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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
COOPER INDUSTRIES, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DANAHER CORPORATION
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
[ ] 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:
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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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SUBJECT TO COMPLETION; DATED August 3, 2001
PRELIMINARY PROXY MATERIAL
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[DANAHER CORPORATION LOGO]
August , 2001
Dear Cooper Shareholder:
Danaher Corporation has proposed a business combination with Cooper
Industries, Inc. that we believe is a clearly superior alternative to Cooper's
proposal to reorganize in Bermuda. The consideration Danaher would pay in this
transaction would consist of 75% Danaher stock and 25% cash. Under our proposal,
each Cooper share would be converted into $14.50 in cash and 0.7650 Danaher
shares at the high end of the proposed range, or $13.50 in cash and 0.7123
Danaher shares at the low end of the proposed range. We have indicated to the
Cooper Board of Directors that we would expect to finalize a combination
proposal at the high end of our range after a customary due diligence review of
Cooper's business, which we believe we could complete in two weeks with Cooper's
cooperation.
The Danaher proposal would provide you with an immediate and
substantial premium for your Cooper shares and would enable you to participate
in the growth of a stronger combined company. Based on Danaher's closing share
price on July 20, 2001, the day before the two companies met to discuss
Danaher's proposal, the Danaher merger proposal would provide a value of $54.00
to $58.00 for each share of Cooper common stock, representing a premium of 33%
to 43% over Cooper's closing share price on that day and a premium of 40% to 50%
over Cooper's average closing share price for the preceding three months.
Because the number of shares of Danaher common stock that Cooper shareholders
would receive pursuant to the Danaher merger proposal is fixed, the implied
value of the Danaher merger proposal will fluctuate based on changes in the
market price of Danaher's common stock. Please obtain a current share price for
Danaher stock to determine the value of our offer to you today.
As you know, Cooper has proposed to reorganize in Bermuda. In
connection with the proposed reorganization, Cooper has scheduled a special
meeting of shareholders to be held at the Chase Center Auditorium, 601 Travis
Street, Houston, Texas on Thursday, August 30, 2001, at 10:00 a.m. The Cooper
Board of Directors is soliciting your vote to approve its proposed
reorganization in Bermuda.
As discussed in the accompanying proxy statement, we believe our
proposed merger is a clearly superior alternative to the proposed
reorganization. However, our proposal is conditioned on rejection by the Cooper
shareholders of the proposed reorganization. Accordingly, we are soliciting your
proxy to vote AGAINST the proposed reorganization.
WE BELIEVE THE DANAHER MERGER PROPOSAL IS SUPERIOR TO THE PROPOSED
REORGANIZATION FOR THE FOLLOWING REASONS:
- SIGNIFICANT PREMIUM. Our proposed merger would provide an
immediate and substantial premium for your Cooper shares. In
contrast, the reorganization in Bermuda will not yield any premium
at all.
- STRONGER CURRENCY. Our proposed merger would provide Cooper
shareholders an opportunity to invest in Danaher common stock,
which has demonstrated stronger performance and delivered more
attractive total returns than Cooper common stock and the S&P 500
for the past three, five and ten year periods.
- STRONGER COMBINED COMPANY. Cooper's shareholders will have the
opportunity to participate in the growth and synergies of a
stronger, well capitalized company, with a management team focused
on the aggressive pursuit of enhanced shareholder value.
- FAVORABLE TAX TREATMENT. Our proposed merger offers Cooper
shareholders consideration comprised of 75% Danaher stock and
25% cash. Accordingly, our proposal provides an immediate and
substantial cash payment to Cooper shareholders and is also
expected to qualify as a reorganization for tax purposes. Thus,
it is expected that shareholders would only pay tax on their
gain up to the amount of the cash they receive, while the
majority of the consideration, namely the shares of Danaher
common stock, would be received tax-free by Cooper shareholders.
In contrast, Cooper's planned reorganization will require
shareholders to pay tax on all their gains without providing
them any cash proceeds with which to satisfy the tax liability
incurred.
YOUR VOTE IS IMPORTANT!
IF COOPER'S REORGANIZATION IN BERMUDA IS APPROVED, YOU WILL NOT HAVE
THE OPPORTUNITY TO RECEIVE THE VALUE REPRESENTED BY OUR MERGER PROPOSAL. WE URGE
YOU TO VOTE AGAINST COOPER'S REORGANIZATION IN BERMUDA BY SIGNING, DATING AND
RETURNING THE ACCOMPANYING BLUE PROXY CARD TODAY.
Even if you previously have submitted a proxy card furnished by the
Cooper Board, it is not too late to change your vote by simply signing, dating
and returning the blue proxy card today.
WE URGE YOU TO PROTECT YOUR INTERESTS AND SEND A STRONG MESSAGE TO THE
COOPER BOARD OF DIRECTORS--PLEASE SIGN, DATE AND RETURN THE BLUE PROXY CARD
TODAY.
If you have any questions, please call MacKenzie Partners, Inc., who is
assisting us with the proxy solicitation, at (800) 322-2885.
Thank you for your consideration and support.
Sincerely,
H. Lawrence Culp, Jr.
President and Chief Executive Officer
This proxy statement is dated and is first being mailed to shareholders on or
about August , 2001.
IMPORTANT
1. If your Cooper shares are held in your own name, please sign, date and
mail the enclosed blue proxy card to MacKenzie Partners, Inc. in the
postage-paid envelope provided.
2. If your Cooper shares are held in "street-name," only your broker or
bank can vote your shares and only upon receipt of your specific
instructions. If your shares are held in "street-name," deliver the
enclosed blue proxy card to your broker or bank and contact the person
responsible for your account to vote on your behalf and to ensure that
a blue proxy card is submitted on your behalf. Danaher urges you to
confirm in writing your instructions to the person responsible for
your account and to provide a copy of those instructions to Danaher in
care of MacKenzie Partners, Inc., so that Danaher will be aware of
all instructions given and can attempt to ensure that such instructions
are followed.
3. Only shareholders of record on July 23, 2001 are entitled to vote at the
annual meeting of Cooper shareholders. Danaher urges each shareholder to
ensure that the record holder of his or her shares signs, dates and
returns the enclosed blue proxy card as soon as possible.
DO NOT SIGN OR RETURN ANY WHITE PROXY CARD YOU MAY RECEIVE FROM COOPER.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL:
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
CALL COLLECT: (212) 929-5500
OR
CALL TOLL-FREE: (800) 322-2885
THIS PROXY STATEMENT RELATES SOLELY TO THE SOLICITATION OF PROXIES IN
OPPOSITION TO COOPER'S PROPOSAL TO REORGANIZE IN BERMUDA AND IS NEITHER AN OFFER
TO SELL ANY SHARES OF DANAHER COMMON STOCK NOR A REQUEST FOR THE TENDER OF
SHARES OF COOPER COMMON STOCK. ANY ISSUANCE OF DANAHER COMMON STOCK IN
CONNECTION WITH DANAHER'S PROPOSED MERGER WITH COOPER WILL HAVE TO BE REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY ONLY BE MADE BY MEANS OF A PROSPECTUS
COMPLYING WITH THE REQUIREMENTS OF SUCH ACT.
SPECIAL MEETING OF SHAREHOLDERS
OF
COOPER INDUSTRIES, INC.
PROXY STATEMENT
OF
DANAHER CORPORATION
SOLICITATION OF PROXIES
IN OPPOSITION
TO COOPER'S PROPOSED
REINCORPORATION IN BERMUDA
This Proxy Statement and the enclosed blue proxy card are furnished by
Danaher Corporation, a Delaware corporation ("Danaher"), in connection with its
solicitation of proxies to be used at the special meeting (the "Special
Meeting") of shareholders of Cooper Industries, Inc., an Ohio corporation
("Cooper"), to be held at the Chase Center Auditorium, 601 Travis Street,
Houston, Texas on Thursday, August 30, 2001, at 10:00 a.m., and at any
adjournments, postponements or reschedulings of that meeting. Pursuant to this
Proxy Statement, Danaher is soliciting proxies from holders of shares of common
stock, par value $5.00 per share, of Cooper ("Cooper Common Stock") to vote
AGAINST Cooper's pending proposal to reorganize in Bermuda (the "Reorganization
Proposal"). Cooper has set the close of business on July 23, 2001 as the record
date (the "Record Date") for determining those shareholders who will be entitled
to vote at the Special Meeting. This Proxy Statement and the enclosed blue proxy
card are first being sent or given to shareholders of Cooper on or about
August , 2001. Cooper's corporate headquarters are located at 600 Travis,
Suite 5800, Houston, Texas 77002-1001, telephone (713) 209-8400.
