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Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On June 27, 2016, HeartWare International, Inc., a Delaware corporation (the “
Company
”), entered into an Agreement and Plan of Merger (the “
Merger Agreement
”) with Medtronic, Inc., a Minnesota corporation (“
Parent
”), and Medtronic Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“
Purchaser
”).
Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof:
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Parent has agreed to cause the Purchaser to commence a tender offer (the “
Offer
”), no later than twenty (20) business days after the date of the Merger Agreement, to purchase all of the outstanding shares of common stock of the Company, $0.001 par value per share (the “
Shares
”), not held by an affiliated person or entity as described in Section 251(h)(2)(a) through (d) of the Delaware General Corporation Law (the “
DGCL
”), at a purchase price of $58.00 per Share (the “
Offer Price
”), paid to the holder of such Share in cash, without interest, and subject to any required withholding of taxes; and
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as soon as practicable after the acquisition of Shares pursuant to the Offer and satisfaction or waiver of certain conditions set forth in the Merger Agreement, Purchaser will merge with and into the Company (the “
Merger
”), such merger to be effected under Section 251(h) of the DGCL, with the Company being the surviving corporation. In the Merger, each Share that is not tendered and accepted pursuant to the Offer, other than shares held by the Company, Parent, Purchaser, or by stockholders who have properly exercised their appraisal rights under Delaware law, will be cancelled and converted into the right to receive cash in an amount equal to the Offer Price.
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The consummation of the Offer is subject to certain closing conditions, including the expiration or termination of any waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other applicable antitrust laws. The consummation of the Offer is conditioned on Parent acquiring a number of Shares that when added to the Shares already owned by the Parent or the Purchaser or any wholly owned subsidiaries of their ultimate parent shall constitute a majority of the then outstanding Shares. The consummation of the Merger is subject to certain customary closing conditions, including consummation of the Offer. Neither the Offer nor the Merger is subject to a financing condition.
The Company has agreed to customary covenants, including the obligation to conduct the business of the Company and its subsidiaries in the ordinary and usual course of business in all material respects consistent with past practice until the effective time of the Merger (the “
Effective Time
”) or the date that the Merger Agreement is terminated in accordance with its terms. The Company has agreed not to solicit or initiate discussions with third parties regarding other proposals to acquire the Company and to certain restrictions on its ability to respond to any such proposal, subject to fulfillment of certain fiduciary requirements of the Company’s board of directors. The Merger Agreement also includes customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee of $27,500,000.
Each option to acquire shares of Company common stock granted under an equity plan of the Company that is outstanding and unexercised immediately prior to the Effective Time and for which the Offer Price exceeds the exercise price of such option, without regard to the extent then vested or exercisable, will be automatically cancelled as of the Effective Time and, in consideration of such cancellation, the holder thereof will be entitled to receive promptly, but in no event later than fifteen (15) days after the Effective Time, a cash payment in respect of such cancellation from the Company in an amount equal to (i) the excess, if any, of the Offer Price over the exercise price of each such Company Option multiplied by (ii) the number of unexercised shares of Company common stock subject to such option. Each restricted stock unit granted under an equity plan of the Company that is outstanding and unvested immediately prior to the Effective Time will be automatically cancelled as of the Effective Time and, in consideration of such cancellation, the holder thereof will be entitled to receive promptly, but in no event later than fifteen (15) days after the Effective Time, a cash payment in respect of such cancellation from the Company in an amount equal to the product of the Offer Price and the number of shares underlying such restricted stock unit as of immediately prior to the Effective Time (with any such restricted stock units that are subject to performance-based vesting being deemed earned assuming achievement of all performance milestones).
This summary of the principal terms of the Merger Agreement and the copy of the Merger Agreement filed as an exhibit to this report are intended to provide information regarding the terms of the Merger Agreement and are not intended to modify or supplement any factual disclosures about the Company in its public reports filed with the U.S. Securities and Exchange Commission (“
SEC
”). In particular, the Merger Agreement and related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company.
The Merger Agreement includes customary representations, warranties and covenants of the Company, Parent and Purchaser made solely for the benefit of the parties to the Merger Agreement. The assertions embodied in those representations and warranties were made solely for purposes of the contract among the Company, Purchaser and Parent and may be subject to important qualifications and limitations agreed to by the Company, Purchaser and Parent in connection with the negotiated terms. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to the Company’s SEC filings or may have been used for purposes of allocating risk among the Company, Purchaser and Parent rather than establishing matters as facts. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts of the Company, Parent, Purchaser or any of the respective subsidiaries or affiliates.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.