SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 4)
LIFECELL CORPORATION
(Name of Subject Company)
LIFECELL CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
531927101
(CUSIP Number of Class of
Securities)
Paul G. Thomas
Chairman of the Board, President and Chief Executive Officer
LifeCell Corporation
One Millennium Way
Branchburg, New
Jersey 08876
(908) 947-1100
(Name, address and telephone number of person authorized to receive notice and communications on behalf of the person filing statement)
Copies to:
Alan Wovsaniker, Esq.
Steven M. Skolnick, Esq.
Lowenstein
Sandler PC
65 Livingston Avenue
Roseland, NJ 07068
(973) 597-2500
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Check the box if the filing relates to preliminary communications made before the commencement date of a tender offer.
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Introduction
This Amendment No. 4 to Schedule 14D-9 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 (the
Schedule 14D-9
) originally filed with the U.S. Securities and Exchange Commission (the
SEC
) by LifeCell Corporation, a Delaware corporation (the
Company
), on April 21, 2008, as amended by Amendment No. 1 to the Schedule 14D-9 filed with the SEC by the Company on April 21, 2008,
Amendment No. 2 to the Schedule 14D-9 filed with the SEC by the Company on April 25, 2008 and Amendment No. 3 to the Schedule 14D-9 filed with the SEC by the Company on April 30, 2008. Except as otherwise noted, the information
set forth in the original Schedule 14D-9 remains unchanged. Capitalized terms used but not defined herein have the meaning ascribed to them in the Schedule 14D-9.
ITEM 4.
THE SOLICITATION OR RECOMMENDATION
Item 4 is hereby amended and supplemented as follows:
1) The paragraph starting with During the weeks of March 17 and 24, 2008 on page 18 is replaced with the following:
During the weeks of March 17 and 24, 2008, pursuant to the Boards request, Merrill Lynch placed calls to three possible strategic acquirors
that were identified as possible candidates for the acquisition of the Company based on discussions involving the Board, the Companys management and Merrill Lynch to inquire into their interest in participating in a potential transaction with
the Company. All three parties considered participating in the process regarding a potential transaction, but ultimately, each declined to do so based on their current strategic priorities. After considering the views of Merrill Lynch, the Board
believed that based on the price range and market conditions that a potential financial buyer would not be able to complete an acquisition of the Company at a price in excess of the $49-$51 price range proposed by KCI and, as such, no financial
buyers were contacted.
2) The paragraph starting with Throughout the period from late March through early April on page 19 is replaced with
the following:
Throughout the period from late March through early April, the Board of the Company met (through in-person or telephonic
meetings on each of March 14, 21 and 31, 2008 and April 4, 2008), in each case to monitor, deliberate and advise management of the Company on how to proceed in connection with the Companys negotiations with KCI. During the Board
meeting on April 4, 2008, representatives of Merrill Lynch presented Merrill Lynchs financial analyses of the offer, and representatives of Lowenstein reviewed at length the proposed terms of the transaction and the provisions of the
Merger Agreement and responded to questions from the Board. Thereafter, the Board directed management and Merrill Lynch to continue their respective discussions with KCI and JPM, respectively, with attention to specified open issues. The primary
open issues under the Merger Agreement concerned the following: (i) KCIs financing condition and the provisions of the Merger Agreement related to KCIs obligation to obtain financing, (ii) KCIs obligation to extend the
tender offer under certain circumstances, (iii) the Outside Date for purposes of the Merger Agreement, (iv) the provisions of the Merger Agreement prohibiting the solicitation of third party acquisition proposals, (v) the
definition of Company Material Adverse Effect in the Merger Agreement, (vi) the conditions applicable to KCIs obligation to consummate the Offer and (vii) the termination fee provisions of the Merger Agreement.
On April 6, 2008, the Board again met to review the transaction. A representative of Lowenstein reviewed the terms of the Merger
Agreement, in which all of the primary outstanding open issues under the Merger Agreement described in the previous paragraph were resolved as reflected in the Merger Agreement,
and a representative of Merrill Lynch updated Merrill Lynchs financial analyses previously provided to the Board. Representatives of Lowenstein and
Merrill Lynch also advised the Board on the status of KCIs Debt Commitment Letter (as defined below). Thereafter, Merrill Lynch orally delivered its fairness opinion to the Board, which was subsequently confirmed in writing. The Board then
unanimously approved the Merger Agreement, as described above. In addition, the Compensation Committee of the Company met on April 6, 2008 to review and direct management with respect to compensation matters insofar as they related to the
proposed transaction.
3) The subsection entitled Discounted Cash Flow Analysis starting on page 27 is replaced with the following:
Merrill Lynch performed a discounted cash flow analysis using the Company managements estimates of free cash flows and EBITDA of the Company.
Using the end-of-year discounting convention, Merrill Lynch calculated a range of the present values as of March 31, 2008 of the estimated free cash flows of the Company over the period of 2008 through 2010 (the period for which such estimates
were prepared by the Companys management) by applying discount rates ranging from 9.50% to 10.50% to those estimates. Merrill Lynch also calculated the Companys terminal values as of the end of 2010 by applying multiples ranging from
14.0x to 18.0x to the Company managements estimate of its 2010 EBITDA. Applying discount rates ranging from 9.50% to 10.50%, Merrill Lynch calculated a range of the present values as of March 31, 2008 of these terminal values. Merrill
Lynch added together the range of the present values of the Companys estimated free cash flows for 2008 through 2010 and the range of the present values of the Companys terminal values at the end of 2010 to derive a range of implied
enterprise values of the Company as of March 31, 2008.
Merrill Lynch subtracted the Companys net debt amount of negative $98
million as of December 31, 2007 (the last date for which the Companys net debt information was publicly available at the time of the announcement of the proposed transaction) from the implied enterprise values resulting from the
above calculations to derive a range of implied equity values for the Company. By dividing these equity values by the number of fully diluted outstanding shares of the Company, Merrill Lynch derived an implied equity value per share of the
Companys Common Stock as of March 31, 2008 ranging from $40.54 to $51.78. The equivalent perpetuity growth rates range from 5.5% to 7.3%.
Merrill Lynch observed that the Offer Price was within this range of implied equity value per share.
The
discount rates used in these analyses reflected Merrill Lynchs estimate of the weighted average cost of capital of the Company, and the terminal multiples used reflected hypothetical EBITDA multiples for the Company at the end of 2010 selected
by Merrill Lynch, in each case based upon Merrill Lynchs judgment and expertise, as well as its review of publicly available business and financial information and the financial and business characteristics of the Company and the selected
companies referenced in the Selected Comparable Publicly Traded Companies Analysis.
4) Item 4 is hereby further amended and supplemented by adding
the following sentence at the end of the last paragraph immediately prior to the subheading Intent to Tender on page 28:
Merrill Lynch does not hold any material share position in the Company or KCI.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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LIFECELL CORPORATION
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By:
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/s/ Steven T. Sobieski
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Steven T. Sobieski
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Chief Financial Officer
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Date: May 9, 2008
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