424b3
MERGER PROPOSED YOUR VOTE IS VERY IMPORTANT
The board of directors of Thermo Electron Corporation, or
Thermo, and the board of directors of Fisher Scientific
International Inc., or Fisher, have agreed to a strategic
combination of the two companies under the terms of the
Agreement and Plan of Merger, dated as of May 7, 2006,
which is referred to as the merger agreement. Upon completion of
the merger of a direct, wholly-owned subsidiary of Thermo with
and into Fisher, Thermo will acquire Fisher, and Fisher will
become a direct, wholly-owned subsidiary of Thermo.
If the merger is completed, Fisher stockholders will have the
right to receive 2.0 shares of Thermo common stock for each
share of Fisher common stock. This exchange ratio is fixed and
will not be adjusted to reflect stock price changes prior to
closing of the merger. Based on the closing price of Thermo
common stock on the New York Stock Exchange on May 5, 2006,
the last trading day before public announcement of the merger,
the 2.0 exchange ratio represented approximately $78.90 in value
for each share of Fisher common stock. Based on the closing
price of Thermo common stock on the New York Stock Exchange on
July 24, 2006, the latest practicable date before the date
of this document, the 2.0 exchange ratio represented
approximately $70.44 in value for each share of Fisher common
stock. Thermo stockholders will continue to own their existing
Thermo shares.
The merger has been structured to qualify as a reorganization
for U.S. federal income tax purposes. Accordingly, Fisher
stockholders are not expected to recognize any gain or loss for
U.S. federal income tax purposes on the exchange of shares
of Fisher common stock for Thermo common stock in the merger.
Upon completion of the merger, we estimate that current Thermo
stockholders will own approximately 39% of the combined company
and former Fisher stockholders will own approximately 61% of the
combined company.
At the special meeting of Thermo stockholders, which we refer to
as the Thermo special meeting, Thermo stockholders will be asked
to vote on the issuance of Thermo common stock to Fisher
stockholders and an amendment to the Amended and Restated
Certificate of Incorporation of Thermo Electron Corporation,
which we refer to as the Thermo charter, each of which is
necessary to effect the merger. The stock issuance proposal
requires the affirmative vote of holders of a majority of the
Thermo common stock present or represented and entitled to vote
on the proposal. The Thermo charter amendment proposal requires
the affirmative vote of holders of a majority of the outstanding
shares of Thermo common stock entitled to vote on the proposal.
At the special meeting of Fisher stockholders, which is referred
to as the Fisher special meeting, Fisher stockholders will be
asked to vote on the approval and adoption of the merger
agreement. In order to complete the merger, an affirmative vote
of holders of a majority of the outstanding shares of Fisher
common stock entitled to vote on the proposal must vote to
approve and adopt the merger agreement.
The Thermo board of directors unanimously recommends that the
Thermo stockholders vote FOR the proposal to issue
shares of Thermo common stock in the merger and FOR
the proposal to amend the Thermo charter.
The Fisher board of directors unanimously recommends that the
Fisher stockholders vote FOR the proposal to approve
and adopt the merger agreement.
The obligations of Thermo and Fisher to complete the merger are
subject to the satisfaction or waiver of several conditions set
forth in the merger agreement. More information about Thermo,
Fisher and the merger is contained in this joint proxy
statement/prospectus. Thermo and Fisher encourage you to read
this entire joint proxy statement/prospectus carefully,
including the section entitled Risk Factors
beginning on page 13.
We look forward to the successful combination of Thermo and
Fisher.
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Sincerely,
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Sincerely, |
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Marijn E. Dekkers
President
and Chief Executive Officer
Thermo Electron Corporation |
|
Paul M. Montrone
Chairman of the Board
and Chief Executive Officer
Fisher Scientific International Inc. |
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
securities to be issued under this joint proxy
statement/prospectus or determined that this joint proxy
statement/prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated July 25,
2006 and is first being mailed to the stockholders of Thermo and
Fisher on or about July 25, 2006.
Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02451
(781) 622-1000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On August 30, 2006
Dear Stockholders of Thermo Electron Corporation:
We are pleased to invite you to attend the special meeting of
stockholders of Thermo Electron Corporation, a Delaware
corporation, which will be held at Thermos principal
executive offices at 81 Wyman Street, Waltham, Massachusetts
02451, on August 30, 2006 at 10:00 a.m., local time,
for the following purposes:
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to consider and vote on a proposal to approve the issuance of
Thermo common stock, par value $1.00 per share, in
connection with the merger contemplated by the Agreement and
Plan of Merger, dated as of May 7, 2006, by and among
Thermo, Trumpet Merger Corporation, a direct, wholly-owned
subsidiary of Thermo, and Fisher Scientific International Inc.,
a copy of which is attached as Annex A to the joint proxy
statement/ prospectus accompanying this notice; |
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to consider and vote on a proposal to amend the Amended and
Restated Certificate of Incorporation of Thermo, to increase the
authorized number of shares of Thermo common stock from
350,000,000 to 1.2 billion and to change the name of Thermo
Electron Corporation upon the completion of the merger to Thermo
Fisher Scientific Inc.; |
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to vote upon an adjournment of the Thermo special meeting, if
necessary, to solicit additional proxies if there are not
sufficient votes for each of the foregoing proposals; and |
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to transact any other business that may properly be brought
before the Thermo special meeting or any adjournments or
postponements thereof. |
Please refer to the attached joint proxy statement/ prospectus
for further information with respect to the business to be
transacted at the Thermo special meeting.
The close of business on July 24, 2006 has been fixed as
the record date for the determination of stockholders entitled
to notice of, and to vote at, the Thermo special meeting or any
adjournments or postponements thereof. Only holders of record of
Thermo common stock at the close of business on the record date
are entitled to notice of, and to vote at, the Thermo special
meeting.
The issuance of Thermo common stock to Fisher stockholders
requires the affirmative vote of holders of a majority of the
Thermo common stock present or represented and entitled to vote
on the proposal. Approval of the charter amendment requires the
affirmative vote of holders of a majority of the outstanding
shares of Thermo common stock entitled to vote on the proposal.
Your vote is important. Whether or not you expect to attend
in person, we urge you to vote your shares as promptly as
possible by (1) accessing the Internet website specified on
your proxy card; (2) calling the toll-free number specified
on your proxy card; or (3) signing and returning the
enclosed proxy card in the postage-paid envelope provided, so
that your shares may be represented and voted at the Thermo
special meeting. If your shares are held in the name of a
bank, broker or other fiduciary, please follow the instructions
on the voting instruction card furnished by the record holder.
A list of the holders of Thermo common stock entitled to vote at
the Thermo special meeting will be available for examination by
any Thermo stockholder, for any purpose germane to the Thermo
special meeting, at Thermos principal executive offices at
81 Wyman Street, Waltham, Massachusetts 02451, for ten days
prior to the Thermo special meeting, between the hours of
9:00 a.m. and 3:00 p.m., and at the Thermo special
meeting during the entire time thereof.
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By Order of the Board of Directors, |
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Seth H. Hoogasian |
|
Vice President, General Counsel and Secretary |
Waltham, Massachusetts
July 25, 2006
Fisher Scientific International Inc.
One Liberty Lane
Hampton, New Hampshire 03842
(603) 926-5911
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On August 30, 2006
Dear Stockholders of Fisher Scientific International Inc.:
We are pleased to invite you to attend the special meeting of
stockholders of Fisher Scientific International Inc., a Delaware
corporation, which will be held at the Sheraton Dover Hotel,
1570 North DuPont Highway, Dover, Delaware, on
August 30, 2006 at 10:00 a.m., local time, for the
following purposes:
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to consider and vote on a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of May 7, 2006, by
and among Thermo Electron Corporation, Trumpet Merger
Corporation, a direct, wholly-owned subsidiary of Thermo, and
Fisher, a copy of which is attached as Annex A to the joint
proxy statement/ prospectus accompanying this notice; |
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to vote upon an adjournment of the Fisher special meeting, if
necessary, to solicit additional proxies if there are not
sufficient votes for the foregoing proposal; and |
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to transact any other business that may properly be brought
before the Fisher special meeting or any adjournments or
postponements thereof. |
Please refer to the attached joint proxy statement/ prospectus
for further information with respect to the business to be
transacted at the Fisher special meeting.
The close of business on July 24, 2006 has been fixed as
the record date for the determination of stockholders entitled
to notice of, and to vote at, the Fisher special meeting or any
adjournments or postponements thereof. Only holders of record of
Fisher common stock at the close of business on the record date
are entitled to notice of, and to vote at, the Fisher special
meeting.
Approval and adoption of the Agreement and Plan of Merger
requires the affirmative vote of holders of a majority of the
outstanding shares of Fisher common stock entitled to vote on
the proposal.
Your vote is important. Whether or not you expect to attend
in person, we urge you to vote your shares as promptly as
possible by (1) accessing the Internet website specified on
your proxy card; (2) calling the toll-free number specified
on your proxy card; or (3) signing and returning the
enclosed proxy card in the postage-paid envelope provided, so
that your shares may be represented and voted at the Fisher
special meeting. If your shares are held in the name of a
bank, broker or other fiduciary, please follow the instructions
on the voting instruction card furnished by the record holder.
A list of the holders of Fisher common stock entitled to vote at
the Fisher special meeting will be available for examination by
any Fisher stockholder, for any purpose germane to the Fisher
special meeting, at Fishers principal executive offices at
One Liberty Lane, Hampton, New Hampshire 03842, for ten days
prior to the Fisher special meeting, between the hours of
9:00 a.m. and 3:00 p.m., and at the Fisher special
meeting during the entire time thereof.
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By Order of the Board of Directors, |
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Paul M. Meister |
|
Vice Chairman of the Board |
Hampton, New Hampshire
July 25, 2006
ADDITIONAL INFORMATION
This document incorporates important business and financial
information about Thermo and Fisher from other documents that
are not included in or delivered with this document. This
information is available to you without charge upon your
request. You can obtain the documents incorporated by reference
into this document by requesting them in writing or by telephone
from the appropriate company at the following addresses and
telephone numbers:
|
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Thermo Electron Corporation
|
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Fisher Scientific International Inc. |
81 Wyman Street
|
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One Liberty Lane |
Waltham, Massachusetts 02451
|
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Hampton, New Hampshire 03842 |
(781) 622-1000
|
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(603) 926-5911 |
Attn: Investor Relations
|
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Attn: Investor Relations |
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Or
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Or |
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D.F. King & Co., Inc.
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MacKenzie Partners, Inc. |
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Innisfree M&A Incorporated |
48 Wall Street
|
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105 Madison Avenue |
|
501 Madison Avenue |
New York, New York 10005
|
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New York, New York 10016 |
|
New York, NY 10022 |
(800) 848-3416
|
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(800) 322-2885 |
|
(888) 750-5835 |
Investors may also consult Thermos or Fishers
website for more information concerning the merger described in
this document. Thermos website is www.thermo.com.
Fishers website is www.fisherscientific.com.
Information included on either website is not incorporated by
reference into this document.
If you would like to request any documents, please do so by
August 23, 2006 in order to receive them before the
meetings.
For more information, see Where You Can Find More
Information beginning on page 89.
You should rely only on the information contained or
incorporated by reference into this document. No one has been
authorized to provide you with information that is different
from that contained in, or incorporated by reference into, this
document. This document is dated July 25, 2006. You should
not assume that the information contained in, or incorporated by
reference into, this document is accurate as of any date other
than that date. Neither our mailing of this document to Thermo
stockholders or Fisher stockholders nor the issuance by Thermo
of common stock in connection with the merger will create any
implication to the contrary.
This document does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any
person to whom it is unlawful to make any such offer or
solicitation in such jurisdiction. Information contained in this
document regarding Thermo has been provided by Thermo and
information contained in this document regarding Fisher has been
provided by Fisher.
TABLE OF CONTENTS
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iii
QUESTIONS AND ANSWERS
The following are some questions that you, as a stockholder
of Thermo or Fisher, may have regarding the merger and the other
matters being considered at the stockholders meetings and
the answers to those questions. Thermo and Fisher urge you to
read carefully the remainder of this document because the
information in this section does not provide all the information
that might be important to you with respect to the merger and
the other matters being considered at the stockholders
meetings. Additional important information is also contained in
the annexes to and the documents incorporated by reference into
this document.
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Q: |
Why am I receiving this document? |
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A: |
Thermo and Fisher have agreed to the combination of Fisher with
Thermo under the terms of a merger agreement that is described
in this document. A copy of the merger agreement is attached to
this document as Annex A. |
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In order to complete the merger, Thermo stockholders must vote
to approve the issuance of shares of Thermo common stock in
connection with the merger and to approve an amendment to
Thermos charter to, among other things, increase the
number of shares of Thermo common stock authorized for issuance,
and Fisher stockholders must vote to approve and adopt the
merger agreement. |
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Thermo and Fisher will hold separate stockholders meetings
to obtain these approvals. This document contains important
information about the merger and the meetings of the respective
stockholders of Thermo and Fisher, and you should read it
carefully. The enclosed voting materials allow you to vote your
shares without attending your respective stockholders
meeting. |
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Your vote is important. We encourage you to vote as soon as
possible. |
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Q: |
When and where will the stockholders meetings be
held? |
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A: |
The Thermo special meeting will be held at, Thermos
principal executive offices at 81 Wyman Street, Waltham,
Massachusetts 02451 on August 30, 2006 at
10:00 a.m., local time. The Fisher special meeting will be
held at the Sheraton Dover Hotel, 1570 North DuPont
Highway, Dover, Delaware, on August 30, 2006 at
10:00 a.m., local time. |
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A: |
If you are a stockholder of record of Thermo as of the record
date for the Thermo special meeting or a stockholder of record
of Fisher as of the record date for the Fisher special meeting,
you may vote in person by attending your stockholders
meeting or, to ensure your shares are represented at the
meeting, you may vote by: |
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accessing the Internet website specified on your proxy card; |
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calling the toll-free number specified on your proxy
card; or |
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signing and returning the enclosed proxy card in the
postage-paid envelope provided. |
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If you hold Thermo shares or Fisher shares in the name of a bank
or broker, please follow the voting instructions provided by
your bank or broker to ensure that your shares are represented
at your stockholders meeting. |
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|
Q: |
What will happen if I fail to vote or I abstain from
voting? |
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A: |
If you are a Thermo stockholder and fail to vote or vote to
abstain: |
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it will have the same effect as a vote against the Thermo
charter amendment proposal, which is necessary to complete the
merger; and |
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it will have no effect on the proposal to approve the issuance
of shares of Thermo common stock in the merger, assuming a
quorum is present. |
iv
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If you are a Fisher stockholder and fail to vote or vote to
abstain: |
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it will have the same effect as a vote against the proposal to
approve and adopt the merger agreement. |
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Q: |
If my shares are held in street name by my broker, will my
broker vote my shares for me? |
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A: |
If you hold your shares in a stock brokerage account or if your
shares are held by a bank or nominee (that is, in street name),
you must provide the record holder of your shares with
instructions on how to vote your shares. Please follow the
voting instructions provided by your bank or broker. Please note
that you may not vote shares held in street name by returning a
proxy card directly to Thermo or Fisher or by voting in person
at your stockholders meeting unless you provide a
legal proxy, which you must obtain from your bank or
broker. Further, brokers who hold shares of Thermo or Fisher
common stock on behalf of their customers may not give a proxy
to Thermo or Fisher to vote those shares without specific
instructions from their customers. |
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If you are a Thermo stockholder and you do not instruct your
broker on how to vote your shares: |
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your broker may not vote your shares on the Thermo charter
amendment proposal, which will have the same effect as a vote
against the Thermo charter amendment proposal; and |
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your broker may not vote your shares on the proposal to approve
the issuance of shares of Thermo common stock in the merger,
which will have no effect on the vote on this proposal, assuming
a quorum is present. |
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If you are a Fisher stockholder and you do not instruct your
broker on how to vote your shares: |
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your broker may not vote your shares, which will have the same
effect as a vote against the proposal to approve and adopt the
merger agreement. |
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Q: |
What will happen if you return your proxy card without
indicating how to vote? |
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A: |
If you return your proxy card without indicating how to vote on
any particular proposal, the Thermo or Fisher common stock
represented by your proxy will be voted in favor of that
proposal. |
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Q: |
Can I change my vote after I have returned a proxy or voting
instruction card? |
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A: |
Yes. You can change your vote at any time before your proxy is
voted at your stockholders meeting. You can do this in one
of three ways: |
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you can send a signed notice of revocation; |
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you can grant a new, valid proxy bearing a later date; or |
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if you are a holder of record, you can attend your
stockholders meeting and vote in person, which will
automatically cancel any proxy previously given, or you may
revoke your proxy in person, but your attendance alone will not
revoke any proxy that you have previously given. |
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If you choose either of the first two methods, you must submit
your notice of revocation or your new proxy to the Secretary of
Thermo or Fisher, as appropriate, no later than the beginning of
the applicable stockholders meeting. If your shares are
held in street name by your bank or broker, you should contact
your broker to change your vote. |
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Q: |
What do I need to do now? |
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A: |
Carefully read and consider the information contained in and
incorporated by reference into this document, including its
annexes. |
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In order for your shares to be represented at your
stockholders meeting: |
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you can attend your stockholders meeting in person; |
v
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you can vote through the Internet or by telephone by following
the instructions included on your proxy card; or |
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you can indicate on the enclosed proxy card how you would like
to vote and return the proxy card in the accompanying
pre-addressed postage paid envelope. |
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|
Q: |
Should I send in my Fisher stock certificates now? |
|
|
A: |
No. Fisher stockholders should not send in any stock
certificates now. After the merger is completed, Thermos
exchange agent will send former Fisher stockholders a letter of
transmittal explaining what they must do to exchange their
Fisher stock certificates for the merger consideration payable
to them. |
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If you are a Thermo stockholder, you are not required to take
any action with respect to your Thermo stock certificates. |
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|
Q: |
Who can help answer my questions? |
|
|
A: |
Thermo or Fisher stockholders who have questions about the
merger or the other matters to be voted on at the
stockholders meetings or desire additional copies of this
document or additional proxy cards should contact: |
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if you are a Thermo stockholder: |
|
if you are a Fisher stockholder: |
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D.F. King & Co., Inc.
|
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MacKenzie Partners, Inc. |
|
Innisfree M&A Incorporated |
48 Wall Street |
|
105 Madison Avenue |
|
501 Madison Avenue |
New York, New York 10005 |
|
New York, New York 10016 |
|
New York, NY 10022 |
(800) 8483416 |
|
(800) 3222885 |
|
(888) 7505835 |
vi
SUMMARY
|
|
This summary highlights information contained elsewhere in
this document and may not contain all the information that is
important to you. Thermo and Fisher urge you to read carefully
the remainder of this document, including the attached annexes,
and the other documents to which we have referred you because
this section does not provide all the information that might be
important to you with respect to the merger and the other
matters being considered at the applicable stockholders
meeting. See also the section entitled Where You Can Find
More Information beginning on page 89. We have
included page references to direct you to a more complete
description of the topics presented in this summary. |
|
The Merger and the Merger Agreement
The Merger (See page 17)
|
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A copy of the merger agreement is attached as Annex A to
this document. Thermo and Fisher encourage you to read the
entire merger agreement carefully because it is the principal
document governing the merger. |
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Form of Merger (See page 17)
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Subject to the terms and conditions of the merger agreement, at
the effective time of the merger, Trumpet Merger Corporation, a
direct, wholly-owned subsidiary of Thermo formed for the
purposes of the merger, will be merged with and into Fisher.
Fisher will survive the merger as a direct, wholly-owned
subsidiary of Thermo. After the merger, Thermo will be called
Thermo Fisher Scientific Inc., referred to in this
document as the combined company. |
|
Consideration to be Received in the Merger; Treatment of
Stock Options (See page 17)
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Fisher stockholders will receive 2.0 shares of Thermo
common stock for each share of Fisher common stock they hold.
The exchange ratio is fixed and will not be adjusted for changes
in the market value of the common stock of Fisher or Thermo.
Because of this, the implied value of the consideration to
Fisher stockholders will fluctuate between now and the
completion of the merger. Based on the closing price of Thermo
common stock on the New York Stock Exchange, or NYSE, on
May 5, 2006, the last trading day before public
announcement of the merger, the 2.0 exchange ratio represented
approximately $78.90 in value for each share of Fisher common
stock. Based on the closing price of Thermo common stock on the
NYSE on July 24, 2006, the latest practicable date before
the date of this document, the 2.0 exchange ratio represented
approximately $70.44 in value for each share of Fisher common
stock. |
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Material U.S. Federal Income Tax Consequences of the
Merger (See page 47)
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The merger has been structured to qualify as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, which we refer to as the Code.
Assuming the merger qualifies as such a reorganization, for
U.S. federal income tax purposes, holders of Fisher common
stock whose shares of Fisher common stock are exchanged in the
merger for shares of Thermo common stock will not recognize gain
or loss. It is a condition to the completion of the merger that
Thermo and Fisher receive written opinions from their respective
counsel to the effect that the merger will qualify as a
reorganization within the meaning of Section 368(a) of the
Code. Neither Thermo nor Fisher intends to waive this closing
condition. In the event that either Thermo or Fisher waives
receipt of such opinion from its counsel, however, Thermo and
Fisher will resolicit the approval of its stockholders after
providing appropriate disclosure. |
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Tax matters are very complicated and the tax consequences of the
merger to each Fisher stockholder will depend on such
stockholders particular facts and circumstances. Fisher
stockholders are urged to consult their tax advisors to
understand fully the tax consequences to them of the merger. |
|
1
Recommendations of the Boards of Directors
Thermo (See page 22)
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After careful consideration, the Thermo board of directors, on
May 7, 2006, unanimously approved the merger agreement. For
the factors considered by the Thermo board of directors in
reaching its decision to approve the merger agreement, see the
section entitled The Merger Thermos
Reasons for the Merger; Recommendation of the Stock Issuance and
Thermo Charter Amendment Proposals by the Thermo Board of
Directors beginning on page 22. The Thermo board
of directors unanimously recommends that the Thermo stockholders
vote FOR the proposal to approve the issuance of
Thermo common stock in the merger and FOR the Thermo
charter amendment proposal at the Thermo special meeting. |
|
Fisher (See page 23)
After careful consideration, the Fisher board of directors, on
May 7, 2006, unanimously approved and adopted the merger
agreement. For the factors considered by the Fisher board of
directors in reaching its decision to approve and adopt the
merger agreement, see the section entitled The
Merger Fishers Reasons for the Merger;
Recommendation of the Merger by the Fisher Board of
Directors beginning on page 23. The Fisher board
of directors unanimously recommends that the Fisher stockholders
vote FOR the proposal to approve and adopt the
merger agreement at the Fisher special meeting.
Opinions of Financial Advisors
Thermo (See page 26)
Thermos financial advisor, Lehman Brothers Inc., delivered
its opinion to the Thermo board of directors that, as of the
date of the fairness opinion and based upon and subject to the
factors and assumptions set forth therein, the exchange ratio to
be paid by Thermo in the merger was fair from a financial point
of view to Thermo.
The full text of the written opinion of Lehman Brothers, dated
May 7, 2006, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with the opinions, is attached as
Annex B. Lehman Brothers provided its opinion for the
information and assistance of the Thermo board of directors in
connection with its consideration of the merger. The Lehman
Brothers opinion is not a recommendation as to how any holder of
Thermo common stock or Fisher common stock should vote on, or
take any action with respect to, the merger.
Fisher (See page 33)
Fishers financial advisors, Goldman, Sachs & Co.,
which is referred to as Goldman Sachs, and Lazard
Frères & Co. LLC, which is referred to as Lazard,
each delivered its respective opinion to the Fisher board of
directors that, as of the date of the fairness opinion and based
upon and subject to the factors and assumptions set forth
therein, the exchange ratio pursuant to the merger agreement was
fair from a financial point of view to the holders of Fisher
common stock.
The full text of the written opinions of Goldman Sachs and
Lazard, each dated May 7, 2006, which both set forth
assumptions made, procedures followed, matters considered and
limitations on the review undertaken in connection with their
opinions, are attached as Annex C and Annex D,
respectively. Goldman Sachs and Lazard provided their opinions
for the information and assistance of the Fisher board of
directors in connection with its consideration of the merger.
The Goldman Sachs and Lazard opinions are not recommendations as
to how any holder of Fisher common stock or Thermo common stock
should vote on, or take any action with respect to, the merger.
Financial Interests of Directors and Officers in the Merger
(See page 42)
Some of the members of Thermos and Fishers
management and the non-employee directors of their boards of
directors have interests in the merger that are in addition to,
or different from, the interests of
2
Thermo and Fisher stockholders generally. The executive officers
of Thermo and Fisher have existing agreements with Thermo or
Fisher, as applicable, that provide for severance benefits in
connection with termination of employment following a change in
control of Thermo or Fisher. Some of Thermos and
Fishers compensation and benefits plans provide for
payment or accelerated vesting or distribution of the rights or
benefits thereunder upon a change in control of Thermo or
Fisher, as applicable.
The Thermo and Fisher boards of directors were aware of these
interests and considered them, among other matters, in approving
the merger agreement and the transactions contemplated by the
merger agreement.
Directors and Management Following the Merger (See
page 46)
Following the merger, the board of directors of the combined
company will consist of eight directors. The board will be
comprised of Marijn E. Dekkers, Jim P. Manzi, Peter
Manning, Michael E. Porter, Elaine S. Ullian and Paul M.
Meister and two additional independent directors to be
designated by Fisher.
Following the merger, Mr. Dekkers will serve as President
and Chief Executive Officer and Mr. Meister will serve as
non-executive Chairman of the board of directors, of the
combined company.
Regulatory Approvals Required for the Merger (See
page 49)
Thermo and Fisher have each agreed to use our reasonable best
efforts in order to obtain all regulatory approvals required in
order to consummate the merger. These approvals include
antitrust filings with the U.S. Department of Justice and
the U.S. Federal Trade Commission and expiration or
termination of the required waiting periods, as well as the
approval of the European Commission. We also expect to file
notices with antitrust and competition authorities in other
jurisdictions. Although we do not expect regulatory authorities
to raise any significant objections in connection with their
review of the merger, we cannot assure you that we will obtain
all required regulatory approvals or that these regulatory
approvals will not contain terms, conditions or restrictions
that would be detrimental to the combined company after the
completion of the merger.
Expected Timing of the Merger (See page 52)
We currently expect to complete the merger in the fourth quarter
of 2006, subject to receipt of required stockholder and
regulatory approvals.
Conditions to Completion of the Merger (See page 52)
The obligations of Fisher and Thermo to complete the merger are
subject to the satisfaction of the following conditions:
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the adoption of the merger agreement by Fisher stockholders; |
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the approval of the issuance of Thermo common stock in the
merger and the Thermo charter amendment proposal by Thermo
stockholders; |
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the termination or expiration of the applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, which we refer to as the HSR Act, all required
notifications and filings under Council Regulation
(EC) 139/2004 of the European Community, which we refer to
as the ECMR; |
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the receipt of other requisite regulatory approvals, unless
failure to obtain them would not, individually or in the
aggregate, have a material adverse effect on Fisher and its
subsidiaries, taken as a whole, or Thermo and its subsidiaries,
taken as a whole (after giving effect to the merger); |
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no judgment or other legal prohibition of any court or other
governmental entity shall be in effect that prohibits the
completion of the merger; |
3
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the Securities and Exchange Commission, which we refer to as the
SEC, having declared effective the registration statement of
which this document forms a part; and |
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the authorization for listing by the NYSE of the Thermo common
stock issuable to Fisher stockholders in the merger. |
In addition, each of Fishers and Thermos obligation
to complete the merger is subject to the satisfaction or waiver
of the following additional conditions:
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the representations and warranties of the other party being true
and correct, subject to the material adverse effect standard
provided in the merger agreement; |
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the other party having performed or complied with, in all
material respects, all obligations required to be performed or
complied with by it under the merger agreement; |
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the other party and its respective subsidiaries, taken as a
whole, not having suffered any material adverse effect, as
defined in the merger agreement; |
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the receipt of an officers certificate executed by each of
the other partys Chief Executive Officer and Chief
Financial Officer stating that the three preceding conditions
have been satisfied; and |
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the receipt of an opinion of that partys counsel to the
effect that the merger will qualify as a
reorganization under the Code. |
Termination of the Merger Agreement (See page 53)
Thermo and Fisher can jointly agree to terminate the merger
agreement at any given time. Either company may also terminate
the merger agreement if the merger is not completed by
May 7, 2007 or under other circumstances described in this
document. See the section entitled The Merger
Agreement Termination of the Merger Agreement
beginning on page 53 for a discussion of each of
Thermos and Fishers rights to terminate the merger
agreement.
Expenses and Termination Fees (See page 54)
Generally, all fees and expenses incurred in connection with the
merger agreement and the transactions contemplated by the merger
agreement will be paid by the party incurring those expenses,
subject to the specific exceptions discussed in this document.
See the section entitled The Merger Agreement
Termination Fee beginning on page 54 for a complete
discussion of the circumstances under which termination fees
will be required to be paid.
Accounting Treatment (See page 48)
Thermo prepares its financial statements in accordance with
accounting principles generally accepted in the United States of
America, which is referred to as GAAP. The merger will be
accounted for using the purchase method of accounting. As
discussed under Accounting Treatment on
page 48, based upon the terms of the exchange and other
factors, such as the composition of the combined companys
board and senior management, Thermo is considered to be the
acquirer of Fisher for accounting purposes. This means that
Thermo will allocate the purchase price to the fair value of
Fishers assets and liabilities at the acquisition date,
with the excess purchase price being recorded as goodwill. Under
the purchase method of accounting, goodwill is not amortized but
is tested for impairment at least annually.
Appraisal Rights (See page 51)
Under Delaware law, the holders of Fisher common stock are not
entitled to appraisal rights in connection with the merger.
4
The Special Meetings
The Thermo Special Meeting (See page 70)
The Thermo special meeting will be held at Thermos
principal executive offices at 81 Wyman Street, Waltham,
Massachusetts 02451, at 10:00 a.m., local time, on
August 30, 2006. At the Thermo special meeting, Thermo
stockholders will be asked to:
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approve the issuance of Thermo common stock in the merger; |
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approve the Thermo charter amendment proposal, which will,
effective upon the completion of the merger, increase the
authorized number of shares of Thermo common stock from
350,000,000 to 1.2 billion and change the name of Thermo to
Thermo Fisher Scientific Inc.; |
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vote upon an adjournment of the Thermo special meeting, if
necessary, to solicit additional proxies if there are not
sufficient votes for each of the foregoing proposals; and |
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transact any other business that may properly be brought before
the Thermo special meeting or any adjournments or postponements
thereof. |
You may vote at the Thermo special meeting if you owned shares
of Thermo common stock at the close of business on July 24,
2006. On that date there were 157,567,431 shares of Thermo
common stock outstanding, less than 1% of which were owned and
entitled to be voted by Thermo directors and executive officers
and their affiliates. We currently expect that Thermos
directors and executive officers will vote their shares in favor
of the merger, although none of them has entered into any
agreements obligating them to do so.
You can cast one vote for each share of Thermo common stock you
own. The proposals require different percentages of votes in
order to approve them:
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The issuance of Thermo common stock to Fisher stockholders
requires approval by an affirmative vote of holders of a
majority of the Thermo common stock present or represented and
entitled to vote on the proposal. |
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The Thermo charter amendment proposal requires the affirmative
vote of holders of a majority of the outstanding shares of
Thermo common stock entitled to vote on the proposal. |
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Approval of the proposal to adjourn the Thermo special meeting,
if necessary, for the purpose of soliciting additional proxies
requires that the votes cast favoring the proposal exceed the
votes cast opposing the proposal. |
The Fisher Special Meeting (See page 73)
The Fisher special meeting will be held at the Sheraton Dover
Hotel, 1570 North DuPont Highway, Dover, Delaware, at
10:00 a.m., local time, on August 30, 2006. At the
Fisher special meeting, Fisher stockholders will be asked to:
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approve and adopt the merger agreement; |
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vote upon an adjournment of the Fisher special meeting, if
necessary, to solicit additional proxies if there are not
sufficient votes for the foregoing proposal; and |
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transact any other business that may properly be brought before
the Fisher special meeting or any adjournments or postponements
thereof. |
You may vote at the Fisher special meeting if you owned shares
of Fisher common stock at the close of business on July 24,
2006. On that date there were 124,418,449 shares of Fisher
common stock outstanding, approximately 1.5% of which were owned
and entitled to be voted by Fisher directors and executive
officers and their affiliates. We currently expect that
Fishers directors and executive officers will vote their
shares in favor of the merger, although none of them has entered
into any agreements obligating them to do so.
5
You can cast one vote for each share of Fisher common stock you
own. The proposals require different percentages of votes in
order to approve them:
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Approval and adoption of the merger agreement requires the
affirmative vote of holders of a majority of the outstanding
shares of Fisher common stock entitled to vote on the proposal. |
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Approval of the proposal to adjourn the Fisher special meeting,
if necessary, for the purpose of soliciting additional proxies
requires that the votes cast favoring the proposal exceed the
votes cast opposing the proposal. |
The Companies
Thermo (See page 61)
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Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02451
Telephone: (781) 622-1000 |
Thermo Electron Corporation is a world-wide provider of
analytical instruments that enable customers to make the world a
healthier, cleaner and safer place. Thermo provides analytical
instruments, scientific equipment, services and software
solutions for life science, drug discovery, clinical,
environmental and industrial laboratories, as well as for use in
a variety of manufacturing processes and
in-the-field
applications including those associated with safety and homeland
security.
Thermo, a Delaware corporation, was founded in 1956 by
Dr. George N. Hatsopoulos in Massachusetts. The
company completed its initial public offering in 1967 and was
listed on the NYSE in 1980.
Fisher (See page 61)
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Fisher Scientific International Inc.
One Liberty Lane
Hampton, New Hampshire 03842
Telephone: (603) 926-5911 |
Fisher Scientific International Inc. is a leading manufacturer
and supplier of products and services principally to the
scientific-research and clinical laboratory markets. Fisher
serves pharmaceutical and biotechnology companies; colleges and
universities; medical-research institutions; hospitals;
reference, quality-control, process-control and research and
development labs in various industries; as well as government
agencies. From biochemicals, cell-culture media and proprietary
RNAi technology to rapid-diagnostic tests, safety products and
other consumable supplies, Fisher offers an array of products
and services. This broad offering, combined with Fishers
global supply chain and sales and marketing capabilities, helps
make Fishers customers more efficient and effective.
Fisher was founded in 1902 by Chester G. Fisher in Pittsburgh,
Pennsylvania. In 1991 Fisher was incorporated as a Delaware
corporation and became a public company whose shares are listed
on the NYSE. Fisher is a Fortune 500 company and a
component of the S&P 500, Russell 1000 and MSCI World
indices.
Recent Developments
Starting in mid-May 2006, Thermo, pursuant to its existing
$300 million board authorized stock repurchase program,
commenced repurchasing shares of its common stock in open market
transactions. These purchases ended on June 16, 2006.
6
Selected Historical Financial Data of Thermo
The following tables set forth selected historical financial
data of Thermo. The selected statement of operations data for
the fiscal years 2005, 2004, and 2003 and the selected balance
sheet data as of December 31, 2005 and December 31,
2004 are derived from Thermos audited consolidated
financial statements incorporated by reference into this
document. The selected statement of operations data for fiscal
years 2002 and 2001 and the selected balance sheet data as of
December 31, 2003, December 28, 2002 and
December 29, 2001 are derived from Thermos
consolidated financial statements not included or incorporated
by reference into this document. The selected statement of
operations data for the three months ended April 1, 2006
and April 2, 2005 and the selected balance sheet data as of
April 1, 2006 have been derived from Thermos
unaudited consolidated financial statements incorporated by
reference into this document. The interim consolidated financial
data, in the opinion of management, reflect all adjustments of a
normal recurring nature necessary for a fair statement of
Thermos financial position and results of operations at
the dates and for the periods indicated. The results of
operations for the three months ended April 1, 2006 may not
be indicative of the results to be expected for the year ending
December 31, 2006 or any other interim period.
Thermos historical financial data may not be indicative of
the results of operations or financial position to be expected
in the future.
The selected consolidated financial data should be read together
with Thermos consolidated financial statements and the
related notes to those financial statements and the
Managements Discussion and Analysis of Financial
Condition and Results of Operations section included in
Thermos Annual Report on
Form 10-K for the
year ended December 31, 2005 and its Quarterly Report on
Form 10-Q for the
quarter ended April 1, 2006, which have been filed with the
SEC and are incorporated by reference into this document.