THE DANAHER MERGER PROPOSAL
On July 25, 2001, Danaher delivered a letter to H. John Riley, Jr.,
Cooper's Chairman and Chief Executive Officer, setting forth a business
combination proposal that Danaher had presented at a meeting with Mr. Riley and
certain other Cooper executives on July 21, 2001. Danaher believes that,
compared to the Reorganization Proposal, the Danaher Merger Proposal
(the "Danaher Merger Proposal")constitutes a superior transaction for holders
of Cooper Common Stock. Under Danaher's proposal, Cooper and Danaher would
combine in a merger (the "Proposed Danaher Merger") in which each share of
Cooper Common Stock would be converted into $14.50 in cash and 0.7650 shares
of Danaher common stock, par value $1.00 per share ("Danaher Common Stock"), at
the high end of our proposed range or $13.50 in cash and 0.7123 shares of
Danaher Common Stock at the low end of our proposed range. In its July 25
letter, Danaher indicated to Mr. Riley that it would expect to finalize a
combination proposal at the high end of this range after a customary due
diligence review of Cooper's business, which we believe we could complete in
two weeks with Cooper's cooperation.
Based on Danaher's closing share price on July 20, 2001, the day before
the two companies met to discuss Danaher's proposal, the Danaher Merger Proposal
would provide a value of $54.00 to $58.00 for each share of Cooper Common Stock,
representing a premium of 33% to 43% over Cooper's closing stock price on that
day and a premium of 40% to 50% over Cooper's average share price for the
preceding three months. Because the number of shares of Danaher Common Stock
that Cooper shareholders would receive pursuant to the Danaher Merger Proposal
is fixed, the implied value of the Danaher Merger Proposal will fluctuate based
on changes in the market price of Danaher's Common Stock. Please obtain a
current share price for Danaher stock to determine the value of our offer to you
today.
1
The Danaher Merger Proposal is subject to certain conditions,
including:
- withdrawal of the Reorganization Proposal by the Cooper Board of
Directors or rejection of the Reorganization Proposal by the
Cooper shareholders,
- a customary due diligence review of Cooper and its businesses,
- execution of a definitive merger agreement by Danaher and Cooper,
and
- redemption of the rights issued pursuant to the Rights Agreement,
dated as of August 5, 1997, between Cooper and First Chicago Trust
Company of New York.
Danaher would expect a merger agreement with Cooper to be conditioned
upon approval by the Danaher and Cooper shareholders, receipt of all required
regulatory approvals, and other customary conditions, including satisfaction of
certain requirements under Ohio law. See "Background of the Solicitation --
Regulatory Approvals Required for the Proposed Danaher Merger."
There can be no assurance as to the timing or satisfaction of the
conditions to the Danaher Merger Proposal or as to the timing or satisfaction of
the conditions that a merger agreement between Danaher and Cooper would contain.
In addition, there can be no assurance that Cooper would be willing to enter
into merger discussions with Danaher even if Cooper shareholders rejected the
Reorganization Proposal.
By voting "AGAINST" the Reorganization Proposal, Cooper shareholders
can demonstrate their support for the proposed combination of Danaher and Cooper
and send a strong message to the Cooper Board that they want to preserve the
opportunity to consider the Danaher Merger Proposal.
TO ENSURE THAT WE MAY VOTE YOUR SHARES AT THE SPECIAL MEETING, WE URGE
YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED BLUE PROXY CARD AND MAIL IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING IN PERSON. YOU CAN WITHDRAW YOUR PROXY, OR CHANGE
YOUR VOTE, AT ANY TIME BEFORE IT IS VOTED BY EXECUTING A LATER-DATED PROXY, BY
VOTING BY BALLOT AT THE SPECIAL MEETING, OR BY FILING AN INSTRUMENT OF
REVOCATION WITH THE INSPECTORS OF ELECTION IN CARE OF MACKENZIE PARTNERS, INC.
2
REASONS TO VOTE AGAINST THE PROPOSED REORGANIZATION
Danaher urges you to vote your shares of Cooper Common Stock AGAINST
the Reorganization Proposal for the following reasons:
- A vote against the Reorganization Proposal satisfies a condition
to the Danaher Merger Proposal and moves you one step closer to
receiving the superior value represented by the Danaher Merger
Proposal.
- A vote against the Reorganization Proposal will send a firm
message to the Cooper Board of Directors that you support the
Danaher Merger Proposal.
- We believe that reincorporating Cooper in Bermuda will have the
effect of further entrenching the Cooper Board of Directors and
increasing the risk that Cooper shareholders will be denied a
change of control premium for their shares.
Danaher believes that the combination of Danaher and Cooper is a
superior alternative to the Reorganization Proposal and would provide
substantial benefits to the Cooper shareholders, for the following reasons:
- SIGNIFICANT PREMIUM. The Danaher Merger Proposal would provide an
immediate and substantial premium for your shares of Cooper Common
Stock. In contrast, the reorganization in Bermuda will not yield
any premium at all.
- STRONGER CURRENCY. The Danaher Merger Proposal would provide
Cooper shareholders an opportunity to invest in Danaher Common
Stock, which has demonstrated stronger performance and delivered
more attractive total returns than Cooper Common Stock and the S&P
500 for the past three, five and ten year periods.
- STRONGER COMBINED COMPANY. Cooper's shareholders will have the
opportunity to participate in the growth and synergies of a
stronger, well capitalized company, with a management team focused
on the aggressive pursuit of enhanced shareholder value.
- FAVORABLE TAX TREATMENT. The Danaher Merger Proposal offers
Cooper shareholders consideration comprised of 75% Danaher stock
and 25% cash. Accordingly, our proposal provides an immediate
and substantial cash payment to Cooper shareholders, and is also
expected to qualify as a reorganization for tax purposes. Thus,
it is expected that shareholders would only pay tax on their
gain up to the amount of the cash they receive, while the
majority of the consideration, namely the shares of Danaher
stock, would be received tax-free by Cooper shareholders. In
contrast, Cooper's planned reorganization will require
shareholders to pay tax on all their gains without providing them
any cash proceeds with which to satisfy the tax liability
incurred.
3
IMPORTANT
IF YOU WANT TO HAVE THE OPPORTUNITY TO CONSIDER THE PROPOSED DANAHER
MERGER, WE URGE YOU TO PROMPTLY SIGN, DATE AND MAIL THE ENCLOSED BLUE PROXY CARD
TO VOTE AGAINST THE REORGANIZATION PROPOSAL. WE URGE YOU TO EXECUTE AND MAIL THE
BLUE PROXY CARD AS SOON AS POSSIBLE.
REJECTION OF THE REORGANIZATION PROPOSAL IS A CRITICAL STEP IN SECURING
THE SUCCESS OF THE DANAHER MERGER PROPOSAL.
EVEN IF YOU HAVE ALREADY SENT A PROXY TO THE BOARD OF DIRECTORS OF
COOPER, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE. YOU MAY REVOKE THAT PROXY AND
VOTE AGAINST THE REORGANIZATION PROPOSAL BY SIGNING, DATING AND MAILING THE
ENCLOSED BLUE PROXY CARD IN THE ENCLOSED ADDRESSED ENVELOPE. NO POSTAGE IS
NECESSARY IF YOUR PROXY IS MAILED IN THE UNITED STATES.
THIS PROXY STATEMENT RELATES SOLELY TO THE SOLICITATION OF PROXIES IN
OPPOSITION TO THE REORGANIZATION PROPOSAL AND IS NEITHER AN OFFER TO SELL ANY
SHARES OF DANAHER COMMON STOCK NOR A REQUEST FOR THE TENDER OF SHARES OF COOPER
COMMON STOCK. THE ISSUANCE OF DANAHER COMMON STOCK IN CONNECTION WITH
DANAHER'S PROPOSED MERGER WITH COOPER WILL HAVE TO BE REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY ONLY BE MADE BY MEANS OF A PROSPECTUS COMPLYING
WITH THE REQUIREMENTS OF SUCH ACT.
