SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 1998
VITALINK PHARMACY SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-19820 37-0903482
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(State or other Jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1250 East Diehl Road, Suite 208
Naperville, Illinois 60563
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630)245-4800
N.A.
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On April 27, 1998, the registrant issued a press release announcing
that the registrant and Genesis Health Ventures, Inc. ("Genesis") had entered
into an Agreement and Plan of Merger (the "Merger Agreement") dated as of April
26, 1998. The consummation of the transactions contemplated by the Merger
Agreement are subject to the approval of the stockholders of each of the
registrant and Genesis. For additional information regarding the transactions
contemplated by the Merger Agreement, reference is made to the press release, a
copy of which is attached hereto as Exhibit 99 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits
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Exhibit No. Description
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99 Press Release dated April 27, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VITALINK PHARMACY SERVICES, INC.
Date: May 1, 1998 By: /s/ Scott T. Macomber
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Name: Scott T. Macomber
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Number Description Page
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99 Press Release dated April 27, 1998 5
EXHIBIT 99
CONTACT:
Investors: Genesis
George V. Hager, Jr.
Senior Vice President and
Chief Financial Officer
Phone: 610-444-6350
Vitalink
Scott T. Macomber
Senior Vice President and
Chief Financial Officer
Phone: 630-245-4800
Manor Care
Leigh C. Comas
Vice President, Finance and Treasurer
Phone: 301-979-4000
Media: Genesis
Jeanne Moore
Director Public Relations
Phone: 410-494-8978
Genesis Health Ventures to Acquire
Vitalink Pharmacy Services, Inc.
Establishing a $900 Million Integrated Pharmacy
Services Business
KENNETT SQUARE, PA - April 27,1998. Genesis Health Ventures,
Inc. (NYSE:GHV), a leading provider of eldercare services in the eastern and
mid-western United States, today announced that it has entered into a definitive
agreement to acquire Vitalink Pharmacy Services, Inc. (NYSE:VTK), for
approximately $600 million plus the assumption of approximately $90 million of
indebtedness for a total consideration of approximately $690 million. Genesis
will merge Vitalink with its NeighborCareSM pharmacy operations to create a
combined inte-
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grated pharmacy services business with revenues of approximately $900 million.
The transaction has been unanimously approved by the Boards of Directors of both
companies.
Genesis will offer $22.50 per share to acquire all of
Vitalink's outstanding shares in a cash election merger. Vitalink shareholders
will be permitted to elect to receive either $22.50 per share in cash or $22.50
per share in a dividend yielding convertible preferred stock with the preferred
stock to account for 50% of the total consideration. Manor Care, Inc.
(NYSE:MNR), the holder of approximately 50% of the shares of Vitalink, has
agreed to elect to exchange all of its Vitalink shares for the preferred stock.
The form of Manor Care's consideration will be prorated to the extent that other
Vitalink shareholders elect to receive preferred stock.
The preferred stock will have a face value of approximately
$300 million and an initial dividend of 5.9375% and generally will not be
transferable without the consent of Genesis. The terms of the transaction call
for the preferred stock to be convertible into Genesis common shares at $37.20
per share and it may be called for
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conversion after three years, provided Genesis' stock price reaches certain
trading levels. After the fourth year, if Genesis' stock price has not reached
specified trading levels, the preferred stock may be called for conversion by
Genesis subject to a market-based call premium provision.
"The acquisition of Vitalink is consistent with our stated
goal to significantly expand the specialty medical and community-based services
components of our business in fiscal 1998 and will be accretive to earnings per
share," commented Michael R. Walker, Genesis Chairman and Chief Executive
Officer.
"Vitalink adds approximately 172,000 beds and 57 pharmacies to
NeighborCare, with approximately 75% of the revenues and cash flows in or
adjacent to Genesis' existing markets. On a pro forma basis, our NeighborCare
pharmacy and medical equipment/supply business will account for approximately
47% of Genesis' consolidated revenues," Walker noted.
"Together, our more than 100 institutional and community-based
pharmacies will serve more than 260,000 long-term care beds, 80% of which are
located in or adjacent to our five regional market concentrations in the eastern
and mid-western United States," he said. "In addition, we will be well
positioned to pursue the community-based opportunities that we expect will fuel
market growth and expansion in the coming years," Walker added.
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Stewart Bainum, Jr., Chairman and Chief Executive Officer of
Manor Care, commented, "The combination of Vitalink and NeighborCare will be a
powerful force in the institutional pharmacy business. This transaction enhances
Manor Care's pharmacy investment, providing the Company with a stronger platform
for improved returns." Bainum continued, "The convertible preferred stock that
we anticipate receiving as consideration for our interest in Vitalink will
provide current cash flow to Manor Care on a tax-efficient basis for investment
in our high growth assisted living business."
Following the sale, Manor Care will continue to purchase from
the Vitalink operations all of its pharmacy services and related pharmacy
consulting services.
Manor Care has provided Genesis with an irrevocable proxy to
vote its Vitalink shares in favor of the merger. Upon closing of the
transaction, it is anticipated that Manor Care will own approximately 18% of
Genesis' pro forma diluted shares outstanding assuming the Vitalink shareholders
other than Manor Care elect to receive cash for their shares. Manor Care will be
subject to certain voting and standstill agreements and will have one
representative on the Genesis Board of Directors.
The combination of the equity to be issued in this transaction
through the convertible preferred stock along with
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expected deleveraging events in the range of $200-$250 million will assist
Genesis in achieving a 50% debt to total book capitalization ratio.
The transaction is subject to regulatory and shareholder
approval of both companies as well as receipt of financing and is expected to
close in late fiscal year 1998.
The above statements include forward-looking statements. The
Company cautions investors that any forward-looking statements made by the
Company are not guarantees of future performance. Numerous factors exist which,
in some cases have affected, and in the future could cause results to differ
materially from these expectations. These statements involve risks and
uncertainties concerning the implementation and interpretation of healthcare
reform legislation and other factors as detailed from time to time in the
Company's filings with the Securities and Exchange Commission.
Vitalink provides medications, consulting, infusion and other
ancillary services to customers with 172,000 institutional beds in 36 states as
well as to home infusion patients.
Manor Care, Inc., founded in 1959 through a corporate
predecessor, is the industry leader in Alzheimer's disease management and one of
the largest long-term care providers in the
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United States. The Company operates 171 nursing facilities containing 24,124
beds and 37 assisted living facilities with 3,875 units in 29 states. Manor Care
owns approximately 50% of Vitalink Pharmacy Services, Inc. and holds a
controlling interest in In Home Health, Inc. (NASDAQ:IHHI).
Genesis Health Ventures, Inc., a recognized innovator in the
healthcare industry, was founded in 1985 to redefine how America cares for the
elderly and is dedicated to helping older adults live a Full LifeSM as
independently as possible in their later years. The Company, which consolidated
its businesses under the brand name Genesis ElderCareSM" in 1996, has
established Genesis ElderCareSM Networks in five regional markets in the eastern
United States and currently serves more than 150,000 customers daily.
