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Sara Lee Corp. & Coach Inc. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications Relief from issuer bid requirements in connectionwith securities exchange issuer bid Parent distributing shares of its subsidiary Bid made in compliance with U.S.securities laws - Neither parent nor subsidiary is a reporting issuer in any Canadian jurisdiction - Issuer has over 50shareholders in the Jurisdiction, holding fewer than 1% of outstanding shares.
Distribution of shares of subsidiary pursuant to the issuer bid or subsequent spin off not subject to prospectusqualification or dealer registration requirements First trade deemed to be a distribution unless executed through thefacilities of an exchange outside of Canada.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(1)(c), 25, 53, 74(1), 95, 96, 97, 98, 100, 104(2)(c).
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
EACH OF THE PROVINCES AND TERRITORIES OF CANADA
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
SARA LEE CORPORATION
AND
IN THE MATTER OF
COACH, INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of the Provincesand Territories of Canada (collectively, the "Jurisdictions") has received an application from Sara Lee Corporation ("SaraLee") and Coach, Inc. ("Coach" and, together with Sara Lee, the "Filers") for:
1. a decision under the securities legislation of Ontario, Quebec and British Columbia (the "Issuer BidRequirements Jurisdictions") that the requirements contained in such legislation relating to delivery of an offerand issuer bid circular and any notices of change or variation thereto, minimum deposit periods and withdrawalrights, take-up and payment for securities tendered to an issuer bid, disclosure, restrictions upon purchasesof securities, financing, identical consideration and collateral benefits (the "Issuer Bid Requirements") shall notapply to a securities exchange issuer bid (the "Issuer Bid") proposed by Sara Lee; and
2. a decision under the securities legislation of each of the Jurisdictions (the "Legislation") that the requirementscontained in the Legislation to be registered to trade in a security and to qualify a prospectus in respect of thedistribution or primary distribution to the public of a security (the "Registration and Prospectus Requirements")shall not apply to any trade of common shares of Coach ("Coach Shares") by Sara Lee to its shareholders (the"Sara Lee Shareholders") pursuant to the Issuer Bid, or pursuant to any pro rata distribution of any remainingCoach Shares held by Sara Lee following the completion of the Issuer Bid (the "Spin Off"), subject to certainconditions;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the"System"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS the Filers have represented to the Decision Makers that:
1. Sara Lee is a corporation incorporated under the laws of the State of Maryland having its head office inChicago, Illinois.
2. The authorized capital of Sara Lee consists of 1.2 billion common shares ("Sara Lee Shares"), of whichapproximately 827 million Sara Lee Shares were issued and outstanding as of December 30, 2000, and 13.5million preferred shares, of which approximately 3.4 million shares were issued and outstanding as ofDecember 30, 2000.
3. The Sara Lee Shares are listed and traded on the New York Stock Exchange (the "NYSE").
4. Sara Lee is not a reporting issuer or its equivalent in any of the Jurisdictions and has no present intention ofbecoming a reporting issuer or its equivalent in any of the Jurisdictions.
5. As at January 10, 2001, there were approximately 1,074 Sara Lee Shareholders resident in Canada (the"Canadian Shareholders"), owning approximately 705,841 Sara Lee Shares (or approximately .0847% of theissued and outstanding Sara Lee Shares). As at January 10, 2001, there were approximately 386 CanadianShareholders resident in Ontario, 538 Canadian Shareholders resident in Quebec, 63 Canadian Shareholdersresident in British Columbia, and fewer than 50 Canadian Shareholders resident in each of the otherJurisdictions.
6. Coach is a corporation incorporated under the laws of the State of Maryland having its head office in New York,New York.
7. The authorized capital of Coach consists of 100 million Coach Shares, of which approximately 43.5 millionCoach Shares were issued and outstanding as of December 30, 2000, and 25 million preferred shares, noneof which were issued and outstanding as of December 30, 2000.
8. The Coach Shares are listed and traded on the NYSE.
9. Coach is not a reporting issuer or its equivalent in any of the Jurisdictions and has no present intention ofbecoming a reporting issuer or its equivalent in any of the Jurisdictions.
