SCHEDULE 14A
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ChemFirst Inc.
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LOGO CHEMFIRST INC.
Interoffice Memorandum
Date: July 23, 2002
To: ChemFirst Employees
From: J. Kelley Williams
RE: Transaction With Dupont
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Our board of directors voted unanimously today upon management's
recommendation to approve a transaction of ChemFirst with Dupont at a price
of $29.20 per share cash. We expect it to close before yearend. We think
this is a fair deal for our shareholders, employees, and other
constituents. Here's why.
Shareholders judge a deal by price, currency, timing, and alternatives.
Employees by impact on their jobs - security, pay, opportunity, working
conditions, etc. Customers by effect on quality, reliability, price,
innovation, and other attributes of products and services. Communities
where we have a presence by changes in headquarters, headcount, payroll,
civic and charitable support.
Shareholders. The price of 29.20 is 28% above yesterday's close and 99% of
our all time high. This in the worst market in years. The DJ is 34% off its
high, the NASDAQ is off 75%, and the S&P 500 47%. Our peers are well off
their highs too. Some over 60%. This is a fair price that reflects current
conditions and discounts future growth and risk. And the currency is cash.
As a liquidity event for shareholders the timing could not be better.
This transaction originated as an unsolicited inquiry last fall. We did not
pick the timing. However, we knew from experience that there are only a few
potential acquirers for our entire company because of our diverse
businesses. We have had other inquiries and discussions with other
companies which were primarily interested in electronic chemicals. Since we
thought an attractive sale or merger of the entire company would be good
for shareholders, we decided to explore this possibility.
We recognized that the semiconductor industry was in recession. But we
expected it to recover. We also expected our businesses to improve. And
they have. We had a good Q1 and a better Q2. But the industry recovery has
been slow and spotty. It's impossible to predict now when the upturn will
come. So we concluded it would not be prudent to turn this offer down and
hope for a possible future transaction that might have a better present
value. I think our shareholders will be pleased with this bird in the hand.
Employees. We expect most subsidiary employees will keep their jobs since
you will be to be needed to run the businesses. There will likely be
significant cuts at headquarters. Maybe some cuts elsewhere too due to
administrative duplication and overlap. But this transaction is not driven
by cost cutting. We are a lean company. There just aren't that many costs
to cut. It is driven by growth. Our businesses are complementary to and
extensions of DuPont"s businesses. We think DuPont intends to grow these
businesses. So there should be career and growth opportunities with DuPont
which has much greater resources to sustain and drive growth.
DuPont is known as a good company to work for. It is the industry leader in
occupational health and safety and environmental responsibility. I
appreciate your loyalty, integrity, creativity, and good work. I go back
over thirty years with some of you. You deserve a good company. You are
getting one of the best. If you do lose your job as a result of the
transaction, you will receive severance payments which will be explained to
you. Most of you are shareholders and will also benefit as shareholders
from the transaction.
Customers. DuPont is well known to our customers and enjoys a premier
reputation for quality, reliability, innovation, safety, environmental
awareness, and competitiveness. Customers may have natural concerns about
the transaction transition and operational integration and expect it to go
smoothly with no disruptions. DuPont is very experienced in such matters.
And they have conducted extensive and exhaustive due diligence of our
operations. They know what we have and what needs to be done for a smooth
transition. I expect it to be routine.
Communities. DuPont is a good corporate citizen as we have tried to be. I
expect DuPont will continue to be involved in and supportive of the
communities where we have a presence as we have been. There should be
little change at most locations. However, it will be different at corporate
headquarters in Jackson. DuPont may maintain a presence here. But it will
not be an independent NYSE company headquarters.
ChemFirst and before that First Mississippi has been a major supporter of
community activities and charities. It was one of the first companies in
Mississippi to form and fund a foundation to support education and
community projects. Its employees have been involved in service and
leadership roles in business, civic, and political affairs. It was the
first company chartered in Mississippi to be listed on the New York Stock
Exchange and to be included in the S&P 500. It had the highest return to
shareholders of all listed U.S. companies in the decade of the 70's. And it
has generated a compound annual return to investors of about 12.4% since it
was founded 45 years ago by Owen Cooper and LeRoy Percy to help promote
business and industry in Mississippi. This return which does not include
dividends compares to 8.1% for the S&P 500 and 7.4% for the Dow over the
same period. ($1000 invested in our company at founding would be worth
$187,420 today.) Not bad in any league.
I would like to think the company will be missed. But to everything there
is a season - a time to keep and a time to cast away. I am grateful for my
35 years with the company and am proud of my association with you and of
what all of us who have worked at First Mississippi and ChemFirst have
accomplished.
JKW/cl
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In connection with the transaction discussed in this memorandum, ChemFirst
Inc. intends to file a proxy statement with the Securities and Exchange
Commission. Security holders are urged to read the proxy statement when it
becomes available because it will contain important information. Security
holders may obtain a free copy of the proxy statement when it becomes
available, as well as other materials filed with the Securities and
Exchange Commission concerning ChemFirst, at the Securities and Exchange
Commission's web site at http://www.sec.gov. Security holders of ChemFirst
Inc. may also obtain for free the proxy statement filed by ChemFirst Inc.
with the Securities and Exchange Commission in connection with the
transaction by directing a request to ChemFirst Inc., Attention: Investor
Relations Department, P.O. Box 1249, Jackson, MS 39215-1249, (601)
949-0213.
ChemFirst Inc. and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from ChemFirst shareholders
with respect to the transaction. Information regarding these directors and
executive officers and their ownership of ChemFirst common stock is
contained in ChemFirst Inc.'s proxy statement on Schedule 14A, filed with
the Securities and Exchange Commission on March 25, 2002, in connection
with the 2002 annual meeting ChemFirst shareholders. Investors may obtain
additional information regarding the interests of such participants by
reading the proxy statement regarding the transaction when it becomes
available.