SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
SCHEDULE 14D-9
(Amendment No. 1)
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934
--------------------
Sterile Concepts Holdings, Inc.
(Name of Subject Company)
Sterile Concepts Holdings, Inc.
(Name of Persons Filing Statement)
Common Stock, no par value
(including associated share purchase rights)
(Title of Class of Securities)
85915P 10 9
(CUSIP Number of Class of Securities)
Paul J. Woo, Jr.
President and Chief Executive Officer
Sterile Concepts Holdings, Inc.
5100 Commerce Road
Richmond, Virginia 23234
(804) 275-0200
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
--------------------
Copy to:
Wellford L. Sanders, Jr., Esq.
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219
(804) 775-1000
<PAGE>
This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 dated June 14, 1996 (the
"Schedule 14D-9"), of Sterile Concepts Holdings, Inc., a Virginia corporation
(the "Company"), with respect to the tender offer by Maxxim Acquisition Co., a
Virginia corporation (the "Purchaser") and a wholly-owned subsidiary of Maxxim
Medical, Inc., a Delaware corporation ("Maxxim"), to purchase all of the
outstanding shares of Common Stock, no par value (the "Shares"), of the Company
and associated share purchase rights. Capitalized terms used and not defined
herein shall have the meanings ascribed to them in the Schedule 14D-9.
Item 4. The Solicitation or Recommendation
Item 4 is hereby amended and supplemented by adding thereto before the
last paragraph on page 9 the following:
On June 28, 1996, Wheat received from the Other Company's financial
advisors an unsolicited written proposal (the "Proposal") from the Other Company
contemplating the proposed acquisition of the Company in a merger transaction
involving an exchange of the Other Company's stock for stock of the Company on
the basis of an exchange ratio determined by dividing $25 by the average per
share closing price of the Other Company's stock as reported on The Nasdaq Stock
Market over a period of 20 trading days immediately preceding the fifth trading
day before the closing of the transaction, but subject to a pricing collar of
not less than $10 or more than $18 (the "Pricing Collar"). On the date of the
Proposal, the Other Company's stock closed at $12 per share. The Proposal was
subject to certain conditions, including the execution of a mutually acceptable
definitive acquisition agreement and the expiration of applicable
Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") waiting periods.
The Proposal stated that it would automatically expire if a definitive agreement
had not been executed by the parties by 5:00 p.m. on July 3, 1996. Upon its
receipt of the Proposal, the Company promptly advised Maxxim and Maxxim's
attorneys and delivered to them a copy of the Proposal. Management of the
Company also advised the Board of Directors of the Company of the receipt of the
Proposal.
On June 29, 1996, the financial and legal advisors of the Company held
a telephone conference with the legal and financial advisors of the Other
Company to, among other things, acknowledge receipt of the Proposal, confirm
that the Proposal was unsolicited, advise the Other Company that a copy of the
Proposal had been delivered to Maxxim, and inform the Other Company that the
Proposal, together with any supplemental information they desired to provide,
would be presented to the Board of Directors of the Company as soon as
practicable. During the course of the conference, the advisors of the Other
Company provided assurance that the Proposal was unsolicited.
Thereafter on the same day, the Board of Directors of the Company and
its financial and legal advisors met to discuss the Proposal. At the meeting,
the advisors reviewed the terms of the Proposal and the pricing volatility and
certain other issues related to the Other Company's stock, including the status
of the pending acquisition referred to above. Without taking any action on the
Proposal, the Board authorized the Company's advisors to enter into discussions
with the advisors of the Other Company to better understand the Proposal.
