SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
DANA CORPORATION
(Name of Subject Company (Issuer))
DELTA ACQUISITION CORP.
ARVINMERITOR, INC.
(Names of Filing Persons (Offerors))
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
23581110
(CUSIP Number of Class of Securities)
----------------------
Vernon G. Baker, II, Esq.
ArvinMeritor, Inc.
2135 West Maple Road
Troy, Michigan 48084
Telephone: (248) 435-1000
(Name, Address and Telephone Numbers of Person Authorized
to Receive Notices and Communications on Behalf of Filing Persons)
Copies to:
Dennis J. Friedman, Esq.
Steven P. Buffone, Esq.
Gibson, Dunn & Crutcher LLP
200 Park Ave.
New York, New York 10166
Telephone: (212) 351-4000
CALCULATION OF FILING FEE
________________________________________________________________________________
Transaction Valuation Amount of Filing Fee
Not applicable* Not Applicable*
________________________________________________________________________________
_________________
* A filing fee is not required in connection with this filing as it relates
solely to preliminary communications made before the commencement of a tender
offer.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer:
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
THIS COMMUNICATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NEITHER AN
OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES OF DANA
CORPORATION OR ARVINMERITOR, INC. ARVINMERITOR INTENDS TO FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION TENDER OFFER DOCUMENTS WITH RESPECT TO THE
PROPOSED TENDER OFFER. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ SUCH
DOCUMENTS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL INCLUDE IMPORTANT
INFORMATION. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF ANY
DOCUMENTS FILED BY ARVINMERITOR WITH THE SEC AT THE SEC'S WEBSITE AT WWW.SEC.GOV
OR FROM ARVINMERITOR AT 2135 W. MAPLE ROAD, TROY, MI 48084, ATTN: INVESTOR
RELATIONS. COPIES OF THE OFFER TO PURCHASE AND RELATED TENDER OFFER MATERIALS
CAN ALSO BE OBTAINED BY CONTACTING MACKENZIE PARTNERS, INC. AT (212) 929-5500
COLLECT OR AT (800) 322-2885 TOLL-FREE OR BY EMAIL AT
PROXY@MACKENZIEPARTNERS.COM.
VIRGINIA:
IN THE CIRCUIT COURT FOR THE CITY OF BUENA VISTA
ARVINMERITOR, INC. )
)
and )
)
DELTA ACQUISITION CORP., )
)
Complainants, ) Chancery No. _________
)
v. )
)
DANA CORPORATION, )
JOSEPH M. MAGLIOCHETTI, )
BENJAMIN F. BAILAR, A. CHARLES )
BAILLIE, EDMUND M. CARPENTER, )
ERIC CLARK, GLEN H. HINER, )
JAMES P. KELLY, MARILYN R. MARKS, )
RICHARD B. PRIORY, FERNANDO M. )
SENDEROS, CHERYL W. GRISE, )
)
Defendants. )
BILL OF COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
Complainants ArvinMeritor, Inc. ("ArvinMeritor") and Delta Acquisition
Corp., by their counsel, allege upon knowledge with respect to themselves and
their own acts, and upon information and belief as to all other matters, as
follows:
SUMMARY OF THIS ACTION
1. On July 8, 2003, ArvinMeritor announced its tender offer (the
"Tender Offer") to acquire all of the outstanding common stock of Defendant Dana
Corporation ("Dana," or the "Company") for $15 per share in cash, an aggregate
price of approximately $2.5 billion for the common equity of the Company. The
Tender Offer represents a 55.7 percent premium over the closing price of the
Company's common stock on June 3, 2003, the last trading day before ArvinMeritor
first submitted a written
proposal for a business combination to Dana, and a 24.9 percent premium over the
closing price of Dana's common stock on July 7, 2003.
