Exhibit 1
Execution Copy
TRANSACTION AGREEMENT
dated 20 March 2003
between
InCentive Capital AG
c/o Bar & Xxxxxx, Xxxxxxxxxxxxx 0,
XX-0000 Xxx, Xxxxxxxxxxx ("InCentive")
and
Xxxxx & Nephew plc.
Heron House, 15 Xxxx Street, ("Xxxxx & Nephew plc")
Xxxxxx XX0X 0XX, Xxxxxx Xxxxxxx
and
Meadowclean Limited
(to be renamed Xxxxx & Nephew Group plc) ("Xxxxx & Nephew Group plc")
000 Xxxxxx xx xx Xxxxx,
XX-0000 Xxxxxxxx, Xxxxxx, Xxxxxxxxxxx
Regarding
A Public Tender Offer to all Shareholders of InCentive
WHEREAS:
(A) Xxxxx & Nephew plc is an English company limited by shares with principal
place of business in England whose ordinary share capital amounts to GBP
113,560,138.10, divided into 929,128,403 ordinary shares of 12 2/9 xxxxx
nominal value each, listed on the London Stock Exchange and, in the form
of American Depositary Receipts, on the New York Stock Exchange.
(B) Centerpulse AG ("Centerpulse") is a Swiss company limited by shares with
registered seat in Zurich whose share capital amounts to CHF 354,919,350,
divided into 11,830,645 registered shares with a par value of CHF 30 each
(the "Centerpulse Shares"), listed on the SWX Swiss Exchange and, in the
form of American Depository Receipts, on the New York Stock Exchange.
(C) Desirous to combine their respective businesses, Centerpulse and Xxxxx &
Nephew plc and Xxxxx & Nephew Group plc have agreed that Xxxxx & Nephew
plc, or Xxxxx & Nephew Group plc, the proposed new holding company of
Xxxxx & Nephew, which will be a UK registered public company, resident in
Switzerland, and listed on the London Stock Exchange and on the SWX Swiss
Exchange, shall submit a public tender offer for all publicly held
Centerpulse Shares on the terms and subject to the conditions of a
transaction agreement of even date (the "Centerpulse Tender Offer").
Except where specifically otherwise provided, all references to "Xxxxx &
Nephew" in this Agreement therefore include Xxxxx & Nephew plc and Xxxxx &
Nephew Group plc, and all references to "Xxxxx & Nephew Shares" shall
include the shares of Xxxxx & Nephew plc listed on the London Stock
Exchange or as appropriate the shares of Xxxxx & Nephew Group plc to be
listed on the London Stock Exchange and the SWX Swiss Exchange.
(D) InCentive, a Swiss company limited by shares with registered seat in Zug
whose share capital amounts to CHF 42,944,040, divided into 2,147,202
fully paid-up bearer shares with a par value of CHF 20 each which are
listed on the SWX Swiss Exchange (the "InCentive Shares"), holds, at the
Signing Date, indirectly through its wholly-owned subsidiary InCentive
Jersey Ltd., 13.14% of the Centerpulse Shares and rights to acquire
further 5.77% of the Centerpulse Shares, all as set forth in Schedule (D).
(E) Concurrently with the Centerpulse Tender Offer, Xxxxx & Nephew wishes to
submit a public tender offer to all shareholders of InCentive, conditional
upon
completion (Zustandekommen) of the Centerpulse Tender Offer, and
InCentive wishes to agree on certain covenants in respect of such public
tender offer.
(F) "Zurich" Versicherungs-Gesellschaft, III Institutional Investors
International Corp., Xx. Xxxx Xxxxxxxxx and Xx. Xxxx Xxxxxx, the main
shareholders of InCentive holding in the aggregate 1,650,190 InCentive
Shares representing approximately 76.85% of the voting rights and
capital stock of InCentive (collectively the "Shareholders"), have
agreed to tender their InCentive Shares under the Public Tender Offer
according to the terms and conditions of a tender agreement of even date
(the "Tender Agreement").
NOW, THEREFORE, the Parties agree as follows:
1. DEFINED TERMS
As used in this Agreement, the capitalised terms shall have the meaning
set forth in Schedule 1.
2. PUBLIC TENDER OFFER
2.1. The Offer
2.1.1. On the terms and subject to the conditions set forth in this Agreement,
Xxxxx & Nephew shall submit a public tender offer for all InCentive
Shares which are presently issued and which may be issued from the
Signing Date until the last day of the Statutory Extension Period other
than any InCentive Shares held by InCentive itself or by any of its
subsidiaries (the "Public Tender Offer").
2.1.2. Xxxxx & Nephew shall publish the pre-announcement (Voranmeldung)
relating to the Public Tender Offer, as contained in Schedule 2.1.2,
(the "Pre-Announcement") in the electronic media on the Signing Date.
2.2. The Offer Price
(a) The offer price per InCentive Share to be offered by Xxxxx &
Nephew in the Public Tender Offer (the "Offer Price") shall be:
-----------
a + b
-----
c
-----------
where:
a is the total amount of Xxxxx & Nephew Shares and amount of
cash that would be payable to InCentive under the
Centerpulse Tender Offer for the Centerpulse Shares held
by InCentive (the "Centerpulse Holding");
b is the adjusted net asset value (positive or negative) of
InCentive as determined in accordance with Schedule 2.2(a)
(the "Adjusted NAV") calculated as at the last day of the
Offer Period, but excluding the Centerpulse Holding, and
attributing no value to any InCentive Shares held by
InCentive or its subsidiaries (the "Treasury Shares"), as
confirmed by InCentive's auditors;
c is the total number of InCentive Shares in issue on the last
day of the Offer Period less the number of Treasury Shares
on that date.
The consideration for each InCentive Share will consist of (i) an
element of Xxxxx & Nephew shares and cash which will mirror the
Centerpulse Holding; plus or minus (ii) the cash equivalent to the
Adjusted NAV excluding the Centerpulse Holding. If the Adjusted
NAV excluding the Centerpulse Holding is negative, then the cash
element attributable to the Centerpulse Holding shall be reduced,
pro tanto, and if after such reduction there is still a negative
balance, the number of Xxxxx & Nephew shares to be issued shall be
reduced by a corresponding amount calculated by reference to the
average closing prices of Xxxxx & Nephew Shares of the fifth to
the third Business Day prior to the Settlement Date.
(b) The Offer Price shall be adjusted for any dilutive effects in
respect of the InCentive Shares (to the extent they have not been
reflected in the Adjusted NAV) or the Xxxxx & Nephew Shares (save
for shares issued for management options issued under the Xxxxx &
Nephew employee share schemes and disclosed in the Xxxxx & Nephew
financial statements for the financial year 2002), including
dividend payments (save for dividends already declared by Xxxxx &
Nephew or an interim dividend thereafter declared by Xxxxx &
Nephew in the normal course), capital increases below market
value, or the issuance of options (save for management options
issued under the Xxxxx & Nephew employee share schemes in the
normal course consistent with past practice), warrants,
convertible securities and other rights of any kind to acquire
InCentive shares or Xxxxx & Nephew shares as the case may be.
(c) Accepting InCentive shareholders under the Public Tender Offer and
accepting Centerpulse shareholders under the Centerpulse Tender
Offer (together the "Accepting Shareholders") may elect to take
fewer Xxxxx & Nephew Shares or more Xxxxx & Nephew Shares than
their basic entitlement under the relevant offer, but elections
under both offers (taken together) to take more Xxxxx & Nephew
Shares (together the "Excess Shares") will only be satisfied to
the extent that elections have been made under both offers (taken
together) by Accepting Shareholders to take fewer Xxxxx & Nephew
Shares (together referred to as the "Available Shares"). The
Available Shares will be allocated to the applicants for Excess
Shares in proportion to the number of Excess Shares applied for.