4
BACKGROUND OF THE SOLICITATION
THE 1999 PROPOSAL
In 1999, George M. Sherman, the former President and Chief Executive
Officer of Danaher contacted Mr. Riley to raise the possibility of a combination
of Danaher and Cooper.
On August 17, 1999, Mr. Sherman sent Mr. Riley the following letter:
[DANAHER LETTERHEAD]
August 17, 1999
Mr. H. John Riley, Jr.
Chairman, President and Chief Executive Officer
Cooper Industries, Inc.
600 Travis Street, Suite 5800
Houston, Texas 77002-1001
Dear John:
The last time we spoke, I did not fully express my view of the compelling
opportunity presented by a merger between Cooper Industries, Inc. and Danaher
Corporation.
We believe there is significant value to be realized in combining our
businesses. Benefits would result from both the strategic alignment of our
businesses as well as the combined size and power of the new entity. The
immediate operational and strategic impact of combining our companies, as well
as the critical mass created, will drive short and long term value.
Together, we would create a company with more than $7 billion in revenues. More
importantly, the new company could assemble four strategic global business
platforms, each with at least $1 billion in revenue, and three additional
platforms with at least $500 million in revenue. Our research suggests these
seven platforms, which could operate under two business segments, would drive
value for all our constituents in part by accelerating internal growth rates and
in part by expanding the opportunities to acquire complementary business lines.
For example, a combination would create a $1 billion dollar utility products
platform. With our complementary lines and market reach, we would be well
positioned to succeed in this consolidating industry.
The combination of our tool businesses represents another opportunity to deliver
incremental value by creating an industry leader that would leverage the
combined operations and distribution channels. Not surprisingly, our tool
companies are already working together to better serve the customer.
5
Furthermore, a combination would create an exciting global enterprise with
compelling strength in industrial and electrical distribution. With the changes
and consolidation occurring in these distribution channels, we believe an
exceptional opportunity exists for sustainable competitive advantage. The
breadth and complementary nature of our products, coupled with the critical mass
and combined commitments to drive quality, costs and customer service, would
position us to take a leadership role in these distribution channels.
Our combined size would also create a balance sheet that would provide
additional opportunities to enhance value. The new entity would leverage our
combined purchasing power and enjoy a greater ability to retain and recruit top
talent. Our size would also allow us to increase the funding for internal growth
initiatives. With the proper funding, we can accelerate growth and deliver
superior returns to our shareholders. In addition, we would be in a position to
explore larger strategic acquisitions. We have already identified dozens of
acquisition opportunities for our combined businesses.
How much is all this worth? I believe the growth and cost opportunities from
combining these businesses is substantial. Simply put, this is an extraordinary
opportunity to bring two companies together to accelerate the combined internal
and external growth rates. This winning combination will help drive superior
value for our customers, associates, suppliers and shareholders. I believe our
management teams and Boards could effectively work together to manage the
combined enterprise.
For all these reasons, we would be prepared to make the following proposal that
has been discussed with and has the full support of our Board.
Our proposal would be for our companies to undertake a tax-free, all-stock
merger in which the shareholders of Cooper will receive 1.33 shares of Danaher
common stock for each Cooper common share they own. This exchange ratio offers a
compelling value of $78 per share based on our current stock price, and
represents a 40% premium above the current Cooper stock price. This exchange
ratio fairly reflects the synergies and benefits we envision would flow from the
combination of our businesses. Moreover, as future Danaher shareholders that
would hold almost half of the combined company's equity, Cooper shareholders
would participate fully in the upside and growth of a much stronger combined
company. As you may be aware, Danaher shareholders have enjoyed compounded
annual returns in excess of 30% for the last five, ten and fifteen year periods.
This of course reflects the company's consistent growth during these periods.
6
We believe that the transaction has no significant contingencies or regulatory
concerns. We have extensive experience in effecting business combinations, and
it is our view that this transaction can be completed expeditiously. We are
ready to undertake a mutual due diligence review at your earliest convenience.
Obviously, no legal obligations would be created on either of our parts until
a definitive merger agreement is signed, which agreement would contain
customary terms and conditions, including that the merger be accounted for as
a "pooling-of-interests."
We strongly desire the support of Cooper's management in this matter and hope
that our proposal will be well received by Cooper's Board of Directors. We have
been advised that there is no requirement for either of us to publicly disclose
this proposal, and we do not intend to disclose it.
John, I hope the two of us can meet and quietly explore this opportunity. I
would welcome the chance to garner your insights and allow me to further explain
Danaher and my thinking on this combination.
Clearly, this opportunity has the highest priority for all of us at Danaher, and
we hope you and your Board share our enthusiasm. I look forward to hearing from
you soon.
Sincerely,
/s/ George M. Sherman
George M. Sherman
President and Chief Executive Officer
* * *
7
On August 30, 1999, Mr. Sherman met with Mr. Riley in Houston to
discuss a possible transaction. At that meeting, Mr. Sherman explained to
Mr. Riley his view of the benefits of a business combination between Danaher
and Cooper.
In September, 1999, Mr. Riley indicated to Mr. Sherman that the Cooper
Board of Directors had decided not to pursue a possible combination with
Danaher.
THE CURRENT PROPOSAL
On July 17, 2001, the Danaher Board of Directors unanimously approved
the Danaher Merger Proposal and related matters. Later that day, H. Lawrence
Culp, Jr., President and Chief Executive Officer of Danaher, telephoned
Mr. Riley to relay the Danaher Merger Proposal and to suggest that Mr. Culp
and Mr. Riley meet to discuss the Danaher Merger Proposal in greater detail.
On July 21, 2001, Mr. Culp and Patrick W. Allender, Executive Vice
President, Chief Financial Officer and Secretary of Danaher met with Mr. Riley,
D. Bradley McWilliams, Senior Vice President and Chief Financial Officer of
Cooper and David A. White, Jr., Senior Vice President, Strategic Planning and
New Venture Development Officer of Cooper at Cooper's headquarters in Houston,
Texas. At the meeting, Messrs. Culp and Allender described to Messrs. Riley,
McWilliams and White Danaher's business and its historical performance and
Danaher's vision for the future. Next, Messrs. Culp and Allender discussed
specific terms of the Danaher Merger Proposal, including the fact that the
proposal is conditioned upon Danaher having an opportunity to conduct a due
diligence review of Cooper. Mr. Culp emphasized his belief that Danaher could
complete its due diligence review of Cooper quickly and indicated Danaher's
eagerness to expeditiously negotiate a friendly transaction. At the conclusion
of the meeting, Mr. Riley indicated that the Cooper Board of Directors would
consider the Danaher Merger Proposal at its next regularly scheduled meeting
on August 7, 2001.
8
On July 25, 2001, Danaher delivered the following letter to Mr. Riley:
[DANAHER LETTERHEAD]
July 25, 2001
Mr. H. John Riley, Jr.
Chairman and Chief Executive Officer
Cooper Industries, Inc.
600 Travis
Suite 5800
Houston, Texas 77002
Dear John:
Pat Allender and I enjoyed meeting with you, Brad McWilliams and Dave White this
past Saturday to discuss our proposal for a business combination between Danaher
Corporation and Cooper Industries, Inc. We appreciate your time, as well as your
assurance that our offer will be relayed to and duly considered by the Cooper
Board of Directors. As we indicated to you, however, in light of the accelerated
timetable for the shareholder vote to consider your proposal to reincorporate
Cooper in Bermuda and the fact that we are offering a substantial premium to
Cooper shareholders, we believe it would be appropriate for our proposal to be
considered more promptly than at your next scheduled Board meeting on August 7.
I thought it would be useful to memorialize for you and to set out for the
Cooper Board of Directors the specifics of our proposed business combination so
that your Board will have the benefit of our thinking and be able to consider
our proposal fully and expeditiously.
As you know, we at Danaher have for some time believed that a combination of our
two companies would create an exciting global enterprise with critical mass and
leverageable strengths across many product platforms that would drive revenue
growth, reduce costs and improve operational efficiency. Such a merger would be
extremely compelling from both an industrial and a financial perspective. With
combined revenues in excess of $8 billion and annual operating profit well in
excess of $1 billion, the combined company would have a powerful financial base
from which to further enhance growth both organically and through acquisitions.
