UNITED
STATES
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)
______________________
OMRIX
BIOPHARMACEUTICALS, INC.
(Name
of Subject Company)
______________________
OMRIX
BIOPHARMACEUTICALS, INC.
(Names
of Persons Filing Statement)
______________________
Common
Stock, par value $0.01 per share
(Title
of Class of Securities)
______________________
681989109
(CUSIP
Number of Class of Securities)
______________________
Robert
Taub
Chief
Executive Officer
Omrix
Biopharmaceuticals, Inc.
1120
Avenue of Americas
New
York, New York 10036
(212)
887-6500
(Name,
address and telephone numbers of person authorized to receive
notices
and communications on behalf of the persons filing statement)
______________________
With
copies to:
|
David
Fox and Randall Doud
Skadden,
Arps, Slate, Meagher & Flom LLP
Four
Times Square
New
York, New York 10036
(212)
735-3000
|
[
]
Check the box if the filing relates solely to
preliminary communications made before the commencement of a tender
offer.
This Amendment No. 4 (this "Amendment")
amends and supplements the Solicitation/Recommendation Statement on Schedule
14D-9 of Omrix Biopharmaceuticals, Inc. (the "Company") initially filed on
November 26, 2008, as amended by Amendment No. 1 thereto filed on December 1,
2008, Amendment No. 2 thereto filed on December 5, 2008 and Amendment No. 3
thereto filed on December 11, 2008 (the "Statement"). The Statement
relates to the cash tender offer by Binder Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Johnson & Johnson ("Parent"),
disclosed in a Tender Offer Statement on Schedule TO dated November 25, 2008
filed with the Securities and Exchange Commission, to purchase all of the
Company's outstanding common stock, par value $0.01 per share (the "Shares"), at
a price of $25.00 per Share, net to the selling stockholder in cash without
interest, less any required withholding taxes, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 25, 2008 (as
amended or supplemented from time to time, the "Offer to Purchase") and in the
related Letter of Transmittal (as amended or supplemented from time to time, the
"Letter of Transmittal" and, together with the Offer to Purchase, the "Offer"),
which were filed with the Statement as Exhibits (a)(1) and (a)(2)
thereto. Except as otherwise set forth below, the information
set forth in the Statement remains unchanged and is incorporated by reference as
relevant to the items in this Amendment. Capitalized terms used but
not otherwise defined herein have the meanings ascribed to such terms in the
Statement.
Item
3.
Past Contacts,
Transactions, Negotiations and Agreements.
The
last sentence of subsection (a) of Item 3 entitled "Arrangements with Current
Executive Officers and Directors of the Company—Compensation Arrangements with
Executive Officers—Robert Taub"" is hereby amended and restated as
follows:
"The
total cash severance payment to be paid to Mr. Taub is estimated at
approximately $1,000,000 and the gross-up payment to be paid to Mr. Taub is
estimated to be approximately $892,032."
The
last sentence of subsection (a) of Item 3 entitled "Arrangements with Current
Executive Officers and Directors of the Company—Merger Agreement Covenants" is
hereby amended by deleting the text "Mr. Taub, $294,000; Mr. Mashiach, $169,688"
and replacing it with the text "Mr. Taub, $359,000; Mr. Mashiach,
$339,688."
Item
4.
The Solicitation
or Recommendation.
Subsection
(b) of Item 4 entitled “Background and Reasons for the Company Board's
Recommendation—Background of the Offer and Merger" is hereby amended and
restated with the following:
"Prior
to their discussions with respect to the Offer and the Merger as described
below, Ethicon, Inc., a wholly owned subsidiary of Parent, and the Company held
discussions in the context of their operating relationship under the agreements
between the Company and Ethicon described above in Item 3 at "Arrangements with
Parent and Purchaser—Other Agreements between the Company and
Parent". In 2004, those discussions resulted in an amendment to those
commercial agreements in connection with which Johnson & Johnson Development
Corporation, a wholly owned subsidiary of Parent, made an investment in the
Company which resulted in it becoming a 2.6% stockholder of the
Company. In 2005, after learning of the Company's plans to move
forward with an initial public offering, Ethicon expressed a
possible
interest in an acquisition of the Company or alternatively an increased
investment in the Company as part of or concurrent with the initial public
offering. These discussions did not result in either an offer by
Parent or any of its subsidiaries to acquire the Company at a specified price or
any additional investment by Parent or any of its subsidiaries in the Company at
that time.