If the total number of Available Shares exceeds the total number
of Excess Shares applied for, the Available Shares shall be
limited to an amount equal to the Excess Shares. Once the share
allocations have been determined, the cash element of the
consideration will be reduced or increased (as the case may be)
for each Accepting Shareholder who has been allocated an increased
or reduced number of Xxxxx & Nephew Shares. All calculations shall
be made by reference to the number of acceptances and elections as
of the last day of the additional acceptance period.
(d) Fractions of Xxxxx & Nephew Shares shall not be allotted or issued
to accepting InCentive shareholders but will be aggregated and
sold in the market, and the net proceeds of sale shall be
distributed on a pro rata basis to the InCentive shareholders who
accept the Public Tender Offer and are entitled to them.
(e) The consideration payable for the Centerpulse Shares under the
Centerpulse Tender Offer shall comprise for each Centerpulse
Share:
(i) 25.15 new Xxxxx & Nephew Shares; and
(ii) CHF 73.42 in cash.
2.3. Conditions of the Public Tender Offer
The Public Tender Offer shall be subject to the fulfilment or waiver by
Xxxxx & Nephew of the conditions as set forth in the Pre-Announcement.
2.4. Implementation by Xxxxx & Nephew of the Public Tender Offer
Following the date of this Agreement, Xxxxx & Nephew shall:
(a) use commercially reasonable efforts to prepare and, each time
within the statutory period of time, publish the prospectus (the
"Offer Prospectus") and such other documents relating to the
Public Tender Offer as are required by law (the "Offer
Documents"), each time after having consulted with InCentive and
its advisers and after having given InCentive and its advisers
reasonable opportunity to review and comment on the Offer
Documents; and
(b) use commercially reasonable efforts that the conditions of the
Public Tender Offer set forth in par. g) of the Pre-Announcement
and the conditions of the Centerpulse Tender Offer set forth in
the Centerpulse Pre-Announcement contained in Schedule 2.4(b)
which are under control of Xxxxx & Nephew are satisfied.
2.5. Secondary Listing of Xxxxx & Nephew Shares
Xxxxx & Nephew shall use all reasonable efforts to procure that the
Xxxxx & Nephew Shares obtain a secondary listing on SWX Swiss Exchange
as of the Settlement Date or as soon as possible thereafter.
3. OBLIGATIONS OF INCENTIVE IN RELATION TO THE PUBLIC TENDER OFFER
3.1. Non-Solicitation
3.1.1. InCentive agrees that it shall immediately cease and cause to be
terminated all existing discussions, negotiations and communications
with any persons with respect to any Acquisition Transaction (as defined
below). Except as otherwise contemplated by this Agreement, none of
InCentive or its subsidiaries shall solicit or initiate any discussions
or negotiations with any corporation, partnership, person or other
entity or group (other than Xxxxx & Nephew or any affiliate or associate
of Xxxxx & Nephew) concerning any merger, consolidation, business
combination, liquidation, reorganisation, sale of substantial assets,
sale of shares of capital stock or similar transaction involving
InCentive or any subsidiary of InCentive or the Centerpulse Holding
(each an "Acquisition Transaction"), provided that nothing contained in
this Section 3.1 shall restrict InCentive's board of directors in taking
and disclosing to InCentive's shareholders or any third parties or
governmental or regulatory bodies a position with respect to an
Acquisition Transaction initiated by a third party, or in making such
other disclosure to InCentive's shareholders or any third parties or
governmental or regulatory bodies which, as advised by outside counsel,
is advisable under applicable law.
3.1.2. InCentive shall promptly advise Xxxxx & Nephew of InCentive's receipt of
any substantive proposal relating to an Acquisition Transaction and any
substantive request for information that may reasonably be expected to
lead to or is otherwise related to any Acquisition Transaction, the
identity of the person making such Acquisition Transaction or request
for information and the terms and, subject to applicable law and the
requirements of any regulatory authorities, conditions of such
Acquisition Transaction.
3.2. No Acquisition and Disposal of Shares
Unless Xxxxx & Nephew shall have given its prior written consent or
declared that the Public Tender Offer has failed, none of InCentive or
its subsidiaries shall, after the Signing Date:
(a) acquire any Centerpulse Shares or rights to acquire Centerpulse
Shares other than through the exercise or termination of the
Centerpulse options in accordance with Section 3.7 or, subject to
Section 3.3, sell or otherwise dispose of any Centerpulse Shares
or rights to acquire Centerpulse Shares, provided
that InCentive shall have the right to procure that its subsidiaries
transfer to it all Centerpulse Shares held by them;
(b) acquire or sell any InCentive Shares or rights to acquire or sell
InCentive Shares, provided that sales of treasury shares to
non-related third parties shall be permitted; or
(c) acquire any Xxxxx & Nephew Shares or rights to acquire Xxxxx & Nephew
Shares except through the settlement of the Public Tender Offer.
3.3. Tender of Centerpulse Shares
In the event that, without the prior consent of Xxxxx & Nephew, and to the
extent that any of the following items cannot be or is not deducted in full
in calculating the Adjusted NAV:
(a) InCentive or any of its subsidiaries disposes of any of its
Centerpulse Shares or enters into any derivative arrangement for the
disposal of Centerpulse Shares, provided that InCentive shall have the
right to procure that its subsidiaries transfer to it all Centerpulse
Shares held by them; or
(b) InCentive does not dispose of any of its material assets according to
Section 3.9 and the Shareholders have not agreed with Xxxxx & Nephew
provisions as to an addition to the escrow referred to in the Tender
Agreement and such other comfort, indemnity and hold harmless
arrangements as Xxxxx & Nephew shall reasonably request; or
(c) InCentive has failed to enter into any termination agreements in
respect of its asset management agreements; or
(d) during the Offer Period not all of the bank guarantees (indemnity
letters) and keep-well obligations issued by InCentive are terminated
or InCentive has not otherwise been released of its obligations
thereunder according to Section 3.10; or
(e) the current members of the board of directors of InCentive have not
resigned according to Section 3.7.1; or
(f) the general meeting of InCentive has not passed the resolutions
set forth in Section 3.7.2; or
(g) during the Offer Period any of InCentive or the Shareholders or
any person related with any of them pursuant to article 15
SESTO-FBC directly or indirectly purchases any Centerpulse
Shares above the value of the offer price under the Centerpulse
Offer at the time;
then, and only then, InCentive shall, if required by Xxxxx & Nephew,
tender or procure that the banks tender pursuant to Section 3.4(c) and
(d) the Centerpulse Shares held by it or them to Xxxxx & Nephew
pursuant to the Centerpulse Tender Offer.
3.4. Share Deposit Confirmations
3.4.1. InCentive shall use best efforts to procure that each bank where the
Centerpulse Shares held by InCentive are deposited delivers to Xxxxx &
Nephew, as soon as possible but not later than ten Business Days after
the Signing Date, a confirmation in writing confirming that the
Centerpulse Shares are deposited with such bank and shall remain
deposited with such bank until the earlier of
(a) the Settlement Date; or
(b) Xxxxx & Nephew having declared that the Public Tender Offer has
failed or lapsed; or
(c) such bank having received joint written instructions from
InCentive and Xxxxx & Nephew to release such Centerpulse
Shares; or
(d) an instruction of an Expert (as defined in Section 3.4.2)
having been delivered to such bank, accompanied by a copy of a
letter by which such Expert is appointed either jointly by
Xxxxx & Nephew and InCentive or by the President of the Zurich
Chamber of Commerce.
3.4.2. For the purpose of Section 3.4.1(d), the Parties shall within ten
Business Days from the Signing Date agree on a fast track process and
an expert who shall be a professional person (the "Expert") who is
willing and able to render a decision
within a time frame not exceeding five Business Days commencing no
later than the 30/th/ Business Day of the Offer Period which shall be,
for the purposes of this Section 3.4, binding on the Parties. In
default of agreement on the fast track process and the identity of the
Expert within such ten Business Days period, the President of the
Zurich Chamber of Commerce may be requested by either Party to appoint
the Expert who shall determine the process and render a decision which
shall be, for the purpose of this Section 3.4, binding upon the
Parties.
