Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On October 10, 2022, SeaSpine Holdings Corporation, a Delaware corporation
("SeaSpine"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Orthofix Medical Inc., a Delaware corporation ("Orthofix") and
Orca Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of
Orthofix ("Merger Sub"). The Merger Agreement provides that, upon the terms and
subject to the conditions set forth in the Merger Agreement, Merger Sub will
merge with and into SeaSpine (the "Merger"), with SeaSpine continuing as the
surviving company and a wholly-owned subsidiary of Orthofix following the
transaction.
Subject to the terms and conditions of the Merger Agreement, at the effective
time and as a result of the Merger, each share of common stock of SeaSpine
issued and outstanding immediately prior to the effective time of the Merger
will be converted into the right to receive 0.4163 shares of common stock of
Orthofix. In addition, at the effective time and as a result of the Merger,
Orthofix will assume SeaSpine's existing equity incentive plans in connection
with the Merger, and outstanding SeaSpine equity awards will be automatically
converted into Orthofix equity awards (on the same vesting schedule and other
terms and conditions as existed prior to such conversion). The conversion of
such equity awards will occur at the same exchange ratio as applies to SeaSpine
common stock in the Merger, and the exercise price of converted SeaSpine stock
options will also be correspondingly adjusted.
Upon completion of the Merger, Orthofix stockholders will own approximately
56.5% of the combined company on a fully diluted basis and SeaSpine stockholders
will own approximately 43.5%.
Pursuant to the terms of the Merger Agreement, as of the effective time of the
Merger, the board of directors of the combined company will consist of 9
individuals, including five individuals who are nominees of the board of
directors of Orthofix (the "Orthofix Directors") immediately prior to the
effective time and four individuals who are nominees of the board of directors
of SeaSpine immediately prior to the effective time. The Merger Agreement
contemplates that Jon Serbousek will serve as Executive Chairman of the Board,
and Keith Valentine will serve as President and Chief Executive Officer and as a
member of the Board.
Orthofix has agreed to take action necessary to list the Orthofix shares of
common stock to be issued in connection with the Merger on the NASDAQ Global
Select Market.
Each party's obligation to implement the Merger is subject to certain customary
conditions, including (i) the approval by Orthofix stockholders of the issuance
of shares of Orthofix common stock in connection with the Merger; (ii) the
adoption of the Merger Agreement by SeaSpine stockholders holding a majority of
the outstanding shares of SeaSpine's common stock; (iii) all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 having
expired or been terminated and all mandatory waiting periods or required
consents under any other applicable antitrust or competition laws having expired
or been obtained; (iv) no law having been enacted or order issued that remains
in effect and has the effect of enjoining or otherwise prohibiting the
consummation of the Merger; (v) the truth and accuracy of the other party's
representations and warranties in the Merger Agreement, generally subject to a
Material Adverse Effect (as defined in the Merger Agreement) standard; (vi) no
Material Adverse Effect of the other party having occurred since the date of the
Merger Agreement; and (vii) the performance in all material respects by the
other party of all of its covenants and agreements under the Merger Agreement.
Each of Orthofix and SeaSpine have made customary representations, warranties
and covenants in the Merger Agreement, including, among others, covenants that
(i) each party will conduct its business in all material respects in the
ordinary course consistent with past practice during the interim period between
the execution of the Merger Agreement and the consummation of the Merger;
(ii) each party will not engage in certain kinds of transactions or take certain
actions during such period; (iii) each party will convene and hold a meeting of
its stockholders for the purpose of considering the adoption of the Merger
Agreement, in the case of SeaSpine, and for the purpose of approving the
issuance of shares of Orthofix common stock in connection with the Merger, in
the case of Orthofix; and (iv) the respective boards of directors will
recommend, subject to certain exceptions, that, its stockholders adopt the
Merger Agreement, in the case of SeaSpine, and its stockholders approve the
issuance of shares of Orthofix common stock in connection with the Merger, in
the case of Orthofix.
Each party also has agreed not to (i) take certain actions to solicit proposals
relating to alternative business combination transactions or (ii) subject to
certain exceptions, including the receipt of a Superior Proposal (as such term
is defined in the Merger Agreement), enter into discussions or an agreement
concerning or provide confidential information in connection with any proposals
for alternative business combination transactions.
The Merger Agreement may be terminated by mutual written consent of Orthofix and
SeaSpine. The Merger Agreement also contains certain termination rights,
including, among others, the right of either party to terminate if (i) the
Merger shall not have become effective by the date that is five (5) months
following the date of the Merger Agreement (the "Termination Date"), subject to
certain conditions, provided that the Termination Date may be extended by either
party to the date that is eight (8) months following the date of the Merger
Agreement if all conditions to consummate the Merger have been satisfied other
than the condition requiring antitrust approvals are not received by the initial
Termination Date; (ii) the Orthofix and/or SeaSpine stockholder approvals are
not obtained; (iii) the other party breaches its representations and covenants
and such breach would result in the closing conditions not being satisfied; or
(iv) a governmental body shall have issued any final and non-appealable order or
any applicable law shall have been enacted that has the effect of enjoining or
otherwise prohibiting the Merger.