2. From the time that ArvinMeritor first contacted Dana, Dana has
flatly rejected ArvinMeritor's proposals for a business combination and has
refused to negotiate with ArvinMeritor. In fact, Dana has refused to meet with
ArvinMeritor even once to discuss its proposal. Instead, Dana's Board of
Directors (the "Board") has embarked upon a campaign to ensure the continued
control of Dana by its current top management and the Board, notwithstanding its
fiduciary obligations to Dana's shareholders.
3. ArvinMeritor seeks to acquire Dana through a transaction that is
non-coercive, non-discriminatory and entirely fair to Dana shareholders. This
transaction will not pose a threat to the interests of Dana's shareholders.
Indeed, the transaction will maximize the value of the Company's outstanding
common shares, and for that reason, it is in the best interest of Dana's
shareholders.
4. If the Tender Offer is successful, ArvinMeritor will complete its
acquisition (the "Proposed Acquisition") of the entire equity interest of Dana
by a merger of Delta Acquisition Corp. into Dana. By this Proposed Acquisition,
ArvinMeritor envisions the creation of an industry leader with the strategic
position, size, and scope of operations that will allow both companies to better
serve their customers, employees, and ultimately, their shareholders.
5. In light of the fair and non-coercive nature of ArvinMeritor's
Proposed Acquisition and its substantial value to Dana shareholders, Dana's
refusal to negotiate or even to discuss the details of ArvinMeritor's proposal
constitutes an unreasonable response to the Proposed Acquisition, in violation
of the fiduciary duties of Defendants to the Company's shareholders. By this
action, ArvinMeritor seeks to compel Defendants to fulfill their fiduciary
duties.
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JURISDICTION AND VENUE
6. This Court has jurisdiction over the Company because Dana is
incorporated under the laws of the Commonwealth of Virginia, and over the
individual Defendants because, among other reasons, they are directors of a
Virginia corporation, and they are subject to jurisdiction under Virginia Code
Section 8.01-328.1. This action is not removable.
7. Venue is proper in this Court under Virginia Code Section
8.01-262(3) because Dana conducts business in Buena Vista, Virginia, at its
branch (the "Branch") located at 3200 Green Forest Avenue. This Branch, a
division of Dana, manufactures automotive and light truck axles. Upon
information and belief, the Branch has approximately 300 employees.
THE PARTIES
8. Complainant ArvinMeritor is an Indiana corporation with its
principal place of business at 2135 West Maple Road, Troy, Michigan, 48084-7186.
ArvinMeritor is the beneficial holder of approximately 1,085,300 shares, or .73
percent, of Dana common stock. ArvinMeritor is a global supplier of integrated
systems, modules, components, and applications serving various industries.
ArvinMeritor also provides coil coating applications to the transportation,
appliance, construction and furniture industries.
9. Complainant Delta Acquisition Corp. was incorporated under the laws
of the Commonwealth of Virginia for the purpose of engaging in a business
combination with the Company. It is a wholly-owned subsidiary of ArvinMeritor.
Delta Acquisition Corp. has not, and is not expected to, engage in any business
other than in connection with its organization, the Tender Offer and the
Proposed Acquisition. Its principal executive offices and telephone number are
the same as those of ArvinMeritor.
10. Defendant Dana is a corporation with its principal executive
offices at 4500 Dorr Street, Toledo, Ohio, 43615. It was incorporated in
Virginia. According to its
3
most recent Form 10-K, Dana is a global supplier of modules, systems, and
components serving various industries.
11. As of April 25, 2003, Dana had approximately 148,620,000 shares of
common stock outstanding. (Dana Corp., Form 10-Q (May 1, 2003)). According to
its most recent Form 10-K, as of February 14, 2003, Dana had 37,400 shareholders
of record. Upon information and belief, those shareholders are located in many,
and perhaps all, states in this country as well as in a number of foreign
countries. Dana stock trades on the New York Stock Exchange and the Pacific
Exchange.
12. In 2002, Dana had gross sales of $9.5 billion, and, through
year-end 2002, more than 63,000 employees. (Dana Corp., Form 10-K (Feb. 25,
2003)). Upon information and belief, fewer than 500 of Dana's employees are
located in Virginia, with approximately 300 located at the Branch.
