Filed by Medtronic, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933, as amended.
Subject Company: Cyberonics, Inc.
Commission File No.: 0-19806
F O R I M M E D I A T E R E L E A S E
MEDTRONIC CONFIRMS PROPOSAL TO ACQUIRE CYBERONICS FOR $26 PER SHARE IN STOCK
MINNEAPOLIS, MN, September 11, 2000 - Medtronic, Inc. (NYSE: MDT),
today confirmed that it has made a proposal to acquire Cyberonics, Inc. (NASDAQ:
CYBX), for $26 per share in Medtronic stock. Medtronic believes that its
proposed strategic acquisition of Cyberonics, the market leader in medical
devices for the treatment of epilepsy, would be beneficial for the many
sufferers of that disease and the physicians who treat it, as well as for the
shareholders of both companies.
Medtronic Chairman and Chief Executive Officer William W. George, on behalf of
his company's Board of Directors, first outlined the company's proposal to
acquire Cyberonics in a letter dated July 17, 2000 to Robert (Skip) Cummins,
chief executive officer of Cyberonics. Medtronic reiterated the proposal in a
follow-up letter on August 9, 2000 to the entire Cyberonics Board of Directors.
The companies subsequently held a series of meetings to discuss a possible
transaction but were unable to come to agreement.
Based on those discussions, and an analysis of current and future prospects of
Cyberonics, Medtronic remains confident that its July 17 offer of $26 in stock
per Cyberonics share, a 62% premium over Cyberonics' September 8 closing price
of $16.0625, is an attractive and appropriate proposal.
Medtronic remains interested in pursuing a negotiated transaction with
Cyberonics.
Cyberonics, with fiscal 2000 sales of $48 million and a net loss of $4 million,
has pioneered vagus nerve stimulation technology for the treatment of epilepsy
and possibly other neurological disorders. The company is based in Houston, TX.
Medtronic, Inc., headquartered in Minneapolis, is the world's leading medical
technology company, providing lifelong solutions for people with chronic
disease. Its Internet address is www.medtronic.com.
Prior to the consummation of any negotiated transaction involving Medtronic,
Inc. ("Medtronic") and Cyberonics, Medtronic would expect to file a registration
statement with the U.S. Securities and Exchange Commission (the "SEC") and
Cyberonics would be expected to file a proxy statement. Shareholders are urged
to read the registration statement and proxy statement (when available) because
they will contain important information about the companies and the proposed
transaction. Investors and shareholders will be able to obtain copies of these
documents (when available), along with other documents filed by the companies
with the SEC, free of charge, through the web site maintained by the SEC at
http://www.sec.gov. Shareholders can also obtain, free of charge, copies of the
registration statement and proxy statement (when available) along with any
documents Medtronic has filed with the SEC by contacting the Medtronic Investor
Relations Department.
<PAGE>
[THE FOLLOWING LETTERS ARE THE LETTERS REFERRED TO IN THE PRECEDING
PRESS RELEASE.]
PERSONAL AND CONFIDENTIAL
July 17, 2000
Mr. Robert P. Cummins
President & Chief Executive Officer
Cyberonics, Inc.
16511 Space Center Blvd.
Suite 600
Houston, TX 77058
Dear Robert:
As you know, we have long admired Cyberonics' technology and potential,
and we have on several occasions expressed an interest in a possible combination
of our two companies. Earlier this year, we discussed with you a proposal to
acquire Cyberonics through a negotiated transaction offering substantial and
unique benefits to Cyberonics' shareholders, patients and the medical community.
At that time, you were not willing to consider our proposal.
Medtronic continues to believe this is a compelling transaction for
both of our companies' shareholders, for the many sufferers of epilepsy, and for
the physicians who treat it. This letter outlines our proposal to acquire
Cyberonics.
A transaction between our two companies would represent a unique
opportunity to address unmet medical needs for epilepsy and potentially other
chronic, debilitating diseases. Medtronic, as you know, is the world leader in
implantable device-based therapies to restore health, extend life and alleviate
pain. We market a vast range of implantable products in over 120 countries.
We're confident that, together, we could use Medtronic's extensive resources,
expertise and broad network of relationships to significantly increase the
market penetration of Cyberonics' existing epilepsy products. We could also
leverage Medtronic's strong research and product development capabilities (with
our $500-$600 million annual R&D budget) to advance new generations of
Cyberonics' products much faster than Cyberonics can on its own - improving the
lives of thousands of patients who are not responsive to traditional therapies.
To accomplish this compelling and worthwhile goal, we are prepared to
pay the shareholders of Cyberonics $26 per share in Medtronic stock in a
tax-free exchange. This represents an immediate 58% premium over Cyberonics'
closing share price on July 17, 2000 of $16 1/2. Importantly, Cyberonics'
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shareholders would have the opportunity to participate in the upside of
Medtronic' growth potential through receipt of our stock. Medtronic has
delivered consistent and exceptional returns for shareholders, with our stock
producing a compounded 36% annual return over the past 15 years, and we are well
positioned to continue delivering superior performance for our shareholders and
customers.