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Three Months Ended | |
|
Fiscal Year Ended | |
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| |
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| |
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|
April 1, | |
|
April 2, | |
|
December 31, | |
|
December 31, | |
|
December 31, | |
|
December 28, | |
|
December 29, | |
|
|
2006(a) | |
|
2005(b) | |
|
2005(c) | |
|
2004(d) | |
|
2003(e) | |
|
2002(f) | |
|
2001(g) | |
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| |
|
| |
|
| |
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| |
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| |
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| |
|
| |
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(In millions, except per share amounts) | |
Statement of Operations Data
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|
|
|
|
|
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Revenues
|
|
$ |
684.3 |
|
|
$ |
559.2 |
|
|
$ |
2,633.0 |
|
|
$ |
2,206.0 |
|
|
$ |
1,899.4 |
|
|
$ |
1,849.4 |
|
|
$ |
1,916.2 |
|
Operating Income
|
|
|
67.8 |
|
|
|
59.7 |
|
|
|
263.5 |
|
|
|
237.5 |
|
|
|
187.4 |
|
|
|
169.9 |
|
|
|
82.4 |
|
Income from Continuing Operations
|
|
|
43.6 |
|
|
|
45.6 |
|
|
|
198.3 |
|
|
|
218.4 |
|
|
|
175.2 |
|
|
|
203.4 |
|
|
|
76.0 |
|
Net Income (Loss)
|
|
|
46.9 |
|
|
|
48.9 |
|
|
|
223.2 |
|
|
|
361.8 |
|
|
|
200.0 |
|
|
|
309.7 |
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|
|
(0.8 |
) |
Earnings per Share from Continuing Operations:
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|
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Basic
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|
.27 |
|
|
|
.28 |
|
|
|
1.23 |
|
|
|
1.34 |
|
|
|
1.08 |
|
|
|
1.21 |
|
|
|
.42 |
|
|
Diluted
|
|
|
.26 |
|
|
|
.28 |
|
|
|
1.21 |
|
|
|
1.31 |
|
|
|
1.05 |
|
|
|
1.17 |
|
|
|
.41 |
|
Earnings (Loss) per Share:
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|
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|
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|
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|
|
|
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|
Basic
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|
|
.29 |
|
|
|
.30 |
|
|
|
1.38 |
|
|
|
2.22 |
|
|
|
1.23 |
|
|
|
1.84 |
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|
|
|
|
|
Diluted
|
|
|
.28 |
|
|
|
.30 |
|
|
|
1.36 |
|
|
|
2.17 |
|
|
|
1.20 |
|
|
|
1.73 |
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|
|
|
|
Balance Sheet Data (at end of period)
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|
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Working Capital
|
|
$ |
660.6 |
|
|
|
|
|
|
$ |
562.2 |
|
|
$ |
890.9 |
|
|
$ |
710.5 |
|
|
$ |
667.8 |
|
|
$ |
823.2 |
|
Total Assets
|
|
|
4,240.7 |
|
|
|
|
|
|
|
4,251.6 |
|
|
|
3,576.7 |
|
|
|
3,389.3 |
|
|
|
3,651.5 |
|
|
|
3,825.1 |
|
Long-term Debt
|
|
|
469.2 |
|
|
|
|
|
|
|
468.6 |
|
|
|
226.1 |
|
|
|
229.5 |
|
|
|
451.3 |
|
|
|
727.5 |
|
Shareholders Equity
|
|
|
2,874.0 |
|
|
|
|
|
|
|
2,793.3 |
|
|
|
2,665.6 |
|
|
|
2,381.7 |
|
|
|
2,030.3 |
|
|
|
1,908.1 |
|
7
Through 2002, Thermo had a fiscal year end ending the Saturday
nearest December 31. In 2003, Thermo changed its year end
to December 31. The consolidated financial statements for
fiscal year 2001 were audited by Arthur Andersen LLP, which has
ceased operations. The results of Spectra-Physics, Inc.,
Thermos optical technologies segment, which was sold in
July 2004, have been reclassified to discontinued operations for
all years presented.
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|
(a) |
Reflects $5.3 million of pre-tax stock option compensation
expense following the adoption of SFAS No. 123R, a
$3.6 million pre-tax charge for restructuring and other
costs and after-tax income of $3.3 million related to
Thermos discontinued operations. |
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(b) |
|
Reflects $0.3 million pre-tax income for restructuring and
other income, net and after-tax income of $3.3 million
related to Thermos discontinued operations. |
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(c) |
|
Reflects a $30.3 million pre-tax charge for restructuring
and other costs; $27.6 million of pre-tax net gains from
the sale of shares of Thoratec Corporation and Newport
Corporation; and after-tax income of $24.9 million related
to Thermos discontinued operations. Also reflects use of
cash and debt for acquisitions, principally the Kendro
Laboratory Products business. |
|
(d) |
|
Reflects a $19.2 million pre-tax charge for restructuring
and other costs; $9.6 million of pre-tax gains from the
sale of shares of Thoratec; $33.8 million of tax benefits
recorded on completion of tax audits; after-tax income of
$143.5 million related to Thermos discontinued
operations; and the repurchase of $231.5 million of
Thermos common stock. |
|
(e) |
|
Reflects a $45.3 million pre-tax charge for restructuring
and other costs; $16.3 million of pre-tax gains from the
sale of shares of Thoratec; $13.7 million of pre-tax gains
from the sale of shares of FLIR Systems, Inc.; after-tax income
of $24.8 million related to Thermos discontinued
operations; and the repurchase and redemption of
$356.9 million of Thermos debt and equity securities. |
|
(f) |
|
Reflects a $46.2 million pre-tax charge for restructuring
and other costs; $111.4 million of pre-tax gains from the
sale of shares of FLIR; after-tax income of $106.3 million
related to Thermos discontinued operations; the repurchase
and redemption of $924.9 million of Thermos debt and
equity securities; and the reclassification of Thermos
$71.9 million principal amount
43/8
% subordinated convertible debentures from long-term
obligations to current liabilities as a result of Thermos
decision to redeem them in April 2003. Also reflects the
adoption of SFAS No. 142, under which amortization of
goodwill ceased. |
|
(g) |
|
Reflects a $107.4 million pre-tax charge for restructuring
and other costs; $38.3 million of goodwill amortization
expense; $35.1 million of pre-tax gains from the sale of
shares of FLIR; an after-tax loss of $75.8 million related
to Thermos discontinued operations; and a
$1.0 million after-tax charge reflecting the cumulative
effect of a change in accounting principle for the adoption of
SFAS No. 133. |
8
Selected Historical Financial Data of Fisher
The following selected consolidated financial information of
Fisher as of and for the five-year period ended
December 31, 2005 is derived from either (i) the
audited consolidated financial statements or (ii) the
selected financial data included in Fishers Current Report
on Form 8-K filed
on May 11, 2006 to reflect the account balances and
activities of the laboratory workstations business as
discontinued operations. The selected consolidated financial
information as of March 31, 2006 and for the three-month
periods ended March 31, 2006 and March 31, 2005 is
derived from the unaudited consolidated financial statements
included in Fishers quarterly report on
Form 10-Q for the
period ended March 31, 2006, and in the opinion of
Fishers management, includes all normal and recurring
adjustments that are considered necessary for the fair
presentation of the results for the interim period. The
operating results for the three-month period ended
March 31, 2006 are not necessarily indicative of the
results to be expected for the full year or any other interim
period. The selected historical financial data is only a
summary, and should be read in conjunction with
Managements Discussion and Analysis of Financial
Condition and Results of Operations and the consolidated
financial statements and the related notes contained in the
Fisher Current Report on
Form 8-K filed on
May 11, 2006, and the quarterly report on
Form 10-Q for the
quarter ended March 31, 2006, all of which have been filed
with the SEC and are incorporated by reference into this
document.
Fishers historical financial data may not be indicative of
the results of operations or financial position to be expected
in the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
|
|
|
March 31, | |
|
Year Ended December 31, | |
|
|
| |
|
| |
|
|
2006 | |
|
2005 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In millions, except per share amounts) | |
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ |
1,412.4 |
|
|
$ |
1,306.8 |
|
|
$ |
5,386.3 |
|
|
$ |
4,458.8 |
|
|
$ |
3,356.6 |
|
|
$ |
3,052.2 |
|
|
$ |
2,709.2 |
|
Operating income(a)
|
|
|
172.3 |
|
|
|
135.7 |
|
|
|
660.3 |
|
|
|
332.1 |
|
|
|
244.7 |
|
|
|
232.3 |
|
|
|
127.2 |
|
Income from continuing operations before cumulative effect of
accounting change
|
|
|
106.2 |
|
|
|
76.0 |
|
|
|
374.2 |
|
|
|
193.6 |
|
|
|
68.8 |
|
|
|
88.4 |
|
|
|
14.0 |
|
Income (loss) from discontinued operations(b)
|
|
|
(3.0 |
) |
|
|
1.0 |
|
|
|
14.9 |
|
|
|
(27.2 |
) |
|
|
9.6 |
|
|
|
(19.5 |
) |
|
|
2.4 |
|
Net income(c)
|
|
|
103.2 |
|
|
|
77.0 |
|
|
|
389.1 |
|
|
|
166.4 |
|
|
|
78.4 |
|
|
|
50.6 |
|
|
|
16.4 |
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.85 |
|
|
$ |
0.63 |
|
|
$ |
3.08 |
|
|
$ |
2.25 |
|
|
$ |
1.21 |
|
|
$ |
1.62 |
|
|
$ |
0.28 |
|
|
Diluted
|
|
|
0.81 |
|
|
|
0.60 |
|
|
|
2.93 |
|
|
|
2.10 |
|
|
|
1.13 |
|
|
|
1.53 |
|
|
|
0.26 |
|
Income (loss) from discontinued operations(b):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.12 |
|
|
$ |
(0.32 |
) |
|
$ |
0.17 |
|
|
$ |
(0.36 |
) |
|
$ |
0.05 |
|
|
Diluted
|
|
|
(0.02 |
) |
|
|
0.01 |
|
|
|
0.12 |
|
|
|
(0.30 |
) |
|
|
0.16 |
|
|
|
(0.34 |
) |
|
|
0.05 |
|
Cumulative effect of accounting changes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(0.33 |
) |
|
$ |
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.32 |
) |
|
|
|
|
Net income(c):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.83 |
|
|
$ |
0.64 |
|
|
$ |
3.20 |
|
|
$ |
1.93 |
|
|
$ |
1.38 |
|
|
$ |
0.93 |
|
|
$ |
0.33 |
|
|
Diluted
|
|
|
0.79 |
|
|
|
0.61 |
|
|
|
3.05 |
|
|
|
1.80 |
|
|
|
1.29 |
|
|
|
0.87 |
|
|
|
0.31 |
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
123.8 |
|
|
|
119.6 |
|
|
|
121.5 |
|
|
|
86.2 |
|
|
|
56.9 |
|
|
|
54.5 |
|
|
|
49.4 |
|
|
Diluted
|
|
|
130.6 |
|
|
|
126.0 |
|
|
|
127.5 |
|
|
|
92.2 |
|
|
|
60.6 |
|
|
|
57.9 |
|
|
|
53.0 |
|
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital(d)
|
|
$ |
1,095.3 |
|
|
|
|
|
|
$ |
967.9 |
|
|
$ |
714.1 |
|
|
$ |
353.3 |
|
|
$ |
162.9 |
|
|
$ |
118.3 |
|
Total assets
|
|
|
8,583.8 |
|
|
|
|
|
|
|
8,445.7 |
|
|
|
8,109.1 |
|
|
|
2,862.9 |
|
|
|
1,887.6 |
|
|
|
1,856.1 |
|
Long-term debt
|
|
|
2,127.5 |
|
|
|
|
|
|
|
2,135.4 |
|
|
|
2,309.2 |
|
|
|
1,386.1 |
|
|
|
921.8 |
|
|
|
956.1 |
|
|
|
|
(a) |
|
For the three-month period ended March 31, 2006, operating
income includes the step up amortization of inventory to the
acquired fair value related to the Companys acquisitions
of $0.2 million ($0.1 million, net of tax),
restructuring charges of $0.4 million ($0.3 million,
net of tax), equity-based compensation expense resulting from
the Companys adoption of FAS 123R in the first
quarter of 2006 of $14.3 million ($9.2 million, net of
tax), and acquisition, integration and other costs of
$0.9 million ($0.5 million, net of tax). For the
three-month period ended March 31, 2005, operating income
includes the step up |
9
|
|
|
|
|
amortization charges of the fair value of inventory from the
Apogent Technologies Inc. transaction of $17.1 million
($11.0 million, net of tax), restructuring charges of
$8.3 million ($5.5 million, net of tax), asset
impairment charges of $0.5 million ($0.3 million, net
of tax), and acquisition and integration cost of
$10.6 million ($7.0 million, net of tax). In 2005,
operating income includes the step up amortization of inventory
to the acquired fair value related to the Companys
acquisition of Apogent in the amount of $20.7 million
($13.3 million, net of tax), the integration costs of
$23.6 million ($16.1 million, net of tax),
restructuring charges of $22.4 million ($14.9 million,
net of tax) and long-lived asset impairment and related charges
of $8.6 million ($5.5 million, net of tax). In 2004,
operating income includes the step up charges of the fair value
of inventory from the Apogent, Oxoid Group Holdings Ltd.,
Dharmacon Inc., and Perbio Science AB transactions of
$82.9 million ($53.0 million, net of tax), integration
costs of $24.6 million ($16.3 million, net of tax),
restructuring charges of $7.7 million ($5.1 million,
net of tax), a charitable contribution of $6.0 million
($3.8 million, net of tax), and impairment charges for
goodwill and other long-lived assets of $14.6 million
($10.3 million, net of tax). Operating income also includes
the step up charges of the fair value of inventory from the
Perbio acquisition of $17.4 million ($11.0 million,
net of tax) in 2003, restructuring credits relating to a
reduction in estimated severance costs of $2.2 million
($1.4 million, net of tax) in 2002, and the restructuring
and other charges of $60.7 million ($38.2 million, net
of tax) in 2001. |
|
(b) |
|
Income from discontinued operations includes the activities of
Atos Medical Holding AB, which was sold on April 5, 2005,
as well as the results of the laboratory workstations business,
which has met the criteria for discontinued operations
presentation as of March 2006. For the three-month period ended
March 31, 2006, loss from discontinued operations was
$4.7 million ($3.0 million, net of tax). For the
three-month period ended March 31, 2005, income from
discontinued operations was $1.2 million
($1.0 million, net of tax). In 2005, income from
discontinued operations comprised a gain on the disposal of
$25.4 million ($17.0 million, net of tax) and loss on
discontinued operations of $2.0 million ($2.1 million,
net of tax). In 2004, loss from discontinued operations was
$45.1 million ($27.2 million, net of tax). In 2003,
income from discontinued operations was $14.2 million
($9.6 million, net of tax). In 2002, income from
discontinued operations was $13.1 million
($8.3 million, net of tax). In 2001, income from
discontinued operations was $3.9 million
($2.4 million, net of tax). Atos was acquired in September
2003 in connection with the Companys acquisition of Perbio
Science. |
|
(c) |
|
For the three-month period ended March 31, 2006, net income
includes the charges described in (a) above, (b) above
and impairment of an investment of $2.0 million
($1.3 million, net of tax). For the three-month period
ended March 31, 2005, net income includes the charges
described in (a) above, (b) above and other income of
$0.5 million. In 2005, net income includes the charges
described in (a) above, (b) above and debt refinancing
and other related charges of $71.3 million
($45.6 million, net of tax), the gain on sale of investment
of $3.3 million ($2.1 million, net of tax), other
income of $0.5 million, the gain on the termination of the
interest rate swaps of $5.3 million ($3.4 million, net
of tax) and a tax provision credit related to finalizing certain
domestic tax audits and negotiations of $6.8 million. In
2004, net income includes the charges described in
(a) above, (b) above and debt refinancing charges of
$14.4 million ($9.0 million, net of tax), the gain on
sale of investment of $22.7 million ($21.5 million,
net of tax), the charge for the termination of a foreign
currency contract of $2.2 million ($1.4 million, net
of tax), and a tax provision credit related to finalizing
certain domestic and foreign tax audits and negotiations of
$10.9 million. Net income in 2003 includes the charges
described in (a) above, (b) above and charges for call
premiums of $43.8 million ($27.6 million, net of tax),
the write-off of deferred financing fees of $22.1 million
($13.9 million, net of tax), and the purchase of options to
hedge foreign currency exposure of $15.7 million
($9.9 million, net of tax) and charges for bridge financing
fees for $2.8 million ($1.8 million, net of tax), each
related to the Perbio acquisition. Net income in 2002 includes
the amounts described in (a) above and includes a charge of
$11.2 million ($7.1 million, net of tax) consisting of
fixed-swap unwind costs of $7.1 million and the write-off
of deferred financing and other costs associated with the
refinancing of our term debt of $4.1 million. |
|
(d) |
|
Working capital excludes the accounts of the laboratory
workstations business and Atos Medical Holding AB. |
10
Summary Unaudited Pro Forma Condensed Combined Financial
Statements
The merger will be accounted for under the purchase method of
accounting, which means the assets and liabilities of Fisher
will be recorded, as of completion of the merger, at their
respective fair values and added to those of Thermo. For a more
detailed description of purchase accounting see Accounting
Treatment on page 48.
The summary unaudited pro forma condensed combined financial
information presented below reflects the purchase method of
accounting and is for illustrative purposes only. The summary
pro forma condensed combined information may have been different
had the companies actually combined. The summary pro forma
condensed combined financial information does not reflect the
effect of asset dispositions, if any, or revenue, cost or other
operating synergies that may result from the merger, nor does it
reflect the effects of any financing, liquidity or other balance
sheet repositioning that may be undertaken in connection with or
subsequent to the merger. You should not rely on the summary pro
forma condensed combined financial information as being
indicative of the historical results that would have occurred
had the companies been combined or the future results that may
be achieved after the merger. The following pro forma condensed
combined financial information has been derived from, and should
be read in conjunction with, the Unaudited Pro Forma Condensed
Combined Financial Statements and related notes presented
elsewhere in this document.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Year Ended | |
|
|
April 1, 2006 | |
|
December 31, 2005 | |
|
|
| |
|
| |
|
|
(In millions, except per share amounts) | |
Statement of Operations Data
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
2,065.9 |
|
|
$ |
8,026.3 |
|
Operating Income
|
|
|
95.0 |
|
|
|
323.9 |
|
Income from Continuing Operations
|
|
|
55.8 |
|
|
|
175.7 |
|
Earnings per Share from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.14 |
|
|
|
0.43 |
|
|
Diluted
|
|
|
0.13 |
|
|
|
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2006 | |
|
|
|
|
| |
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
Working Capital
|
|
$ |
1,794.5 |
|
|
|
|
|
Total Assets
|
|
|
20,098.7 |
|
|
|
|
|
Long-term Debt
|
|
|
2,622.5 |
|
|
|
|
|
Shareholders Equity
|
|
|
13,334.2 |
|
|
|
|
|
11
Equivalent and Comparative Per Share Information
We present below per common share data regarding the income and
book value of Thermo and Fisher on both historical and unaudited
pro forma condensed combined bases and on a per share equivalent
unaudited pro forma condensed combined basis for Fisher. We have
derived the unaudited pro forma condensed combined per share
information from the unaudited pro forma condensed combined
financial statements presented elsewhere in this document. You
should read the information below in conjunction with the
financial statements and accompanying notes of Thermo and Fisher
that are incorporated by reference into this document and with
the unaudited pro forma condensed combined information included
under the section entitled Unaudited Pro Forma Condensed
Combined Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Year Ended | |
Thermo |
|
April 1, 2006 | |
|
December 31, 2005 | |
|
|
| |
|
| |
Basic earnings per common share
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.27 |
|
|
$ |
1.23 |
|
|
Pro forma
|
|
|
0.14 |
|
|
|
0.43 |
|
Diluted earnings per common share
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
0.26 |
|
|
|
1.21 |
|
|
Pro forma
|
|
|
0.13 |
|
|
|
0.42 |
|
Dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
|
|
|
|
|
|
Book value per common share
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
17.58 |
|
|
|
17.19 |
|
|
Pro forma
|
|
|
32.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Year Ended | |
Fisher |
|
March 31, 2006 | |
|
December 31, 2005 | |
|
|
| |
|
| |
Basic earnings per common share
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.85 |
|
|
$ |
3.08 |
|
|
Equivalent pro forma
|
|
|
0.27 |
|
|
|
0.87 |
|
Diluted earnings per common share
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
0.81 |
|
|
|
2.93 |
|
|
Equivalent pro forma
|
|
|
0.26 |
|
|
|
0.84 |
|
Dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
Equivalent pro forma
|
|
|
|
|
|
|
|
|
Book value per common share
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
36.09 |
|
|
|
34.88 |
|
|
Equivalent pro forma
|
|
|
64.21 |
|
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12
RISK FACTORS
In addition to the other information included and
incorporated by reference into this document, including the
matters addressed in the section entitled Cautionary
Statement Regarding Forward-Looking Statements, you should
carefully consider the following risks before deciding whether
to vote for adoption and approval of the merger agreement, in
the case of Fisher stockholders, or for the issuance of shares
of Thermo common stock in the merger and the Thermo charter
amendments, in the case of Thermo stockholders. In addition, you
should read and consider the risks associated with each of the
businesses of Thermo and Fisher because these risks will also
affect the combined company. These risks can be found in
Thermos Quarterly Report on
Form 10-Q for the
first quarter of 2006 and in the Fisher Current Report on
Form 8-K filed on
May 11, 2006, each of which are filed with the SEC and
incorporated by reference into this document. You should also
read and consider the other information in this document and the
other documents incorporated by reference into this document.
See the section entitled Where You Can Find More
Information beginning on page 89.
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The exchange ratio is fixed and will not be adjusted in
the event of any change in either Thermos or Fishers
stock price. |
Upon closing of the merger, each share of Fisher common stock
will be converted into the right to receive 2.0 shares of
Thermo common stock. This exchange ratio will not be adjusted
for changes in the market price of either Thermo common stock or
Fisher common stock. Changes in the price of Thermo common stock
prior to the merger will affect the value that Fisher common
stockholders will receive on the date of the merger. Stock price
changes may result from a variety of factors (many of which are
beyond our control), including the following factors:
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changes in our businesses, operations and prospects; |
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changes in market assessments of the business, operations and
prospects of either company; |
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market assessments of the likelihood that the merger will be
completed, including related considerations regarding regulatory
approval of the merger; |
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interest rates, general market and economic conditions and other
factors generally affecting the price of Thermos and
Fishers common stock; and |
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federal, state and local legislation, governmental regulation
and legal developments in the businesses in which Fisher and
Thermo operate. |
The prices of Thermo common stock and Fisher common stock at the
closing of the merger may vary from their respective prices on
the date the merger agreement was executed, on the date of this
document and on the date of the respective stockholder meetings.
As a result, the value represented by the exchange ratio will
also vary. For example, based on the range of closing prices of
Thermo common stock during the period from May 5, 2006, the
last trading day before public announcement of the merger,
through July 24, 2006, the latest practicable date before
the date of this document, the exchange ratio represented a
value ranging from a high of $78.90 to a low of $68.00 for each
share of Fisher common stock.
Because the date that the merger is completed may be later
than the date of the stockholder meetings, at the time of your
stockholder meeting, you will not know the exact market value of
the Thermo common stock that Fisher stockholders will receive
upon completion of the merger. You should consider the
following two risks:
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If the price of Thermo common stock increases between the date
the merger agreement was signed or the date of the Thermo
special meeting and the effective time of the merger, Fisher
stockholders will receive shares of Thermo common stock that
have a market value that is greater than the market value of
such shares when the merger agreement was signed, and Thermo
will pay more for shares of Fisher common stock than the value
calculated pursuant to the exchange ratio on the date the merger
agreement was signed or on the date of the Thermo annual
meeting. Therefore, Thermo stockholders |
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cannot be sure of the value of the consideration that will be
paid to Fisher stockholders upon completion of the merger. |
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If the price of Thermo common stock declines between the date
the merger agreement was signed or the date of the Fisher
special meeting and the effective time of the merger, including
for any of the reasons described above, Fisher stockholders will
receive less value for their shares upon completion of the
merger than they would have received based on the value
calculated pursuant to the exchange ratio on the date the merger
agreement was signed or on the date of the Fisher special
meeting. Therefore, Fisher stockholders cannot be sure of the
market value of the Thermo common stock they will receive upon
completion of the merger or the market value of Thermo common
stock at any time after the completion of the merger. |
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The combined company may be unable to integrate
successfully the businesses of Thermo and Fisher and realize the
anticipated benefits of the merger. |
The merger involves the combination of two companies which
currently operate as independent public companies. The combined
company will be required to devote significant management
attention and resources to integrating its business practices
and operations. Potential difficulties the combined company may
encounter in the integration process include the following:
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if we are unable to successfully combine the businesses of
Thermo and Fisher in a manner that permits the combined company
to achieve the cost savings and operating synergies anticipated
to result from the merger, such anticipated benefits of the
merger may not be realized fully or at all or may take longer to
realize than expected; |
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lost sales and customers as a result of certain customers of
either of the two companies deciding not to do business with the
combined company; |
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complexities associated with managing the combined businesses; |
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integrating personnel from diverse corporate cultures while
maintaining focus on providing consistent, high quality products
and customer service; |
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potential unknown liabilities and unforeseen increased expenses
or delays associated with the merger; and |
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performance shortfalls at one or both of the two companies as a
result of the diversion of managements attention to the
merger. |
In addition, Thermo and Fisher have operated and, until the
completion of the merger, will continue to operate,
independently. It is possible that the integration process could
result in the loss of key employees, diversion of each
companys managements attention, the disruption or
interruption of, or the loss of momentum in, each companys
ongoing businesses or inconsistencies in standards, controls,
procedures and policies, any of which could adversely affect our
ability to maintain relationships with customers and employees
or our ability to achieve the anticipated benefits of the
merger, or could reduce our earnings or otherwise adversely
affect the business and financial results of the combined
company.
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Failure to complete the merger could negatively impact the
stock prices and the future business and financial results of
Fisher and Thermo. |
If the merger is not completed, the ongoing businesses of Fisher
or Thermo may be adversely affected and Fisher and Thermo will
be subject to several risks, including the following:
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being required, under certain circumstances under the merger
agreement, to pay a termination fee of $300 million, in the
case of a payment by Fisher to Thermo, or $200 million, in
the case of a payment by Thermo to Fisher; |
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having to pay certain costs relating to the merger, such as
legal, accounting, financial advisor and printing fees; and |
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the focus of management of each of the companies on the merger
instead of on pursuing other opportunities that could be
beneficial to the companies, |
in each case, without realizing any of the benefits of having
the merger completed. If the merger is not completed, Fisher and
Thermo cannot ensure their stockholders that these risks will
not materialize and will not materially affect the business,
financial results and stock prices of Fisher or Thermo.
15
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document and the documents incorporated by reference into
this document contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
with respect to the financial condition, results of operations,
business strategies, operating efficiencies or synergies,
competitive positions, growth opportunities, plans and
objectives of the management of each of Thermo, Fisher and the
combined company, the merger and the markets for Thermo and
Fisher common stock and other matters. Statements in this
document and the documents incorporated by reference herein that
are not historical facts are hereby identified as
forward-looking statements for the purpose of the
safe harbor provided by Section 21E of the Securities
Exchange Act of 1934, as amended, which is referred to as the
Exchange Act, and Section 27A of the Securities Act of
1933, as amended, which is referred to as the Securities Act.
These forward-looking statements, including, without limitation,
those relating to the future business prospects, revenues and
income of Thermo and Fisher, wherever they occur in this
document or the documents incorporated by reference herein, are
necessarily estimates reflecting the best judgment of the
respective managements of Thermo and Fisher and involve a number
of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking
statements. These forward-looking statements should, therefore,
be considered in light of various important factors, including
those set forth in and incorporated by reference into this
document.
Words such as estimate, project,
plan, intend, expect,
anticipate, believe, would,
should, could and similar expressions
are intended to identify forward-looking statements. These
forward-looking statements are found at various places
throughout this document, including in the section entitled
Risk Factors beginning on page 13. Important
factors that could cause actual results to differ materially
from those indicated by such forward-looking statements include
those set forth in Thermos and Fishers filings with
the SEC, including their respective Quarterly Reports on
Form 10-Q for the
first quarter of 2006. These important factors include risks and
uncertainties relating to:
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the ability to obtain regulatory approvals of the transaction on
the proposed terms and schedule; |
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the risk that the businesses will not be integrated successfully; |
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the risk that the cost savings and any other synergies from the
transaction may not be fully realized or may take longer to
realize than expected; |
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disruption from the transaction making it more difficult to
maintain relationships with customers, employees or suppliers; |
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competition and its effect on pricing, spending, third-party
relationships and revenues; |
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the need to develop new products and adapt to significant
technological change; |
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implementation of strategies for improving internal growth; |
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use and protection of intellectual property; |
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dependence on customers capital spending policies and
government funding policies; |
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realization of potential future savings from new productivity
initiatives; |
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dependence on customers that operate in cyclical industries; |
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general worldwide economic conditions and related uncertainties; |
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the effect of changes in governmental regulations; |
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exposure to product liability claims in excess of insurance
coverage; and |
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the effect of exchange rate fluctuations on international
operations. |
The parties undertake no obligation to publicly update any
forward-looking statement, whether as a result of new
information, future events or otherwise.
16
THE MERGER
The following is a discussion of the proposed merger and the
merger agreement. This is a summary only and may not contain all
of the information that is important to you. A copy of the
merger agreement is attached to this document as Annex A
and is incorporated by reference herein. Thermo and Fisher
stockholders are urged to read this entire document, including
the merger agreement, for a more complete understanding of the
merger.
Effect of the Merger; Consideration to be Received in the
Merger; Treatment of Stock Options and Other Equity-Based
Awards
Under the merger agreement, Trumpet Merger Corporation, a
direct, wholly-owned subsidiary of Thermo, will merge with and
into Fisher, with Fisher continuing as the surviving
corporation. As a result of the merger, Fisher will become a
direct, wholly-owned subsidiary of Thermo.
At the effective time of the merger, each share of Fisher common
stock issued and outstanding immediately prior to the effective
time of the merger, excluding shares of Fisher common stock
owned by Fisher, Thermo or Trumpet Merger Corporation, will be
converted into the right to receive 2.0 shares of Thermo
common stock.
The Thermo charter amendment will, among other things, increase
the number of shares of Thermos authorized common stock
from 350,000,000 to 1.2 billion shares, and its approval is
a condition to the completion of the merger. Without this
increase, Thermo would be unable to complete the merger as it
would not have sufficient unissued and unreserved shares to
issue and reserve for issuance the shares of common stock
required to be issued and reserved for issuance under the merger
agreement, and which may be issuable following completion of the
merger in connection with Fishers convertible debentures
and under Thermos and Fishers equity plans. In
determining that an increase in authorized common stock of the
combined company to 1.2 billion authorized shares was
appropriate, Thermo considered, in addition to the stock
issuances described in the preceding sentence, the desire for
flexibility to effect any stock splits in the future based on
market conditions.
Background of the Merger
Each of Thermos and Fishers board of directors has
from time to time in recent years engaged with senior management
in strategic reviews, and considered ways to enhance its
companys performance and prospects in light of the
business and economic environment. For each company these
reviews have included consideration of potential transactions
with third parties that would further its strategic objectives,
and the potential benefits and risks of those transactions. With
respect to both Thermo and Fisher, these strategic reviews have
on several occasions related to informal exploratory discussions
regarding potential strategic transactions, including possible
business combinations, with other companies in the life
sciences/healthcare industry.
Thermo and Fisher have for many years had a significant
commercial relationship involving Fishers distribution of
a substantial variety of Thermo products. As a result of this
relationship, the companies and their senior managements have
become well known to one another. Discussions between Thermo and
Fishers senior managements in recent years have from time
to time included informal discussions of the potential strategic
advantages of a possible combination of the two companies, as
well as other potential transactions and joint ventures. For
example, during 2004 and 2005 Thermo and Fisher had periodic,
preliminary discussions regarding potential transactions
involving the purchase and sale of certain business units owned
by the other, and in 2005 conducted preliminary due diligence
with respect to one such proposed transaction. Also in 2005 the
companies had preliminary discussions about forming a joint
venture to partner in the pursuit of a significant acquisition
transaction. Each of these discussions, however, remained
exploratory and none led to any transaction.
Beginning in mid-2005, representatives of senior management of
Thermo and Fisher occasionally discussed in general terms their
respective companies, the complementary aspects of their
businesses and the
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potential benefits that a strategic business combination of
Thermo and Fisher could provide, including cost and revenue
related synergies and the related potential benefits to
stockholders, customers and other important constituents of both
companies. However, these discussions remained preliminary and
ultimately were not pursued.
Beginning in October 2005, representatives of Fisher senior
management and representatives of senior management of another
company in the healthcare industry, referred to as
Company A, had intermittent informal discussions regarding
a possible strategic business combination. In late January 2006,
representatives of senior management of Company A and
Fisher met to exchange views with respect to a possible
strategic business combination. However, no commitment to
explore a transaction resulted from the meeting.
In early February 2006, representatives of senior management of
Thermo and Fisher again discussed generally a possible
combination of Thermo and Fisher.
On March 1, 2006, at a meeting of the Fisher board of
directors, senior management of Fisher updated the board as to
its informal discussions with Company A. At such meeting a
variety of differing views were expressed as to the potential
merits and challenges posed by a business combination with
Company A. The meeting of the Fisher board also included
its review and discussion of other strategic alternatives
potentially available to Fisher, including a discussion relating
to the possibility of a transaction with Thermo.
Also, in early March 2006, representatives of senior management
of Fisher and of another company in the healthcare industry,
referred to as Company B, discussed potential areas of
business collaboration. These discussions did not relate to a
potential business combination transaction.
In mid-March 2006, representatives of senior management of
Company A and Fisher had further discussions as to the potential
strategic merits and terms of a business combination.
Thereafter, until mid-April 2006, Fisher and Company A and
their respective legal and financial advisors engaged in mutual
due diligence and continued discussions regarding a possible
business combination transaction.
In early April 2006, representatives of senior management of
Thermo and Fisher resumed their previous informal discussions as
to a possible combination of Thermo and Fisher. Representatives
of Fisher advised Thermo that Fisher was engaged in discussions
with another party relating to a potential strategic
combination. They agreed that both Thermo and Fisher had made
significant progress in completing the respective business and
acquisition strategies previously undertaken by each company and
that it was appropriate in the current circumstances to give
more consideration to whether a mutually agreeable transaction
structure for a combination of Thermo and Fisher might be
developed, and discussed generally the possible structure and
terms of such a combination.
In early April 2006, in connection with further discussions with
Company B regarding potential areas of business
collaboration, representatives of senior management of
Company B indicated to representatives of Fisher that
Company B would be interested in exploring a strategic
business combination transaction with Fisher. In light of the
discussions with Company A and developments in discussions
with Thermo with respect to a possible business combination,
representatives of Fisher senior management indicated to
representatives of Company B senior management that if
Company B had serious interest in a transaction it would
have to make a compelling proposal to Fisher and be prepared to
complete a transaction quickly. Thereafter, in early April 2006,
representatives of Fisher and Company B met to discuss whether
it was worthwhile exploring a strategic business combination,
and whether Company Bs preliminary assumptions as to
the nature and amount of synergies that might result from a
combination were reasonable.
At a meeting of the Fisher board of directors on April 11,
2006, representatives of senior management of Fisher reviewed
the strategic alternatives potentially available to Fisher.
Fishers financial advisors, Goldman Sachs and Lazard,
discussed with the Fisher board financial information relating
to each of Company A and Thermo. The board also discussed
the potential strategic benefits and challenges posed by each of
these alternatives, as well as the strategic direction and
alternatives of Fisher generally. In addition, representatives
of Skadden, Arps, Slate, Meagher & Flom LLP,
Fishers outside legal advisor, discussed fiduciary duties
applicable to the Fisher board of directors in the context of
the ongoing discussions. After discussion, the consensus of the
Fisher board was that senior management should continue its
mutual due diligence and
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discussions with Company A, but also conduct further
discussions with Thermo because, among other factors, Thermo and
its management were well known to Fisher and a combination with
Thermo appeared to present potentially strong strategic benefits
in light of Thermos complementary business and significant
opportunities for synergies and future growth. The Fisher board
also reached a consensus that senior management of Fisher should
explore further whether a possible strategic combination with
Company B merited serious consideration.