13. Dana maintains operations in 30 countries worldwide. Dana has
consolidated subsidiaries in 36 countries or territories and twelve states.
(Dana Corp., Form 10-K (Feb. 25, 2003)). Upon information and belief, none of
these consolidated subsidiaries is located in Virginia.
14. Upon information and belief, Dana does not own any real property in
Virginia.
15. Defendant Joseph M. Magliochetti is Chairman of the Dana Board and
the Company's Chief Executive Officer, President, and Chief Operating Officer.
16. Defendant Benjamin F. Bailar is a director of Dana.
17. Defendant A. Charles Baillie is a director of Dana.
18. Defendant Edmund M. Carpenter is a director of Dana.
19. Defendant Eric Clark is a director of Dana.
20. Defendant Glen H. Hiner is a director of Dana.
21. Defendant James P. Kelly is a director of Dana.
22. Defendant Marilyn R. Marks is a director of Dana.
4
23. Defendant Richard B. Priory is a director of Dana.
24. Defendant Fernando M. Senderos is a director of Dana.
25. Defendant Cheryl W. Grise is a director of Dana.
26. Defendants named in paragraphs 15 through 25 above are sometimes
collectively referred to herein as the "Individual Defendants."
FACTUAL BACKGROUND
Dana's Current Financial Condition
27. Dana has encountered significant financial difficulties over the
past several years, as evidenced by a steady decline in its stock price. In June
1999, Dana's stock was trading at more than $54 per share. Over the next four
years, Dana's stock lost substantial value, closing at $9.63 on June 3, 2003,
the last trading day before ArvinMeritor first submitted its proposal in writing
to Dana, and at $12.02 on July 7, 2003.
28. Upon information and belief, due to its substantial financial
difficulties, Dana undertook a restructuring program nearly two years ago, in
September 2001. However, this restructuring plan has led only to plant closings
and to lost jobs for Dana employees, as Dana itself has acknowledged:
Among the elements of the restructuring are a workforce reduction of
more than 15 percent and the planned closure or consolidation of more
than 30 facilities. Through June 30, [2002,] Dana had reduced its
permanent workforce by approximately 8 percent, closed 14 facilities,
and announced plans to close 14 others.
(Dana Corp., Press Release (July 17, 2002)).
Dana has reduced its permanent workforce by approximately 9 percent,
closed 18 facilities, and announced plans to close 16 others from the
inception of the restructuring plan announced one year ago through
Sept. 30, 2002.
(Dana Corp., Press Release (Oct. 25, 2002)).
5
29. Dana's performance has not improved since last year. In fact, as of
February 12, 2003, Dana had been forced to close 28 of its facilities as part of
its restructuring program. (Dana Corp., Press Release (Feb. 12, 2003)).
30. The Proposed Acquisition would dramatically improve the situation
for Dana's shareholders. In fact, ArvinMeritor's Tender Offer of $15 per share
would provide Dana's shareholders with a 55.7 percent premium over the closing
price of the Company's common stock on June 3, 2003, the last trading day before
ArvinMeritor first submitted its proposal in writing to Dana, and a 24.9 percent
premium over the closing price of Dana's common stock on July 7, 2003.
ArvinMeritor's Proposal and Dana's Response
31. From the start, despite the clear-cut, substantial economic
benefits for Dana's shareholders and Dana's significant financial struggles in
the hands of its current management, Dana and its Board have improperly
dismissed ArvinMeritor's proposal without sufficient consideration. This conduct
is entirely inconsistent with the Board's fiduciary duty to protect the
interests of Dana shareholders and to maximize shareholder value.
32. On July 8, 2003, ArvinMeritor publicly announced its Tender Offer
to acquire all of the outstanding shares of Dana for $15 per share in cash.
ArvinMeritor first conveyed its interest in acquiring Dana for $14 per share in
cash to Defendant Magliochetti, Dana's Chairman, Chief Executive Officer,
President, and Chief Operating Officer, during a telephone conversation on June
4, 2003 (the "June 4, 2003 Conversation").