2
On June 30, 1996, the financial and legal advisors of the Company held
a second telephone conference with the financial and legal advisors of the Other
Company to, among other things, inquire further into the specifics of the
Proposal, including whether the stated expiration date was negotiable or firm;
inquire into the status of the Other Company's pending acquisition; determine
the extent to which the Other Company may want to engage in additional due
diligence; and discuss whether the proposed timetable for completion of a
transaction was realistic under the circumstances. In addition, the advisors of
the Company communicated the Company's concern respecting the volatility of the
Other Company's stock and the potential effect it could have on the proposed
purchase price in view of the Pricing Collar. The advisors of the Other Company
acknowledged the Company's concern respecting the volatility of the Other
Company's stock and stated that they might consider ways to address it,
including the possible revision or elimination of the Pricing Collar and the
possible addition of a cash component to the proposed consideration; indicated
that they would furnish the Company shortly the details of additional due
diligence the Other Company would like to perform; indicated that the Other
Company's pending acquisition was at a stage where it had been renegotiated, a
new prospectus/proxy statement was being reviewed by the SEC and closing would
probably occur in late August 1996; indicated, without elaboration, that they
believed a transaction with the Company could proceed on a parallel path and be
completed at about the same time; and stated that, because of the pending
acquisition, the July 3 expiration date of the Proposal was relatively firm. At
the conclusion of the conference, the advisors of the Company asked those of the
Other Company promptly to submit in writing the details of the additional due
diligence desired by them, a detailed time schedule for completing the
acquisition taking into account the Other Company's pending acquisition, and a
proposed form of definitive acquisition agreement similar to that required of
Maxxim and the other participants in the auction process referred to above. The
advisors of the Company also advised those of the Other Company that the Company
would need to engage in due diligence with respect to both the Other Company and
its acquisition target if the Board of Directors of the Company decided to
pursue the Proposal.
Later on June 30, the legal advisors to the Other Company called those
of the Company and orally communicated the major due diligence items the Other
Company would like to review and indicated that a written due diligence list and
definitive time schedule would be forthcoming. The legal advisors to the Company
said that they would furnish a list of due diligence items relating to the Other
Company and its pending acquisition that they would like to review from a legal
standpoint. Wheat called the Other Company's financial advisors to begin to make
arrangements for the exchange of business-related due diligence matters
involving the Company, the Other Company and its acquisition target.
On June 29 and 30 and the morning of July 1, the Company's legal
advisors had several telephone conversations with Maxxim's attorneys to keep
them informed about the status of the discussions with representatives of the
Other Company.
During the morning of July 1, the legal advisors of the Other Company
sent to the legal advisors of the Company a written list of due diligence items
to be reviewed by the Other Company and a brief written time schedule for
completing the transaction. The Board of Directors of the Company met later that
day to review the status of the discussions and the supplemental information
3
obtained in the various conferences among the advisors. The Company's legal and
financial advisors summarized the discussions held over the weekend with the
financial and legal advisors of the Other Company and the separate conversations
which had taken place over the weekend with the legal advisors of Maxxim about
the Proposal; indicated that there had been no response to the Company's concern
regarding the volatility of the Other Company's Stock and the potential effect
it could have on the proposed purchase price in view of the Pricing Collar;
reported that tentative arrangements had been made for several attorneys to
travel to the offices of the Other Company's legal counsel to commence legal due
diligence on the Other Company and its acquisition target; reported that a draft
of a definitive acquisition agreement had not yet been submitted by the Other
Company; reviewed the brief timetable proposed by the Other Company and
expressed doubt whether it was realistic under the circumstances; and reported
that Maxxim's advisors had given no indication of any willingness to improve the
terms of the pending tender offer. Wheat presented additional information about
the performance of the Other Company's stock and the potential adverse effect of
the Pricing Collar on the value to be received by the Company's stockholders.
The Board and its financial and legal advisors then held an extensive discussion
about the Proposal and whether it would be in the best interests of the
stockholders of the Company to pursue it. The Board did not, however, take any
action.
On July 2, 1996, the Other Company's financial advisors orally advised
Wheat that the Other Company was unwilling to change the Pricing Collar but that
it was willing to change the purchase price component of the Proposal to include
$20 in the Other Company's stock and $5 in cash, subject to approval of the
Other Company's Board of Directors. Wheat advised management of the Company and
its legal advisors of this conversation. The legal advisors of the Company
promptly advised those of Maxxim of the conversation.