At a meeting of the Thermo board of directors held on
April 12, 2006, representatives of Thermo senior management
discussed the conversations between senior management of Thermo
and Fisher, and there was a strong consensus among the Thermo
directors that pursuing a transaction would be an attractive
strategic and financial transaction for Thermo. Following this
meeting, Thermo retained Lehman Brothers as its outside
financial advisor and Wachtell, Lipton, Rosen & Katz as
its outside legal advisor to advise Thermo in connection with
this potential transaction. Subsequently, on April 13,
2006, Fisher and Thermo entered into a confidentiality
agreement, and thereafter commenced mutual financial due
diligence.
Throughout the remainder of the month of April, representatives
of Thermo and Fisher met to discuss a potential business
combination transaction and to conduct mutual financial, legal
and other customary due diligence.
During the course of discussions between Fisher and
Company A in mid-April 2006, Fisher advised Company A
that Fisher was exploring a potential strategic transaction with
another company. Subsequently, representatives of Company A
advised representatives of Fisher that in light of Fishers
exploration of other strategic transactions, Company A no
longer wished to proceed with discussions with Fisher.
In addition, during the period from mid- to late-April 2006,
representatives of Fisher senior management continued
discussions with representatives of Company B senior
management as to whether it was worthwhile exploring a strategic
business combination between the two companies, including
general discussion of possible synergies.
On April 25, 2006, the board of directors of Fisher met
together with Fisher senior management and outside legal and
financial advisors. Senior management reported to the board that
Company A had terminated discussions regarding a possible
transaction, and updated the board on the status of discussions
with Thermo. Representatives of Goldman Sachs and Lazard
discussed with the board financial information with respect to a
potential transaction with Thermo. The board discussed the
potential strategic benefits of such a transaction with Thermo,
including the complementary aspects of the businesses of the two
companies, the anticipated synergies that could result, and the
opportunity for creation of long-term shareholder value for
stockholders of the combined company. In addition, senior
management of Fisher updated the board as to the exploratory
discussions between Company B and Fisher, and
representatives of Goldman Sachs and Lazard discussed with the
Fisher board certain financial information with respect to
Company B. After discussion, including discussion of the
strategic rationale and potential for long-term value creation
for Fisher stockholders presented by the alternatives, it was
the sense of the Fisher board that a transaction with Thermo
appeared to present an attractive strategic opportunity and it
instructed management and its advisors to pursue actively such a
transaction. The Fisher board also instructed senior management
to continue exploratory discussions with Company B and to
continue to consider whether a potential combination represented
an opportunity that merited further consideration.
Thereafter representatives of senior management of Fisher and
Thermo continued their discussions. In addition, following a
meeting in late April 2006 with representatives of Fisher as to
potential synergies, representatives of Company B outlined the
general framework within which it proposed to discuss a business
combination transaction with Fisher, which would be subject to
completion of due diligence and confirmation of its assumptions
with respect to synergies.
On April 27, 2006, the board of directors of Thermo met,
together with Thermo management and outside legal and financial
advisors. Senior management reported on the background of
discussions with Fisher, proposed governance arrangements for
the combined company that would result from any potential
transaction and certain strategic considerations relating to the
potential transaction. Representatives from
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Lehman Brothers discussed each of Thermo and Fisher and their
positions within their respective industries and certain
financial information with respect to the potential transaction.
Following questions and discussions among the participants at
the meeting, the Thermo board of directors authorized and
directed Thermos senior management and outside legal and
financial advisors to continue discussions with Fisher.
On May 1, 2006, the board of directors of Fisher met
together with Fishers senior management. Senior management
updated the Fisher board with respect to the status of
discussions with Thermo and Company B. The Fisher board
directed senior management to continue discussions with Thermo
with a view to presenting a fully developed transaction to the
board for consideration on May 7, 2006. In addition, the
Fisher board authorized Fisher senior management to continue
exploratory discussions with Company B.
On May 2, 2006, the board of directors of Thermo met,
together with Thermos management and outside legal and
financial advisors. Management updated for the Thermo board of
directors the status of discussions with Fisher, and reported on
Thermos due diligence investigations of Fisher.
Representatives from Lehman Brothers reported on certain
preliminary financial analyses with respect to the proposed
transaction, and representatives from Wachtell, Lipton discussed
fiduciary duties applicable to the Thermo board of directors in
the context of the proposed transaction. Following questions and
discussions among those in attendance, Thermos board of
directors authorized Thermo management to continue negotiations
with Fisher and work toward finalizing definitive documentation
regarding the potential transaction, and determined that the
board of directors would meet on Sunday, May 7, 2006, to
consider the proposed transaction. Also, on May 2, 2006,
Thermos board of directors engaged Rothschild Inc. to act
as an additional financial advisor to the board of directors in
connection with the proposed transaction.
During the first week of May 2006, Fisher and Thermo and their
outside counsel continued to work to finalize the terms of the
merger agreement and the related transaction documents, while
continuing to conduct mutual financial, legal and other
customary due diligence.
On the morning of May 7, 2006, representatives of senior
management of Thermo and Fisher met together with their
respective financial advisors to finalize the exchange ratio and
certain other terms of the proposed transaction. In this
discussion, the parties agreed that the exchange ratio would be
2.0 shares of Thermo common stock for each outstanding
share of Fisher common stock. The parties also agreed on the
governance structure for the combined company that would result
from the proposed transaction, with the board of directors of
the combined company to consist of 5 Thermo designees and 3
Fisher designees.
Also on the morning of May 7, 2006, the Fisher board of
directors met with senior management and their outside legal and
financial advisors. Representatives of Fisher senior management
updated the Fisher board on the status of discussions with
Thermo, including the discussions with Thermo earlier that
morning, and managements consideration of a potential
business combination with Company B. Senior management and
Fishers financial and legal advisors then discussed with
the Fisher board the rationale, opportunities, benefits,
prospects and risks associated with a potential transaction with
Thermo based on the terms outlined in the proposed merger
agreement. Senior management and Fishers financial and
legal advisors also reviewed with the board the rationale,
opportunities, benefits, prospects and risks associated with a
potential transaction with Company B. Senior management
also discussed the potential timing and process involved with
respect to pursuing a transaction with each of Thermo and
Company B. Representatives of Goldman Sachs and Lazard made
a financial presentation to the board regarding the potential
transaction with Thermo based on the terms of the transaction
discussed that morning. Representatives of Skadden, Arps then
summarized the terms of the merger agreement with Thermo and
related documents, including those areas that were still under
discussion, and also discussed fiduciary duties of the Fisher
board of directors under the circumstances.
After extensive discussion, including consideration of the
matters discussed under Fishers Reasons
for the Merger; Recommendation of the Merger by the Fisher Board
of Directors, the Fisher board of directors unanimously
determined to proceed with a transaction with Thermo. The Fisher
board reached a consensus that the proposed transaction with
Thermo presented an attractive opportunity for Fisher
stockholders, in light of, among other factors, the strong
strategic rationale for the combination of Fisher and Thermo,
the significant familiarity of the companies with one another,
the confidence of Fisher senior management in the skills of
Thermo senior management, and the expected benefits to Fisher
stockholders of
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owning stock of Thermo after a transaction. The Fisher board
noted that a potential business combination transaction with
Company B would not present as clear a strategic rationale
as that present in the transaction with Thermo and remained
subject to a number of significant uncertainties and
contingencies. In addition, the board noted that a combination
with Company B appeared to be significantly less attractive
to Fisher and its stockholders than the transaction with Thermo
and that even if Fisher continued negotiations with
Company B, the transaction with Thermo would remain likely
strategically and financially superior due to the highly
complementary nature of the businesses and the related
opportunities for synergies and potential for the creation of
significant long-term value for Fisher stockholders. The board
also discussed its concern that Thermo would terminate
discussions if Fisher sought to delay execution of a definitive
merger agreement to pursue further negotiations with
Company B. The Fisher board of directors then instructed
senior management and its legal advisors to finalize the terms
of the merger agreement and related documentation with Thermo
and instructed senior management to advise Company B that it
intended to pursue a transaction with another party. Thereafter,
the Fisher board of directors adjourned the meeting with a view
to reconvening later in the day. Representatives of Fisher and
its legal advisors then continued final negotiations with
respect to a definitive merger agreement with representatives of
Thermo and its legal advisors.
Later in the day on May 7, 2006, the board of directors of
Thermo met with senior management and their outside legal
advisors and financial advisors. Management reviewed for the
Thermo board of directors the background of discussions with
Fisher and the progress of negotiations, and reported on
Thermos due diligence investigations of Fisher. Lehman
Brothers reviewed with the Thermo board of directors the
structure and other indicated terms of the proposed transaction,
and financial information regarding Fisher, Thermo and the
transaction, as well as information regarding peer companies and
comparable transactions. In connection with the deliberation by
the Thermo board of directors, Lehman Brothers rendered to the
Thermo board of directors its oral opinion (subsequently
confirmed on May 7, 2006 in writing), as described under
Opinion of Thermos Financial
Advisor, that, as of the date of its opinion, and subject
to and based on the factors and assumptions set forth in its
opinion, the exchange ratio to be paid by Thermo in the merger
was fair, from a financial point of view, to Thermo.
Representatives of Wachtell, Lipton discussed with the Thermo
board of directors the legal standards applicable to its
decisions and actions with respect to its evaluation of merger
proposals, and reviewed the legal terms of the finalized merger
proposal and the related agreements.
Following these discussions, and review and discussion among the
members of the Thermo board of directors, including
consideration of the factors described under
Thermos Reasons for the Merger;
Recommendation of the Stock Issuance and Thermo Charter
Amendment Proposals by the Thermo Board of Directors, the
Thermo board of directors unanimously determined that the
transactions contemplated by the merger agreement, including the
issuance of Thermo shares in connection with the merger and the
Thermo charter amendment proposal, are advisable and in the best
interests of Thermo and its stockholders, and the Thermo
directors voted unanimously to approve the merger with Fisher
and to approve and adopt the merger agreement.
Late in the evening on May 7, 2006, the Fisher board of
directors reconvened. Representatives of senior management of
Fisher reported to the board that they had advised
representatives of Company B that Fisher would likely be
pursuing a business combination with another party and therefore
would be terminating discussions with Company B. Management also
updated the board with respect to discussions concerning certain
terms of the merger agreement that had been finalized during the
course of the day. Each of Goldman Sachs and Lazard rendered to
the Fisher board of directors its oral opinion (subsequently
confirmed on May 7, 2006 in writing), as described under
Opinions of Fishers Financial
Advisors, that, as of the date of its opinion, and subject
to and based on the qualifications and assumptions set forth in
its opinion, the exchange ratio pursuant to the merger agreement
was fair, from a financial point of view, to the holders of
Fisher common stock.
Following these discussions, and further review and discussion
among the members of the Fisher board of directors, the Fisher
board of directors unanimously determined that the transactions
contemplated by the merger agreement and the merger are
advisable and fair to and in the best interests of Fisher and its
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stockholders, and the Fisher directors voted unanimously to
approve the merger and to approve and adopt the merger agreement.
Thereafter the parties executed the merger agreement. The
transaction was announced on the morning of May 8, 2006 in
a press release issued jointly by Fisher and Thermo.
Thermos Reasons for the Merger; Recommendation of the
Stock Issuance and Thermo Charter Amendment Proposals by the
Thermo Board of Directors
In reaching its decision to adopt and approve the merger
agreement and recommend approval of the stock issuance and the
Thermo charter amendment proposal to the Thermo stockholders,
the Thermo board of directors consulted with Thermos
management, as well as with its legal and financial advisors,
and considered a number of factors, including the following
factors which the Thermo board viewed as generally supporting
its decision to approve the merger and the merger agreement and
recommend the Thermo stockholders vote FOR approval of the
issuance of Thermo common stock in connection with the merger
and FOR the Thermo charter amendment proposal.
Strategic Considerations. Thermos board believes
the merger will provide a number of significant strategic
opportunities, including the following:
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Thermos board believes that the combined companys
significantly broader product and services offerings will
position it to better service customers by providing a complete
set of solutions, and to respond more effectively to a number of
industry dynamics, including increased marketplace competition; |
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The significantly greater scale and scope of the combined
companys operations will better enable it to take
advantage of growth opportunities, including in the areas of
drug discovery, proteomics research, pharmacology services,
molecular diagnostics, immunohistochemistry and environmental
regulatory compliance; |
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Fishers strong product set and well-recognized brands, as
well as its global manufacturing and sales presence, will
enhance Thermos ability to access customers, including in
growing markets such as China and India; |
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Fishers worldwide distribution and supply network will
provide opportunities for increasing distribution efficiency,
growing sales and introducing Thermo products to new markets; |
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Thermo expects the combined company to achieve at least
$75 million in cost savings in 2007, and approximately
$200 million of cost savings and revenue opportunities in
three years, coming from, among other things, rationalizing
manufacturing operations, leveraging combined purchasing power,
consolidating administrative activities, and pursuing revenue
enhancing opportunities, such as cross-selling, entering new
markets and developing new solutions; |
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Thermo expects that the merger will result in a significant
accretion to Thermos adjusted earnings per share; and |
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Thermo anticipates cash flow from operations will increase, to
over $1 billion annually, as a result of the transaction
contemplated by the merger agreement and result in increased
financial flexibility which will enhance Thermos ability
to pursue strategic growth opportunities. |
Other Factors Considered by the Thermo Board. In addition
to considering the strategic and financial factors described
above, the Thermo board considered the following additional
factors, all of which it viewed as supporting its decision to
approve the merger:
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its knowledge of Thermos business, operations, financial
condition, earnings and prospects and of Fishers business,
operations, financial condition, earnings and prospects, taking
into account the results of Thermos due diligence review
of Fisher; |
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the current and prospective competitive climate in the
industries in which Thermo and Fisher operate, including the
potential for consolidation, and the alternatives reasonably
available to Thermo if it did not pursue the merger; |
22
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the financial analyses and presentations of Lehman Brothers, and
its opinion, dated May 7, 2006, to the effect that, as of
that date and based upon and subject to the factors and
assumptions set forth in its opinion, the exchange ratio to be
paid by Thermo in the merger was fair from a financial point of
view to Thermo (see Opinion of Thermos
Financial Advisor); |
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the terms and conditions of the merger agreement and the
likelihood of completing the merger on the anticipated schedule; |
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the governance agreements with respect to the combined company
post-merger, as described under Board of
Directors and Management Following the Merger, including
the fact that Mr. Dekkers will serve as President and Chief
Executive Officer of the combined company, and the board will
consist of five Thermo designees and three Fisher designees; |
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the fact that the exchange ratio represented a premium to Fisher
stockholders of approximately 7% based on the closing prices of
each companys stock on the NYSE on May 5, 2006, the
last trading day before the merger was publicly announced, and
that the exchange ratio is fixed, which the Thermo board
believed was consistent with market practice for mergers of this
type and with the strategic purpose of the merger; and |
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the anticipated market capitalization, adjusted price/earnings
ratio and capital structure of the combined company. |
The Thermo board of directors weighed these advantages and
opportunities against a number of other factors identified in
its deliberations weighing negatively against the merger,
including:
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the challenges inherent in the combination of two businesses of
the size and scope of Thermo and Fisher and the possible
diversion of management attention for an extended period of time; |
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the risk of not capturing all the anticipated cost savings and
operational synergies between Thermo and Fisher and the risk
that other anticipated benefits might not be realized; |
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the risk that regulatory agencies may not approve the merger or
may impose terms and conditions on their approvals that
adversely affect the projected financial results of the combined
company; See the section entitled Regulatory
Approvals Required for the Merger; and |
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the risks of the type and nature described under Risk
Factors, and the matters described under Cautionary
Statement Regarding Forward-Looking Statements. |
In view of the wide variety of factors considered in connection
with its evaluation of the merger and the complexity of these
matters, the Thermo board of directors did not find it useful
and did not attempt to quantify or assign any relative or
specific weights to the various factors that it considered in
reaching its determination to approve the merger and the merger
agreement and to recommend that Thermo stockholders
vote FOR the issuance of Thermo common stock in connection
with the merger and FOR the Thermo charter amendment proposal.
In addition, individual members of the Thermo board of directors
may have given differing weights to different factors. The
Thermo board of directors conducted an overall analysis of the
factors described above, including through discussions with, and
questioning of, Thermos management and outside legal and
financial advisors.
The Thermo board of directors unanimously determined that
the merger, the merger agreement and the transactions
contemplated by the merger agreement, including the stock
issuance and the Thermo charter amendment, are advisable and in
the best interests of Thermo and its stockholders and
unanimously approved the merger agreement. The Thermo board
unanimously recommends that Thermo stockholders vote
FOR the issuance of Thermo common stock in
connection with the merger and FOR the Thermo
charter amendment proposal.
Fishers Reasons For the Merger; Recommendation of the
Merger by the Fisher Board of Directors
At a special meeting of the Fisher board of directors on
May 7, 2006, after careful consideration, including
consultation with Fishers management and its financial and
legal advisors, the Fisher board
23
unanimously determined that the merger agreement and the merger
are advisable and fair to and in the best interests of Fisher
and its stockholders and that the board shall recommend that the
Fisher stockholders vote FOR the approval and adoption of the
merger agreement. In arriving at its determination, the Fisher
board considered a number of factors, including the following
material factors, which the Fisher board viewed as generally
supporting its determination:
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the complementary aspects of the respective businesses of Fisher
and Thermo, including that the combined company is expected to
create a provider of fully integrated,
end-to-end solutions in
the life, laboratory and health sciences industry for its
customers; |
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the potential financial benefits of the merger and significant
opportunities for the creation of long-term value for Fisher
stockholders, including: |
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that the merger is expected to result in a 20% compound annual
growth rate in adjusted earnings per share over three years; |
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that the transaction is expected to generate approximately
$200 million in cost and revenue synergies over three
years, including: |
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at least $75 million expected in 2007; |
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$150 million of cost-related synergies, excluding one-time
costs, expected to result primarily from manufacturing
rationalization, sourcing and logistics efficiencies, and shared
administrative functions; and |
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$50 million of revenue-related synergies expected to result
from cross-selling opportunities, enhanced geographic reach,
penetration of new and existing markets, and new solutions
development; |
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that the cash flow from operations of the combined company is
expected to be in excess of $1 billion in 2007, making the
combined company well-positioned to accelerate growth both
organically and through acquisitions; |
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the conditions in the life, laboratory and health sciences
industry generally and the business, prospects, financial
performance and condition, operations, management and
competitive position of Fisher on a stand-alone basis as
compared to the positions of the combined company after giving
effect to the merger; |
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historical information concerning Fishers and
Thermos respective businesses, prospects, financial
performance and condition, operations, management and
competitive position, including information contained in public
reports concerning results of operations during the most recent
fiscal year and fiscal quarter for each of Fisher and Thermo
filed with the SEC, as well as reports from Fishers
management and Fishers legal advisors as to the results of
the due diligence investigation of Thermo; |
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Fisher managements view of the businesses, prospects,
financial performance and condition, operations, management and
competitive position of Fisher and Thermo before the merger, and
of the combined company after giving effect to the merger; |
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that the combination of Fisher and Thermo is expected to benefit
customers and suppliers, and provide greater opportunities for
the employees of the combined company; |
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current financial market conditions and historical market
prices, volatility and trading information with respect to
Fishers common stock and Thermos common stock; |
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that stockholders of Fisher immediately prior to the merger will
own approximately 61% of the combined company immediately
following the merger and will therefore participate meaningfully
in the significant opportunities for long-term growth of the
combined company; |
24
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that senior management of Thermo is well known to senior
management of Fisher and that senior management of Fisher
expressed confidence in the ability of senior management to
successfully manage the combined company and to achieve
long-term value for its stockholders; |
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the opinion of each of Goldman Sachs and Lazard to the effect
that, as of May 7, 2006 and based upon and subject to the
factors and assumptions set forth therein, the exchange ratio
pursuant to the merger agreement was fair, from a financial
point of view, to the holders of Fisher common stock. See the
section entitled Opinions of Fishers
Financial Advisors; |
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the opportunity for Fisher stockholders to benefit from any
increase in the trading price of Thermo common stock between the
announcement of the merger and the completion of the merger
because the exchange ratio is a fixed number of shares of Thermo
common stock; |
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the expected qualification of the merger as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code, resulting in the merger consideration to be
received by Fisher stockholders not being subject to federal
income tax, as described in the section entitled
Material U.S. Federal Income Tax
Consequences of the Merger; and |
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the belief that the terms of the merger agreement are
reasonable, including: |
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the limited conditions to the parties respective
obligations to complete the merger; |
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that Paul M. Meister, Vice Chairman of the Fisher board of
directors, will become the non-executive Chairman of the board
of directors of the combined company; |
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that Marijn E. Dekkers, President and Chief Executive Officer of
Thermo, will continue to serve as the President and Chief
Executive Officer of the combined company and that
Mr. Dekkers has agreed to waive the acceleration of certain
change of control benefits to which he would otherwise have been
entitled in connection with the merger; |
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that the combined companys board of directors will include
at least three members nominated by Fisher for a period of at
least three years; |
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that each party has agreed to not solicit proposals relating to
alternative business combination transactions or, subject to
certain exceptions, enter into discussions or an agreement
concerning or provide confidential information in connection
with any proposals for alternative business combination
transactions; |
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that, unless the merger agreement is terminated in accordance
with its terms, stockholders of Fisher and Thermo will have the
opportunity to vote on approval and adoption of the merger
agreement and related matters, taking into consideration that
while the ability of Fisher stockholders to consider an
alternative transaction may therefore be delayed or prevented,
the ability of Thermo stockholders to consider an alternative
transaction may similarly be delayed or prevented; |
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that the merger agreement contains certain termination rights
for both Fisher and Thermo and that upon termination of the
merger agreement under specified circumstances, Fisher may be
required to pay Thermo a termination fee of $300 million or
Thermo may be required to pay Fisher a termination fee of
$200 million; and |
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that Thermo will establish a long-term incentive compensation
program for Thermo senior management and that there will also be
appropriate continuing performance incentives for senior
management of Fisher who will continue with the combined company. |
In addition to these factors, the Fisher board identified and
considered a variety of risks and potentially negative factors
in its deliberations concerning the merger, including:
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the possibility that the merger might not be consummated, or
that consummation might be unduly delayed or subject to
conditions that may be imposed by governmental authorities; |
25
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the effect of public announcement of the merger on Fishers
revenues, operating results, the price of its common stock and
Fishers ability to attract and retain customers and key
employees; |
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the risk that the potential benefits sought in the merger might
not be fully realized; |
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the substantial charges to be incurred in connection with the
merger, including costs of integrating the businesses and
transaction expenses arising from the merger; |
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the risk that despite the efforts of the combined company, key
employees might not remain employed by the combined company; |
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because the exchange ratio is a fixed number of shares of Thermo
common stock, the possibility that Fisher stockholders could be
adversely affected by a decrease in the trading price of Thermo
common stock between the date of announcement of execution of
the merger agreement and the closing of the merger, and the fact
that the merger agreement does not provide Fisher with a
price-based termination right or other similar protection; |
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the limitations imposed in the merger agreement on the
solicitation or consideration by Fisher and Thermo of
alternative business combinations prior to the completion of the
merger; |
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the fact that upon termination of the merger agreement under
specified circumstances, Fisher may be required to pay Thermo a
termination fee of $300 million and this termination fee
may discourage other parties that may otherwise have an interest
in a business combination with, or an acquisition of, Fisher; |
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the terms of the merger agreement restricting the conduct of
Fishers business during the period between execution of
the merger agreement and the completion of the merger; and |
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the interests that certain executive officers and directors of
Fisher may have with respect to the merger in addition to their
interests as stockholders of Fisher generally, as described in
the section entitled Financial Interests of
Directors and Officers in the Merger, which the Fisher
board considered to be neutral in its evaluation of the proposed
transaction. |
The above discussion of the material factors considered by the
Fisher board of directors is not intended to be exhaustive, but
does set forth the principal factors considered by the Fisher
board. The Fisher board unanimously reached the conclusion to
approve and adopt the merger agreement and the other
transactions contemplated by the merger agreement and to
recommend the merger agreement to the Fisher stockholders for
approval and adoption in light of the various factors described
above and other factors that each member of the Fisher board
felt were appropriate. In view of the wide variety of factors
considered by the Fisher board in connection with its evaluation
of the merger and the complexity of these matters, the Fisher
board did not consider it practical, and did not attempt, to
quantify, rank or otherwise assign relative weights to the
specific factors it considered in reaching its decision. Rather,
the Fisher board made its recommendation based on the totality
of information presented to, and the investigation conducted by,
it. In considering the factors discussed above, individual
directors may have given different weights to different factors.
The Fisher board unanimously approved and adopted the
merger agreement and the other transactions contemplated by the
merger agreement and recommends that the Fisher stockholders
vote FOR the approval and adoption of the merger
agreement.
Opinion of Thermos Financial Advisor
On May 7, 2006, Lehman Brothers delivered its oral opinion,
which was subsequently confirmed in writing as of such date, to
the Thermo board of directors to the effect that as of such date
and, based upon and subject to factors and assumptions described
at the meeting of the Thermo board of directors on May 7,
2006 and set forth in the written opinion, the exchange ratio to
be paid by Thermo in the merger was fair, from a financial point
of view, to Thermo.
The full text of Lehman Brothers written opinion, dated
May 7, 2006, is attached hereto as Annex B. Thermo
stockholders are urged to read this opinion for a discussion of
the assumptions made, procedures
26
followed, factors considered and limitations upon the review
undertaken by Lehman Brothers in rendering its opinion. The
following is a summary of Lehman Brothers opinion and the
methodologies that Lehman Brothers used to render its fairness
opinion. The summary is qualified in its entirety by reference
to the full text of the opinion.
Lehman Brothers advisory services and opinion were
provided for the information and assistance of the Thermo board
of directors in connection with its consideration of the
proposed transaction. Lehman Brothers opinion is not
intended to be and does not constitute a recommendation to any
stockholder of Thermo or Fisher as to how such stockholder
should vote in connection with the proposed transaction. Lehman
Brothers was not requested to opine as to, and Lehman
Brothers opinion does not address, Thermos
underlying business decision to proceed with or effect the
proposed transaction.
In arriving at its opinion, Lehman Brothers reviewed and
analyzed:
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the merger agreement and the specific terms of the proposed
transaction (including with respect to governance of the
combined company); |
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publicly available information concerning Thermo that Lehman
Brothers believed to be relevant to its analysis, including
Thermos Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005 and Thermos
Quarterly Report on
Form 10-Q for the
quarter ended April 1, 2006; |
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publicly available information concerning Fisher that Lehman
Brothers believed to be relevant to its analysis, including
Fishers Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005 and Fishers
Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2006; |
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financial and operating information with respect to the
business, operations and prospects of Thermo furnished to Lehman
Brothers by Thermo, including financial estimates and forecasts
for Thermo prepared by Thermos management; |
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financial and operating information with respect to the
business, operations and prospects of Fisher furnished to Lehman
Brothers by Fisher, including financial estimates and forecasts
for Fisher prepared by Fishers management; |
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the trading histories of Thermo common stock and Fisher common
stock from May 6, 2005 to May 5, 2006 and a comparison
of those trading histories with each other and with those of
other companies and indices that Lehman Brothers deemed relevant; |
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a comparison of the historical financial results and present
financial condition of Thermo and Fisher with each other and
with those of other companies that Lehman Brothers deemed
relevant; |
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published estimates of independent research analysts with
respect to ratings and future price targets of Thermo common
stock and Fisher common stock; |
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the relative contributions of Thermo and Fisher to the
historical and future financial condition and performance of the
combined company on a pro forma basis; |
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the potential pro forma impact of the proposed transaction on
the future financial condition and performance of Thermo,
including estimated cost savings, operating synergies and other
strategic benefits that the managements of Thermo and Fisher
anticipated would result from a combination of the businesses of
Thermo and Fisher, referred to as the estimated synergies, and
the anticipated impact of the proposed transaction on
Thermos pro forma adjusted earnings per share; and |
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a comparison of the financial terms of the proposed transaction
with the financial terms of certain other transactions that
Lehman Brothers deemed relevant. |
In addition, Lehman Brothers had discussions with the
managements of Thermo and Fisher concerning their respective
businesses, operations, assets, liabilities, financial
conditions and prospects and undertook such other studies,
analyses and investigations as Lehman Brothers deemed
appropriate.
27
In arriving at its opinion, Lehman Brothers assumed and relied
upon the accuracy and completeness of the financial and other
information used by it without assuming any responsibility for
independent verification of such information and further relied
upon the assurances of managements of Thermo and Fisher that
they were not aware of any facts or circumstances that would
make such information inaccurate or misleading. With respect to
forecasts and estimates prepared by Thermos management and
Fishers management, upon advice of Thermo, Lehman Brothers
assumed that these forecasts and estimates were reasonably
prepared on a basis reflecting the best currently available
estimates and judgments of the managements of Thermo and Fisher
as to the future financial performance of Thermo and Fisher and
that Thermo and Fisher will perform substantially in accordance
with these forecasts and estimates. Upon the advice of Thermo
and Fisher, Lehman Brothers also assumed that the estimated
synergies will be realized substantially in accordance with such
estimates.
In arriving at its opinion, Lehman Brothers did not conduct a
physical inspection of the properties and facilities of Thermo
and Fisher and did not make or obtain any evaluations or
appraisals of the assets or liabilities of Thermo or Fisher.
Lehman Brothers opinion necessarily was based upon market,
economic and other conditions as they existed on, and could be
evaluated as of, the date of Lehman Brothers opinion.
Lehman Brothers expressed no opinion as to the prices at which
shares of Thermo common stock will trade at any time following
the announcement or the consummation of the proposed
transaction. Although Lehman Brothers evaluated the fairness,
from a financial point of view, to Thermo of the exchange ratio
to be paid by Thermo in the proposed transaction, Lehman
Brothers was not requested to, and did not, recommend the
specific exchange ratio to be paid in the proposed transaction,
which was determined through negotiations between Thermo and
Fisher.
In connection with rendering its opinion, Lehman Brothers
performed certain financial, comparative and other analyses as
summarized below. In arriving at its opinion, Lehman Brothers
did not ascribe a specific range of values to Thermo or Fisher,
but rather made its determination as to the fairness, from a
financial point of view, to Thermo of the exchange ratio to be
paid by Thermo on the basis of financial, comparative and other
analyses. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods
of financial and comparative analysis and the application of
those methods to the particular circumstances. Therefore, such
an opinion is not readily susceptible to summary description.
Furthermore, in arriving at its opinion, Lehman Brothers did not
attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor.
Accordingly, Lehman Brothers believes that its analyses must be
considered as a whole and that considering any portion of such
analyses and factors, without considering all analyses and
factors as a whole, could create a misleading or incomplete view
of the process underlying its opinion. In its analyses, Lehman
Brothers made numerous assumptions with respect to industry
performance, general business and economic conditions and other
matters, many of which are beyond the control of Thermo and
Fisher. Because these assumptions are inherently subject to
uncertainty, none of Thermo, Fisher, Lehman Brothers or any
other person assumes responsibility if future results are
materially different from those forecast. Any estimates
contained in these analyses were not necessarily indicative of
actual values or predictive of future results or values, which
may be significantly more or less favorable than as set forth in
these analyses. In addition, analyses relating to the value of
businesses do not purport to be appraisals or to reflect the
prices at which businesses actually may be sold.
The following is a summary of the material financial analyses
used by Lehman Brothers in connection with providing its opinion
to the Thermo board of directors. Certain of the summaries of
financial analyses include information presented in tabular
format. In order to fully understand the financial analyses used
by Lehman Brothers, the tables must be read together with the
text of each summary. The tables alone do not constitute a
complete description of the financial analyses. Accordingly, the
analyses listed in the tables and described below must be
considered as a whole. Considering any portion of such analyses
and of the factors considered, without considering all analyses
and factors, could create a misleading or incomplete view of the
results of Lehman Brothers opinion.
28
Stock Trading History
Lehman Brothers considered historical data with regard to the
trading prices of Thermo common stock and Fisher common stock
for the period from May 6, 2005 to May 5, 2006 and the
relative stock price performances during this same period of the
Standard & Poors 500 Index and an index of Life
and Laboratory Suppliers comprised of the following companies:
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Becton, Dickinson and Company; |
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Applied Bioscience International Inc.; |
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Waters Corporation; |
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Sigma-Aldrich Corporation; |
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Millipore Corporation; |
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Beckman Coulter, Inc.; |
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PerkinElmer, Inc.; |
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Mettler-Toledo International Inc.; and |
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Bio-Rad Laboratories, Inc. |
Lehman Brothers noted that during this time period, the share
price of Thermo common stock increased 51.2%, which outperformed
the Standard & Poors 500 Index, the Life and
Laboratory Suppliers Index, as well as the share price of Fisher
common stock which increased 22.7%.
Historical Exchange Ratio Analysis
Lehman Brothers compared the historical share prices of Thermo
and Fisher common stock during different periods between
May 6, 2005 and May 5, 2006, in order to determine the
implied average exchange ratios that existed for those periods.
The following table sets forth the exchange ratio of shares of
Thermo common stock for each share of Fisher common stock for
the periods indicated:
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Implied Exchange | |
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Ratio | |
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May 5, 2006
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1.869x |
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One-month Average
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1.860x |
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Three-month Average
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1.911x |
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Six-month Average
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1.976x |
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One-year Average
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2.077x |
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One-year High
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2.423x |
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One-year Low
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1.808x |
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Proposed Transaction
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2.000x |
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Comparable Company Analysis
In order to assess how the public market values shares of
similar publicly-traded companies, Lehman Brothers reviewed and
compared specific financial and operating data relating to
Thermo and Fisher and the nine companies in the Life and
Laboratory Supplier Index. Using internal estimates and
forecasts prepared by Thermo management for Thermo, internal
estimates and forecasts prepared by Fisher management for
Fisher, and publicly available information for the other
companies, Lehman Brothers calculated and analyzed the ratios of
each companys May 5, 2006 stock price to its
estimated earnings per share on both a reported and adjusted
basis (adjusted earnings per share excluded expenses related to
the amortization of intangibles),
29
referred to as a price earnings ratio, or P/ E, for calendar
years 2006 and 2007 and the ratios of each companys
enterprise value to calendar years 2006 and 2007 earnings before
interest, taxes, depreciation and amortization, referred to as
EBITDA. The enterprise value of each company was obtained by
adding its short and long-term debt to, and subtracting its cash
from, the sum of the market value of its diluted common equity
as of May 5, 2006, the value of any preferred stock (at
liquidation value), the book value of any minority interest and
the value of any material debt-equivalent liabilities. The
following presents the results of this analysis:
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Enterprise |
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Value/ EBITDA |
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P/E Reported |
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P/E Adjusted |
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2006 |
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2007 |
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2006 |
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2007 |
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2006 |
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2007 |
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Selected Life and Laboratory Supply Companies:
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High
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15.0 |
x |
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13.1 |
x |
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26.9 |
x |
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23.2 |
x |
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26.2 |
x |
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22.7x |
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Mean
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11.3 |
x |
|
|
10.3 |
x |
|
|
21.4 |
x |
|
|
18.6 |
x |
|
|
20.3 |
x |
|
|
17.9x |
|
Median
|
|
|
10.8 |
x |
|
|
9.8 |
x |
|
|
20.7 |
x |
|
|
18.0 |
x |
|
|
19.1 |
x |
|
|
17.0x |
|
Low
|
|
|
8.2 |
x |
|
|
7.8 |
x |
|
|
18.0 |
x |
|
|
16.4 |
x |
|
|
17.5 |
x |
|
|
16.0x |
|
Thermo
|
|
|
13.9 |
x |
|
|
12.4 |
x |
|
|
30.4 |
x |
|
|
25.2 |
x |
|
|
22.9 |
x |
|
|
19.9x |
|
Fisher at Proposed Transaction
|
|
|
11.9 |
x |
|
|
10.7 |
x |
|
|
20.7 |
x |
|
|
17.8 |
x |
|
|
18.8 |
x |
|
|
16.3x |
|
However, given the inherent differences between the business,
operations and prospects of Thermo and Fisher and the business,
operations and prospects of the companies included in the
comparable company analysis, Lehman Brothers believed that it
was inappropriate to, and therefore did not, rely solely on the
quantitative results of the comparable company analysis and
accordingly also made qualitative judgments concerning
differences between the financial and operating characteristics
and prospects of Thermo and Fisher and the companies included in
the comparable company analysis that would affect the public
trading values of each. These qualitative judgments related
primarily to the differing sizes, growth prospects,
profitability levels and degree of operational risk between
Thermo, Fisher and the selected comparable companies.