During
a June 13, 2008 telephonic Company Board meeting, Mr. Taub informed the Company
Board that he had been approached by a group of investors (the “Investor Group”)
with a verbal proposal for making an acquisition of the Company. During this
meeting, representatives from Skadden, Arps, Slate, Meagher & Flom LLP
(“Skadden”) gave a presentation to the Company Board on its fiduciary duties in
connection with a potential transaction. In addition, the Company Board
appointed a special committee of independent directors (the “Special
Committee”), made up of Messrs. Larry Ellberger, Chairman of the Special
Committee, Steven St. Peter, M.D. and Kevin Rakin, to review and evaluate any
proposal made by the Investor Group or any other parties for an acquisition, or
other business combination with, the Company.
Later
that day, the Special Committee met telephonically to discuss the Investor
Group’s request for certain information regarding the Company in connection with
a possible acquisition proposal. After extensive discussion, the committee
members authorized a representative of the Company to advise the Investor Group
that the Company was not prepared to share non-public information until it
determined if and how it wished to proceed. During this meeting, the Special
Committee members also discussed the possibility of approaching Parent about a
possible business combination with Parent given, among other things, the
Company's existing commercial relationship with Parent, Parent's knowledge of
the Company and its products derived from that commercial arrangement, Parent's
previously expressed interest in a possible acquisition of the Company, and
Parent's financial ability to acquire the Company without the need for external
financing. The Special Committee also retained Skadden as the Special
Committee’s legal advisor.
On
June 17, 2008, the Special Committee selected UBS Securities LLC (“UBS”) as the
Company’s financial advisor and reviewed, together with the Company’s management
and representatives of the Company’s legal and financial advisors, the Company’s
response to the Investor Group. During this meeting, the Special Committee
authorized the Company’s financial advisor to inform the Investor Group that the
Company was not prepared to share non-public information of the Company until
such time as the Company were to commence a sale process.
On
June 25, 2008, the Company received a non-binding preliminary proposal from the
Investor Group, in which the Investor Group indicated its interest in pursuing
an acquisition of all or a controlling interest of the Shares at a target range
cash price of $21.00 to $25.00 per Share. The Investor Group also indicated that
it intended to invite Mr. Taub to participate in the transaction.
On
June 26, 2008, the Special Committee met telephonically, together with
representatives of the Company’s legal and financial advisors, to discuss the
proposal, during which representatives of Skadden provided an overview of the
Company Board’s fiduciary duties in connection with the proposal. After
discussion, the Special Committee determined that a review of the prospects of
the Company on a stand-alone basis was important to enable the Special Committee
to formulate a view regarding the Investor Group’s proposal. The
Special Committee then authorized the Company’s financial advisor to inform the
Investor Group that its proposal was under consideration.
On
July 9, 2008, the Special Committee met, together with the Company’s management
and the Company’s representatives of legal and financial advisors, to discuss
the prospects of the Company on a stand-alone basis.
On
July 14, 2008, the Special Committee also authorized the Company’s financial
advisor to contact Parent to determine its potential interest in pursuing an
acquisition of the Company. The Special Committee also instructed the
Company's financial advisor to inform the Investor Group that, in order for its
proposal to be considered, its proposed purchase price would need to be above or
at the high end of the Investor Group’s proposed range of $21.00 to $25.00 per
Share.
On
July 23, 2008, the Company Board met, together with the Company’s management and
the representatives of the Company’s legal and financial advisors, and received
an update from the Special Committee regarding its activities to date.
Representatives of the Company’s financial advisor provided the Company Board
with an update on discussions with the Investor Group. In addition, the Board
was informed that, in accordance with the Special Committee’s directives, Parent
also had been contacted to determine its current level of interest in a
potential transaction and that Parent had expressed interest, had provided a
preliminary due diligence list and was reviewing the Company’s proposed
nondisclosure agreement.
On
July 30, 2008, at the invitation of the Special Committee, Mr. Taub participated
in a telephonic meeting of the Special Committee, together with representatives
of the Company’s legal and financial advisors, during which he advised the
Special Committee of his decision not to become a party to the bid of the
Investor Group for the Company. Mr. Taub indicated that, despite this decision,
the Investor Group had decided to proceed with its bid without him. The Special
Committee was then updated on the status of negotiations of Parent’s
nondisclosure agreement. At this meeting, the Special Committee authorized the
Company’s financial advisor to begin contacting potential bidders regarding a
possible sale of the entire Company.
