UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(RULE
14d100)
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
(Amendment No. 3)
CON-WAY INC.
(Name of Subject Company)
CANADA MERGER CORP.
(Offeror)
XPO LOGISTICS,
INC.
(Parent of Offeror)
(Names of Filing Persons)
COMMON STOCK,
$0.625 PAR VALUE
(Title of Class of Securities)
205944101
(CUSIP Number
of Class of Securities)
Gordon E. Devens
Senior Vice President, General Counsel and Secretary
XPO Logistics, Inc.
Five
Greenwich Office Park
Greenwich, CT 06831
(855) 976-4636
(Name,
address and telephone number of person authorized to receive notices and communications on behalf of filing persons)
With a
copy to:
Adam O. Emmerich, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New
York, NY 10019
(212) 403-1000
CALCULATION OF FILING FEE
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Transaction valuation* |
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Amount of filing fee** |
$2,765,579,896.80 |
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$321,360.38 |
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* |
Estimated for purposes of calculating the filing fee only. The transaction valuation was calculated by adding the sum of (i) 56,866,820 shares of common stock, par value $0.625 per share (the Shares), of
Con-way Corporation (Con-way) outstanding multiplied by the offer price of $47.60 per share, (ii) 1,233,598 Shares subject to outstanding restricted stock unit award and performance share plan units, which reflects the maximum number of
restricted stock unit awards and performance share plan units that may be outstanding at the time the offer is completed, multiplied by the offer price of $47.60 per share. The calculation of the filing fee is based on information provided by
Con-way as of September 3, 2015. |
** |
The filing fee was calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, and Fee Rate Advisory No. 1 for Fiscal Year 2015, issued August 29, 2014, by multiplying the Transaction
Valuation by 0.0001162. |
x |
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. |
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Amount Previously Paid: $321,360.38 |
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Filing Party: XPO Logistics, Inc. and Canada Merger Corp. |
Form or Registration No.: Schedule TO (File No. 005-14440) |
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Date Filed: September 15, 2015 |
¨ |
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:
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x |
third-party tender offer subject to Rule 14d-1. |
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¨ |
issuer tender offer subject to Rule 13e-4. |
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¨ |
going-private transaction subject to Rule 13e-3. |
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¨ |
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 Amendment No. 3 (this Amendment) amends and supplements the Tender Offer
Statement on Schedule TO filed with the U.S. Securities and Exchange Commission on September 15, 2015 (together with any subsequent amendments and supplements thereto, the Schedule TO). The Schedule TO relates to the tender offer by
Canada Merger Corp., a Delaware corporation (Purchaser) and a wholly owned subsidiary of XPO Logistics, Inc., a Delaware corporation (XPO or Parent), for all of the outstanding shares of common stock, par value
$0.625 per share (Shares), of Con-way Inc., a Delaware corporation (Con-way), at a price of $47.60 per share, net to the seller in cash, without interest thereon and less any applicable withholding taxes, upon the terms and
conditions set forth in the offer to purchase dated September 15, 2015 (the Offer to Purchase), a copy of which is attached as Exhibit (a)(1)(A), and in the related letter of transmittal (the Letter of Transmittal), a
copy of which is attached as Exhibit (a)(1)(B), which, as each may be amended or supplemented from time to time, collectively constitute the Offer.
All the information set forth in the Offer to Purchase, including Schedule I thereto, is incorporated by reference herein in response to Items
1 through 9 and Item 11 of this Schedule TO, and is supplemented by the information specifically provided in this Schedule TO.
This
Amendment is being filed to amend and supplement Items 11 and 12 as reflected below.
Item 11. |
Additional Information. |
Item 11 of the Schedule TO is hereby
amended and supplemented as follows:
The information set forth in Section 16 Certain Legal Matters; Regulatory
Approvals of the Offer to Purchase is hereby amended and supplemented to add the paragraph set forth below.
Litigation. On October 7, 2015, a purported stockholder of Con-way filed a putative class action complaint in the Delaware
Court of Chancery, captioned Abrams v. Espe, et al., C.A. No. 11585-VCN. The complaint names the members of the Con-way Board, XPO, Purchaser, and Citi as defendants. The complaint alleges that the directors breached their
fiduciary duties by, among other things, failing to maximize shareholder value in connection with the proposed transaction and failing to disclose certain information in the Schedule 14D-9. The complaint also alleges that XPO, Purchaser, and
Citi aided and abetted those alleged breaches of fiduciary duty. The lawsuit seeks, among other relief, injunctive relief (i) enjoining the defendants from closing the tender offer and the proposed transaction, (ii) enjoining the
defendants from initiating or continuing any purported defensive measures that would inhibit their ability to conduct a market check, and (iii) enjoining the defendants from closing the tender offer until the defendants make certain
additional disclosures. The lawsuit also seeks, among other things, rescissory damages and recovery of the costs of the action, including reasonable attorneys and experts fees. The plaintiff in the lawsuit also filed motions on
October 7, 2015 (i) seeking a preliminary injunction enjoining the closing of the tender offer until defendants make certain purported disclosures, and (ii) seeking expedited proceedings with respect to the preliminary injunction
motion.
