June i, 1905."! 



THE INDIA RUBBER WORLD 



311 



THE MERGER OF THE RUBBER COMPANIES. 



AT a meeting of the directors of the United States Rub- 

 ber Co., in New York, on May 12, the executive com- 

 mittee made a report in favor of the acquisition by the 

 company of not less than two-thirds of the capital 

 stock of the Rubber Goods Manufacturing Co., the means for 

 such purchase being an increase of the capital stock of the 

 United States Rubber Co. There was also presented a form of 

 contract, bearmg the same date, by and between the United 

 States Rubber Co. and Anthony N. Brady, acting in behalf of 

 a syndicate stated to be in a position to secure control of the 

 capital stock of the Rubber Goods company on certain terms. 



Whereupon, after discussion, the directors of the United 

 States Rubber Co. adopted resolutions that it would be desira- 

 ble to have their articles of incorporation amended so as to in- 

 crease their issue of preferred capital shares by $15,000,000, and 

 to create one more class of slock — a second preferred 6 per 

 cent, cumulative stock — to the amount of $10,000,000, with a 

 a view to the exchange of shares on the following basis: 



$9,051,400 in first preferred stock of the United .States Rubber Co., 

 at par, and $to,ooo,ooo in new second preferred stock of the United 

 States Rubber Co., at par, for all the shares of preferred stock of the 

 Rubber Goods Manufacturing Company, and for all the shares of the 

 common stock of the Rubber Goods Manufacturing Co. — subject in 

 each case to a suitable deduction in the event that less than all the 

 shares be acquired. 



It was resolved to enter into the conditional contract with 

 the Brady syndicate and to call a special meeting of sharehold- 

 ers of the United .States Rubber Co. to be held in New Bruns- 

 wick, New Jersey, on May 25, to take action upon the resolu- 

 tions adopted by the board, and to authorize and approve the 

 acquisition of stock of the Rubber Goods Manufacturing Co. 



Following the meeting in question, a circular was issued to 

 the shareholders of the United States company, the text of 

 which is given herewith in full, and which serves to set forth 

 all the conditions and the proposed means for bringing about 

 the merger: 



UNITED STATES RUBBER COMPANY. 



Mav 12, 1905. 



To THE Stockholders oi-' the United States Rubber Company : 



The original certificate of incorporation of the United States Rubber 

 Company stated, as one of the objects of the corporation : 



"The purchasing the stock of any company or companies owning, 

 mining, manufacturing, or producing materials or other property neces- 

 sary for its business, or of any other company whose shares it may 

 lawfully purchase, and enercising with relation thereto, all the rights, 

 powers, and privileges of individual owners of the shares of such 

 stock." 



In pursuance of its corporate powers, and in consummation of its 

 corporate purposes as thus declared, the United States Rubber Company 

 has acquired and now holds the stock of many other companies. Among 

 such stocks during several years, the United States Rubber Company 

 (or one of its subsidiary companies) held shares of the Rubber Goods 

 Manufacturing Company. Preeminently and conspicuously that is a 

 company whose stock the United States Rubber Company might and 

 may lawfully purchase, for in the rubber industry it is the most impor- 

 tant manufacturer of rubber goods, not including boots aud shoes, 

 whose business naturally would complete and would supplement the 

 business of the subsidiary companies of the United States Rubber Com- 

 pany, which are engaged almost exclusively in the manufacture of rub- 

 ber boots and rubber shoes. 



The relations between these two companies in no sense are competi- 

 tive, but clearly are supplementary ; and for several years have sugges- 



ted to those conversant with the rubber business, and especially with 

 the affairs of these two companies, the advantages to be gained from 

 their closer connection. Accordingly, for some time the business and 

 results of the business of each company, and the possibility by union of 

 improving and extending the business of each, have engaged the atten- 

 tion of the management of the United States Rubber Company, which 

 deems that now the time has come for effecting such union, if the same 

 can be accomplished substantially in the method and upon the terms 

 hereinafter set forth. 



Investigation into the affairs of the Rubber Goods Manufacturing 

 Company has satisfied the management that its business is in a prosper- 

 ous condition as regards both stability and profits, the net earnings for the 

 last fiscal year having exceeded $1 ,500,000, thus providing for the preferred 

 stock the full 7 per cent, dividend and for the common stock a substantial 

 sum, although not paid out in dividends ; that it is reasonably certain that, 

 if operated in connection with the business of the United States Rubber 

 Company, its holdings in the Rubber Goods Manufacturing Company 

 would result to the United States Rubber Company in annual net re- 

 turns not less, and probably more than the sum of $2,000,000, with every 

 prospect of increase of business in volume and profit to each company ; 

 that such earnings would exceed the amount required to pay the dividends 

 upon the increased amount of the first preferred stock, and upon the 

 (new) second preferred stock of the United States Rubber Company 

 (hereinafter proposed), were the same to he issued in exchange for stock 

 of the Rubber Goods Manufacturing Company, provided that not less 

 than two thirds thereof be acquired ; and that it would be reasonable to 

 anticipate an ihiportant extension of the business of the United States 

 Rubber Company through channels opened by the Rubber Goods Manu- 

 facturing Company. 



For the accomplishment of the result thus regarded as desirable, sev- 

 eral methods have been considered, but none has seemed as feasible as 

 the purchase of the slock of the Rubber Goods Manufacturing Company, 

 which purchase, under the express terms of the original certificate of in- 

 corporation of the United States Rubber Company, is authorized to be 

 made in its discretion, by the board of directors, without referring the 

 question to a stockholders' meeting. 



The means of miking payment for the stock so purchased also have 

 been carefully considered. At the outset it was thought that such pur- 

 chase might be accomplished by an issue of collateral trust notes, se- 

 cured by a pledge of the shares of stock of the Rubber Goods Manufac- 

 turing Company acquired by the use of such notes ; and rather than 

 forego the purchase and the advantages to result therefrom to the United 

 States Rubber Company, if no better means were provided, it might 

 still be advisable to make such purchase by the use of such collateral 

 trust notes. But it occurred to the management that rather than sub- 

 ject their stock to the prior fixed charges of such collateral trust notes, 

 the United States Rubber Company stockholders might prefer to provide 

 the means of purchase by an increased issue of stock, especially if the 

 stock issues were to be adjusted so as not only to give assurance of sta- 

 bility of value to the preferred stock, but also to hold out reasonable 

 expectations of increase of value in the common stock of the United 

 States Rubber Company. Both of these purposes, it is believed, would 

 be attained were the very moderate amount of the preferred stock and 

 all of the common stock of the Rubber Goods Manufacturing Company 

 to be acquired by an issue of new first preferred stock of the United 

 States Rubber Company in amount equal to that of the Rubber Goods 

 Manufacturing Company, and an issue of a new 6 per cent, second pre- 

 ferred stock of the United States Rubber Company, preferred only as to 

 dividends (and not as to principal) over the common stock, which thus 

 would get the benefit of the entire residue of earnings after providing 

 for the preferred dividends, which would be limited respectively to 8 

 per cent, and to 6 per cent, annually. For the total amount of the com- 

 mon stock of the Rubber Goods Manufacturing Company, there would 

 thus be issuable not more than 60 per cent, of the par thereof in the 



