KCI Shareholders to receive $68.50 per share in cash
SAN ANTONIO, Jul 13, 2011 (BUSINESS WIRE) --
Concepts, Inc. (NYSE: KCI) today announced that it has entered into
a definitive merger agreement under which a consortium comprised of
funds advised by Apax Partners, together with controlled affiliates of
Canada Pension Plan Investment Board and the Public Sector Pension
Investment Board, will acquire KCI for $68.50 per share in cash in a
transaction valued at $6.3 billion (including KCI's outstanding debt).
This per share acquisition price represents a premium of approximately
21 percent to the one-month historical average stock price of $56.49
through July 5, 2011 (one day prior to press speculation of a
transaction) and a premium of 52 percent to the 12-month historical
average stock price of $45.01 through July 5, 2011.
The board of directors of KCI has unanimously approved the merger
agreement and recommended that KCI's shareholders adopt the agreement
with the consortium. A special meeting of KCI's shareholders will be
held as soon as practicable after the filing of a definitive proxy
statement with the U.S. Securities and Exchange Commission (SEC) and
subsequent mailing to shareholders. The mailing of the proxy statement
is expected to take place following the expiration of a 40-day 'go-shop'
period, during which KCI is permitted to encourage and solicit
alternative proposals from third parties.
The agreement will bring together KCI's clinical expertise, commercial
capabilities and global reach with a seasoned group of investors that
has expertise in global markets and a proven track record in healthcare
"This consortium is a group of well-respected investors whose interest
in KCI represents an endorsement of our market leadership,
differentiated products and services and consistently strong
performance," said Cathy Burzik, KCI president and CEO. "We're proud of
what we've achieved in the marketplace and will continue making the
right investments in people, product innovation and commercial
capabilities that help the medical community deliver superior outcomes
"We are highly impressed by the culture of innovation at KCI and are
excited to work with a business that produces solutions that
dramatically improve the lives of many people around the world," said
Buddy Gumina, partner and co-head of the Apax Healthcare team. "Over the
years, we have reviewed multiple investments in the medical devices and
products industry, having originally identified it as a key growth
sector within our overall healthcare investment practice. Based on this
experience, we possess a deep understanding of KCI's business and the
markets in which the company operates. We are delighted to have the
opportunity to partner with CPPIB and PSP Investments to support the
company's continued growth."
James R. Leininger, founder of KCI and chairman emeritus, and certain
shareholder parties related to or affiliated with him, which
collectively hold approximately 11% of the company's outstanding shares,
have entered into a voting agreement with the consortium under which
those shareholders have agreed to vote their shares in favor of the
The consortium has secured committed debt financing from Morgan Stanley
& Co. LLC, BofA Merrill Lynch and Credit Suisse AG. These funds, in
addition to equity financing from funds advised by Apax Partners, CPPIB
and PSP Investments, will finance the cash consideration to KCI's
J.P. Morgan Securities, LLC is acting as financial advisor to KCI.
Skadden, Arps, Slate, Meagher & Flom LLP and Cox Smith Matthews
Incorporated are acting as legal advisors to KCI.
Morgan Stanley & Co. LLC is acting as financial advisor to the
consortium. Simpson Thacher & Bartlett LLP is acting as legal advisor to
the consortium. Kirkland & Ellis LLP is acting as legal advisor on the
financing to the consortium. Epstein Becker is acting as healthcare
regulatory counsel to the consortium.
The transaction is subject to certain closing conditions, including the
approval of KCI's shareholders, regulatory approvals and the
satisfaction of other customary closing conditions but is not subject to
any condition with regard to the financing of the transaction. The
transaction is currently expected to close in the second half of 2011.
KCI will be submitting a current report on form 8-K with the U.S.
Securities and Exchange Commission containing a summary of terms and
conditions of the proposed acquisition.
Kinetic Concepts, Inc. (NYSE:KCI) is a leading global medical technology
company devoted to the discovery, development, manufacture and marketing
of innovative, high-technology therapies and products for the wound
care, tissue regeneration and therapeutic support system markets.
Headquartered in San Antonio, Texas, KCI's success spans more than three
decades and can be traced to a history deeply rooted in innovation and a
passion for significantly improving the healing and the lives of
patients around the world. The company employs approximately 7,100
people and markets its products in more than 20 countries. For more
information about KCI and how its products are changing the practice of
medicine, visit www.KCI1.com.
About Apax Partners
Apax Partners is one of the world's leading private equity investment
groups. It operates across the United States, Europe and Asia and has
more than 30 years of investing experience. Funds under the advice of
Apax Partners total over $40 billion around the world. These Funds
provide long-term equity financing to build and strengthen world-class
companies. Apax Partners Funds invest in companies across its global
sectors of Tech & Telecom, Retail & Consumer, Media, Healthcare and
Financial & Business Services. For more information about Apax Partners,
please visit www.apax.com.