The strength of the combined balance sheet and the new opportunities that will
be created will deliver superior returns to our combined shareholder base with
benefits flowing to our customers, associates, suppliers and other
constituencies as well. The excellent fit between our two companies is evident
to us not only in the complementary nature of our businesses along product and
geographic lines, and in our mutual commitment to operating excellence, but also
in our strategic vision. You have made it clear that your primary reasons for
proposing to reincorporate Cooper in Bermuda are the opportunity to enhance cash
flow and with the additional cash be a more effective player in the
consolidating sectors in which we both operate. As you will recall, this was the
essential rationale for combining our two fine companies that my predecessor,
George Sherman, emphasized in his letter to you on August 17, 1999. It was
prescient then and is even more persuasive today. We believe that a combination
with Danaher would accelerate the fulfillment of your own desired objectives.
It has been almost two years since you rejected George's proposal for a merger,
which also offered a significant premium to Cooper's shareholders, in order to
pursue your business strategy independently. Because you had no interest in
pursuing a negotiated transaction, we did not pursue the matter at that time,
although we continued to believe in the tremendous value of combining our two
companies. A comparison of our respective companies' financial results and share
price performance from that time clearly indicates that your shareholders would
have realized significant additional value had you accepted our earlier
proposal. Since the date of George's letter to you, Danaher's stock has
outperformed Cooper's stock and the S&P 500 by 25 percentage points and 7
percentage points, respectively (a trend that has held true for the past three,
five and ten year periods as well).
9
Your recent decision to seek shareholder approval for a major reorganization and
reincorporation of Cooper in Bermuda prompted us to formally re-propose a
combination of Cooper and Danaher. We firmly believe that our merger proposal
represents a far more attractive near-term and long-term alternative to Cooper's
shareholders than your proposed restructuring plan. The significant tax and
other costs involved in migrating Cooper offshore would be altogether avoided in
a Danaher transaction which would also provide your shareholders with an
immediate and substantial value boost. More important even than our own view, we
are convinced that your shareholders will overwhelmingly agree with this
assessment and will not want to incur the costs of the move offshore in light of
our proposal. We note with interest the limited impact on your share price that
has resulted from your announced plan.
For all the above reasons, we have proposed to you a merger in which the Cooper
shareholders will receive consideration consisting of 75% Danaher stock and 25%
cash. Specifically, as we conveyed to you and your team when we met on July 21,
our proposal is to structure the transaction as a merger in which each Cooper
share would (subject to shareholder elections and proration as desired) be
converted into $14.50 in cash and 0.7650 Danaher shares at the high end of our
proposal or $13.50 in cash and 0.7123 Danaher shares at the low end of our
proposal. As we discussed, this offer would provide a value of $54.00 to $58.00
for each Cooper share based on the Danaher closing price on the day prior to our
meeting, which represented a 33% to 43% premium over Cooper's closing stock
price on the same day and a 40% to 50% premium over the average Cooper closing
stock price for the prior three months. Based on today's closing prices, our
proposal represents a 35% to 45% premium to Cooper's stock price. While our
proposal is based on our review and analysis of publicly available information
regarding Cooper, we expect that confirmation of our understanding of Cooper's
financial results and outlook through a due diligence review of Cooper's
business (which we believe could be completed in as little as two weeks) would
allow us to finalize a combination proposal at the high end of our range. We
believe that a transaction with a substantial component of Danaher stock (in
addition to a significant cash component) would be enthusiastically received by
your shareholders as it offers a significant participation in the growth and
synergy prospects of a much stronger combined company.
It is our view, and we are pleased that your team seems to agree, that a
combination of our companies would have no significant contingencies and that
this transaction can be completed expeditiously. We are ready to undertake a
mutual due diligence review at your earliest convenience and to meet with your
team to negotiate a merger agreement at any time. We believe ardently in the
wisdom and strategic value of this transaction and the benefits that it offers
to our combined shareholders and other stakeholders. I sincerely hope that you
and Cooper's other directors will share our enthusiasm. As I said above, we feel
strongly that an offer as compelling as this warrants prompt and thorough
consideration by your Board at a special meeting and should not languish "on the
back burner" for two weeks, particularly while you are actively soliciting your
shareholders to support your alternative reincorporation plan. Accordingly, we
would hope to hear back from you by the close of business on Monday, July 30 as
to your Board's considered view of our proposal.
This matter has the highest priority for us at Danaher and we are committed to
work with you in any way we can to expeditiously bring this vision to fruition.
I look forward to continuing our discussions soon and hopefully working together
to bring about a transaction in which everyone wins.
Sincerely,
/s/ H. Lawrence Culp, Jr.
H. Lawrence Culp, Jr.
President and Chief Executive Officer
* * *
10
On July 30, 2001, Mr. Riley sent a letter to Mr. Culp confirming that
the Board of Directors of Cooper would not consider the Danaher Merger Proposal
until its regularly scheduled meeting during the week of August 6. The
following is a copy of Mr. Riley's letter to Mr. Culp:
[COOPER LETTERHEAD]
July 30, 2001
Mr. H. Lawrence Culp, Jr.
President and Chief Executive Officer
Danaher Corporation
2099 Pennsylvania Avenue, N.W.
12th Floor
Washington, D.C. 20006-1813
Dear Larry:
I am responding to your letter dated July 25, 2001. I must admit that I am
somewhat disappointed at the tone of your letter after what I thought was a very
candid and cordial meeting here in Houston on Saturday, July 21, 2001.
I will begin by reiterating what I told you at the conclusion of our meeting on
July 21. With the advice and assistance of the Company's legal and financial
advisors, the Board of Directors of Cooper Industries will carefully and
thoroughly consider your proposal. We currently anticipate that the Board will
be meeting early in the week of August 6, and we fully intend to respond to you
promptly thereafter.
Given the nature of our meeting, I am also surprised by your apparent need to
create a "record" with a letter that contains several misstatements and
omissions. Without identifying each one of them, I feel compelled to address two
issues.
We attempted to clarify for you at our meeting the major shortcomings of
Danaher's 1999 proposal, made by your predecessor, George Sherman. Danaher's
proposal was anything but firm.
Your "all stock" proposal at that time was conditioned on receipt of "pooling"
accounting treatment. This required, among other things, that Cooper reissue
approximately 19% of its outstanding equity capital prior to consummation of any
business combination with Danaher, subjecting Danaher's "all stock" acquisition
proposal (and consequently both of our shareholder groups) to substantial
uncertainty and market risk. After a thorough evaluation, our Board of Directors
concluded that, under the circumstances, no further action on Danaher's proposal
was warranted.
11
Your letter also includes assertions regarding the costs associated with our
moving offshore. Our proxy statement, which was mailed to our shareholders,
clearly states that we do not expect the costs of our move offshore to be
material. Further, we believe the reorganization will facilitate growth of
Cooper by enabling it to obtain business, financial and strategic advantages
that are not currently available, thereby making Cooper stock a more attractive
investment alternative.
Larry, after receiving your letter, I believe it is all the more important that
management, the Company's legal and financial advisors and Cooper's Board of
Directors carefully and diligently review both the substance and implications of
your proposal. We intend to do so promptly and will respond to you following
that review.
Sincerely,
/s/ H. John Riley, Jr.
H. John Riley, Jr.
Chairman, President and Chief Executive Officer
* * *
12
On August 1, 2001, Danaher issued a press release announcing the
Danaher Merger Proposal and delivered the following letter to Mr. Riley:
[DANAHER LETTERHEAD]
August 1, 2001
Mr. H. John Riley, Jr.
Chairman and Chief Executive Officer
Cooper Industries, Inc.
600 Travis Street
Suite 5800
Houston, Texas 77002
Dear John:
I am responding to your letter dated July 30, 2001. We were disappointed that
you did not consider it appropriate to deal with our offer more expeditiously.
We believe Cooper shareholders will find our proposal preferable to the
company's proposal to redomicile in Bermuda, especially given Danaher's long
history of superior performance. We were also surprised by your remarks
concerning our prior proposal in 1999 to merge Danaher with Cooper. Danaher's
proposal was firm and achievable and we believe would have created considerable
value for shareholders.
Given your apparent misunderstanding of the seriousness of our prior offer, we
wanted to make it clear that we are deeply committed to a merger of our two
companies. To demonstrate our firm commitment to achieving a negotiated
transaction, we publicly disclosed our proposal to merge with Cooper this
morning. We will not, however, act against the will of your shareholders and if
they approve the action to redomicile, Danaher will withdraw its proposal
promptly.