3.5. No Tender of InCentive Treasury Shares
InCentive shall not tender any treasury InCentive Shares held by it or
any of its subsidiaries under the Public Tender Offer and shall not
dispose of any such shares.
3.6. Report of InCentive's Board of Directors
InCentive hereby confirms that its board of directors has, subject to
the receipt of a fairness opinion, (i) determined that this Agreement
and the transactions contemplated thereby are fair to, and in the best
interests of, InCentive's shareholders, (ii) approved this Agreement
and (iii) resolved unanimously to recommend acceptance of the Public
Tender Offer in accordance with Article 29 (1) SESTA in a timely
manner so that such report can be attached to the Offer Prospectus.
3.7. Resignation of Board Members; Shareholders' Meeting
3.7.1. Subject to completion (Zustandekommen) of the Public Tender Offer and
effective from the Settlement Date, InCentive shall procure that all
members of InCentive's board of directors resign from InCentive's
board of directors.
3.7.2. InCentive shall procure that a shareholders' meeting of InCentive is
held during the Offer Period for the passing of the resolutions
necessary for the satisfaction of the conditions precedent set forth
in the conditions section of the Pre-Announcement and a resolution
approving this Agreement and the transactions contemplated thereby, in
particular the conditional tender of Centerpulse Shares in accordance
with Section 3.3 and the sale of subsidiaries.
3.8. Exercise or Termination of Centerpulse Share Options
InCentive shall exercise or terminate, as soon as reasonably possible
after the Signing Date but in any event prior to the expiry of the
Offer Period, the options on Centerpulse Shares set forth in Schedule
(D), provided that such options may not be exercised or terminated if
(i) the exercise or termination of such options would infringe, to the
extent applicable, US laws and regulations, or (ii) Xxxxx & Nephew
would become required by law to increase the offer price under the
Centerpulse Tender Offer or the Public Tender Offer as a result of the
exercise or termination of such options.
3.9. Divestiture of Certain Assets
InCentive shall sell and transfer, effective prior to the expiry of
the Offer Period, all its assets (including the shares of all its
subsidiaries) other than (i) all Centerpulse Shares held by it on the
Signing Date and acquired by it through the exercise or termination of
the options according to Section 3.7 and (ii) cash. InCentive shall
procure that:
(a) any Centerpulse Shares or options on Centerpulse Shares held by
any of its direct or indirect subsidiaries are transferred to
InCentive prior to the disposal of such subsidiaries;
(b) the consideration for such divestitures consists in cash and is
paid, without any contingency or condition, by the respective
buyer in full prior to the expiry of the Offer Period without
there being any deferred component to be paid or collected
after the expiry of the Offer Period; and
(c) a fair and transparent sales process is conducted in respect of
the private equity investments;
(d) the sale and purchase agreements in relation to InCentive's
direct or indirect subsidiaries and the sale and purchase
agreements in relation to InCentive's direct or indirect
private equity interests, do not contain any representations or
warranties or indemnities or other residual liabilities of
InCentive.
3.10. Termination of Certain Agreements
InCentive shall terminate, or procure its release after the Signing
Date from all material agreements to which it is a party, including
bank guarantees (indemnities) and keep-well obligations and material
agreements with, banks and asset managers. To the extent that payments
have to be made under such agreements by InCentive after the expiry of
the Offer Period, such future payments shall be taken into account in
full in calculating the Adjusted NAV.
3.11. Determination of the Adjusted NAV and Establishment of Interim
Financials
InCentive shall procure that the Adjusted NAV is determined according
to Section 2.2 and that interim financial statements of InCentive as at
the last day of the Offer Period are established, consisting of a
balance sheet, profit and loss statements and notes (the "Interim
Financials"), and that the determination of the Adjusted NAV by
InCentive and its auditors PricewaterhouseCoopers and the Interim
Financials are delivered to Xxxxx & Nephew in a timely manner, i.e. on
the second Business Day, after the expiry of the Offer Period in order
to allow Xxxxx & Nephew to publish the definite Purchase Price in the
notification of the interim results of the Public Tender Offer by the
fourth Business Day after the expiry of the Offer Period. InCentive
shall procure that Ernst & Young, acting on behalf of Xxxxx & Nephew,
are given reasonable opportunity to participate in the preparation of
the Interim Financials and the determination of the Adjusted NAV by
InCentive and its auditors PricewaterhouseCoopers.
3.12. Collection of Receivables
InCentive shall use reasonable best efforts to collect any receivables
prior to the expiry of the Offer Period.
3.13. Further Undertakings by InCentive
Prior to the expiry of the Offer Period, InCentive shall:
(a) not issue any new shares or equity related financial instruments;
and
(b) comply with all disclosure and reporting obligations under the
SESTA and the related ordinances;
(c) provide in a timely manner the information required by Xxxxx &
Nephew in relation to the preparation of the Offer Documents.
3.14. Tier I Test
InCentive does not know, or have reason to know, that more than 10% of
the outstanding InCentive Shares, after deducting from the outstanding
amount any InCentive Shares held by InCentive or shareholders holding
in excess of 10% of the outstanding InCentive Shares, are held by U.S.
holders.
4. CONDUCT OF BUSINESS BETWEEN THE SIGNING DATE AND THE SETTLEMENT DATE
Except as otherwise contemplated by this Agreement, during the period
from the Signing Date until the Settlement Date, each of InCentive and
its subsidiaries and Xxxxx & Nephew and its subsidiaries shall conduct
their respective operations according to their ordinary and usual
course of business and consistent with past practice and use all
reasonable efforts consistent with prudent business practice to
preserve intact the business organisation, to keep available the
services of its and their current officers and key employees and to
maintain existing relationships with those having significant business
relationships with the respective party and its subsidiaries, in each
case in all material respects.
5. COVENANTS
5.1. Merger and Other Filings
Subject to the terms and conditions of this Agreement and to the
fiduciary duties of the board of directors under applicable law as
advised by legal counsel, InCentive and Xxxxx & Nephew shall use all
reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, including without
limitation to make all national filings under applicable competition
laws, to complete and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
5.2. Notification of Certain Matters
InCentive shall give prompt notice to Xxxxx & Nephew, and Xxxxx &
Nephew shall give prompt notice to the InCentive, of any failure of
such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
5.3. Corporate Name, Trademarks and Domain Name "InCentive"
5.3.1. As from the Settlement Date, any rights to use the word or logo
"InCentive" or any combination including the word or logo "InCentive"
in connection with corporate names, trade names, trade and service
marks, domain names, logos or otherwise shall be the sole and
unrestricted property of InCentive Asset Management AG or any other
company controlled by or under common control of Xxxx Xxxxxxxxx. Any
transfer by InCentive shall be effected without residual liabilities to
InCentive.
5.3.2. Xxxxx & Nephew shall procure that InCentive and its subsidiaries as
soon as possible and in no event later than three months after the
Settlement Date change their the corporate names, trade names, trade
and service marks, domain names and logos so that they no longer
include the word or logo "InCentive" or any combination containing the
word or logo "InCentive" or any other word or words or logo or logos
resembling the word or logo "InCentive". Subject to the first sentence
of this Section 5.3.2, as from the Settlement Date, Xxxxx & Nephew
shall not use, and shall procure that InCentive and its subsidiaries
cease and desist from using, the word or logo "InCentive" or any
combination including the word or logo "InCentive" in any manner
whatsoever in connection with corporate names, trade names, trade and
service marks, domain names, logos or otherwise.
