CONTROL SHARE MEETING
SCHEDULE 14A
(RULE 14A)
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 [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[X]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
COMMERCIAL INTERTECH CORP.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------------------------------------------
(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), 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.
[_]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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Commercial
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Intertech
Forward-Looking Information
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The information herein contains certain forward-looking statements and
information relating to CUNO Incorporated ("CUNO"), a wholly-owned subsidiary of
Commercial Intertech Corp. ("TEC"), and TEC after giving effect to the
previously announced spin-off of CUNO from TEC. Such information and statements
are based on the beliefs of CUNO's and TEC's managements as well as assumptions
made by and information currently available to them. When used in this document,
the words "anticipate", "believe", "estimate" and "expect" and similar
expressions, as they relate to CUNO or TEC or their managements, are intended to
identify forward-looking statements. Such statements reflect the current views
of CUNO and TEC with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of the uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated or expected. Neither CUNO nor TEC intends to update these forward-
looking statements. Neither CUNO nor TEC makes any representation as to the
accuracy of the information contained herein.
Reference is made to the Form 10 Information Statement filed by CUNO with the
Securities and Exchange Commission ("SEC") on July 30, 1996 under the heading
"Projections" and to Amendment No. 14 to TEC's Schedule 14D-9 filed by TEC with
the SEC, which contain additional information concerning the CUNO and TEC
projections contained herein and certain underlying assumptions.
The range of estimated trading values for CUNO and TEC set forth herein are
based on management estimates of 1997 EPS and a range of price/earnings
multiples which are similar to certain comparable companies. No representation
is made that the estimates of 1997 EPS will in fact be realized or that the
common stock of CUNO or TEC would, in fact, trade within the range of estimated
trading multiples or values set forth herein.
Commercial
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Intertech
Why We Are Here
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[ ] Background on situation
[ ] TEC pre-existing plan to unlock CUNO value
[ ] Describe what United Dominion ("UDI") is asking you to do
[ ] Why our plan is superior
[ ] Answer questions and establish a dialogue
Commercial
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Intertech
Summary of Key Events
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[ ] March 22 TEC meets with Goldman Sachs to discuss shareholder value
improvement alternatives
[ ] April 17 Goldman Sachs presentation to TEC management regarding
distribution of CUNO to TEC shareholders
[ ] June 27 UDI presents a $27 per share offer for TEC
[ ] July 11 UDI announces an intention to commence a tender offer at $27
per share
[ ] July 12 TEC rejects $27 per share offer as inadequate and announces a
stock buyback of 2.5 million shares and its intention to
distribute CUNO in a tax-free spin-off to current TEC
shareholders
[ ] July 15 UDI raises tender offer to $30 per share
[ ] July 17 TEC board rejects $30 per share offer as inadequate and
reaffirms its July 12 plan
[ ] July 29 TEC announces date of CUNO distribution to shareholders
Commercial
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Intertech
What UDI is Asking You to Do
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[ ] Vote at August 30 meeting to allow UDI to purchase shares under Ohio
Takeover Statute
[ ] Tender your shares into UDI's offer which expires August 8th, unless
extended
[ ] Give your consent to call a special shareholders' meeting
[ ] Replace current TEC board, redeem the rights and allow UDI to consummate
its offer
Commercial
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Intertech
Critical Upcoming Dates
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[ ] August 8 UDI tender offer expires, unless extended
[ ] August 9 Record date for CUNO distribution
[ ] August 19 Effective date for CUNO distribution (i.e., later of approval
