-- Diverse product portfolio and scale across geographies
to drive shareholder value
-- Focused innovation platform to exploit market
opportunities and accelerate product development in heart failure,
sleep apnea and percutaneous mitral valve to improve patient
outcomes
-- All-stock transaction resulting in pro forma combined
equity value of $2.7
billion
-- Transaction expected to enhance revenue growth, drive
cash flow generation and be accretive to cash EPS for all
shareholders from 2016
MILAN and HOUSTON, Feb. 26,
2015 /PRNewswire/ -- Sorin S.p.A. ("Sorin"), (MTA;
Reuters Code: SORN.MI), a global medical device company and a
leader in the treatment of cardiovascular diseases, and Cyberonics
Inc. (NASDAQ: CYBX), a medical device company with core expertise
in neuromodulation, today announced their merger plan to create a
new global leader in medical technologies with a combined equity
value of approximately $2.7 billion
(€2.4 billion1) based on the closing price of Sorin and
Cyberonics shares on 25 February.
The proposed transaction has been unanimously approved by the
boards of directors of both companies. Under the terms of the
transaction, Sorin and Cyberonics will combine under a newly formed
holding company, "NewCo", which the parties will name prior to
closing. Each Cyberonics stockholder will receive one ordinary
share of NewCo for every share of Cyberonics owned. Each Sorin
shareholder will receive a fixed ratio of 0.0472 ordinary shares of
NewCo for every Sorin share owned. Following completion of the
transaction, assuming no withdrawal rights under Italian law are
exercised by Sorin shareholders with respect to the merger, Sorin
shareholders will own approximately 46 percent of NewCo, and
Cyberonics shareholders will own approximately 54 percent, on a
fully diluted basis.
The proposed transaction will bring together global leaders in
cardiac surgery and neuromodulation, and the combined company will
also be a major player in cardiac rhythm management, especially in
Europe and Japan. NewCo will have several promising
opportunities focused on multi-billion dollar markets, including
complementary research programs addressing heart failure, with an
initial commercial launch in Europe anticipated in the coming weeks. Both
companies bring minority equity investments that are complementary
in different forms of sleep apnea. Sorin, in addition, has
opportunities that address mitral valve regurgitation.
Andre-Michel Ballester, Chief
Executive Officer of Sorin, will serve as Chief Executive Officer
of NewCo and Dan Moore, Chief
Executive Officer of Cyberonics, will become non-executive
Chairman.
Commenting on the announcement, Andre-Michel Ballester
said:
"I am delighted to announce this transformational merger between
Sorin and Cyberonics, which we expect to create significant value
for shareholders. As one company we will be able to leverage our
combined strengths, capture new opportunities and create new
solutions to benefit patients and healthcare professionals alike.
This is particularly exciting for our employees, who will be able
to share technical expertise and innovate faster, ensuring that we
serve our customers by remaining at the forefront of new product
development which continues to be the foundation of our
success."
Dan Moore
said:
"This transformational transaction maximizes both companies'
strengths and leadership positions for the benefit of patients and
our shareholders. Sorin is an ideal partner, given its heart
failure programs and the ability to combine Vagus Nerve Stimulation
with cardiac rhythm management technology. Sorin's well-established
international operations are expected to accelerate our epilepsy
growth strategy by enabling us to reach a larger number of
potential new patients in the underpenetrated markets outside the
U.S. while integrating Sorin's technology expertise into future
neuromodulation products. While each company has a strong track
record of execution on its own, the geographic diversification,
benefits of scale and strong financial profile of the combined
company will create tremendous new opportunities to drive growth
and build significant shareholder value."
Strategic rationale
The proposed transaction will create a global leader in the
large and growing markets for cardiac surgery and neuromodulation
and a leading innovator in cardiac rhythm management with a
diversified product portfolio, leveraging product technologies and
complementary marketing capabilities. The potential combination of
product development, clinical and regulatory expertise will
accelerate time to market across worldwide geographies and will
leverage the combined group's extensive relationships with
healthcare professionals globally, as well as patient education and
awareness initiatives.