Item 12 of the Schedule TO is hereby amended and
supplemented as follows:
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Exhibit No. |
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Description |
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(a)(5)(A) |
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Complaint filed by Robert Abrams on behalf of himself and all others similarly situated, on October 7, 2015, in the Court of Chancery, State of Delaware. |
SIGNATURES
After due inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
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Dated: October 9, 2015 |
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CANADA MERGER CORP. |
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By: |
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/s/ Gordon E. Devens |
Name: |
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Gordon E. Devens |
Title: |
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Vice President, Secretary and Treasurer |
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XPO LOGISTICS, INC. |
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By: |
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/s/ Gordon E. Devens |
Name: |
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Gordon E. Devens |
Title: |
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Senior Vice President; General Counsel and Secretary |
EXHIBIT INDEX
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Exhibit No. |
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Description |
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(a)(1)(A) |
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Offer to Purchase, dated September 15, 2015.* |
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(a)(1)(B) |
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Letter of Transmittal.* |
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(a)(1)(C) |
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Notice of Guaranteed Delivery.* |
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(a)(1)(D) |
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Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* |
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(a)(1)(E) |
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Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* |
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(a)(1)(F) |
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Joint Press Release issued by XPO Logistics, Inc. and Con-way Inc. on September 9, 2015 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by XPO Logistics, Inc. with the Securities and Exchange
Commission on September 9, 2015).* |
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(a)(1)(G) |
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Investor Presentation dated September 9, 2015 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed by XPO Logistics, Inc. with the Securities and Exchange Commission on September 9, 2015).* |
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(a)(1)(H) |
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Investor Presentation Script dated September 9, 2015 (incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K filed by XPO Logistics, Inc. with the Securities and Exchange Commission on September 9,
2015).* |
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(a)(1)(I) |
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Transcript of September 10, 2015, (incorporated by reference to Schedule TO-C filed by XPO Logistics, Inc. with the Securities and Exchange Commission on September 11, 2015).* |
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(a)(1)(J) |
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Summary Advertisement as published in the Wall Street Journal on September 15, 2015.* |
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(a)(1)(K) |
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Form of Notice to Participant and Beneficiaries in the Con-way Plans.* |
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(a)(1)(L) |
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Trustee Instruction Form for Conway Plans.* |
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(a)(1)(M) |
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Form of Notice Follow-up Notice to Participant and Beneficiaries in the Con-way Plans.* |
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(a)(5)(A) |
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Complaint filed by Robert Abrams on behalf of himself and all others similarly situated, on October 7, 2015, in the Court of Chancery, State of Delaware. |
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(b)(1) |
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Amended and Restated Debt Commitment Letter, dated as of September 25, 2015, among Morgan Stanley Senior Funding, Inc. and the other Commitment Parties named therein and XPO Logistics,
Inc.* |
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Exhibit No. |
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Description |
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(d)(1) |
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Agreement and Plan of Merger, dated as of September 9, 2015, by and among XPO Logistics, Inc., Canada Merger Corp. and Con-way Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by XPO
Logistics, Inc. with the Securities and Exchange Commission on September 10, 2015).* |
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(d)(2) |
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Confidentiality Agreement and Plan of Merger, dated as of July 28, 2015, by and between XPO Logistics, Inc. and Con-way Inc.* |
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(g) |
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None. |
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(h) |
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None. |
Exhibit (a)(5)(A)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
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ROBERT ABRAMS, Individually and On Behalf of All Others Similarly Situated, |
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C. A. No.: - |
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Plaintiff, |
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v. |
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MATTHEW J. ESPE, W. KEITH |
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KENNEDY, JR., GRETCHEN W. |
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MCCLAIN, MICHAEL J. MURRAY, |
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EDITH R. PEREZ, P. CODY PHIPPS, |
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JOHN C. POPE, WILLIAM J. |
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SCHROEDER, WAYNE R. SHURTS, |
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DOUGLAS W. STOTLAR, PETER W. |
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STOTT, ROY W. TEMPLIN, |
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CHELSEA C. WHITE III, XPO |
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LOGISTICS, INC., CANADA |
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MERGER CORP., and CITIGROUP |
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GLOBAL MARKETS INC., |
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Defendants. |
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VERIFIED CLASS ACTION COMPLAINT
Plaintiff Robert Abrams (Plaintiff), on behalf of himself and all other similarly situated public stockholders of Con-way Inc.
(Con-way or the Company), brings the following Verified Class Action Complaint (the Complaint) against the members of the board of directors of Con-way (the Individual Defendants or the
Board) for breaching their fiduciary duties, against XPO Logistics, Inc. (XPO Logistics), XPO Logistics wholly-owned subsidiary, Canada Merger Corp. (Merger Sub, and together with XPO Logistics,
XPO), and Citigroup Global Markets Inc. (Citigroup) for aiding and
abetting the same. The allegations of the Complaint are based on the knowledge of Plaintiff as to himself, and on information and belief, including the investigation of counsel and review of
publicly available information, as to all other matters.
NATURE OF THE ACTION
1. This stockholder class action arises from disabling conflicts of interest that led the Board to undertake a flawed process and agree to an
inadequately priced all-cash sale of Con-way to XPO.
2. By undertaking a sale of Con-way in an all-cash transaction, the Board had a
fiduciary obligation to secure the highest price reasonably attainable for the Companys shares. See Revlon, Inc., v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986). Instead of satisfying its fiduciary obligations,
the Board retained a conflicted financial advisor, Citigroup, to oversee a flawed sales process. Based on the advice of Citigroup which desired to maintain its ongoing and lucrative business relationship with XPO the Con-way Board made
the bewildering (and problematic) decision not to engage in a pre-signing market check whatsoever despite the existence of a known interested suitor other than XPO. This defective process resulted in a merger that undervalued Con-way, a problem
exacerbated by certain provisions in the merger agreement that prevented the alternate interested suitor who continued to express interest in Con-way post-signing from submitting a topping bid.
2
3. On September 9, 2015, Con-way, a leading transportation and logistics company, and XPO, a
serial acquirer in the transportation industry controlled by Bradley Jacobs (Jacobs), issued a joint press release announcing that: (1) each of the companies respective boards had agreed to terms and entered into the Agreement
and Plan of Merger (Merger Agreement), and (2) the merger was an all-cash tender offer valued at approximately $3 billion, or roughly $47.60 per share (the Tender Offer or Proposed Transaction). The Tender
Offer is governed by Delaware General Corporation Law (DGCL) §251(h), which permits the offer to close as early as twenty business days following its commencement. The Tender Offer is currently expected to close on October 14,
2015.
4. Citigroup, Con-ways financial advisor for the Proposed Transaction, was conflicted and had a strong financial incentive to
slant the process towards XPO even if that meant a sale of Con-way at less than the highest price reasonable available. The Proposed Transaction permitted Citigroup to not only recoup lost advisory fees stemming from Con-ways failed sale of
its Menlo Logistics business in 2014, but also to foster its significant financial relationship with XPO.
5. Citigroup is one of
XPOs preferred financing sources. This is an incredibly lucrative position because as serial acquirers, XPO and Jacobs are in almost constant need of acquisition financing. Indeed, Jacobs formed XPO for the express purpose of rolling
up transportation-related companies.
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6. Following his roll-up acquisition playbook, Jacobs targeted Con-way for XPOs portfolio
of transportation and logistic companies. In January 2014, Jacobs reached out to Citigroup to inquire about acquiring Con-ways Menlo Logistics business. Unbeknownst to the Board at the time, and without its authorization, Con-way retained
Citigroup for a potential sale of Menlo Logistics. While a sale of Menlo Logistics never materialized, Jacobs was still able to use his relationship with Citigroup to establish a rapport with Con-way CEO Douglas Stotlar (Stotlar), and to
initiate negotiations for an acquisition of the entire Company. Unfortunately for Citigroup, it lost an opportunity to earn a valuable fee when a potential sale of Menlo Logistics failed to materialize.
7. In May 2015, a private equity firm referred to as Fund X in the Companys tender offer materials expressed interest to
Citigroup in acquiring Con-way, which interest Citigroup subsequently conveyed to CEO Stotlar. Despite this unsolicited expression of interest, Stotlar refused to discuss a strategic transaction with Fund X and failed to inform the Con-way Board of
this development until two months later.
8. In mid-June, when Con-ways stock price was trading near its 2015 low, Citigroup,
without consultation with the Board, contacted Jacobs and asked if
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XPO would be interested in acquiring Con-way in its entirety. Without consulting the full Board, CEO Stotlar and Con-ways Chairman Roy Templin (Templin) decided to put the
Company up for sale. On the following day, Jacobs informed Stotlar that XPO was interested in a potential acquisition of Con-way. Six days later, XPO submitted a written, non-binding proposal to acquire Con-way for $47.50 per share.
9. Shortly after receiving XPOs written proposal, the Board decided to retain Citigroup as its financial advisor subject to
clearing conflicts.
