DJ Orthopedics (NYSE:DJO)
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DJO Incorporated (NYSE:DJO), a global provider of products and services
that promote musculoskeletal and vascular health, and ReAble
Therapeutics, Inc., a diversified medical device company focused on
rehabilitation, pain management, physical therapy and orthopedics, today
announced the signing of an agreement and plan of merger under which an
affiliate of ReAble will acquire all outstanding shares of DJO in a
transaction valued at approximately $1.6 billion, including the
assumption of debt. The agreement provides for a cash payment of $50.25
per share for each outstanding share of DJO common stock, representing a
premium of approximately 25 percent over DJO’s
average closing share price for the 30 trading days ended July 13, 2007.
An affiliate of The Blackstone Group is the controlling shareholder of
ReAble and has committed to provide the equity financing needed by
ReAble to complete the transaction.
The Board of Directors of DJO and a Transaction Committee of independent
directors have unanimously approved the transaction and recommends that
DJO stockholders approve the merger.
DJO and ReAble provide complementary products in orthopedic
rehabilitation and pain management, and, when combined, will offer a
broad go-to-market approach through multiple sales channels. As a
result, the combination is expected to quickly provide improved value to
customers by utilizing the existing capabilities and product portfolios
of both companies.
Ken Davidson, CEO of ReAble said, “DJO and
ReAble have established strong positions in the orthopedic and
rehabilitation markets. We are delighted to be joining them together.
The resources of the combined company will allow us to develop even
better and more innovative products, and to take care of more of the
needs of more patients and caregivers than ever before. The strategic
fit, both in the U.S. and overseas, is absolutely compelling.”
“After completing extensive negotiations and
comprehensive analysis, our board unanimously concluded that this
transaction is in the best interests of the Company and our stockholders,”
said Les Cross, President and CEO of DJO. “We
believe that the value of this transaction appropriately recognizes DJO’s
leadership position in non-operative orthopedics, demonstrated by our
highly respected brands, innovative products, and commitment to
continuous improvement, therefore providing our stockholders with an
immediate and substantial cash premium for their investment in DJO.”
It is anticipated that the transaction will close in the fourth quarter
of 2007. The transaction is subject to certain closing conditions,
including the approval of DJO’s stockholders
and regulatory approvals. There is no financing condition to consummate
the transaction. DJO expects to hold a Special Meeting of Stockholders
to consider and vote on the proposed merger and merger agreement, among
other things. The transaction is expected to close promptly following
the satisfaction of all closing conditions.
Under the merger agreement, DJO may solicit superior proposals from
third parties during the next 50 calendar days. To the extent that a
superior proposal solicited during this period leads to the execution of
a definitive agreement, DJO would be obligated to pay a break-up fee to
ReAble of $18.7 million. In accordance with the agreement, the Board of
Directors of DJO, with the assistance of its independent financial
advisors, intends to solicit superior proposals during this period. In
addition, DJO may, at any time, subject to the provisions of the merger
agreement, respond to unsolicited proposals. DJO advises that there can
be no assurance that the solicitation of superior proposals will result
in an alternative transaction. DJO does not intend to disclose
developments with respect to this solicitation process unless and until
its Board of Directors has made a decision regarding any alternative
proposal.
Wachovia Securities is acting as financial advisor and Latham & Watkins
LLP is acting as legal counsel to the DJO Board of Directors in this
transaction.
Credit Suisse is acting as financial advisor and Simpson Thatcher &
Bartlett LLP is acting as legal advisor to ReAble and Blackstone in this
transaction. Financing commitments have been provided by Credit Suisse
and Bank of America.
About DJO Incorporated
DJO Incorporated is a global provider of solutions for musculoskeletal
and vascular health, specializing in rehabilitation and regeneration
products for the non-operative orthopedic, spine and vascular markets.
Marketed under the Aircast®, DonJoy®
and ProCare® brands, the Company’s
broad range of over 700 rehabilitation products, including rigid knee
braces, soft goods and pain management products, are used in the
prevention of injury, in the treatment of chronic conditions and for
recovery after surgery or injury. The Company’s
regeneration products consist of bone growth stimulation devices that
are used to treat nonunion fractures and as an adjunct therapy after
spinal fusion surgery. The Company’s vascular
systems products help prevent deep vein thrombosis and pulmonary
embolism that can occur after orthopedic and other surgeries. Together,
these products provide solutions throughout the patient’s
continuum of care. The Company sells its products in the United States
and in more than 70 other countries through networks of agents,
distributors and its own direct sales force. Customers include
orthopedic, podiatric and spine surgeons, orthotic and prosthetic
centers, third-party distributors, hospitals, surgery centers, physical
therapists, athletic trainers, other healthcare professionals and
individual and team athletes. For additional information on the Company,
please visit www.djortho.com.