33. Defendant Magliochetti's reaction was immediate and adverse to
Dana's shareholders. He simply refused to discuss ArvinMeritor's proposal.
Instead, twice during the June 4, 2003 Conversation, Defendant Magliochetti
stated emphatically that Dana was "not for sale."
6
34. This rejection of ArvinMeritor's proposal was not based on
consulting with the Board, any committees of the Board, any officers of Dana, or
any legal counsel or other professionals. As such, Defendant Magliochetti's
rejection of ArvinMeritor's proposal constitutes a breach of his fiduciary duty
to the Company's shareholders.
35. Following Defendant Magliochetti's improper rejection of
ArvinMeritor's proposal without discussing any details with ArvinMeritor or
consulting with the Board, on June 4, 2003, Larry D. Yost, the Chairman and
Chief Executive Officer of ArvinMeritor, sent a letter to Defendant Magliochetti
(the "June 4, 2003 Letter") memorializing ArvinMeritor's proposal of June 4,
2003. The letter noted that the price offered by ArvinMeritor represented a
premium of 45 percent over the closing price of Dana's common stock on June 3,
2003.
36. The June 4, 2003 Letter also noted that, as an alternative to the
proposal advanced earlier that day, ArvinMeritor was "prepared to consider a mix
of cash and stock consideration if it will facilitate a transaction." The June
4, 2003 Letter further stated that "[i]f you are willing to work with us to
consummate a transaction expeditiously, we may be prepared to analyze further
whether a higher value is warranted."
37. Finally, in the June 4, 2003 Letter, Mr. Yost indicated that "[i]f
you or any of your directors have any questions about our proposal, please feel
free to give me a call. I will make myself available at any time." At no time
since ArvinMeritor first communicated its proposal, however, has Defendant
Magliochetti or any member of Dana's Board called Mr. Yost to raise questions
about ArvinMeritor's proposal.
38. On June 12, 2003, Defendant Magliochetti telephoned Mr. Yost (the
"June 12, 2003 Conversation") to express that Dana was not interested in a
business combination with ArvinMeritor. On June 12, 2003, Defendant Magliochetti
also sent a letter (the "June 12, 2003 Letter") to ArvinMeritor stating that
Dana did not have any interest whatsoever in pursuing a sale transaction with
ArvinMeritor. Upon information
7
and belief, Dana's Board failed to give the offer due consideration. Indeed, in
violation of the fiduciary duties of Defendants to act in good faith and in the
best interests of Dana's shareholders, Dana refused to meet with ArvinMeritor or
even to discuss ArvinMeritor's proposal with ArvinMeritor.
39. The June 12, 2003 Letter also stated that Dana was pursuing a plan
to maximize value for its shareholders. Upon information and belief, this
statement was merely an after-the-fact rationalization for the failure of Dana's
Board to give ArvinMeritor's proposal due consideration, as its fiduciary duties
require.
40. In addition, the June 12, 2003 Letter stated that Dana "[h]as been
advised by able and experienced financial and legal advisors." The Letter does
not contain any description of any advice received by Dana, nor does it identify
the purported advisors.
41. On June 16, 2003, Mr. Yost sent a letter to Defendant Magliochetti
and to Dana's Board (the "June 16, 2003 Letter") reiterating ArvinMeritor's
serious interest in pursuing a transaction with Dana. In addition, Mr. Yost
further explained the significant benefits to both companies' shareholders of a
merger between ArvinMeritor and Dana. As the letter noted,
The combination of ArvinMeritor and Dana will create a stronger Tier
One supplier company providing numerous technological and service
benefits for our combined worldwide light vehicle, commercial truck and
aftermarket customers. This transaction will bring together the right
combination of innovation, capabilities and resources to establish a
more significant global enterprise. Together, ArvinMeritor and Dana
will become a true industry leader with the strategic position that
will allow us to better serve our customers, employees and
shareholders. . .