In particular NewCo will have several exciting opportunities
focused on three multi-billion dollar product categories: heart
failure, sleep apnea and percutaneous mitral valve. In heart
failure, NewCo will have promising products with European market
entry starting as early as 2015. Cyberonics recently received CE
Mark approval of its VITARIA™ device delivering autonomic
regulation therapy for the treatment of chronic heart failure and
will commence a limited market launch in Europe in the coming weeks. Recently, Sorin
announced the first successful implants of its Equilia™ Vagus Nerve
Stimulation system for heart failure patients. NewCo is expected to
benefit from the developing market for active implantable
treatments for sleep apnea with investments aimed at the
under-addressed obstructive sleep apnea (OSA) market, and also in
central sleep apnea (CSA), recently launched in selected European
countries. In addition, NewCo is expected to have new percutaneous
mitral valve replacement/repair products with estimated initial
market entry in 2017.
Financial highlights
The combined company will have pro-forma revenues of
approximately $1.3
billion2, and the merger is expected to drive
significant cash flow generation. The proposed transaction is
expected to be cash EPS3 accretive to all shareholders
from 2016.
The merger presents the opportunity to achieve significant
revenue and cost synergies. Approximately $80 million of annual pre-tax synergies are
expected to be delivered by the end of calendar year 2018 as the
combined company leverages an efficient corporate structure and a
global operational platform with the commercial, regulatory, supply
chain, R&D and manufacturing capabilities to drive growth and
efficiencies.
NewCo's strong cash flow generation and robust balance sheet
with essentially no net debt will enable investment in new medical
technology solutions for patients and customers and provide the
ability to fund future growth opportunities. NewCo will have a
sound financial profile with a larger market capitalization and the
opportunity to attract a wider, global investor base.
Cyberonics and Sorin currently have different fiscal year ends
and report under different accounting standards and currencies.
After the closing of the transaction, NewCo is expected to report
on a calendar year basis, with reporting in US$ and on US Generally
Accepted Accounting Principles (GAAP).
Governance and organizational structure
Upon closing of the transaction, the Board of Directors of NewCo
will be equally balanced between Sorin and Cyberonics, with four
directors designated by Sorin and four by Cyberonics. One
additional Board member will be jointly selected.
NewCo will operate as three business units: Cardiac Surgery,
Cardiac Rhythm Management and Neuromodulation, with operating
headquarters in Mirandola (Italy),
Clamart (France) and Houston (U.S.) respectively. The combined
company will have a strategic presence in over 100 countries on
five continents around the world with approximately 4,500
employees.
Additional transaction details
Under the terms of the proposed transaction, Cyberonics and
Sorin will combine under NewCo, which will be domiciled in the UK
and will apply for dual-listing on NASDAQ and the London Stock
Exchange (LSE). The all-stock transaction will be implemented
through two mergers, which will occur in immediate succession:
first, Sorin will be merged with and into NewCo by means of an EU
cross-border merger, with NewCo as the surviving company in the
merger, and immediately thereafter, a wholly owned subsidiary of
NewCo will be merged with and into Cyberonics, with Cyberonics
surviving the merger as a wholly owned subsidiary of NewCo. At the
closing of the transaction, Cyberonics shares will cease trading on
NASDAQ and Sorin shares will cease trading on the Borsa Italiana
(MTA).
For Sorin shareholders, the exchange ratio implies a per share
valuation of Sorin that represents approximately 14.2 percent
premium to Sorin's closing share price on 25
February, 2015, the last trading day prior to the parties
announcing the agreement.
The merger will trigger the withdrawal right, which can be
exercised by any Sorin shareholder who does not attend the
shareholders' meeting called to approve the merger of Sorin into
Newco, or abstains or votes against the merger. There is no cap
linked to the exercise of withdrawal rights.
The transaction is currently expected to be completed by the end
of the third calendar quarter of 2015 and is subject to approval by
both Sorin and Cyberonics' shareholders, the receipt of required
antitrust and regulatory clearances, and other customary closing
conditions. Where required by local law, including in France, Sorin will initiate a consultation on
the proposed transaction with its relevant works councils, trade
unions and other employee organizations. Once the works council
consultation process in France is
completed, the parties anticipate entering into a definitive
agreement.
Mittel S.p.A. and Equinox Two S.C.A., which control Bios S.p.A.
and Tower 6 Bis S.a.r.l., holding in total 25.6 percent of Sorin's
outstanding shares, have entered into a support agreement with
Cyberonics pursuant to which they have agreed to vote in favor of
the transaction and not to sell their shares until the closing of
the transaction. Mittel S.p.A. and Equinox Two S.c.a. are expected
to hold approximately 11.5 percent of NewCo's ordinary shares
following the closing of the proposed transaction. In addition, the
Chairman and CEO of each of Sorin and Cyberonics have also entered
into support agreements in favor of the proposed transaction.