The combination of our two companies has our highest priority. I very much hope
that we can quickly achieve a mutually beneficial transaction. I look forward to
continuing our discussions soon.
Sincerely,
/s/ H. Lawrence Culp, Jr.
H. Lawrence Culp, Jr.
President and Chief Executive Officer
* * *
13
REGULATORY APPROVALS REQUIRED FOR THE PROPOSED DANAHER MERGER
ANTITRUST APPROVALS AND CLEARANCES
The Proposed Danaher Merger would be subject to the clearance or
approval under the United States antitrust laws and probably certain other
countries' antitrust or trade regulation laws and regulations. Danaher is in the
process of determining which, if any, foreign antitrust approvals or clearances
would be required.
In the United States, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR
Act"), and the related rules and regulations that have been issued by the
Federal Trade Commission (the "FTC"), certain acquisition transactions may not
be consummated until certain information and documentary material have been
furnished for review by the FTC and the Antitrust Division of the Department of
Justice (the "Antitrust Division") and certain waiting period requirements have
been satisfied. These requirements would apply to the Proposed Danaher Merger.
Under the HSR Act, the Proposed Danaher Merger may not be
completed until the expiration of a 30 calendar-day waiting period (or 15
calendar-day waiting period in the case of a tender or exchange offer) following
the filing of certain required information and documentary material concerning
the Proposed Danaher Merger with the FTC and the Antitrust Division, unless the
waiting period is earlier terminated by the FTC and the Antitrust Division. If
within such waiting period either the FTC or the Antitrust Division requests
additional information or documentary material from Danaher and Cooper, the
waiting period with respect to the Proposed Danaher Merger would be extended for
an additional period of 30 calendar days following the date of Danaher's
substantial compliance with that request. Only one extension of the waiting
period pursuant to a request for additional information is authorized by the HSR
rules. After that time, the waiting period could be extended only by court order
or with Danaher's consent. The FTC or the Antitrust Division may terminate the
additional 30 calendar-day waiting period before its expiration. In practice,
complying with a request for additional information or documentary material can
take a significant period of time.
The FTC and the Antitrust Division may scrutinize the legality
under the antitrust laws of transactions such as the Proposed Danaher Merger.
The FTC or the Antitrust Division could take any action under the antitrust laws
that either considers necessary or desirable in the public interest, including
seeking to enjoin a transaction, the divestiture of shares purchased in a
transaction or the divestiture of substantial assets. Private parties as well as
state attorneys general may also bring legal actions under the antitrust laws
under certain circumstances.
14
Based upon an examination of publicly available information
relating to the businesses in which Cooper is engaged, we believe that the
Proposed Danaher Merger would not violate the applicable United States, or any
other country's, antitrust laws. Nevertheless, we cannot be certain that a
challenge to the Proposed Danaher Merger on antitrust grounds would not be made,
or, if such challenge is made, what the result will be.
OTHER REQUIRED APPROVALS
Danaher is not aware of any other material governmental approvals or
actions that are required prior to the consummation of the Proposed Danaher
Merger other than approval under the HSR Act described above. Danaher presently
contemplates that if any additional governmental approvals or actions were to be
required, these approvals or actions would be sought. However, Danaher cannot
assure Cooper shareholders that any of these additional approvals or actions
would be obtained.
ANTI-TAKEOVER MEASURES
Certain anti-takeover provisions of Cooper's articles and code of
regulations are designed to deter a business combination with Cooper, including
Cooper's staggered Board and its shareholder rights plan, each of which is
intended to require the cooperation of the Cooper Board of Directors with
respect to merger proposals from third parties, such as the Danaher Merger
Proposal.
Certain provisions of Ohio law must be complied with before the
Danaher Merger Proposal can be implemented. For example, Section 1701.831 of
the Ohio General Corporation Law prohibits the acquisition of certain threshold
amounts of a company's shares without the prior approval of a majority of the
outstanding shares and a majority of the shares not owned by the acquirer,
officers or employee directors. This provision would apply to the Danaher
Merger Proposal.
15
VOTING INFORMATION
GENERAL
According to information contained in Cooper's July 27, 2001 proxy
statement/prospectus relating to the Reorganization Proposal, as of the Record
Date there were approximately 93,650,500 shares of Cooper Common Stock
outstanding. On each matter properly submitted to Cooper shareholders, each
Cooper shareholder is entitled to one vote for each outstanding share of Cooper
Common Stock held as of the close of business on the Record Date.
REORGANIZATION PROPOSAL
Approval of the Reorganization Proposal requires the affirmative vote
of a majority of the voting power of Cooper. Broker non-votes and abstentions
will have the same effect as votes against the Reorganization Proposal.
The accompanying blue proxy card will be voted in accordance with the
shareholder's instructions on such blue proxy card. Shareholders may vote
against the Reorganization Proposal (Item 1 on the enclosed proxy card) by
marking the proper box on the blue proxy card. If no instructions are given
with respect to Item 1, the blue proxy card will be voted AGAINST the
Reorganization Proposal.
Whether or not you plan to attend the Special Meeting, we urge you to
vote AGAINST the Reorganization Proposal on the enclosed blue proxy card and
immediately mail it in the enclosed envelope. You may do this even if you have
already sent in a different proxy solicited by Cooper's Board of Directors. IT
IS YOUR LATEST DATED PROXY THAT COUNTS. Execution and delivery of a proxy by a
record holder of shares of Cooper Common Stock will be presumed to be a proxy
with respect to all shares held by such record holder unless the proxy specifies
otherwise.
You may revoke your proxy at any time prior to its exercise by
attending the Special Meeting and voting in person, by submitting a duly
executed later dated proxy or by submitting a written, signed and dated notice
of revocation which clearly identifies the proxy being revoked to Danaher's
Corporate Secretary at Danaher Corporation, 2099 Pennsylvania Avenue, NW, 12th
Floor, Washington, D.C. 20006-1813. Unless revoked in the manner set forth
above, duly executed proxies in the form enclosed will be voted at the Special
Meeting on the Reorganization Proposal in accordance with your instructions. In
the absence of such instructions, such proxies will be voted AGAINST the
Reorganization Proposal.
16
DANAHER STRONGLY RECOMMENDS A VOTE AGAINST THE REORGANIZATION PROPOSAL.
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE BLUE PROXY CARD TODAY.
IF YOU ALREADY HAVE SENT A PROXY TO COOPER, YOU MAY REVOKE THAT PROXY
AND VOTE AGAINST THE REORGANIZATION PROPOSAL BY SIGNING, DATING AND MAILING THE
ENCLOSED BLUE PROXY CARD.
If you have any questions about the voting of your shares, please call:
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
CALL COLLECT: (212) 929-5500
OR
CALL TOLL-FREE: (800) 322-2885
OTHER PROPOSALS
Except as set forth above, Danaher is not aware of any other matter to
be considered at the Special Meeting. However, if any other matter properly
comes before the Special Meeting, Danaher will vote all proxies held by it as
Danaher, in its sole discretion, may determine.
17
CERTAIN INFORMATION ABOUT DANAHER
Danaher is a Delaware corporation with its principal executive offices
located at 2099 Pennsylvania Avenue, NW, 12th Floor, Washington, D.C.
20006-1813. Danaher's telephone number at such location is (202) 828-0580.
Danaher designs, manufactures and markets industrial and consumer
products with strong brand names, proprietary technology and major market
positions in two principal businesses: Process/Environmental Controls and Tools
and Components. Through a focused strategy, Danaher has become a leading
manufacturer, competing effectively on a global basis by leveraging product
value, quality and customer service.
Danaher is subject to the informational filing requirements of the
Securities Exchange Act of 1934, as amended, and, in accordance therewith, is
obligated to file reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC") relating to its business,
financial condition and other matters. Information as of particular dates
concerning Danaher's directors and officers, their remuneration, options granted
to them, the principal holders of Danaher's securities and any material
interests of such persons in transactions with Danaher is required to be
disclosed in proxy statements distributed to Danaher's shareholders and filed
with the SEC. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the SEC at 450
Fifth Street, NW, Washington, D.C. 20549 (call 1-800-SEC-0330 for hours). Copies
of such information should be obtainable by mail, upon payment of the SEC's
customary charges, by writing to the SEC's principal office at 450 Fifth Street,
NW, Washington, D.C. 20549-6009. The SEC also maintains an Internet website at
http://www.sec.gov that contains the reports, proxy statements and other
information filed electronically by Danaher. Danaher Common Stock is listed on
the NYSE under the symbol "DHR," and reports, proxy statements and other
information concerning Danaher should also be available at the offices of the
NYSE located at 20 Broad Street, New York, NY 10005.