In addition to the compelling strategic fit of our respective product
portfolios, a business combination of our two companies will also
create significant financial benefits, including considerable sales,
operating and cost synergies beyond what either company could achieve
on its own. We believe these benefits will better position us to
compete and succeed in the increasingly competitive automotive supply
industry.
(June 16, 2003 Letter).
8
42. The June 16, 2003 Letter also stated that ArvinMeritor was
"flexible in considering a mix of cash and stock consideration if it will
facilitate a transaction," and again noted that ArvinMeritor "may be prepared to
analyze further whether a higher value is warranted." Again, in further
derogation of its fiduciary duties, Dana's Board refused to meet with
ArvinMeritor or even to discuss ArvinMeritor's proposal with ArvinMeritor.
43. The June 16, 2003 Letter further noted that ArvinMeritor was "ready
to meet at a moment's notice." Yet Dana's Board refused to meet with
ArvinMeritor even once.
44. Dana's wholesale refusal to consider ArvinMeritor's proposal or to
attempt to negotiate the terms of the deal clearly is not in the best interest
of Dana's shareholders and is inconsistent with the Board's fiduciary duties.
ArvinMeritor's proposal is available to all Dana shareholders, for all
outstanding shares. It is not "front-end loaded" or otherwise coercive in
nature, and ArvinMeritor has made clear that it intends to acquire any shares
not tendered in response to the Tender Offer for the same price of $15 per share
in cash in a second-step merger. The Tender Offer provides Dana shareholders
with the opportunity to realize a 55.7 percent premium over the closing price of
their shares on June 3, 2003, the last trading day before ArvinMeritor first
submitted its proposal in writing to Dana, and a 24.9 percent premium over the
closing price of their shares on July 7, 2003.
45. Notwithstanding the fair and non-coercive nature of the Proposed
Acquisition, the substantial premium that ArvinMeritor is offering to Dana's
shareholders and Dana's impaired financial condition under its current
management, on June 19, 2003
9
- only three days after ArvinMeritor sent its second letter to Defendant
Magliochetti - ArvinMeritor received a letter from Defendant Magliochetti (the
"June 19, 2003 Letter") reiterating that Dana had no interest whatsoever in
pursuing a sale transaction with ArvinMeritor.
46. In addition, despite ArvinMeritor's clear offer to negotiate the
terms of the Proposed Acquisition, the June 19, 2003 Letter - like the June 12,
2003 Letter - conveyed an adamant refusal to meet with ArvinMeritor or even to
discuss ArvinMeritor's proposal with ArvinMeritor. Upon information and belief,
this knee-jerk reaction arises from the Board's impermissible attempt to
entrench itself and Dana's current management at the expense, and to the
detriment, of Dana's shareholders.
47. Indeed, Dana's officers and directors have a great stake in
preventing the Proposed Acquisition. Upon information and belief, Dana's
directors awarded themselves, as well as the Company's officers, significant
numbers of stock options in order to reap substantial personal gains at the
expense of Dana's shareholders. Due to the mismanagement of the Company by the
Board and Dana's officers, upon information and belief, the vast majority of
those options are currently "under water" - the price at which they may be
exercised is higher than Dana's stock price as of July 7, 2003 and the price per
share of the Tender Offer. The Individual Defendants, upon information and
belief, are acting to entrench themselves in an effort to hang on in the
unfounded hope that, at some point, their options will have value, or that they
will have time to issue themselves new options at a lower exercise price in
order to enrich themselves. The Individual Defendants and Dana's management,
upon information and belief, are not willing to relinquish control and the
ability to issue themselves new options, notwithstanding that
10
relinquishing such control would be in the best interests of those who own the
Company - the shareholders.
48. ArvinMeritor intends, as soon as is practicable following
consummation of the Tender Offer, to propose and seek to have Dana consummate
the Proposed Acquisition. The purpose of the Proposed Acquisition is to acquire
- at the same price of $15 per share - any Dana shares that are not tendered and
purchased pursuant to the Tender Offer or otherwise.