On the afternoon of July 3, 1996, the Board of Directors of the Company
met to review the status of the discussions and to consider the Proposal. The
legal advisors of the Company reported that the Other Company had neither
submitted a draft acquisition agreement, as requested, for consideration by the
Board nor indicated a willingness to extend the stated expiration date (5:00
p.m. that day); reviewed the directors' duties with respect to the Proposal and
the Company's agreement with Maxxim; summarized the various calls to Maxxim's
attorneys to keep them apprised of the status of the Proposal; and reported on
their preliminary legal due diligence review of the Other Company and its
acquisition target. Wheat reviewed the oral change to the Proposal communicated
by the Other Company's financial advisors; reviewed the performance of the Other
Company's stock and the effect of the Pricing Collar on the value to be received
by the Company's stockholders if the Other Company's stock price fell below $10;
discussed the potential effect on valuation of the uncertain timing of the Other
Company's pending acquisition as well as the proposed transaction with the
Company; reviewed other financial information related to the Proposal; presented
a risk assessment of the Proposal compared to the Maxxim transaction; and
reconfirmed its original opinion (subsequently confirmed in writing) to the
effect that the Maxxim transaction was fair to the Company's stockholders from a
financial point of view. The legal advisors of the Company also informed the
Board that the waiting period required by the HSR Act with respect to the Maxxim
transaction was scheduled to expire later that day. Management of the Company
updated the Board on its recent operations and performance as well as its
4
prospects. The Board conducted detailed discussions about the advantages and
disadvantages of the Proposal and concluded, for essentially the same reasons
set forth above with respect to the Other Company's indication of interest
expressed in connection with the auction process as well as the negative
attributes of the Pricing Collar and the significant uncertainties and risks
inherent in the Proposal, to terminate its discussions with the Other Company.
On July 5, 1996, the legal advisors of the Company advised those of
both the Other Company and Maxxim of the Board's July 3 decision, and Wheat made
a similar call to the financial advisors of the Other Company. Later on July 5,
the Company issued a press release announcing the expiration of the HSR Act
waiting period with respect to the Maxxim transaction and discussing its receipt
of the Proposal and the Board's decision not to pursue it.
Item 9. Material to be Filed as Exhibits.
Item 9 is hereby amended and supplemented as follows:
The following Exhibits are filed herewith:
(f) Updated Opinion of Wheat, First Securities, Inc. dated July
15, 1996*
(h) Letter dated July 15, 1996 from the Company's President and
Chief Executive Officer to the Company's stockholders*
- --------------------
*Included in copies mailed to stockholders
5
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment is true, complete and
correct.
STERILE CONCEPTS HOLDINGS, INC.
By: /s/ PAUL J. WOO, JR.
-------------------------------------------
Name: Paul J. Woo, Jr.
Title: President and Chief Executive Officer
Date: July 15, 1996
Exhibit (f)
The Board of Directors
July 15, 1996
CONFIDENTIAL
Sterile Concepts Holdings, Inc.
5100 Commerce Road
Richmond, Virginia 23234
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of Common Stock, without par
value (the "Shares"), of Sterile Concepts Holdings, Inc. (the "Company") of the
cash consideration of $20.00 per Share to be received by such holders pursuant
to the Agreement and Plan of Merger dated as of June 10, 1996, among Maxxim
Medical, Inc. (the "Acquiror"), Maxxim Acquisition Co.
and the Company (the "Agreement").
Wheat, First Securities, Inc. ("Wheat"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. Wheat has provided investment banking services for the Company
in the past for which it has recieved customary compensation. In the ordinary
course of our business as a broker-dealer, we may, from time to time, have a
long or short position in, and buy or sell, debt or equity securities of the
Company or the Acquiror for our own account or for the accounts of our
customers. Wheat has acted as financial advisor to the Board of Directors of the
Company in connection with this transaction and will receive a fee for such
services. Wheat will also receive a fee from the Company for rendering this
opinion.
