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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[x] Soliciting Material under Rule 14a-12.
GLIATECH INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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On July 7, 2000, an article was published in the Cleveland Plain
Dealer, the text of which is set forth below. Such article may be deemed a
solicitation under the rules and regulations of the Securities Exchange Act of
1934 by or on behalf of Gliatech Inc. The direct and indirect interests of
executive officers and directors, including, without limitation, their
beneficial ownership of common stock of Gliatech may be found in the joint proxy
statement/prospectus filed on registration statement on Form S-4 (registration
number 333-39546) with the Securities and Exchange Commission on June 16, 2000.
Stockholders of Gliatech Inc. should read the joint proxy statement/prospectus
in the form currently available as well as the definitive form of the proxy
statement when it is available because it contains important information. All
investors in Gliatech may obtain a copy of the joint proxy statement/prospectus
without charge from the web site maintained by the Commission at
http://www.sec.gov. In addition, investors may obtain copies of these documents
as well as documents incorporated by reference to the joint proxy
statement/prospectus by contacting:
Gliatech Inc.
23420 Commerce Park Road
Cleveland, Ohio 44122
Attention: Corporate Secretary
(216) 831-3200
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A crowd of suitors
Gliatech talked with 4 firms before sale to Guilford
The mating dance between Beachwood's Gliatech Inc. and its buyer,
Guilford Pharmaceuticals Inc., was anything but a two-party tango.
In fact, a veritable crowd of suitors inquired about buying Gliatech, a
biotechnology company that makes gels used to prevent scarring after surgery,
before it announced May 30 that it would sell out to Guilford in a stock deal.
Gliatech talked to four other companies about a possible sale - and one
about a possible purchase - before embracing Guilford.
The match also had at least one bump along the way: Gliatech managers
rejected Guilford's first offer, saying it was too low.
The extended discussions were described in the preliminary registration
statement Guilford has filed with regulators prior to votes by both companies'
shareholders on the proposed merger. Those haven't been scheduled yet but should
be held by September.
The saga began last August, when Gliatech managers recommended to the
board that the company consider possible alliances and dispositions as part of
what Chief Financial Officer Rodney E. Dausch yesterday said was "a hard
strategic look" at the business.
"From time to time, you have to sit back and take stock of your
long-term objectives and look at all the alternatives," said Robert P. Pinkas, a
Gliatech director and former chairman.
Gliatech began by contacting "Company A" - it doesn't disclose any of
the would- be-suitors or targets - to discuss a possible purchase of that
company, Dausch said.
Last fall, the company discussed a combination with two others Dausch
said were looking to buy Gliatech.
Only in November did an investment bank suggest to Guilford CEO Dr.
Craig R. Smith that there might be a fit between Gliatech and Guilford. Gliatech
CEO Thomas O. Oesterling then met with Smith in January.
Two other would-be buyers surfaced later, and Gliatech had three
separate discussions with one of them.
Dausch said that Gliatech didn't make overtures to others that it was
for sale and never received any offer other than Guilford's.
"It wasn't that we were comparing deal a, b, c and d," he said. "We had
had discussions with those companies, but it never got to a point where we had
any formal offers or agreements."
Guilford, which is based in Baltimore, is in its summer shutdown this
week, and officials there weren't available to comment.
Dausch said Gliatech is an attractive partner because "we have
revenues," in contrast with many other small technology companies.
Dausch also speculated that the regulatory problems Gliatech
experienced last year may have contributed to interest by suitors.
Last September, the Food & Drug Administration issued a warning letter
to Gliatech's Dutch contract manufacturer regarding its quality systems. That
led to a ban on imports of Gliatech's only U.S. product, Adcon-L, an
anti-scarring gel used in back surgery, and prevented the company from selling
it in this country.
Gliatech, which had booked four successive profitable quarters,
temporarily fell into the red, though it got the product back on the market in
January.
Once Adcon-L got FDA approval, Pinkas said, "we had people banging on
our door all the time to purchase us."
Robin Young, an analyst at Stephens Inc., said that many companies are
trying to get into the business of preventing adhesion after surgery, since 55
percent of all surgery patients experience the problem.
When Guilford made its proposal to Gliatech on April 13, Oesterling and
other Gliatech representatives told Smith that the bid was too low. But the
companies and their advisers kept on meeting, even as Gliatech managers met
separately with another prospective suitor.
Ultimately, Gliatech's board accepted Guilford's offer of 1.38 Guilford
shares for each Gliatech share, or a total of $207 million when it was
announced. Dausch characterized that bid as acceptable.
Dausch said that Guilford was "much more of a strategic fit" than the
others. Guilford isn't profitable but has a big cash hoard and promising
technology to treat Parkinson's disease. Guilford is focused more on developing
its research than on delivering short-term earnings.
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If the deal is consummated, Gliatech expects to leave only its small
manufacturing facility in the Cleveland area, which employs fewer than a dozen.
Should Gliatech decide to back out of the deal, it would have to pay
Guilford $6.5 million and expenses of up to $1.5 million.