10. The Boards subsequent decision to formally retain Citigroup was unreasonable. Either (a) the
Board was not alerted to the true extent of Citigroups conflict and failed to take reasonable steps to investigate the blatant conflict or (b) the Board was alerted to the conflict and nonetheless retained Citigroup to serve as its
exclusive financing advisor. A reasonable, well-informed board of directors would have, at a minimum, retained a second, independent financial advisor in light of Citigroups ongoing business relationship and financial ties with XPO.
11. Citigroup and the Con-way Board then embarked on a fundamentally flawed process to sell the Company. Despite XPOs unwillingness to
meaningfully increase its initial offer, the Board agreed not to negotiate exclusively with XPO. Indeed, based on the advice of Citigroup, the Board refused to even reach out to Fund X, which had expressed serious interest in acquiring Con-way, or
to any other potential strategic or financial buyer.
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12. The Board also agreed to a no-shop provision and certain other
lock-ups in the Merger Agreement that prevent it from engaging with interested post-signing suitors unless certain conditions are satisfied. Indeed, Fund X has continued to express unsolicited interest in the Company post-announcement of
the Proposed Transaction, but the Board has determined that the lock-up provisions in the Merger Agreement prohibit any negotiation with Fund X.
13. On September 22, 2015, Con-way filed and disseminated to stockholders a Tender Offer Solicitation/Recommendation Statement on Schedule
14D-9 (the Recommendation Statement and, collectively with the Schedule TO, the Tender Offer Documents) with the SEC. The Recommendation Statement misrepresents and fails to disclose material information necessary for the
Companys public stockholders to make an informed decision whether to tender their shares of stock in the Tender Offer.
14. Among
other things, the Recommendation Statement fails to disclose:
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a. |
The aggregate ($) amount of fees paid by XPO to Citigroup in the past 4 years (Recommendation Statement at 27-28); |
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b. |
Citigroups fee arrangement with Con-way in connection with a potential sale of the Menlo Logistics business (Recommendation Statement at 13); |
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c. |
What knowledge the Board had of Citigroups (past, current and/or future) work with XPO (Recommendation Statement at 27-28); |
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d. |
What knowledge the Board had regarding the origins of XPOs expression of interest; |
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e. |
Whether the Board authorized Citigroup to reach out Jacobs in the summer of 2015 to inquire as to whether XPO wanted to buy all of Con-Way; |
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f. |
A fair summary of Citis relationships
provided to the Board on July 20, 2015 (Recommendation Statement at 15); |
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g. |
The basis and rationale supporting CEO Stotlars refusal to meet with private equity sponsor Fund X in May 2015, but willingness to meet with Jacobs on July 2, 2015 (Recommendation Statement at
13); and |
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h. |
The rationale for including stock-based compensation as a cash expense (Recommendation Statement at 30-31). |
15. Prior to the closing of the Tender Offer, material information must be disclosed so that the Companys public stockholders can make
an informed decision on whether to tender their shares of stock in the Tender Offer.
16. For these reasons and as set forth in additional
detail herein, Plaintiff seeks to enjoin Defendants from taking any steps to consummate the Proposed Transaction or, in the event the Proposed Transaction is consummated, to recover damages resulting from the Individual Defendants violations
of their fiduciary duties.
7
THE PARTIES
17. Plaintiff is, and has been continuously throughout all times relevant hereto, the owner of Con-way common stock.
18. Non-Defendant Con-way is a corporation organized and existing under the laws of the State of Delaware, with its principal executive
offices located at 2211 Old Earhart Road, Suite 100, Ann Arbor, Michigan. Con-way is a diversified freight transportation and supply chain management company. Con-ways common stock trades on the New York Stock Exchange under the ticker symbol
CNW.
19. Defendant Matthew J. Espe (Espe) is and has been a director on the Companys Board since 2015.
20. Defendant W. Keith Kennedy, Jr. (Kennedy) is and has been a director on the Companys Board since 2014.
21. Defendant Gretchen W. McClain (McCain) is and has been a director on the Companys Board since 2015.
22. Defendant Michael J. Murray (Murray) is and has been a director on the Companys Board since 1997.
23. Defendant Edith R. Perez (Perez) is and has been a director on the Companys Board since 2010.
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24. Defendant P. Cody Phipps (Phipps) is and has been a director on the
Companys Board since 2013.
25. Defendant John C. Pope (Pope) is and has been a director on the Companys Board
since 2003.
26. Defendant William J. Schroeder (Schroeder) is and has been a director on the Companys Board since 1996.
27. Defendant Wayne R. Shurts (Shurts) is and has been a director on the Companys Board since 2015.
28. Defendant Douglas W. Stotlar (Stotlar) is and has been a director on the Companys Board since 2011. Stotlar is also the
President and Chief Executive Officer of Con-way.
29. Defendant Peter W. Stott (Stott) is and has been a director on the
Companys Board since 2004.
30. Defendant Roy W. Templin (Templin) is and has been the Chairman of the Companys
Board since 2014.
31. Defendant Chelsea C. White III (White) is and has been a director on the Companys Board since
2004.
32. Defendant XPO is a corporation organized and existing under the laws of the State of Delaware, with its principal executive
offices located at 5 Greenwich Office Park Greenwich, CT. XPO is a provider of transportation
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logistics services and a provider of engineered, technology-enabled contract logistics. XPO is a serial acquirer of other companies. In the past year alone, XPO acquired four companies:
Norbert Dentressangle SA, UX Specialized Logistics, New Breed Holding Company, and Atlantic Central Logistics. XPOs common stock trades on the New York Stock Exchange under the ticker symbol XPO.
33. Defendant Merger Sub is a Delaware corporation and an indirect, wholly owned subsidiary of XPO. Upon information and belief, Merger Sub
was created for the sole purpose of facilitating the Tender Offer and has not engaged in any other business activities prior to the announcement of the Proposed Transaction.
SUBSTANTIVE ALLEGATIONS
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A. |
The Companys Background |
34. Con-way was founded in 1929 and incorporated
in Delaware in 1958. Though its principal executive offices are located in Ann Arbor, Michigan, it is a global company with approximately 582 subsidiaries located in 20 countries across five continents: North America, Asia, Europe, South America,
and Australia. Con-way is a Fortune 500 company that provides transportation, logistics and supply-chain management services to more than 36,000 customers in the manufacturing, industrial and retail sectors. The Company is the second largest
provider of less-than-truckload transportation and operates four additional lines of business:
10
contract logistics; managed transportation and truck brokerage through its subsidiary, Menlo Logistics; and full truckload transportation. Con-way and its subsidiaries employ over 30,000
employees. The Company had $5.8 billion of revenue for the full year 2014.
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B. |
The Company Had A Bright Future As A Standalone Concern |
35. Before announcing
the Proposed Transaction, the Company had been providing stockholders with a litany of positive news assuring them of Con-ways continued growth and status as a valuable long-term investment.
