORE'S ACQUISITION PROPOSAL
- Moore believes that an offer of $56 per share in cash represents a full and
fair price to the shareholders of Wallace Computer Services, Inc.
- As mentioned earlier, Moore's offer represents a premium of 27% over
Wallace's closing price immediately prior to the offer and a 42% premium over
Wallace's average share price for the 30 trading days prior to the offer.
- Immediately prior to Moore's acquisition offer, the public trading multiples
for Wallace were at the high end of the ranges for comparable companies in
the business forms industry (see page 8). (With a latest twelve month
earnings multiple of 20x compared to 14x for the business forms industry
average, Moore Corporation and its financial advisors viewed Wallace's stock
price as fully-valued by the marketplace.)
- Discounted cash flow analysis (DCF) further confirmed our view that on a
stand-alone basis, Wallace was fully-valued in the market immediately prior
to the acquisition offer. (Our DCF analysis assumed that Wallace's earnings
would continue to grow at the analysts' consensus estimate, used the Weighted
Average Cost of Capital for Wallace and applied EBIT exit multiples towards
the high end of comparable companies in the business forms industry.)
- An offer of $56 per share implies multiples of approximately 11x, 16x and 25x
Wallace's EBITDA, EBIT and net income for the latest twelve months ending
April 30, 1995. These multiples compare very favorably to the multiple's of
precedent transactions in the business forms industry (see page 10).
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MOORE CORPORATION LIMITED
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DISCUSSION OF MOORE'S ACQUISITION PROPOSAL (CONT'D)
- Our analysis of the economic alternatives available to Wallace, including a
leveraged buyout and a leveraged recapitalization, using assumptions similar
to those used in the DCF analysis indicated that these options become
unfeasible at a valuation meaningfully higher than the pre-offer share price
of $44.
- Moore Corporation's management believes that the favorable public market
valuation of Wallace prior to the offer is a reflection of the Wallace
management team's ability to effectively and efficiently run the business.
Moore management firmly believes, however, that a combination of Wallace with
Moore would result in a company that is greater than the sum of its parts. It
is for this reason that Moore management is actively pursuing this
combination and why they believe a combination with Moore is the best
economic alternative for the Wallace shareholders.
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MOORE CORPORATION LIMITED
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DISCUSSION OF MOORE'S ACQUISITION PROPOSAL (CONT'D)
CONCLUSION
THE PREMIUM OFFERED TO WALLACE SHAREHOLDERS DERIVES NOT FROM A VIEW THAT WALLACE
WAS UNDERVALUED IN THE MARKET, BUT INSTEAD REPRESENTS VALUE CREATED THROUGH
SYNERGIES FROM A COMBINATION OF WALLACE WITH MOORE. THE PREMIUM IS VALUE OFFERED
TO WALLACE SHAREHOLDERS THAT IN THE ABSENCE OF THE PROPOSED COMBINATION
DISAPPEARS. WALLACE HAS NOT OFFERED ANY OTHER ECONOMIC ALTERNATIVES TO ITS
SHAREHOLDERS AND INSTEAD HAS SUGGESTED AN UNSPECIFIED VALUE AT AN UNSPECIFIED
TIME. MOORE STRONGLY BELIEVES ITS ACQUISITION PROPOSAL IS THE MOST ATTRACTIVE
OPTION FOR WALLACE SHAREHOLDERS.
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MOORE CORPORATION LIMITED
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ANALYSIS OF WALLACE PUBLIC TRADING MULTIPLES
% PREMIUM TO % PREMIUM TO
WALLACE BEFORE WALLACE AFTER AVERAGE BEFORE AVERAGE AFTER
MOORE OFFER MOORE OFFER PEER GROUP MOORE OFFER MOORE OFFER
ANNOUNCEMENT(1) ANNOUNCEMENT(2) AVERAGE(3) ANNOUNCEMENT ANNOUNCEMENT
--------------- --------------- ---------- ------------ ------------
MARKET CAPITALIZATION AS A MULTIPLE OF:
Latest Twelve Month Sales 1.5x 1.9x 1.0x 50% 90%
Latest Twelve Month EBITDA 8.7x 11.1x 6.4x 36% 73%
Latest Twelve Month EBIT 12.6x 16.1x 8.8x 43% 83%
PRICE AS A MULTIPLE OF:
Latest Twelve Month EPS 19.5x 24.8x 13.8x 41% 80%
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(1) Based upon $44 price on July 28, 1995.
(2) Based upon the $56 per share acquisition price.
(3) As on July 28, 1995. Average includes American Business Products, Ennis
Business Forms, Moore Corporation, New England Business Service, Reynolds
and Reynolds and Standard Register.