6. INDEMNITY
In the event that InCentive or any of its subsidiaries acquires or
agrees to acquire any Centerpulse Shares or any InCentive Shares or any
rights to acquire Centerpulse Shares or InCentive Shares after the
Signing Date and Xxxxx & Nephew is, as a result of any such
acquisition, required by law to increase the offer price un-
der the Centerpulse Tender Offer or the Public Tender Offer, then
InCentive shall indemnify Xxxxx & Nephew for, and hold Xxxxx & Nephew
harmless from, any damages, loss, claims, cost and expenses (including
reasonable attorney's fees and expenses) incurred or payable by Xxxxx &
Nephew as a result of such required offer price increase, provided that
InCentive shall have the right to defend against such asserted
obligation of Xxxxx & Nephew to increase the offer price. Any such
asserted obligation of Xxxxx & Nephew shall be included as a liability
in the calculation of the Adjusted NAV per InCentive Share pursuant to
Section 2.2.
7. TERMINATION
7.1. By Incentive
InCentive shall have the right to terminate this Agreement by notice to
Xxxxx & Nephew with immediate effect in any of the following events:
(a) The Pre-Announcement is not made according to Section 2.1.2.
(b) In the circumstances envisaged by Section 3.2.3(c) of the Tender
Agreement, after release of the InCentive Shares as set forth
therein.
(c) Any of the conditions of the Public Tender Offer is not
satisfied or waived by Xxxxx & Nephew according to the
Pre-Announcement and the Offer Prospectus, as the case may be,
or the Public Tender Offer is not successful for any other
reason.
7.2. By Xxxxx & Nephew
Xxxxx & Nephew shall have the right to terminate this Agreement by
notice to InCentive with immediate effect if (a) any of the conditions
of the Public Tender Offer is not satisfied or waived by Xxxxx & Nephew
according to the Pre-Announcement and the Offer Prospectus, (b) the
Public Tender Offer fails for any other reason; or (c) there is a
breach by InCentive of Section 3.2 hereof. Xxxxx & Nephew shall have
the right to terminate this Agreement partially if an event such as is
set forth in Section 3.2 has occurred and Xxxxx & Nephew is, as a
result thereof, required by law to increase the offer price under the
Centerpulse Tender
Offer or the Public Tender Offer, to the extent necessary to avoid an
obligation to increase the Offer Price pursuant to article 10 (6) TOO.
7.3. Effect of Termination
In the event of a termination by Xxxxx & Nephew or InCentive, the
provisions of this Agreement shall cease to have any effect except for
the provisions of Section 8 and Section 9 which shall continue to be in
effect for an indefinite period of time. Any such termination shall be
without prejudice to the liabilities of any Party for breach of this
Agreement prior to termination.
8. MISCELLANEOUS
8.1. Entire Agreement; Modifications
Except for the confidentiality agreement executed in connection with
and prior to this Agreement, this Agreement constitutes the entire
agreement of the Parties concerning the object of this Agreement and
supersedes all previous agreements or arrangements, negotiations,
correspondence, undertakings and communications, oral or in writing.
This Agreement including this Section shall be modified only by an
agreement in writing executed by the Parties which shall explicitly
refer to this Section.
8.2. No Waiver
The failure of either of the Parties to enforce any of the provisions
of this Agreement or any rights with respect hereto shall in no way be
considered as a waiver of such provisions or rights or in any way
affect the validity of this Agreement. The waiver of any breach of this
Agreement by either Party shall not operate to be construed as a waiver
of any other prior or subsequent breach.
8.3. Severability
If any provision of this Agreement is held to be invalid or
unenforceable for any reason, such provision shall, if possible, be
adjusted rather than voided, in order to achieve a result which
corresponds to the fullest possible extent to the intention of
the Parties. The nullity or adjustment of any provision of this
Agreement shall not affect the validity and enforceability of any other
provision of this Agreement, unless this appears to be unreasonable for
any of the Parties.
8.4. Notices
Any notice, request or instruction to be made under or in connection
with this Agreement to InCentive shall be made to InCentive Asset
Management AG who shall act as notification agent for InCentive under
this Agreement. Any notice, request or instruction to be made under
this Agreement shall be made in writing and be delivered by registered
mail or courier or by facsimile (to be confirmed in writing delivered
by registered mail or courier) to the following addresses (or such
other addresses as may from time to time have been notified according
to this Section 8.4):
(a) If to Xxxxx & Nephew: Xxxxx & Nephew plc.
Attn. of Company Secretary
Xxxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Facsimile: x00 000 000 0000
(b) If to Xxxxx & Nephew
Group plc: Xxxxx & Nephew Group plc.
Attn. of Company Secretary
122 Moulin de la Xxxxx
XX-1236 Cartigny, Geneva
Switzerland
with copies to:
Xxxxx & Nephew plc.
Attn. of Company Secretary
Xxxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Facsimile: x00 000 000 0000
(b) If to InCentive: InCentive Asset Management AG
Xxxxxxxxxxx 00
0000 Xxxxxx
Xxxxxxxxxxx
Facsimile: + 41 1 205 93 05
with copies to:
Lombard Odier Darier Xxxxxxx & Cie
Zurich Branch
Attn. of Xx. Xxxxx Xxxxxxx
Xxxxxxxxxxx 00
XX-0000 Xxxxxx
Xxxxxxxxxxx
Facsimile: x00 0 000 00 00
Xxxx & Staehelin
Attn. of Xx. Xxxxxx Tschani
Xxxxxxxxxxx 00
XX-0000 Xxxxxx
Xxxxxxxxxxx
Facsimile: x00 0 000 00 00
Any notice, request or instruction made under or in connection with
this Agreement shall be deemed to have been delivered on the Business
Day on which it has been dispatched or the fax confirmation been
received by the Party making such notice, request or instruction.
8.5. Confidentiality and Press Releases
Without the prior written consent of the other Party, either Party
shall not disclose to any third party and keep in strict confidence
this Agreement and its contents and shall not publish any press release
or make any public announcement in respect of the transactions
contemplated by this Agreement, unless any such disclosure, press
release or public announcement is required under applicable laws or
stock exchange regulations or ordered by any competent judicial or
regulatory authority or by any competent stock exchange (in which case
the Parties shall, to the extent permissible, consult with each other
prior to any such disclosure).
8.6. Assignment
None of the Parties shall assign this Agreement or any rights or
obligations under this Agreement to any third party without the prior
written consent of all of the other Parties.
8.7. Cost and Expenses; Taxes
Subject to Section 8.7, each Party shall bear all cost, expenses and
taxes incurred by it in connection with the transactions contemplated
by this Agreement, provided that (a) Xxxxx & Nephew shall bear and pay
the Swiss securities transfer tax (Umsatzabgabe) and any transfer cost
and expenses resulting from the transfer of InCentive Shares and
Centerpulse Shares to Xxxxx & Nephew or Xxxxx & Nephew Shares to the
Shareholders, and (b) the transaction cost and expenses incurred by
InCentive shall be subtracted in calculating the Adjusted NAV.
8.8. Break-up Fee
8.8.1. Xxxxx & Nephew, and not, for the avoidance of doubt, in any
circumstances, Xxxxx & Nephew Group plc, shall pay to InCentive a lump
sum cost reimbursement of CHF 4 million in the event that the Public
Tender Offer is not successful for a reason attributable to (i) the
failure of Xxxxx & Nephew to publish the Pre-Announcement or any other
material breach of this Agreement by Xxxxx & Nephew, (ii) the
contravention by Xxxxx & Nephew of any applicable laws and regulations
applying to the Public Tender Offer, or (iii) the non-satisfaction of
the conditions listed in par. g) of the conditions section of the
Pre-Announcement. The cost reimbursement is agreed for the sole
purpose of compensating InCentive for frustrated actions and
negotiation expenses and is not intended in any way whatsoever to
coerce Xxxxx & Nephew into completing the Public Tender Offer. Nothing
contained in this Section 8.8.1 shall be deemed or construed to
restrict the right of InCentive or the Shareholders to request
specific performance or claim damages in excess of CHF 4 million.