Lehman Brothers considered publicly available price targets
published by various firms that publish independent research on
Thermo (including Deutsche Bank Securities Inc., Infinium
Capital Corp., JPMorgan Chase & Co., Leerink
Swann & Co., Lehman Brothers Inc., Merrill
Lynch & Co. Inc., Needham & Company, LLC.,
Robert W. Baird & Co. Inc., and UBS Securities LLC) and
Fisher (including Banc of America Securities LLC., Deutsche Bank
Securities Inc., First Analysis Securities Corp., The Goldman
Sachs Group, Inc., Infinium Capital Corp., JPMorgan
Chase & Co., Leerink Swann & Co., Lehman
Brothers Inc., Merrill Lynch & Co. Inc., Morgan
Stanley & Co. Inc., Robert W. Baird & Co.
Inc., Thomas Weisel Partners LLC., and UBS Securities LLC) in
order to determine the exchange ratio implied by such research.
The following table shows the range of implied exchange ratios
using the Thermo and Fisher share price targets as published by
various firms:
|
|
|
Implied Exchange Ratio Range
|
|
1.889x - 2.028x |
Proposed Transaction
|
|
2.000x |
|
|
|
Comparable Transaction Analysis |
Lehman Brothers reviewed 14 acquisitions of companies that
Lehman Brothers, based on its experience with merger and
acquisition transactions, deemed comparable to the proposed
transaction. Lehman Brothers selected the transactions used in
the comparable transaction analysis based on the similarity of
the target
30
companies in the transaction to Fisher and Thermo with respect
to size, mix, margins and other characteristics of their
businesses. Set forth below are the announcement date and
parties to those transactions:
|
|
|
|
|
Announcement Date |
|
Acquiror |
|
Target |
|
|
|
|
|
4/27/2006
|
|
Siemens AG |
|
Diagnostic Products Corp. |
4/25/2006
|
|
Millipore Corp. |
|
Serologicals Corp. |
3/16/2006
|
|
Fisher Scientific Intl. |
|
Athena Diagnostics, Inc. |
3/18/2005
|
|
Siemens AG |
|
CTI Molecular Imaging, Inc. |
1/19/2005
|
|
Thermo Electron Corp. |
|
Kendro Laboratory Products |
3/17/2004
|
|
Fisher Scientific Intl. |
|
Apogent Technologies Inc. |
2/16/2004
|
|
Clayton, Dubilier & Rice, Inc. |
|
VWR International Inc. |
12/24/2003
|
|
Invitrogen Corp. |
|
BioReliance Corp. |
10/10/2003
|
|
General Electric Co. |
|
Amersham PLC |
6/26/2003
|
|
Fisher Scientific Intl. |
|
Perbio Science AB |
7/16/2001
|
|
PerkinElmer Inc. |
|
Packard Bioscience Co. |
7/9/2000
|
|
Invitrogen Corp. |
|
Life Technologies, Inc. |
9/17/1998
|
|
Bayer Corp. |
|
Chiron Diagnostics |
8/29/1997
|
|
Beckman Instruments, Inc. |
|
Coulter Corp. |
Based on publicly available information, Lehman Brothers
considered, among other things, the enterprise values of each
target company as a multiple of the EBITDA of the target company
in each case for the latest 12 months, which is referred to
as LTM, prior to the date that the transaction was announced.
The following table sets forth the results of this analysis:
|
|
|
|
|
|
|
Enterprise Value/ | |
|
|
LTM EBITDA | |
|
|
| |
Selected Life and Laboratory Suppliers Transactions:
|
|
|
|
|
High
|
|
|
21.3x |
|
Mean
|
|
|
15.0x |
|
Median
|
|
|
14.9x |
|
Low
|
|
|
10.2x |
|
Thermo
|
|
|
15.5x |
|
Fisher at Proposed Transaction
|
|
|
13.2x |
|
Because the market conditions, rationale and circumstances
surrounding each of the transactions analyzed were specific to
each transaction, and because of the inherent differences
between the businesses, operations and prospects of Thermo and
Fisher and the businesses, operations and prospects of the
acquired companies included in the comparable transaction
analysis, Lehman Brothers believed that it was inappropriate to,
and therefore did not, rely solely on the quantitative results
of the comparable transaction analysis and accordingly also made
qualitative judgments concerning differences between the
financial and operating characteristics and prospects of Thermo
and Fisher and the companies included in the comparable
transaction analysis that would affect the transaction values of
each.
|
|
|
Discounted Cash Flow Analysis |
Lehman Brothers performed a discounted cash flow analysis of
Thermo and Fisher to calculate the estimated present values of
Thermo common stock and Fisher common stock. A discounted cash
flow analysis is a traditional valuation methodology used to
derive a valuation of an asset by calculating the present
value of estimated future cash flows of the asset.
Present value refers to the current value of future
cash flows or amounts and is obtained by discounting those
future cash flows or amounts by a discount rate that takes into
account macro-economic assumptions and estimates of risk, the
opportunity cost of capital, expected returns and other
appropriate factors applicable to a particular asset. The
estimated present values of Thermo
31
common stock and Fisher common stock were calculated by adding
the present values of the estimated free cash flow estimates for
the fiscal years 2006 through 2010 for each of Thermo and
Fisher. The cash flow estimates for 2006 and 2007 were based on
internal estimates and forecasts prepared by Thermo management
for Thermo and internal estimates and forecasts prepared by
Fisher management for Fisher, and the information for 2008
through 2010 was based on extrapolation after consultation with
Thermo management.
To estimate the residual value of Thermo and Fisher at the end
of the forecast period, or terminal value, Lehman Brothers
applied a range of terminal value multiples based on estimated
calendar 2010 EBITDA of 13.5x to 15.5x for Thermo and 10.5x to
12.5x for Fisher and discount rates ranging from 8.5% to 10.5%.
The discount rates used were based on an analysis of
Thermos and Fishers weighted average cost of capital
and those of other comparable companies.
Based upon these terminal values and discount rates, Lehman
Brothers calculated a range of implied equity values per share
of Thermo and Fisher common stock, which were then used to
calculate a range of implied exchange ratios. Based on these
implied per share values, this analysis indicated the following
implied exchange ratio range, as compared to the exchange ratio
in the proposed transaction:
|
|
|
Implied Exchange Ratio Range
|
|
1.484x - 2.256x |
Proposed Transaction
|
|
2.000x |
Lehman Brothers analyzed the respective contributions of Thermo
and Fisher to certain income statement metrics for the combined
company for calendar years 2006 and 2007, using internal
estimates and forecasts prepared by Thermo management for Thermo
and internal estimates and forecasts prepared by Fisher
management for Fisher. The proportionate contributions were
calculated taking into account Thermos and Fishers
respective current debt and cash levels and compared to the pro
forma ownership of the combined company by Thermo and Fisher
stockholders as a result of the proposed transaction. Based on
the implied diluted equity ownership of each of Thermo and
Fisher stockholders of the combined company, Lehman Brothers
calculated a range of implied exchange ratios. The following
table sets forth the results of this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Diluted |
|
|
|
|
Equity Ownership |
|
Implied |
|
|
|
|
Exchange |
|
|
Thermo |
|
Fisher |
|
Ratio |
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated 2006
|
|
|
35.2% |
|
|
|
64.8% |
|
|
|
2.327x |
|
Estimated 2007
|
|
|
34.6% |
|
|
|
65.4% |
|
|
|
2.394x |
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated 2006
|
|
|
34.8% |
|
|
|
65.2% |
|
|
|
2.376x |
|
Estimated 2007
|
|
|
35.1% |
|
|
|
64.9% |
|
|
|
2.340x |
|
|
Adjusted Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated 2006
|
|
|
34.2% |
|
|
|
65.8% |
|
|
|
2.439x |
|
Estimated 2007
|
|
|
33.4% |
|
|
|
66.6% |
|
|
|
2.523x |
|
|
Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated 2006
|
|
|
30.1% |
|
|
|
69.9% |
|
|
|
2.953x |
|
Estimated 2007
|
|
|
30.1% |
|
|
|
69.9% |
|
|
|
2.933x |
|
Proposed Transaction
|
|
|
38.6% |
|
|
|
61.4% |
|
|
|
2.000x |
|
32
Lehman Brothers analyzed the pro forma impact of the proposed
transaction on the future financial condition and performance of
Thermo, reflected in the pro forma earnings per share of Thermo.
For purposes of this analysis, Lehman Brothers utilized internal
estimates and forecasts prepared by Thermo management for Thermo
and internal estimates and forecasts prepared by Fisher
management for Fisher, as well as the estimated synergies. This
analysis indicated that the proposed transaction would be
accretive to Thermos calendar year 2007 adjusted earnings
per share. The financial forecasts and assumptions that underlie
this analysis are subject to substantial uncertainty and exclude
one-time costs that may be incurred in connection with the
implementation of the expected synergies and, therefore, actual
results may be substantially different.
|
|
|
Illustrative Trading Prices Analysis |
Lehman Brothers calculated illustrative implied per share price
ranges of the combined company following consummation of the
proposed transaction. The analysis was based on a
2.0 exchange ratio to be paid by Thermo in the proposed
transaction, a range of synergies from $75 million to
$200 million, which represents the synergies estimated by
the managements of Thermo and Fisher to be realized in calendar
year 2007 and the total synergies to be realized in connection
with the proposed transaction, respectively. Based on an
adjusted P/E multiple range of 15.3x to 19.9x (which is based
upon the current P/E multiples of Fisher and Thermo,
respectively) the analysis resulted in implied trading prices
per share of Thermo common stock ranging from $35.34 to $49.95.
Lehman Brothers is an internationally recognized investment
banking firm and, as part of its investment banking activities,
is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes.
Thermos board of directors selected Lehman Brothers
because of its expertise, reputation and familiarity with Thermo
and the life and laboratory supply industry generally, and
because its investment banking professionals have substantial
experience in transactions comparable to the proposed
transaction.
As compensation for its services in connection with the proposed
transaction, Thermo has agreed to pay Lehman Brothers a fee of
$17 million, a portion of which was due upon delivery of
Lehman Brothers opinion and the remainder of which is
contingent upon the consummation of the proposed transaction,
plus an additional fee of up to $5 million, which is
payable at Thermos sole discretion. In addition, Thermo
has agreed to reimburse Lehman Brothers for reasonable
out-of-pocket expenses
incurred in connection with the proposed transaction and to
indemnify Lehman Brothers for certain liabilities that may arise
out of its engagement by Thermo and the rendering of Lehman
Brothers opinion.
Lehman Brothers also provided a $1.5 billion
364-day credit facility
to be used by Thermo for the potential refinancing of certain of
Fishers and Thermos indebtedness in connection with
the proposed transaction, for which Lehman Brothers expects to
receive customary fees. Lehman Brothers has also performed
various investment banking services for Thermo in the past and
expects to perform various investment banking services for
Thermo in the future and has received, and expects to receive,
customary fees for such services. In the ordinary course of its
business, Lehman Brothers may actively trade in the debt and
equity securities of Thermo and Fisher for its own account and
for the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities.
Opinions of Fishers Financial Advisors
Descriptions of the respective opinions delivered by the Fisher
financial advisors, Goldman Sachs and Lazard, as to the
fairness, from a financial point of view, to the holders of
Fisher common stock of the exchange ratio pursuant to the merger
agreement are set forth below. These descriptions are qualified
in their entirety by reference to the full text of the opinions
included as Annex C and Annex D, respectively, to this
document. You are urged to read the opinions for a discussion of
the assumptions made, procedures followed,
33
matters considered and limitations on the reviews undertaken by
Goldman Sachs and Lazard in rendering their respective opinions.
Goldman Sachs rendered its opinion to the Fisher board of
directors that, as of May 7, 2006 and based upon and
subject to the assumptions, procedures, factors, limitations and
qualifications set forth in such opinion, the exchange ratio
pursuant to the merger agreement was fair from a financial point
of view to the holders of Fisher common shares.
The full text of the written opinion of Goldman Sachs, dated
May 7, 2006, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with its opinion, is attached as
Annex C to this document and is incorporated herein by
reference. Fisher stockholders should read the opinion in its
entirety. Goldman Sachs provided its opinion for the information
and assistance of the Fisher board of directors in connection
with its consideration of the merger. The Goldman Sachs opinion
is not a recommendation as to how any holder of Fisher common
stock or Thermo common stock should vote at any
stockholders meeting to be held in connection with, or
take any action with respect to, the merger.
In connection with rendering its opinion described above and
performing its related financial analyses, Goldman Sachs has
reviewed, among other things:
|
|
|
|
|
the merger agreement; |
|
|
|
annual reports to stockholders and Annual Reports on
Form 10-K of
Fisher and Thermo for the five years ended December 31,
2005; |
|
|
|
certain interim reports to stockholders and Quarterly Reports on
Form 10-Q of
Fisher and Thermo; |
|
|
|
certain other communications from Fisher and Thermo to their
respective stockholders; |
|
|
|
certain internal financial analyses and forecasts for Thermo
prepared by its management; |
|
|
|
certain internal financial analyses and forecasts for Thermo
prepared by its management, reviewed and revised by the
management of Fisher, and certain internal financial analyses
and forecasts for Fisher prepared by its management; and |
|
|
|
certain cost savings and operating synergies projected by the
respective managements of Fisher and Thermo to result from the
merger. |
Goldman Sachs also held discussions with members of the senior
managements of Fisher and Thermo regarding their assessment of
the strategic rationale for, and the potential benefits of, the
merger and the past and current business operations, financial
condition, and future prospects of Fisher and Thermo. In
addition, Goldman Sachs reviewed the reported price and trading
activity for the shares of Fisher common stock and the shares of
Thermo common stock, compared certain financial and stock market
information for Fisher and Thermo with similar information for
certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business
combinations in the healthcare industry specifically and in
other industries generally and performed such other studies and
analyses, and considered such other factors, as it considered
appropriate.
Goldman Sachs has relied upon the accuracy and completeness of
all of the financial, accounting, legal, tax and other
information discussed with or reviewed by it and assumed such
accuracy and completeness for purposes of rendering the opinion
described above and did not assume any responsibility for any
independent verification of such information. In that regard,
Goldman Sachs assumed with the consent of the Fisher board of
directors that the financial forecasts and the cost savings and
operating synergies projected by Fisher and Thermo, were
reasonably prepared on a basis reflecting the best currently
available estimates and judgments of management of Fisher and
Thermo. In addition, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities (including
any contingent, derivative or off-balance-sheet assets and
34
liabilities) of Fisher or Thermo or any of their respective
subsidiaries and no such evaluation or appraisal was furnished
to Goldman Sachs.
Goldman Sachs opinion did not address the underlying
business decision of Fisher to engage in the merger, nor did
Goldman Sachs express any opinion as to the prices at which
shares of Fisher common stock or Thermo common stock will trade
at any time. Goldman Sachs also assumed that all governmental,
regulatory or other consents and approvals necessary for the
consummation of the merger will be obtained without any adverse
effect on Fisher or Thermo or on the expected benefits of the
merger in any way meaningful to its analyses. Goldman
Sachs opinion is necessarily based on economic, monetary,
market and other conditions as in effect on, and the information
made available as of, the date therein.
Goldman Sachs advisory services and opinion were provided
for the information and assistance of the Fisher board of
directors in connection with its consideration of the merger and
its opinion did not constitute a recommendation as to how any
holder of Fisher common shares should vote with respect to the
merger.
See Financial Analyses of Fishers
Financial Advisors below for a summary of the material
financial analyses used by Goldman Sachs in connection with
rendering its opinion.
Goldman Sachs and its affiliates, as part of their investment
banking business, are continually engaged in performing
financial analyses with respect to businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private
placements and other transactions as well as for estate,
corporate and other purposes. Goldman Sachs is currently
providing and has provided certain investment banking services
to Fisher from time to time, including having acted as:
|
|
|
|
|
a lead manager in connection with the offering of
2.50% Convertible Senior Notes due October 2023 (aggregate
principal amount $250,000,000) in July 2003; |
|
|
|
financial advisor with respect to Fishers acquisition of
Dharmacon Inc. in February 2004; |
|
|
|
a lead manager in connection with the offering of
3.25% Convertible Senior Subordinated Notes due
March 1, 2024 (aggregate principal amount $300,000,000) in
March 2004; |
|
|
|
financial advisor with respect to Fishers acquisition of
Apogent Technologies in March 2004; |
|
|
|
dealer manager for the exchange offers related to indebtedness
of Apogent (aggregate principal amount $645,000,000) in May
2004; and |
|
|
|
a lead manager in connection with the offering of Senior
Subordinated Notes due 2014 (aggregate principal amount
$300,000,000) in July 2004. |
In addition, Goldman Sachss commercial bank affiliate is a
lender under bank loans of Fisher.
Goldman Sachs may also provide investment banking and other
services to Fisher and Thermo in the future. In connection with
the above-described services performed by it, Goldman Sachs
received, and with respect to services in the future would
expect to receive, compensation.
Goldman Sachs is a full service securities firm engaged, either
directly or through its affiliates, in securities trading,
investment management, financial planning and benefits
counseling, risk management, hedging, financing and brokerage
activities for both companies and individuals. In the ordinary
course of these activities, Goldman Sachs and its affiliates may
provide such services to Fisher and Thermo and their respective
affiliates and may actively trade the debt or equity securities
(or related derivative securities) of Fisher or Thermo for their
own account and for the accounts of their customers and may at
any time hold long and short positions of such securities.
The Fisher board of directors selected Goldman Sachs as one of
its financial advisors because Goldman Sachs is an
internationally recognized investment banking firm that has
substantial experience in transactions similar to the merger.
Pursuant to a letter agreement dated March 16, 2006, Fisher
engaged Goldman Sachs to act as a financial advisor in
connection with the merger. Pursuant to the terms of this
engagement letter, Fisher has agreed to pay Goldman Sachs a
transaction fee of $22,000,000, $6,600,000 of which became
35
payable upon the execution of the merger agreement and the
remainder of which is payable upon consummation of the merger.
In addition, Fisher has agreed to reimburse Goldman Sachs
expenses incurred in connection with this engagement and to
indemnify Goldman Sachs and related persons against various
liabilities, including certain liabilities under the federal
securities laws.
Lazard rendered its opinion to the Fisher board of directors
that, as of May 7, 2006 and based upon and subject to the
assumptions, procedures, factors, limitations and qualifications
set forth in such opinion, the exchange ratio pursuant to the
merger was fair from a financial point of view to the holders of
Fisher common stock.
The full text of the written opinion of Lazard, dated
May 7, 2006, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with its opinion, is attached as
Annex D to this document and is incorporated herein by
reference. Fisher stockholders should read the opinion in its
entirety. Lazard provided its opinion for the information and
assistance of the Fisher board of directors in connection with
its consideration of the merger. Lazards opinion is not a
recommendation as to how any holder of Fisher common stock or
Thermo common stock should vote at any stockholders
meeting to be held in connection with, or take any action with
respect to, the merger.
In connection with rendering its opinion described above and
performing its related financial analyses, Lazard:
|
|
|
|
|
reviewed the financial terms and conditions of the latest draft
of the merger agreement; |
|
|
|
analyzed certain historical business and financial information
relating to Fisher and Thermo; |
|
|
|
reviewed various financial forecasts and other data provided to
it by Fisher and Thermo relating to their respective businesses; |
|
|
|
reviewed the synergistic savings and benefits and the timing of
their occurrence as projected by Fisher and Thermo to be
realized by the combined company following the merger; |
|
|
|
held discussions with members of the senior managements of
Fisher and Thermo with respect to the businesses and prospects
of Fisher and Thermo, respectively, the strategic objectives of
each, and synergistic savings and benefits projected by Fisher
and Thermo to be realized by the combined company following the
merger; |
|
|
|
reviewed public information with respect to certain other
companies in lines of business it believed to be generally
comparable to those of Fisher and Thermo; |
|
|
|
reviewed the financial terms of certain business combinations
involving companies in lines of business it believed to be
generally comparable to those of Fisher and Thermo; |
|
|
|
reviewed the historical stock prices and trading volumes of
Fisher common stock and Thermo common stock; and |
|
|
|
conducted such other financial studies, analyses and
investigations as it deemed appropriate. |
Lazard relied upon the accuracy and completeness of the
foregoing information and did not assume any responsibility for
any independent verification of such information or any
independent valuation or appraisal of any of the assets or
liabilities of Fisher or Thermo, or concerning the solvency or
fair value of Fisher or Thermo. In that regard, Lazard assumed
with the consent of the Fisher board of directors that the
financial forecasts, including the synergistic savings and
benefits projected by Fisher and Thermo to be realized following
the merger and the timing of their occurrence, were reasonably
prepared on bases reflecting the best currently available
estimates and judgments of management of Fisher and Thermo as to
the future financial performance of Fisher and Thermo,
respectively, and of both Fisher and Thermo with respect to the
combined
36
company. Lazard assumed no responsibility for, and expressed no
view as to, the financial forecasts or the assumptions on which
they are based.
In rendering its opinion, Lazard assumed that the merger will be
consummated on the terms described in the latest draft of the
merger agreement reviewed by Lazard, without any waiver or
modification of any material terms or conditions, that obtaining
the necessary regulatory approvals for the merger will not have
an adverse effect on Fisher, Thermo or the combined company, and
that the synergistic savings and benefits of the merger
projected by Fisher and Thermo will be substantially realized
both in scope and timing. In addition, Lazard assumed that the
representations and warranties of Fisher and Thermo contained in
the draft merger agreement were true and complete and that the
merger will be accounted for as a tax-free
reorganization within the meaning of
Section 368(a) of the Internal Revenue Code.
Lazards opinion did not address the merits of the
underlying business decision of Fisher to engage in the merger
or the relative merits of the merger as compared to other
business strategies or transactions that might be available to
Fisher. Lazard did not express any opinion as to any tax or
other consequences that might result from the merger, nor did
its opinion address any legal, tax, regulatory or accounting
matters, as to which Lazard understood that Fisher obtained such
advice as it deemed necessary from qualified professionals.
Lazard did not express any opinion as to the prices at which
shares of Fisher common stock or Thermo common stock would trade
at any time. Lazards opinion is necessarily based on
economic, monetary, market and other conditions as in effect on,
and the information made available as of, the date therein.
Lazard assumed no responsibility for updating or revising its
opinion based on circumstances or events occurring after the
date thereof.
Lazards advisory services and opinion were provided for
the information and assistance of the Fisher board of directors
in connection with its consideration of the merger and its
opinion did not constitute a recommendation as to how any holder
of Fisher common shares should vote at any stockholders
meeting to be held in connection with, or take any action with
respect to, the merger.
See Financial Analyses of Fishers
Financial Advisors below for a summary of the material
financial analyses used by Lazard in connection with rendering
its opinion.
Lazard and its affiliates, as part of their investment banking
business, are continually engaged in performing financial
analyses with respect to businesses and their securities in
connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and other
transactions as well as for estate, corporate and other
purposes. Lazard has in the past provided investment banking
services to Fisher, for which Lazard received customary fees.
Lazard may provide investment banking or other services to
Fisher and Thermo in the future and would expect to receive
customary compensation. In addition, in the ordinary course of
their respective businesses, affiliates of Lazard and LFCM
Holdings LLC (an entity indirectly held in large part by
managing directors of Lazard) may actively trade securities of
Fisher or Thermo for their own accounts and for the accounts of
their customers and, accordingly, may at any time hold a long or
short position in such securities.
The Fisher board of directors selected Lazard as one of its
financial advisors because Lazard is an internationally
recognized investment banking firm that has substantial
experience in transactions similar to the merger. Pursuant to a
letter agreement dated May 6, 2006, Fisher engaged Lazard
to act as a financial advisor in connection with the merger.
Pursuant to the terms of this engagement letter, Fisher has
agreed to pay Lazard a transaction fee of $22,000,000,
$6,000,000 of which became payable upon the execution of the
merger agreement and the remainder of which is payable upon
consummation of the merger. In addition, Fisher has agreed to
reimburse Lazards expenses in connection with this
engagement and to indemnify Lazard and related persons against
various liabilities, including certain liabilities under the
federal securities laws.
|
|
|
Financial Analyses of Fishers Financial
Advisors |
The following is a summary of the material financial analyses
used by Goldman Sachs and Lazard, which are sometimes referred
to collectively as the Fisher financial advisors, in connection
with rendering their
37
respective opinions described above. The following summary,
however, does not purport to be a complete description of the
financial analyses performed by the Fisher financial advisors.
The order of analyses described does not represent relative
importance or weight given to those analyses by either of the
Fisher financial advisors. Some of the summaries of the
financial analyses include information presented in tabular
format. The tables must be read together with the full text of
each summary and are alone not a complete description of the
Fisher financial advisors financial analyses. Except as
otherwise noted, the following quantitative information, to the
extent that it is based on market data, is based on market data
as it existed on or before May 5, 2006 and is not
necessarily indicative of current market conditions.
The Fisher financial advisors reviewed specific estimated future
operating and financial contributions of each of Fisher and
Thermo including sales, earnings before interest, taxes and
depreciation and amortization, which is referred to as EBITDA,
earnings before interest, taxes and amortization, which is
referred to as EBITA, GAAP net income and cash net income based
on the financial forecasts for 2006 and 2007, before taking into
account any of the synergies that may be realized following the
merger. The proportionate contributions were calculated taking
into account Fishers and Thermos respective
debt and cash and were compared to the estimated ownership by
the Fisher stockholders prior to the merger of 61.4% of the
outstanding common equity of the combined company following the
merger. The following table presents the results of this
analysis:
Fisher Forecast Contribution to Combined Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
|
GAAP Net |
|
Cash Net |
Year |
|
Sales |
|
EBITDA |
|
EBITA |
|
Income |
|
Income |
|
|
|
|
|
|
|
|
|
|
|
2006E
|
|
|
68% |
|
|
|
68% |
|
|
|
68% |
|
|
|
70% |
|
|
|
66% |
|
2007E
|
|
|
68% |
|
|
|
68% |
|
|
|
67% |
|
|
|
70% |
|
|
|
67% |
|
|
|
|
Pro Forma Merger Analysis |
For the year 2007, the Fisher financial advisors compared the
earnings per share of the Thermo common stock, projected by
Thermo management, as reviewed and approved by Fisher
management, on a standalone basis, to the pro forma earnings per
share of the combined company following the merger, utilizing
forecasts for Fisher prepared by Fisher management and forecasts
for Thermo prepared by Thermo management, as reviewed and
approved by Fisher management. Based on such analyses, the
proposed transaction would be approximately 18% accretive in
2007 on a pro forma cash earnings per share basis.
|
|
|
Discounted Cash Flow Analysis |
The Fisher financial advisors performed discounted cash flow
analyses on Fisher and the combined company using the financial
forecasts and, in the case of the combined company, the
synergistic savings and benefits projected by Fisher and Thermo
to be realized following the merger. For estimates for 2008
through 2010 the Fisher financial advisors utilized, based upon
management assumptions, revenue growth equal to the expected
market growth rate and EBITDA margins constant at 2007 levels.
The Fisher financial advisors calculated implied net present
values of free cash flows for Fisher, Thermo and the combined
company following the merger for the years 2006 through 2010
using discount rates ranging from 8.5% to 10.5%. The Fisher
financial advisors calculated implied per share ranges of Fisher
common stock, Thermo common stock and the common stock of the
combined company to be received by Fisher stockholders in the
merger using implied terminal value indications in the year 2010
based on multiples ranging from 10.0 to 13.0 times EBITDA for
Fisher, from 11.0 to 14.0 times EBITDA for Thermo and from 11.0
to 14.0 times EBITDA for the combined company. These implied
terminal value indications were then discounted to an implied
present value using discount rates ranging from 8.5% to 10.5%.
These analyses resulted in implied per share values ranging from
$76.21 to $102.25 for Fisher, $34.90 to $45.63 for Thermo and
$84.60 to $113.65 for the combined company.
38
The Fisher financial advisors calculated the implied premium for
Fisher common stock represented by the 2.0 exchange ratio
pursuant to the merger based on the closing prices of Fisher
common stock and Thermo common stock during the one-month,
three-month, six-month, one-year and two-year periods ended
May 5, 2006 and on the closing share prices of Fisher
common stock and Thermo common stock on May 5, 2006. The
results of this analysis are shown in the following table:
|
|
|
|
|
|
|
Implied | |
Day/Period |
|
Premium | |
|
|
| |
May 5, 2006
|
|
|
7.0 |
% |
One-Month Average
|
|
|
13.3 |
% |
Three-Month Average
|
|
|
14.8 |
% |
Six-Month Average
|
|
|
18.9 |
% |
One-Year Average
|
|
|
22.5 |
% |
Two-Year Average
|
|
|
28.5 |
% |
|
|
|
Illustrative Future Trading Value Analysis |
The Fisher financial advisors calculated illustrative implied
per share price ranges of the two shares of the combined company
to be received for each share of Fisher common stock in the
merger, a range of potential synergies from $75 million to
$200 million, which represents the synergies estimated by
the managements of Thermo and Fisher to be realized in calendar
year 2007 and the total synergies to be realized in connection
with the proposed transaction, respectively, and the resulting
pro forma 2007 cash earnings per share estimates, and an
illustrative range of pro forma 2007 estimated price/earnings
multiples. Based on a price/earnings multiple range of 16.5 to
19.0 times, the analysis resulted in implied value indications
for each share of Fisher common stock ranging from $77.61 to
$97.07. This analysis also calculated the pro forma weighted
average implied price/earnings multiple of 16.9 times 2007
estimated cash earnings per share based upon the weighted
average of Fisher and Thermo managements 2007 cash net
income forecasts.
|
|
|
Selected Transactions Analysis |
The Fisher financial advisors analyzed certain publicly
available information relating to the following selected
completed and pending transactions (listed by buyer and target)
in the life sciences industry since 2000:
|
|
|
|
|
Announcement |
|
|
|
|
Date |
|
Buyer |
|
Target |
|
|
|
|
|
4/27/2006
|
|
Siemens |
|
Diagnostic Products Corp. |
4/25/2006
|
|
Millipore |
|
Serologicals |
2/8/2005
|
|
Invitrogen Corp. |
|
Dynal Biotech A/S (75% stake) |
1/19/2005
|
|
Thermo Electron Corp. |
|
Kendro Laboratory Products LP |
3/17/2004
|
|
Fisher Scientific International Inc |
|
Apogent Technologies Inc |
2/11/2004
|
|
Fisher Scientific International Inc |
|
Oxoid Group Holding Ltd |
12/24/2003
|
|
Invitrogen Corp. |
|
BioReliance Corp. |
10/10/2003
|
|
General Electric |
|
Amersham Plc |
6/25/2003
|
|
Fisher Scientific International Inc |
|
Perbio Science AB |
3/12/2002
|
|
Amersham Plc |
|
Amersham Biosciences (45% stake) |
7/7/2000
|
|
Invitrogen Corp. |
|
Dexter Corp. (Life Technologies) |
39
The Fisher financial advisors analyzed certain information
relating to the following selected transactions (listed by buyer
and target) in the healthcare distribution industry since 1997:
|
|
|
|
|
Announcement |
|
|
|
|
Date |
|
Buyer |
|
Target |
|
|
|
|
|
4/7/2004
|
|
Clayton, Dubilier & Rice, Inc. |
|
VWR International |
6/14/2002
|
|
Cardinal Health |
|
Syncor International |
3/19/2001
|
|
Amerisource Health Corp. |
|
Bergen Brunswig Corp. |
12/4/2000
|
|
Cardinal Health |
|
Bindley Western |
1/11/1999
|
|
Bergen Brunswig Corp. |
|
PharMerica |
10/9/1998
|
|
Cardinal Health |
|
Allegiance Corp. |
1/28/1997
|
|
McKesson Corp. |
|
General Medical Corp. |
Although none of the selected transactions or the companies
party to the transactions is directly comparable to the merger
or to Fisher or Thermo, the transactions were chosen because
they involve transactions that, for purposes of analysis, may be
considered similar to the merger and/or involve publicly traded
companies with operations that, for purposes of analysis, may be
considered similar to certain operations of Fisher and Thermo.
For each of the selected transactions, the Fisher financial
advisors calculated and, to the extent information was publicly
available, compared transaction value as a multiple of each of
earnings before interest and taxes, which is referred to as
EBIT, EBITDA and sales, in each case, for the latest
12 months, which is referred to as LTM, prior to the date
that the merger was announced.
The following table presents the results of this analysis:
Life Sciences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Value as | |
|
|
Multiple of LTM | |
|
|
| |
|
|
EBIT | |
|
EBITDA | |
|
Sales | |
|
|
| |
|
| |
|
| |
Mean
|
|
|
18.8 |
x |
|
|
14.7 |
x |
|
|
3.4x |
|
Median
|
|
|
17.9 |
x |
|
|
13.1 |
x |
|
|
3.3x |
|
The merger
|
|
|
16.0 |
x |
|
|
12.7 |
x |
|
|
2.2x |
|
Healthcare Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Value as | |
|
|
Multiple of LTM | |
|
|
| |
|
|
EBIT | |
|
EBITDA | |
|
Sales | |
|
|
| |
|
| |
|
| |
Mean
|
|
|
17.3 |
x |
|
|
12.6 |
x |
|
|
0.7x |
|
Median
|
|
|
16.0 |
x |
|
|
12.4 |
x |
|
|
0.7x |
|
The merger
|
|
|
16.0 |
x |
|
|
12.7 |
x |
|
|
2.2x |
|
|
|
|
Implied Transaction Multiples |
Based on the closing price of Thermo common stock and Fisher
common stock on May 5, 2006, and the exchange ratio of 2.0,
the Fisher financial advisors calculated an implied price per
share of $78.90 for each share of Fisher common stock. In
addition, the Fisher financial advisors calculated an implied
enterprise value of approximately $12.8 billion for Fisher
using the implied price per share of $78.90, the net debt of
Fisher (estimated by Fisher to exist as of March 31, 2006)
and the fully diluted number of shares outstanding (assuming
treasury method treatment for all of Fishers convertible
bonds). The Fisher financial advisors also calculated the
implied enterprise value as a multiple of each of revenue,
EBITDA, and EBIT, for calendar years 2005 and 2006 based on the
financial forecasts for Fisher.
40
The following table presents the results of this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Transaction Multiples |
|
Revenues |
|
EBITDA |
|
EBIT |
|
|
|
|
|
|
|
CY2005A
|
|
|
2.4 |
x |
|
|
14.0 |
x |
|
|
17.3x |
|
|
LTM
|
|
|
|
|
|
|
12.7 |
x |
|
|
16.0x |
|
CY2006E
|
|
|
2.1 |
x |
|
|
11.9 |
x |
|
|
14.9x |
|
The Fisher financial advisors also calculated the $78.90 implied
per share price to be received by holders of shares of Fisher
common stock pursuant to the merger as a multiple of earnings
per share for calendar years 2006 and 2007 based on the
financial forecasts for Fisher. The following table presents the
results of this analysis:
SHARE PRICE AS A MULTIPLE OF:
|
|
|
|
|
|
|
|
|
|
|
GAAP EPS |
|
Cash EPS |
|
|
|
|
|
CY2006E
|
|
|
20.5x |
|
|
|
18.8x |
|
CY2007E
|
|
|
17.7x |
|
|
|
16.5x |
|
|
|
|
Selected Companies Analysis |
The Fisher financial advisors reviewed and compared certain
financial information for Fisher and Thermo to corresponding
financial information and public market multiples for the
following publicly traded corporations and indices of publicly
traded corporations in the life sciences and healthcare
distribution industries:
|
|
|
|
|
an instruments index which includes Agilent Technologies Inc.,
Applera Corp. Applied Biosystems Group, Biacore
International, Bruker BioSciences Corp., Dionex Corp., MDS Inc.,
Mettler Toledo International Inc., PerkinElmer Inc.,
Tecan Group, Varian Medical Systems Inc., and Waters Corp. |
|
|
|
Beckman Coulter, Inc. |
|
|
|
Thermo |
|
|
|
Qiagen N.V. |
|
|
|
Millipore Corp. |
|
|
|
Becton, Dickinson and Company; |
|
|
|
Invitrogen Corp. |
|
|
|
Sigma-Aldrich Corp. |
|
|
|
Fisher |
|
|
|
a Distribution Index which includes AmerisourceBergen Corp.,
Henry Schein Inc., Cardinal Health Inc., McKesson Corp.,
Owens & Minor Inc., Patterson Companies Inc. and PSS
World Medical Inc. |
Although none of the selected companies or the companies
comprising the selected indices is directly comparable to Fisher
or Thermo, the companies included were chosen because they are,
and the indices included were chosen because the companies of
which they are comprised are, publicly traded companies with
operations that for purposes of analysis may be considered
similar to certain operations of Fisher and Thermo.
