Filer: Cooper Industries, Inc.
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12(b)
under the Securities Exchange Act of 1934
Subject Company: Cooper Industries, Inc.
Commission File No.: 1-1175
Registration Statement No.: 333-62740
February 14, 2002
Dear Fellow Shareholder:
I wanted to take this opportunity to share with you the press release that we
issued on Wednesday, February 13, 2002. I'm sure that you have been reading the
press coverage over the last several months regarding the process we undertook
to review all of our alternatives to maximize the value of your shares,
including a possible sale of the Company. The process has come to an end. After
a very careful review of all available alternatives, your Board of Directors has
concluded that it is in the best interest of the Company's shareholders to move
forward with our previously-announced plan to reincorporate in Bermuda.
We are excited about the opportunities available to us by a Bermuda
reincorporation. We believe it will enhance our strategic flexibility and reduce
our effective tax rate from approximately 32 percent to a range of 20 to 25
percent. Our improved global tax position should generate additional cash flow
of approximately $55 million annually, or close to an additional $.58 per share.
This transaction is subject to your approval. We plan to call a special meeting
of shareholders shortly and will provide you with detailed materials explaining
the reincorporation.
Let me assure you, however, that we do not plan to stop there. We intend to
continue to aggressively run our businesses, emphasizing a highly disciplined
approach to cost reduction and efficiency improvements to maximize the value of
Cooper's strong business platforms. The enclosed press release describes our
reincorporation proposal further and sets out how we intend to deliver solid
results and enhance Cooper's performance. I encourage you to read it.
Our goal has always been to maximize the value of your shares. That continues to
be our first priority.
Thank you for the support you have shown us.
Sincerely,
/s/ H. John Riley, Jr.
FOR IMMEDIATE RELEASE
February 13, 2002
Contact: John Breed
Cooper Industries, Inc
(713) 209-8835
COOPER INDUSTRIES WILL PURSUE BERMUDA REINCORPORATION
HOUSTON, TX, February 13, 2002 - Cooper Industries, Inc. (NYSE:CBE)
today announced that it has completed its strategic alternatives review process
authorized by its Board in August 2001. The Company, working with its financial
advisors, Credit Suisse First Boston Corporation and Goldman Sachs & Co. Inc.,
was authorized to pursue every reasonable alternative that could maximize value
for Cooper's shareholders, including a sale of Cooper in whole or in parts.
After careful review of all the available alternatives with management
and its advisors, Cooper's Board of Directors concluded that it is in the best
interest of Cooper's shareholders to move forward with the previously-announced
plan to reincorporate in Bermuda.
"We are excited about the opportunities presented by a Bermuda
reincorporation and are confident that it is in the best interests of our
shareholders and other constituencies," said H. John Riley, Jr., chairman,
president and chief executive officer. "This change will enhance Cooper's
strategic flexibility and our reduced global tax position will significantly
increase cash flow -- enabling us to further strengthen our balance sheet and
better position us to pursue worldwide growth opportunities.
"We will continue to aggressively run our businesses, emphasizing a
highly disciplined approach to cost reduction and efficiency improvements to
maximize Cooper's strong business platforms," continued Riley. "Cooper has
impressive product breadth, leading brand names and market strength. We are more
confident than ever in the fundamental soundness and potential of our valuable
global franchise."
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COOPER INDUSTRIES PAGE 2
"The process we undertook almost seven months ago was very careful,
deliberate and complete in analyzing how best to maximize value for our
shareholders," said Riley. "However, the tragic events of September 11, the
bankruptcy of Federal-Mogul and a very difficult business environment
intervened. As a result, we received no definitive proposals to acquire the
Company as a whole or in parts."
Going forward, Cooper intends to deliver solid results and enhance the
Company's performance by:
o Continuing to invest in revenue growth initiatives, including the
Cooper Connection distributor-relationship program, which is
broadening market coverage and enhancing service to distributor
and end-user customers;
o Expanding the Company's global strategic sourcing initiative and
its programs to move production to lower-cost geographic regions;
and
o Continuing to restructure business units and exiting
underperforming product lines to ensure that Cooper is optimally
positioned within the broad range of markets it serves.