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MOORE CORPORATION LIMITED
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COMPARISON OF WALLACE TO SELECTED PUBLICLY TRADED BUSINESS FORMS COMPANIES
WALLACE WALLACE AMERICAN ENNIS
COMPUTER COMPUTER BUSINESS BUSINESS MOORE
SERVICES(1) SERVICES(2) PRODUCTS(1) FORMS(1) CORPORATION(1)
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MARKET DATA:
Market Capitalization $991 $1,267 $262 $183 $1,810
MARKET CAPITALIZATION AS A MULTIPLE OF:
Latest Twelve Month Sales 1.5x 1.9x 0.5x 1.3x 0.7x
Latest Twelve Month EBITDA 8.7x 11.1x 4.3x 5.4x 7.9x
Latest Twelve Month EBIT 12.6x 16.1x 6.0x 6.1x 12.8x
PRICE AS A MULTIPLE OF:
Latest Twelve Month EPS 19.5x 24.8x 9.5x 10.6x 17.5x
NEW
ENGLAND REYNOLDS PEER
BUSINESS AND STANDARD GROUP
SERVICE(1) REYNOLDS(1) REGISTER(1) AVERAGE(3)
--------- ---------- ---------- ---------
MARKET DATA:
Market Capitalization $288 $1,348 $539
MARKET CAPITALIZATION AS A MULTIPLE OF:
Latest Twelve Month Sales 1.1x 1.6x 0.7x 1.0x
Latest Twelve Month EBITDA 6.9x 8.3x 5.3x 6.4x
Latest Twelve Month EBIT 9.6x 10.8x 7.2x 8.8x
PRICE AS A MULTIPLE OF:
Latest Twelve Month EPS 17.1x 15.5x 12.6x 13.8x
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(1) As on July 28, 1995.
(2) Based upon the $56 per share acquisition price.
(3) Average includes American Business Products, Ennis Business
Forms, Moore Corporation, New England Business Service, Reynolds
and Reynolds and Standard Register.
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MOORE CORPORATION LIMITED
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SELECTED COMPARABLE PRECEDENT TRANSACTIONS
PRICE PER SHARE AS A
TRANSACTION MULTIPLE OF: TRANSACTION VALUE AS A MULTIPLE OF:
ANNOUNCEMENT VALUE -------------------- -----------------------------------------
DATE ACQUIROR/ACQUIREE MILLIONS LTM EPS LTM EBIT LTM EBITDA LTM SALES
------------ ----------------------------------- ---------- -------------------- -------- ---------- ---------
13-Sep-93 Sonoco Products Company $349 26.5x 15.8x 10.6x 1.4x
Engraph, Inc.
23-Jun-93 American Business Products, Inc. $25 22.8x 13.9x 9.7x 1.1x
Home Safety Equipment Co., Inc.
3-Apr-92 Reynolds & Reynolds Company $36 11.4x 6.3x 5.6x 1.0x
Norick Brothers, Inc.
25-May-90 Avery International Corporation $433 16.4x 12.7x 6.5x 0.6x
Dennison Manufacturing Company
18-Sep-89 Nitto Denko Corporation/ Management $56 22.3x 17.3x 12.6x 1.9x
Graphic Technology, Inc. ----- ----- ----- ----
AVERAGE 19.9x 13.2x 9.0x 1.2x
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MOORE CORPORATION LIMITED $1,267.0(1) 24.8x 16.1x 11.1x 1.9x
WALLACE COMPUTER SERVICES, INC.
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(1) Based upon the $56.00 per share offer price.
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MOORE CORPORATION LIMITED
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CERTAIN INFORMATION CONCERNING PARTICIPANTS IN PROXY SOLICITATION
Moore Corporation Limited ("Moore") and FRDK, Inc., a wholly owned subsidiary of
Moore ("FRDK"), are soliciting proxies for the 1995 Annual Meeting of
Stockholders (the "Annual Meeting") of Wallace Computer Services, Inc.
("Wallace") in support of the election of the three nominees named below as
directors of Wallace (the "Moore Nominees") and in favor of three stockholder
resolutions that FRDK plans to introduce at the Annual Meeting. The following
information concerning the identities of the "participants" (as defined in
Instruction 3 of Item 4 of Schedule 14A promulgated by the Securities and
Exchange Commission (the "Commission")) in the proxy solicitation by Moore and
FRDK referred to above and the interests of such participants is furnished
pursuant to Rule 14a-11(b)(2) promulgated by the Commission.
The Moore Nominees are Curtis A. Hessler, Albert W. Isenman III and Robert P.
Rittereiser. In addition to Moore, FRDK and the Moore Nominees, the following
directors and executive officers of Moore and FRDK may be deemed participants in
the solicitation of proxies: Reto Braun (Chairman of the Board, President and
Chief Executive Officer of Moore), Stephen A. Holinski (Senior Vice President
and Chief Financial Officer of Moore; Director, Vice President and Treasurer of
FRDK), Joseph M. Duane (Vice President and General Counsel of Moore; Director,
Chairman and President of FRDK), Shoba Khetrapal (Vice President and Treasurer
of Moore), Hilda Mackow (Vice President Communications of Moore), Janice
McKenzie (Senior Analyst, Corporate Secretarial of Moore), Joan M. Wilson (Vice
President and Secretary of Moore; Director, Vice President and Secretary of
FRDK). No Moore Nominee or any director of executive officer of Moore or FRDK
currently owns any Shares. Moore owns 200 shares of common stock, par value
$1.00 per share (the "Shares"), of Wallace. In addition, FRDK owns 150 Shares.
In addition to the persons listed above, the following individuals may be deemed
participants in the solicitation of proxies: Lazard Freres & Co. LLC ("Lazard
Freres"), Gerald Rosenfeld (Managing Director of Lazard Freres), Mark McMaster
(Vice President of Lazard Freres), RBC Dominion Securities ("Dominion") and John
Budreski (Vice President, Equity Division of Dominion). None of the foregoing
entities or individuals currently own any Shares.
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