Certain information concerning the executive officers and directors of
Danaher and other representatives of Danaher who may solicit proxies from Cooper
shareholders is set forth in Schedule II of this Proxy Statement. Certain
information concerning the shares of Cooper Common Stock held by the persons
described in the preceding sentence and by Danaher is also set forth in Schedule
II of this Proxy Statement.
18
DISSENTERS' RIGHTS
Shareholders of a corporation that is proposing to merge with another
entity are sometimes entitled to appraisal or dissenters' rights in connection
with the proposed transaction, depending on the circumstances. Most commonly,
these rights give shareholders who oppose the merger the right to receive the
fair value of their shares, as determined in a judicial appraisal proceeding,
instead of the consideration being offered in the merger.
According to Cooper's July 27, 2001 proxy statement/prospectus relating
to the Reorganization Proposal, Cooper shareholders are entitled to dissenters'
rights in connection with the reorganization in Bermuda. Cooper, as an Ohio
corporation, is governed by Section 1701.85 of the Ohio General Corporation Law
regarding the rights of dissenting shareholders.
If you are a Cooper shareholder and want to receive the fair cash value
of your shares, you should consult Section 1701.85 of the Ohio General
Corporation Law and strictly adhere to all of the provisions of that section.
That provision is included as Annex IV to Cooper's July 27, 2001 proxy
statement/prospectus relating to the Reorganization Proposal.
19
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, telefax, telegraph, the
Internet, newspapers and other publications of general distribution and in
person. Directors, officers and certain employees of Danaher and the other
participants listed on Schedule II hereto may assist in the solicitation of
proxies without any additional remuneration (except as otherwise set forth in
this Proxy Statement).
Danaher has retained MacKenzie Partners, Inc. ("MacKenzie") for
solicitation and advisory services in connection with solicitations relating to
the Special Meeting, for which MacKenzie is to receive a fee estimated not to
exceed $ in connection with the solicitation of proxies for the Special
Meeting. Up to people may be employed by MacKenzie in connection with the
solicitation of proxies for the Special Meeting. Danaher has also agreed to
reimburse MacKenzie for out-of-pocket expenses and to indemnify MacKenzie
against certain liabilities and expenses, including reasonable legal fees and
related charges. MacKenzie will solicit proxies for the Special Meeting from
individuals, brokers, banks, bank nominees and other institutional holders.
Directors, officers and certain employees of Danaher may assist in the
solicitation of proxies without any additional remuneration. The entire expense
of soliciting proxies for the Special Meeting by or on behalf of Danaher is
being borne by Danaher.
Danaher has retained Lehman Brothers and Merrill Lynch & Co. to act as
its financial advisors in connection with the Danaher Merger Proposal. In
connection with the Danaher Merger Proposal and pursuant to Letter Agreements
between each of Lehman Brothers and Merrill Lynch, on the one hand, and Danaher
on the other hand, Danaher has agreed to pay each of Lehman Brothers and Merrill
Lynch financial advisory fees of (i) $1,000,000 upon the earliest to occur of
commencement of a tender offer, exchange offer, or certain specified
solicitations of proxies or consents (other than the solicitation of proxies
against the Reorganization Proposal), (ii) $3,000,000 upon the execution of a
definitive business combination agreement with Cooper, and (iii) up to
$12,000,000 (offset by any amounts paid pursuant to clauses (i) and (ii) above)
upon consummation of a business combination agreement with Cooper. If,
following the execution of a definitive business combination agreement with
Cooper, the agreement is terminated and Danaher receives a termination fee,
Danaher will pay each of Lehman Brothers and Merrill Lynch a fee of up to
$7,500,000 (offsetby any amounts paid pursuant to clauses (i) and (ii) above).
Danaher has also agreed to reimburse Lehman Brothers and Merrill Lynch for
their reasonable expenses, including the fees and expenses of legal counsel,
incurred in connection with their respective engagements by Danaher. In
addition, Danaher has agreed to indemnify Lehman Brothers and Merrill Lynch
and certain related persons against certain liabilities, including certain
liabilities under the federal securities laws, arising out of their engagement.
In connection with the engagement of Lehman Brothers and Merrill Lynch
as financial advisors, Danaher anticipates that certain employees of Lehman
Brothers and Merrill Lynch may communicate in person, by telephone or otherwise
with a limited number of institutions, brokers or other persons who are Cooper
shareholders for the purpose of assisting in the solicitation of proxies for the
Special Meeting. Lehman Brothers and Merrill Lynch will not receive any fee for
or in connection with such solicitation activities apart from the fees which
they are otherwise entitled to receive as described above.
20
FORWARD LOOKING STATEMENTS
This proxy statement contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. In some cases, you can identify these so-called "forward-looking
statements" by words such as "may," "will," "expects," "plans," "believes,"
"estimates," "predicts," "potential," or words of similar tenor. These
forward-looking statements are based on management's good faith expectations and
beliefs concerning future developments, but you are cautioned that actual events
or results may differ materially from the expectations expressed in such
forward-looking statements as a result of various factors, including risks and
uncertainties, many of which are beyond the control of Danaher. Factors that
could cause actual results to differ materially include, but are not limited to:
(1) the businesses of Danaher and Cooper may not be integrated successfully or
such integration may be more difficult, time consuming or costly than expected;
(2) expected combination benefits from the transaction may not be fully realized
or realized within the expected time frame; (3) Cooper may not be able to meet
Danaher's expectations and revenues following the transaction may be lower than
expected; (4) operating costs and business disruption, including difficulties in
maintaining relationships with employees, customers or suppliers, may be greater
than expected following the transaction; (5) the regulatory approvals required
for the transaction may not be obtained on the proposed terms or on the
anticipated schedule; (6) the effects of legislative and regulatory changes
(particularly environmental regulations) which could affect demand for products
in the Process/Environmental Controls segment; (7) unanticipated developments
that could occur with respect to contingencies such as environmental matters and
litigation; (8) technological changes; (9) changes in labor or capital costs;
(10) Danaher's ability to attract and retain qualified employees; (11) future
acquisitions, strategic partnerships and divestitures; (12) general business and
economic conditions; and (13) other risks described from time to time in
Danaher's periodic reports filed with the SEC. Danaher disclaims any duty to
update any forward-looking statements, all of which are expressly qualified by
the foregoing.
21
SHAREHOLDER PROPOSALS
REQUIREMENTS FOR PROPOSING BUSINESS AND DIRECTOR NOMINATIONS AT COOPER
SHAREHOLDER MEETINGS ASSUMING COOPER SHAREHOLDERS APPROVE THE REORGANIZATION
PROPOSAL
The following description of the requirements for proposing business
and director nominations at Cooper shareholder meetings was taken from Cooper's
July 27, 2001 proxy statement/prospectus relating to the Special Meeting:
If the reorganization is approved by the shareholders, Cooper's
bye-laws will require that shareholders who wish to nominate persons for
election to the board of directors must submit their nominations to Cooper no
later than November 8, 2001 to be considered at the 2002 Annual Meeting of
Shareholders. Nominations must include certain information concerning the
nominee and the proponent's ownership of common shares of Cooper. Nominations
not meeting these requirements will not be entertained at the Annual Meeting.
The Secretary of Cooper can be contacted at 600 Travis, Suite 5800, Houston,
Texas 77002. Any other shareholder proposals intended to be presented for
consideration at the 2002 Annual Meeting of Shareholders must also be received
by the Secretary of Cooper no later than November 8, 2001, to be included in the
proxy materials relating to that meeting. If timely notice is not given of a
shareholder proposal, then the proxies named on the proxy cards distributed by
Cooper for the Annual Meeting may use the discretionary voting authority granted
them by the proxy cards if the proposal is raised at the meeting, whether or not
there is any discussion of the matter in the proxy statement/prospectus. In any
event, all shareholder proposals to be presented for consideration at the 2002
Annual Meeting of Shareholders must be received by the Secretary of Cooper no
later than January 22, 2002.