49. The Proposed Acquisition cannot be consummated unless Defendants -
voluntarily or by direction of the Court - remove or render inapplicable Dana's
anti-takeover devices, including Dana's shareholder rights plan (the "Rights
Plan" or "Poison Pill").
Dana's Rights Plan
50. On April 25, 1996, the Company adopted its Rights Plan pursuant to
a Rights Agreement (the "Rights Agreement") with Chemical Mellon Shareholder
Services, L.L.C. (the predecessor in interest to Bank of New York). The term of
the Rights Plan extends until July 25, 2006.
51. On April 15, 1996, the Company's Board declared a dividend of one
preferred share purchase right (the "Right") for each outstanding share of
common stock, par value $1 per share, of the Company. The dividend became
payable on July 25, 1996 to the shareholders of record on that date.
52. The primary purpose of the Rights Plan is to allow the holders of
the Rights, under certain circumstances, to purchase shares of Dana's common
stock at a deep discount. In this way, the Rights Plan enables the holders of
the Rights to dilute the interests in Dana of a person or group of affiliated or
associated persons (an "Acquiring Person") who has acquired, obtained the right
to acquire, or commenced or announced an
11
intention to commence a tender offer or exchange offer for, 15 percent or more
of the outstanding shares of Dana's common stock.
53. Each Right entitles the holder, except for the Acquiring Person, to
purchase from the Company one one-thousandth of a share of the Company's Series
A Junior Participating Preferred Stock, no par value (the "Preferred Shares"),
at a price of $110 per one one-thousandth of a Preferred Share, subject to
adjustment (the "Purchase Price"). The Rights do not become exercisable, and
separate certificates representing the rights (the "Rights Certificates") are
not distributed, unless and until the earlier to occur of:
a) ten days after a public announcement or notice to the
Company that an Acquiring Person has acquired, or
obtained the right to acquire, beneficial ownership
of 15 percent or more of the outstanding shares of
common stock of the Company; or
b) ten business days (or such later date as may be
determined by action of the Board prior to such time
a person becomes an Acquiring Person) after the
commencement of, or the announcement of an intention
to make, a tender offer or exchange offer for 15
percent or more of the outstanding shares of the
Company's common stock.
54. The Rights do not have any economic value until the occurrence of a
"Flip-In Event" or a "Flip-Over Event." A Flip-In Event occurs if and when a
holder of Dana stock becomes an Acquiring Person. At that point, all Rights
other than those held by the Acquiring Person "flip-in" and become discount
rights which entitle the holders to purchase Dana common stock at a steep
discount, thereby diluting the interests of the Acquiring Person. Specifically,
each right that "flips-in" becomes exercisable for shares
12
of the Company's common stock with a value equal to twice the Right's exercise
price. Thus, for the exercise price of $110, the holder of a Right other than an
Acquiring Person may purchase Dana common stock having a market value of $220 -
a 50 percent discount to market price.
55. If and when Dana engages in a merger or a sale of 50 percent or
more of its assets (a "Flip-Over Event"), the Rights then "flip-over." Following
a Flip-Over Event, each holder of the Rights - other than the Acquiring Person -
will be entitled to receive shares of the acquiring company. In particular, upon
exercising the Rights at their then-current exercise price, the holders will be
entitled to receive that number of shares of common stock of the acquiring
company with a market value, at the time of such event, of twice the exercise
price of the Right. In this way, the Company's shareholders come to
significantly dilute the percentage of the acquiror's stock that the acquiror's
original stockholders held.
56. The existence of the Rights has the practical effect of precluding
ArvinMeritor from consummating the Tender Offer, regardless of the extent to
which Dana's shareholders wish to sell their shares pursuant to the Tender
Offer. ArvinMeritor believes that the Board's failure to redeem the Rights,
insofar as the Rights subvert the wishes of the Company's shareholders to those
of the Board and deny the shareholders the opportunity to accept the Tender
Offer, constitutes a breach of fiduciary duties on the part of the Board.
