EXHIBIT 20.1
January __, 1996
Dear A. Schulman, Inc. Stockholder:
The Board of Directors has announced the
adoption of a Stockholder Rights Plan. This letter
describes the Plan and explains our reasons for adopting
it. Also, we are enclosing a document entitled "Detailed
Summary of Rights to Purchase Series A Junior
Participating Special Stock" which provides more detailed
information about the Rights Plan, and we urge you to
read it carefully.
The Plan is intended to protect your interests
in the event A. Schulman, Inc. is confronted with
coercive or unfair takeover tactics. The Plan contains
provisions to safeguard you in the event of an
unsolicited offer to acquire the Company, whether through
a gradual accumulation of shares in the open market, a
partial or two-tiered tender offer that does not treat
all stockholders equally, the acquisition in the open
market or otherwise of shares constituting control
without offering fair value to all stockholders, or other
abusive takeover tactics which the Board believes are not
in the best interests of the Company's stockholders.
These tactics unfairly pressure stockholders, squeeze
them out of their investment without giving them any real
choice, and deprive them of the full value of their
shares. In adopting the Rights Plan, the Board of
Directors was concerned that a person or company could
acquire control of the Company without paying a fair
premium for control and without offering a fair price to
all stockholders.
A large number of other companies have Rights
Plans similar to the one we have adopted. We consider
the Rights Plan to be the best available means of
protecting your right to retain your equity investment in
A. Schulman, Inc. and the full value of that investment,
while not foreclosing a fair acquisition bid for the
Company.
The Plan is not intended to prevent a takeover
of the Company and will not do so. The mere declaration
of the rights dividend will not interfere with a merger
or other business combination transaction approved by
your Board of Directors. Also, because the Rights may be
redeemed by the Company at $0.01 per Right up to 10 days
(subject to extension) after the time any person or group
has acquired 15% or more of the Company's shares, the
Rights should not interfere with any merger or other
business combination approved by the current Board of
Directors.
Issuance of the Rights does not in any way
weaken the financial strength of the Company or interfere
with its business plan. The issuance of the Rights has
no dilutive effect, will not affect reported earnings per
share, is not taxable to the Company or to you, and will
not change the way in which you can currently trade the
Company's shares. As explained in detail below, the
Rights will only be exercisable if and when an event
occurs which triggers their effectiveness. They will
then operate to protect you against being deprived of
your right to share in the full measure of the Company s
long-term potential.
The Board was aware when it acted that some
people have advanced arguments that securities of the
type we are issuing deter legitimate acquisition
proposals. We carefully considered these views and
concluded that the arguments are speculative and do not
justify leaving stockholders without this protection
against unfair treatment by an acquiror -- who, after
all, is seeking his own company's advantage, not yours.
The Board believes that the Rights represent a sound and
reasonable means of addressing the complex issues of
corporate policy created by the current takeover
environment.
The Rights will be issued to stockholders of
record on January 25, 1996 and will expire in ten years,
as set forth in the Rights Plan. Initially, the Rights
will not be exercisable, certificates will not be sent to
you, and the Rights will automatically trade with the
Common Stock. However, ten days after a person or group
either acquires 15% or more of the Company's Common Stock
or ten business days after a person or group commences a
tender or exchange offer that would result in such person
or group owning 15% or more of the outstanding shares
(even if no purchases actually occur), whichever is
earlier, the Rights will become exercisable and separate
certificates representing the Rights will be distributed.
We expect that the Rights will begin to trade
independently from the Common Stock at that time. At no
time will the Rights have any voting power.
When the Rights first become exercisable, each
Right will entitle the holder thereof to buy from the
Company one unit of a share of special stock for $85.00.
If any person acquires 15% or more of the Company's
Common Stock, each Right not owned by a 15%-or-more
stockholder would become exercisable for the number of
shares of Common Stock of the Company having at that time
a market value of two times the then current exercise
price of the Right. If the Company is involved in a
merger or other business combination with or into another
person or in which the Company's Common Stock is changed
or exchanged, or sells 50% or more of its assets or
earning power to another person, at any time after the
Rights become exercisable, the Rights will entitle the
holder thereof to buy a number of shares of common stock
of such other person having a market value of twice the
then current exercise price of each Right.
While, as noted above, the distribution of the
Rights will not be taxable to you or the Company,
stockholders may, depending upon the circumstances,
recognize taxable income if and when the Rights become
exercisable.
Continuing our growth and maximizing long-term
stockholder value are the major goals of A. Schulman,
Inc.'s management and Board of Directors.
Sincerely,
Chairman of the Board and
Chief Financial Officer