"Cooper's performance in 2001 showed impressive operational resiliency
and disciplined cost control, despite the unexpected severity of the downturn in
the economy and the significant management resources needed to complete our
process to review strategic alternatives," said Riley. "Our decisive actions
last year to reduce costs and improve our businesses enhanced our
already-formidable competitive position. We are confident that we will continue
to positively differentiate ourselves from our peers in the difficult times
forecasted for the next several quarters."
BERMUDA REINCORPORATION
Under the plan to change its place of incorporation from Ohio to
Bermuda, previously announced on June 11, 2001, Cooper Industries, Ltd., a
newly-formed Bermuda corporation, will become the parent holding company of
Cooper Industries, Inc. The reincorporation offers strategic advantages not
available under the Company's current corporate structure. Cooper's effective
tax rate post-reincorporation will be reduced to a range of 20 to 25 percent
from approximately 32 percent, creating immediate value for Cooper shareholders.
The improved global tax position is expected to generate additional cash flow of
approximately $55 million annually, and add approximately $.58 per share to
earnings.
-more-
COOPER INDUSTRIES PAGE 3
Additionally, the reincorporation will enable the Company to pursue
international acquisition opportunities to strengthen its market-leading
position and enhance growth. The reorganization is subject to the approval of
the holders of a majority of Cooper's outstanding shares.
Upon completion of the reorganization, which is expected to be in the
second quarter of 2002, each share of Cooper Industries, Inc. common stock will
automatically convert into a share of Cooper Industries, Ltd. common stock and
will have substantially the same attributes as Cooper Industries, Inc. common
stock. Cooper Industries, Ltd. shares will be listed on the New York Stock
Exchange under the "CBE" symbol, the same symbol under which the Company's
common stock currently trades. Generally, upon the conversion of shares of
Cooper Industries, Inc. into Cooper Industries, Ltd., shareholders subject to
U.S. federal income taxation will recognize as gains any appreciation in the
market value of Cooper Industries shares over their cost basis, and a new
holding period will commence.
The Company reiterated that the reincorporation would have no impact on
its day-to-day operations for employees, customers and suppliers. Cooper will
continue to be headquartered in Houston.
A special meeting of shareholders of Cooper Industries, Inc. will be
called to vote on the proposed transaction. Notice of the meeting and a proxy
statement/prospectus describing the reorganization will be mailed to all Cooper
shareholders. An amended registration statement for Cooper Industries, Ltd. and
the proposed proxy statement/prospectus will be filed with the Securities and
Exchange Commission and will be available for free at the SEC's Web site,
www.sec.gov. When finalized, these documents will be available at no charge at
the SEC's Web site as well as through the Investor Center section of Cooper's
Web site, www.cooperindustries.com.
Cooper Industries, with 2001 revenues of $4.2 billion, is a worldwide
manufacturer of electrical products, tools and hardware. Additional information
about Cooper is available on the Company's Internet site:
www.cooperindustries.com.
-more-
COOPER INDUSTRIES PAGE 4
Statements in this news release are forward-looking under the Private
Securities Litigation Reform Act of 1995. These statements are subject to
various risks and uncertainties, many of which are outside the control of the
Company, including but not limited to: 1) competitive pressures and future
global economic conditions; 2) the rate at which benefits are realized from
cost-reduction programs recently completed, currently under way or to be
initiated in the near future; 3) shareholder approval of the plan to
reincorporate in Bermuda and the ability to realize the expected benefits
thereof. Further information regarding these and other risk factors is set forth
in Cooper's filings with the Securities and Exchange Commission, including
Cooper's Annual Report on Form 10-K.
This announcement does not constitute an offer of any securities for
sale, or an offer or an invitation to purchase any securities. AS SOON AS THE
REGISTRATION STATEMENT AND THE RELATED PROXY STATEMENT/PROSPECTUS ARE FINALIZED,
INVESTORS SHOULD READ THESE DOCUMENTS BEFORE MAKING A DECISION CONCERNING THE
TRANSACTION. These documents will contain important information that investors
should consider.
Cooper Industries, Inc. and its officers and directors may be deemed to
be participants in the solicitation of proxies from shareholders in favor of the
reorganization. Information about the directors and executive officers and
ownership of stock is set forth in the proxy statement for Cooper's 2001 Annual
Meeting of Shareholders which was filed with the SEC on March 8, 2001.
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