57. Any amendment of the Rights Agreement to further hinder and/or
delay consummation of the Proposed Acquisition, which the Board may effect
without the approval of the holders of the Rights, would constitute a further
breach of the Board's fiduciary duties to Dana's shareholders.
58. Dana's Board also has the power to redeem the Rights, at a
redemption price of $0.01 per Right, at any time before an Acquiring Person
acquires beneficial ownership of 15 percent or more of the Company's outstanding
common stock.
13
59. In light of the fair and non-coercive nature of the Tender Offer,
the substantial premium that ArvinMeritor is offering to the Company's
shareholders and the fiduciary obligations of the Individual Defendants to
Dana's shareholders, Dana's Board should redeem the Rights as described above.
60. Unless the Board redeems the Rights, ArvinMeritor's acceptance of
shares tendered pursuant to its Tender Offer (i) will result in it becoming an
Acquiring Person, (ii) will make the Rights exercisable for shares of Dana's
common stock at a discount of 50 percent of their market value, (iii) will make
the Tender Offer economically infeasible for ArvinMeritor to accomplish, and
(iv) will deprive Dana's shareholders of the ability to benefit from the
Proposed Acquisition.
COUNT I
(Breach of Fiduciary Duty; Failure to Negotiate)
61. Complainants repeat and reallege each and every allegation set
forth in paragraphs 1 through 60 as if fully set forth herein.
62. Defendants owe Dana's shareholders the highest duties of care,
loyalty and good faith.
63. In light of the superior value offered to Dana shareholders by the
Proposed Acquisition, there is no legitimate reason for the Dana Board to refuse
to meet with ArvinMeritor or even to discuss ArvinMeritor's proposal with
ArvinMeritor. Defendants' failure to discuss the details of ArvinMeritor's
proposal with ArvinMeritor and to negotiate or even meet with ArvinMeritor
deprives Dana's shareholders of the opportunity to sell their Dana shares at the
premium price offered by the Proposed Acquisition, and accordingly, to maximize
their wealth.
64. Defendants' failure to negotiate has no economic justification,
serves no legitimate purpose, and is an unreasonable response to the Proposed
Acquisition, which
14
poses no threat to the interests of Dana's shareholders. As such, the actions of
Defendants are in breach of their fiduciary duties to Dana's shareholders.
65. ArvinMeritor and Delta Acquisition Corp. have no adequate remedy at
law.
COUNT II
(Breach of Fiduciary Duty; Conflict of Interest)
66. Complainants repeat and reallege each and every allegation set
forth in paragraphs 1 through 65 as if fully set forth herein.
67. Defendants owe Dana's shareholders the highest duties of care,
loyalty and good faith.
68. Pursuant to these duties, Defendants must ensure that no conflict
exists between Defendants' own interests and those of Dana's shareholders, or,
if such a conflict exists, to ensure that such a conflict is resolved in favor
of the Company's shareholders.
69. In light of the superior value offered to Dana shareholders by the
Proposed Acquisition, there is no legitimate reason for the Dana Board to refuse
to meet with ArvinMeritor or even to discuss ArvinMeritor's proposal with
ArvinMeritor. Defendants' failure to discuss the details of ArvinMeritor's
proposal with ArvinMeritor and to negotiate or even meet with ArvinMeritor
deprives Dana's shareholders of the opportunity to sell their Dana shares at the
premium price offered by the Proposed Acquisition, and accordingly, to maximize
their wealth.
70. Defendants' failure to negotiate is due to their personal interest
in entrenching themselves in the unfounded hope that, at some point, their
options that are currently under water will have value, or, in the alternative,
that they will have time to issue themselves new options at a lower exercise
price in order to enrich themselves. This failure to negotiate is in breach of
Defendants' fiduciary duties to Dana's shareholders.
15
71. ArvinMeritor and Delta Acquisition Corp. have no adequate remedy at
law.
