Acquisition Highlights:
-- Combination establishes leading platform in rapidly growing
biosurgery market
-- Acquisition of new growth platform represents significant
diversification and expansion of KCI´s business portfolio and
long-term revenue and earnings growth
-- Combines two market leaders with complementary, best-in-class
technologies and advances KCI´s presence in the operating room
and acute care setting
-- Strong shared commitment to innovation and commercialization
of novel medical solutions
-- Purchase price of $51.00 per share represents 18% premium over
April 4, 2008 closing price
Kinetic Concepts, Inc. (NYSE:KCI), a global medical technology
company with leadership positions in advanced wound care and
therapeutic support systems, and LifeCell Corporation (NASDAQ:LIFC), a
leader in innovative tissue repair products for use in reconstructive,
urogynecologic and orthopedic surgical procedures, today announced
that they have signed a definitive agreement whereby KCI will acquire
LifeCell for $51.00 per share, or $1.7 billion in cash. The offer
represents an 18% premium over the closing price of LifeCell´s stock
on April 4, 2008, and a 26% premium over the 90-day volume weighted
average trading price. The boards of directors of both companies have
unanimously approved the transaction.
Following the completion of the transaction, LifeCell will operate
as a new global biosurgery division within KCI. Paul Thomas will
continue to lead the business as President of the division and will
join KCI´s Executive Committee. LifeCell´s management team and
corporate headquarters will continue to be located in Branchburg, New
Jersey. Based on existing KCI and LifeCell operations, the combined
companies are expected to generate revenue of approximately $2 billion
in 2008 and will employ more than 7,000 people.
"This is an exciting day for KCI," said Catherine Burzik,
President and Chief Executive Officer of KCI. "LifeCell is an
exceptional strategic fit for us. The acquisition of LifeCell provides
additional long-term growth opportunities, benefiting patients and
physicians and delivering sustained value to our shareholders. The
acquisition brings together two respected market leaders with
well-established best-in-class technologies. This combination allows
us to accelerate our strategy to increase KCI´s presence in the
operating room and will leverage our broad global market reach to
drive future growth of LifeCell´s products. The focus of the
integrated management team will be to bring to market unparalleled
therapeutic solutions for patients. I am confident that the combined
company will be a powerful force in delivering advanced therapies for
complex clinical situations. We admire the achievements of Paul Thomas
and his management team and look forward to welcoming LifeCell´s
world-class sales force and product development organizations to KCI
where they will play a crucial role in our future success."
"Our board of directors and management team believe this
transaction makes strategic sense for our company, offers a premium to
our stockholders and creates exciting opportunities for our
employees," said Paul Thomas, Chairman of the Board, President and
Chief Executive Officer of LifeCell. "We expect that the combination
of our leadership position in regenerative medicine and KCI´s
innovative therapeutic approach to wound healing will present
opportunities for both organizations to expand the markets we serve.
KCI´s global infrastructure will accelerate the penetration of
LifeCell products into international markets. We also believe KCI´s
experience and leadership position in advanced wound care will
facilitate the adoption of LifeCell´s innovative products into this
market. Together, we look forward to improving the lives of more
patients around the world."
Benefits of the Combination
-- Global Biosurgical Leadership: KCI will leverage its
infrastructure together with LifeCell´s products to create a
global medical technology leader with extensive experience
developing and commercializing best-in-class technologies and
clinically-proven products that achieve superior patient
outcomes.
-- Diversification of KCI Revenue Stream: The combination will
significantly diversify KCI´s future revenue. The company´s
advanced wound care platform has been its primary growth
driver and this acquisition represents the third major product
line for the company going forward. With revenue growth at 35%
in 2007, LifeCell would have represented approximately 11% of
combined revenue and provides a meaningful enhancement to the
growth trajectory that currently exists for KCI´s negative
pressure technology platform.
-- Increased Presence in the Operating Room and Acute Care
Setting: KCI continues to focus on the operating room and the
acute care setting both with its current product offerings and
with the development of novel products from its negative
pressure technology platform. Because LifeCell´s products are
primarily used in these care settings, this acquisition
accelerates KCI´s strategy and provides additional growth
opportunities for the combined company´s advanced products.