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The Merger Agreement also provides that Orthofix must pay SeaSpine a termination
fee of $13,744,149 plus expenses not to exceed $2 million if the Merger
Agreement is terminated because (a) the Orthofix board of directors or committee
thereof (i) makes an Orthofix Adverse Recommendation Change (as defined in the
Merger Agreement), (ii) does not include its recommendation in the Joint Proxy
Statement (as defined in the Merger Agreement), or (iii) publicly proposes to
take any actions in clauses (i) and (ii); (b) Orthofix materially breaches the
non-solicitation provisions of the Merger Agreement; or (c) Orthofix enters into
a definitive agreement with respect to a Superior Proposal (as defined in the
Merger Agreement) prior to obtaining the requisite Orthofix stockholder
approval, and while in compliance with the non-solicitation provisions of the
Merger Agreement.
The Merger Agreement provides that SeaSpine must pay Orthofix a termination fee
of $10,582,995 plus expenses not to exceed $2 million if the Merger Agreement is
terminated because (a) the SeaSpine board of directors or committee thereof
(i) makes a SeaSpine Adverse Recommendation Change (as defined in the Merger
Agreement), (ii) does not include its recommendation in the Joint Proxy
Statement (as defined in the Merger Agreement), or (iii) publicly proposes to
take any actions in clauses (i) and (ii), (b) SeaSpine materially breaches the
non-solicitation provisions of the Merger Agreement, or (c) SeaSpine enters into
a definitive agreement with respect to a Superior Proposal (as defined in the
Merger Agreement) prior to obtaining the requisite SeaSpine stockholder
approval, and while in compliance with the non-solicitation provisions of the
Merger Agreement.
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 Orthofix in its public
reports filed with the United States 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 Orthofix.
The Merger Agreement includes customary representations, warranties and
covenants of Orthofix, Merger Sub and SeaSpine 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 Orthofix, Merger Sub and SeaSpine and may be subject to important
qualifications and limitations agreed to by Orthofix, Merger Sub and SeaSpine 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 Orthofix's SEC filings or may have been used for purposes of
allocating risk among Orthofix, Merger Sub and SeaSpine rather than establishing
. . .
Item 8.01 Other Events.
On October 11, 2022, Orthofix and SeaSpine issued a joint press release
announcing the execution of the Merger Agreement, a copy of which is filed as
Exhibit 99.1 hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibits are filed with this Current Report on Form 8-K:
Exhibit
No. Description
2.1† Agreement and Plan of Merger, dated as of October 10, 2022, by and
among Orthofix Medical Inc., Orca Merger Sub Inc. and SeaSpine
Holdings Corporation.
99.1 Joint Press Release of Orthofix Medical Inc. and SeaSpine Holdings
Corporation, dated October 11, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
† The schedules to the Agreement and Plan of Merger have been omitted from this
filing pursuant to Item 601(b)(2) of Regulation S-K. Orthofix will furnish
copies of any such schedules to the SEC upon request.
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Forward-Looking Statement
This report contains statements which, to the extent they are not statements of
historical or present fact, constitute "forward-looking statements" under the
securities laws. From time to time, oral or written forward-looking statements
may also be included in other information released to the public. These
forward-looking statements are intended to provide Orthofix's and SeaSpine's
respective management's current expectations or plans for our future operating
and financial performance, based on assumptions currently believed to be valid.
Forward-looking statements can be identified by the use of words such as
"believe," "expect," "expectations," "plans," "strategy," "prospects,"
"estimate," "project," "target," "anticipate," "will," "should," "see,"
"guidance," "outlook," "confident," "on track" and other words of similar
meaning. Forward-looking statements may include, among other things, statements
relating to future sales, earnings, cash flow, results of operations, uses of
cash, tax rates, R&D spend, other measures of financial performance, potential
future plans, strategies or transactions, credit ratings and net indebtedness,
other anticipated benefits of the proposed merger, including estimated synergies
and cost savings resulting from the proposed merger, the expected timing of
completion of the proposed merger, estimated costs associated with such
transaction and other statements that are not historical facts. All
forward-looking statements involve risks, uncertainties and other factors that
may cause actual results to differ materially from those expressed or implied in
the forward-looking statements. For those statements, we claim the protection of
the safe harbor for forward-looking statements contained in the U.S. Private
Securities Litigation Reform Act of 1995. Such risks, uncertainties and other
factors include, without limitation: (1) the effect of economic conditions in
the industries and markets in which Orthofix and SeaSpine operate in the U.S.