8.8.2. InCentive shall pay to Xxxxx & Nephew a lump sum cost reimbursement of
CHF 4 million in the event that the Public Tender Offer is not
successful for a reason attributable to (i) a material breach by
InCentive of this Agreement, (ii) the contravention by InCentive of
any applicable laws and regulations applying to the Public Tender
Offer, or (iii) the non-satisfaction of the conditions listed in par.
c) of the conditions section of the Pre-Announcement, or (iv) the
successful completion of a competing public tender offer for InCentive
Shares by a third party. The cost reimbursement is agreed for the sole
purpose of compensating Xxxxx & Nephew for frustrated actions and
negotiation expenses. Nothing contained in this Section 8.8.2 shall be
deemed or construed to restrict the right of Xxxxx & Nephew to request
specific performance or claim damages in excess of CHF 4 million.
9. APPLICABLE LAW AND DISPUTE RESOLUTION
9.1. This Agreement is subject to and governed by Swiss substantive law.
9.2. Any disputes arising out of or in connection with this Agreement,
including disputes regarding its conclusion, binding effect, amendment
and termination, shall be finally resolved to the exclusion of the
ordinary courts by a three-person arbitral tribunal in accordance with
the International Arbitration Rules of the Zurich Chamber of Commerce.
The arbitration shall be conducted in English and the place of
arbitration shall be Zurich.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
above written.
Xxxxx & Nephew plc
/s/ Xxxxx X'Xxxxxxx /s/ Xxxxx Xxxxxx
--------------------------------- --------------------------------------
Name: Mr. Xxxxx X'Xxxxxxx Name: Xx. Xxxxx Xxxxxx
Title: Chief Executive Officer Title: Finance Director
Meadowclean Limited
/s/ Antoine Vidts /s/ Xxxxxx Xxxxxxxx
--------------------------------- --------------------------------------
Name: Xx. Xxxxxxx Vidts Name: Xx. Xxxxxx Xxxxxxxx
Title: Director Title: Director
InCentive Capital AG
/s/ Xxxx Xxxxx /s/ Xxxxxx Xxxxx
--------------------------------- --------------------------------------
Name: Xx. Xxxx Xxxxx Name: Xx. Xxxxxx Xxxxx
Title: Director Title: Member of the Managing Board
SCHEDULE (D)
CENTERPULSE SHARES AND CALL OPTIONS
ON CENTERPULSE SHARES OF INCENTIVE AT THE SIGNING DATE
As of the Signing Date, InCentive holds Centerpulse Shares and Centerpulse
Share Options as follows:
Mango Shares:
No. of Shares %
1,554,577.... 13.140
Call Options on Mango Shares:
No.
Counter-party of Options Strike Price (CHF) Expiry No. of Mango Shares %
------------- ---------- ------------------ ---------- ------------------- ----
UBS.......... 200,000 200.00 04/10/2003 200,000 1.69
ABN.......... 80,000 195.00 04/10/2003 80,000 0.68
ABN.......... 160,000 215.00 04/10/2003 160,000 1.35
Credit Suisse 100,000 220.00 04/10/2003 100,000 0.85
LBF.......... 38,000 240.00 05/15/2003 38,000 0.32
ABN.......... 105,000 230.00 05/21/2003 105,000 0.89
Total........ 683,000 683,000 5.77
Aggregate:
No. %
Shares:. 1,554,577 13.140
Options: 683,000 5.773
Total:.. 2,237,577 18.913
Schedule 1
DEFINED TERMS
The capitalised terms used in the Agreement shall have the meaning ascribed to
them in this Schedule 1.
"Accepting Shareholders" shall have the meaning set forth in Section 2.2.
"Acquisition Transaction" shall have the meaning set forth in Section 3.1.
"Adjusted NAV" shall have the meaning set forth in Section 2.2.
"Available Shares" shall have the meaning set forth in Section 2.2.
"Agreement" shall mean this agreement including all Schedules.
"Business Day" shall mean a day on which SWX Swiss Exchange is open for normal
trading.
"Centerpulse" shall have the meaning set forth in Recital B.
"Centerpulse Holding" shall have the meaning set forth in Section 2.2.
"Centerpulse Pre-Announcement" shall mean the pre-announcement in respect of
the Centerpulse Tender Offer contained in Schedule 2.4(b).
"Centerpulse Shares" shall have the meaning set forth in Recital (B).
"Centerpulse Tender Offer" shall have the meaning set forth in Recital (C).
"CHF" shall mean Swiss Francs, being the lawful currency of Switzerland.
"CO" shall mean the Swiss Code of Obligations (Obligationenrecht) of 30 March
1911, as amended.
"Excess Shares" shall have the meaning set forth in Section 2.2.
"Expert" shall have the meaning set forth in Section 3.4.2.
"GBP" shall mean British Pound Sterling, being the lawful currency of the
United Kingdom.
"HK" shall mean Xxxx Xxxxxx.
"III" shall mean III Institutional Investors International Corp.
"InCentive" means InCentive Capital AG, as set out on the cover page of the
Agreement and in Recital (D).
"InCentive Shares" shall have the meaning set forth in Recital (D).
"Interim Financials" shall have the meaning set forth in Section 3.11.
"Offer Documents" shall have the meaning set forth in Section 2.4(a).
"Offer Period" shall mean the period during which the Public Tender Offer is
open for acceptance by the InCentive shareholders according to article 14 (3)
and (4) TOO (Angebotsfrist), excluding, for the avoidance of doubts, the
Statutory Extension Period (Nachfrist).
"Offer Price" shall have the meaning set forth in Section 2.2.
"Offer Prospectus" shall have the meaning set forth in Section 2.4(a).
"Party" shall mean any of, and "Parties" shall mean all of, the parties listed
on the cover sheet of this Agreement.
"Pre-Announcement" shall have the meaning set forth in Section 2.1.2.
"Public Tender Offer" shall have the meaning set forth in Section 2.1.1.
"RB" shall mean Xxxx Xxxxxxxxx.
"Representatives" shall mean RB and HK in their capacity as members of the
board of directors of InCentive.
"Schedule" shall mean each schedule attached to this Agreement.
"Section" shall mean a section of this Agreement.
"SESTA" shall mean the Stock Exchange and Securities Trading Act (Bundesgesetz
uber die Borsen und den Effektenhandel) of 24 March 1995, as amended.
"SESTO-FBC" shall mean the Stock Exchange and Securities Trading Ordinance of
the Federal Banking Commission (Borsenverordnung-EBK) of 25 June 1997, as
amended.
"Settlement Date" shall mean the day on which the Public Tender Offer is
settled (vollzogen) for the first time.
"Shareholder" shall mean any of, and "Shareholders" shall mean all of, RB, HK,
Z and III.
"Signing Date" shall mean the date of this Agreement.
"Xxxxx & Nephew" shall mean Xxxxx & Nephew plc. or Xxxxx & Nephew Group plc.,
as set out on the cover page of this Agreement and in Recitals (C).
"Xxxxx & Nephew Shares" shall have the meaning set forth in Recital (C)
"Statutory Extension Period" shall mean the additional acceptance period of 10
Business Days following completion (Zustandekommen) of the Public Tender Offer
according to article 14 (5) TOO (Nachfrist).
"Tender Agreement" shall have the meaning set forth in Recital (F).
"TOO" shall mean the Takeover Ordinance of the Takeover Commission (Verordnung
der Ubernahmekommission uber offentliche Kaufangebote) of 21 July 1997, as
amended.
"Treasury Shares" shall have the meaning set forth in Section 2.2.
"Z" shall mean "Zurich" Versicherungs-Gesellschaft.
