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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): November 21, 1999
E'TOWN CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 1-11023 22-2596330
(State of Incorporation) (Commission File Number) IRS Employer
Identification
Number)
600 South Avenue, Westfield, New Jersey 07090
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 654-1234
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ITEM 5. OTHER EVENTS.
On November 21, 1999, E'town Corporation, a New Jersey corporation (the
"Company"), Thames Water Plc, a public limited company organized under the laws
of England and Wales ("Thames") and Edward Acquisition Corp., a New Jersey
corporation which is indirectly wholly owned by Thames ("Merger Sub"), entered
into an Agreement and Plan of Merger dated as of November 21, 1999 (the "Merger
Agreement"), providing for a merger transaction between the Company, Thames and
Merger Sub. The Merger Agreement and the press release issued in connection
therewith are filed herewith as Exhibits 2.1 and 99A, respectively, and are
incorporated herein by reference. The description of the Merger Agreement set
forth herein does not purport to be complete and is qualified in its entirety by
the provisions of the Merger Agreement.
Pursuant to the Merger Agreement, Merger Sub will merge with and into
the Company (the "Merger"). The Company will be the surviving entity (the
"Surviving Corporation"). The Merger, which was unanimously approved by the
Board of Directors of the Company, is expected to occur shortly after all of the
conditions to the consummation of the Merger, including the receipt of certain
regulatory approvals, are met. The Company anticipates that the Merger can be
consummated before the fourth quarter of 2000.
Under the terms of the Merger Agreement, (i) each outstanding share of
common stock of Merger Sub will be converted into one share of common stock of
the Surviving Corporation, and (ii) each outstanding share of common stock of
the Company (the "Company Common Stock") other than shares owned by the Company
as treasury shares, or by Thames, will be converted into the right to receive
$68.00 in cash.
The Merger is subject to certain customary closing conditions,
including the receipt of the required approval by a majority of the votes
entitled to be cast by all holders of Company Common Stock, the consent or
approval of the New Jersey Board of Public Utilities, and the filing of the
requisite notification with the Federal Trade Commission and the Department of
Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the expiration of the applicable waiting period thereunder. A
meeting of the Company's shareholders to vote upon the Merger will be convened
as soon as practicable.
The Merger Agreement contains certain covenants of the parties pending
the consummation of the Merger. Generally, the Company and its subsidiaries
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must carry on their respective businesses in the ordinary course in
substantially the same manner as before, preserve intact their business
organizations and goodwill, keep available the services of their workforces as a
group and maintain their properties and assets in as good repair and condition
as at present, maintain supplies and inventories in quantities consistent with
past practice and maintain their rights and franchises except for those which,
if allowed to terminate or expire, would not reasonably be expected to have a
material adverse effect on the Company. There are restrictions on the
declaration of dividends by the Company and its subsidiaries, although the
Company is permitted to declare and pay its regular quarterly dividends and, if
the closing of the Merger (the "Closing") has not occurred by September 30,
2000, the Company may increase the annual rate of such dividends by not more
than 3%. If the Merger does not become effective between a record date and
payment date of a regular quarterly dividend, the Company may declare and pay a
special dividend, at the then current quarterly rate, for the period between
such payment date and the date the Merger becomes effective. The Merger
Agreement also contains restrictions on issuing and repurchasing equity
securities, amending the articles of organization of the Company or its
subsidiaries, acquisitions, capital expenditures, dispositions, incurrence of
indebtedness, making of investments, modification of employee compensation and
benefits, changes in accounting methods, entering into, terminating, renewing or
modifying material contracts and waiving and releasing or assigning material
rights and claims of the Company and its subsidiaries against third parties. The
Company also agreed not to permit Elizabethtown Water Company, the Company's
principal operating subsidiary, ("Elizabethtown") to file for an increase in
base rates prior to August 21, 2000 without the consent of Thames.