The above undertakings will be disclosed to the public pursuant
to article 122 of Legislative Decree no. 58 of 24 February, 1998 and its implementing
regulations.
In connection with this transaction, Rothschild is serving as
financial advisor to Sorin, and Latham & Watkins is serving as
its primary legal advisor. Piper
Jaffray is serving as financial advisor to Cyberonics, and
Sullivan & Cromwell is serving as its legal advisor, with
Legance advising Cyberonics on Italian law matters.
Investor
Call
Sorin and Cyberonics will hold a joint investor conference call to
discuss the combination today at 2:00PM Central European Time, 7:00AM U.S. Central Time, 8:00AM U.S. Eastern Time. To access the call,
please use one of the following dial-in numbers: 877-638-4557
(toll-free U.S. and Canada), and
001-914-495-8522 (International), and enter the Conference ID
number 61678386.
Prior to the conference call, an Investor Presentation will be
available on the Investor Relations sections of Sorin's and
Cyberonics' websites and on the authorized storage mechanism 1Info
(www.1Info.it). A telephone replay of the call will be available
within 24 hours on each company's Investor Relations sections.
About Sorin
Group
Sorin Group (www.sorin.com) is a global, medical device company and
a leader in the treatment of cardiovascular diseases. The Company
develops, manufactures, and markets medical technologies for
cardiac surgery and for the treatment of cardiac rhythm disorders.
With approximately 3,900 employees worldwide, the Company focuses
on two major therapeutic areas: Cardiac Surgery (cardiopulmonary
products for open heart surgery and heart valve repair or
replacement products) and Cardiac Rhythm Management (pacemakers,
defibrillators and non invasive monitoring to diagnose and deliver
anti-arrhythmia therapies as well as cardiac resynchronization
devices for heart failure treatment). Every year, over one million
patients are treated with Sorin Group devices in more than 100
countries.
About Cyberonics
Cyberonics Inc., (NASDAQ: CYBX) is a medical device company with
core expertise in neuromodulation. The company developed and
markets the Vagus Nerve Stimulation (VNS) Therapy system, which is
FDA-approved for the treatment of refractory epilepsy and
treatment-resistant depression. The VNS Therapy system uses a
surgically implanted medical device that delivers pulsed electrical
signals to the vagus nerve. Cyberonics markets the VNS Therapy
system in selected markets worldwide. Cyberonics also has CE Mark
for VITARIA™, providing autonomic regulation therapy for chronic
heart failure.
Important Information for Investors and
Shareholders
This press release is for informational purposes only and is not
intended to and does not constitute an offer to sell or the
solicitation of an offer to subscribe for or buy or an invitation
to purchase or subscribe for any securities or the solicitation of
any vote in any jurisdiction pursuant to the proposed transactions
or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and applicable European regulations.
Subject to certain exceptions to be approved by the relevant
regulators or certain facts to be ascertained, the public offer
will not be made directly or indirectly, in or into any
jurisdiction where to do so would constitute a violation of the
laws of such jurisdiction, or by use of the mails or by any means
or instrumentality (including without limitation, facsimile
transmission, telephone and the internet) of interstate or foreign
commerce, or any facility of a national securities exchange, of any
such jurisdiction. This press release does not represent an
investment solicitation in Italy,
pursuant to Section 1, letter (t) of Legislative Decree no. 58 of
February 24, 1998, as amended.
NewCo will file with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-4, which will include a
proxy statement of Cyberonics that also constitutes a prospectus of
NewCo (the "proxy statement/prospectus"). INVESTORS AND
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND
OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC,
CAREFULLY AND IN THEIR ENTIRETY, WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SORIN GROUP,
CYBERONICS, NEWCO, THE PROPOSED TRANSACTIONS AND RELATED
MATTERS.
Investors and shareholders will be able to obtain free copies of
the proxy statement/prospectus and other documents filed with the
SEC by the parties through the website maintained by the SEC at
www.sec.gov. In addition, investors and shareholders will be able
to obtain free copies of the proxy statement/prospectus and other
documents filed with the SEC on Cyberonics's website at
www.cyberonics.com or within the "Investor Relations" section or by
contacting Cyberonics's Investor Relations (for documents filed
with the SEC by Cyberonics) or on Sorin Group's website at
www.sorin.com (for documents filed with the SEC by NewCo).