During
the first half of August 2008, ten potential bidders, in addition to Parent and
the Investor Group, were contacted regarding a possible acquisition of the
entire Company. A list of potential bidders to be contacted was
developed by the Company's management in consultation with the Company's
financial advisor and was reviewed and approved by the Special
Committee. These potential bidders were all large strategic companies
with substantial financial resources and which already had exposure, or had
publicly expressed interest in obtaining or increasing their exposure, to
products and markets similar to the Company's products and
markets. Potential financial bidders were not contacted given the
view of the Special Committee, in consultation with the Company’s management and
financial advisor, as to the likely difficulty of financial bidders to obtain
the requisite financing in the current economic environment.
During
these weeks, in accordance with the Company’s directives, the Company's
financial advisor contacted the ten potential bidders, distributed to them some
information about the Company that had been prepared by the Company and, to the
extent any potential bidders responded to such efforts, followed up by offering
them an opportunity to execute a non-disclosure agreement with the Company in
order to obtain access to more detailed information concerning the
Company. Other than as noted below, none of the potential bidders
executed non-disclosure agreements.
On
August 1, 2008, the Company and Parent executed the Non-Disclosure Agreement,
and Parent commenced its due diligence review of the Company.
On
August 13, 2008, representatives of Parent and of the Company met to discuss the
terms of a potential acquisition by Parent of the Company. Representatives of
the Company conducted a management presentation.
On
August 15, 2008, during a telephonic meeting of the Special Committee,
representatives of the Company’s financial advisor provided the committee
members with an update on the status of discussions with potential bidders
regarding a possible transaction with the Company. The Special Committee
was
informed
that of the ten companies that had been approached, five had declined to express
interest and five had yet to respond, and that potential bidders had been
informed that indications of interest were due on August 26,
2008. Following this meeting, the Company’s financial advisor
continued to work with the other parties that had not yet responded to assess if
any would be interested in participating in a potential transaction with the
Company.
On
August 22, 2008, one of the other potential bidders (the “Other Potential
Bidder”) that had been contacted signed a non-disclosure agreement with the
Company, received some selected due diligence information concerning the Company
and was requested to submit an indicative proposal by no later than September
12, 2008. Over the next weeks, the Other Potential Bidder received additional
due diligence information and access to the Company’s management team. During
the period, the Company held telephonic due diligence meetings with the Other
Potential Bidder.
On
August 26, 2008, Parent submitted a non-binding, preliminary proposal letter
offering to purchase the Company for $25.00 per Share. The letter also outlined
certain significant terms and conditions under which Parent would be prepared to
acquire the Company. After such submission, Parent continued its due diligence
of the Company.
Also
on August 26, 2008, at a telephonic meeting of the Company Board with the
Company’s management and representatives of the Company’s financial advisor, the
Board was provided with an update regarding the Special Committee’s
activities.
On
August 27, 2008, at a telephonic meeting of the Special Committee with Mr. Taub
and representatives of the Company’s legal and financial advisors, the Special
Committee was briefed on the non-binding, preliminary proposal letter received
from Parent on August 26, 2008 and on other discussions with Parent and the
Investor Group. After extensive deliberation, the Special Committee instructed
the Company’s financial advisor to convey to Parent that the proposal it
submitted was below what would be acceptable to the Company Board.
Between
August 26, 2008 and September 8, 2008, representatives of Parent and of the
Company participated in several discussions concerning Parent’s non-binding
preliminary proposal of August 26, 2008.
On
September 8, 2008, Parent submitted a revised non-binding preliminary proposal
to purchase the Company for $29.00 in cash per Share and outlining certain
significant terms and conditions under which Parent would be prepared to acquire
the Company.
During
a September 9, 2008 telephonic meeting of the Special Committee also attended by
a representative of Skadden, Mr. Taub and the Company’s financial advisor
discussed with the Special Committee Parent’s revised non-binding preliminary
proposal and provided an update on discussions held with the Other Potential
Bidder. After extensive deliberation, the Special Committee decided to allow
Parent to continue in a sale process.