REQUIREMENTS FOR PROPOSING BUSINESS AND DIRECTOR NOMINATIONS AT COOPER
SHAREHOLDER MEETINGS ASSUMING COOPER SHAREHOLDERS REJECT THE REORGANIZATION
PROPOSAL
The following description of the requirements for proposing business
and director nominations at Cooper shareholder meetings was taken from Cooper's
March 8, 2001 proxy statement relating to Cooper's 2001 annual meeting:
All shareholder proposals must be submitted in writing to Diane K.
Schumacher, Senior Vice President, General Counsel and Secretary, Cooper
Industries, Inc., 600 Travis Street, Suite 5800, Houston, Texas 77002. Any
shareholder who intends to present a proposal at the 2002 Annual Meeting of
Shareholders must deliver the proposal to Cooper so that it is received no later
than November 8, 2001, to have the proposal included in Cooper's proxy materials
for that meeting. Shareholder proposals must also meet other requirements of the
Securities and Exchange Act of 1934 to be eligible for inclusion. If a
shareholder proposal is received after January 22, 2002, the persons voting the
proxies may vote in their discretion on such proposal as to all the shares for
which they have received proxies for the 2002 Annual Meeting of Shareholders.
22
OTHER INFORMATION
All information concerning Cooper and the Proposed Reorganization
contained herein has been taken from, or based upon, and is qualified in its
entirety by Cooper's July 27, 2001 proxy statement/prospectus relating to the
Reorganization Proposal and other publicly available documents on file with the
SEC and other publicly available information. Danaher does not take any
responsibility for the accuracy or completeness of such information or for any
failure by Cooper to disclose events that may have occurred and may affect the
significance or accuracy of any such information. Cooper shareholders can find
more information about the Reorganization Proposal in Cooper's July 27, 2001
proxy statement/prospectus relating to the Special Meeting.
August , 2001 Danaher Corporation
If you have any questions or need assistance voting your shares,
please call:
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
CALL TOLL-FREE: (800) 322-2885
BANKS AND BROKERS CALL COLLECT: (212) 929-5500
23
SCHEDULE I
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT OF COOPER
According to information contained in Cooper's Proxy Statement filed
with the SEC on March 8, 2001 (the "March Proxy Statement"), as of March 1,
2001, there were 93,539,239 shares of Cooper Common Stock outstanding. The
information contained in this Schedule I has been taken from the March Proxy
Statement. Danaher does not take any responsibility for the accuracy or
completeness of such information or for any failure by Cooper to disclose events
that may have occurred and may affect the significance or accuracy of any such
information.
The following table was copied from the March Proxy Statement and sets
forth, as of March 1, 2001, each person who beneficially owned more than 5% of
Cooper Common Stock. According to the March Proxy Statement, to the best of
Cooper's knowledge, no other person owned more than 5% of Cooper Common Stock as
of March 1, 2001.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------- ------------------- -------------------- --------
Common Stock............... AXA 12,375,626(1) 13.2%
27 Avenue Matignon
75008 Paris, France
Common Stock............... Wellington Management 6,152,000 (2) 6.6%
Company, LLP
75 State Street
Boston, Massachusetts 02109
Common Stock............... J.P. Morgan Chase & Co. 6,083,635(3) 6.5%
270 Park Avenue
New York, NY 10017
------------
(1) Based on Schedule 13G dated February 12, 2001 filed jointly on behalf
of AXA Financial, Inc. (formerly known as The Equitable Companies
Incorporated), AXA, and four French mutual insurance companies (AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil
Vie Assurance Mutuelle, AXA Courtage Assurance Mutuelle) as a group.
Individually and as a group, the French mutual insurance companies and
AXA have sole voting power over 6,110,296 shares, shared voting power
over 1,359,502 shares, sole dispositive power over 12,232,326 shares
and shared dispositive power over 143,300 shares. AXA Financial, Inc.
has sole voting power over 6,045,996 shares, shared voting power over
1,359,502 shares, sole dispositive power over 12,232,326 shares and
shared dispositive power over no shares. The shares are beneficially
owned directly by AXA entities or subsidiaries of AXA Financial, Inc.
as follows:
I-1
AXA Rosenberg (U.S.) -- 143,300 shares; Alliance Capital Management
L.P. -- 12,231,526 shares; and The Equitable Life Assurance Society of
the United States -- 800 shares. The addresses of the joint filers
are: AXA Conseil Vie Assurance Mutuelle, AXA Assurances I.A.R.D.
Mutuelle and AXA Assurances Vie Mutuelle, 370 rue Saint Honore,
75001 Paris, France; AXA Courtage Assurance Mutuelle, 26 rue Louis le
Grand, 75002 Paris, France; and AXA Financial, Inc., 1290 Avenue of
the Americas, New York, New York 10104.
(2) Based on Schedule 13G dated February 14, 2001 filed by Wellington
Management Company, LLP ("WMC") and Schedule 13G dated February 14,
2001 filed by Vanguard Wellington Fund ("VWF"). Shares are held by WMC
directly or through its affiliate, Wellington Trust Company NA.
Includes 4,029,400 shares that are beneficially owned by VWF, which is
a client of WMC. WMC has shared voting power over 619,900 shares,
shared dispositive power over 6,152,000 shares, and sole voting power
and sole dispositive power over no shares. VWF has sole voting power
and shared dispositive power over 4,029,400 shares, and shared voting
power and sole dispositive power over no shares.
(3) Based on Schedule 13G dated February 12, 2001 filed by J.P. Morgan
Chase & Co. Shares are held by J.P. Morgan Chase & Co. directly or
through its affiliates, The Chase Manhattan Bank, Morgan Guaranty Trust
Co. of New York, and J.P. Morgan Investment Management Inc. J.P.
Morgan Chase & Co. has sole voting power with respect to 5,045,181
shares, shared voting power with respect to 11,574 shares, sole
dispositive power with respect to 5,957,640 shares and shared
dispositive power with respect to 66,200 shares.
(4) In addition, The Chase Manhattan Bank, a subsidiary of J.P. Morgan
Chase & Co., as Trustee of CO-SAV, holds of record 3,919,945 shares
of Cooper Common Stock, which is 4.2% of the outstanding shares of
Common Stock. The CO-SAV participants have voting rights with respect
to all such shares.
I-2
The following table was copied from the March Proxy Statement and sets
forth, as of March 1, 2001, the number of shares of Cooper Common Stock held by
each director or nominee for director of Cooper and each executive officer named
in the March Proxy Statement's list of executive officers. As of March 1, 2001,
each of the named individuals and all directors and executive officers as a
group beneficially owned 1.37% of Cooper's outstanding Common Stock.
Number of Shares Beneficially
Name of Beneficial Owner Owned (1)
------------------------ ---------
H. John Riley, Jr. 502,917 (2)(3)
Warren L. Batts 21,492 (4)(5)
Robert M. Devlin 4,200
Clifford J. Grum 22,200
Linda A. Hill 4,200
John D. Ong 7,900 (6)
Sir Ralph H. Robins 4,575
H. Lee Scott 2,558 (5)
Dan F. Smith 4,280 (5)
Gerald B. Smith 0
James R. Wilson 7,973 (5)
Ralph E. Jackson, Jr. 161,914 (2)(3)
D. Bradley McWilliams 107,056 (2)(3)
Diane K. Schumacher 70,905 (3)
David R. Sheil 51,830 (2)(3)
All Directors and Executive Officers as a Group 1,279,030 (2)(3)
------------
(1) Includes shares held by executive officers in the Cooper Industries,
Inc. Retirement Savings and Stock Ownership Plan. Also includes shares
issuable upon the exercise of options granted under either the Stock
Incentive Plan or the Directors' Stock Plan that are exercisable within
a period of 60 days from March 1, 2001, as follows: Mr. Riley --
243,499 shares; Mr. Batts -- 3,000 shares; Mr. Devlin -- 1,000 shares;
Mr. Grum -- 2,000 shares; Ms. Hill -- 3,000 shares; Mr. Ong -- 3,000
shares; Sir Ralph Robins -- 3,000 shares; Mr. Wilson -- 2,000 shares;
Mr. Jackson -- 87,499 shares; Mr. McWilliams -- 53,366 shares; Ms.
Schumacher -- 41,332 shares; Mr. Sheil -- 39,398 shares; and all
directors and executive officers as a group -- 657,952 shares.
