312 



THE INDIA RUBBER WORLD 



[June i, 1905. 



(new) second preferred stock (at par) of the United States Rubber 

 Company. 



The reports of the Rubber Goods Manufacturing Company, and an 

 investigation into its business, have satisfied the management that if all 

 of the stock of the Rubber Goods Manufacturing Company were ob- 

 tained on these terms the first preferred stock of the United States Rub- 

 ber Company would be substantially assured of regularity and stability of 

 8 per cent, dividends ; that the second preferred stock would have every 

 reasonable expectation of a regular 6 per cent dividend ; and that full div- 

 idends would be earned and without great delay might reasonably be paid 

 upon the common stock of the United States Rubber Company. These 

 advantages to the stockholders of the United States Rubber Company 

 would be gained without sacrifice of any right, but rather with a corre- 

 sponding advantage to the interests of the stockholders of the Rubber 

 Goods Manufacturing Company ; for the 7 percent, first preferred stock 

 of that company would be exchanged for an 8 per cent, preferred stock, 

 and the common stock of that company upon which for some time no 

 dividends have been paid would (though to a lesser amount) become a 

 preferred stock with reasonable assurance of 6 per cent, dividends. The 

 case seems to be one in which each of the two parties would derive just 

 and proportionate gain from the transaction. 



But, in addressing the stockholders of the United States Rubber Com- 

 pany, the directors are concerned particularly and primarily with the 

 separate interests of the stockholders of their own company. As to 

 these, the opinion of the directors present at the meeting authorizing this 

 circular is emphatic and unanimous that all might anticipate advantage 

 in the acquisition of the stock of the Rubber Goods Manufacturing Com- 

 pany upon the terms above stated : and by an issue of stock of the 

 United States Rubber Company, rather than by an issue of collateral 

 trust notes. This latter method is held in abeyance until after the stock- 

 holders shall have decided whether or not to amend the certificate of 

 incorporation, and to increase the stock and to create a new class of 

 preferred stock. 



Of course, in view of the various contingenciesof the situation, includ- 

 ing the risk of lluctuations in market value, and the possibilities of 

 ' ' corners," it must be obvious that it would not be prudent for the board 

 of directors to enter upon a series of purchases in the open market, with- 

 out any certainty as to how far such purchases might be effected. It 

 was not and is not for the interest of the United States Rubber Company 

 to undertake purchases of any of the stock of the Rubber Goods Manu- 

 facturing Company unless it can be certain of acquiring not less than 

 two thirds of all of such stock. Accordingly, it has seemed to the manage- 

 ment reasonable and proper to determine first what would be the fair 

 value to the United States Rubber Company for its corporate purposes 

 of all of the capital stock of the Rubber Goods Manufacturing Company, 

 and, after having determined such value, to agree to pay the same or a 

 lesser amount to a Syndicate if it would procure and would sell and de- 

 liver to the United States Rubber Company, within the indicated price, 

 all of the stock of the Rubber Goods Manufacturing Company, or not 

 less than two-thirds thereof--a ratable deduction from the aggregate 

 price being made for and on account of all shares of the preferred stock 

 or of the common stock of the Rubber Goods Manufacturing Company 

 not delivered by the Syndicate, provided that not less than two- thirds of 

 all the stock should be delivered. This Syndicate would bear all the ex- 

 penses of the transaction, and would find its profit in the difference be- 

 tween the price by it paid for the stocks of the Rubber Goods Manufac- 

 turing Company and the price by it received therefor from the United 

 States Rubber Company in its stocks as above proposed. 



Such a Syndicate naturally would be formed only by those familiar with 

 the business in question ; and, therefore, the one that has been formed 

 includes directors of the United States Rubber Company acting on their 

 own account. It is stated that the Syndicate includes also the president 

 of the Rubber Goods Manufacturing Company, acting in his own per- 

 sonal capacity and upon his own account, and in no sense as an officer 

 or representative of that company. 