The release, publication or distribution of this press release
in certain jurisdictions may be restricted by law, and therefore
persons in such jurisdictions into which this press release is
released, published or distributed should inform themselves about
and observe such restrictions.
Italian CONSOB Regulation No. 11971 of May 14, 1999
Prior to the meeting of Sorin Group shareholders, Sorin will
voluntarily make available an information document pursuant to
Article 70, paragraph 6, of the CONSOB Regulation on Issuers
(CONSOB Regulation no. 11971 of May 14,
1999, as amended), in accordance with applicable terms.
Italian CONSOB Regulation No. 17221 of March 10, 2010
Pursuant to Article 6 of the CONSOB Regulation no. 17221 of
March 12, 2010 (as amended, the
"CONSOB Regulation"), NewCo is a related party of Sorin, being a
wholly owned subsidiary of Sorin Group. The merger agreement
providing for the terms and conditions of the transaction, which
exceeds the thresholds for "significant transactions" pursuant to
the Regulation, was approved unanimously by the board of
directors of Sorin Group. The merger of Sorin into NewCo is subject
to the exemption set forth in Article 14 of the CONSOB Regulation
and Article 13.1.(v) of the "Procedura per operazioni con
parti correlate" ("Procedures for transactions with related
parties") adopted by Sorin on October 26,
2010 and published on its website (www.sorin.com). Pursuant
to this exemption, Sorin will not publish an information document
(documento informativo) for related party transactions as provided
by Article 5 of the CONSOB Regulation. Prior to the meeting of
Sorin shareholders, Sorin will make available an information
document pursuant to Article 70, Pararaph 6, of the CONSOB
Regulation on Issuers (CONSOB Regulation no. 11971 of May 24, 1999, as amended), in accordance with
applicable terms.
Participants in the Distribution
Sorin, Cyberonics and NewCo and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the shareholders of Cyberonics with
respect to the proposed transactions contemplated by the proxy
statement/prospectus. Information regarding the persons who are,
under the rules of the SEC, participants in the solicitation of
proxies from the shareholders of Cyberonics in connection with the
proposed transactions, including a description of their direct or
indirect interests, on account of security holdings or otherwise,
will be set forth in the proxy statement/prospectus when it is
filed with the SEC. Information regarding Cyberonics' directors and
executive officers is contained in Cyberonics's Annual Report on
Form 10-K for the year ended on April 25,
2014 and its Proxy Statement on Schedule 14A, dated
July 30, 2014, which are filed with
the SEC and can be obtained free of charge from the sources
indicated above.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains forward-looking statements
(including within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995 (the "PSLRA")) concerning Cyberonics,
Sorin Group, NewCo, the proposed transactions and other matters.
These statements may discuss goals, intentions and expectations as
to future plans, trends, events, results of operations or financial
condition, or otherwise. They are based on current beliefs of the
management of Cyberonics and Sorin Group as well as assumptions
made by, and information currently available to, such management,
and therefore, you are cautioned not to place undue reliance on
them. These forward-looking statements are subject to various risks
and uncertainties, many of which are outside the parties' control.
No forward-looking statement can be guaranteed, and actual results
may differ materially from those projected. None of Cyberonics,
Sorin Group or NewCo undertake any obligation to publicly update
any forward-looking statement, whether as a result of new
information, future events or otherwise, except to the extent
required by law. Forward-looking statements are not
historical facts, but rather are based on current expectations,
estimates, assumptions and projections about the business and
future financial results of the medical device industry, and other
legal, regulatory and economic developments. We use words
such as "anticipates," "believes," "plans," "expects," "projects,"
"future," "intends," "may," "will," "should," "could," "estimates,"
"predicts," "potential," "continue," "guidance," and similar
expressions to identify these forward-looking statements that are
intended to be covered by the safe harbor provisions of the PSLRA.