In arriving at our opinion, we have, among other things:
1. reviewed the financial and other information contained in the Company's
Annual Reports to Shareholders and Annual Reports on Form 10-K for the
fiscal years ended September 30, 1995, September 30, 1994 and September
30, 1993, and certain interim reports to Shareholders and Quarterly
Reports on Form 10-Q;
2. reviewed the financial and other information contained in the
Acquiror's Annual Reports to Shareholders and Annual Reports on Form
10-K for the fiscal years ended October 29, 1995, October 30, 1994, and
October 31, 1993, and certain interim reports to Shareholders and
Quarterly Reports on Form 10-Q;
3. conducted discussions with members of senior management of the Company
and the Acquiror concerning their respective businesses and prospects;
4. reviewed certain publicly available information with respect to
historical market prices and trading activity for the Company's Common
Stock and for certain publicly traded companies which we deemed
relevant;
5. compared the results of operations of the Company with those of certain
publicly traded companies which we deemed relevant;
6. compared the proposed financial terms of the transaction with the
financial terms of certain other mergers and acquisitions which we
deemed to be relevant;
7. performed a discounted cash flow analysis of the Company based upon
estimates of projected financial performance prepared by the management
of the Company;
8. reviewed the Agreement (including the Exhibits thereto) dated June 10,
1996; and
9. reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to us by
the Acquiror and the Company, and we have not assumed any responsibility for
independent verification of such information or any independent valuation or
appraisal of any of the assets of the Acquiror and the Company. We have relied
upon the management of the Acquiror and the Company as to the reasonableness and
achievability of their financial and operational forecasts and projections, and
the assumptions and bases therefor, provided to us, and we have assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of such management and that such forecasts and projections will be
realized in the amounts and in the time periods currently estimated by such
management. Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof. Our opinion does not
address the relative merits of the transaction contemplated by the Agreement as
compared to any alternative business strategies that might exist for the
Company, nor does it address the effect of any other business combination in
which the Company might engage.
Our advisory services and the opinion expressed herein are provided to the
Company's Board of Directors for use in evaluating the transaction contemplated
by the Agreement, are not on behalf of, and are not intended to confer rights or
remedies upon the Acquiror or any stockholder of the Acquiror and do not
constitute a recommendation to any holder of the Shares as to whether such
holder should tender his or her Shares pursuant to the Acquiror's offer or
approve the merger. This opinion may not be summarized, excerpted from or
otherwise publicly referred to without our prior written consent, except that it
may be reproduced in the Schedule 14D-9 relating to the Acquiror's offer.
On the basis of, and subject to the foregoing, we are of the opinion that as of
the date hereof the cash consideration of $20.00 per Share to be received by the
holders of the Shares is fair, from a financial point of view, to such holders.
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
By: /s/ Schuyler E. Grow
---------------------------
Vice President
Exhibit (h)
STERILE CONCEPTS HOLDINGS, INC.
5100 COMMERCE ROAD
RICHMOND, VIRGINIA 23234
July 15, 1996
Dear Stockholder:
Accompanying this letter is a copy of Amendment No. 1 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 relating to the tender
offer commenced June 14, 1996 by a subsidiary of Maxxim Medical, Inc. at a cash
price of $20 per share for all of the outstanding shares of Sterile Concepts
Common Stock and associated share purchase rights. The offer was made pursuant
to an Agreement and Plan of Merger dated June 10, 1996 among Sterile Concepts,
Maxxim and the Maxxim subsidiary. The Amendment to the Schedule 14D-1 describes
an unsolicited written proposal to acquire Sterile Concepts made by a company
other than Maxxim and the Board of Directors' deliberations with respect
thereto. We urge you to read the enclosed materials, together with those
previously transmitted in connection with Maxxim's offer, carefully.
After careful consideration, your Board of Directors determined not to
pursue the unsolicited proposal. Your Board has unanimously approved the Maxxim
transaction and determined that the terms of that transaction are fair to and in
the best interests of Sterile Concepts stockholders. Accordingly, the Board of
Directors continues to unanimously recommend that all Sterile Concepts'
stockholders accept the Maxxim offer and tender their shares to Maxxim.
On behalf of the Board of Directors,
Sincerely,
Paul J. Woo, Jr.
President and
Chief Executive Officer