36. On February 4, 2015, the Company issued a press release in which it touted its 2014 full-year results. Con-way reported net income of
$137.0 million, or $2.36 per diluted share, compared to full-year 2013 net income of $99.2 million, or $1.73 per diluted sharean increase of 38%. The Companys operating income of $268.5 million in 2014 increased 28.5% from the $209.0
million earned in 2013. Con-way also reported revenue for the full-year 2014 of $5.81 billion, a 6.1% increase from $5.47 billion in 2013.
37. The Company more than doubled its fourth quarter net income compared to the fourth quarter of 2013, from $11.7 million to $24.9 million,
or 43 cents per diluted share compared to 20 cents. Similar to its net income, the Companys operating income increased considerably in the fourth quarter of 2014 compared to the fourth quarter of 2013: a 23.8% increase from the $33.4 million
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earned in the fourth quarter 2013 to $41.3 million in 2014. Revenue for the fourth quarter of 2014 was $1.44 billion, up 6.1% compared to $1.36 billion in the previous-year period.
38. The Companys truckload segment was positively affected by the declining costs of diesel fuel coupled with strong demand for trucking
services and increased pricing. But particularly successful was the Companys Freight segment, on the performance of which Stotlar commented as follows: Con-way Freight achieved growth in revenue and significantly higher operating income
compared to last year on the strength of its ongoing revenue management efforts bolstered by a stable demand and pricing environment. Con-ways Freight segments operating income reported a 55.1% increase from $23.8 million earned in
the fourth quarter of 2013 to $36.8 million in 2014.
39. Just as impressive were the Companys 2015 first-quarter results. In the
press release issued by the Company on April 29, 2015, Con-way reported an increase in its net income from $12.9 million, or 22 cents per diluted share, in the first quarter of 2014 to $21.8 million, or 37 cents per diluted share, in the first
quarter of 2015. Operating income for the first quarter of 2015 was $51.9 million, an astounding 57.1% increase from the $33.1 million earned in the same period a year ago.
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40. The first quarter of 2015 was also a time of expansion for Con-way: on April 01, 2015,
Menlo Logistics, the US$1.7 billion global logistics subsidiary of Con-way, announced its continued expansion of automotive logistics operations in India, moving to a new after-sales spare parts facility in Dharuhera, near New Delhi in Haryana
state; on April 02, 2015, Con-way Multimodal, the freight brokerage division of San Francisco-based Menlo Logistics, announced the expansion and relocation of its Bentonville, Arkansas office; on April 20, 2015, Con-way Truckload, a full
truckload carrier and subsidiary of Con-way, announced its purchase of 635 new, twin-screw tractors that would maintain the companys 2,500-tractor fleet as one of the newest and most technically advanced in the truckload industry; and on
April 23, 2015, Con-way Freight, a less-than-truckload trucking company and subsidiary of Con-way, announced the grand opening of its newest, state-of-the art service center in Joliet, Illinois.
41. The Companys promising performance was reflected in Con-ways stock price. About a year ago, on September 15, 2014,
Con-way common stock traded as high as $53.53. Indeed, several analysts set a price target of $59.00 per share for the stock.
13
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C. |
Citigroups Ongoing Lucrative Relationship With XPO |
42. XPOs
Chairman, CEO and largest stockholder is Bradley Jacobs, an entrepreneurial investor that grows his portfolio companies by implementing an aggressive growth strategy by acquiring smaller companies. As noted in a June 2011 New York Times
DealBook article, [Jacobs] goal is to follow the playbook he used for his previous enterprises: Grow through a series of roll-up acquisitions, as well as through organic expansion of the business.
43. In 1989, Jacobs founded United Waste Systems, which completed roughly 200 acquisitions over an eight-year period. In 1997, Jacobs sold
United Waste Systems for over $2 billion.
44. In June 2011, Jacobs became XPOs Chairman, CEO and largest stockholder by investing
$150 million into XPOs predecessor Express-1. Under Jacobs leadership, and consistent with his prior investment history, XPO has acquired four companies in 2014 alone: (1) Norbert Dentressangle SA, (2) UX
Specialized Logistics, (3) New Breed Holding Company, and (4) Atlantic Central Logistics.
45. Because XPOs business model
revolves around acquisitions, it is the ideal client for a full-service investment bank like Citigroup that wishes to obtain lucrative potential financing engagements.
46. Citigroup has significant financial ties to XPO. Since 2014 alone, Citigroup has (i) co-funded XPOs $645 million term loan
credit facility for its July 2014 acquisition of New Breed Holding Company and (ii) served as a joint book-running manager for XPOs February 2014 $360 million stock offering.
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47. Additionally, Jacobs has certain contacts at Citigroup that he communicates with regarding
potential investment ideas. For example, in early 2014, Jacobs approached Citigroup (before Citigroup had been retained by Con-way) regarding a potential acquisition of Con-ways Menlo Logistics business.
48. Unfortunately for Citigroup, in June 2014, the Con-way Board determined not to sell the Menlo Logistics business, such that Citigroup lost
a valuable fee.
49. In mid-June 2015, Citigroup was presented with an opportunity to get compensated for the time it had already invested
in XPO. Citigroup unilaterally pushed to sell the Con-way by contacting Jacobs and inquiring whether XPO would be interested in acquiring the Company in its entirety.
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E. |
A Potential Unsolicited Suitor Is Ignored & The Company Is Put |
Up for
Sale During A Temporary Depression In Its Stock Price
50. In May 2015, Fund X, a private equity firm, contacted Citigroup and
indicated that it was interested in acquiring Con-way. Fund X requested that Citigroup arrange a meeting between itself and Con-way CEO Stotlar.
51. According to the Recommendation Statement, Citigroup relayed Fund Xs interest and request to Stotlar, but neither Stotlar nor
Citigroup reported Fund Xs indication of interest to the Board until months later. In addition, both
15
Citigroup and the Board refused to invite or even recommend Fund X to participate in any due diligence process pre-signing. Instead, Stotlar simply declined to meet with Fund X, leading Fund X to
believe that the Company was not for sale.
52. During June 2015 through July 2015, Con-ways stock temporarily traded at annual lows
from $35.00 per share to $40.00 per share. This temporary depression in stock price was not an opportune time for Citigroup to put the Company in play for a sale. Nevertheless, Citigroup, without the Boards knowledge or approval,
approached XPO to plant the seed for an acquisition of Con-way. While Con-ways year-end 2014 and first-quarter 2015 earnings looked promising, its second-quarter 2015 results were more modest. In fact, there were decreases in Con-ways
net income, operating income, and revenues. Despite Stotlars July 29, 2015 statement that the performance was expected to improve, the underwhelming financial results affected the performance of the Companys stock: it
traded at more than $10 less in June and July than it had in the previous five months. Nevertheless, by July 1, 2015, Citigroup, at Jacobs request, arranged a meeting between Jacobs and Stotlar to discuss possible business opportunities
between Con-way and XPO.
53. After Citigroup informed him about XPOs interest in acquiring the Company, Stotlar met with Chairman
Templin on July 1, 2015 and agreed to put the Company up for sale without informing the rest of the Board. A day later, on July 2, 2015, Stotlar met with Jacobs and advised him that if Jacobs made an offer, he would communicate it to the
Board.