On
September 12, 2008, the Other Potential Bidder informed the Company’s financial
advisor, via telephone, that it would not be submitting an indicative offer for
the Company and was withdrawing from the process. The Other Potential Bidder
subsequently returned due diligence information provided to it. No other bids
were received from the other potential bidders contacted regarding a potential
transaction with the Company or from the Investor Group.
By
a letter dated September 17, 2008, Parent was invited to participate in a second
round of the sale process, and was asked to submit a final binding written offer
by October 15, 2008.
On
September 18, 2008, the Company Board met and received an update from the
Special Committee on its activities.
On
September 23, 2008, representatives of Parent attended a management presentation
conducted by the Company.
During
a telephonic meeting on September 29, 2008, the Special Committee received an
update on the process and the due diligence that was being conducted by Parent.
In addition, representatives from Skadden provided the Special Committee with an
overview of a draft merger agreement that it prepared on behalf of the Company
and the timing of the proposed process. After this discussion, the Special
Committee decided that this draft merger agreement should be provided to Parent.
Later that day, the draft merger agreement was forwarded to Parent, and Parent
was provided access to a virtual data room. Thereafter, Parent continued its due
diligence review of the Company.
On
October 9, 2008, the Company extended the due date for submission of Parent’s
final binding written offer to October 22, 2008.
On
October 22, 2008, Parent sent a non-binding proposal proposing to acquire the
Company at $25.00 in cash per Share and outlining the significant terms and
conditions under which Parent would be prepared to acquire the Company. The
Company has been advised by Parent that it had decreased its bid based on a
determination, after further due diligence, that the assumptions used by Parent
in its September 8 bid could not be supported, including its assumptions with
respect to the Company's capital expansion plans and the period of overcapacity
likely to result from such plans, the manufacturing process and relationships
between the Company's product lines in terms of the Company's total cost
structure, the level of investment required to upgrade the Company's
information, infrastructure and control systems to integrate such systems with
Parent's and the overall risks relating to business integration and the
immunotherapy product line. Parent also submitted a markup prepared
by Parent’s counsel, Cravath, Swaine & Moore LLP, reflecting their proposed
revisions to the draft merger agreement that had been provided by the
Company.
On
October 26, 2008, the Special Committee met with the Company Board and
representatives of the Company’s legal and financial advisors to discuss the
status of Mr. Taub’s discussions with Parent, including Parent’s proposed
purchase price. During this meeting, representatives of the Company’s financial
advisor informed the Company Board that Parent expressed an unwillingness to
increase its offer beyond $25.00 in cash per Share. Mr. Taub then presented the
Company Board with an update on the Company’s business potential, and
recommended that the Company Board reject Parent’s offer. During an executive
session, the Special Committee voted, two in favor, and one opposed, to reject
Parent’s offer. The Company Board meeting was then reconvened, and the Special
Committee then conveyed its recommendation to the Company Board, which
recommendation was adopted by the Company Board. The Company Board then
instructed the Company’s financial advisor to convey the Board’s decision to
Parent, which decision was subsequently conveyed.
On
November 10, 2008, in accordance with the Company’s directives, representatives
of the Company’s financial advisor called representatives of Parent to discuss
Parent’s offer price. Parent was informed it would be contacted the following
day for further discussions.
On
November 11, 2008, Mr. Taub spoke with Alex Gorsky, Company Group Chairman and
Worldwide Franchise Chairman of Ethicon, Inc., to discuss the offer price. No
agreement was reached on such date. Mr. Gorsky reiterated that Parent was not
willing to increase its offer beyond $25.00 in cash per Share. Mr. Gorsky agreed
to meet in person with representatives of the Company the following week to
continue
their
discussions.
Discussions
regarding Parent’s offer price also took place on November 11, 2008 between
representatives of Parent and the Company’s financial advisor. A representative
of Parent advised that, should the parties proceed with a transaction, Parent
would like to announce and close the transaction before year-end.