-- Combined Research and Development Capabilities: KCI and
LifeCell share similar philosophies for research and product
development. This acquisition will bring complementary
technical capabilities together to facilitate the timely
commercialization of high-value solutions to complex, unmet
clinical needs.
Financing and Structure
Under the terms of the merger agreement, a subsidiary of KCI will
commence a cash tender offer to acquire all outstanding shares of
LifeCell´s common stock at a price of $51.00 per share. KCI´s
obligation to consummate the tender offer is conditioned upon the
tender of at least a majority of the fully diluted LifeCell shares in
the offer, completion and funding of KCI´s financing arrangements
described below, and the satisfaction of regulatory and other
customary closing conditions. Following completion of the tender
offer, any remaining LifeCell shares would be acquired in a merger for
$51.00 per share.
KCI will use cash on hand and proceeds from a fully underwritten
debt financing from Bank of America and JPMorgan Chase Bank for the
acquisition. The bank financing includes syndicated term loans and a
revolving credit facility. Funding under the commitment is subject to
various conditions, including consummation of the tender offer in
accordance with the terms of the merger agreement and other conditions
similar to those applicable to the completion of the tender offer and
merger. As part of permanent financing and subject to market
conditions, KCI may access the equity-linked markets during 2008. KCI
and LifeCell had combined EBITDA in excess of $500 million in 2007 and
KCI expects to rapidly pay down debt.
KCI believes substantial opportunities exist to leverage adjacent
technologies and global infrastructure to drive meaningful revenue
synergies, and expects a reduction of certain general and
administrative expenses. Excluding the non-cash amortization of
intangibles, the transaction is expected to be initially dilutive to
cash earnings per share, becomes accretive to cash earnings per share
during 2009 and significantly accretive in 2010 and thereafter. On a
GAAP basis, the transaction is expected to become accretive to
earnings per share during 2010.
J.P. Morgan Securities Inc. acted as financial advisor to KCI and
Merrill Lynch & Co. acted as financial advisor to LifeCell. Skadden,
Arps, Slate, Meagher & Flom LLP and Lowenstein Sandler PC served as
legal advisors to KCI and LifeCell, respectively.
Ideal Strategic Partner
LifeCell´s best-selling product AlloDerm(R), used to repair
damaged tissue in hernias and breast reconstruction, generated $167
million in revenue for the company last year. LifeCell is the clear
leader in the rapidly growing biologics market. The addition of
LifeCell expands KCI´s offerings in the biosurgery and surgical suite
and provides access to new commercial and therapeutic opportunities.
By capitalizing on LifeCell´s strong relationships with acute care
operating physicians, KCI will have a platform upon which to launch
its next generation negative pressure-based products for the surgery
suite. Additionally, KCI plans to leverage its broad reach and global
competencies in market development, regulatory and reimbursement
functions to accelerate the global introduction of LifeCell´s
products.
LifeCell´s newest product, Strattice(TM), is the next generation
of regenerative products and has the potential to transform the tissue
regeneration industry. Easier to use, non-refrigerated, and available
in large sizes, Strattice(TM) will provide the company´s biosurgery
business opportunities for growth in other therapeutic areas and
international markets. Strattice(TM) received 510(k) FDA clearance in
June 2007 and is commercially available in the U.S.
Web Cast
KCI and LifeCell will host a joint conference call to discuss the
transaction on April 7, 2008, at 9:00 a.m. ET. To join the live audio
portion of the call, domestic callers should dial 866-202-0886 and
international callers should dial 617-213-8841 and give the operator
the conference ID #58919422. The conference call will also be
available by web cast at http://www.kci1.com/investor/index.asp. There
will be a slide presentation that accompanies the audio portion of the
conference call. To view the slide presentation while listening to the
audio, log on at http://www.kci1.com/investor/index.asp. The archived
audio with slides will be available on KCI´s web site shortly after
the conclusion of the call.
About KCI
KCI is a global medical technology company with leadership
positions in advanced wound care and therapeutic support systems. We
design, manufacture, market and service a wide range of proprietary
products that can improve clinical outcomes and can help reduce the
overall cost of patient care. Our advanced wound care systems
incorporate our proprietary Vacuum Assisted Closure(R), or V.A.C. (R)
Therapy technology, which has been demonstrated clinically to promote
wound healing through unique mechanisms of action and can help reduce
the cost of treating patients with serious wounds. Our therapeutic
support systems, including specialty hospital beds, mattress
replacement systems and overlays, are designed to address pulmonary
complications associated with immobility, to reduce skin breakdown and
assist caregivers in the safe and dignified handling of obese
patients. We have an infrastructure designed to meet the specific
needs of medical professionals and patients across all healthcare
settings, including acute care hospitals, extended care organizations
and patients´ homes, in 19 countries in the United States and abroad.