The Merger Agreement prevents the Company and its subsidiaries and
representatives from initiating, soliciting or encouraging, directly or
indirectly, any inquiry or proposal or offer, or engaging in discussions or
negotiations with, or providing confidential information to, any third party
relating to a business combination proposal, and requires the Company to
terminate immediately any existing discussions or negotiations and notify Thames
(identifying the third party and the material terms of its proposal) of any such
inquiries relating to a business combination proposal. The Company may, however,
prior to the Company shareholders' approval of the Merger, engage in discussions
or negotiations with, and provide information to, a third party who, without
solicitation on the part of the Company or its subsidiaries, seeks to initiate
discussions or negotiations, but only to the extent that (i) the third party has
made an Alternative Proposal (as defined in the Merger Agreement) that in the
good faith judgment of the Company's Board of Directors,
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based on advice of its financial advisors, is reasonably likely to be more
favorable to the Company's shareholders than the Merger, and has demonstrated
that it will have adequate sources of financing and (ii) the Company Board of
Directors concludes in good faith, based upon such matters it deems relevant and
the advice of outside counsel, that such actions are necessary for the Board to
act in a manner consistent with its fiduciary duties to shareholders under
applicable law. Prior to furnishing such information to, or entering into such
discussions or negotiations with, such third party, the Company must promptly
notify Thames in writing of such intention to furnish information or enter
discussions or negotiations (identifying the third party and the material terms
of its proposal) and enter into a confidentiality agreement with such third
party. The Company may also, prior to the Company shareholders' approval,
terminate the Merger Agreement to accept an Alternative Proposal (in which case,
the termination fee described below would be payable). However, before so
terminating, (i) the Company's Board must determine that, based on the advice of
outside counsel, it is necessary, in order to act consistently with its
fiduciary duties to the Company's shareholders, to terminate the Merger
Agreement in order to enter into an agreement with respect to a Superior
Proposal (as defined in the Merger Agreement), (ii) the Company shall have
notified Thames that it has received a Superior Proposal (identifying the third
party and the material terms of its proposal) and that the Company intends to
terminate the Merger Agreement, and (iii) either (A) Thames shall not have
revised its proposal for the Merger within 10 days of being so notified or (B)
if it has made a firm revised proposal for the Merger, the Company's Board,
after receiving advice from the Company's financial advisor, shall have
determined in its good faith judgment that notwithstanding a binding commitment
to consummate the Merger Agreement and notwithstanding all concessions that may
be offered by Thames's revised proposal, the third party's Alternative Proposal
is superior to Thames's revised proposal for the Merger.
The Merger Agreement may be terminated under certain circumstances,
including: (i) by mutual written agreement of the boards of the Company and
Thames; (ii) by either the Company or Thames if the Merger has not been effected
on or before a date which is nine months from the date of the Merger Agreement
(the "Initial Termination Date"), provided that if all conditions to closing are
satisfied except for the receipt of governmental approvals, the Initial
Termination Date will be extended to a date which is twelve months from the date
of the Merger Agreement (the "Extended Termination Date") or until all waiting
periods applicable to such governmental approvals have expired; (iii) by either
the Company or Thames if the Company shareholders' approval has not been
obtained at a Company Special Meeting, or any adjournments thereof; and (iv)
by either the Company or Thames if any law, order, rule or regulation
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is adopted which effectively prohibits the Merger or any final order or
injunction of a court permanently prohibits the Merger. In addition, the Company
may terminate the Merger Agreement: (i) under certain circumstances, in order to
accept an Alternative Proposal (subject to the limitations and procedures
described above and to payment of the termination fee described below); or (ii)
if there has been a material breach of certain of Thames's representations and
warranties or a material breach by Thames of its agreements or covenants under
the Merger Agreement and such breach or failure has not been cured. Thames may
terminate the Merger Agreement if: (i) the Board of the Company withdraws or
modifies its approval or recommendation of the Merger Agreement in any manner
adverse to Thames; (ii) the Board of the Company approves or recommends an
Alternative Proposal; or (iii) there has been a material breach of the Company's
representations and warranties or a material breach of its agreements or
covenants under the Merger Agreement and such breach or failure has not been
cured.
If the Merger Agreement is terminated on account of the material breach
by a party of its representations, warranties, agreements or covenants, the
breaching party will pay up to $5 million to the other party for reimbursement
of documented fees and expenses. The Company will pay Thames a termination fee
of $16.5 million plus up to $5 million for reimbursement of documented
out-of-pocket expenses: (i) if the Company terminates the Merger Agreement
because the Company's Board determines that it is necessary in order to act
consistently with its fiduciary duties to terminate the Merger Agreement in
order to enter into an agreement with respect to a Superior Proposal, as
described above; (ii) if, at a time when an Alternative Proposal is pending, the
Merger Agreement is terminated (A) by Thames because the Company shareholders'
approval was not obtained, (B) by Thames on account of the Company Board of
Directors withdrawing or modifying its approval or recommendation of the Merger
Agreement or approving or recommending an Alternative Proposal, or (C) by the
Company on account of the Closing not having occurred by the Initial or (if
applicable) the Extended Termination Date, provided, that in the case of
(ii)(A), (B) and (C), the Company enters into a definitive agreement with the
party making such Alternative Proposal within one year of such termination.
Concurrently with the execution of the Merger Agreement, the Company's
President, Andrew M. Chapman, entered into an employment agreement with the
Company, to be effective as of the date of Closing, pursuant to which Mr.
Chapman agreed to serve as the Company's President and Chief Executive Officer
for an initial period of three years, subject to the terms and conditions
provided in the agreement.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following exhibits are filed as part of this report:
2.1 Agreement and Plan of Merger, dated as of November 21, 1999, among
E'town Corporation, Thames Water Plc and Edward Acquisition Corp.
99A Press Release dated November 22, 1999.
SIGNATURE
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.
Dated: November 24, 1999
E'TOWN CORPORATION
By: /s/ Gail P. Brady
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Gail P. Brady
Treasurer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement and Plan of Merger, dated as of November 21, 1999, among
E'town Corporation, Thames Water Plc and Edward Acquisition Corp.*
99A Press Release dated November 22, 1999.
* Disclosure schedules to the Agreement and Plan of Merger are omitted, but will
be furnished supplementally to the Commission upon request.
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