Or Later of NASDAQ listing and commencement of trading or August 19th,
subject to any court order which makes distribution illegal)
[ ] Uncertain Possible shareholder meeting to consider, among other things,
the removal of current board
[ ] August 30 Ohio Control Share Act meeting
Commercial
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Intertech
Summary of TEC Plan
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[ ] TEC will distribute 100% of the common stock of CUNO to its shareholders
[ ] TEC is providing liquidity for shareholders by buying back up to 2.5
million shares
[ ] Beyond 1997, TEC and CUNO anticipate accelerated growth
[ ] TEC plan is superior because:
-- Near-term potential public market values approach the offer price
-- UDI's offer does not embody an appropriate control premium
-- Shareholders can choose to keep or sell TEC and/or CUNO shares
Commercial
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Intertech
TEC Business
Segment Breakdown
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LTM Sales LTM Operating Profit
$638 million $45 million
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
Hydraulic Fluid Building Systems Hydraulic Fluid Building Systems
Systems Purification & Metal Products Systems Purification & Metal Products
- --------- ------------ ---------------- --------- ------------ ----------------
$288 mm $171 mm $178 mm $20 mm $13 mm $11 mm
Commercial
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Intertech
Summary Comparison of
Publicly Traded Companies
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P/E (a)
------------------
Company 1996E 1997E
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TEC Pre-Offer 9.5x 8.3x
Hydraulics Composite 10.6 9.7
Fluid Purification Composite 19.6 16.3
Commercial
(a) Based on latest calendarized IBES median estimates. [LOGO] ----------
Intertech
TEC
Weekly Indexed Common Stock Price History
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[GRAPH APPEARS HERE]
Fluid Composite Hydraulic Composite TEC
Fluid Hydraulic TEC
- --------------------- ----------------------------- -------------
Date Indexed Price Indexed Price Indexed Price
- ----
1/1/95 134.16 109.49 139.69
1/6/95 130.87 110.68 140.63
1/13/95 133.22 113.52 138.75
1/20/95 132.04 110.56 135.00
1/27/95 129.56 104.95 145.32
2/3/95 129.93 106.19 144.38
2/10/95 133.76 107.08 148.13
2/17/95 135.04 108.12 153.75
2/24/95 135.11 109.43 157.50
3/3/95 133.51 108.87 155.63
3/10/95 137.32 108.57 160.32
3/17/95 141.78 110.08 165.00
3/24/95 145.65 109.49 165.00
3/31/95 146.30 116.61 165.00
4/7/95 146.73 117.28 164.07
4/14/95 149.57 120.44 165.00
4/21/95 149.63 125.43 165.00
4/28/95 148.82 127.74 165.94
5/5/95 150.93 129.23 165.00
5/12/95 154.03 131.72 161.25
5/19/95 154.12 128.30 156.57
5/26/95 155.35 129.52 137.82
6/2/95 154.27 131.76 147.19
6/9/95 154.05 129.70 139.69
6/16/95 159.19 131.21 142.50
6/23/95 160.18 131.38 132.19
7/1/95 163.79 134.47 120.00
7/7/95 166.48 140.14 138.75
7/14/95 171.17 141.39 131.25
7/21/95 172.32 137.11 133.13
7/28/95 174.86 142.44 142.50
8/4/95 174.11 141.98 149.07
8/11/95 171.57 142.09 145.32
8/18/95 170.73 145.40 149.07
8/25/95 173.26 143.10 150.00
9/1/95 172.83 142.89 152.82
9/8/95 174.96 144.46 149.07
9/15/95 176.69 143.95 146.25
9/22/95 176.17 136.40 147.19
9/29/95 183.23 135.20 143.44
10/6/95 182.87 130.15 138.75
10/13/95 185.18 126.19 136.88
10/20/95 183.34 125.57 134.07
10/27/95 179.76 121.28 127.50
11/3/95 179.26 126.34 131.25
11/10/95 179.52 128.37 133.13
11/17/95 183.12 128.71 130.32
11/24/95 187.36 133.58 129.38
12/1/95 191.15 133.33 135.00
12/8/95 193.44 134.54 131.25
12/15/95 196.19 132.68 140.63
12/22/95 196.90 132.83 137.82
1/1/96 201.23 131.83 135.94
1/5/96 196.89 134.06 141.57
1/12/96 190.82 133.26 141.57
1/19/96 192.00 128.65 140.63
1/26/96 198.94 132.68 140.63
2/2/96 205.23 139.05 137.82
2/9/96 209.80 140.12 141.57
2/16/96 208.19 139.15 145.32
2/23/96 213.06 141.63 144.38
3/1/96 214.02 139.41 148.13
3/8/96 207.19 141.55 140.63
3/15/96 211.03 146.80 137.82
3/22/96 217.81 149.65 144.38
3/29/96 215.77 149.19 141.57
4/5/96 222.25 148.02 142.50
4/12/96 218.97 144.71 143.44
4/19/96 225.98 148.61 142.50
4/26/96 230.17 152.98 140.63
5/3/96 232.49 149.10 136.88
5/10/96 237.64 147.78 140.63
5/17/96 244.93 148.17 146.25
5/24/96 243.61 149.98 154.69
5/31/96 247.31 147.73 156.57
6/7/96 249.12 147.42 153.75
6/14/96 245.11 147.33 154.69
6/21/96 243.82 146.99 147.19
Weekly 1/1/95 to 6/27/96
Commercial
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Intertech
Why Distribute CUNO?