16
54. On July 8, 2015, Jacobs sent a written non-binding proposal to Stotlar on behalf of XPO
proposing an acquisition of all of Conways outstanding common stock at a price of $47.50 per share in cash. The proposal, however, carried a caveat: Jacobs and other members of XPO management threatened Con-way management and Citigroup that
XPO would not proceed with any negotiations if Con-way were to auction the Company or initiate any other process that would involve soliciting acquisition proposals from other third parties.
55. The Board had no reason to acquiesce to this demand. An all-cash offer for the Company with no urgency to sell was hardly
deserving of exclusive negotiations. Further, this initial offer was not a blow-out price that could possibly justify preservation at the expense of a value-maximizing exploration of strategic alternatives or simply better offers for
Con-way, particularly when Fund Xs unsolicited expression of interest had confirmed the existence of alternative options. Nevertheless, instead of zealously pursuing the best interests of Con-way stockholders, the Board inexplicably acquiesced
without protest to XPOs unreasonable and unwarranted demand.
17
|
F. |
The Board Retains A Conflicted Financial Advisor And |
Pursues A Flawed Sales
Process
56. During a July 20, 2015 telephonic meeting, the Board decided to formally retain Citigroup as its financial
advisor in a merger with XPO subject to clearing conflicts and agreed to pay Citigroup an aggregate fee of approximately $20.1 million in return for its financial advisory services to Con-way. Presumably to paper the record, the Board
put Citigroup through a conflicts check, which appears to have consisted of receiving a summary drafted by Citigroup that listed the banks fee structure and relationships. (Recommendation Statement at 15). The Board,
however, appears to have failed to proactively investigate (or at a minimum, sufficiently investigate) Citigroups conflict. Instead, the Board members acted as mere instrumentalities, merely relying on Citigroups
representations.
57. Following this discussion during the meeting, the Board finally learned about Fund Xs interest in acquiring
the Company. Specifically, Citigroup told the Board that Fund X had requested to meet with Stotlar in May 2015 and that Stotlar had declined to have any discussions with Fund X. To justify Stotlars decision not to even meet with Fund X and to
steer the Board away from any alternative third party acquirer, Citigroup stated that the capital intensive nature of Con-ways business would likely constrain a private equity sponsors ability to acquire Con-way at a valuation
higher than that of a strategic party and that it was unlikely that a private equity sponsor would acquire Con-way at a price per share in excess of that offered by XPO.
18
58. This vague and assumption-heavy rationale was simply a means for Citigroup to protect its
preferred transaction and keep it on track for completion. For Citigroup, deal certainly outweighed any interest in value-maximization, especially with respect to a deal with its preferred buyer (XPO). By contrast, deal certainty should not have
been the Boards paramount concern. Con-way was not in dire straits or otherwise desperate to sell itself at any price, and XPOs offer was not so lucrative that it required (or even warranted) protection or nurturing. Thus, the course of
action recommended by Citigroup in an all-cash sale of the Company could only be explained by Citigroups own preference for a deal with XPO, which would please XPO and deliver a hefty advisory fee to Citigroup itself.
59. Based exclusively on Citigroups conflicted, biased and self-interested opinion, without even engaging in any sort of discussion or
at least inquiring what its offer would be, the Board concluded that neither Fund X nor any other private equity buyer could match XPOs offer. Nor did the Board seek to leverage Fund Xs interest into a better offer from XPO.
60. Moreover, to further deter any potential interest the Board may have had in other potential suitors, Citigroup informed the Board that
based on its knowledge of the industry, it was highly unlikely that a strategic party would be
19
interested in pursuing an acquisition of the Company at a price per share in excess of XPOs proposal. Again, without probing the conflicted financial advisors view on the
matter, the Board adopted Citigroups belief that pursuing interest from other strategic acquirers would be fruitless.
61. At this
same meeting, the Board and Citigroup recognized that $47.50 price per share offered by XPO was inadequate. The Board instructed the Companys management to request that XPO increase its offer price. Stotlar conveyed this request to Jacobs on
July 24, 2015.
62. The Boards half-hearted attempt to obtain the highest price per share for Con-way stockholders
concluded when, on August 19, 2015, XPO submitted a revised offer that entailed a de minimis 10 cent increase, making $47.60 per share XPOs best and final offer.
63. On September 8, 2015, during the Boards telephonic special meeting, Citigroup presented its financial analysis on the $47.60
per share consideration and delivered an oral opinion that the $47.60 price was fair. Subsequently, the Board approved the Proposed Transaction and on September 9, 2015, Con-way, XPO and the Merger Sub executed the Merger Agreement and publicly
announced the Proposed Transaction.
64. Following the public announcement of the Proposed Transaction, on September 10, 2015, a
representative of Fund X informed Citigroup that Fund X
20
had seen the announcement of the execution of the Merger Agreement and was formally expressing interest in the Company. Citigroup informed the Board of Fund Xs continued interest in
acquiring the Company, but based on Citigroups determination that Fund X would not top XPOs offer, neither Con-way nor Citigroup acted on Fund Xs inquiry.
65. The Boards conduct prevented Fund X from submitting a formal bid: Fund X was never invited to participate in the due diligence
process pre-signing and it could not get diligence materials post-signing because of the non-solicit provision and the absence of a go-shop period in the Merger Agreement.
|
G. |
The Proposed Transaction |
66. The Proposed Transaction is structured as an
all-cash Tender Offer valued at approximately $3.0 billion, including $290 million of net debt.
67. Pursuant to the terms of the Merger
Agreement, XPO launched a tender offer for all of Con-ways outstanding shares at a cash price of $47.60 per share. Following the Tender Offer, Con-way will merge with a subsidiary of XPO, becoming a wholly-owned subsidiary of XPO. All
remaining outstanding shares of Con-way will receive the same consideration paid to stockholders who participated in the Tender Offer.
68. The Tender Offer is governed by DGCL §251(h), which provides that once stockholders tender 50.1% of all outstanding shares, XPO may
immediately
21
consummate the Proposed Transaction, without a vote of stockholders. The Tender Offer may close twenty-days (20) after its commencement, and is currently scheduled to close on
October 14, 2015.
69. According to the press release disseminated in connection with announcement of the Proposed Transaction,
XPOs opportunistic acquisition of Con-way will make XPO the second largest provider of less-than-truckload transportation in North America, a $35 billion market. LTL is a non-commoditized, high-value-add business thats used
by nearly all of our customers. Con-way is a premier platform that [XPO] will run with a fresh set of eyes as part of [its] broader offering. Importantly, [XPO will] gain strategic ownership of assets that will benefit [XPO] and [its] customers
during periods of tight capacity. (emphasis added).
70. In the same press release, Jacobs added: Another crown jewel in this
transaction is Con-ways subsidiary, Menlo Logistics, an asset-light top 30 global contract logistics provider with additional lines of business in freight brokerage and managed transportation. Menlo serves blue chip contract logistics
customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO.
