PHOENIX — CSK Auto confirmed that it has received from O’Reilly Automotive an unsolicited proposal to acquire all of the outstanding shares of CSK Auto.
The company issued a statement in response, which said that CSK’s Board of Directors and management remain committed to acting in the best interests of the company’s stockholders. In response to comments made to CSK President and CEO Lawrence Mondry in a letter from O’Reilly CEO Greg Henslee, the company stated:
“In December 2007, CSK retained JPMorgan to assist its board of directors in developing and evaluating alternatives to preserve and maximize stockholder value. As part of this process, to date, more than 20 parties – including both strategic and non-strategic, and control and non-control seeking parties – have executed customary confidentiality and standstill agreements, and have thus been granted access to non-public information. O’Reilly has been, and continues to be, afforded the opportunity to participate in this process, but has declined to do so.”
“We are conducting a thoughtful and comprehensive process, and we fully intend to complete the process as planned in order to ensure a result that we believe will serve the best interests of our stockholders,” said Mondry.
In addition, CSK announced today that it has adopted a Shareholder Rights Plan “in order to maintain the integrity of the strategic review process” that its Board of Directors is conducting.
As previously announced, CSK’s Board of Directors, with assistance from JPMorgan, has commenced a process in which more than 20 parties to date have been given access to information about the company so that they can develop strategic alternatives for the board’s consideration. On Feb. 1, O’Reilly Automotive announced an unsolicited proposal to acquire all of the outstanding shares of CSK, choosing not to participate in the process.
The adoption of this Rights Plan supports the board’s intent to complete its process as initially contemplated so as to best preserve and maximize shareholder value.
Under the Plan, one “Right” will be issued for each share of CSK common stock outstanding as of Feb. 14. The Rights are not exercisable, and separate Right Certificates will not be issued, unless the Rights are triggered. The Rights would be triggered by, among other things, any person acquiring or announcing an intention to acquire 10 percent or more of CSK’s common stock, or upon the consummation of any transaction in which CSK is not the surviving entity, the outstanding shares of CSK common stock are exchanged for stock or assets of another person, or 50 percent or more of CSK’s consolidated assets or earning power are sold. If a party exceeds the ownership thresholds and the Rights are not redeemed, each Right will entitle the holder, other than the triggering party, to purchase a number of shares of the Company’s common stock having a value of twice the $45 exercise price. Such an exercise would dilute the triggering party’s holdings in CSK.
The Rights will expire on Feb. 3, 2009, unless they are extended by CSK’s shareholders, in which case the Rights will expire on Feb. 4, 2011. Subject to certain exceptions, the Rights are redeemable by action of the Board at a minimal price per right.
The company will file a Registration Statement on Form 8-A with the U.S. Securities and Exchange Commission setting forth additional information regarding the terms and conditions of the Rights Plan and the Shareholder Rights Agreement that governs it.