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[ ] Fluid purification companies trade at a premium to TEC multiples
[ ] Can create greater near-term value while maintaining significant control
premium for TEC shareholders
[ ] Opportunity for management to focus on fluid purification business
[ ] Ability to use stock as an acquisition currency
[ ] Offers investors a "pure play"
[ ] Opportunity to create appropriate incentives for management and employees
Commercial
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Intertech
Description of
Proposed Spin-Off
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[ ] CUNO borrows $30 million which is used to retire TEC debt
[ ] Net dividend payable to TEC of $11 million is created on CUNO balance sheet
for distribution in 1997
[ ] CUNO will have pro forma debt of $55 million in 1996E (inclusive of
dividend payable to TEC)
[ ] Distribute CUNO to TEC shareholders on a one-for-one basis tax-free
Commercial
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Intertech
CUNO Markets
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[ ] Health Care
-- Bioprocessing/Pharmaceuticals
-- Food & Beverage
-- Diagnostic/Laboratory
[ ] Fluid Processing
-- Electronics
-- Coatings
-- Chemicals/Petrochemicals
[ ] Potable Water - Consumer
-- Residential and Commercial
-- Food Service
Commercial
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Intertech
CUNO Products
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[ ] Membranes -- Zetapor/(R)/, Microfluor/(R)/,
BevASSURE/TM/, ZetaBind
[ ] Depth Filters -- Zeta Plus/(R)/, Betafine/(R)/,
Micro-Klean/(R)/, Beta Klean/TM/
[ ] Cleanable Filters and Systems -- Poro-Klean/(R)/, Micro-Screen/(R)/,
Auto-Klean/(R)/
[ ] Housing and Systems -- CTG-Klean
Commercial
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Intertech
Experienced CUNO Management
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Mark Kachur [ ] President / CEO - Biotage Inc.
(President and COO) [ ] 20 years with Pall Corporation
Michael Croft [ ] President - U.S. Operations CUNO
(SVP) [ ] 9 years with CUNO Asia
Ronald Drabik [ ] Vice President - ACME-Cleveland
(SVP and CFO) [ ] President - Met-Coil Systems
[ ] CFO - RB&W Corporation
Commercial
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Intertech
CUNO Growth Strategies
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[ ] Develop new products from core technologies
[ ] Decrease product development cycle times
[ ] Increase customer focus
[ ] Improve distribution
[ ] Improve operating efficiencies
[ ] Pursue selective acquisitions
Commercial
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Intertech
CUNO Historical
Income Statement
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($ in millions)
1993 1994 1995 CAGR
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Sales $130.8 $143.1 $162.7 11.5%
Operating Income (1.7) 5.0 10.8
Operating Margin (1.3)% 3.5% 6.7%
Commercial
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Intertech
CUNO Pro Forma
1996E Balance Sheet
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Amount Percent
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Debt (a) $55.0 51%
Equity 53.5 49
==== ==
Total $108.5 100%
(a) Includes a net $11.1 million dividend payable to TEC.
Commercial
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Intertech
CUNO Pro Forma
Projected Income Statement
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($ in millions, except EPS)
1995 1996E 1997E CAGR
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Sales $162.7 $182.3 $202.1 11.5%
Operating Income 10.8 17.2 21.8 41.9
Interest Expense 3.2 2.7 2.7
Net Income 4.5 9.4 11.3 57.4
EPS (a) $0.33 $0.69 $0.82 57.4
==== ==== ====
Operating Margin 6.6% 9.4% 10.8%
(a) Excludes extraordinary or nonrecurring charges.
Assumes no conversion of the Series B shares.
Commercial
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Intertech
Selected Fluid
Purification Companies
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P/E Multiples (a)
-----------------
Company 1997E
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Culligan 21.8x
Ionics 21.9
Millipore 12.7
Osmonics 16.7
Pall 16.0
U.S. Filter 15.4
Gelman Sciences (b) 25.0
(a) Based on latest calendarized IBES median estimates.
(b) Implied multiple at $35 offer price of Memtec transaction.
Commercial
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Intertech
CUNO Publicly-Traded Value
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1997E EPS (a) $0.82
P/E Multiple 16x - 18x
Implied Stock Price Range $13.00 - $14.75
===== =====
(a) Excludes extraordinary or nonrecurring charges.
Assumes no conversion of the Series B shares.