The Fisher financial advisors calculated the estimated 2006
price-to-earnings ratio
for these selected companies, which is referred to as
price/earnings ratio based on IBES projections. The
price/earnings ratios of the selected companies ranged from
18.0x to 28.4x, with Thermos price/earnings ratio at 23.0x
on a cash basis and Fishers price/earnings ratio at 19.2x
and 17.6x on a GAAP and cash basis, respectively.
41
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying the opinions of the Fisher financial advisors. In
arriving at their respective opinions, each of the Fisher
financial advisors considered the results of all of its analyses
and did not attribute any particular weight to any factor or
analysis considered by it. Rather, each Fisher financial advisor
made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the above analyses as a comparison is directly comparable to
Fisher or Thermo or the merger.
The Fisher financial advisors prepared these analyses for
purposes of providing their respective opinions to the Fisher
board of directors as to the fairness from a financial point of
view to the holders of the outstanding shares of Fisher common
stock of the exchange ratio. These analyses do not purport to be
appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold. Analyses based upon
forecasts of future results are not necessarily indicative of
actual future results, which may be significantly more or less
favorable than suggested by these analyses. Because these
analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or
their respective advisors, none of Fisher, Thermo, either of the
Fisher financial advisors or any other person assumes
responsibility if future results are materially different from
those forecast. As described above, the opinions of each Fisher
financial advisor to the Fisher board of directors were two of
many factors taken into consideration by the Fisher board of
directors in making its determination to approve the merger
agreement.
The exchange ratio was determined through arms-length
negotiations between Fisher and Thermo and was approved by the
Fisher board of directors. The Fisher financial advisors
provided advice to Fisher during these negotiations. The Fisher
financial advisors did not, however, recommend any specific
amount of consideration to Fisher or its board of directors or
that any specific exchange ratio constituted the only
appropriate consideration for the merger.
Financial Interests of Directors and Officers in the
Merger
Some of the members of Thermos and Fishers
management, executive officers and the non-employee directors of
their boards of directors have interests in the merger that are
in addition to, or different from, the interests of Thermo and
Fisher stockholders generally, which are described below. The
Thermo and Fisher boards of directors were aware of these
interests and considered them, among other matters, in approving
the merger agreement, the issuance of Thermo common stock to
Fisher stockholders, the amendment of the Thermo charter and the
other transactions contemplated by the merger agreement.
Financial Interests of Fisher Directors and Officers in
the Merger
Fishers executive officers are Messrs. Montrone,
Meister, Della Penta, Clark and Rea. Fisher has entered into
employment agreements with each of its executive officers that,
among other things, provide for certain payments and benefits
upon a qualifying termination of the executives
employment, including a qualifying termination of employment
following a change in control, referred to as a
Qualifying Separation. The consummation of the merger would
constitute a change in control for purposes of these agreements.
Set forth below are the payments and benefits that would be
applicable on the assumption that a Qualifying Separation
occurred as of October 1, 2006. It is anticipated that
Messrs. Montrones, Meisters, Della
Pentas, Clarks and Reas employment under their
existing employment agreements with Fisher will terminate upon
the consummation of the merger. However, certain executive
officers of Fisher are expected to continue to be available to
provide services to the combined company after the merger on a
basis to be determined as part of the integration planning
process.
42
Mr. Montrone. Mr. Montrones employment
agreement provides for payment of certain post-termination and
retirement benefits, as described in Fishers Proxy
Statement filed with the SEC on April 6, 2006, which is
incorporated by reference into this document. These benefits are
fully vested and unaffected by the merger.
Mr. Meister. In a Qualifying Separation,
Mr. Meister would be entitled to receive a pro-rata portion
of his target bonus for the year of termination and, subject to
his remaining available to assist in the transition of his
duties and responsibilities, a lump sum payment of severance
equal to three times the sum of his annual base salary and
target bonus. Mr. Meister would also receive three years of
continued fringe benefits, personal perquisites and other
benefits provided during his employment. For purposes of
calculating his supplemental retirement benefits,
Mr. Meister would be deemed to have completed three
additional years of service and received the cash severance as
compensation for services over such three year period. The
amount of the cash payments described above would be
approximately $6.9 million. Mr. Meister will serve as
non-executive Chairman of the board of directors of the combined
company.
Mr. Della Penta. On January 10, 2006,
Fishers Compensation Committee accepted Mr. Della
Pentas notification of his retirement from employment
effective at the end of 2006.
In a Qualifying Separation, Mr. Della Penta would be
entitled to receive a lump sum payment equal to the product of
two times his base salary and outplacement services with a cost
of up to $50,000. Mr. Della Penta would also receive two
years of continued medical coverage. The amount of the cash
payments described above would be approximately
$1.3 million.
Mr. Clark. In a Qualifying Separation,
Mr. Clark would be entitled to receive a pro-rata portion
of his target bonus for the year of termination, a lump sum
payment of severance equal to two and one-half times the sum of
his annual base salary and target bonus, and a lump sum payment
equal to two and one-half times Fishers annual
contributions to any defined contribution plans for
Mr. Clark. Mr. Clark would also receive from Fisher
two and one-half years of continued medical, dental, vision,
life insurance and accidental death and dismemberment insurance
benefits. For purposes of calculating his supplemental
retirement benefits, Mr. Clark would be deemed to have
completed two and one-half additional years of service and
received his annual base salary and annual bonus as compensation
for services over such two and one-half year period. To the
extent the date of Mr. Clarks termination of
employment is after Fishers fiscal year end, but before
the determination of a long term incentive plan payout,
Mr. Clark would be entitled to receive the target long term
incentive award to which he is then entitled based upon the
results for the prior fiscal year. In addition, Mr. Clark
would also receive a payment equal to the full target of the
long term incentive plan award for the year of termination. The
amount of the cash payments described above would be
approximately $6.5 million.
Mr. Rea. In a Qualifying Separation, Mr. Rea
would be entitled to receive a pro-rata portion of his target
bonus for the year of termination, a lump sum payment of
severance equal to two and one-half times the sum of his annual
base salary and target bonus, and a lump sum payment equal to
two and one-half times Fishers annual contributions to any
defined contribution plans for Mr. Rea. Mr. Rea would
also receive two and one-half years of continued medical,
dental, vision, life insurance and accidental death and
dismemberment insurance benefits. For purposes of calculating
his supplemental retirement benefits, Mr. Rea would be
deemed to have completed two and one-half additional years of
service and received the cash severance as compensation for
services over such two and one-half year period. Mr. Rea
would also receive a $20,000 cash payment, which he may use for
outplacement services. The amount of the cash payments described
above would be approximately $1.1 million.
As described in The Merger Treatment of Stock
Options and Other Equity-Based Awards, upon completion of
the merger each outstanding Fisher option, whether or not
exercisable, will be assumed by Thermo and converted into an
option to acquire the number of shares of Thermo common stock
equal to two times the number of shares of Fisher common stock
that were subject to the original Fisher stock option at a per
share exercise price equal to the exercise price per share of
the original Fisher stock option divided by two (rounded up to
the nearest whole cent). Each converted Fisher stock option will
have the same terms and
43
conditions as were in effect immediately prior to the merger,
subject to any accelerated vesting as a result of the merger to
the extent provided by the terms of the applicable Fisher stock
plan.
Upon completion of the merger, each Fisher stock unit award will
be assumed by Thermo and converted into a stock unit award in
respect of the number of shares of Thermo common stock equal to
two times the number of shares of Fisher common stock subject to
the Fisher stock unit award. Each converted stock unit award
will have the same terms and conditions as were in effect
immediately prior to the merger, except that the performance
conditions applicable to the vesting of the converted stock unit
awards will be deemed to have been satisfied upon completion of
the merger, and the converted stock unit awards (other than
those stock unit awards granted under the Fisher 2005 Equity and
Incentive Plan which are subject to a performance based
restricted stock unit purchase agreement, referred to as
Investment RSUs, and which become vested and payable in
accordance with their current terms upon the merger) will
instead generally vest and be settled in three equal increments
on the first three anniversaries of their original grant date,
subject to the holders continued employment on each such
vesting date (other than upon a Qualifying Separation, in which
case such award would vest immediately upon such Qualifying
Separation).
As soon as practicable following the merger, Fisher will make
cash payments as contemplated by the initial terms of grant for
the Investment RSUs. Similar cash payments to Fishers
executive officers as contemplated by the initial terms of grant
for other restricted stock unit awards, referred to as Cash
Payment RSUs, will vest and become payable in three equal
installments on each of the first, second and third
anniversaries of their original grant date, subject to the
holders continued employment on each such payment date
(other than upon a Qualifying Separation, in which case such
award would vest immediately upon such Qualifying Separation).
Assuming that each of Messrs. Montrone, Meister, Della
Penta, Clark and Rea experience a Qualifying Separation
immediately following completion of the merger, the aggregate
amount of all such cash payments (with respect to both
Investment RSUs and Cash Payment RSUs) payable to
Messrs. Montrone, Meister, Della Penta, Clark and Rea will
be approximately $4.1 million, $3.3 million,
$0.6 million, $2.2 million and $0.4 million,
respectively.
Pursuant to the initial grant terms for certain stock option and
restricted stock unit awards and/or underlying equity incentive
plans, the consummation of the merger will result in the vesting
of certain stock options and restricted stock units held by
Fishers executive officers. In addition, certain unvested
stock options and restricted stock unit awards will vest and/or
become free of restrictions if the holder experiences a
Qualifying Separation following the consummation of the merger.
Assuming that each of Messrs. Montrone, Meister, Della
Penta, Clark and Rea experience a Qualifying Separation
immediately following completion of the merger, the aggregate
amount and value (based on an assumed Fisher stock price of
$73.75) of all such unvested Fisher stock options and the number
of Fisher restricted stock units held by the Fisher executive
officers that will become fully vested and/or free of
restrictions in connection with the completion of the merger and
such Qualifying Separation is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Spread | |
|
|
|
|
|
|
Number of Shares | |
|
for All Unvested | |
|
Total Number of | |
|
Aggregate Value for | |
|
|
Underlying All | |
|
Fisher Stock | |
|
All Unvested | |
|
All Unvested Restricted | |
|
|
Unvested Fisher | |
|
Options | |
|
Restricted Stock | |
|
Stock Units | |
Executive Officer |
|
Stock Options | |
|
($)(millions) | |
|
Units | |
|
($)(millions) | |
|
|
| |
|
| |
|
| |
|
| |
Mr. Montrone
|
|
|
182,000 |
|
|
|
1.9 |
|
|
|
125,610 |
|
|
|
9.3 |
|
Mr. Meister
|
|
|
145,640 |
|
|
|
1.5 |
|
|
|
99,230 |
|
|
|
7.3 |
|
Mr. Della Penta
|
|
|
109,180 |
|
|
|
1.1 |
|
|
|
18,400 |
|
|
|
1.4 |
|
Mr. Clark
|
|
|
90,880 |
|
|
|
1.0 |
|
|
|
65,570 |
|
|
|
4.8 |
|
Mr. Rea
|
|
|
15,880 |
|
|
|
0.1 |
|
|
|
11,570 |
|
|
|
0.9 |
|
Each of Fishers non-employee directors hold options to
acquire Fisher common stock, which ordinarily vest over three
years from the date of grant, subject to the directors
continued service on the board. Any such options which are
unvested will become fully vested at the time of the merger. A
total of 160,004 unvested options held by Fishers
non-employee directors as a group will vest in connection with
the merger.
44
Each of Fishers non-employee directors hold restricted
stock units, which ordinarily vest over three years from the
date of grant, subject to the directors continued service
on the board. Any such restricted stock units which are unvested
will become fully vested at the time of the merger. A total of
16,000 unvested restricted stock units held by Fishers
non-employee directors as a group will vest in connection with
the merger.
Pursuant to the terms of the Retirement Plan for Non-Employee
Directors of Fisher Scientific International Inc., upon a change
in control, a non-employee director with less than 5 years
of eligible service on the Fisher Board will be deemed to have
completed 5 years of eligible service for purposes of
receiving benefits under the plan. As a result of the merger,
the retirement benefits of six non-employee directors will vest.
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|
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Indemnification and Insurance |
The merger agreement provides that, for at least six years after
the merger, the combined company will indemnify and hold
harmless, and provide advancement of expenses to, all present
and former officers and directors of Fisher and its subsidiaries
with respect to acts or omissions occurring prior to the merger,
including those relating to the merger, to the fullest extent
permitted by applicable laws. After the merger, the combined
company will also fulfill and honor the obligations of Fisher
under any indemnification agreements between Fisher and its
present or former directors, officers and employees.
The merger agreement also provides that the combined company
will maintain for a period of six years after completion of the
merger the current directors and officers and
fiduciary liability insurance policies maintained by Fisher, or
policies of at least the same coverage and amount and containing
terms and conditions that are not less advantageous than the
current policies, with respect to facts or events occurring
prior to the merger, including events relating to the merger,
although the combined company will not be required to make
aggregate annual premium payments for such policies in excess of
250% of the annual premiums currently paid by Fisher and its
subsidiaries for directors and officers and
fiduciary liability insurance. In the event that the combined
company is unable to maintain or obtain such insurance, the
combined company will obtain as much comparable insurance as is
available for annual premium payments equal to 250% of the
annual premiums currently paid by Fisher for directors and
officers and fiduciary liability insurance.
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|
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Surviving Company Board of Directors |
For a discussion of the composition of the surviving company
board of directors, see Board of Directors and
Management Following the Merger.
Financial Interests of Thermo Directors and Officers in
the Merger
Existing Thermo Change in Control Retention Agreements.
The seven executive officers of Thermo, including Marijn E.
Dekkers, Marc N. Casper, Guy Broadbent, Seth H. Hoogasian and
Peter M. Wilver, have previously entered into agreements with
Thermo that contain change in control severance provisions.
Under these agreements, if, during the eighteen-month period
following a change in control of Thermo, the employment of a
covered executive is terminated other than for cause
or disability, or by the covered executive for good
reason, the covered executive will be entitled to receive
the following payments and benefits: (1) a pro-rata annual
bonus through the date of termination, based on the annual bonus
paid for the most recently completed year, (2) a payment
equal to two (three in the case of Mr. Dekkers) times the
sum of the executives highest annual base salary during
the five-year period preceding the change in control and the
executives highest annual bonus earned during the same
five-year period, (3) two years (three in the case of
Mr. Dekkers) of benefits continuation and
(4) outplacement services. If any amounts or benefits
received under the change in control retention agreements or
otherwise are subject to the excise tax imposed under
section 4999 of the Internal Revenue Code, an additional
payment will be made to restore the executive to the after-tax
position that he would have been in if the excise tax had not
been imposed. The merger will be a change in control for
purposes of these agreements. Assuming the merger is completed
after September 30, 2006, it is currently estimated that
the aggregate amount of the cash severance payments that could
become
45
payable to the seven executive officers of Thermo, as a group,
upon their qualifying terminations of employment following the
completion of the merger, is $19,370,000 in the aggregate.
Thermo Deferred Compensation Plans. Thermo maintains two
deferred compensation plans, one for certain employees and one
for non-employee directors. In the event of a change in control
of Thermo, the employee deferred compensation plan requires the
appointment of a third-party administrator and provides that if
the plan is terminated all account balances must be paid as lump
sum distributions. The merger will be a change in control for
purposes of this plan, although Thermo intends to amend the plan
to provide that the merger will not constitute a change in
control under the plan. In the event of a change in control of
Thermo, the director deferred compensation plan provides that
the plan will terminate and all account balances denominated in
Thermo stock units will be distributed in shares of Thermo
common stock. The merger will be a change in control for
purposes of the director plan. Based on the expected account
balances of the four active participating non-employee directors
as of September 30, 2006, the approximate number of shares
of Thermo common stock to be distributed to them as a group is
74,672 in the aggregate.
Thermo Equity-Based Awards. Pursuant to the terms of the
Thermo equity incentive plans, upon a change in control of
Thermo, substantially all of the outstanding awards under the
plans will vest, become exercisable or be settled and/or the
restrictions thereon will lapse, as applicable. In connection
with the execution of the merger agreement, Mr. Dekkers
waived his right to accelerated vesting of his currently
outstanding options to acquire 1,264,600 shares of Thermo
common stock solely as a result of the merger.
Assuming the merger is completed after September 30, 2006,
(1) the number of unvested stock options to acquire shares
of Thermo common stock held by six of the Thermo executive
officers as a group that will become fully vested upon
completion of the merger is 1,444,662, in the aggregate,
(2) the number of shares of restricted Thermo common stock
and restricted stock units held by the seven Thermo executive
officers as a group that will vest and become free of
restriction in connection with the completion of the merger is
145,001, in the aggregate, and (3) the number of unvested
stock options to acquire shares of Thermo common stock held by
the seven non-employee directors of Thermo as a group that will
become fully vested upon completion of the merger is 190,326, in
the aggregate.
Future Long-Term Incentive Awards. Pursuant to the merger
agreement, the board of directors of Thermo will, in
consultation with Fisher, establish a long-term incentive
compensation program for the benefit of the senior management of
the combined company. Subject to completion of the merger, this
program will provide each such individual with unvested
long-term incentive compensation that is comparable in aggregate
value to the currently unvested (but which will vest upon the
completion of the merger as described above) equity-based awards
that are now held by such individuals.
Board of Directors and Management Following the Merger
Following the merger, the board of directors of the combined
company will consist of eight directors and for a period of
three years will be maintained at a ratio of five directors
selected by Thermo and three directors selected by Fisher. If
there is a vacancy created by the cessation of service by a
Thermo director, a majority of the remaining Thermo directors
will propose a nominee to fill the vacant position. Similarly,
if there is a vacancy created by the cessation of service by a
Fisher director, a majority of the remaining Fisher directors
will propose a nominee to fill the vacant position. Following
the merger, Mr. Dekkers will serve as President and Chief
Executive Officer and Mr. Meister will serve as
non-executive Chairman of the board of directors, of the
combined company and in that role will continue to advise the
combined company on strategic matters. The foregoing agreements
will be included in the bylaws of the combined company. See
The Merger Agreement Amendments to Thermo
Bylaws.
The board will include Mr. Meister, Mr. Manzi,
Mr. Dekkers, Mr. Manning, Dr. Porter,
Ms. Ullian and two additional independent Fisher directors
as selected by Fisher who are reasonably acceptable to Thermo.
The board of directors of the combined company after the merger
will have the following committees, each with three members. The
executive committee will be comprised of Messrs. Meister,
Manzi and
46
Dekkers, with Mr. Meister as Chairman. The audit committee
will be comprised of two Thermo designees to be determined and
one Fisher designee to be determined, with the Chairman being a
Thermo designee to be determined. The compensation committee
will be comprised of two Thermo designees to be determined and
one Fisher designee to be determined, with the Chairman being a
Thermo designee to be determined. The nominating and corporate
governance committee will be comprised of two Thermo designees
to be determined and one Fisher designee to be determined, with
the Chairman being a Thermo designee to be determined.
Material U.S. Federal Income Tax Consequences of the
Merger
The following is a discussion of the material
U.S. federal income tax consequences of the merger to
Fisher stockholders who exchange their shares of Fisher common
stock for shares of Thermo common stock in the merger. This
discussion addresses only Fisher stockholders who are
U.S. Holders (as defined below) and hold Fisher common
stock as a capital asset. It does not address all of the
U.S. federal income tax consequences that may be relevant
to a particular Fisher stockholder in light of that
stockholders individual circumstances or to a Fisher
stockholder who is subject to special rules, including, without
limitation:
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|
|
|
|
a financial institution or insurance company; |
|
|
|
a tax-exempt organization; |
|
|
|
a stockholder who is not a U.S. Holder; |
|
|
|
a pass-through entity or an investor in such an entity; |
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|
|
a dealer or broker in securities or foreign currencies; |
|
|
|
a trader in securities who elects to apply a
mark-to-market method
of accounting; |
|
|
|
a stockholder who holds Fisher common stock as part of a hedge,
appreciated financial position, straddle, constructive sale or
conversion transaction; and |
|
|
|
a stockholder who acquired his or her shares of Fisher common
stock pursuant to the exercise of employee stock options or
otherwise as compensation. |
The following discussion is based on the Code, applicable
Treasury regulations, administrative interpretations and court
decisions, each as in effect as of the date of this document and
all of which are subject to change, possibly with retroactive
effect. This discussion is not binding on the Internal Revenue
Service, which is referred to as the IRS, and there can be no
assurance that the IRS (or a court, if challenged by the IRS)
will agree with the conclusions stated herein. In addition, this
discussion does not address any state, local or foreign tax
consequences of the merger. Fisher stockholders are urged to
consult their tax advisors as to the specific tax consequences
to them of the merger in light of their particular circumstances
including the applicability and effect of U.S. federal,
state, local, foreign income and other tax laws.
For purposes of this discussion, U.S. Holder
refers to a beneficial holder of Fisher common stock that is,
for U.S. federal income tax purposes, (i) an
individual citizen or resident of the United States, (ii) a
corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia, (iii) an estate the income of which
is subject to U.S. federal income taxation regardless of
its source or (iv) a trust (x) that is subject to the
supervision of a court within the United States and the control
of one or more U.S. persons or (y) that has a valid
election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
If an entity treated as a partnership for U.S. federal
income tax purposes holds Fisher common stock, the tax treatment
of a partner will generally depend upon the status of the
partner and the activities of that partnership. If a
U.S. Holder is a partner of a partnership holding that
common stock, the holder should consult its tax advisor
regarding the tax consequences of the merger.
It is a condition to the completion of the merger that Thermo
receive a written opinion from its counsel, Wachtell, Lipton,
Rosen & Katz, and that Fisher receive a written opinion
from its counsel, Skadden, Arps,
47
Slate, Meagher & Flom LLP, in each case dated as of the
effective date of the merger, to the effect that the merger will
qualify as a reorganization within the meaning of
Section 368(a) of the Code. Neither Thermo nor Fisher
intends to waive this closing condition. In the event that
either Thermo or Fisher waives receipt of such opinion from its
counsel, however, Thermo and Fisher will resolicit the approval
of its stockholders after providing appropriate disclosure. The
opinions will rely on certain assumptions as well as
representations made by Thermo, Trumpet Merger Corporation and
Fisher. If any of those assumptions or representations are
inaccurate, counsel may not be able to render the required
opinions and the tax consequences of the merger could differ
from those discussed here. An opinion of counsel is not binding
on the IRS or any court, nor does it preclude the IRS from
adopting a contrary position. No ruling has been or will be
sought from the IRS on the U.S. federal income tax
consequences of the merger.
Assuming that the merger qualifies as a reorganization within
the meaning of Section 368(a) of the Code, for
U.S. federal income tax purposes:
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a Fisher stockholder whose shares of Fisher common stock are
exchanged in the merger for shares of Thermo common stock will
not recognize gain or loss; |
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a Fisher stockholders aggregate tax basis in shares of
Thermo common stock received in the merger will equal the
aggregate tax basis of the Fisher common stock surrendered in
the merger; and |
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a Fisher stockholders holding period for shares of Thermo
common stock received in the merger will include the holding
period for the shares of Fisher common stock surrendered in the
merger. |
U.S. Holders receiving Thermo common stock as a result of
the merger generally will be required to retain records
pertaining to the merger and generally will be required to file
with their U.S. federal income tax return for the year in
which the merger takes place a statement setting forth certain
facts relating to the merger.
Accounting Treatment
Thermo prepares its financial statements in accordance with
GAAP. The merger will be accounted for using the purchase method
of accounting. Statement of Financial Accounting Standards
No. 141, Business Combinations, referred to as
SFAS 141, provides guidance for determining the accounting
acquirer in a business combination when equity interests are
exchanged between two entities. SFAS 141 provides that in a
business combination effected through an exchange of equity
interests, such as the merger, the entity that issues the equity
interests is generally the acquiring entity. In some business
combinations, however, the acquired entity issues the equity
interests. Commonly, the acquiring entity is the larger entity.
However, the facts and circumstances surrounding a business
combination sometimes indicate that a smaller entity acquires a
larger one. SFAS 141 further provides that in identifying
the acquiring entity in a combination effected through an
exchange of equity interests, all pertinent facts and
circumstances must be considered, including: the relative voting
rights of the stockholders of the constituent companies in the
combined entity, the composition of the board of directors and
senior management of the combined company and the terms of the
exchange of equity securities in the business combination,
including payment of any premium.
Based on the Thermo board members and senior management
representing a majority of the board and senior management of
the combined company, as well as the terms of the exchange, with
Fisher shareholders receiving a premium (as of the date
preceding the merger announcement) over the fair market value of
their shares on such date, Thermo is considered to be the
acquirer of Fisher for accounting purposes. This means that
Thermo will allocate the purchase price to the fair value of
Fishers assets and liabilities at the acquisition date,
with the excess purchase price being recorded as goodwill. Under
the purchase method of accounting, goodwill is not amortized but
is tested for impairment annually.
Regulatory Approvals Required for the Merger
Thermo and Fisher have each agreed to use reasonable best
efforts in order to obtain all regulatory approvals required in
order to consummate the merger.
48
Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and related rules (referred to as the HSR
Act), the merger cannot be completed until the expiration of a
waiting period that follows the filing of notification forms by
both parties to the transaction with the U.S. Federal Trade
Commission (referred to as the FTC) and the Antitrust Division
of the U.S. Department of Justice (referred to as the
Antitrust Division). Thermo and Fisher are in the process of
finalizing submission of the necessary notification and report
forms under the HSR Act with the FTC and the Antitrust Division,
which the parties expect to complete on or before July 26,
2006. The initial waiting period is 30 days after the
filing of the notification and report forms, but this period may
be extended if the reviewing agency issues a formal request for
additional information and documentary material, referred to as
a second request. If the reviewing agency issues a second
request, the parties may not complete the merger until
30 days after both parties substantially comply with the
second request, unless the waiting period is terminated earlier.
At any time before or after completion of the merger, the
Antitrust Division or the FTC or any state could take such
action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin
the completion of the merger, to rescind the merger or to seek
divestiture of particular assets of Thermo or Fisher. Private
parties also may seek to take legal action under the antitrust
laws under certain circumstances. As in every transaction, a
challenge to the merger on antitrust grounds may be made, and,
if such a challenge is made, it is possible that Thermo and
Fisher will not prevail.
Thermo and Fisher each conducts business in member states of the
European Union. Council Regulation (EEC) 139/2004, as
amended, requires notification to and approval by the European
Commission of mergers or acquisitions involving parties with
aggregate worldwide sales and individual European Union sales
exceeding specific thresholds before these mergers or
acquisitions are implemented. Thermo and Fisher intend to file a
merger notification with the European Union antitrust
authorities as soon as practicable.
The European Commission must review the merger to determine
whether or not it is compatible with the common market, and,
accordingly, whether or not to permit it to proceed. A merger or
acquisition that would not significantly impede effective
competition in the common market or in a substantial part of it,
in particular as a result of the creation or strengthening of a
dominant position, shall be declared compatible with the common
market and must be allowed to proceed. If, following a
preliminary 25 business days Phase I investigation,
which may be extended to 35 business days, the European
Commission determines that it needs to examine the merger more
closely because the merger raises serious doubts as to its
compatibility with the common market, it must initiate a
Phase II investigation. If it initiates a Phase II
investigation, the European Commission must issue a final
decision as to whether or not the merger is compatible with the
common market no later than 125 business days after the
initiation of the Phase II investigation.
Thermo and Fisher conduct operations in a number of
jurisdictions where other regulatory filings or approvals may be
required or advisable in connection with the completion of the
merger. Thermo and Fisher are currently reviewing whether
filings or approvals may be required or advisable in those
jurisdictions that may be material to Thermo and Fisher. It is
possible that any of the regulatory authorities with which
filings are made may seek regulatory concessions as conditions
for granting approval of the merger.
Prior to completing the merger, the applicable waiting period
under the HSR Act must expire or be terminated, and Thermo and
Fisher are required to obtain the requisite antitrust approvals
from the European Commission. In addition, Thermo and Fisher
must obtain requisite approvals from any other regulatory
authorities if the failure to obtain approvals of those
regulatory authorities would have a material adverse effect on
Thermo and its subsidiaries taken as a whole, or Fisher and its
subsidiaries taken as a whole, respectively, in each case after
giving effect to the merger.
Although we do not expect regulatory authorities to raise any
significant objections in connection with their review of the
merger, we cannot assure you that we will obtain all required
regulatory approvals or that these regulatory approvals will not
contain terms, conditions or restrictions that would be
detrimental to the combined company after the completion of the
merger.
49
Exchange of Certificates in the Merger
At or prior to the effective time of the merger, an exchange
agent will be appointed to handle the exchange of Fisher stock
certificates for certificates representing shares of Thermo
common stock. Promptly after the effective time of the merger,
the exchange agent will send a letter of transmittal and
instructions to each former Fisher stockholder explaining the
procedure for surrendering Fisher stock certificates in exchange
for certificates representing the number of shares of Thermo
common stock into which the shares of Fisher common stock will
be converted in the merger.
After the effective time of the merger, each certificate that
previously represented shares of Fisher common stock will
represent only the right to receive a certificate representing
the shares of Thermo common stock into which the shares of
Fisher common stock have been converted. In addition, after the
effective time of the merger, Fisher will not register any
transfers of the shares of Fisher common stock. Thermo
stockholders need not exchange their stock certificates.
Treatment of Stock Options and Other Equity-Based Awards
Upon completion of the merger, each outstanding option to
acquire Fisher common stock, whether or not exercisable, will be
assumed by Thermo and converted into an option to acquire that
number of whole shares of Thermo common stock equal to the
product of the number of shares of Fisher common stock that were
subject to the original Fisher stock option multiplied by the
exchange ratio (rounded down to the nearest whole share) at a
per share exercise price equal to the exercise price per share
of the original Fisher stock option divided by the exchange
ratio (rounded up to the nearest whole cent). Each converted
Fisher stock option will have the same terms and conditions as
were in effect immediately prior to the completion of the
merger, subject to any accelerated vesting as a result of the
merger to the extent provided by the terms of the applicable
Fisher stock plan.
Upon completion of the merger, each stock unit award in respect
of Fisher common stock will be assumed by Thermo and converted
into a stock unit award in respect of the number of shares of
Thermo common stock (or an amount in respect thereof for cash
settled Fisher stock unit awards) equal to the number of shares
of Fisher common stock subject to the Fisher stock unit award,
multiplied by the exchange ratio (rounded down to the nearest
whole share). Each converted stock unit award will have the same
terms and conditions as were in effect immediately prior to the
completion of the merger, except that the performance conditions
applicable to the vesting of the converted stock unit awards
will be deemed to have been satisfied upon completion of the
merger, and the converted stock unit awards (other than those
stock unit awards granted under the Fisher 2005 Equity and
Incentive Plan that are evidenced by a performance based
restricted stock unit investment agreement and which become
vested and payable in accordance with their current terms upon a
change in control transaction, such as the completion of the
merger) will instead generally vest and be settled in three
equal increments on the first three anniversaries of their
original grant date, subject to the holders continued
employment with the combined company or the surviving
corporation as of each such vesting date.
Prior to the completion of the merger, Thermo will take the
corporate action necessary to reserve for issuance a sufficient
number of shares of Thermo common stock for delivery in
connection with the exercise of the converted stock options and
stock unit awards and, within one business day of the completion
of the merger, Thermo will register the shares of Thermo common
stock subject to such converted options and awards.
Following the completion of the merger, Thermo may grant equity
awards under the Fisher stock and equity incentive plans, to the
extent shares are available for grant under any such plan, in
accordance with the mergers and acquisitions exemption to the
equity compensation plan shareholder approval requirement under
the NYSE rules.
50
Restrictions on Sales of Shares of Thermo Common Stock
Received in the Merger
Thermo common stock issued in the merger will not be subject to
any restrictions on transfer arising under the Securities Act,
except for shares issued to any Fisher stockholder who may be
deemed to be an affiliate of Thermo or Fisher for
purposes of Rule 145 under the Securities Act.
Under Rule 145, former Fisher stockholders who were
affiliates of Fisher at the time of the Fisher special meeting
and who are not affiliates of Thermo after the completion of the
merger, may sell their Thermo common stock received in the
merger at any time subject to the volume and sale limitations of
Rule 144 under the Securities Act. Further, so long as such
former Fisher affiliates are not considered affiliates of Thermo
following the completion of the merger, and a period of at least
one year has elapsed from the completion of the merger, such
former affiliates may sell their Thermo common stock received in
the merger without regard to the volume and sale limitations of
Rule 144 under the Securities Act so long as there is
adequate current public information available about Thermo in
accordance with Rule 144. After a period of two years has
elapsed from the completion of the merger, and so long as such
former affiliates are not affiliates of Thermo and have not been
for at least three months prior to such sale, such former
affiliates may freely sell their Thermo common stock. Former
Fisher stockholders who become affiliates of Thermo after
completion of the merger will still be subject to the volume and
sale limitations of Rule 144 under the Securities Act,
until each such stockholder is no longer an affiliate of Thermo.
This document does not cover resales of Thermo common stock
received by any person upon completion of the merger, and no
person is authorized to make any use of this document in
connection with any resale.
Listing of Thermo Common Stock
It is a condition to the completion of the merger that the
Thermo common stock issuable in the merger or upon exercise of
options to purchase Thermo common stock issued in substitution
for Fisher options be approved for listing on the NYSE, subject
to official notice of issuance.
Appraisal Rights
Under the General Corporation Law of the State of Delaware, or
the DGCL, holders of Fisher common stock are not entitled to
appraisal rights in connection with the merger. See the section
entitled Appraisal Rights beginning on page 88.
51
THE MERGER AGREEMENT
The following summarizes material provisions of the merger
agreement which is attached as Annex A to this document and
is incorporated by reference herein. The rights and obligations
of the parties are governed by the express terms and conditions
of the merger agreement and not by this summary or any other
information contained in this document. Thermo and Fisher
stockholders are urged to read the merger agreement carefully
and in its entirety as well as this document before making any
decisions regarding the merger.
Completion of the Merger
Unless the parties agree otherwise, the closing of the merger
will take place on a date specified by the parties, but no later
than the second business day after all closing conditions have
been satisfied or waived, at the offices of Wachtell, Lipton,
Rosen & Katz, 51 West 52nd Street, New York,
New York 10019. The merger will be completed when we file a
certificate of merger with the Delaware Secretary of State,
unless we agree to a later time for the completion of the merger
and specify that time in the certificate of merger.
We currently expect to complete the merger in the fourth quarter
of 2006, subject to receipt of required stockholder and
regulatory approvals.
Conditions to Completion of the Merger
The obligations of Fisher and Thermo to complete the merger are
subject to the satisfaction of the following conditions:
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the adoption of the merger agreement by Fisher stockholders; |
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the approval of the issuance of Thermo common stock in the
merger and the Thermo charter amendment proposal by Thermo
stockholders; |
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the termination or expiration of the applicable waiting periods
under the HSR Act and all required notifications and filings
under the ECMR; |
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the receipt of other requisite regulatory approvals, unless
failure to obtain them would not, individually or in the
aggregate, have a material adverse effect on Fisher and its
subsidiaries, taken as a whole, or Thermo and its subsidiaries,
taken as a whole (after giving effect to the merger); |
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no judgment or other legal prohibition of any court or other
governmental entity shall be in effect that prohibits the
completion of the merger; |
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the SEC having declared effective the registration statement of
which this document forms a part; and |
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the authorization for listing by the NYSE of the Thermo common
stock issuable to Fisher stockholders in the merger. |
In addition, each of Fishers and Thermos obligation
to effect the merger is subject to the satisfaction or waiver of
the following additional conditions:
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the representations and warranties of the other party being true
and correct, subject to the material adverse effect standard
provided in the merger agreement; |
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the other party having performed or complied with, in all
material respects, all obligations required to be performed or
complied with by it under the merger agreement; |
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the other party and its respective subsidiaries, taken as a
whole, not having suffered any material adverse effect, as
defined in the merger agreement; |
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the receipt of an officers certificate executed by each of
the other partys Chief Executive Officer and Chief
Financial Officer stating that the three preceding conditions
have been satisfied; and |
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the receipt of an opinion of that partys counsel to the
effect that the merger will qualify as a
reorganization under the Code. |
Reasonable Best Efforts to Obtain Required Stockholder
Votes
Each company has agreed to take all lawful action to give notice
of, convene and hold a meeting of its stockholders as promptly
as practicable for the purpose of obtaining the required
stockholder vote to approve the transactions contemplated by the
merger agreement. In addition, each party has agreed to use its
reasonable best efforts to obtain from its stockholders the
required stockholder vote, in the case of Thermo, in favor of
the stock issuance proposal and the Thermo charter amendment
proposal, and in the case of Fisher, in favor of adoption of the
merger agreement.