About ReAble Therapeutics, Inc.
ReAble Therapeutics, Inc. is a diversified orthopedic device company
that develops, manufactures and distributes a comprehensive range of
high quality orthopedic devices used by orthopedic surgeons, physicians,
therapists, athletic trainers and other healthcare professionals to
treat patients with musculoskeletal conditions resulting from
degenerative diseases, deformities, traumatic events and sports-related
injuries. Through its Orthopedic Rehabilitation Division, ReAble is a
leading distributor of electrical stimulation and other orthopedic
products used for pain management, orthopedic rehabilitation, physical
therapy, fitness and sport performance enhancement. ReAble's Surgical
Implant Division offers a comprehensive suite of reconstructive joint
products and spinal implants. For more information, visit www.encoremed.com.
About The Blackstone Group
The Blackstone Group (NYSE:BX) is a leading global alternative asset
manager and provider of financial advisory services. Its alternative
asset management businesses include the management of corporate private
equity funds, real estate opportunity funds, funds of hedge funds,
mezzanine funds, senior debt funds, proprietary hedge funds and
closed-end mutual funds. The Blackstone Group also provides various
financial advisory services, including mergers and acquisitions
advisory, restructuring and reorganization advisory and fund placement
services. For more information, visit www.blackstone.com.
Additional Information and Where to Find It
In connection with the proposed transaction, DJO intends to file a proxy
statement with the Securities and Exchange Commission (the "SEC").
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT (AND ALL AMENDMENTS
AND SUPPLEMENTS TO IT) AND OTHER MATERIALS THAT THE COMPANY MAY FILE
WITH THE SEC IN THEIR ENTIRETY WHEN SUCH MATERIALS BECOME AVAILABLE,
BECAUSE THE MATERIALS WILL CONTAIN IMPORTANT INFORMATION ABOUT DJO AND
THE PROPOSED TRANSACTION. The final proxy statement will be mailed to
the Company's stockholders. Stockholders will be able to obtain free
copies of the final proxy statement, as well as the Company's other
filings, without charge, at the SEC's Web site (www.sec.gov)
when they become available. Copies of the filings may also be obtained
without charge from the Company by directing a request to: DJO
Incorporated, 1430 Decision Street, Vista, CA, 92081, Attention: Mark
Francois, Director of Investor Relations (Tel: 1-760-734-4766, Email: mark.francois@djortho.com).
Participants in the Solicitation
DJO and its directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies from stockholders in respect of the proposed
transaction. Information regarding DJO's directors and executive
officers is available in the Company's 2006 Annual Report on Form 10-K,
filed with the SEC on March 1, 2007 and the Company's proxy statement
for its 2007 annual meeting of stockholders, filed with the SEC on April
20, 2007. Additional information regarding the interests of such
potential participants will be included in the proxy statement filed
with the SEC in connection with the Special Meeting of Stockholders when
it becomes available.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Such statements include statements
about the conduct of DJO following this announcement and the anticipated
timing of the transaction. The words “believe,”
“should,” “expect,”
“intend,” “estimate”
and “anticipate,”
variations of such words and similar expressions identify
forward-looking statements, but their absence does not mean that a
statement is not a forward-looking statement. These forward-looking
statements are based on DJO’s current
expectations and are subject to a number of risks, uncertainties and
assumptions. The Company undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. The important factors that could cause
actual results to differ significantly from those expressed or implied
by such forward-looking statements include, but are not limited to, the
occurrence of any event, change or other circumstance that could give
rise to a termination of the merger agreement; the outcome of any legal
proceedings that may be instituted against DJO, ReAble or others
following the announcement of the merger agreement; the inability to
complete the merger due to the failure to obtain stockholder approval or
the failure to satisfy other conditions to the merger, including
receiving applicable regulatory approvals relating to the transaction;
the failure to obtain the necessary financing arrangements set forth in
the commitment letters received in connection with the merger; risks
that the proposed transaction disrupts current plans and operations and
the potential difficulties in employee retention as a result of the
merger. Other risk factors are detailed in the Company’s
Quarterly Report on Form 10-Q for the three months ended March 31, 2007,
filed on May 10, 2007, with the Securities and Exchange Commission. Many
of the factors that will determine the outcome of the subject matter of
this press release are beyond DJO’s ability
to control or predict.