Directors of the United States Rubber Company, having no interest 

 in the Syndicate, constituting a quorum, have adopted resolutions for 

 the increase of the capital stock of the corporation, for the creation of a 

 second preferred stock, and for the amendment of the certificate of in- 



corporation, to the extent deemed necessary for the accomplishment of 

 the purchase of the stock of the Rubber Goods Manufacturing Com- 

 pany, which purchase the directors have voted also to be desirable. The 

 directors aho have authorized the execution of a conditional contract 

 with the Syndicate authorizing it to sell and to deliver to the United 

 States Rubber Company not less than two-thirds of the stock of the 

 Rubber Goods Manufacturing Company upon the termsof said contract, 

 which has been executed and delivered, and which (with the resolutions 

 before referred to) may be obtained by any stockholder from Samuel 

 Norris, secretary, or at the New York office of the United States Rub- 

 ber Company, 42 Broadway, New York. The contract is not finally to 

 become or to be operative until after approval by the stockholders in 

 special meeting assembled. 



Accordingly, the directors have caused to be called a special meeting 

 of the stockholders, to be held at the principal office of the United 

 States Rubber Company in the city of New Brunswick, New Jersey, at 

 12 30 o'clock P. M.. on Thursday, the 25th day of May, 1905, for the 

 purpose of taking action upon all the matters mentioned in this circular 

 or in the notice mailed to every stockholder. 



If you approve the proposed plan and cannot be present at the special 

 meeting, you may execute the enclosed proxy and return the same 

 promptly in the accompanying envelope. 



By the order of the Board of Directors, 



JAMES B. FORD. Vice President. 

 SAMUl'X NORKIS, Secretary 



It is of interest to note that in the proceedings of the direc- 

 tors' meeting above referred to, the preferred share capital out- 

 standing of the Rubber Goods Manufacturing Co. was stated 

 at $9,051,400, which is larger by $1,000,000 than the figures ap- 

 pearing in the annual report of the Rubber Goods company 

 of March 31 last. The explanation is found in the recent is- 

 sue of an additional $1,000,000 in preferred shares of the Rub- 

 ber Goods company for the purpose of acquiring 25 per cent. 

 of the capital slock of the old corporation, Morgan & Wright 

 (Chicago), the Rubber Goods company having in the past held 

 only 75 per cent, of the Morgan & Wright shares. The amount 

 of common stock of the Rubber Goods company is $16 941.700, 

 and the amount of second preferred stock of the United Stales 

 company proposed to be issued for this is $10,000,000 or about 

 60 per cent, of the par value of the Rubber Goods common. 

 THE MERGER RATIFIED. 



At a meeting of shareholders of the United States Rubber 

 Co. at New Brunswick, on May 25. presided over by James B. 

 Ford, first vice president, there were represented 185,000 shares 

 of preferred and 190,000 shares of common stock, being prac- 

 tically 80 per cent, of the entire capital of the company. The 

 meeting voted to ratify the action of the board on May 12 and 

 to approve the conditional contract between the company and 

 Anthony N. Brady and his associates, and adopt certain resolu- 

 tions to increase the capital stock of the company and to secure 

 an amendment of the charter of the company under the New 

 Jersey law, and to authorize and approve the acquisition of 

 stock of the Rubber Goods Manufacturing Co. upon the terms 

 and in the manner proposed. 



NO CHANGE IN RUBBER GOODS MANAGEMENT. 



Following the first public intelligence of the rubber mer- 

 ger, the president of the Rubber Goods Manufacturing Co. is- 

 sued the following notice: 



New York, May 15, 1905. 

 Mr. E. J. CouGHLiN, General Supervisor of Factories : 



The merger of Rubber Goods and United States Rubber will in no 

 way affect the management of your companies, or any individual in 

 them, other than to give them greater opportunities. 



The management will be continued under my administration in fu- 

 ture, as in the past. Notify all concerned. 

 This is sent you owing to newspaper reports. 



C H- D.^LE, 

 Prebidenl Rubber Goods .Manufacturing Co. 