For more information, visit our web site at www.kci1.com.
About LifeCell
LifeCell is the leading provider of innovative biological products
for soft tissue repair. Surgeons use our products to restore
structure, function and physiology in a variety of reconstructive,
orthopedic and urogynecologic surgical procedures. LifeCell´s products
include: ALLODERM(R) regenerative tissue matrix, for plastic
reconstructive, general surgical, burn and periodontal procedures;
STRATTICE(TM) reconstructive tissue matrix, for plastic reconstructive
and general surgical procedures; GRAFTJACKET(R) regenerative tissue
matrix, for orthopedic applications and lower extremity wounds;
ALLOCRAFT(R)DBM, for bone grafting procedures; and REPLIFORM(R) tissue
regeneration matrix for urogynecologic surgical procedures. The
Company´s research and development initiatives include programs
designed to extend the use of its current marketed products into new
surgical applications as well as expanding its product line in the
rapidly growing biosurgery market. For more information, view our web
site at www.LifeCell.com.
Forward Looking Statements
This communication contains forward-looking statements, which may
be identified by words such as "believes," "expects," "anticipates,"
"estimates," "projects," "intends," "should," "seeks," "future,"
"continue," or the negative of such terms, or other comparable
terminology. Forward-looking statements are subject to risks,
uncertainties, assumptions and other factors that are difficult to
predict and that could cause actual results to vary materially from
those expressed in or indicated by them. Factors that could cause
actual results to differ materially include, but are not limited to:
(1) the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement; (2) the
outcome of any legal proceedings that may be instituted against KCI,
LifeCell and others following announcement of the merger agreement;
(3) the inability to complete the tender offer or the merger due to
the failure to satisfy the conditions to the offer and the merger,
including obtaining at least a majority of LifeCell´s shares in the
tender offer, the consummation of KCI´s financing, the expiration of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the receipt of other required regulatory
approvals; (4) risks that the proposed transaction disrupts current
plans and operations and potential difficulties in employee retention
as a result of the Offer or the merger; (5) the ability to recognize
the benefits of the merger; (6) the increased leverage as a result of
the transaction; (7) legislative, regulatory and economic
developments; and (8) other factors described in filings with the SEC.
Many of the factors that will determine the outcome of the subject
matter of this communication are beyond KCI´s and LifeCell´s ability
to control or predict. The companies can give no assurance that any of
the transactions related to the offer will be completed or that the
conditions to the offer and the merger will be satisfied. The
companies undertake no obligation to revise or update any
forward-looking statement, or to make any other forward-looking
statements, whether as a result of new information, future events or
otherwise. The companies are not responsible for updating the
information contained in this communication beyond the published date,
or for changes made to this communication by wire services or Internet
service providers.
Important Information
The tender offer described herein has not yet been commenced. The
description contained herein is neither an offer to purchase nor a
solicitation of an offer to sell securities of LifeCell. At the time
the tender offer is commenced, KCI and its wholly-owned subsidiary
intend to file a Tender Offer Statement on Schedule TO containing an
offer to purchase, forms of letters of transmittal and other documents
relating to the tender offer, and LifeCell intends to file a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect
to the tender offer.
KCI, its wholly-owned subsidiary and LifeCell intend to mail these
documents to the stockholders of LifeCell. These documents will
contain important information about the tender offer, and stockholders
of LifeCell are urged to read them carefully when they become
available. Stockholders of LifeCell will be able to obtain a free copy
of these documents (when they become available) and other documents
filed by LifeCell or KCI with the SEC at the web site maintained by
the SEC at www.sec.gov. In addition, stockholders will be able to
obtain a free copy of these documents (when they become available)
from KCI by contacting KCI at 8023 Vantage Drive, San Antonio, TX
78230-4726, attention: Investor Relations, or from LifeCell by
contacting LifeCell at One Millennium Way, Branchburg, New Jersey
08876, attention: Investor Relations.