No Solicitation
Each company has agreed that from the time of the execution of
the merger until the consummation of the merger or the
termination of the merger agreement, subject to certain
customary exceptions, none of Fisher or Thermo, their respective
subsidiaries or any officer, director, employee, agent or
representative (including any investment banker, financial
advisor, attorney, accountant or other retained representative)
of Fisher or Thermo will directly or indirectly solicit,
initiate or encourage or knowingly facilitate (including by way
of furnishing information or entering into any agreements,
arrangements or understandings) or take any other action
designed to facilitate any inquiries or proposals regarding any
merger, share exchange, consolidation, sale of assets, sale of
shares of capital stock (including, without limitation, by way
of a tender offer) or similar transactions involving Fisher or
Thermo or any of their respective subsidiaries. Additionally,
each company has agreed that neither company will participate in
any discussions or negotiations regarding any alternative
transaction to this transaction or enter into any agreement
regarding any alternative transaction.
Nevertheless, the board of directors of both Fisher and Thermo
will be permitted to, prior to the receipt of the relevant
stockholder approval required to consummate the merger, furnish
information with respect to Fisher or Thermo and their
respective subsidiaries, to a person making a bona fide written
alternative transaction proposal and participate in discussions
and negotiations with respect to such bona fide written
alternative transaction proposal received by Fisher or Thermo,
if the board of directors of such company determines in good
faith (after consultation with outside legal counsel) that the
failure to do so would, or would reasonably be likely to, cause
it to violate its fiduciary duties. The merger agreement
requires that the companies notify each other if any alternative
transaction proposals are presented to either company.
The merger agreement requires both Fisher and its subsidiaries,
and Thermo and its subsidiaries, to cease and terminate any
existing discussions or negotiations with any persons conducted
prior to the execution of the merger agreement and use
reasonable best efforts to cause all persons other than Fisher
or Thermo who have been furnished confidential information
regarding Fisher or Thermo in connection with the solicitation
of or discussions regarding an alternative transaction proposal
within the 12 months prior to the date of the signing of
the merger agreement to promptly return or destroy such
information. In addition, Fisher and Thermo agree not to, and to
cause their respective subsidiaries not to, release any third
party from the confidentiality and standstill provisions of any
agreement to which Fisher or Thermo or their respective
subsidiaries is or may become a party.
Fisher and Thermo are required to use their reasonable best
efforts to inform their respective representatives of the no
solicitation restrictions provided for in the merger agreement.
Termination of the Merger Agreement
Right to Terminate. The merger agreement may be
terminated at any time prior to the effective time of the
merger, under the following circumstances:
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by mutual written consent of Fisher and Thermo, if the board of
directors of each so determines; |
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by written notice of either Fisher or Thermo (as authorized by
the board of directors of Fisher or Thermo, as applicable): |
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1. |
if the merger is not consummated by May 7, 2007; |
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2. |
if a governmental entity issues a final and nonappealable order,
decree or ruling or takes any other action that permanently
restrains, enjoins or otherwise prohibits the merger; |
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3. |
if Fishers stockholder approval is not obtained at
Fishers stockholder meeting or at any adjournment or
postponement, at which the vote to obtain the approval required
for this transaction is taken; or |
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4. |
if Thermos stockholder approval is not obtained at
Thermos stockholder meeting or at any adjournment or
postponement, at which the vote to obtain the approval required
for this transaction is taken; |
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by Fisher upon a breach of any representation, warranty,
covenant or agreement on the part of Thermo, or if any
representation or warranty of Thermo becomes untrue, in either
case such that the conditions to Fishers obligations to
complete the merger would not then be satisfied and in any such
case such breach is incapable of being cured or is not cured in
all material respects within 10 days after written notice
of such breach is received by Thermo; |
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by Thermo upon a breach of any representation, warranty,
covenant or agreement on the part of Fisher, or if any
representation or warranty of Fisher becomes untrue, in either
case such that the conditions to Thermos obligations to
complete the merger would not then be satisfied and in any such
case such breach is incapable of being cured or is not cured in
all material respects within 10 days after written notice
of such breach is received by Fisher; |
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by Fisher if the board of directors of Thermo, for any reason
fails to recommend in this document a vote in favor of the stock
issuance and the charter amendment, or in a manner adverse to
Fisher withdraws, modifies or qualifies, or proposes to
withdraw, modify or qualify, the recommendation by the board of
directors in favor of the stock issuance and the charter
amendment to Thermos stockholders. Additionally, Fisher
can terminate if Thermo takes any public action or makes any
public statement in connection with the meeting of Thermo
stockholders inconsistent with the recommendation to approve the
stock issuance and the charter amendment or recommends any
alternative transaction; or |
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by Thermo if the board of directors of Fisher, for any reason
fails to recommend in this document a vote in favor of adoption
of the merger agreement, or in a manner adverse to Thermo
withdraws, modifies or qualifies, or proposes to withdraw,
modify or qualify, the recommendation by the board of directors
in favor of adoption of the merger agreement to Fishers
stockholders. Additionally, Thermo can terminate if Fisher takes
any public action or makes any public statement in connection
with the meeting of Fisher stockholders inconsistent with the
recommendation to approve the adoption of the merger agreement
or recommends any alternative transaction. |
Termination Fee
If the merger agreement is validly terminated, the agreement
will become void without any liability on the part of any party
unless the party is in willful or intentional breach of any
representation, warranty, covenant or agreement contained in the
merger agreement. The provisions of the merger agreement
relating to the effects of termination, fees and expenses,
termination payments, governing law, jurisdiction, waiver of
jury trial and specific performance, as well as the
confidentiality agreement entered into between Thermo and
Fisher, will continue in effect notwithstanding termination of
the merger agreement. Upon a termination, a
54
party may become obligated to pay to the other party a
termination fee (which will, in any case, only be payable once),
as described below:
Fisher will be obligated to pay a termination fee of
$300 million immediately upon termination if the merger
agreement is terminated:
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by Thermo if the board of directors of Fisher, for any reason
fails to recommend in this document a vote in favor of adoption
of the merger agreement, or in a manner adverse to Thermo
withdraws, modifies or qualifies, or proposes to withdraw,
modify or qualify, the recommendation by the board of directors
in favor of adoption of the merger agreement to Fishers
stockholders; or |
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by Thermo if Fisher, in a manner adverse to Thermo, takes any
public action or makes any public statement in connection with
the meeting of Fishers stockholders inconsistent with the
recommendation to approve the adoption of the merger agreement
or recommends any alternative transaction. |
Fisher will separately be obligated to pay a termination fee of
$300 million if the merger agreement is terminated:
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by either party because the merger is not consummated by
May 7, 2007 and at the time of such termination Fisher has
not obtained stockholder approval for the adoption of the merger
agreement; |
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by either party because Fisher does not obtain stockholder
approval for the adoption of the merger agreement at the Fisher
special meeting; or |
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by Thermo because Fisher breaches one of its representations or
warranties or covenants in the merger agreement, in such a way
that the related closing conditions described in the first and
second bullets in the second paragraph under
Conditions to Completion of the Merger
above would not be satisfied, and |
in each case at any time after the signing of the merger
agreement and before such termination
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an alternative transaction proposal with respect to Fisher is
publicly proposed or publicly disclosed or, solely in the case
of a termination because of Fishers breach of any
representation or warranty or covenant under the merger
agreement, otherwise communicated to the senior management or
board of directors of Fisher, and |
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within 12 months of the date of such termination of the
merger agreement, Fisher or any of its subsidiaries executes any
definitive agreement with respect to, or consummates any
alternative transaction. |
Thermo will be obligated to pay a termination fee of
$200 million immediately upon termination if the merger
agreement is terminated:
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by Fisher if the board of directors of Thermo, for any reason
fails to recommend in this document a vote in favor of the stock
issuance and the charter amendment, or in a manner adverse to
Fisher withdraws, modifies or qualifies, or proposes to
withdraw, modify or qualify, the recommendation by the board of
directors in favor of the stock issuance and the charter
amendment to Thermos stockholders; or |
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by Fisher if Thermo, in a manner adverse to Fisher, takes any
public action or makes any public statement in connection with
the Thermo special meeting inconsistent with the recommendation
to approve the stock issuance and the charter amendment or
recommends any alternative transaction. |
Thermo will separately be obligated to pay a termination fee of
$200 million if the merger agreement is terminated:
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by either party because the merger is not consummated by
May 7, 2007 and at the time of such termination Thermo has
not obtained stockholder approval for the stock issuance and the
charter amendment; or |
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by either party because Thermo does not obtain stockholder
approval for the stock issuance and the charter amendment at the
Thermo special meeting; or |
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by Fisher because Thermo breaches one of its representations or
warranties or covenants in the merger agreement, in such a way
that the related closing conditions described in the first and
second bullets in the second paragraph under
Conditions to Completion of the Merger
above would not be satisfied, and |
in each case at any time after the signing of the merger
agreement and before such termination
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an alternative transaction proposal with respect to Thermo is
publicly proposed or publicly disclosed or, solely in the case
of a termination because of Thermos breach of any
representation or warranty or covenant under the merger
agreement, otherwise communicated to the senior management or
board of directors of Thermo, and |
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within 12 months of the date of such termination of the
merger agreement, Thermo or any of its subsidiaries executes any
definitive agreement with respect to, or consummates any
alternative transaction. |
Conduct of Business
Each of Thermo and Fisher have undertaken certain covenants in
the merger agreement restricting the conduct of their respective
businesses between the date of the merger agreement and the
effective time of the merger. In general, each of Thermo and
Fisher has agreed to (1) maintain its existence in good
standing under applicable laws, (2) conduct its operations
only in the ordinary and usual course of business consistent
with past practice and (3) use its reasonable best efforts
to keep available the services of the current officers, key
employees and key consultants of each of our companies, and to
preserve the current relationships of each company, with its
customers, suppliers and other persons with which it has
significant business relations as are reasonably necessary in
order to preserve substantially intact its business organization.
In addition, between the date of the merger agreement and the
effective time of the merger, each of Fisher and Thermo, has
agreed to various specific restrictions relating to the conduct
of its business, including the following (subject in each case
to exceptions specified in the merger agreement or previously
disclosed in writing as provided in the merger agreement):
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amendments or changes to its certificate of incorporation or
bylaws or equivalent organizational documents; |
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the issuance or sale of capital stock, voting debt or other
equity interests; |
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the declaration or payment of dividends or other distributions,
other than certain ordinary course dividends or other
distributions; |
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the reclassification, combination, split or subdivision of any
of its capital stock or the issuance of any other securities in
substitution for shares of its capital stock; |
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the acquisition of its capital stock, other equity interests or
other securities; |
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the incurrence or guarantee of indebtedness for borrowed money
or the issuance of any debt securities; |
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the termination or any material change in certain types of
material contracts of either company, where such termination or
change would have an adverse effect on either of the companies
and their subsidiaries; |
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the entry into certain types of new material contracts (based on
dollar amounts specified in the merger agreement); |
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the authorization of any material loan to any person (other than
a wholly-owned subsidiary) outside the ordinary course of
business; |
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changes in employee benefit plans and compensation of directors,
executive officers and employees of either company; |
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grants of certain rights to severance or termination pay; |
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changes in accounting policies or procedures, other than in the
ordinary course of business consistent with past practice or
except as required by GAAP or by a governmental entity; |
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changes with regard to taxes, except in the ordinary course of
business consistent with past practice; |
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changes to any material rights or claims to any confidentiality
or standstill agreement to which either company is a party and
which relates to a business combination involving either of the
companies; |
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actions to write up, write down or write off the book value of
any assets, individually or in the aggregate; |
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actions to render inapplicable, or to exempt any third person
from, any state law takeover protections; |
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the acquisition or disposition of assets, operations, business
or securities; |
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the engagement in any merger, consolidation or other business
combination with any person; |
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actions that are intended or would reasonably result in any of
the conditions to the merger not being satisfied; |
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acquisitions or dispositions of material intellectual property; |
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actions that would result in restructuring charges pursuant to
GAAP; |
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the payment, discharge, settlement or satisfaction of any
material claims, liabilities, obligations or litigation; |
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the entry into any new line of business material to either of
the companies; |
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the maintenance of insurance coverage substantially similar to
insurance coverage maintained as of the signing of the merger
agreement; and |
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the entry into any non-competition contract or other contract
that purports to limit either the type of business in which
Fisher or its subsidiaries, or Thermo or its subsidiaries, may
engage or the manner or locations in which any of them may so
engage in any business. |
Other Covenants and Agreements
Expenses. Each company has agreed to pay its own fees and
expenses incurred in connection with the merger and the merger
agreement, except that each company has agreed to pay 50% of any
expenses incurred in connection with the filing, printing and
mailing of the registration statement of which this document
forms a part with the SEC and the filing of pre-merger
notification and report forms under the HSR Act and any
applicable antitrust, competition or similar laws of any foreign
jurisdiction (including filing fees).
Other Covenants and Agreements. The merger agreement
contains certain other covenants and agreements, including
covenants relating to:
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cooperation between Thermo and Fisher in the preparation of this
document; |
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timeliness in holding stockholders meetings to propose and
approve the merger, the issuance of Thermo common stock in the
merger and the Thermo charter amendments and the recommendation
of the parties boards of directors that stockholders vote
in favor of the proposals; |
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confidentiality and access by each party to certain information
about the other party during the period prior to the effective
time of the merger; |
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joint consultation between Thermo and Fisher with respect to any
public statements regarding the merger; |
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cooperation between Thermo and Fisher to obtain (and to keep
each other apprised of the status of) all governmental approvals
and consents required to complete the merger; |
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action to make Thermos rights agreement inapplicable to
the merger and waiver by each party of state takeover statutes
applicable to the merger; |
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cooperation between Thermo and Fisher in the preparation of all
returns or other documents regarding any real property transfer
or gains, sales, use, transfer, value added, stock transfer and
stamp taxes, any transfer, recording, registration and other
fees or any similar taxes which become payable in connection
with the merger; |
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Fishers agreement to terminate its Employee Stock Purchase
Plan at least one full payroll period prior to the
merger; and |
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employee plans and benefits provided after the merger, as
described in the section entitled Employee
Benefits Matters. |
Representations and Warranties
The merger agreement contains reciprocal representations and
warranties, many of which are qualified by materiality, made by
each party to the other. The representations and warranties
relate to, among other topics, the following:
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organization, standing and corporate power, charter documents
and ownership of subsidiaries; |
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capital structure; |
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corporate authority to enter into and perform the merger
agreement, enforceability of the merger agreement, approval of
the merger agreement by the parties boards of directors
and voting requirements to consummate the merger; |
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filings with the SEC and other governmental entities; |
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accuracy of information supplied or to be supplied in the
registration statement to be filed in connection with the merger; |
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absence of certain changes or events; |
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compliance with applicable laws and validity of permits; |
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labor and other employment matters, including benefit plans; |
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benefit plans; |
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tax matters; |
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absence of undisclosed interested party transactions; |
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environmental matters; |
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intellectual property matters; |
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compliance with the FDA; |
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inapplicability of state takeover statutes and shareholder
rights agreements; |
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brokers used in connection with the merger agreement; |
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opinions of financial advisors; |
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existence and enforceability of material contracts; |
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ownership of real property; |
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absence of any actions that would prevent the merger from
qualifying as a reorganization for U.S. federal
income tax purposes; and |
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in the case of Thermo, that all action necessary has been taken
or will be taken to render Thermos rights agreement
inapplicable to the merger. |
The merger agreement also contains certain representations and
warranties of Thermo with respect to its direct, wholly-owned
subsidiary, Trumpet Merger Corporation, including corporate
organization and authorization, no prior business activities,
capitalization and approval of the merger agreement.
The representations described above and included in the merger
agreement were made for purposes of the merger agreement and are
subject to qualifications and limitations agreed by the
respective parties in connection with negotiating the terms of
the merger agreement. In addition, certain representations and
warranties were made as of a specific date, may be subject to a
contractual standard of materiality different from what might be
viewed as material to stockholders, or may have been used for
purposes of allocating risk between the respective parties
rather than establishing matters as facts. This description of
the representations and warranties, and their reproduction in
the copy of the merger agreement attached to this document as
Annex A, are included solely to provide investors with
information regarding the terms of the merger agreement.
Accordingly, the representations and warranties and other
provisions of the merger agreement should not be read alone, but
instead should be read together with the information provided
elsewhere in this document and in the documents incorporated by
reference into this document. See Where You Can Find More
Information on page 89.
Employee Benefits Matters
Thermo has agreed to provide non-union Fisher employees, for a
period of two years following closing, with benefits (other than
options or equity-based awards or incentive plans) in the
aggregate substantially no less favorable than benefits under
comparable Fisher plans. Thermo will give Fisher employees full
credit for purposes of eligibility, vesting, determination of
level of benefits and benefit accrual under any employee benefit
plans or arrangements maintained by Thermo.
In connection with the merger, Thermo will waive all limitations
on preexisting conditions or waiting periods with respect to
participation and coverage requirements applicable to the Fisher
employees under any welfare benefit plans that the employees may
be eligible to participate. Thermo has also agreed to provide
each Fisher employee with credit for any co-payments and
deductibles paid under any Fisher benefit plan that provides
healthcare benefits in the plan year in effect as of the closing
in satisfying any applicable deductible or
out-of-pocket expenses
under any healthcare plans of Thermo.
For any employee whose terms and conditions of employment are
governed by collective bargaining agreements, Thermo will honor
each of Fishers existing collective bargaining agreements
and the terms and conditions thereunder.
Combined Company Headquarters and Fisher Offices
The parties agreed that the headquarters of the combined company
will be located in Waltham, Massachusetts, Thermos current
headquarters, and that the combined company will maintain the
current offices of Fisher in its current facility in Hampton,
New Hampshire for at least three years after the completion of
the merger.
Amendments, Extensions and Waivers
Amendment. The merger agreement may be amended by the
parties at any time before or after the Fisher stockholders or
the Thermo stockholders approve the merger, the issuance of
Thermo common stock in the merger or the Thermo charter
amendments. However, after any such stockholder approval, there
may not be, without further approval of Thermo stockholders and
Fisher stockholders, any amendment of the merger agreement that
changes the amount or the form of the consideration to be
delivered to Fisher stockholders, or any amendment for which
applicable laws expressly require further stockholder approval.
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Extension; Waiver. At any time prior to the effective
time of the merger, with certain exceptions, any party may
(a) extend the time for performance of any obligations or
other acts of the other party, (b) waive any inaccuracies
in the representations and warranties of the other party
contained in the merger agreement or in any document delivered
pursuant to the merger agreement or (c) waive compliance by
another party with any of the agreements or conditions contained
in the merger agreement.
Amendments to Thermo Bylaws
This section of the document describes the material terms of the
amendments to Thermos bylaws as agreed to in the merger
agreement. The following summary is qualified in its entirety by
reference to the complete text of the amendments to
Thermos bylaws, which are incorporated by reference and
attached as Annex E to this document. We urge you to read
the full text of these amendments.
The bylaws of Thermo will be amended, effective not later than
the completion of the merger, to add a new bylaw providing the
following:
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that the board of directors has resolved that, effective as of
the completion of the merger, Mr. Dekkers will continue to
serve as President and Chief Executive Officer of the combined
company, and Mr. Meister will become Chairman of the board
of directors of the combined company; |
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that on the effective date of the merger, and continuing for a
period of three years following the effective date, the
composition of the combined companys board of directors
will be maintained at a ratio of five continuing Thermo
directors to three continuing Fisher directors; and |
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that on the effective date of the merger, and continuing for a
period of three years following the effective date, any
vacancies on the board of directors created by the cessation of
service of a director will be filled by a nominee proposed to
the nominating and governance committee of the board of
directors by a majority of the remaining continuing Thermo
directors in the case of a vacancy from among the continuing
Thermo directors, and by a majority of the remaining continuing
Fisher directors in the case of a vacancy from among the
continuing Fisher directors. |
The bylaws will provide that, until the third anniversary of the
effective time, the affirmative vote of at least 75% of the full
board of directors will be required for any amendment of or
change to the bylaw provisions described in the second and third
bullets above.
60
THE COMPANIES
Thermo Electron Corporation
Thermo Electron Corporation is a world-wide provider of
analytical instruments that enable customers to make the world a
healthier, cleaner and safer place. Thermo provides analytical
instruments, scientific equipment, services and software
solutions for life science, drug discovery, clinical,
environmental and industrial laboratories, as well as for use in
a variety of manufacturing processes and
in-the-field
applications including those associated with safety and homeland
security.
Thermo, a Delaware corporation, was founded in 1956 by
Dr. George N. Hatsopoulos in Massachusetts. The
company completed its initial public offering in 1967 and was
listed on the NYSE in 1980.
Additional information about Thermo and its subsidiaries is
included in documents incorporated by reference into this
document. See Where You Can Find More Information on
page 89.
The principal executive office of Thermo is located at
81 Wyman Street, Waltham, Massachusetts.
Fisher Scientific International Inc.
Fisher Scientific International Inc. is a leading manufacturer
and supplier of products and services principally to the
scientific-research and clinical laboratory markets. Fisher
serves pharmaceutical and biotechnology companies; colleges and
universities; medical-research institutions; hospitals;
reference, quality-control, process-control and research and
development labs in various industries; as well as government
agencies. From biochemicals, cell-culture media and proprietary
RNAi technology to rapid-diagnostic tests, safety products and
other consumable supplies, Fisher offers an array of products
and services. This broad offering, combined with Fishers
global supply chain and sales and marketing capabilities, helps
make our customers more efficient and effective.
Fisher was founded in 1902 by Chester G. Fisher in
Pittsburgh, Pennsylvania. In 1991, Fisher was incorporated as a
Delaware corporation and became a public company whose shares
are listed on the NYSE. Fisher is a Fortune 500 company and
a component of the S&P 500, Russell 1000 and MSCI
World indices.
Additional information about Fisher and its subsidiaries is
included in documents incorporated by reference into this
document. See Where You Can Find More Information on
page 89.
The principal executive office of Fisher is located at One
Liberty Lane, Hampton, New Hampshire.
61
UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined balance sheet as of
April 1, 2006, and the unaudited pro forma condensed
combined statements of income for the three months ended
April 1, 2006 and the year ended December 31, 2005,
are presented herein. The unaudited pro forma condensed combined
balance sheet combines the unaudited condensed balance sheets of
Thermo and Fisher and gives effect to the merger as if it had
been completed on April 1, 2006. The unaudited pro forma
condensed combined statements of income for the three months
ended April 1, 2006 and the year ended December 31,
2005 combine the historical results of Thermo and Fisher and
give effect to the merger as if it had occurred on
January 1, 2005. The unaudited pro forma condensed combined
statement of income for the year ended December 31, 2005
also gives effect to Thermos May 2005 acquisition of the
Kendro Laboratory Products business as if it had occurred on
January 1, 2005.
The unaudited pro forma condensed combined financial statements
presented are based on the assumptions and adjustments described
in the accompanying notes. The unaudited pro forma condensed
combined financial statements are presented for illustrative
purposes and do not purport to represent what the financial
position or results of operations would actually have been if
the merger occurred as of the dates indicated or what such
financial position or results would be for any future periods.
The unaudited pro forma condensed combined financial statements
are based upon the respective historical consolidated financial
statements of Thermo and Fisher, and should be read in
conjunction with:
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the accompanying notes to the unaudited pro forma condensed
combined financial statements; |
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the separate historical financial statements of Thermo as of and
for the three months ended April 1, 2006 included in
Thermos quarterly report on
Form 10-Q for the
three months ended April 1, 2006, which is incorporated by
reference into this document; |
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the separate historical financial statements of Thermo as of and
for the year ended December 31, 2005 included in
Thermos annual report on
Form 10-K for the
year ended December 31, 2005, which is incorporated by
reference into this document; |
|
|
|
the separate historical financial statements of Fisher as of and
for the three months ended March 31, 2006 included in
Fishers quarterly report on
Form 10-Q for the
three months ended March 31, 2006, which is incorporated by
reference into this document; and |
|
|
|
the separate historical financial statements of Fisher as of and
for the year ended December 31, 2005 included in
Fishers current report on
Form 8-K filed
May 11, 2006, to reflect the account balances and
activities of the laboratory workstations business as
discontinued operations, which is incorporated by reference into
this document. |
The unaudited pro forma condensed combined financial information
was prepared using the purchase method of accounting. As
discussed under Accounting Treatment on page 48,
based upon the terms of the merger and other factors, such as
the composition of the combined companys board and senior
management, Thermo is treated as the acquirer of Fisher.
Accordingly, we have adjusted the historical combined financial
information to give effect to the impact of the consideration
issued in connection with the merger. In the unaudited pro forma
condensed consolidated balance sheet, Thermos cost to
acquire Fisher has been allocated to the assets acquired and
liabilities assumed based upon managements preliminary
estimate of their respective fair values as of the date of the
merger. Any differences between fair value of the consideration
issued and the fair value of the assets and liabilities acquired
will be recorded as goodwill. The amounts allocated to acquired
assets and liabilities in the unaudited pro forma condensed
combined financial statements are based on managements
preliminary internal valuation estimates. Definitive allocations
will be performed and finalized based on certain valuations and
other studies that will be performed by Thermo with the services
of outside valuation specialists after the closing of the
merger. Accordingly, the purchase price allocation adjustments
and related amortization reflected in the following unaudited
pro forma condensed combined financial statements are
preliminary, have been made solely for the purpose of preparing
these statements and are subject to revision based on a final
determination of fair value after the closing of the
62
merger. For example, if the value of the definite-lived
intangible assets increased by 10%, annual pro forma income from
continuing operations would decrease by $41 million.
The unaudited pro forma condensed combined statements of income
also include certain purchase accounting adjustments, including
items expected to have a continuing impact on the combined
results, such as increased amortization expense on acquired
intangible assets.
In analysis contained elsewhere in this document, Thermos
investment banker, Lehman Brothers, reviewed prospective
financial data for the combined entity on both a reported (GAAP)
and adjusted basis. Adjusted results are not prepared in
accordance with generally accepted accounting principles. For
future periods, the chief difference between GAAP and adjusted
results assumed by Lehman is the inclusion of amortization
expense from acquisition-related intangible assets in GAAP
results and the exclusion of this expense from adjusted results.
The following historic pro forma results are presented on a GAAP
basis only. After-tax amortization expense totaled $0.29 and
$1.13 per share in the pro forma combined statement of
operations for the first quarter of 2006 and the year ended
December 31, 2005, respectively.
The unaudited pro forma condensed combined statements of income
do not include the impacts of any revenue, cost or other
operating synergies that may result from the merger or any
related restructuring costs. Cost savings, if achieved, could
result from material sourcing and elimination of redundant costs
including headcount and facilities.
The unaudited pro forma condensed combined financial statements
do not reflect the impact of financing, liquidity or other
balance sheet repositioning that may be undertaken in connection
with or subsequent to the merger. For example, Thermos
board of directors authorization of the repurchase of up to
$300 million of Thermo common stock through May 7,
2007 is not reflected herein.
The unaudited pro forma condensed combined financial statements
do not reflect certain amounts resulting from the merger because
we consider them to be of a non-recurring nature. Such amounts
will be comprised of charges for the sale of inventories
revalued at the date of acquisition as well as restructuring and
other exit and non-recurring costs related to the integration of
the Thermo and Fisher businesses. To the extent the exit costs
relate to the Fisher business and meet certain criteria, they
will be recognized in the opening balance sheet in accordance
with EITF Issue No 95-3, Recognition of Liabilities
in Connection with a Purchase Business Combination. To the
extent that such costs relate to Thermo businesses, they will
not meet the criteria in EITF Issue No 95-3, and will be
recorded as expenses pursuant to SFAS No. 146. Thermo
and Fisher have just recently begun collecting information in
order to formulate detailed integration plans to deliver planned
synergies. However, at this time, the status of the integration
plans and the related merger-related costs are too uncertain to
include in the pro forma financial information.
Based on Thermos review of Fishers summary of
significant accounting policies disclosed in Fishers
financial statements, the nature and amount of any adjustments
to the historical financial statements of Fisher to conform
their accounting policies to those of Thermo are not expected to
be significant. Upon consummation of the merger, further review
of Fishers accounting policies and financial statements
may result in required revisions to Fishers policies and
classifications to conform to Thermos.
63
Unaudited Pro Forma Condensed Combined Balance Sheet
April 1, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thermo, As | |
|
Fisher, As | |
|
Pro Forma | |
|
Pro Forma | |
|
|
Reported | |
|
Reported | |
|
Adjustments | |
|
Combined | |
|
|
| |
|
| |
|
| |
|
| |
|
|
(In millions) | |
ASSETS |
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
230.8 |
|
|
$ |
433.9 |
|
|
$ |
(112.3 |
)(A) |
|
$ |
552.4 |
|
|
Short-term available-for-sale investments
|
|
|
79.8 |
|
|
|
|
|
|
|
|
|
|
|
79.8 |
|
|
Accounts receivable, net
|
|
|
542.9 |
|
|
|
726.9 |
|
|
|
(15.3 |
)(J) |
|
|
1,254.5 |
|
|
Inventories
|
|
|
381.5 |
|
|
|
618.9 |
|
|
|
208.4 |
(B) |
|
|
1,208.8 |
|
|
Deferred tax assets
|
|
|
77.9 |
|
|
|
154.8 |
|
|
|
|
|
|
|
232.7 |
|
|
Other current assets
|
|
|
64.2 |
|
|
|
119.9 |
|
|
|
|
|
|
|
184.1 |
|
|
Current assets held for sale
|
|
|
|
|
|
|
42.4 |
|
|
|
|
|
|
|
42.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,377.1 |
|
|
|
2,096.8 |
|
|
|
80.8 |
|
|
|
3,554.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, Net
|
|
|
283.1 |
|
|
|
793.4 |
|
|
|
|
|
|
|
1,076.5 |
|
Acquisition-related Intangible Assets
|
|
|
425.5 |
|
|
|
1,566.6 |
|
|
|
(1,566.6 |
)(C) |
|
|
5,287.6 |
|
|
|
|
|
|
|
|
|
|
|
|
4,862.1 |
(D) |
|
|
|
|
Other Assets
|
|
|
204.0 |
|
|
|
271.5 |
|
|
|
144.7 |
(E) |
|
|
598.8 |
|
|
|
|
|
|
|
|
|
|
|
|
(21.4 |
)(G) |
|
|
|
|
Goodwill
|
|
|
1,951.0 |
|
|
|
3,797.8 |
|
|
|
(3,797.8 |
)(C) |
|
|
9,523.4 |
|
|
|
|
|
|
|
|
|
|
|
|
7,572.4 |
(D) |
|
|
|
|
Long-term Assets Held for Sale
|
|
|
|
|
|
|
57.7 |
|
|
|
|
|
|
|
57.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,240.7 |
|
|
$ |
8,583.8 |
|
|
$ |
7,274.2 |
|
|
$ |
20,098.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term obligations and current maturities of long-term
obligations
|
|
$ |
91.3 |
|
|
$ |
41.5 |
|
|
$ |
|
|
|
$ |
132.8 |
|
|
Accounts payable
|
|
|
155.6 |
|
|
|
502.1 |
|
|
|
(15.3 |
)(J) |
|
|
642.4 |
|
|
Other accrued expenses
|
|
|
434.9 |
|
|
|
415.5 |
|
|
|
72.9 |
(E) |
|
|
923.3 |
|
|
Current liabilities held for sale
|
|
|
|
|
|
|
26.9 |
|
|
|
|
|
|
|
26.9 |
|
|
Current liabilities of discontinued operations
|
|
|
34.8 |
|
|
|
|
|
|
|
|
|
|
|
34.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
716.6 |
|
|
|
986.0 |
|
|
|
57.6 |
|
|
|
1,760.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
|
|
44.0 |
|
|
|
647.9 |
|
|
|
(600.2 |
)(C) |
|
|
1,793.4 |
|
|
|
|
|
|
|
|
|
|
|
|
1,701.7 |
(E) |
|
|
|
|
Other Long-term Liabilities
|
|
|
136.8 |
|
|
|
338.5 |
|
|
|
104.3 |
(F) |
|
|
579.6 |
|
Long-term Obligations
|
|
|
469.2 |
|
|
|
2,127.5 |
|
|
|
25.8 |
(G) |
|
|
2,622.5 |
|
Long-term Liabilities Held for Sale
|
|
|
|
|
|
|
8.8 |
|
|
|
|
|
|
|
8.8 |
|
Shareholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
182.9 |
|
|
|
1.2 |
|
|
|
(1.2 |
)(H) |
|
|
434.7 |
|
|
|
|
|
|
|
|
|
|
|
|
251.8 |
(I) |
|
|
|
|
|
Capital in excess of par value
|
|
|
1,446.4 |
|
|
|
4,233.8 |
|
|
|
283.3 |
(G) |
|
|
11,654.7 |
|
|
|
|
|
|
|
|
|
|
|
|
(4,233.8 |
)(H) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,925.0 |
(I) |
|
|
|
|
|
Retained earnings
|
|
|
1,651.4 |
|
|
|
232.2 |
|
|
|
(232.2 |
)(H) |
|
|
1,651.4 |
|
|
Treasury stock at cost
|
|
|
(438.0 |
) |
|
|
(4.0 |
) |
|
|
4.0 |
(H) |
|
|
(438.0 |
) |
|
Accumulated other comprehensive items
|
|
|
31.4 |
|
|
|
11.9 |
|
|
|
(11.9 |
)(H) |
|
|
31.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,874.1 |
|
|
|
4,475.1 |
|
|
|
5,985.0 |
|
|
|
13,334.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,240.7 |
|
|
$ |
8,583.8 |
|
|
$ |
7,274.2 |
|
|
$ |
20,098.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited pro forma condensed combined
financial statements.
64
Unaudited Pro Forma Condensed Combined Statement of Income
Three Months Ended April 1, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thermo, | |
|
Fisher, | |
|
Pro Forma | |
|
Pro Forma | |
|
|
as Reported | |
|
as Reported | |
|
Adjustments | |
|
Combined | |
|
|
| |
|
| |
|
| |
|
| |
|
|
(In millions, except per share amounts) | |
Revenues
|
|
$ |
684.3 |
|
|
$ |
1,412.4 |
|
|
$ |
(30.8 |
)(J) |
|
$ |
2,065.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
371.7 |
|
|
|
898.6 |
|
|
|
(30.8 |
)(J) |
|
|
1,239.5 |
|
|
Selling, general and administrative expenses
|
|
|
202.5 |
|
|
|
328.5 |
|
|
|
(14.4 |
)(C) |
|
|
676.1 |
|
|
|
|
|
|
|
|
|
|
|
|
159.5 |
(D) |
|
|
|
|
|
Research and development expenses
|
|
|
38.7 |
|
|
|
12.6 |
|
|
|
|
|
|
|
51.3 |
|
|
Restructuring and other income, net
|
|
|
3.6 |
|
|
|
0.4 |
|
|
|
|
|
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616.5 |
|
|
|
1,240.1 |
|
|
|
114.3 |
|
|
|
1,970.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
67.8 |
|
|
|
172.3 |
|
|
|
(145.1 |
) |
|
|
95.0 |
|
Other Income (Expense), Net
|
|
|
(3.8 |
) |
|
|
(26.4 |
) |
|
|
(1.3 |
)(A) |
|
|
(29.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
1.8 |
(G) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Before Provision for Income
Taxes
|
|
|
64.0 |
|
|
|
145.9 |
|
|
|
(144.6 |
) |
|
|
65.3 |
|
(Provision for) Benefit from Income Taxes
|
|
|
(20.4 |
) |
|
|
(39.7 |
) |
|
|
50.6 |
(L) |
|
|
(9.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$ |
43.6 |
|
|
$ |
106.2 |
|
|
$ |
(94.0 |
) |
|
$ |
55.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.27 |
|
|
$ |
0.85 |
|
|
|
|
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
0.26 |
|
|
$ |
0.81 |
|
|
|
|
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
163.0 |
|
|
|
123.8 |
|
|
|
123.8 |
(M) |
|
|
410.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
167.0 |
|
|
|
130.6 |
|
|
|
130.6 |
(M) |
|
|
428.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited pro forma condensed combined
financial statements.