10. Sara Lee owns approximately 80.5% of the issued and outstanding Coach Shares.
11. Under the Issuer Bid, Sara Lee proposes to offer all the Sara Lee Shareholders, including the CanadianShareholders, the opportunity to exchange Sara Lee Shares for Coach Shares at an exchange ratio that will,as of the date the Issuer Bid commences, constitute a premium to the market value of the tendered Sara LeeShares.
12. The Sara Lee Shareholders will have the option of tendering all, some or none of their Sara Lee Shares to theIssuer Bid.
13. In the event that the Issuer Bid is oversubscribed, the number of Sara Lee Shares accepted by Sara Lee fromeach Sara Lee Shareholder who has validly tendered Sara Lee Shares to the Issuer Bid will be reduced on apro rata basis (except for certain odd lot holders, who will not be subject to proration).
14. If the Issuer Bid is not fully subscribed but the conditions of the bid are satisfied or waived, then Sara Lee willaccept all of the Sara Lee Shares that are validly tendered to the Issuer Bid and, thereafter, distribute itsremaining Coach Shares to the Sara Lee Shareholders on a pro rata basis pursuant to the Spin Off.
15. The Issuer Bid and the Spin Off (if any) will be made in compliance with the Securities Act of 1933 (UnitedStates) (the "1933 Act"), the Securities Exchange Act of 1934 (United States) (the "1934 Act") and the rules ofthe U.S. Securities and Exchange Commission pursuant to the 1933 Act and the 1934 Act (collectively, the"Applicable U.S. Securities Laws").
16. All material relating to the Issuer Bid and any amendment thereto, including the offering circular-prospectus,that is sent by or on behalf of Sara Lee to the Sara Lee Shareholders resident in the United States (the "U.S.Shareholders") also will be delivered concurrently to all Canadian Shareholders and filed with each of theDecision Makers.
17. The Coach Shares to be distributed pursuant to the Issuer Bid and the Spin Off (if any) have been approvedfor listing on the NYSE and it is expected that any resale of the Coach Shares will be effected through thefacilities of that exchange.
18. Following the completion of the Issuer Bid, it is estimated that there will be approximately 1,000 holders ofCoach Shares resident in Canada, owning approximately 500,000 Coach Shares (or approximately 1.15% ofthe issued and outstanding Coach Shares).
19. Holders of Coach Shares resident in the Jurisdictions will receive the same continuous disclosure materialsfurnished to holders of Coach Shares resident in the United States.
20. Sara Lee cannot rely upon the de minimus exemption from the Issuer Bid Requirements under the securitieslegislation of the Issuer Bid Requirements Jurisdictions because in each of those jurisdictions there are morethan 50 Canadian Shareholders.
AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers in the Issuer Bid Requirements Jurisdictions under the Legislation ofsuch Jurisdictions is that the Issuer Bid shall be exempt from the Issuer Bid Requirements of the Legislation of suchJurisdictions, provided that:
(a) the Issuer Bid is made in compliance with the requirements of Applicable U.S. Securities Laws; and
(b) all material related to the Issuer Bid and any amendment thereto that is sent by or on behalf of SaraLee to U.S. Shareholders is also delivered to Canadian Shareholders whose last address, as shownon the books of Sara Lee, is in the Issuer Bid Requirements Jurisdictions and such material is filedwith each of the Decision Makers in the Issuer Bid Requirements Jurisdictions; and
THE DECISION of the Decision Makers in each of the Jurisdictions under the Legislation of such Jurisdictionsis that the distribution of Coach Shares pursuant to the Issuer Bid and the Spin Off (if any) shall be exempt from theRegistration and Prospectus Requirements of the Legislation of such Jurisdictions, provided that the first trade in theCoach Shares acquired pursuant to the Issuer Bid and the Spin Off (if any) shall be deemed to be a distribution orprimary distribution to the public unless such trade is executed through the facilities of a stock exchange outside ofCanada in accordance with the rules of such exchange.
February 19, 2001.
"Howard I. Wetston" "Theresa McLeod"