Given that our proposal is based solely upon public information, a
limited due diligence review would be required to confirm our view on valuation.
We understand that you may have specific views with respect to the value created
through this combination, and we welcome the chance to discuss our valuation
with you and your board.
This is intended to be a confidential proposal which is subject to the
execution of a definitive merger agreement, qualification for pooling of
interests accounting and receipt of customary approvals. In addition, we have
carefully studied the regulatory environment, and are confident that necessary
approvals can be obtained in a manner that both Cyberonics and Medtronic will
find acceptable.
We are hopeful that you will see the merit in a potential combination
of our two companies. Our understanding of a future together clearly drives our
willingness to pay a substantial value today to Cyberonics' stockholders while,
in addition, offering you and your fellow stockholders continued participation
through ownership of Medtronic stock.
We want to and are prepared to move forward rapidly toward a merger of
our two companies. To this end, our board has approved this proposal. Please
call me once you have reviewed our proposal with your board so that we can
respond to any questions you may have and determine how best to move forward
expeditiously.
Yours sincerely,
/s/ William W. George
Chairman & Chief Executive Officer
Medtronic, Inc.
<PAGE>
August 9, 2000
The Board of Directors
Cyberonics, Inc.
c/o Mr. Robert P. Cummins
President & Chief Executive Officer
16511 Space Center Blvd.
Suite 600
Houston, TX 77058
Dear Skip:
I appreciate your taking the time yesterday to come in and present what
are clearly exciting prospects for Cyberonics. As you know, we have for some
time been interested in a transaction between Medtronic and Cyberonics and the
meeting only served to strengthen that interest.
We continue to believe that a combination of Medtronic and Cyberonics
would be strategically and financially compelling for both of our companies and
our respective shareholders, and one which would provide significant benefits to
the many sufferers of epilepsy and the physicians who treat it and which may
provide those same benefits to the sufferers of depression. Based on our
meeting, we remain confident that our July 17 proposal to acquire Cyberonics for
$26 per share in Medtronic stock is an attractive and appropriate price. We
believe the $26 per share proposal, which represents a 97% premium to your
current market price, fully reflects the significant future potential you
outlined for Cyberonics. We understand that you have specific views with respect
to the value created by this transaction. As we gather more information about
your business, we would be amenable to reviewing our valuation. We would also be
prepared to discuss this offer with your Board in the very near future.
Medtronic/Cyberonics Combination
To reiterate, we believe a transaction between our two companies is so
compelling because:
o It represents a unique opportunity to address unmet medical needs for
epilepsy, depression and potentially other chronic, debilitating
diseases.
<PAGE>
o Medtronic is the world leader in implantable device-based therapies to
restore health, extend life and alleviate pain - marketing a vast range
of implantable products in over 120 countries. As such, we are uniquely
situated to best maximize the value of Cyberonics' leading Vagus Nerve
Stimulation (VNS) technology.
o Medtronic could use our extensive resources, expertise and broad
network of relationships to significantly increase the market
penetration of Cyberonics' existing epilepsy products. We could
significantly improve Cyberonics' less than 1% market penetration of
the 590,000 patients eligible for VNS implants in the U.S. and Europe.
o Medtronic could use our strong research and product development
capabilities (with our $500-$600 million annual R&D budget) to advance
new generations of Cyberonics' products much faster than Cyberonics can
on its own - improving the lives of thousands of patients who are not
responsive to traditional therapies.
An important component of our proposal is the fact that, through
receipt of Medtronic stock, Cyberonics' shareholders would have the opportunity
to participate in the upside of Medtronic's growth potential. Medtronic has
delivered consistent and exceptional returns for shareholders, with our stock
producing a compounded 37.5% annual return over the past 15 years, and we are
well positioned to continue delivering superior performance for our shareholders
and customers. We believe that consideration in the form of Medtronic stock
should be particularly attractive to your shareholders, given that Medtronic
stock has significantly outperformed the stock of Cyberonics.
Our proposed transaction would be tax-free to your shareholders and
treated as a pooling of interests. In addition, we have carefully studied the
regulatory environment, and are confident that necessary approvals can be
obtained.
Our understanding of a future together clearly drives our willingness
to pay a substantial value today to Cyberonics' shareholders while, in addition,
offering you and your fellow shareholders continued growth through ownership of
Medtronic stock.
Our Board of Directors has approved our proposal and has given us the
authority to move expeditiously.
I look forward to hearing from you.
Yours sincerely,
/s/ William W. George
Chairman & Chief Executive Officer
Medtronic, Inc.
