Bandag declares dividend, adopts shareholder rights plan
For the fourth consecutive quarter, Bandag Inc.'s board of directors declared a regular quarterly dividend of $.335 per share on its common stock, Class A common stock and Class B common stock. The dividend is payable Oct. 20, 2006, to shareholders of record at the close of business on Sept. 20, 2006.
Additionally, the company's board of directors announced that it has adopted a shareholder rights plan. The rights plan includes the declaration of a dividend of the following:
1. one common share purchase right for each outstanding share of Common Stock and each outstanding share of Class B common stock.
2. one Class A common share purchase right for each outstanding share of Class A common stock.
The issuance of the rights under the rights plan will be made on Sept. 12, 2006, to shareholders of record as of the close of business on that date.
The rights are designed to enable the company's shareholders to realize the full long-term value of their investment and to provide for fair and equal treatment for all shareholders in the event that an
unsolicited attempt is made to acquire the company. In adopting the rights plan, the board was mindful of the upcoming automatic conversion of the Class B common stock in January 2007 and the potential impact of that conversion on the company's ability to execute its long-term strategy.
The company's board says it "continues to believe the leadership of the Carver family is an important factor in the company's long-term earnings growth and success." It also believes that the rights plan will help to protect shareholders against abusive takeover tactics that may be used to gain control of the company.
"The rights plan was not adopted in response to any known offers for
the company and is similar to shareholder rights plans adopted by many other companies," according to Bandag.
The distribution of rights is not taxable to the company or the shareholders. Until the rights become exercisable, the rights will not be represented by separate certificates and will trade with the
company's common stock, Class B common stock and Class A common stock.
Each common share purchase right will initially entitle shareholders to buy one-half of one share of common stock at a price of $50 per one-half of one share of common stock (equivalent to $100 per
full share of common stock). Also, each Class A common share purchase right will initially entitle shareholders to buy one-half of one share of Class A common stock at a price of $50 per one-half of
one share of Class A common stock (equivalent to $100 per full share of Class A common stock), subject to adjustment.
"If any person or group acquires 20% or more of the company's outstanding shares of common stock, 20% or more of the company's outstanding shares of Class A common stock or 20% or more of the company's outstanding shares of common stock and shares of Class A
common stock on a collective basis, or announces a tender offer, the consummation of which would result in ownership by a person or group in excess of those thresholds, then each right (subject to certain limitations) will entitle its holder to purchase, at the right's then current exercise price, a number of shares of common stock or shares of Class A common stock, as applicable, having a market value at the time of twice the right's exercise price," says the company.
The rights plan excludes from the definition of a 20% or more acquiring person members of the Carver family and any person who the board of directors determines in good faith has inadvertently
become an acquiring person if such person promptly divests of shares of common stock and/or Class A common stock so that the person would no longer be a 20% or more acquiring person. It also excludes from the definition of a 20% or more acquiring person any shareholders who or which, as of the effective date of the plan, own in excess of the thresholds, as long as they do not purchase any additional shares of common stock or Class A common stock.
The board may redeem the rights for $0.001 per right at any time prior to the time when the rights become exercisable. Unless the rights are redeemed, exchanged or terminated earlier, the rights will expire on Aug. 20, 2016.
Additional details regarding the rights plan will be contained in filings with the Securities and Exchange Commission.
Bandag's common stock closed at $35.72 a share on the New York Stock Exchange on May 15. That compares to a 52-week high of $45.42 and low of $32.79. Bandag's Class A common stock closed at $29.50 a share versus a 52-week high of $39.05 and low of $27.99.
Bandag's Class B common stock is unlisted.
For the second quarter ended June 30, 2006, Bandag reported consolidated net earnings of $10.5 million on consolidated net sales of $247.3 million.