and globally and any changes therein, including financial market conditions,
fluctuations in commodity prices, interest rates and foreign currency exchange
rates, and the levels of market demand in the health care segments in which our
products are purchased and utilized; (2) challenges in the development,
regulatory approval, commercialization, reimbursement, market acceptance,
performance and realization of the anticipated benefits of new products of the
combined company; (3) the scope, nature, impact or timing of the proposed
merger, including among other things the integration of the businesses and
realization of synergies and opportunities for growth and innovation and
incurrence of related costs and expenses; (4) future levels of indebtedness,
capital spending and research and development spending; (5) future availability
of credit and factors that may affect such availability, including credit market
conditions and our capital structure; (6) delays and disruption in delivery of
materials and services from suppliers; (7) cost reduction efforts and
restructuring costs and savings; (8) new business and investment opportunities;
(9) the ability to realize the intended benefits of organizational changes;
(10) the anticipated benefits of diversification and balance of operations
across product lines, regions and industries; (11) the effect of changes in
political conditions in the U.S. and other countries in which Orthofix, SeaSpine
and the businesses of each operate, including the effect of changes in U.S.
healthcare policies, on general market conditions in the near term and beyond;
(12) the effect of changes in tax, regulatory and other laws and regulations in
the U.S. and other countries in which Orthofix, SeaSpine and the businesses of
each operate; (13) negative effects of the announcement or pendency of the
proposed merger on the market price of Orthofix and/or SeaSpine's respective
common stock and/or on their respective financial performance; (14) the ability
of the parties to receive the required regulatory approvals for the proposed
merger (and the risk that such approvals may result in the imposition of
conditions that could adversely affect the combined company or the expected
benefits of the transaction) and approvals of Orthofix's and SeaSpine's
shareholders and to satisfy the other conditions to the closing of the merger on
a timely basis or at all; (15) the occurrence of events that may give rise to a
right of one or both of the parties to terminate the merger agreement;
(16) risks relating to the value of the Orthofix shares to be issued in the
proposed merger, significant transaction costs and/or unknown liabilities;
(17) the possibility that the anticipated benefits from the proposed merger
cannot be realized in full or at all or may take longer to realize than
expected, including risks associated with third party contracts containing
consent and/or other provisions that may be triggered by the proposed
transaction; (18) risks associated with transaction-related litigation; (19) the
possibility that costs or difficulties related to the integration of Orthofix's
and SeaSpine's operations will be greater than expected; (20) the ability of the
combined company to retain and hire key personnel; (21) the intended
qualification of the merger as a tax-free reorganization to Orthofix and
SeaSpine shareholders for U.S. federal income tax purposes; and (22) the impact
of the proposed merger on the respective businesses of Orthofix and SeaSpine.
There can be no assurance that the proposed merger will in fact be consummated
in the manner described or at all. For additional information on identifying
factors that may cause actual results to vary materially from those stated in
forward-looking statements, see the reports of Orthofix and SeaSpine on Forms
10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any
forward-looking statement speaks only as of the date on which it is made, and
Orthofix and SeaSpine assume no obligation to update or revise such statement,
whether as a result of new information, future events or otherwise, except as
required by applicable law.
Important Additional Information and Where to Find It
In connection with the proposed transaction, Orthofix intends to file with the
SEC a registration statement on Form S-4, which will include a document that
serves as a prospectus of Orthofix and a joint proxy statement of Orthofix and
SeaSpine (the "joint proxy statement/prospectus"). Each party also plans to file
other relevant documents with the SEC regarding the proposed transaction.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. A definitive joint proxy statement/prospectus will be sent
to Orthofix's shareholders and SeaSpine's shareholders. Investors and
securityholders may obtain a free copy of the joint proxy statement/prospectus
(if and when it becomes available) and other relevant documents filed by
Orthofix and SeaSpine with the SEC at the SEC's website at www.sec.gov. Copies
of the documents filed by Orthofix with the SEC will be available free of charge
on Orthofix's website at http://ir.orthofix.com/ or by contacting Orthofix's
Investor Relations at (214) 937-3190. Copies of the documents filed by SeaSpine
with the SEC will be available free of charge on SeaSpine's website at
http://investor.seaspine.com/ or by contacting SeaSpine's Investor Relations at
(415) 937-5402.
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Orthofix and SeaSpine and their respective directors, executive officers and
other members of management and employees may be deemed to be participants in
the solicitation of proxies in respect of the proposed transaction. Information
about directors and executive officers of Orthofix is available in the Orthofix
proxy statement for its 2022 Annual Meeting, which was filed with the SEC on
April 27, 2022. Information about directors and executive officers of SeaSpine
is available in the SeaSpine proxy statement for its 2022 Annual Meeting, which
was filed with the SEC on April 22, 2022. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
joint proxy statement/prospectus and other relevant materials filed with the SEC
regarding the proposed transaction when they become available. Investors should
read the joint proxy statement/prospectus carefully when it becomes available
before making any voting or investment decisions. Investors may obtain free
copies of these documents from Orthofix and SeaSpine as indicated above.
No Offer or Solicitation
This report and the information contained herein shall not constitute an offer
to sell or the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering 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.
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