Commercial
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Intertech
TEC Business Profile
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[ ] Hydraulics Systems - World leader in gear pumps
- Operates 16 manufacturing
facilities in six countries
- More than 220 sales outlets
worldwide
[ ] Building Systems - Leader in European market custom
and standard prefabricated buildings
[ ] U.S. Metals - Manufactures a wide variety
of custom-formed metal shapes
Commercial
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Intertech
TEC Growth Strategies
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[ ] Launch of new products
[ ] $3.5 million reduction in corporate and operating
unit overhead
[ ] Continued improvement in the German businesses
[ ] Building Systems' penetration of the Central and
Eastern Europe markets
Commercial
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Intertech
TEC Historical
Income Statement
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($ in millions)
1993 1994 1995 CAGR
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Sales $317.8 $373.8 $459.1 20.2%
Operating Income 27.0 29.9 34.4 12.9
Operating Margin 8.5% 8.0% 7.5%
Commercial
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Intertech
TEC Pro Forma
1996E Balance Sheet
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Amount Percent
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Debt (a) $112.7 57%
Equity 84.3 43
==== ==
Total $197.0 100%
(a) Reduced by a net $11.1 million CUNO dividend payable to TEC in 1997.
Commercial
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Intertech
TEC Pro Forma Projected
Income Statement
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($ in millions, except EPS)
1996E 1997E % Increase
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Sales $475.1 $500.8 5.4%
Operating Income 37.7 49.0 30.0
Interest Expense 7.5 10.4
Net Income 23.1 27.9 20.9
EPS (a) $1.36 $1.65 21.3
==== ====
Operating Margin 7.9% 9.8%
(a) Excludes extraordinary or nonrecurring charges. Commercial
Assumes conversion of the Series B shares. [LOGO] ----------
Intertech
Valuation of Selected
Equipment Manufacturer Companies
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P/E Multiples (a)
-------------------------
Company 1997E
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Case 9.2x
Caterpillar 10.4
Cummins Engine 9.3
Dana 8.8
Deere 10.4
Eaton 10.4
Parker-Hannifin 9.9
Sundstrand 13.1
Trinova 8.4
Commercial
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(a) Based on latest calendarized IBES median estimates. Intertech
TEC Publicly-Traded Value
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1997E EPS (a) $1.65
P/E Multiple 8x - 10x
Implied Stock Price Range $13.25 - $16.50
===== =====
(a) Excludes extraordinary or nonrecurring charges. Commercial
Assumes conversion of the Series B shares. [LOGO] ----------
Intertech
Combined TEC - CUNO
Publicly-Traded Values
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Implied Stock
1997 EPS P/E Multiple Price Range
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CUNO $0.82 16x - 18x $13.00 - $14.75
TEC $1.65 8x - 10x $13.25 - $16.50
---------------
Total $26.25 - $31.25
===============
Commercial
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Intertech
Why You Should Support TEC's
Plan
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[ ] TEC Board's plan offers potential public market value in the $26.25
to $31.25 range
[ ] TEC's plan retains your control premium in both companies until
you receive an appropriate offer
[ ] TEC and CUNO expect earnings acceleration beyond 1997
timeframe
[ ] Greater research coverage and more natural buyers for post-
distribution companies
[ ] UDI's $30 per share offer is inadequate and you should support
management's plan
Commercial
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Intertech
# # #
The following is a list of the names and shareholdings of individuals who
may be deemed to be "participants" in the solicitation of proxies or
revocation of agent designations by Commercial Intertech in opposition to
United Dominion and OAC's solicitation of proxies for a "control share"
meeting and their solicitation of agent designations to call a special meeting
(information with respect to shareholdings includes common shares, shares
issuable pursuant to options exercisable within 60 days, and preferred
shares): Paul J. Powers (329,041 shares); Mark G. Kachur (32,086 shares);
Bruce C. Wheatley (34,714 shares); Hubert Jacobs van Merlen (13,103 shares);
John Gilchrist (32,032 shares); William J. Bresnahan (300 shares); Charles B.
Cushwa III (220,380 shares); William W. Cushwa (238,925 shares); John M.
Galvin (5,750 shares); Richard J. Hill (10,397 shares); Neil D. Humphrey
(6,635 shares); William E. Kassling (5,000 shares); Gerald C. McDonough (4,500
shares); C. Edward Midgley (10,000 shares); George M. Smart (2,750 shares);
Don E. Tucker (136,855 shares); Robert A. Calcagni (58,463 shares); Gilbert M.
Manchester (33,994 shares); and Steven J. Hewitt (23,880 shares). Commercial
Intertech has engaged Goldman, Sachs & Co. as its financial adviser in
connection with the United Dominion tender offer and the solicitations described
above. Goldman, Sachs & Co. will receive certain fees in connection with its
services. Certain partners and employees of Goldman, Sachs & Co. may assist in
the solicitation of proxies on behalf of Commercial Intertech's Board of
Directors. In the normal course of business, Goldman, Sachs & Co. regularly buys
and sells securities, including Commercial Intertech securities on its own
account and for the account of its customers, which transactions may result from
time to time in Goldman, Sachs & Co. having a net long or net short position in
Commercial Intertech securities.