(2) Includes shares the receipt of which has been deferred pursuant to the
Stock Incentive Plan and the Executive Restricted Stock Incentive Plan,
as follows: Mr. Riley -- 134,713 shares; Mr. Jackson -- 57,788 shares;
Mr. McWilliams -- 26,833 shares; Mr. Sheil -- 517 shares; and all
executive officers as a group -- 258,193 shares.
I-3
(3) Includes shares the receipt of which has been deferred pursuant to the
Management Annual Incentive Plan, as follows: Mr. Riley -- 10,374
shares; Mr. Jackson -- 2,345 shares; Mr. McWilliams -- 4,187 shares;
Ms. Schumacher -- 2,607 shares; Mr. Sheil -- 1,019 shares; and all
executive officers as a group -- 20,532 shares.
(4) Includes 17,200 shares held in a trust for which Mr. Batts is the
settlor and trustee and for which a member of his family is the
beneficiary. Mr. Batts has sole voting and investment power with
respect to these shares.
(5) Includes shares the receipt of which has been deferred by the
directors under the Directors' Retainer Fee Stock Plan, as follows:
Mr. Batts -- 1,292 shares; Mr. Scott -- 2,158 shares; Mr. D. Smith --
3,480 shares; and Mr. Wilson -- 4,273 shares.
(6) Includes 400 shares owned by members of Mr. Ong's family.
I-4
SCHEDULE II
INFORMATION CONCERNING
DIRECTORS AND OFFICERS OF DANAHER
AND OTHER PERSONS WHO MAY SOLICIT PROXIES
The following tables set forth the names and the titles of persons who
may be deemed to be participants on behalf of Danaher in the solicitation of
proxies from the shareholders of Cooper.
DIRECTORS AND OFFICERS OF DANAHER
Name Position
---- --------
Steven M. Rales Director, Chairman of the Board
Mitchell P. Rales Director, Chairman of the Executive Committee
H. Lawrence Culp, Jr. Director, President and Chief Executive Officer
Alan G. Spoon Director
Mortimer M. Caplin Director
Donald J. Ehrlich Director
Walter G. Lohr, Jr. Director
A. Emmet Stephenson, Jr. Director
Patrick W. Allender Executive Vice President, Chief Financial
Officer and Secretary
Philip W. Knisely Executive Vice President
Steven E. Simms Executive Vice President
William J. Butler Vice President and Group Executive
Thomas S. Gross Vice President and Group Executive
Daniel L. Comas Vice President-Corporate Development
W. Bruce Graham Vice President-Danaher Business System
James H. Ditkoff Vice President-Finance and Tax
Dennis A. Longo Vice President-Human Resources
Christopher C. McMahon Vice President-Controller
Daniel A. Pryor Vice President-Strategic Development
Uldis K. Sipols Vice President-Procurement
As of the date of this filing, Mortimer M. Caplin beneficially owned
approximately 6,800 shares of Cooper Common Stock.
II-1
OTHER PERSONS WHO MAY ALSO SOLICIT PROXIES
Representatives of Merrill Lynch:
Name Position
---- --------
Paul Stefanick Managing Director
Michael Santini Director
Greg Starkins Director
Merrill Lynch's principal business address is 4 World Financial Center,
New York, New York 10080. Merrill Lynch engages in a full range of investment
banking, securities trading, market-making and brokerage services for
institutional and individual clients. In the normal course of its business,
Merrill Lynch may trade the debt and equity securities of Cooper for its own
account and for the accounts of its customers, and, accordingly, may at any time
hold a long or short position in such securities. Merrill Lynch has informed
Danaher that, as of the close of business on August 2, 2001, Merrill Lynch, for
its own account, held 41,257 shares of Cooper Common Stock. Merrill Lynch and
certain of its affiliates also may have voting and dispositive power with
respect to certain shares of Cooper Common Stock held in asset management,
brokerage and other accounts. Merrill Lynch and such affiliates disclaim
beneficial ownership of such shares of Cooper Common Stock.
Merrill Lynch does not admit that it or any of its partners, directors,
officers, employees, affiliates or controlling persons, if any, is a
"participant" as defined in Schedule 14A promulgated under the Securities
Exchange Act of 1934, as amended, in the solicitation of proxies, or that
Schedule 14A requires the disclosure of certain information concerning it or
them.
II-2
Representatives of Lehman Brothers:
Name Position
---- --------
Steven Wolitzer Managing Director
Roman Martinez Managing Director
Mark Hudson Senior Vice President
Lehman Brothers' principal business address is 3 World Financial
Center, New York, New York 10285. Lehman Brothers engages in a full range of
investment banking, securities trading, market-making and brokerage services for
institutional and individual clients. In the normal course of its business,
Lehman Brothers may trade the debt and equity securities of Cooper for its own
account and for the accounts of its customers, and, accordingly, may at any time
hold a long or short position in such securities. Lehman Brothers and certain of
its affiliates also may have voting and dispositive power with respect to
certain shares of Cooper Common Stock held in asset management, brokerage and
other accounts. Lehman Brothers and such affiliates disclaim beneficial
ownership of such shares of Cooper Common Stock.
Lehman Brothers does not admit that it or any of its partners,
directors, officers, employees, affiliates or controlling persons, if any, is a
"participant" as defined in Schedule 14A promulgated under the Securities
Exchange Act of 1934, as amended, in the solicitation of proxies, or that
Schedule 14A requires the disclosure of certain information concerning it or
them.
Other than as set forth in this Proxy Statement, as of the date of this
filing, neither Danaher nor any of the other participants listed above has any
substantial interest, direct or indirect, by security holdings or otherwise, in
Cooper.
II-3
Appendix A
[FORM OF DANAHER PROXY]
THIS PROXY IS SOLICITED ON BEHALF OF DANAHER CORPORATION
IN OPPOSITION TO THE SOLICITATION BY THE COOPER BOARD OF DIRECTORS
FOR USE AT THE SPECIAL MEETING OF SHAREHOLDERS
OF COOPER INDUSTRIES, INC.
TO BE HELD ON AUGUST 30, 2001
The undersigned shareholder of Cooper Industries, Inc. ("Cooper")
hereby appoints H. Lawrence Culp, Jr., Patrick W. Allender, and Daniel L. Comas,
each or any of them, attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of common stock, par value $5.00 per
share, of Cooper which the undersigned is entitled to vote at the Special
Meeting of Shareholders of Cooper to be held on August 30, 2001, and at any
adjournments or postponements thereof (the "Special Meeting"), with all the
powers the undersigned would possess if personally present at the Special
Meeting, as directed on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER AND AT THE DISCRETION OF THE
PROXY HOLDERS AS TO ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE SPECIAL
MEETING. IF NO DIRECTION IS INDICATED FOR ITEM 1, THIS PROXY WILL BE VOTED
AGAINST APPROVAL OF THE REINCORPORTION PROPOSAL.
This card also constitutes voting instructions for any shares held for
the shareholder in Cooper's Dividend Reinvestment Plan and Stock Purchase Plan
and the Cooper Industries, Inc. Retirement Savings and Stock Ownership Plan, as
well as any shares acquired through Cooper's Employee Stock Purchase Plan that
are being held in a book-entry account at EquiServe Trust Company, N.A.
THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED WITH
RESPECT TO THE MATTERS COVERED HEREBY.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
A-1
DANAHER RECOMMENDS THAT YOU VOTE AGAINST ITEM 1 BELOW.
ITEM 1.
To adopt the Agreement and Plan of Merger, dated as of June 11, 2001,
among Cooper Industries Ltd., a Bermuda company, Cooper Industries, Inc., an
Ohio corporation and Cooper Mergerco, Inc., an Ohio corporation, whereby the
company will effectively change its place of incorporation from Ohio to Bermuda.
AGAINST [ ] FOR [ ] ABSTAIN [ ]
The proxies are authorized to vote in their discretion upon all such
other matters as may properly come before the Special Meeting.
Dated , 2001
------------------------------
-------------------------------
Signatures Date
Please sign your name exactly
as it appears hereon. When
signing as attorney, executor,
administrator, trustee or
guardian, please give your full
title. If a corporation,
please sign in full corporate
name by the president or other
authorized officer. If a
partnership, please sign the
partnership name by authorized
person(s).
PLEASE SIGN, DATE AND RETURN THIS BLUE PROXY CARD
PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
If you need assistance in voting your shares, please call MacKenzie
Partners, Inc., Danaher's proxy solicitor, toll-free at 1-800-322-2885.
A-2