71. Thus, this
opportunistic transaction between Con-way and XPO will bring immense benefits to XPO at the expense of Con-ways stockholders.
22
|
H. |
The Individual Defendants Have Agreed To An Unfair And |
|
|
Inadequate Price In Connection With The Proposed Transaction |
72. Rather than
allowing the Companys common stock to trade freely and permit its public stockholders to share in the benefits of the Companys promising growth prospects as an independent entity, the Individual Defendants have acted to the detriment of
the Companys public stockholders by endorsing the terms of the Proposed Transaction. In so doing, the Individual Defendants have agreed to cap the value of a successful company with solid performance and potential for growth at a time when its
stock was trading lower than its actual value.
73. In addition to the loss of future growth, stockholders will receive barely any premium
over share prices reached shortly before the announcement of the Proposed Transaction. For example, just this year, the Companys common stock traded as high as $49.54 per share. Con-ways 12-month-high trading price is $50.81. As
stockholders are set to receive $47.60 per share, the Companys stockholders will realize less than these recent high market stock prices and just a modest premium of 22.9% based on Con-ways stock average closing price over the trailing
90 trading days as of September 8, 2015, the day before the announcement of the Proposed Transaction.
74. Prior to the announcement
of the Proposed Transaction, several financial analysts who regularly follow the Company valued the Companys
23
common stock significantly higher than the tender offer price. For example, according to Yahoo! Finance, at least one financial analyst set a price target of $59.00 per share for
Con-ways stock before the Proposed Transaction was announced. Based on the recently announced price target, the Tender Offer price appears to undervalue the Companys long-term growth prospects.
75. Con-way stockholders have a right to receive consideration that appropriately accounts for the full and true value of the Companys
long-run growth prospects and the highly desirable Menlo Logistics business. However, the Proposed Transaction, as currently structured, deprives the Companys public stockholders of the full and true value of their investments in the Company.
76. First, the timing of the Tender Offer poses an almost insurmountable obstacle to any potential competing bid. Pursuant to the
terms of the Proposed Transaction, the Tender Offer may close as early as twenty business days following its commencement.
77. This
expedited closing precludes alternative offers for the Company because potential bidders will be unable to conduct meaningful due diligence on Con-way or obtain adequate financing in time to make a Superior Proposal (as defined in the
Merger Agreement) that may be considered by the Con-way Board. This time constraint, combined with the other deal protections described below and a provision that prevents the Board from providing information to potential suitors in advance of any
firm offer and the time period required by the Matching Rights described below, insulate the Proposed Transaction from competing bids.
24
78. Second, the Board wrongfully agreed to a prohibitive No-Shop, further
limiting the possible emergence of strategic alternatives. Section 4.2 of the Merger Agreement provides:
[T]he Company shall and
shall cause each of its Affiliates and its Representatives to: (i) immediately cease any solicitation, encouragement, discussions or negotiations with any Persons that may be ongoing with respect to an Acquisition Proposal, and promptly (but in
any event within one (1) business day) after the date of this Agreement, if not already done so prior to the date of this Agreement, instruct any Person who entered into a confidentiality agreement with the Company that has not expired or been
terminated in connection with any actual or potential Acquisition Proposal to return or destroy all such information or documents in accordance with the terms of such confidentiality agreement and (ii) from the date hereof until the Effective
Time or, if earlier, the termination of this Agreement in accordance with Article VI, not, directly or indirectly, (A) solicit, initiate or knowingly facilitate or knowingly encourage (including by way of furnishing non-public
information) any inquiries regarding, or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal, (B) other than informing Persons of the provisions contained in this
Section 4.2, engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other Person any non-public information in connection with or for the purpose of encouraging or facilitating, an
Acquisition Proposal, or (C) approve, recommend or enter into, or propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment, or agreement in principle (whether written or oral, binding or
nonbinding) with respect to, or take any action to support or in furtherance of, an Acquisition Proposal.
25
79. Third, the Board granted XPO Matching Rights in the Merger Agreement that
provide XPO five business days an inordinate amount of time under the circumstances to revise its proposal or persuade the Board not to change its recommendation on the Proposed Transaction in the face of a proposal from a third party
suitor.
80. The Matching Rights dissuade interested parties from making an offer for the Company by providing XPO the opportunity to make
a matching bid. The Matching Rights also impair the Board from offering a competing bidder a reasonable termination or bidding fee in exchange for a blowout price, since any competing bid must be subjected to the matching rights. Due to
the Proposed Transactions flawed process and inadequate price, no justification exists for the Boards decision to agree to the inclusion of the Matching Rights and other bid advantages in the Merger Agreement.
81. Fourth, the Board further reduced the possibility of maximizing shareholder value by agreeing to a termination fee of $102,861,000,
which is wholly out of line with XPOs actual expenses or damages in the event the Tender Offer does not close, and while perhaps of standard relative size in ordinary circumstances, is impermissibly obstructionist in light of the flawed
process leading to the Proposed Transaction and Fund Xs clear indication of interest.
26
|
I. |
The Materially Misleading Recommendation Statement |
82. Compounding the unfair
process and inadequacy of the Tender Offer price, on September 22, 2015, the Company filed a materially false and misleading Recommendation Statement with the SEC. The Recommendation Statement fails to provide the Companys stockholders
with material information and/or provides them with materially misleading information in contravention of the Boards duty of candor. Without the disclosure of such information before consummation of the Tender Offer (which is scheduled to
expire on October 14, 2015), the Companys public stockholders will be irreparably harmed by being forced to decide whether to tender their shares of stock in the Tender Offer without the total mix of information being made available to
them.
|
1. |
Materially Incomplete and Misleading Disclosure |
|
|
Regarding Citigroups Conflicts and Financial Analysis |
83. First, the
Recommendation Statement fails to disclose the nature of the services provided by Citigroup to XPO and the amount of fees earned by Citigroup for those services (Recommendation Statement at 27-28). Given Citigroups instrumental role as
Con-ways financial advisor in the Proposed Transaction, this information would allow stockholders to consider whether Citigroup suffered any conflicts of interest at the time it rendered its fairness opinion concerning the Proposed
Transaction. Thus, this information is highly material.
27
84. Second, the Recommendation Statement fails to specify the aggregate amount of fees
paid by XPO to Citigroup in the past four years and what Citigroups fee arrangement was with XPO in connection with a potential sale of the Menlo Logistics business (Recommendation Statement at 27-28).
85. Third, the Recommendation Statement fails to (1) provide Con-way stockholders with a fair summary of the description of
Citigroups relationships with XPO that was provided to the Con-way Board on July 20, 2015 (Recommendation Statement at 15) or (2) disclose whether the Citigroup banker(s) who contacted Con-way regarding a possible acquisition of
Menlo Logistics were the same bankers who advised Con-way with respect to the sale of the Company to XPO (Recommendation Statement at 13).
86. Fourth, the Recommendation Statement further fails to disclose whether the Board (other than Stotlar) had knowledge of
Citigroups past, current and future engagements with XPO. Nor does it disclose whether the Board considered other financial advisors before making its decision to retain a conflicted advisor, Citigroup.