On
November 13, 2008, the Special Committee met telephonically, together with the
Company’s management and representatives of the Company’s legal and financial
advisors. The Special Committee received an update on discussions with
Parent. The Company’s financial advisor also provided an update on
recent financial market conditions and market volatility and the potential
negative impact on the Company's ability to finance its capital expansion plans
if it needed to do so from external sources. Mr. Taub then presented
an update on the Company’s business potential and potential risks facing the
Company, including expected delays in obtaining certain regulatory approvals and
product introductions and other potential weaknesses in the business and current
market conditions. Mr. Taub explained that these considerations
influenced his decision to change his recommendation to a recommendation in
favor of Parent’s offer. After extensive discussion, the Special
Committee voted unanimously to accept Parent’s offer subject to negotiating an
acceptable merger agreement. In recommending Parent's offer, the
Special Committee considered a number of factors, including, among others,
developments in the financial markets and the Company’s business discussed
during this meeting as noted above, and the factors discussed below in the
subsections entitled "Reasons for the Recommendation". The Special
Committee authorized the Company’s financial advisor to communicate to Parent
the committee’s acceptance of Parent’s offer. The Special Committee
then requested that Mr. Taub and Mr. Ellberger notify the other members of the
Company Board of the Special Committee’s decision.
On
November 17, 2008, Mr. Taub met with Mr. Gorsky to discuss the terms of the
potential acquisition, including Parent’s offer price. Mr. Gorsky stated that
Parent’s offer would remain $25.00 in cash per Share. Also on
November 17, 2008, Skadden circulated a revised draft of the merger agreement to
Parent and its counsel.
From
November 17, 2008 to November 23, 2008, representatives of the Company and
Parent had frequent discussions regarding finalizing the Merger Agreement and
the related documents, and Parent continued to conduct its due diligence. Also,
during this period, Mr. Taub, the Company and Parent finalized the Tender and
Support Agreement, and Messrs. Taub and Mashaich had frequent discussions with
Parent regarding certain amendments Parent required relating to their employment
arrangements, which were pre-conditions to Parent’s signing of the Merger
Agreement.
On
November 20, 2008, the Company Board met and received a presentation from
representatives of Skadden on the terms of the Merger Agreement, and the
material issues that were under discussion among the parties. Also at this
meeting, UBS provided the Company Board with a preliminary financial analysis of
Parent’s $25.00 per Share offer.
On
November 23, 2008, the Company Board approved the Merger Agreement, the Offer
and the Tender and Support Agreement. Also at this meeting, UBS updated for the
Company Board UBS’ financial analysis of the $25.00 per Share consideration
preliminarily provided at the Company Board November 20 meeting and delivered to
the Board an oral opinion, which opinion was confirmed by delivery of a written
opinion dated November 23, 2008, to the effect that, as of that date and based
on and subject to various assumptions, matters considered and limitations
described in its opinion, the $25.00 per Share consideration to be received in
the Offer and the Merger, taken together, by holders of Shares (other than
Parent, Purchaser and their respective affiliates) was fair, from a financial
point of view, to such holders. During this meeting, the Board also approved the
modifications requested by Parent to Mr. Taub’s and Mr. Mashiach’s employment
arrangements described elsewhere in this Statement. Following
such
meeting,
Parent, Sub and the Company executed and delivered the Merger Agreement and
related documents.
On
November 24, 2008, Parent and the Company issued a joint press release
announcing the execution of the Merger Agreement.
On
November 25, 2008, Purchaser commenced the Offer. During the pendency of the
Offer, the Company and its representatives and Parent, Purchaser and their
representatives intend to have ongoing contacts.”
Subsection
(b) of Item 4 entitled “Background and Reasons for the Company Board's
Recommendation—Reasons for the Recommendation—Strategic Alternatives" is hereby
amended and restated as follows:
"Strategic
Alternatives. The Company Board considered the recent evaluations by
the Company Board of the Company’s strategic alternatives other than an
acquisition of the entire Company. The Company Board considered the
risks inherent with remaining independent and the prospects of the Company going
forward as an independent entity. The Company Board also reviewed the
potential benefits of a joint venture or alliance with a strategic partner other
than Parent."
SIGNATURE
After due inquiry and to the best of
its knowledge and belief, the undersigned certifies that the information set
forth in this Statement is true, complete and correct.
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OMRIX
BIOPHARMACEUTICALS, INC.
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By:
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/s/
Nanci Prado
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Name:
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Nanci
Prado
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Title:
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Vice
President, General Counsel
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Dated:
December 17, 2008
Omrix Biopharmaceuticals (MM) (NASDAQ:OMRI)
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