65
Unaudited Pro Forma Condensed Combined Statement of Income
Year Ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thermo | |
|
|
|
|
|
|
|
|
Thermo, | |
|
Kendro, | |
|
Pro Forma | |
|
Pro Forma | |
|
Fisher, | |
|
Pro Forma | |
|
Pro Forma | |
|
|
as Reported | |
|
Jan. 1 - May 8 | |
|
Adjustments | |
|
Combined | |
|
as Reported | |
|
Adjustments | |
|
Combined | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In millions, except per share amounts) | |
Revenues
|
|
$ |
2,633.0 |
|
|
$ |
128.3 |
|
|
$ |
|
|
|
$ |
2,761.3 |
|
|
$ |
5,386.3 |
|
|
$ |
(121.3 |
)(J) |
|
$ |
8,026.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
1,438.1 |
|
|
|
78.5 |
|
|
|
|
|
|
|
1,516.6 |
|
|
|
3,503.4 |
|
|
|
(121.3 |
)(J) |
|
|
4,898.7 |
|
|
Selling, general and administrative expenses
|
|
|
761.8 |
|
|
|
27.0 |
|
|
|
22.4 |
(N) |
|
|
811.2 |
|
|
|
1,156.0 |
|
|
|
(53.3 |
)(C) |
|
|
2,563.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
637.8 |
(D) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.5 |
(K) |
|
|
|
|
|
Research and development expenses
|
|
|
152.7 |
|
|
|
4.2 |
|
|
|
|
|
|
|
156.9 |
|
|
|
44.2 |
|
|
|
|
|
|
|
201.1 |
|
|
Restructuring and other costs, net
|
|
|
16.9 |
|
|
|
0.1 |
|
|
|
|
|
|
|
17.0 |
|
|
|
22.4 |
|
|
|
|
|
|
|
39.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,369.5 |
|
|
|
109.8 |
|
|
|
22.4 |
|
|
|
2,501.7 |
|
|
|
4,726.0 |
|
|
|
474.7 |
|
|
|
7,702.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
263.5 |
|
|
|
18.5 |
|
|
|
(22.4 |
) |
|
|
259.6 |
|
|
|
660.3 |
|
|
|
(596.0 |
) |
|
|
323.9 |
|
Other Income (Expense), Net
|
|
|
22.4 |
|
|
|
2.7 |
|
|
|
(12.3 |
)(O) |
|
|
12.8 |
|
|
|
(169.8 |
) |
|
|
(3.6 |
)(A) |
|
|
(153.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.9 |
(G) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Before Provision for Income
Taxes
|
|
|
285.9 |
|
|
|
21.2 |
|
|
|
(34.7 |
) |
|
|
272.4 |
|
|
|
490.5 |
|
|
|
(592.7 |
) |
|
|
170.2 |
|
(Provision for) Benefit from Income Taxes
|
|
|
(87.6 |
) |
|
|
(5.3 |
) |
|
|
7.3 |
(P) |
|
|
(85.6 |
) |
|
|
(116.3 |
) |
|
|
207.4 |
(L) |
|
|
5.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$ |
198.3 |
|
|
$ |
15.9 |
|
|
$ |
(27.4 |
) |
|
$ |
186.8 |
|
|
$ |
374.2 |
|
|
$ |
(385.3 |
) |
|
$ |
175.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
1.23 |
|
|
|
|
|
|
|
|
|
|
$ |
1.16 |
|
|
$ |
3.08 |
|
|
|
|
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
1.21 |
|
|
|
|
|
|
|
|
|
|
$ |
1.14 |
|
|
$ |
2.93 |
|
|
|
|
|
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
161.6 |
|
|
|
|
|
|
|
|
|
|
|
161.6 |
|
|
|
121.5 |
|
|
|
121.5 |
(M) |
|
|
404.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
165.3 |
|
|
|
|
|
|
|
|
|
|
|
165.3 |
|
|
|
127.5 |
|
|
|
127.5 |
(M) |
|
|
420.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited pro forma condensed combined
financial statements.
66
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
The unaudited pro forma condensed combined balance sheet was
prepared using the historical balance sheets of Thermo as of
April 1, 2006 and Fisher as of March 31, 2006. The
unaudited pro forma condensed combined statements of income were
prepared using the historical statements of income of Thermo for
the three months ended April 1, 2006 and for the year ended
December 31, 2005; of Kendro for the period from
January 1, 2005 to May 8, 2005; and of Fisher for the
three months ended March 31, 2006 and for the year ended
December 31, 2005.
The unaudited pro forma condensed combined financial information
was prepared using the purchase method of accounting. As
discussed under Accounting Treatment on page 48,
based upon the terms of the merger and other factors, such as
the composition of the combined companys board and senior
management, Thermo is treated as the acquirer of Fisher.
Accordingly, we have adjusted the historical consolidated
financial information to give effect to the impact of the
consideration issued in connection with the merger. In the
unaudited pro forma condensed combined balance sheet,
Thermos cost to acquire Fisher has been allocated to the
assets acquired and liabilities assumed based upon
managements preliminary estimate of their respective fair
values as of the date of the merger. Any differences between
fair value of the consideration issued and the fair value of the
assets and liabilities acquired will be recorded as goodwill.
The amounts allocated to acquired assets and liabilities in the
unaudited pro forma condensed combined financial statements are
based on managements preliminary internal valuation
estimates. Definitive allocations will be performed and
finalized based on certain valuations and other studies that
will be performed by Thermo with the services of outside
valuation specialists after the closing of the merger.
Accordingly, the purchase price allocation adjustments and
related amortization reflected in the foregoing unaudited pro
forma condensed combined financial statements are preliminary,
have been made solely for the purpose of preparing these
statements and are subject to revision based on a final
determination of fair value after the closing of the merger. For
example, if the value of the definite-lived intangible assets
increased by 10%, annual pro forma income from continuing
operations would decrease by $41 million.
The following is a preliminary estimate of the purchase price
for Fisher:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) | |
Estimated number of Fisher shares to be acquired (in
thousands)(a)
|
|
|
125,911 |
|
|
|
|
|
Exchange ratio
|
|
|
2.00 |
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares of Thermo to be issued to the holders of Fisher
stock (in thousands)
|
|
|
251,822 |
|
|
|
|
|
Multiplied by the assumed price per share of Thermo common
stock(b)
|
|
$ |
38.93 |
|
|
$ |
9,803.4 |
|
Estimated fair value of outstanding Fisher stock options to be
exchanged for Thermo stock options
|
|
|
|
|
|
|
373.4 |
|
Estimated transaction costs
|
|
|
|
|
|
|
112.3 |
|
|
|
|
|
|
|
|
|
Estimated purchase price
|
|
|
|
|
|
$ |
10,289.1 |
|
|
|
|
|
|
|
|
For purposes of this pro forma analysis, the above purchase
price has been allocated based on a preliminary estimate of the
fair value of net assets acquired.
67
|
|
|
|
|
|
Purchase Price Allocation |
|
|
|
|
(In millions) | |
Book value of net assets acquired
|
|
$ |
4,475.1 |
|
Less: write-off of existing deferred financing costs, goodwill
and intangible assets, including related deferred taxes
|
|
|
(4,785.6 |
) |
Adjusted book value of assets acquired
|
|
|
(310.5 |
) |
Remaining allocation:
|
|
|
|
|
Increase inventory to fair value
|
|
|
208.4 |
|
Increase pension obligation to fair value
|
|
|
(104.3 |
) |
Adjust debt to fair value
|
|
|
(309.1 |
) |
Identifiable intangible assets at fair value
|
|
|
4,862.1 |
|
Deferred taxes
|
|
|
(1,629.9 |
) |
Goodwill
|
|
|
7,572.4 |
|
|
|
|
|
|
Estimated purchase price
|
|
$ |
10,289.1 |
|
|
|
|
|
|
|
|
(a) |
|
Includes 124.0 million shares outstanding, 1.4 million
shares assumed issued to satisfy outstanding warrants
(calculated using the treasury stock method) and
0.5 million shares to satisfy restricted stock units. |
|
(b) |
|
Represents the average Thermo closing stock price beginning
2 days before and ending 2 days after May 8,
2006, the date of the public announcement of the merger
agreement. |
The following pro forma adjustments are based on preliminary
estimates, which may change as additional information is
obtained:
|
|
|
(A) To record the cash paid for the merger transaction
costs and to record the related estimated decrease in interest
income earned. |
|
|
(B) To adjust Fishers inventory to fair value. The
cost of sales impact of the
write-up of inventory
to fair value has been excluded from the pro forma condensed
combined statement of income as it is a non-recurring item. |
|
|
(C) To eliminate Fishers existing goodwill,
intangible assets, related deferred tax liability and
amortization of the intangible assets. |
|
|
(D) To record goodwill and $4.9 billion of acquired
intangible assets ($3.8 billion with definite lives and
$1.1 billion with indefinite lives), and amortization of
definite-lived intangible assets over a weighted average life of
6 years. |
|
|
(E) To record deferred taxes related to identified
intangible assets and fair value adjustments, where required, at
35%, the estimated weighted average statutory tax rate. |
|
|
(F) To adjust Fishers pension and other
post-retirement obligations and any associated assets to fair
value. |
|
|
(G) To adjust Fishers long-term debt to fair value,
write-off Fishers deferred financing costs and record the
related adjustment to interest expense, and to increase
stockholders equity for the fair value attributable to the
beneficial conversion features of Fishers convertible debt. |
|
|
(H) To remove the historical equity accounts of Fisher. |
|
|
(I) To record the issuance of Thermo common stock and to
record the fair value of Fishers stock options. |
68
|
|
|
(J) To eliminate revenues, cost of revenues and the
associated accounts receivable and payable for sales between
Thermo and Fisher. |
|
|
(K) To record stock option compensation expense based on
the intrinsic value of Fishers non-vested stock options. |
|
|
(L) To record a tax benefit on pro forma adjustments to
income related to the merger, at 35%, the estimated weighted
average statutory tax rate. |
|
|
(M) To reflect the exchange ratio of 2 shares of
Thermo for each share of Fisher. |
|
|
(N) To reflect the amortization of the Kendro
acquisition-related intangible assets for the period from
January 1, 2005 to May 8, 2005. |
|
|
(O) To reflect additional interest expense for the period
from January 1, 2005 to May 8, 2005 related to the
debt issued in connection with the acquisition of Kendro. |
|
|
(P) To record a tax benefit on pro forma adjustments to
income related to the Kendro acquisition. |
69
THE THERMO SPECIAL MEETING
Date, Time and Place
The special meeting of Thermo stockholders will be held at
Thermos principal executive offices at 81 Wyman Street,
Waltham, Massachusetts 02451, on August 30, 2006 at 10:00
a.m., local time.
Purpose of the Thermo Special Meeting
At the Thermo special meeting, stockholders will be asked to:
|
|
|
|
|
consider and vote on a proposal to approve the issuance of
Thermo common stock in connection with the merger; |
|
|
|
consider and vote on a proposal to amend the Amended and
Restated Certificate of Incorporation of Thermo, effective upon
the completion of the merger, to increase the authorized number
of shares of Thermo common stock from 350,000,000 to
1.2 billion and to change the name of Thermo Electron
Corporation upon the completion of the merger to Thermo Fisher
Scientific Inc.; |
|
|
|
vote upon an adjournment of the Thermo special meeting, if
necessary, to solicit additional proxies if there are not
sufficient votes for each of the foregoing proposals; and |
|
|
|
transact any other business that may properly be brought before
the Thermo special meeting or any adjournments or postponements
thereof. |
Thermo Record Date; Stock Entitled to Vote
Only Thermo stockholders of record at the close of business on
July 24, 2006, the Thermo record date for the Thermo
special meeting, will be entitled to notice of, and to vote at,
the Thermo special meeting or any adjournments or postponements
thereof.
On the Thermo record date, there were a total of
157,567,431 shares of Thermo common stock outstanding and
entitled to vote at the Thermo special meeting. Thermo
stockholders will have one vote for each share of Thermo common
stock that they owned on the Thermo record date, exercisable in
person or through the Internet or by telephone or by a properly
executed and delivered proxy with respect to the Thermo special
meeting.
On the record date, directors and executive officers of Thermo
and their affiliates owned and were entitled to vote
295,064 shares of Thermo common stock, or less than 1% of
the shares of Thermo common stock outstanding on that date. We
currently expect that Thermos directors and executive
officers will vote their shares in favor of the issuance of
Thermo common stock in connection with the merger and the Thermo
charter amendment proposal, although none of them has entered
into any agreements obligating them to do so.
Quorum
The holders of shares having a majority of the voting power of
the common stock of Thermo issued and outstanding and entitled
to vote thereat must be present or represented by proxy to
constitute a quorum for the transaction of business at the
special meeting. All shares of Thermo common stock represented
at the Thermo special meeting, including abstentions and broker
non-votes, will be treated as present for purposes of
determining the presence or absence of a quorum for all matters
for consideration at the Thermo special meeting.
70
Required Vote
The proposals require different percentages of votes in order to
approve them:
|
|
|
|
|
The issuance of Thermo common stock to Fisher stockholders,
approval of which is necessary to complete the merger, requires
approval by an affirmative vote of holders of a majority of the
Thermo common stock present or represented and entitled to vote
on the proposal. |
|
|
|
The Thermo charter amendment proposal, approval of which is
necessary to complete the merger, requires the affirmative vote
of holders of a majority of the outstanding shares of Thermo
common stock as of the record date. |
|
|
|
Approval of the proposal to adjourn the Thermo special meeting,
if necessary, for the purpose of soliciting additional proxies
requires that the votes cast favoring the proposal exceed the
votes cast opposing the proposal. |
Abstentions
If you are a Thermo stockholder and fail to vote or vote to
abstain:
|
|
|
|
|
it will have the same effect as a vote against the Thermo
charter amendment proposal, which is necessary to complete the
merger; and |
|
|
|
it will have no effect on the proposal to approve the issuance
of shares of Thermo common stock in the merger, assuming a
quorum is present. |
Voting of Proxies
A proxy card is enclosed for your use. Thermo requests that you
sign the accompanying proxy and return it promptly in the
enclosed postage-paid envelope. When the accompanying proxy is
returned properly executed, the shares of Thermo common stock
represented by it will be voted at the Thermo special meeting or
any adjournment thereof in accordance with the instructions
contained in the proxy.
If a proxy is returned without an indication as to how the
shares of Thermo common stock represented are to be voted with
regard to a particular proposal, the Thermo common stock
represented by the proxy will be voted in favor of each such
proposal. At the date hereof, management has no knowledge of any
business that will be presented for consideration at the special
meeting and which would be required to be set forth in this
proxy statement or the related proxy card other than the matters
set forth in the Notice of Special Meeting of Stockholders. If
any other matter is properly presented at the special meeting
for consideration, it is intended that the persons named in the
enclosed form of proxy and acting thereunder will vote in
accordance with their best judgment on such matter.
Your vote is important. Accordingly, please sign and return
the enclosed proxy card whether or not you plan to attend the
Thermo special meeting in person.
Shares Held in Street Name
If you hold your shares in a stock brokerage account or if your
shares are held by a bank or nominee (that is, in street name),
you must provide the record holder of your shares with
instructions on how to vote your shares. Please follow the
voting instructions provided by your bank or broker. Please note
that you may not vote shares held in street name by returning a
proxy card directly to Thermo or by voting in person at your
stockholders meeting unless you provide a legal
proxy, which you must obtain from your bank or broker.
Further, brokers who hold shares of Thermo common stock on
behalf of their customers may not give a proxy to Thermo to vote
those shares without specific instructions from their customers.
If you are a Thermo stockholder and you do not instruct your
broker on how to vote your shares:
|
|
|
|
|
your broker may not vote your shares on the Thermo charter
amendment proposal, which will have the same effect as a vote
against the Thermo charter amendment proposal; and |
71
|
|
|
|
|
your broker may not vote your shares on the proposal to approve
the issuance of shares of Thermo common stock in the merger,
which will have no effect on the vote on this proposal, assuming
a quorum is present. |
Revocability of Proxies
You have the power to revoke your proxy at any time before your
proxy is voted at the Thermo special meeting. You can revoke
your proxy in one of three ways:
|
|
|
|
|
you can send a signed notice of revocation; |
|
|
|
you can grant a new, valid proxy bearing a later date; or |
|
|
|
if you are a holder of record, you can attend the Thermo special
meeting and vote in person, which will automatically cancel any
proxy previously given, or you can revoke your proxy in person,
but your attendance alone will not revoke any proxy that you
have previously given. |
If you choose either of the first two methods, you must submit
your notice of revocation or your new proxy to Thermos
Secretary at 81 Wyman Street, Waltham, Massachusetts 02451, no
later than the beginning of the Thermo special meeting.
Solicitation of Proxies
In accordance with the merger agreement, the cost of proxy
solicitation for the Thermo special meeting will be borne by
Thermo, except that Fisher and Thermo will share equally all
expenses incurred in connection with the filing of the
registration statement of which this document forms a part with
the SEC and the printing and mailing of this document. In
addition to the use of the mail, proxies may be solicited by
officers and directors and regular employees of Thermo, without
additional remuneration, by personal interview, telephone,
facsimile or otherwise. Thermo will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy
materials to the beneficial owners of shares held of record on
the record date and will provide customary reimbursement to such
firms for the cost of forwarding these materials. Thermo has
retained D.F. King & Co. and MacKenzie Partners to
assist in its solicitation of proxies and has agreed to pay them
in the aggregate approximately $45,000, plus reasonable
expenses, for these services.
72
THE FISHER SPECIAL MEETING
Date, Time and Place
The special meeting of Fisher stockholders will be held at the
Sheraton Dover Hotel, 1570 North DuPont Highway, Dover,
Delaware, on August 30, 2006 at 10:00 a.m., local time.
Purpose of the Fisher Special Meeting
At the Fisher special meeting, stockholders will be asked to:
|
|
|
|
|
consider and vote on a proposal to approve and adopt the merger
agreement; |
|
|
|
vote upon an adjournment of the Fisher special meeting, if
necessary, to solicit additional proxies if there are not
sufficient votes for the foregoing proposal; and |
|
|
|
transact any other business that may properly be brought before
the Fisher special meeting or any adjournments or postponements
thereof. |
Fisher Record Date; Stock Entitled to Vote
Only Fisher stockholders of record at the close of business on
July 24, 2006, the Fisher record date for the Fisher
special meeting, will be entitled to notice of, and to vote at,
the Fisher special meeting or any adjournments or postponements
thereof.
On the Fisher record date, there were a total of
124,418,449 shares of Fisher common stock outstanding and
entitled to vote at the Fisher special meeting. Fisher
stockholders will have one vote for each share of Fisher common
stock that they owned on the Fisher record date, exercisable in
person or through the Internet or by telephone or by a properly
executed and delivered proxy with respect to the Fisher special
meeting.
On the record date, directors and executive officers of Fisher
and their affiliates owned and were entitled to vote
1,845,105 shares of Fisher common stock, or approximately
1.5% of the shares of Fisher common stock outstanding on that
date. We currently expect that Fishers directors and
executive officers will vote their shares in favor of the
merger, although none of them has entered into any agreements
obligating them to do so.
Quorum
A majority of the votes entitled to be cast by the shares
entitled to vote must be present or represented by proxy to
constitute a quorum for action on the matters to be voted upon
at the special meeting. All shares of Fisher common stock
represented at the Fisher special meeting, including abstentions
and broker non-votes, will be treated as present for purposes of
determining the presence or absence of a quorum for all matters
voted on at the Fisher special meeting.
Required Vote
The proposals require different percentages of votes in order to
approve them:
|
|
|
|
|
Approval and adoption of the merger agreement requires the
affirmative vote of holders of a majority of the outstanding
shares of Fisher common stock entitled to vote on the proposal. |
|
|
|
Approval of the proposal to adjourn the Fisher special meeting,
if necessary, for the purpose of soliciting additional proxies
requires that the votes cast favoring the proposal exceed the
votes cast opposing the proposal. |
Voting of Proxies
A proxy card is enclosed for your use. Fisher requests that you
sign the accompanying proxy and return it promptly in the
enclosed postage-paid envelope. When the accompanying proxy is
returned properly executed, the shares of Fisher common stock
represented by it will be voted at the Fisher special meeting or
any adjournment thereof in accordance with the instructions
contained in the proxy.
73
If a proxy is returned without an indication as to how the
shares of Fisher common stock represented are to be voted with
regard to a particular proposal, the Fisher common stock
represented by the proxy will be voted in favor of each such
proposal. A proxy may confer discretionary authority to vote
with respect to any matter presented at the Fisher special
meeting, except as set forth in the proxy and except for matters
proposed by a stockholder who notifies Fisher not later than the
close of business on the tenth day following the day on which
the Notice of Special Meeting of Stockholders was mailed. At the
date hereof, management has no knowledge of any business that
will be presented for consideration at the special meeting and
which would be required to be set forth in this proxy statement
or the related proxy card other than the matters set forth in
the Notice of Special Meeting of Stockholders. If any other
matter is properly presented at the special meeting for
consideration, it is intended that the persons named in the
enclosed form of proxy and acting thereunder will vote in
accordance with their best judgment on such matter.
Your vote is important. Accordingly, please sign and return
the enclosed proxy card whether or not you plan to attend the
Fisher special meeting in person.
Shares Held in Street Name
If you hold your shares in a stock brokerage account or if your
shares are held by a bank or nominee (that is, in street name),
you must provide the record holder of your shares with
instructions on how to vote your shares. Please follow the
voting instructions provided by your bank or broker. Please note
that you may not vote shares held in street name by returning a
proxy card directly to Fisher or by voting in person at your
stockholders meeting unless you provide a legal
proxy, which you must obtain from your bank or broker.
Further, brokers who hold shares of Fisher common stock on
behalf of their customers may not give a proxy to Fisher to vote
those shares without specific instructions from their customers.
If you are a Fisher stockholder and you do not instruct your
broker on how to vote your shares:
|
|
|
|
|
your broker may not vote your shares, which will have the same
effect as a vote against the proposal to approve and adopt the
merger agreement. |
Revocability of Proxies
You have the power to revoke your proxy at any time before your
proxy is voted at the Fisher special meeting. You can revoke
your proxy in one of three ways:
|
|
|
|
|
you can send a signed notice of revocation; |
|
|
|
you can grant a new, valid proxy bearing a later date; or |
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if you are a holder of record, you can attend the Fisher special
meeting and vote in person, which will automatically cancel any
proxy previously given, or you can revoke your proxy in person,
but your attendance alone will not revoke any proxy that you
have previously given. |
If you choose either of the first two methods, you must submit
your notice of revocation or your new proxy to Fishers
Secretary at One Liberty Lane, Hampton, New Hampshire 03842, no
later than the beginning of the Fisher special meeting.
Solicitation of Proxies
In accordance with the merger agreement, the cost of proxy
solicitation for the Fisher special meeting will be borne by
Fisher, except that Fisher and Thermo will share equally all
expenses incurred in connection with the filing of the
registration statement of which this document forms a part with
the SEC and the printing and mailing of this document. In
addition to the use of the mail, proxies may be solicited by
officers and directors and regular employees of Fisher, without
additional remuneration, by personal interview, telephone,
facsimile or otherwise. Fisher will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy
materials to the beneficial owners of shares held of record on
the record date and will provide customary reimbursement to such
firms for the cost of forwarding these materials. Fisher has
retained Innisfree to assist in its solicitation of proxies and
has agreed to pay it approximately $50,000, plus $25,000 if the
Fisher stockholders vote to approve and adopt the merger
agreement, plus reasonable expenses, for these services.
74
COMPARATIVE STOCK PRICES AND DIVIDENDS
For current price information, Fisher stockholders are urged to
consult publicly available sources. The table below presents the
NYSE closing market price for Thermo common stock, as reported
on the NYSE Composite Transactions Tape, and the closing market
price for Fisher common stock, as reported on the NYSE Composite
Transactions Tape, on the two dates set forth below. The table
also presents the equivalent value of the merger consideration
per share of Fisher common stock on those dates, calculated by
multiplying the closing price of Thermo common stock on those
dates by 2.0, representing the number of shares of Thermo common
stock that Fisher stockholders will receive in the merger for
each share of Fisher common stock.
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May 5, 2006, the last trading day before the public
announcement of the signing of the merger agreement; and |
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July 24, 2006, the latest practicable date before the date
of this document. |
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Thermo |
|
Fisher |
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Equivalent Per |
Date |
|
Closing Price |
|
Closing Price |
|
Share Value |
|
|
|
|
|
|
|
May 5, 2006
|
|
$ |
39.45 |
|
|
$ |
73.73 |
|
|
$ |
78.90 |
|
July 24, 2006
|
|
$ |
35.22 |
|
|
$ |
70.51 |
|
|
$ |
70.44 |
|
Market Prices and Dividend Data
Thermo common stock and Fisher common stock are both traded on
the NYSE under the symbols TMO and FSH, respectively. The
following tables set forth the high and low closing prices of
each companys common stock as reported in the consolidated
transaction reporting system, and the quarterly cash dividends
declared per share, for the calendar quarters indicated.
Thermo
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Dividend | |
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|
High | |
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Low | |
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Declared | |
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| |
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| |
|
| |
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
29.33 |
|
|
$ |
25.03 |
|
|
$ |
0.00 |
|
Second Quarter
|
|
$ |
31.00 |
|
|
$ |
27.81 |
|
|
$ |
0.00 |
|
Third Quarter
|
|
$ |
29.45 |
|
|
$ |
24.21 |
|
|
$ |
0.00 |
|
Fourth Quarter
|
|
$ |
30.88 |
|
|
$ |
26.20 |
|
|
$ |
0.00 |
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
29.99 |
|
|
$ |
24.89 |
|
|
$ |
0.00 |
|
Second Quarter
|
|
$ |
27.20 |
|
|
$ |
24.24 |
|
|
$ |
0.00 |
|
Third Quarter
|
|
$ |
30.90 |
|
|
$ |
26.70 |
|
|
$ |
0.00 |
|
Fourth Quarter
|
|
$ |
31.78 |
|
|
$ |
29.53 |
|
|
$ |
0.00 |
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
37.12 |
|
|
$ |
30.28 |
|
|
$ |
0.00 |
|
Second Quarter
|
|
$ |
39.45 |
|
|
$ |
34.00 |
|
|
$ |
0.00 |
|
Third Quarter (through July 24, 2006)
|
|
$ |
36.53 |
|
|
$ |
34.59 |
|
|
$ |
0.00 |
|
75
Fisher
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|
|
|
|
|
|
|
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|
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|
|
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|
|
Dividend | |
|
|
High | |
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Low | |
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Declared | |
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|
| |
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| |
|
| |
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
56.20 |
|
|
$ |
39.76 |
|
|
$ |
0.00 |
|
Second Quarter
|
|
$ |
60.10 |
|
|
$ |
54.15 |
|
|
$ |
0.00 |
|
Third Quarter
|
|
$ |
59.61 |
|
|
$ |
53.26 |
|
|
$ |
0.00 |
|
Fourth Quarter
|
|
$ |
62.60 |
|
|
$ |
53.49 |
|
|
$ |
0.00 |
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
64.75 |
|
|
$ |
56.92 |
|
|
$ |
0.00 |
|
Second Quarter
|
|
$ |
64.90 |
|
|
$ |
55.88 |
|
|
$ |
0.00 |
|
Third Quarter
|
|
$ |
67.12 |
|
|
$ |
61.20 |
|
|
$ |
0.00 |
|
Fourth Quarter
|
|
$ |
65.50 |
|
|
$ |
54.27 |
|
|
$ |
0.00 |
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
70.20 |
|
|
$ |
62.20 |
|
|
$ |
0.00 |
|
Second Quarter
|
|
$ |
77.87 |
|
|
$ |
66.49 |
|
|
$ |
0.00 |
|
Third Quarter (through July 24, 2006)
|
|
$ |
73.68 |
|
|
$ |
69.32 |
|
|
$ |
0.00 |
|
76
COMPARISON OF RIGHTS OF THERMO STOCKHOLDERS
AND FISHER STOCKHOLDERS
Thermo and Fisher are both organized under the laws of the State
of Delaware. Any differences, therefore, in the rights of
holders of Thermo capital stock and Fisher capital stock arise
primarily from differences in their respective certificates of
incorporation and bylaws. Upon completion of the merger, the
certificate of incorporation and bylaws of Thermo in effect
immediately prior to the effective time of the merger will be
the certificate of incorporation and bylaws of the combined
company, except for those changes to the Thermo charter and
bylaws expressly contemplated by the merger agreement (including
the Thermo charter amendment) and discussed below and under
The Thermo Special Meeting Purpose of the
Thermo Special Meeting and The Merger
Board of Directors and Management Following the Merger.
Consequently, after the effective time of the merger, the rights
of the former stockholders of Fisher will be determined by
reference to the Thermo charter and bylaws, each as amended.
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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Corporate Governance |
|
The rights of Fisher stockholders are currently governed by
Delaware law and Fishers certificate of incorporation and
bylaws. Upon completion of the merger, the rights of Fisher
stockholders will continue to be governed by Delaware law but
will be governed by Thermos certificate of incorporation
and bylaws. |
|
Upon completion of the merger, the rights of Thermo stockholders
will be governed by Delaware law and Thermos certificate
of incorporation and bylaws. |
|
Outstanding Capital Stock |
|
Fisher has outstanding only one class of common stock. Holders
of Fisher common stock are entitled to all of the rights and
obligations provided to common stockholders under Delaware law
and Fishers certificate of incorporation and bylaws. |
|
Thermo has outstanding only one class of common stock. Holders
of Thermo common stock are entitled to all of the rights and
obligations provided to common stockholders under Delaware law
and Thermos certificate of incorporation and bylaws. |
|
Authorized Capital Stock |
|
The authorized capital stock of Fisher consists of
500,000,000 shares of common stock, $0.01 par value
per share, and 15,000,000 shares of preferred stock,
$0.01 par value per share. No shares of preferred stock are
outstanding. |
|
Thermo currently has authorized 350,000,000 shares of
common stock, $1.00 par value per share. Following the
merger, the authorized capital stock of Thermo will consist of
1.2 billion shares of common stock, $1.00 par value
per share. The number of authorized preferred shares will remain
unchanged at 50,000 shares of preferred stock,
$100 par value per share. 40,000 shares of preferred
stock are designated as Series B Junior Participating
Preferred stock, $100 par value per share. |
Special Meetings of Stockholders |
|
Under the DGCL, a special meeting of stockholders may be called
by the board of directors or by any other person authorized |
|
Thermos bylaws provide that a special meeting of
stockholders may be called only by the board of directors, the
Chairman of the |
77
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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to do so in the certificate of incorporation or bylaws.
Fishers certificate of incorporation provides that,
subject to the rights of preferred stockholders, a special
meeting of stockholders may be called only by the board of
directors or by Fishers Chief Executive Officer. |
|
board of directors, or the Chief Executive Officer. |
Stockholder Action by Written Consent |
|
As permitted under the DGCL, Fishers certificate of
incorporation prohibits action by the written consent of Fisher
stockholders. Any stockholder action must be taken at a duly
called annual or special meeting of the stockholders. |
|
Thermos bylaws provide that any action required or
permitted to be taken by stockholders for or in connection with
any corporate action may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in
writing, setting forth the action to be taken, is signed by the
minimum number of votes required for the action.
If action is taken by less than unanimous consent of
stockholders, prompt notice of the taking of such action without
a meeting must be given to those stockholders who have not
consented in writing. |
Stockholder Proposals and Nominations of Candidates for
Election to the Board of Directors |
|
Fishers bylaws allow stockholders to propose business to
be brought before an annual meeting. In addition, Fishers
bylaws allow stockholders who are entitled to vote in the
election of directors to nominate candidates for election to the
Fisher board of directors.
However, such proposals with respect to an annual meeting and
such nominations may only be brought by a stockholder who has
given timely notice in proper written form to Fishers
Secretary prior to the meeting.
To be timely, the notice must be delivered to or mailed and
received at Fishers principal executive offices not less
than 30 days nor more than 60 days prior to the
meeting, unless less than 40 days notice or prior
public disclosure of the date of the meeting is given or made to |
|
Thermos bylaws allow stockholders to propose business to
be brought before an annual meeting. In addition, Thermos
bylaws allow stockholders who are entitled to vote in the
election of directors to nominate candidates for election to the
Thermo board of directors at an annual meeting.
However, proposals and nominations may only be brought before an
annual meeting by a stockholder who has given timely notice in
proper written form to Thermos Secretary prior to the
meeting.
To be timely, the notice must be delivered to or mailed and
received at Thermos principal executive offices not less
than 60 days nor more than 75 days prior to the first
anniversary of the date on which Thermo first mailed its proxy
materials for the |
78
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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Fisher stockholders, in which case the notice, to be timely,
must be received not later than the close of business on the
10th day following the day on which notice of the date of
the meeting was mailed or publicly disclosed.
To be in proper written form, notice of a stockholder proposal
must provide:
A brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting;
The name and address, as they appear in
Fishers books, of the stockholder proposing such
business;
The class and number of shares of Fisher stock which
are beneficially owned by the stockholder; and
Any material interest of the stockholder in such
business.
To be in proper written form, notice of a stockholder nomination
must provide:
All information relating to the person to be
nominated that is required to be disclosed in solicitations of
proxies for the election of directors pursuant to the proxy
rules of the SEC, including such persons written consent
to being named as a nominee and to serving as a director if
elected;
The name and address, as they appear on
Fishers books, of the stockholder making the nomination;
and
The class and number of shares of Fisher which are
beneficially owned by such stockholder. |
|
preceding years annual meeting of stockholders; provided,
however, that if the date of the annual meeting is advanced more
than 30 days prior to or delayed more than 30 days
after the anniversary of the preceding years annual
meeting, notice by the stockholder to be timely must be
delivered not later than the close of business on the later of
the 90th day prior to such annual meeting or the
10th day following the day on which public announcement of
the date of such meeting is first made. |
79
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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Fishers Secretary must appoint inspectors to determine
whether a stockholder making a nomination has complied with
these procedural requirements. The inspectors may determine, and
direct the chairman of the meeting to declare, that the
nomination has not been properly brought or made and disregard
it. The chairman of an annual meeting may, in the case of a
stockholder proposal, determine that the proposal has not been
properly brought or made and disregard it. |
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Number of Directors |
|
The DGCL provides that the board of directors of a Delaware
corporation must consist of one or more directors as fixed by
the corporations certificate of incorporation or
bylaws.
Fishers bylaws provide that Fishers board of
directors may consist of no less than three and no more than
15 directors, the exact number of authorized directors to
be determined from time to time by the vote of a majority of the
then authorized number of directors or by the affirmative vote
of the holders of at least 80% of the voting power of the
outstanding shares of capital stock of Fisher entitled to vote
in the election of directors, voting together as a single class.
The minimum and maximum number of directors may be increased
pursuant to a resolution of the board of directors upon the
establishment of a series of preferred stock or a class of
common stock. |
|
Following the merger, Thermos bylaws will provide that the
board of directors, for a period of three years following the
merger, will consist of eight directors, five directors selected
by Thermo and three directors selected by Fisher.
After the three year period following the merger, the number of
directors may be increased at any time by resolution of the
board of directors. The board of directors may be decreased from
time to time by a majority of the directors then in office, but
only to eliminate vacancies existing by reason of death,
resignation, removal or expiration of the term of one or more
directors. |
Classification of Board of Directors |
|
The DGCL permits a Delaware corporation to provide in its
certificate of incorporation or bylaws for the board of
directors to be divided into up to three classes of directors
with staggered terms of office, with only one class of directors
to be elected each year for a maximum term of three years. |
|
Thermos bylaws provide that the board of directors is
divided into three separate classes, as nearly equal in number
as possible, with staggered three-year terms. At each annual
meeting of stockholders, directors elected to succeed those
directors whose terms expire shall be elected for a three-year
term. |
80
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|
Rights of Fisher Stockholders |
|
Rights of Thermo Stockholders |
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|
Fishers certificate of incorporation divides the board of
directors into three separate classes, as nearly equal in number
as possible, with staggered three-year terms. At each annual
meeting of stockholders, directors elected to succeed those
directors whose terms expire shall be elected for a three-year
term. |
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|
Removal of Directors |
|
Under the DGCL, stockholders holding a majority of shares
entitled to vote at an election of directors may remove any
director or the entire board of directors, except that, unless
the certificate of incorporation provides otherwise, in the case
of a corporation whose board of directors is classified,
stockholders may only remove a director for cause.