87. Fifth, the Recommendation Statement fails to state whether the Board knew of the origins of XPOs expression of interest,
i.e., that XPOs offer was solicited by Citigroup, Con-way own financial advisor. It also fails to disclose whether the Board authorized Citigroup to reach out to Jacobs in the summer 2015 to inquire if XPO wanted to acquire Con-way.
28
88. Sixth, the Recommendation Statement fails to explain the rationale for including
stock-based compensation as a cash expense for the purposes of Citigroups Discounted Cash Flow Analysis.
|
2. |
Omissions Concerning Fund X |
89. Seventh, Con-way must disclose an
explanation for Stotlars refusal to speak to Fund X following its indication of interest to acquire the Company. It is material to shareholders to know the basis and rationale for Stotlars refusal to meet with Fund X or to
commence any negotiations with this seemingly persistent potential acquirer in light of the fact that the Board negotiated solely with XPO.
90. Accordingly, Plaintiff seeks preliminary and permanent injunctive relief unless and until the Individual Defendants initiate a proper
process to obtain the best possible value for stockholders and disclose all material information to stockholders regarding the Proposed Transaction.
THE INDIVIDUAL DEFENDANTS FIDUCIARY DUTIES
91. By reason of the Individual Defendants positions with the Company as directors and/or officers, said individuals are in a fiduciary
relationship with Plaintiff and the other public stockholders of Con-way and owe Plaintiff and the
29
other members of the Class the duties of loyalty, due care, good faith and candor. Additionally, pursuant to Delaware law, and in the context of a cash-out transaction, the Board owes Plaintiff
and the Companys public stockholders a fiduciary duty to achieve the best possible price for stockholders under the circumstances.
92. By virtue of their positions as directors and/or officers of Con-way, the Individual Defendants, at all relevant times, had the power to
control and influence and did control and influence Con-way, and caused the Company to engage in the conduct and practices complained of herein.
93. Each of the Individual Defendants is required to act in good faith, in the best interests of the Companys stockholders and with such
care, including reasonable inquiry, as would be expected of an ordinary prudent person. To diligently comply with this duty, the directors of a corporation may not take any action that:
a. Adversely affects the value provided to the corporations stockholders;
b. Contractually prohibits them from complying with or carrying out their fiduciary duties;
c. Discourages or inhibits alternative offers to purchase control of the corporation or its assets;
30
d. Adversely affects their duty to search for and secure the best value reasonably available
under the circumstances for the corporations stockholders; or
e. Provides the Individual Defendants with preferential treatment at
the expense of, or separate from, the public stockholders.
94. In accordance with their duties of loyalty and good faith, the Individual Defendants are
and were obligated to refrain from:
a. Participating in any transaction where their loyalties are divided;
b. Participating in any transaction where they receive, or are entitle to receive, a personal financial benefit not equally shared by the
public stockholders of the corporation; and/or
c. Unjustly enriching themselves at the expense or to the detriment of the
public stockholders.
95. As discussed supra, Plaintiff alleges herein that the Individual Defendants, separately and together, in
connection with the Proposed Transaction, are knowingly and/or recklessly violating their fiduciary duties, including their duties of loyalty, due care, good faith, and candor owed to Plaintiff and the other public stockholders of Con-way.
31
CLASS ACTION ALLEGATIONS
96. Plaintiff brings this action pursuant to Delaware Court of Chancery Rule 23, individually and on behalf of the holders of the common stock
of the Company, who have been and/or will be harmed as a result of the wrongful conduct alleged herein. The Class excludes defendants herein, and any person, firm, trust, corporation or other entity related to, or affiliated with, any of the
defendants.
97. This action is properly maintainable as a class action.
98. The Class is so numerous that joinder of all members is impracticable. As of September 3, 2015, the Company reportedly had over
56,866,820 shares of common stock outstanding, held by at least hundreds and likely thousands of public stockholders. Members of the Class are scattered geographically and are so numerous that it is impracticable to bring them all before this Court.
99. Questions of law and fact exist that are common to the Class, including, among others:
a. Whether the Individual Defendants have fulfilled, and are capable of fulfilling, their fiduciary duties owed to Plaintiff and the Class;
b. Whether the Individual Defendants have obtained the best possible price for the Companys public stockholders under the
circumstances;
32
c. Whether the Individual Defendants are acting in furtherance of their own self-interest to the
detriment of the Class;
d. Whether the Individual Defendants, in bad faith and for improper motives, have impeded or erected barriers to
discourage other offers for the Company or its assets;
e. Whether the Individual Defendants will disclose all material information
affecting the total mix of information available to stockholders so that they can make an informed decision whether to tender their shares of stock in the Tender Offer
f. Whether XPO and Merger Sub have aided and abetted the Individual Defendants breaches of fiduciary duty;
g. Whether Citigroup has aided and abetted the Individual Defendants breaches of fiduciary duty; and
h. Whether Plaintiff and the other members of the Class will be irreparably harmed if Defendants are not enjoined from continuing the conduct
described herein.
100. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of
this nature. Plaintiffs claims are typical of the claims of the other members of the Class and Plaintiff has the same interests as the other members of the Class. Accordingly, Plaintiff is an adequate representative for the Class and will
fairly and adequately protect the interests of the Class.
33
101. The prosecution of separate actions by individual members of the Class would create the risk
of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a
practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests.
102. Therefore, preliminary and final injunctive relief on behalf of the Class as a whole is entirely appropriate because defendants have
acted, or refused to act, on grounds generally applicable and causing injury to the Class.
CLAIMS FOR RELIEF
C O U N T
I
Direct Claim for Breach of Fiduciary Duty
Against the Individual Defendants
103. Plaintiff repeats and realleges each and every allegation set forth herein.
104. The Individual Defendants have violated their fiduciary duties owed to Con-ways public stockholders by engaging in a flawed process
that failed to obtain the best possible price for stockholders under the circumstances. The
34
Individual Defendants also breached their fiduciary duties to the Companys public stockholders by putting their own personal interests ahead of the interests of stockholders to obtain the
best possible price for stockholders. The Individual Defendants further breached their fiduciary duties to the Companys public stockholders by failing to disclose all material information necessary for stockholders to make an informed decision
whether to tender their shares of stock in the Tender Offer. Both by the Boards inaction and its misconduct as described herein, the Board has breached its fiduciary duties to the Companys public stockholders. XPO and Merger Sub
acquiesced in those actions by participating in the conduct alleged herein and by, inter alia, not permitting the Board to engage in a reasonable pre-market check or go-shop period prior to commencement of the Tender Offer period.
The Individual Defendants have therefore breached their fiduciary duties by failing to take adequate measures to ensure that the interests of the Companys public stockholders are properly protected and failure to embark on a process to obtain
the best possible price for stockholders.
105. The Individual Defendants have also breached their fiduciary duties by failing to disclose
all material information relating to the Proposed Transaction.
