Filer: Thermo Cardiosystems Inc.
Subject Company: Thermo Cardiosystems Inc.
Subject Company Exchange Act File No.: 001-10114
Registration Statement No.: 333-
PRESS RELEASE:
Investor Contact: 781-622-1111
Media Contact: 781-622-1252
Thermo Cardiosystems and Thoratec Laboratories
Announce Merger Agreement
WOBURN, Mass., October 3, 2000 - Thermo Cardiosystems Inc. (ASE: TCA) announced
today that it has entered into a definitive merger agreement with Thoratec
Laboratories Corporation (NASDAQ: THOR). Under the terms of the agreement, each
issued and outstanding share of Thermo Cardiosystems stock will be exchanged for
0.835 shares of newly issued Thoratec stock. The companies expect that the
transaction will be treated as a tax-free exchange.
"We're delighted to join forces with a company that, like Thermo
Cardiosystems, has a long, proud history of developing new and innovative
heart-assist technologies for the treatment of heartfailure patients," said R.
Michael Kleine, chief executive officer of Thermo Cardiosystems. "The new
organization, to be called Thoratec Corporation, will bring together the
knowledge and resources of two dynamic and growing companies, and will greatly
improve our ability to develop, manufacture, and distribute our current and
next-generation HeartMate(R) left ventricular-assist systems."
The agreement includes Thermo Cardiosystems' International Technidyne and
Nimbus subsidiaries. Closing of the transaction, which is expected in the first
quarter of 2001, is subject to approval by shareholders of both companies,
regulatory approval, and usual conditions. As part of the agreement, Thermo
Electron will vote its shares in favor of the transaction.
Thoratec, based in Pleasanton, California, is engaged in the research,
development, manufacture, and marketing of medical devices for circulatory
support and vascular graft applications. Thoratec's VAD System is currently used
by approximately 150 leading hospitals around the world as a bridge to
transplant and for recovery of the natural heart following open heart surgery.
Its Vectra(TM) vascular access graft, which is used in patients undergoing
hemodialysis, is currently approved for sale in Europe, Japan, and a number of
other countries and is in final clinical trials in the U.S. Thoratec's Aria(TM)
coronary artery bypass graft, which is designed for use by patients having too
few suitable native blood vessels, is currently in clinical trials in the U.S.
and Canada.
D. Keith Grossman, president and chief executive officer of Thoratec,
said, "The proposed combination of these two successful companies will create a
world-class medical technology company and assure that we remain competitive
within the dynamic world of cardiac surgery and congestive heart failure. Both
companies have experienced strong growth in revenues and cash flow, and we
believe that the complementary nature of our products and technologies will
enable us to more effectively market our devices to the medical community. We
expect that customers of both companies will be enthusiastic about the current
and future benefits resulting from this transaction."
Thoratec reported revenues of $22.5 million in 1999 and $14.9 million for
the first six months of 2000. Thermo Cardiosystems had revenues of $79.1 million
in 1999 and $42.8 million for the first six months of 2000. The combined company
will have approximately 700 employees. Management of Thermo Cardiosystems will
continue to operate its facilities in Massachusetts, New Jersey, and California.
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Upon completion of the merger, Thermo Cardiosystems common stock will no
longer be traded on the American Stock Exchange. Thermo Cardiosystems' parent
company, Thermo Electron Corporation (NYSE: TMO), which owns approximately 23.1
million shares of Thermo Cardiosystems stock, will own approximately 34 percent
of Thoratec. The merger agreement includes a provision that restricts the sale
by Thermo Electron of the Thoratec shares it receives in this transaction. The
restriction lapses gradually over the 18-month period immediately following the
closing of the transaction, with no sales permitted prior to four months after
the closing.
Options to purchase Thermo Cardiosystems common stock would be assumed by
Thoratec and converted into options to purchase Thoratec common stock. Thermo
Cardiosystems' 4 3/4% convertible subordinated debentures due 2004 would be
assumed by Thoratec, although Thermo Electron would continue to guarantee these
debentures. As part of the agreement, Thoratec will segregate $45 million of
cash as security for this guarantee.
Separately, Thermo Cardiosystems announced that its results for the third
quarter of 2000 will be lower than anticipated, due in part to the uncertainty
related to the proposed sale of the company. Revenues for the third quarter were
approximately $19.3 million, compared with $19.7 million for the third quarter
of 1999. Thermo Cardiosystems intends to announce its full quarterly results on
October 30, 2000.
Thermo Cardiosystems has been advised by J.P. Morgan Securities Inc.
and Chase Securities Inc.
Thermo Cardiosystems will hold a conference call tomorrow, October 4, at
10 a.m. EDT. To listen, dial 888-872-9028 within the U.S., or 973-633-6740
outside the U.S. A recording will be available until October 11, 2000. To listen
to the replay, please call 888-463-5487 within the U.S., or 402-220-2923 outside
the country.
Thermo Cardiosystems Inc. is a leader in the research, development, and
manufacture of implantable left ventricular-assist systems (LVAS). Its
air-driven and electric HeartMate heart-assist devices are implanted alongside
the natural heart and take over the pumping function of the left ventricle for
patients whose hearts are too damaged or diseased to produce adequate blood
flow. Both devices are approved for commercial sale in the United States,
Europe, and Canada. The company also supplies whole-blood coagulation testing
equipment and related disposables, as well as single-use skin-incision devices.
Thermo Cardiosystems is a public subsidiary of Thermo Electron company. More
information is available on the Internet at http://www.thermocardio.com.
Other Important Information:
The transaction described in this announcement has not yet commenced. Once the
transaction commences, we will file a joint proxy statement/prospectus with the
Securities and Exchange Commission. You should read this document when it
becomes available because it will contain important information about the
transaction. You can obtain the joint proxy statement/prospectus and other
documents that will be filed with the Securities and Exchange Commission for
free when they are available on the Securities and Exchange Commission's web
site at http://www.sec.gov. Also, if you write us or call us at the below
address and phone number, we will send you the joint proxy statement/prospectus
for free when it is available.
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You can call us at (781) 622-1111, or write to us at:
Investor Relations Department
Thermo Cardiosystems Inc.
81 Wyman Street, P.O. Box 9046
Waltham, MA 02454-9046
The following constitutes a "Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995: This press release contains forward-looking
statements that involve a number of risks and uncertainties. Important factors
that could cause actual results to differ materially from those indicated by
such forward-looking statements are set forth under the heading "Forward-looking
Statements" in Exhibit 13 to the company's annual report on Form 10-K for the
year ended January 1, 2000. These include risks and uncertainties relating to:
regulatory approvals, reimbursement by insurers, medical community acceptance,
technological change, competition, new products, availability of materials and
components, intellectual property rights, limited experience in commercializing
LVAS products, product liability, and international operations and sales.
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