Schedule 2.1.2
PRE-ANNOUNCEMENT
Pre-annoucement of 20 March 2003
Translated from German
Pre-announcement of the Public Tender Offer
by
Xxxxx & Nephew plc, London, UK
(Xxxxx & Nephew plc will launch the public tender offer through a new parent
company of Xxxxx & Nephew plc to be listed on the London Stock Exchange and the
SWX Swiss Exchange. Xxxxx & Nephew plc will guarantee and be fully liable for
the obligations of the offeror)
for all the publicly held
Bearer Shares of InCentive Capital AG, Zug, with a nominal value of CHF 20 each
Introduction
Xxxxx & Nephew plc ("Xxxxx & Nephew") intends to launch a public tender offer
(the "InCentive Offer") on or about 16 April 2003 in accordance with art. 22 et
seq. of the Federal Act on Stock Exchanges and Securities Trading for all of
the publicly held bearer shares in InCentive Capital AG ("InCentive") with a
nominal value of CHF 20 each ("InCentive Shares").
Current Situation
On 20 March 2003, Xxxxx & Nephew and Centerpulse AG, Zurich, ("Centerpulse")
entered into a transaction agreement (the "Centerpulse Transaction Agreement")
in which they agreed to combine their businesses to create a leading global
orthopaedics company. Under the Centerpulse Transaction Agreement, Xxxxx &
Nephew has undertaken to achieve this combination by way of a share and cash
offer (the "Centerpulse Offer") for all publicly held registered shares in
Centerpulse with a nominal value of CHF 30 each (the "Centerpulse Shares") by
Xxxxx & Nephew.
Xxxxx & Nephew has today released a separate pre-announcement relating to the
Centerpulse Offer.
InCentive is the largest shareholder of Centerpulse and holds, or has the right
to hold (after the exercise of its call options and lapse of related put
options), approximately 18.9% of the share capital of Centerpulse. On 20 March
2003, Xxxxx & Nephew and InCentive entered into a transaction agreement (the
"InCentive Transaction Agreement"). Under the InCentive Transaction Agreement,
Xxxxx & Nephew has undertaken to acquire, inter alia, InCentive's 18.9%
interest in Centerpulse by way of a share and cash offer for InCentive through
Xxxxx & Nephew Group plc, the proposed new holding company of Xxxxx & Nephew,
which will be a UK registered public company, resident in Switzerland, and
listed on the London Stock Exchange, with a secondary listing on the SWX Swiss
Exchange. All references to Xxxxx & Nephew in this pre-announcement therefore
include Xxxxx & Nephew Group plc or mean Xxxxx & Nephew Group plc if the
context so requires.
On the same date, Xxxxx & Nephew entered into a tender agreement (the "Tender
Agreement") with the principal shareholders of InCentive, namely Zurich
Insurance Company, III Institutional Investors Corp., Xx. Xxxx Xxxxxxxxx and
Xx. Xxxx Xxxxxx (the "Principal Shareholders"), who together hold approximately
77% of InCentive's share capital. Under this Tender Agreement, the Principal
Shareholders have irrevocably undertaken, inter alia, to tender their InCentive
Shares under the InCentive Offer.
Offer Price
The offer price for each InCentive Share shall be a+b where:
c
a = the total amount of Xxxxx & Nephew shares (the "Xxxxx & Nephew Shares")
and the amount of cash that would be payable under the Centerpulse Offer
for the Centerpulse Shares held by InCentive (the "Centerpulse Holding");
b = the adjusted net asset value (positive or negative) of InCentive (the
"Adjusted NAV") calculated as at the last day of the InCentive Offer
period but excluding the Centerpulse Holding and attributing no value to
any InCentive Shares held by InCentive or its subsidiaries (the
"Treasury Shares"), as confirmed by InCentive's auditors;
c = the total number of InCentive Shares in issue on the last day of the
InCentive Offer period less the number of Treasury Shares on that date.
The consideration for each InCentive Share will consist of (i) an element of
Xxxxx & Nephew Shares and cash which will mirror InCentive's Centerpulse
Holding; plus or minus (ii) the cash attributable to Adjusted NAV of InCentive
excluding the Centerpulse Holding. If the Adjusted NAV is negative, then the
cash element attributable to the Centerpulse Holding shall be reduced, pro
tanto, and if after such reduction there is still a negative balance, the
number of Xxxxx & Nephew Shares to be issued shall be reduced by a
corresponding amount.
The offer price will be adjusted for any dilutive effects in respect of the
InCentive Shares (to the extent they have not been reflected in the Adjusted
NAV) or the Xxxxx & Nephew Shares (save for shares issued for management
options issued under the Xxxxx & Nephew employee share schemes and disclosed in
the Xxxxx & Nephew financial statements for the financial year 2002), including
dividend payments (save for dividends already declared by Xxxxx & Nephew or an
interim dividend hereafter declared by Xxxxx & Nephew in the normal course
consistent with past practice), capital increases below market value, or the
issuance of options (save for management options issued under the Xxxxx &
Nephew employee share schemes in the normal course consistent with past
practice), warrants, convertible securities and other rights of any kind to
acquire InCentive Shares or Xxxxx & Nephew Shares as the case may be.
The consideration payable for the Centerpulse Shares under the Centerpulse
Offer pre-announced today by Xxxxx & Nephew comprises for each Centerpulse
registered share with a nominal value of CHF 30:
.. 25.15 Xxxxx & Nephew Shares; and
.. CHF 73.42 in cash
Mix and Match
Accepting InCentive shareholders under the InCentive Offer and accepting
Centerpulse shareholders under the Centerpulse Offer (together the "Accepting
Shareholders") may elect to take fewer Xxxxx & Nephew Shares or more Xxxxx &
Nephew Shares than their basic entitlement under the relevant Offer, but
elections under both Offers (taken together) to take more Xxxxx & Nephew Shares
(together the "Excess Shares") will only be satisfied to the extent that
elections have been made under both Offers (taken together) by Accepting
Shareholders to take fewer Xxxxx & Nephew Shares (together referred to as the
"Available Shares"). The Available Shares will be allocated to the applicants
for Excess Shares in proportion to the number of Excess Shares applied for. If
the total number of Available Shares exceeds the total number of Excess Shares
applied for, the Available Shares shall be limited to an amount equal to the
Excess Shares. Once the share allocations have been determined, the cash
element of the consideration will be reduced or increased (as the case may be)
for each Accepting Shareholder who has been allocated an increased or reduced
number of Xxxxx & Nephew Shares. All calculations shall be made by reference to
the number of acceptances and elections as of the last day of the additional
acceptance period.
Offer Period
The offer prospectus for the InCentive Offer is likely to be published on or
about 16 April 2003.
It is intended that the InCentive Offer will remain open for 40 trading days,
i.e. probably from 16 April 2003 until 4pm CET on 17 June 2003. Xxxxx & Nephew
reserves the right to extend the offer period beyond 40 trading days with the
prior approval of the Swiss Takeover Board.
Conditions
The InCentive Offer is expected to be subject to the following conditions:
a) All conditions of the Centerpulse Offer having been satisfied or waived by
Xxxxx & Nephew.
b) The General Meeting of InCentive shareholders having:
i) received the resignation of all current members of InCentive's board of
directors or required these to resign and elected the persons proposed
by Xxxxx & Nephew as new members of the board of directors, subject to
all other conditions to this offer being accepted or waived by Xxxxx &
Nephew; and
ii) to the extent required approved the InCentive Transaction Agreement and
the actions contemplated thereunder.
c) Xxxxx & Nephew having received valid acceptances for at least 80% of the
InCentive Shares outstanding at the expiry of the (possibly extended) offer
period.
d) No court or regulatory authority having issued a decision or an order which
prohibits the InCentive Offer or its completion or renders this offer or its
completion unlawful.
e) InCentive or any of its subsidiaries not having disposed, or agreed to
dispose (including acceptance of any offer), of any Centerpulse Shares held
by it or its subsidiaries and not having become obliged to do so, save for
any such transfer within the InCentive group.
f) Until the end of the (possibly extended) offer period no litigation
proceedings having been initiated against InCentive and its subsidiaries
which have not been made public prior to the date hereof and which are
neither insured nor provisioned for in the consolidated balance sheet of
InCentive and whose amount in dispute is in excess of CHF 35 million in the
aggregate.
