By Lisa Kerner
Charlotte, N.C., July 23 - FoxHollow Technologies, Inc. stockholders can elect to receive a combination of cash and ev3 Inc. stock for a total value of $25.92 per FoxHollow share under a definitive merger agreement between the two companies announced on Monday.
The agreement gives FoxHollow stockholders the right to elect to receive $25.92 in cash, 1.62 shares of ev3 common stock or 1.45 shares of ev3 stock plus $2.75 in cash for each share of common stock, subject to proration.
ev3 and FoxHollow will merge in a $780 million deal, creating a new company with a market capitalization of some $1.7 billion. ev3 intends to maintain FoxHollow's existing relationship with Merck & Co., Inc.
Both companies' boards of directors have approved the transaction, which is designed to create a global leader in endovascular devices with 2008 project net sales expected to be $585 million to $615 million.
Upon completion of the transaction, expected in the fourth quarter of 2007, FoxHollow stockholders would own about 41%, and ev3 stockholders 59%, of the combined company.
The agreement includes termination rights for ev3 and FoxHollow, according to a form 8-K filing with the Securities and Exchange Commission. Under certain triggering events, FoxHollow will be required to pay ev3 a termination fee of $31 million or up to $5 million for expenses in connection with the transaction.
"This combination brings together two organizations that share a deep commitment to advancing the treatment of peripheral and neurovascular disease," ev3 president and chief executive officer Jim Corbett said in a company news release. "By combining our respective strengths, we believe we can develop innovative technologies to address the needs of endovascular specialists and their patients, while also providing significant growth opportunities for employees and shareholders."
"The combined company will enhance our aggressive market building activities and accelerate our clinical and research and development initiatives in this market," FoxHollow founder and CEO Dr. John Simpson added.
The merger could general annual cost savings in excess of $40 million from streamlined sales and marketing, increased purchasing scale, logistics efficiencies and shared administrative services, the companies said.
ev3 expects adjusted earnings per share for 2008 to be in the range of $0.60 to $0.70, not including transaction-related expenses.
Following the transaction's close, Corbett will become chairman of the board and CEO of the combined company, while Simpson will become vice chairman of the board and chief scientist. The combined company's board will have 10 members; six members will be ev3 nominees and four will be FoxHollow nominees.
Headquarters for the company will be in Plymouth, Minn., operating and manufacturing divisions will be in Irvine and Redwood City, Calif., and the international office will be based in Paris.
Certain FoxHollow stockholders, including Simpson and Merck, together beneficially owning 31.7% of the outstanding shares of common stock of FoxHollow, entered into a voting agreement with ev3 to vote their shares in favor of the deal.
In connection with the transaction, Banc of America Securities LLC is acting as sole financial adviser to ev3, and Oppenheimer Wolff & Donnelly LLP is legal counsel. J.P. Morgan Securities Inc. is acting as financial adviser to FoxHollow and provided a fairness opinion. Thomas Weisel Partners LLC is also acting as a financial adviser to FoxHollow and provided a fairness opinion. Wilson Sonsini Goodrich & Rosati, PC is legal counsel to FoxHollow.
ev3, based in Plymouth, Minn., is a medical device company specializing in endovascular technologies for the minimally invasive treatment of vascular diseases and disorders.
Redwood City, Calif.-based FoxHollow develops and markets minimally invasive devices for the removal of plaque and thrombus for the treatment of peripheral artery disease.
| Acquirer: | ev3, Inc.
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| Target: | FoxHollow Technologies, Inc.
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| Transaction total: | $780 million
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| Price per share: | $25.92 consisting of $25.92 in cash, 1.62 shares of ev3 common stock or 1.45 ev3 shares plus $2.75 in cash for each FoxHollow share
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| Announcement date: | July 23
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| Termination fee: | $31 million
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| Expected closing: | Fourth quarter
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| Stock price for acquirer: | Nasdaq: EVVV: $15.98 on July 20
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| Stock price for target: | Nasdaq: FOXH: $24.72 on July 20
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