106. By the acts, transactions, and courses of conduct alleged herein,
these Defendants, individually and acting as a part of a common scheme and plan, will unfairly deprive Plaintiff and other members of the Class of the true value of their
35
Con-way investment. Plaintiff and other members of the Class will suffer irreparable harm unless the actions of these Defendants are enjoined and a fair process is substituted.
107. By reason of the foregoing acts, practices, and courses of conduct, the Individual Defendants have failed to exercise their fiduciary
obligations toward Plaintiff and the other members of the Class.
108. As a result of the actions of the Individual Defendants, Plaintiff
and the Class have been, and will be, irreparably harmed in that they have not, and will not, receive their fair portion of the value for their Con-way stock and businesses, and will be prevented from obtaining the best possible price for their
common stock under the circumstances.
109. Unless enjoined by this Court, the Individual Defendants will continue to breach the fiduciary
duties owed to Plaintiff and the Class and may consummate the Proposed Transaction to the disadvantage of the public stockholders.
110.
Plaintiff and the members of the Class have no adequate remedy at law. Only through the exercise of this Courts equitable powers can Plaintiff and the Class be fully protected from the immediate and irreparable injury that these actions
threaten to inflict.
36
C O U N T
I I
Direct Claim
Against XPO and Merger Sub for Aiding Abetting the
Individual Defendants Breaches of Fiduciary Duties
111. Plaintiff repeats and realleges each and every allegation set forth herein.
112. The Individual Defendants breached their fiduciary duties to Con-ways public stockholders by the wrongful actions alleged herein.
113. Such breaches of fiduciary duties could not, and would not, have occurred but-for the conduct of XPO and Merger Sub, which,
therefore, aided and abetted such breaches of fiduciary duty through entering into the Proposed Transaction.
114. XPO and Merger Sub had
knowledge that they were aiding and abetting the Individual Defendants breaches of fiduciary duties to Con-ways public stockholders.
115. XPO and Merger Sub leveraged their relationship with Citigroup to assist the Individual Defendants in their breaches of their fiduciary
duties to Con-ways public stockholders.
116. As a result of XPOs and Merger Subs conduct of aiding and abetting the
Individual Defendants breaches of fiduciary duties, Plaintiff and the other members of the Class have been, and will be, damaged in that they have been, and will be, prevented from obtaining the best possible price for their shares of stock
under the circumstances.
37
117. As a result of the unlawful actions of XPO and Merger Sub, Plaintiff and the other members
of the Class will be irreparably harmed in that they will be prevented from obtaining the fair value of their equity ownership in the Company. Unless enjoined by the Court, XPO and Merger Sub will continue to aid and abet the Individual
Defendants breaches of their fiduciary duties owed to Plaintiff and the members of the Class, and will aid and abet a process that inhibits stockholders ability to obtain the best possible price under the circumstances.
118. Plaintiff and the other members of the Class have no adequate remedy at law. Only through the exercise of this Courts equitable
powers can Plaintiff and the Class be fully protected from immediate and irreparable injury that defendants actions threaten to inflict.
C O U N T
I I
I
Direct Claim Against Citigroup for Aiding and Abetting the
Individual Defendants Breaches of Fiduciary Duties
119. Plaintiff repeats and realleges each and every allegation set forth herein.
120. The Individual Defendants breached their fiduciary duties to Con-ways public stockholders by the wrongful actions alleged herein.
121. Such breaches of fiduciary duties could not, and would not, have occurred but-for the conduct of Citigroup, which, therefore, aided
and abetted such breaches of fiduciary duty through steering Con-way into the Proposed Transaction.
38
122. Citigroup had knowledge of the Individual Defendants obligations to Con-way
stockholders in the context of an all-cash sale of the Company, yet nonetheless purposely took steps to aid and abet the Individual Defendants breaches of fiduciary duties to Con-ways public stockholders.
123. Citigroup, to advance its own interests, rendered significant and substantial assistance to the Individual Defendants in their breaches
of their fiduciary duties to Con-ways public stockholders.
124. As a result of Citigroups conduct of aiding and abetting the
Individual Defendants breaches of fiduciary duties, Plaintiff and the other members of the Class have been, and will be, damaged in that they have been, and will be, prevented from obtaining the best possible price for their shares of stock
under the circumstances.
125. As a result of the unlawful actions of Citigroup, Plaintiff and the other members of the Class will be
irreparably harmed in that they will be prevented from obtaining the fair value of their equity ownership in the Company. Unless enjoined by the Court, Citigroup will continue to aid and abet the Individual Defendants breaches of their
fiduciary duties owed to Plaintiff and the members of the Class, and will aid and abet a process that inhibits stockholders ability to obtain the best possible price under the circumstances.
39
126. Plaintiff and the other members of the Class have no adequate remedy at law. Only through
the exercise of this Courts equitable powers can Plaintiff and the Class be fully protected from immediate and irreparable injury that defendants actions threaten to inflict.
PRAYER FOR RELIEF
127.
WHEREFORE, Plaintiff demands judgment and relief, including injunctive relief, in his favor and in favor of the Class, and against the defendants as follows:
A. Certifying this case as a Class Action, and certifying Plaintiff as Lead Plaintiff in the Class Action and his chosen counsel as Lead
Counsel for the Class Action;
B. Enjoining the Defendants and all those acting in concert with them from consummating the Tender Offer
and/or the Proposed Transaction;
C. Enjoining the Individual Defendants from initiating and/or continuing any defensive measures that
would inhibit their ability to conduct a true auction or market check of the Company so as to test its true value in connection with a potential sale and/or to obtain the best possible price for Con-ways public stockholders;
40
D. Enjoining the Individual Defendants from consummating the Tender Offer and/or Proposed
Transaction until the defendants disclose all material information encompassing the total mix of information available to the Companys stockholders so that they can make an informed decision whether to tender their shares of stock in the
Tender Offer;
E. To the extent that the Proposed Transaction is consummated before this Courts entry of final judgment, award
rescissory damages;
F. Directing Defendants to account to Plaintiff and the Class for all damages suffered by them as a result of
Defendants wrongful conduct alleged herein;
G. Awarding Plaintiff the costs, expenses, and disbursements of this action, including
all reasonable attorneys and experts fees and expenses and, if applicable, pre-judgment and post-judgment interest; and
H.
Awarding Plaintiff and the Class such other relief as this Court deems just, equitable, and proper.
41
|
Dated: October 7, 2015 |
|
FRIEDMAN OSTER & TEJTEL PLLC |
Jeremy Friedman |
Spencer Oster |
David Tejtel |
240 East 79th Street, Suite A |
New York, NY 10075 |
(888) 529-1108 |
|
Counsel for Plaintiff Robert Abrams |
|
|
|
ANDREWS & SPRINGER, LLC |
|
|
By: |
|
/s/ Peter B. Andrews |
Peter B. Andrews (Del. Bar No. 4623) |
Craig J. Springer (Del. Bar No. 5529) |
3801 Kennett Pike, |
Building C, Suite 305 |
Wilmington, DE 19807 |
Tel.: (302) 504-4957 |
Fax: (302) 397-2681 |
|
Counsel for Plaintiff Robert Abrams |
42