3
g) The General Meetings of Xxxxx & Nephew shareholders having passed the
necessary resolutions to effect a Court Scheme under which Xxxxx & Nephew
will become a wholly owned subsidiary of Xxxxx & Nephew Group plc, and the
Court Scheme having become effective.
Xxxxx & Nephew reserves the right to waive one or more of the conditions set
out above other than condition g), either in whole or in part, and to withdraw
the InCentive Offer if one or more of the above conditions is not met.
Restrictions
General
This offer will not be made in any country where such offer would be considered
illegal or would otherwise violate any applicable law or regulation or where
Xxxxx & Nephew may be obliged to change the terms of the offer, to file an
additional application with any authorities or other institutions or to
undertake additional measures in relation to this offer. It is not foreseen to
extend the offer to such jurisdictions. Documents in relation to this
transaction must not be distributed in such jurisdictions or sent to such
jurisdictions. Persons in such jurisdictions must not use these documents for
marketing purposes for sales of shares of InCentive.
US Sales Restrictions
This offer will not be made in or into the United States of America and may
only be accepted outside the United States of America. Accordingly, copies of
this pre-announcement are not being made and should not be mailed or otherwise
distributed or sent in or into or from the United States of America and persons
receiving this pre-announcement (including custodians, nominees and trustees)
must not distribute or send them into or from the United States of America.
Information
Detailed information on the InCentive Offer is expected to be published on or
about 16 April 2003 in the same media.
Identification
Securities No. ISIN Bloomberg
Bearer shares InCentive Capital AG 286089 CH0002860895 INC SW
Registered shares Xxxxx & Nephew plc 922320 GB0009223206 SN LN
Registered shares Centerpulse AG 654485 CH0006544859 CEPN SW
For the bank entrusted with the technical execution of the offer:
Lombard Odier Darier Xxxxxxx & Cie
4
Schedule 2.2
DETERMINATION OF THE ADJUSTED NAV
The Adjusted NAV shall be determined according to this Schedule:
1. Except as otherwise set forth in this Schedule, the Adjusted NAV shall be
determined and calculated by applying the methods and principles that were
applied by InCentive in determining its net asset value prior to the Signing
Date on a consistent basis.
2. The Adjusted NAV shall be net of the impact of any distributions
(Ausschuttungen), if any, per InCentive Share made by InCentive from the
Signing Date until the Settlement Date.
3. All and any transaction costs payable by InCentive in connection with the
Agreement or the transactions contemplated by the Agreement shall be
deducted from the Adjusted NAV.
4. Treasury Shares shall not be taken into account in calculating the Adjusted
NAV.
5. For the avoidance of doubt, the value of Centerpulse Shares is excluded from
the definition of the Adjusted NAV and is accordingly not included in the
calculation of the Adjusted NAV.
6. A liability of InCentive under section Error! Reference source not found. of
the Transaction Agreement shall be included as a liability in the
determination of the Adjusted NAV.
Schedule 2.2
CENTERPULSE PRE-ANNOUNCEMENT
Pre-announcement of 20 March 2003 (Translated from German)
Pre-announcement of the Public Tender Offer
By
Xxxxx & Nephew plc, London, UK
(Xxxxx & Nephew plc will launch the public tender offer through a new parent
company of Xxxxx & Nephew plc to be listed on the London Stock Exchange and the
SWX Swiss Exchange. Xxxxx & Nephew plc will guarantee and be fully liable for
the obligations of the offeror)
for all the publicly held
Registered Shares of Centerpulse AG, Zurich, with a nominal value of CHF 30 each
INTRODUCTION
Xxxxx & Nephew plc ("Xxxxx & Nephew") intends to launch a public tender offer
(the "Centerpulse Offer") on or about 16 April 2003 in accordance with art. 22
et seq. of the Federal Act on Stock Exchanges and Securities Trading for all of
the publicly held registered shares in Centerpulse AG ("Centerpulse") with a
nominal value of CHF 30 each.
The Centerpulse Offer will be made available to all shareholders on
substantially the same terms and conditions but for regulatory reasons will
take the form of (a) a public public tender offer in Switzerland applicable to
all holders of Centerpulse shares not located in the United States in
accordance with the Swiss Stock Exchanges and Securities Trading Act and its
implementing rules and regulations; and (b) a public tender offer in the United
States (the "US Offer") applicable only to holders of Centerpulse shares
(including the Centerpulse shares represented by American Depositary Shares,
"ADSs") located in the United States in accordance with the Securities Exchange
Act of 1934, as amended, and the Securities Act of 1933, as amended.
CURRENT SITUATION
On 20 March 2003, Xxxxx & Nephew and Centerpulse entered into a transaction
agreement (the "Centerpulse Transaction Agreement") in which they agreed to
combine their businesses to create a leading global orthopaedics company. Under
the Centerpulse Transaction Agreement, Xxxxx & Nephew has undertaken to achieve
this combination by way of a share and cash offer for Centerpulse by Xxxxx &
Nephew through Xxxxx & Nephew Group plc, the proposed new holding company of
Xxxxx & Nephew, which will be a UK registered public company, resident in
Switzerland, and listed on the London Stock Exchange, with a secondary listing
on the SWX Swiss Exchange. All references to Xxxxx & Nephew in this
pre-announcement therefore include Xxxxx & Nephew Group plc or mean Xxxxx &
Nephew Group plc if the context so requires.
At the same time, Xxxxx & Nephew entered into a separate transaction agreement
(the "InCentive Transaction Agreement") with InCentive Capital AG
("InCentive"). Under the InCentive Transaction Agreement, Xxxxx & Nephew has
undertaken to procure that Xxxxx & Nephew Group plc launches a public tender
offer (the "InCentive Offer") on or about 16 April 2003 for all outstanding
bearer shares in InCentive.
InCentive, an investment company listed on the SWX Swiss Exchange, holds, or
has the right to hold (after the exercise of its call options and lapse of
related put options), approximately 18.9% of the share capital of Centerpulse.
Shareholders representing 77% of InCentive's issued share capital have given
irrevocable undertakings to accept the InCentive Offer. InCentive's portfolio
is currently being rationalised so as to comprise Centerpulse shares and cash,
and the terms of the InCentive Offer will be such that in respect of its
holding in Centerpulse they will reflect the terms of Xxxxx & Nephew's offer
for Centerpulse itself. InCentive shareholders will, therefore, not receive a
premium for the Centerpulse shares held by InCentive in relation to the other
Centerpulse shareholders.
Xxxxx & Nephew has today released a separate pre-announcement relating to the
InCentive Offer.
OFFER PRICE
The price offered for each Centerpulse registered share with a nominal value of
CHF 30 comprises:
.. 25.15 Xxxxx & Nephew shares; and
.. CHF 73.42 in cash
The offer price will be adjusted for any dilutive effects in respect of the
Centerpulse shares or the Xxxxx & Nephew shares (save for shares issued for
management options issued under the Centerpulse or Xxxxx & Nephew employee
share schemes and disclosed in the Centerpulse or Xxxxx & Nephew financial
statements for the financial year 2002), including dividend payments (save for
dividends already declared by Xxxxx & Nephew or an interim dividend hereafter
declared by Xxxxx & Nephew in the normal course consistent with past practice),
capital increases below market value, or the issuance of options (save for
management options issued under the Xxxxx & Nephew employee share schemes in
the normal course consistent with past practice), warrants, convertible
securities and other rights of any kind to acquire Centerpulse shares or Xxxxx
& Nephew shares as the case may be.
