DJO Enters into Merger Agreement with ReAble Therapeutics, Inc.
Published July 16th, 2007
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.
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