COUNT III
(Breach of Fiduciary Duty; the Rights Plan)
72. Complainants repeat and reallege each and every allegation set
forth in paragraphs 1 through 71 as if fully set forth herein.
73. Defendants owe Dana's shareholders the highest duties of care,
loyalty and good faith.
74. In light of the superior value offered to Dana shareholders by the
Proposed Acquisition, there is no legitimate reason for Defendants to retain the
Rights Plan. Defendants' failure to redeem the Rights or to render the Rights
Plan inapplicable to the Proposed Acquisition has no economic justification,
serves no legitimate purpose, and is an unreasonable response to the Proposed
Acquisition, which poses no threat to the interests of Dana's shareholders. As
such, this failure of Defendants constitutes a breach of their fiduciary duties
to Dana's shareholders.
75. ArvinMeritor and Delta Acquisition Corp. have no adequate remedy at
law.
COUNT IV
(Declaratory and Injunctive Relief; Anti-Takeover Devices)
76. Complainants repeat and reallege each and every allegation set
forth in paragraphs 1 through 75 as if fully set forth herein.
77. Defendants owe Dana's shareholders the highest duties of care,
loyalty and good faith.
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78. The Tender Offer is non-coercive and non-discriminatory. It is fair
to Dana's shareholders and represents a substantial premium over the market
price of Dana common stock.
79. Adoption of any defensive measures by Defendants against the
Proposed Acquisition, or of any measure that would prevent a future board of
directors from exercising its fiduciary duties - including, but not limited to,
amendments to the Rights Plan, amendments to Dana's Bylaws, pursuit of
alternative transactions with substantial break-up fees and/or lock-ups, "White
Knight" stock issuances, changes to licensing agreements, or executive
compensation arrangements with substantial payments triggered by a change in
control - would itself constitute a breach of the fiduciary duties owed to
Dana's shareholders and should be enjoined.
80. ArvinMeritor and Delta Acquisition Corp. have no adequate remedy at
law.
PRAYER FOR RELIEF
WHEREFORE, Complainants respectfully request that this Court:
a) declare that Defendants have breached their fiduciary
obligations to Dana's shareholders by refusing to
negotiate and even to meet with ArvinMeritor;
b) declare that Defendants have breached their fiduciary
obligations to Dana's shareholders by failing to
resolve all conflicts of interest in favor of the
Company's shareholders;
c) enjoin Dana, its employees, agents and all persons
acting on its behalf or in concert with it from
taking any action with respect to the Rights Plan,
including, but not limited to, adopting any other
Rights Plan, designed to impede, or
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that has the effect of impeding, the Tender Offer or
the efforts of ArvinMeritor to acquire control of
Dana, in violation of their respective fiduciary
duties to Dana's shareholders.
d) enjoin Defendants from adopting any further measure
that has the effect of improperly impeding,
thwarting, frustrating or interfering with the
Proposed Acquisition in a manner inconsistent with
their fiduciary duties;
e) enjoin Defendants from taking any action to delay,
impede, postpone or thwart the voting or other rights
of Dana's shareholders;
f) award Complainants their costs and disbursements in
this action, including reasonable attorneys' and
experts' fees; and
g) grant Complainants such other and further relief as
this Court may deem just and proper.
Respectfully Submitted,
ARVINMERITOR, INC. and DELTA
ACQUISITION CORP.
By Counsel
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McGUIREWOODS, LLP
Court Square Building
310 Fourth Street, N.E., Suite 300
Charlottesville, Virginia 22902
Telephone: (434) 977-2500
Facsimile: (434) 980-2222
By: /s/ Richard Cullen
--------------------------
Richard Cullen (VSB No. 16765)
Thomas E. Spahn (VSB No. 17411)
Charles W. McIntyre (VSB No. 27480)
Michael E. Derdeyn (VSB No. 40240)
OF COUNSEL
Wesley G. Howell
Adam H. Offenhartz
Jennifer H. Rearden
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue
47th Floor
New York, New York 10166-0193
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Dated: Charlottesville, Virginia
July 7, 2003
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