About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional
investment management organization that invests the funds not needed by
the Canada Pension Plan to pay current benefits on behalf of 17 million
Canadian contributors and beneficiaries. In order to build a diversified
portfolio of CPP assets, CPPIB invests in public equities, private
equities, real estate, inflation-linked bonds, infrastructure and fixed
income instruments. Headquartered in Toronto, with offices in London and
Hong Kong, CPPIB is governed and managed independently of the Canada
Pension Plan and at arm's length from governments. At March 31, 2011,
the CPP Fund totaled $148.2 billion. For more information about CPPIB,
please visit www.cppib.ca.
About PSP Investments
The Public Sector Pension Investment Board is a Canadian Crown
corporation established to manage investments for the pension funds of
the Public Service, the Canadian Forces, the Royal Canadian Mounted
Police and the Reserve Force. PSP Investments' mandate is to manage
funds entrusted to it in the best interests of the contributors and
beneficiaries of the pension plans and to maximize investment returns
without undue risk of loss having regard to the funding, policies and
requirements of the plans and their ability to meet their financial
obligations. For more information about PSP Investments, visit www.investpsp.ca.
Additional Information about the Merger and Where to Find It
This press release may be deemed to be solicitation material in respect
of the proposed acquisition of Kinetic Concepts, Inc. ("KCI") by a
consortium comprised of funds advised by Apax Partners, L.P. and Apax
Partners LLP, together with controlled affiliates of Canada Pension Plan
Investment Board and the Public Sector Pension Investment Board. KCIplans
to file a proxy statement with the SEC. INVESTORS AND SECURITY HOLDERS
OF KCI ARE ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE
DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
ACQUISITION. The definitive proxy statement will be mailed to
shareholders of KCI. Investors and security holders may obtain a free
copy of the proxy statement when it becomes available, and other
documents filed by KCI with the SEC, at the SEC's web site at http://www.sec.gov.
Free copies of the proxy statement, when it becomes available, and KCI's
other filings with the SEC may also be obtained from KCI by directing a
request to Kinetic Concepts, Inc., Attention: Investor Relations, 8023
Vantage Drive, San Antonio, TX 78230-4726, or by calling 210-255-6157.
KCI and its directors, executive officers and other members of its
management and employees may be deemed to be soliciting proxies from
KCI'sshareholders in favor of the proposed acquisition.
Information regarding KCI'sdirectors and executive officers is
available in its 2010 Annual Report on Form 10-K filed with the SEC on
March 1, 2011, and definitive proxy statement relating to its 2011
Annual Meeting of Shareholders filed with the SEC on April 15, 2011.
Shareholders may obtain additional information regarding the interests
of KCI and its directors and executive officers in the proposed
acquisition, which may be different than those of KCI'sshareholders
generally, by reading the proxy statement and other relevant documents
filed with the SEC when they become available.
Forward Looking Statements
This communication contains forward-looking statements, which may be
identified by words such as "believes," "expects," "anticipates,"
"estimates," "projects," "intends," "should," "seeks," "future,"
"continue," or the negative of such terms, or other comparable
terminology. Forward-looking statements are subject to risks,
uncertainties, assumptions and other factors that are difficult to
predict and that could cause actual results to vary materially from
those expressed in or indicated by them. Factors that could cause actual
results to differ materially include, but are not limited to: (1) the
occurrence of any event, change or other circumstances that could give
rise to the termination of the merger agreement; (2) the outcome of any
legal proceedings that may be instituted against KCI and others
following announcement of the merger agreement; (3) the inability to
complete the merger due to the failure to satisfy the conditions to the
merger, including obtaining the approval of at least two-thirds of KCI's
shareholders, the expiration of the waiting period under the
Hart--Scott--Rodino Antitrust Improvements Act of 1976, as amended, and
the receipt of other required regulatory approvals; (4) risks that the
proposed transaction disrupts current plans and operations and potential
difficulties in employee retention as a result of the merger; (5) the
ability to recognize the benefits of the merger; (6) legislative,
regulatory and economic developments; and (7) other factors described in
KCI's filings with the SEC. Many of the factors that will determine the
outcome of the subject matter of this communication are beyond KCI's and
the consortium's ability to control or predict. KCI can give no
assurance that the conditions to the merger will be satisfied. Except as
required by law, KCI undertakes no obligation to revise or update any
forward-looking statement, or to make any other forward-looking
statements, whether as a result of new information, future events or
otherwise. KCI is not responsible for updating the information contained
in this communication beyond the published date, or for changes made to
this communication by wire services or Internet service providers.
SOURCE: Kinetic Concepts, Inc.
KCI Corporate Communications
Kevin Belgrade, 210-216-1236
KCI Investor Relations
Todd Wyatt, 210-255-6157