Mix and Match
Accepting Centerpulse shareholders under the Centerpulse Offer and accepting
InCentive shareholders under the InCentive Offer (together the "Accepting
Shareholders") may elect to take fewer Xxxxx & Nephew shares or more Xxxxx &
Nephew shares than their basic entitlement under the relevant Offer, but
elections under both Offers (taken together) to take more Xxxxx & Nephew shares
(together the "Excess Shares") will only be satisfied to the extent that
elections have been made under both Offers (taken together) by Accepting
Shareholders to take fewer Xxxxx & Nephew shares (together referred to as the
"Available Shares"). The Available Shares will be allocated to the applicants
for Excess Shares in proportion to the number of Excess Shares applied for. If
the total number of Available Shares exceeds the total number of Excess Shares
applied for, the Available Shares shall be limited to an amount equal to the
Excess Shares. Once the share allocations have been determined, the cash
element of the consideration will be reduced or increased (as the case may be)
for each Accepting Shareholder who has been allocated an increased or reduced
number of Xxxxx & Nephew shares. All calculations shall be made by reference to
the number of acceptances and elections as of the last day of the additional
acceptance period.
OFFER PERIOD
The offer prospectus for the Centerpulse Offer is likely to be published on or
about 16 April 2003.
It is intended that the Centerpulse Offer will remain open for 40 trading days,
i.e. probably from 16 April 2003 until 4pm CET on 17 June 2003. Xxxxx & Nephew
reserves the right to extend the offer period - with the prior approval of the
Swiss Takeover Board - beyond 40 trading days.
CONDITIONS
The Offer is expected to be subject to the following conditions:
1. The General Meetings of Xxxxx & Nephew shareholders having:
a. approved the transactions contemplated by the Centerpulse Transaction
Agreement; and
b. passed the necessary resolutions to effect a Court Scheme under which
Xxxxx & Nephew will become a wholly owned subsidiary of Xxxxx & Nephew
Group plc
and the Court Scheme having become effective.
2. The Xxxxx & Nephew shares to be issued in connection with the Centerpulse
Offer having been admitted to the Official List of the United Kingdom
Listing Authority and to trading on the London Stock Exchange plc and the
listing of the additional ADSs of Xxxxx & Nephew on the New York Stock
Exchange to be issued in connection with the US Offer having been approved.
3. All competent EU, US and other foreign authorities having approved and/or
granted clearance of the acquisition of Centerpulse without a party being
required to meet any condition or requirement giving rise to (a) costs
and/or loss of earnings before interest, tax and amortisation ("EBITA") in
excess of CHF 23 million in the aggregate; or (b) a decrease in consolidated
turnover of CHF 75 million in the aggregate of the Combined Group. In
addition, no other orders or directions by any court or other authority
prohibiting the completion of the Centerpulse Offer having been issued.
4. The Registration Statement on Form F-4 to be filed by Xxxxx & Nephew with
the Securities and Exchange
3
Commission ("SEC") in connection with the US Offer (the "Registration
Statement") having become effective in accordance with the provisions of the
US Securities Act; no stop order suspending the effectiveness of the
Registration Statement having been issued by the SEC and no proceedings for
that purpose having been initiated by the SEC and not concluded or withdrawn.
5. Xxxxx & Nephew having received valid acceptances for at least 75% of the
total number of the Centerpulse shares outstanding (including Centerpulse
shares represented by ADSs and, provided the InCentive Offer has become
unconditional, Centerpulse Shares held by InCentive) on a fully diluted
basis at the expiry of the (possibly extended) offer period.
6. Three of Centerpulse's current board members having resigned from
Centerpulse's board of directors subject to completion of the Centerpulse
Offer, and the other board members having entered into a fiduciary
arrangement with Xxxxx & Nephew covering the period until a Centerpulse
General Meeting will have resolved to elect the persons proposed by Xxxxx &
Nephew to the board of directors of Centerpulse, subject to completion of
the Centerpulse Offer.
7. Centerpulse until the end of the (possibly extended) offer period (save for
extensions beyond the statutory 40 day trading period solely as a result of
the Court Scheme not having become effective) not having:
a. become subject to a mandated recall for a product, the consolidated
turnover of which product family exceeded CHF 75 million in
Centerpulse's consolidated prior year results and such recall having
resulted, or, according to the opinion of an investment bank or
accounting firm of international repute to be appointed by Xxxxx &
Nephew with the consent of Centerpulse (the "Expert"), likely to result,
in costs and/or loss of EBITA (after insurance payable to Centerpulse)
in excess of CHF 23 million; or
b. suffered a disablement of its manufacturing facilities in Winterthur or
Austin having resulted, or, according to the opinion of the Expert,
likely to result, in costs and/or loss of EBITA (after insurance payable
to Centerpulse) in excess of CHF 23 million.
Xxxxx & Nephew reserves the right to waive one or more of the conditions set
out above (other than condition 1, 2, 3 as to the requirement to obtain merger
approval as such and 4) either in whole or in part, or to withdraw the
Centerpulse Offer if one or more of the above conditions is not met.
SALES RESTRICTIONS
This pre-announcement is not being made, directly or indirectly, in or into, or
by use of the mails or by any means or instrumentality (including, without
limitation, telephonically or electronically) of interstate or foreign commerce
of, or of any facility of a national securities exchange of, Canada, Australia
or Japan. Accordingly, copies of this document and any related documents are
not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from, Canada, Australia or Japan
and persons receiving this document and any related documents (including
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send it in or into or from, Canada, Australia or Japan.
Relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus
will be lodged with, or registered by, the Australian Securities and
Investments Commission or the Japanese Ministry of Finance; and the new Xxxxx &
Nephew shares will not be registered under or offered in compliance with
applicable securities laws of any state, province, territory or jurisdiction of
Canada, Australia or Japan. Accordingly, the new Xxxxx & Nephew shares may not
(unless an exemption under relevant securities laws is applicable) be offered,
sold, resold or delivered, directly or indirectly in or into Canada, Australia
or Japan or any other jurisdiction as to do so may constitute a violation of
the relevant laws of, or require registration thereof in such jurisdiction or
to, or for the account or benefit of, a person in or resident in Canada,
Australia or Japan.
Any offer in the United States will only be made through a prospectus which is
part of a registration statement on Form F-4 to be filed with the SEC.
Centerpulse shareholders who are US persons or are located in the United States
are urged to carefully review the registration statement on Form F-4 and the
prospectus included therein, the Schedule TO and other documents relating to
the Centerpulse Offer that will be filed by Xxxxx & Nephew with the SEC because
these documents will contain important information relating to the Centerpulse
Offer. You are also urged to read the related solicitation/recommendation
statement on Schedule 14D-9 that will be filed with the SEC by Centerpulse
relating to the Centerpulse Offer. You may obtain a free copy of these
documents after they have been filed with the SEC, and other documents filed by
Xxxxx & Nephew and Centerpulse with the SEC, at the SEC's Web site at
xxx.xxx.xxx. Once the registration statement on Form F- 4, as well as any
documents incorporated by reference therein, the Schedule TO and the Schedule
14D-9 are filed with the SEC, you will also be able to inspect and copy these
documents at the public reference room maintained by the SEC at 000 Xxxxx
Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000. Please call the SEC at 1-800-SEC- 0330 for
further information about the public reference room. YOU SHOULD READ THE
PROSPECTUS
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AND THE SCHEDULE 14D-9 CAREFULLY BEFORE MAKING A DECISION CONCERNING THE OFFER.
INFORMATION
Detailed information on the Centerpulse Offer is expected to be published on or
about 16 April 2003 in the same media.
IDENTIFICATION
SECURITIES
NO. ISIN BLOOMBERG
. Registered share of Centerpulse AG.... 654485 CH0006544859 CEPN SW
. Registered share of Xxxxx & Nephew plc 922320 GB0009223206 SN LN
. Bearer share of InCentive Capital AG.. 286089 CH0002860895 INC SW
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