Factors that could cause actual results to differ materially from
those in the forward-looking statements include the failure to
obtain applicable regulatory or shareholder approvals in a timely
manner or otherwise, or the requirement to accept conditions that
could reduce the anticipated benefits of the proposed transactions
as a condition to obtaining regulatory approvals; the failure to
satisfy other closing conditions to the proposed transactions; the
length of time necessary to consummate the proposed transactions,
which may be longer than anticipated for various reasons; risks
that the new businesses will not be integrated successfully or that
the combined companies will not realize estimated cost savings,
value of certain tax assets, synergies and growth, or that such
benefits may take longer to realize than expected; the inability of
Cyberonics and Sorin Group to meet expectations regarding the
timing, completion and accounting and tax treatments with respect
to the proposed transactions; risks relating to unanticipated costs
of integration, including operating costs, customer loss or
business disruption being greater than expected; reductions in
customer spending, a slowdown in customer payments and changes in
customer demand for products and services; unanticipated changes
relating to competitive factors in the industries in which the
companies operate; the ability to hire and retain key personnel;
the potential impact of announcement or consummation of the
proposed transactions on relationships with third parties,
including customers, employees and competitors; the ability to
attract new customers and retain existing customers in the manner
anticipated; reliance on and integration of information technology
systems; changes in legislation or governmental regulations
affecting the companies; international, national or local economic,
social or political conditions that could adversely affect the
companies or their customers; conditions in the credit markets;
risks to the industries in which Cyberonics and Sorin Group operate
that are described in the "Risk Factors" section of the Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and other
documents filed from time to time with the SEC by Cyberonics and
NewCo and the analogous section from Sorin Group's annual reports
and other documents filed from time to time with the Italian
financial market regulator (CONSOB); risks associated with
assumptions the parties make in connection with the parties'
critical accounting estimates and legal proceedings; the parties'
international operations, which are subject to the risks of
currency fluctuations and foreign exchange controls; and the
potential of international unrest, economic downturn or effects of
currencies, tax assessments, tax adjustments, anticipated tax
rates, raw material costs or availability, benefit or retirement
plan costs, or other regulatory compliance costs. The foregoing
list of factors is not exhaustive. You should carefully consider
the foregoing factors and the other risks and uncertainties that
affect the parties' businesses, including those described in
Cyberonics's Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and other documents filed from
time to time with the SEC and those described in Sorin Group's
annual reports, registration documents and other documents filed
from time to time with CONSOB. Nothing in this press release is
intended, or is to be construed, as a profit forecast or to be
interpreted to mean that earnings per Sorin share or Cyberonics
share for the current or any future financial years or those of the
combined group, will necessarily match or exceed the historical
published earnings per Sorin share or Cyberonics share, as
applicable. Neither Cyberonics nor Sorin gives any assurance (1)
that either Cyberonics, Sorin or Newco will achieve its
expectations, or (2) concerning any result or the timing thereof,
in each case, with respect to any regulatory action, administrative
proceedings, government investigations, litigation, warning
letters, consent decree, cost reductions, business strategies,
earnings or revenue trends or future financial results.
Contacts:
For Sorin
Group
|
|
Investors
Demetrio
Mauro
CFO
Sorin
Group
Tel: +39 02 69969
512
e-mail:
investor.relations@sorin.com
Media
Gabriele
Mazzoletti
Director, Corporate
Communications
Sorin
Group
Tel: +39 02 69 96 97
85
Mobile: +39 348 979
22 01
e-mail:
corporate.communications@sorin.com
|
Francesca
Rambaudi
Director, Investor
Relations
Sorin
Group
Tel: +39 02
69969716
e-mail:
investor.relations@sorin.com
|
Edward
Simpkins
Finsbury
(London)
Tel: +44 7958 421
519
e-mail:
edward.simpkins@finsbury.com
|
Kal
Goldberg
Finsbury (New
York)
Tel: +(1)
646-805-2000
e-mail:
Kal.Goldberg@finsbury.com
|
For Cyberonics
Inc:
|
|
Investors
|
Media
|
Greg
Browne
Chief Financial
Officer
Cyberonics,
Inc.
Tel: +(1)
281-228-7262
e-mail:
ir@cyberonics.com
|
Andrew Cole/Chris
Kittredge
Sard Verbinnen &
Co (New York)
Tel: +(1)
212-687-8080
London: Conrad
Harrington
Tel: +44 (0)20 3178
8914
|
1 Translated at €/$ exchange rate as of 25 February, 2015.
2 Based on the last four quarters reported ended
January 23, 2015 for Cyberonics and
preliminary financial results presented by Sorin as of December 31, 2014 at an average exchange rate of
€1/$1.33
3 Cash EPS is based on US GAAP, excluding transaction
related expenses, purchase accounting and stock based compensation
expenses. Calculated on a fully-diluted basis