Fishers certificate of incorporation and bylaws provide
that a director may be removed from office by stockholders only
for cause by the affirmative vote of the holders of at least 80%
of the voting power of the outstanding shares of capital stock
of Fisher entitled to vote in the election of directors, voting
together as a single class. |
|
Thermo is governed by the default DGCL provisions with respect
to removal of directors, which means that Thermos
directors can only be removed for cause. |
Filling Director Vacancies |
|
Under the DGCL, unless a corporations certificate of
incorporation and bylaws provide otherwise, vacancies and newly
created directorships resulting from a resignation, an increase
in the authorized number of directors or otherwise may be filled
by a vote of a majority of the directors remaining in office,
even if such majority is less than a quorum, or by the sole
remaining director.
Fishers certificate of incorporation and bylaws do not
provide otherwise. In addition, they specify that any director
elected in accordance with the above shall hold office until the
annual meeting of stockholders at |
|
For three years following the merger, if there is a vacancy
created by the cessation of service by a continuing Thermo
director, a majority of the remaining continuing Thermo
directors will propose a nominee to fill the vacant position.
Similarly, if there is a vacancy created by the cessation of
service by a continuing Fisher director, a majority of the
remaining continuing Fisher directors will propose a nominee to
fill the vacant position.
After the three year period following the merger, Thermos
bylaws will provide that any vacancy in the board of directors,
however occurring, or any newly |
81
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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which the term of office of the class to which such director has
been elected expires, and until such directors successor
shall have been duly elected and qualified. |
|
created directorship resulting from an enlargement in the size
of the board, will be filled only by vote of a majority of the
directors then in office, even if less than a quorum, or by the
sole remaining director and not by the stockholders.
A director elected to fill a vacancy will be elected for the
unexpired term of such directors predecessor in office,
and a director chosen to fill a newly created directorship will
hold office until the next election for the class which such
director is chosen, subject in each case to the election and
qualification of the directors successor and to the
directors earlier death, resignation or removal. |
Indemnification of Directors and Officers |
|
Under the DGCL, a Delaware corporation must indemnify its
present or former directors and officers against expenses
(including attorneys fees) actually and reasonably
incurred to the extent that the officer or director has been
successful on the merits or otherwise in defense of any action,
suit or proceeding brought against him or her by reason of the
fact that he or she is or was a director or officer of the
corporation.
The DGCL generally permits a Delaware corporation to indemnify
directors and officers against expenses, judgments, fines and
amounts paid in settlement of any action or suit for actions
taken in good faith and in a manner they reasonably believed to
be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal action, which they had no
reasonable cause to believe was unlawful.
Fishers certificate of incorporation provides that each
person who was or is made a party or is threatened to be made |
|
Thermos certificate of incorporation provides that each
person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or
officer of Thermo is indemnified and held harmless by Thermo to
the fullest extent authorized by the DGCL against all expense,
liability and loss (including attorneys fees, judgments,
fines and amounts paid or to be paid in settlement) actually and
reasonably incurred or suffered by such person in connection
with such proceeding.
Thermo is governed by the same provisions of the DGCL,
permitting Thermo to purchase directors and officers
insurance to protect itself and any director, officer, employee
or agent of Thermo. |
82
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Rights of Fisher Stockholders |
|
Rights of Thermo Stockholders |
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|
a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or
officer of Fisher will be indemnified and held harmless by
Fisher to the fullest extent authorized by the DGCL against all
expense, liability and loss (including attorneys fees,
judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection with such proceeding. In
addition, Fisher may provide indemnification to employees and
agents of Fisher to the same extent.
The DGCL and Fishers certificate of incorporation permit
Fisher to purchase and maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of
Fisher or another corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability or loss,
whether or not Fisher would have the power to indemnify such
person against such expense, liability or loss under the DGCL. |
|
|
Amendments to Certificate or Articles of Incorporation |
|
Under the DGCL, Fishers certificate of incorporation may
be amended only if the proposed amendment is approved by the
board of directors and the holders of a majority of the
outstanding stock entitled to vote.
In addition, Fishers certificate of incorporation requires
the affirmative vote of the holders of at least 80% of the
voting power of the outstanding shares of capital stock of
Fisher entitled to vote in the election of directors, voting
together as a single class, in order to approve amendments to
Fishers certificate of incorporation relating to: |
|
Thermos certificate of incorporation reserves the right to
amend, alter, change or repeal any provision contained in the
certificate of incorporation in the manner prescribed by the
DGCL. |
83
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|
Rights of Fisher Stockholders |
|
Rights of Thermo Stockholders |
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The authority to amend or repeal certain provisions
of Fishers bylaws;
The prohibition on stockholder voting by written
consent;
Calling special meetings of stockholders;
The structure and composition of the board of
directors;
Filling vacancies on the board of directors; or
The removal of directors. |
|
|
Amendments to Bylaws |
|
Fishers certificate of incorporation and bylaws provide
that Fishers bylaws may be amended, supplemented or
repealed, or new bylaws may be adopted, by the board of
directors or by the stockholders. In addition, stockholders may
change or repeal any bylaw adopted by the board of directors,
and no amendment or supplement to the bylaws adopted by the
board of directors shall vary or conflict with any amendment or
supplement adopted by the stockholders.
Certain bylaws shall not be amended or repealed, and no
provision inconsistent with them shall be adopted, without the
affirmative vote of the holders of at least 80% of the voting
power of the outstanding shares of capital stock of Fisher
entitled to vote in the election of directors, voting together
as a single class. These bylaws relate to:
Calling special meetings of stockholders;
The structure and composition of the board of
directors; and
The removal of directors. |
|
Thermos bylaws provide that Thermos bylaws may be
altered, amended, or repealed, or new bylaws may be adopted, by
the board of directors or by the stockholders. The stockholders
have the power to amend, alter, and repeal any provision of the
bylaws by an affirmative vote of the holders of a majority of
the shares of capital stock entitled to vote, voting together as
a single class.
Certain bylaws cannot be altered, amended or repealed, or made
new, by the stockholders, in a manner inconsistent with the
existing bylaws, without the affirmative vote of the holders of
at least
662/3%
of the voting power of the outstanding shares of capital stock
of Thermo entitled to vote, voting together as a single class.
These bylaws relate to:
the board of directors; and
amendments to the bylaws.
Following the merger and until the third anniversary of the
closing, any amendment or change to the five Thermo to three
Fisher director ratio and the vacancy provisions described
above, will require the affirmative vote of 75% of the full
board of |
84
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|
Rights of Fisher Stockholders |
|
Rights of Thermo Stockholders |
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directors of the combined company. |
Business Combination Statute |
|
Section 203 of the DGCL prohibits a Delaware corporation
from engaging in a business combination with a
person owning 15% or more of the corporations voting stock
for three years following the time that person becomes a 15%
stockholder, with certain exceptions.
As permitted under Delaware law, Fisher has expressly elected
not to be governed by Section 203 in its certificate of
incorporation. |
|
Thermo has not opted out of Section 203 and is therefore
governed by the default terms of this provision of the DGCL. |
|
Stockholder Rights Plan |
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Fisher does not have a stockholder rights plan. |
|
Thermos rights plan entitles the registered holder to a
right to purchase from the Thermo a unit consisting
of one one-hundred-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $100 per share, at
a purchase price of $200 in cash per unit, subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement dated as of September 15, 2005
between Thermo and American Stock Transfer & Trust
Company, as rights agent.
Under the agreement, if any person commences a tender or
exchange offer, the consummation of which would result in such
person becoming the beneficial owner of 15% or more of the
outstanding shares of Thermo common stock, or thereafter Thermo
is involved in a merger or other business combination in which
50% or more of Thermos assets or earning power is sold,
each right entitles its holder to receive, upon exercise, Thermo
common stock (or, in the case of a merger or other business
combination, stock of the acquiring company) having a value
equal to two times the exercise price of the right. |
85
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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Upon exercise, each share of preferred stock will be entitled to
a minimum preferential quarterly dividend payment of
$100 per share and will be entitled to an aggregate
dividend of 100,000 times the dividend declared per share of
common stock. In the event of liquidation, the holders of the
preferred stock will be entitled to a minimum preferential
liquidating payment of $100 per share and will be entitled
to an aggregate payment of 100,000 times the payment made per
share of common stock. Each share of preferred stock will have
100,000 votes, voting together with the common stock. Finally,
in the event of any merger, consolidation or other transaction
in which common stock is changed or exchanged, each share of
preferred stock will be entitled to receive 100,000 times the
amount received per share of common stock. These rights are
protected by customary anti-dilution provisions.
Because of the nature of the preferred stocks dividend,
liquidation and voting rights, the value of one one-hundred-
thousandth of a share of preferred stock purchasable upon
exercise of each right should approximate the value of one share
of common stock.
The rights have certain anti- takeover effects. The rights will
cause substantial dilution to a person or group that attempts to
acquire Thermo without conditioning the offer on a substantial
number of rights being acquired.
The rights, however, should not affect any prospective offeror
willing to make a permitted offer. The rights should not
interfere with any merger or other business combination approved
by the board of directors of |
86
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Rights of Fisher Stockholders |
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Rights of Thermo Stockholders |
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Thermo since the board of directors may, at its option, redeem
all but not less than all of the then outstanding rights for a
nominal redemption price ($0.01 per right).
The rights agreement contains a so-called TIDE
provision, which requires that a stockholder rights plan
committee of the board of directors of Thermo shall review (not
less than once every three years) whether maintaining the rights
agreement continues to be in the best interest of the
stockholders.
On May 7, 2006, Thermo amended its rights agreement to
exempt the merger and the other transactions contemplated by the
merger agreement from the effect of the rights agreement.
The rights will expire at the close of business on
September 29, 2015, unless earlier redeemed or exchanged by
Thermo. |
87
APPRAISAL RIGHTS
Holders of Fisher common stock who dissent to the merger will
not have rights to an appraisal of the fair value of their
shares. Under Delaware law, appraisal rights are not available
for the shares of any class or series if the shares of the class
or series are registered on a national securities exchange or
quoted on the National Association of Securities Dealers, Inc.
automated quotation system on the record date. Fishers
common stock is listed on the NYSE.
LEGAL MATTERS
The validity of the shares of Thermo common stock to be issued
in the merger will be passed upon by Wachtell, Lipton,
Rosen & Katz. Certain U.S. federal income tax
consequences relating to the merger will also be passed upon for
Thermo by Wachtell, Lipton, Rosen & Katz, and for
Fisher by Skadden, Arps, Slate, Meagher & Flom LLP.
EXPERTS
Thermo
The financial statements and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated into this
document by reference to Thermos Annual Report on
Form 10-K for the
year ended December 31, 2005, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
The combined financial statements of Kendro Laboratory Products
incorporated in this document by reference from Amendment
No. 1 to Thermos Current Report on
Form 8-K/ A filed
on July 22, 2005 have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as
stated in their report (which report expresses an unqualified
opinion and includes explanatory paragraphs relating to the
preparation of the Kendro Laboratory Products combined financial
statements as of and for the year ended December 31, 2004
covered by their report as described in Note 1 and stating
that the combined balance sheet as of March 31, 2005 and
the combined statements of income, comprehensive income and
parents investment, and cash flows for the three months
ended March 31, 2004 and 2005 of Kendro Laboratory Products
were not audited by Deloitte & Touche LLP and,
accordingly, Deloitte & Touche LLP did not express an
opinion on such combined financial statements), which is
incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
Fisher
The financial statements and the related financial statement
schedule of Fisher as of December 31, 2005 and 2004 and for
each of the three years in the period ended December 31,
2005 incorporated into this document by reference to
Fishers Current Report on
Form 8-K dated
May 11, 2006, and managements report on the
effectiveness of internal control over financial reporting as of
December 31, 2005 incorporated into this document by
reference to Fishers Annual Report on
Form 10-K for the
year ended December 31, 2005 have been audited by
Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
88
STOCKHOLDER PROPOSALS
Thermo
Proposals of stockholders intended to be included in the proxy
statement and proxy card relating to the 2007 Annual Meeting of
Stockholders of Thermo and to be presented at such meeting must
be received by Thermo for inclusion in the proxy statement and
proxy card no later than December 12, 2006. In addition,
Thermos bylaws include an advance notice provision that
requires stockholders desiring to bring proposals before an
annual meeting (which proposals are not to be included in
Thermos proxy statement and thus are submitted outside the
processes of
Rule 14a-8 under
the Exchange Act) to do so in accordance with the terms of such
advance notice provision. The advance notice provision requires
that, among other things, stockholders give timely written
notice to the Secretary of Thermo regarding their proposals. To
be timely, notices must be delivered to the Secretary at the
principal executive office of Thermo not less than 60, nor more
than 75, days prior to the first anniversary of the date on
which Thermo mailed its proxy materials for the preceding
years annual meeting of stockholders. Accordingly, a
stockholder who intends to present a proposal at the 2007 Annual
Meeting of Stockholders without inclusion of the proposal in
Thermos proxy materials must provide written notice of
such proposal to the Secretary no earlier than January 26,
2007, and no later than February 10, 2007. Proposals
received at any other time will not be voted on at the meeting.
If a stockholder makes a timely notification, the proxies that
management solicits for the meeting may still exercise
discretionary voting authority with respect to the
stockholders proposal under circumstances consistent with
the proxy rules of the SEC.
Fisher
If the merger is not consummated, Fisher will hold a 2007 Annual
Meeting of Stockholders. Stockholders may submit proposals on
matters appropriate for stockholder action at Fishers
annual meetings, consistent with regulations adopted by the SEC
and the bylaws of Fisher. Proposals to be considered for
inclusion in the proxy statement for the 2007 Annual Meeting
must be received by Fisher at its principal executive offices
not later than December 8, 2006. Proposals to be timely
submitted for stockholder action at Fishers 2007 Annual
Meeting must be received by Fisher at its principal executive
offices not less than 30 days nor more than 60 days
prior to the 2007 Annual Meeting (or, if less than
40 days notice or prior public disclosure of the date
of the 2007 Annual Meeting is given or made, not later than the
tenth day following the date on which such notice was mailed or
public disclosure was made). Proposals should be directed to the
attention of the Secretary, Fisher Scientific International
Inc., One Liberty Lane, Hampton, New Hampshire 03842.
OTHER MATTERS
As of the date of this document, neither the Thermo board of
directors nor the Fisher board of directors knows of any matters
that will be presented for consideration at either the Thermo
special meeting or the Fisher special meeting other than as
described in this document. If any other matters come before
either of the meetings or any adjournments or postponements of
the meetings and are voted upon, the enclosed proxies will
confer discretionary authority on the individuals named as
proxies to vote the shares represented by the proxies as to any
other matters. The individuals named as proxies intend to vote
in accordance with their best judgment as to any other matters.
WHERE YOU CAN FIND MORE INFORMATION
Thermo and Fisher file annual, quarterly and special reports,
proxy statements and other information with the SEC under the
Exchange Act. You may read and copy any of this information at
the SECs Public Reference Room at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. Please call
the SEC at
1-800-SEC-0330 for
further information on the Public Reference Room. The SEC also
maintains an Internet website that contains reports, proxy and
information statements, and other information regarding issuers,
including Thermo and Fisher, who file electronically with the
SEC. The address of that site is www.sec.gov.
89
The information contained on the SECs website is expressly
not incorporated by reference into this document.
Thermo has filed with the SEC a registration statement of which
this document forms a part. The registration statement registers
the shares of Thermo common stock to be issued to Fisher
stockholders in connection with the merger. The registration
statement, including the attached exhibits and schedules,
contains additional relevant information about Thermo common
stock. The rules and regulations of the SEC allow Thermo and
Fisher to omit certain information included in the registration
statement from this document.
In addition, the SEC allows Thermo and Fisher to disclose
important information to you by referring you to other documents
filed separately with the SEC. This information is considered to
be a part of this document, except for any information that is
superseded by information included directly in this document.
This document incorporates by reference the documents listed
below that Thermo has previously filed or will file with the
SEC. They contain important information about Thermo, its
financial condition or other matters.
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Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005. |
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Proxy Statement dated April 11, 2006. |
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Quarterly Report on
Form 10-Q for the
quarterly period ended April 1, 2006. |
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Current Report on
Form 8-K filed on
May 12, 2005, as amended on July 22, 2005, regarding
combined financial statements of Kendro Laboratory Products. |
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Current Reports on
Form 8-K, dated
February 2, 2006, March 1, 2006, April 26, 2006,
April 28, 2006, May 8, 2006, May 11, 2006, and
May 19, 2006 (other than the portions of those documents
not deemed to be filed). |
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The description of Thermos common stock contained in
Thermos
Form 8-A filed on
September 9, 1999 and any amendment or report filed with
the SEC for the purpose of updating such description. |
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The description of Thermos preferred stock contained in
Thermos
Form 8-A filed on
September 16, 2005, as amended in
Form 8-A/A filed
on May 12, 2006, and any other amendment or report filed
with the SEC for the purpose of updating such description. |
In addition, Thermo incorporates by reference any future filings
it makes with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this document and
prior to the date of the Thermo special meeting. Such documents
are considered to be a part of this document, effective as of
the date such documents are filed. In the event of conflicting
information in these documents, the information in the latest
filed document should be considered correct.
You can obtain any of the documents listed above from the SEC,
through the SECs website at the address described above or
from Thermo by requesting them in writing or by telephone at the
following address:
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Thermo Electron Corporation |
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81 Wyman Street |
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Waltham, Massachusetts 02451 |
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Attention: Investor Relations |
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Telephone: (781) 622-1000 |
These documents are available from Thermo without charge,
excluding any exhibits to them unless the exhibit is
specifically listed as an exhibit to the registration statement
of which this document forms a part.
90
This document also incorporates by reference the documents
listed below that Fisher has previously filed or will file with
the SEC. They contain important information about Fisher, its
financial condition or other matters.
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Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005. |
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Proxy Statement dated April 6, 2006. |
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Quarterly Report on
Form 10-Q for the
quarterly period ended March 31, 2006. |
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Current Reports on
Form 8-K, dated
January 10, 2006, February 7, 2006, February 9,
2006, March 1, 2006, March 8, 2006, March 15,
2006, May 1, 2006, May 8, 2006, May 10, 2006, and
May 11, 2006 (other than the portions of those documents
not deemed to be filed). |
In addition, Fisher incorporates by reference any future filings
it makes with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this document and
prior to the date of the Fisher special meeting. Such documents
are considered to be a part of this document, effective as of
the date such documents are filed. In the event of conflicting
information in these documents, the information in the latest
filed document should be considered correct.
You can obtain any of these documents from the SEC, through the
SECs website at the address described above, or Fisher
will provide you with copies of these documents, without charge,
upon written or oral request to:
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Fisher Scientific International Inc. |
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One Liberty Lane |
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Hampton, New Hampshire 03842 |
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Attention: Investor Relations |
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Telephone: (603) 926-5911 |
If you are a stockholder of Thermo or Fisher and would like to
request documents, please do so by August 23, 2006 to
receive them before the Thermo special meeting and the Fisher
special meeting. If you request any documents from Thermo or
Fisher, Thermo or Fisher will mail them to you by first class
mail, or another equally prompt means, within one business day
after Thermo or Fisher receives your request.
This document is a prospectus of Thermo and is a joint proxy
statement of Thermo and Fisher for the Thermo special meeting
and the Fisher special meeting. Neither Thermo nor Fisher has
authorized anyone to give any information or make any
representation about the merger or Thermo or Fisher that is
different from, or in addition to, that contained in this
document or in any of the materials that Thermo has incorporated
by reference into this document. Therefore, if anyone does give
you information of this sort, you should not rely on it. The
information contained in this document speaks only as of the
date of this document unless the information specifically
indicates that another date applies.
This document contains a description of the representations and
warranties that each of Thermo and Fisher made to the other in
the merger agreement. Representations and warranties made by
Thermo, Fisher and other applicable parties are also set forth
in contracts and other documents (including the merger
agreement) that are attached or filed as exhibits to this
document or are incorporated by reference into this document.
These representations and warranties were made as of specific
dates, may be subject to important qualifications and
limitations agreed to between the parties in connection with
negotiating the terms of the agreement, and may have been
included in the agreement for the purpose of allocating risk
between the parties rather than to establish matters as facts.
These materials are included or incorporated by reference only
to provide you with information regarding the terms of the
agreements. Accordingly, the representations and warranties and
other provisions of the agreements (including the merger
agreement) should not be read alone, but instead should be read
only in conjunction with the other information provided
elsewhere in this document or incorporated by reference into
this document.
91
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THERMO ELECTRON CORPORATION,
TRUMPET MERGER CORPORATION
AND
FISHER SCIENTIFIC INTERNATIONAL INC.
DATED AS OF MAY 7, 2006
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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Page | |
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ARTICLE I
THE MERGER |
Section 1.1.
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The Merger |
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A-1 |
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Section 1.2.
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Closing |
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A-1 |
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Section 1.3.
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Effective Time |
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A-2 |
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Section 1.4.
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Effects of the Merger |
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A-2 |
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Section 1.5.
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Organizational Documents of the Surviving Corporation |
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A-2 |
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Section 1.6.
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Directors and Officers of the Surviving Corporation |
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A-2 |
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Section 1.7.
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Governance |
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A-2 |
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Section 1.8.
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Directors of Thermo Electron at the Effective Time |
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A-3 |
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ARTICLE II
EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES |
Section 2.1.
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Effect on Capital Stock |
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A-3 |
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Section 2.2.
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Exchange of Shares and Certificates |
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A-4 |
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ARTICLE III
REPRESENTATIONS AND WARRANTIES |
Section 3.1.
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Representations and Warranties of Fisher |
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A-6 |
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Section 3.2.
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Representations and Warranties of Thermo Electron and Merger Sub |
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A-22 |
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS |
Section 4.1.
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Conduct of Business |
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A-39 |
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Section 4.2.
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No Solicitation |
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A-42 |
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ARTICLE V
ADDITIONAL AGREEMENTS |
Section 5.1.
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Preparation of SEC Documents; Stockholders Meetings |
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A-43 |
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Section 5.2.
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Accountants Letters |
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A-45 |
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Section 5.3.
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Access to Information; Confidentiality |
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A-45 |
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Section 5.4.
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Reasonable Best Efforts |
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A-45 |
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Section 5.5.
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Indemnification and Insurance |
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A-47 |
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Section 5.6.
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Fees and Expenses |
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A-47 |
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Section 5.7.
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Public Announcements |
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A-48 |
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Section 5.8.
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Listing |
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A-48 |
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Section 5.9.
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Tax-Free Reorganization Treatment |
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A-48 |
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Section 5.10.
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Conveyance Taxes |
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A-48 |
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Section 5.11.
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Equity Awards and Employee Benefits |
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A-48 |
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Section 5.12.
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Honoring of Collective Bargaining Agreements; Represented
Employees |
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A-51 |
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Section 5.13.
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Affiliates |
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A-51 |
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Section 5.14.
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Notification of Certain Matters |
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A-51 |
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Section 5.15.
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Section 16 Matters |
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A-52 |
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Section 5.16.
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State Takeover Laws |
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A-52 |
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Section 5.17.
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Reservation of Thermo Electron Common Stock |
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A-52 |
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A-i
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ARTICLE VI
CONDITIONS PRECEDENT |
Section 6.1.
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Conditions to Each Partys Obligation to Effect the Merger |
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A-52 |
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Section 6.2.
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Conditions to Obligations of Fisher |
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A-53 |
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Section 6.3.
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Conditions to Obligations of Thermo Electron and Merger Sub |
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A-53 |
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER |
Section 7.1.
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Termination |
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A-54 |
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Section 7.2.
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Effect of Termination and Payment |
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A-55 |
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Section 7.3.
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Amendment |
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A-56 |
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Section 7.4.
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Extension; Waiver |
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A-56 |
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ARTICLE VIII
GENERAL PROVISIONS |
Section 8.1.
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Nonsurvival of Representations and Warranties |
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A-56 |
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Section 8.2.
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Notices |
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A-57 |
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Section 8.3.
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Definitions |
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A-57 |
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Section 8.4.
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Terms Defined Elsewhere |
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A-59 |
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Section 8.5.
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Interpretation |
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A-62 |
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Section 8.6.
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Counterparts |
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A-62 |
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Section 8.7.
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Entire Agreement; No Third-Party Beneficiaries |
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A-62 |
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Section 8.8.
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Governing Law |
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A-62 |
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Section 8.9.
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Assignment |
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A-62 |
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Section 8.10.
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Consent to Jurisdiction |
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A-62 |
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Section 8.11.
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Headings, etc |
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A-63 |
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Section 8.12.
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Severability |
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A-63 |
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Section 8.13.
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Failure or Indulgence Not Waiver; Remedies Cumulative |
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A-63 |
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Section 8.14.
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Waiver of Jury Trial |
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A-63 |
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Section 8.15.
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Specific Performance |
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A-63 |
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Exhibit 1.7(a)
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Amendment to By-Laws of Thermo Electron |
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Exhibit 1.8
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Members of the Board of Directors of Thermo Electron and its
Committees |
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Exhibit 5.13
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Form of Affiliate Letter Agreement |
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A-ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this
Agreement) is made and entered into as of
May 7, 2006, by and among THERMO ELECTRON CORPORATION, a
Delaware corporation (Thermo Electron),
TRUMPET MERGER CORPORATION, a Delaware corporation and a direct
wholly-owned subsidiary of Thermo Electron (Merger
Sub) and FISHER SCIENTIFIC INTERNATIONAL INC., a
Delaware corporation (Fisher).
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Thermo Electron,
Merger Sub and Fisher have deemed it advisable and fair to and
in the best interests of their respective corporations and their
respective stockholders, that Thermo Electron and Fisher engage
in a business combination in order to advance their respective
long-term strategic business interests; and
WHEREAS, in furtherance thereof, the respective Boards of
Directors of Thermo Electron, Merger Sub and Fisher have
approved this Agreement and the merger of Merger Sub with and
into Fisher with Fisher continuing as the surviving corporation
(the Merger), upon the terms and subject to
the conditions set forth in this Agreement and in accordance
with the provisions of the Delaware General Corporation Act (the
DGCL); and
WHEREAS, the Board of Directors of Fisher has determined that
this Agreement and the transactions contemplated hereby are in
the best interests of Fisher and its stockholders and has
determined to recommend to its stockholders approval and
adoption of this Agreement and the Merger (the Fisher
Stockholder Approval); and
WHEREAS, the Board of Directors of Thermo Electron has approved,
and has determined to recommend to its stockholders (together
with the recommendation of the Board of Directors of Fisher, the
Recommendations) approval of, the issuance of
shares of Thermo Electron Common Stock (as defined in
Section 2.1(a)) and the Charter Amendment (as
defined in Section 3.2(c)(i)) in connection with the
Merger (the Thermo Electron Stockholder
Approval); and
WHEREAS, Thermo Electron, as the sole stockholder of Merger Sub,
has approved this Agreement and the Merger; and
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the Code),
and this Agreement is intended to be, and is hereby adopted as,
a plan of reorganization within the meaning of Sections 354
and 361 of the Code; and
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth
herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
THE MERGER
Section
1.1. The
Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the
Effective Time (as defined in Section 1.3), Merger
Sub shall be merged with and into Fisher, the separate corporate
existence of Merger Sub shall cease and Fisher shall continue as
the surviving corporation in the Merger (the Surviving
Corporation) and shall succeed to and assume all the
property, rights, privileges, powers and franchises of Merger
Sub in accordance with the DGCL.
Section
1.2. Closing.
The closing of the Merger (the Closing) shall
take place at 10:00 a.m., New York time, on a date to be
specified by the parties, which shall be no later than the
second business day after
A-1
satisfaction or waiver of all of the conditions set forth in
Article VI (other than delivery of items to be
delivered at the Closing and other than those conditions that by
their nature are to be satisfied at the Closing, it being
understood that the occurrence of the Closing shall remain
subject to the delivery of such items and the satisfaction or
waiver of such conditions at the Closing) at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West
52nd Street, New York, New York 10019, unless another time,
date or place is agreed to in writing by the parties hereto. The
date on which the Closing occurs is referred to herein as the
Closing Date.
Section
1.3. Effective
Time. Subject to the terms and conditions of this
Agreement, as soon as practicable on the Closing Date, the
parties shall cause the Merger to be consummated by filing a
certificate of merger in such form as required by, and executed
in accordance with, the relevant provisions of the DGCL (the
Certificate of Merger) with the Secretary of
State of the State of Delaware and shall make all other filings
or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware, or
at such subsequent date or time as Thermo Electron and Fisher
shall agree and specify in the Certificate of Merger, which date
shall be not more than 90 days after the date the
Certificate of Merger is received for filing. The time at which
the Merger becomes effective is referred to herein as the
Effective Time.
Section
1.4. Effects of the
Merger. At the Effective Time, the Merger shall have the
effects set forth in this Agreement and in the applicable
provisions of the DGCL.
Section
1.5. Organizational
Documents of the Surviving Corporation. The Fisher
Charter (as defined in Section 3.1(a)(ii)), as in
effect immediately prior to the Effective Time, shall thereafter
be the certificate of incorporation of the Surviving
Corporation, until amended in accordance with Applicable Laws
(as defined in Section 3.1(g)(ii)) and as provided
in such certificate of incorporation. The Fisher By-Laws (as
defined in Section 3.1(a)(ii)), as in effect immediately
prior to the Effective Time, shall thereafter be the bylaws of
the Surviving Corporation, until amended in accordance with
Applicable Laws and as provided in such bylaws.
Section
1.6. Directors and
Officers of the Surviving Corporation. The directors of
Merger Sub shall, from and after the Effective Time, become the
initial directors of the Surviving Corporation until their
successors shall have been duly elected, appointed or qualified
or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and bylaws of
the Surviving Corporation and Applicable Laws. The officers of
Merger Sub shall, from and after the Effective Time, become the
initial officers of the Surviving Corporation until their
successors shall have been duly elected, appointed or qualified
or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and the bylaws
of the Surviving Corporation.
Section
1.7. Governance.
Subject to the Thermo Electron Stockholder Approval, the Thermo
Electron Charter (as defined in Section 3.2(a)(ii))
as in effect immediately prior to the Effective Time, as amended
pursuant to the Charter Amendment, shall thereafter be the
certificate of incorporation of Thermo Electron, until amended
in accordance with Applicable Laws and as provided in such
certificate of incorporation. Prior to the Effective Time,
Thermo Electron shall take all actions necessary to adopt the
amendment to the Thermo Electron By-Laws (as defined in
Section 3.2(a)(ii)), provided for in
Exhibit 1.7(a) hereof, and to effect the
requirements and adopt the resolutions referenced therein.
(a) On or prior to the Effective Time, the Board of
Directors of Thermo Electron shall cause the number of directors
that will comprise the full Board of Directors of Thermo
Electron at the Effective Time to be eight. The members of the
Board of Directors and the composition of the committees of the
Board of Directors of Thermo Electron (as specified in
Exhibit 1.8) at the Effective Time shall be as
provided in Section 1.8 of this Agreement.
(b) In accordance with, and to the extent provided in, the
Thermo Electron By-Laws (as amended as provided in
Exhibit 1.7(a)), (i) effective as of the
Effective Time, Mr. Dekkers shall continue to serve as
President and Chief Executive Officer of Thermo Electron, and
(ii) Mr. Meister shall become non-executive Chairman
of the Board of Directors of Thermo Electron.
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(c) The headquarters of Thermo Electron will be located in
Waltham, Massachusetts; provided that, for at least three
years after the Effective Time, Thermo Electron shall maintain
the current offices of Fisher in its current facility in
Hampton, New Hampshire.
(d) Immediately following the Effective Time, as set forth
in the Charter Amendment, Thermo Electron will change its name
to Thermo Fisher Scientific Inc.
Section
1.8. Directors of
Thermo Electron at the Effective Time. As of the
Effective Time, and continuing for a period of at least three
years following the Effective Time: (i) the ratio of
Continuing Thermo Electron Directors to Continuing Fisher
Directors (each as defined in this Section 1.8)
serving on the Board of Directors of Thermo Electron shall be
maintained at
five-to-three;
(ii) all vacancies on the Board of Directors of Thermo
Electron created by the cessation of service of a Continuing
Thermo Electron Director for any reason shall be filled by a
nominee proposed to the Nominating and Corporate Governance
Committee of the Board of Directors of Thermo Electron by a
majority of the remaining Continuing Thermo Electron Directors;
and (iii) all vacancies on the Board of Directors of Thermo
Electron created by the cessation of service of a Continuing
Fisher Director for any reason shall be filled by a nominee
proposed to the Nominating and Corporate Governance Committee of
the Board of Directors of Thermo Electron by a majority of the
remaining Continuing Fisher Directors. The terms
Continuing Thermo Electron Directors and
Continuing Fisher Directors shall for
purposes of this Section 1.8 mean, respectively, the
directors of Thermo Electron or Fisher, as the case may be, who
were selected to be directors of Thermo Electron as of the
Effective Time pursuant to Section 1.7(a), and any
other directors of Thermo Electron who take office after the
Effective Time who are nominated, or proposed to the Nominating
and Corporate Governance Committee of the Board of Directors of
Thermo Electron, by a majority of the Continuing Thermo Electron
Directors or the Continuing Fisher Directors, as the case may
be. Until the third anniversary of the Effective Time, any
amendments to the Thermo Electron By-Law provisions relating to
the foregoing terms of this Section 1.8 shall require the
affirmative vote of at least 75% of the full Board of Directors
of Thermo Electron.
ARTICLE II
EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES
Section
2.1. Effect on Capital
Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of Thermo Electron, Merger Sub,
Fisher or the holders of any shares of common stock, par value
$0.01 per share, of Fisher (Fisher Common
Stock):
(a) Conversion of Fisher Common Stock.
Subject to Sections 2.1(f) and 2.1(g), each
share of Fisher Common Stock issued and outstanding immediately
prior to the Effective Time, other than any shares of Fisher
Common Stock to be canceled pursuant to
Section 2.1(c), shall be automatically converted
into and become the right to receive 2.0 (the Exchange
Ratio) fully paid and nonassessable shares of common
stock, par value $1.00 per share (Thermo Electron
Common Stock), of Thermo Electron (the Merger
Consideration). As a result of the Merger, at the
Effective Time, each holder of a Certificate (as defined in
Section 2.2(b)) shall cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration payable in respect of the shares of Fisher Common
Stock represented by such Certificate immediately prior to the
Effective Time, any cash in lieu of fractional shares payable
pursuant to Section 2.1(f) and any dividends or
other distributions payable pursuant to
Section 2.2(c), all to be issued or paid, without
interest, in consideration therefor upon the surrender of such
Certificate in accordance with Section 2.2(b)(or, in
the case of a lost, stolen or destroyed Certificate,
Section 2.2(i)).
(b) Capital Stock of Merger Sub. Each share
of common stock, par value $0.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time
shall be converted into one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the
Surviving Corporation.
(c) Cancellation of Shares. Each share of
Fisher Common Stock owned by Thermo Electron, Merger Sub or
Fisher immediately prior to the Effective Time shall
automatically be extinguished without any conversion, and no
consideration shall be delivered in respect thereof.
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(d) Fisher Options, Stock Unit Awards and Employee
Stock Purchase Plans. At the Effective Time,
(i) subject to and in accordance with
Section 5.11(a), all options to purchase Fisher
Common Stock (each, a Fisher Option) and all
restricted stock units and rights to receive shares of Fisher
Common Stock or an amount in cash measured by the value of a
number of shares of Fisher Common Stock (each, a Fisher
Stock Unit Awards), in each case, issued and
outstanding at the Effective Time under a Fisher Stock Plan or a
Fisher Deferred Compensation Plan (each as defined in
Section 3.1(b)(i)), shall be assumed by Thermo
Electron and (ii) all rights outstanding under
Fishers Employee Stock Purchase Plan, as approved by the
Fisher stockholders on May 5, 2006 (the Fisher
Purchase Plan), shall be treated as set forth in
Section 5.11(b).
(e) Conversion of Debt. The Fisher
Convertible Debentures (as defined in
Section 3.1(b)(i)) shall remain outstanding as
debentures of Fisher, however in lieu of being convertible into
shares of Fisher Common Stock, following the Effective Time, the
Fisher Convertible Debentures shall become convertible into
Thermo Electron Common Stock at a conversion ratio equal to the
conversion ratio in effect immediately prior to the Effective
Time multiplied by the Exchange Ratio and Thermo Electron shall
agree to guarantee the payment of, or become a co-obligor on,
said debentures.
(f) Fractional Shares. No fraction of a share
of Thermo Electron Common Stock will be issued by virtue of the
Merger, but in lieu thereof each holder of shares of Fisher
Common Stock who would otherwise be entitled to a fraction of a
share of Thermo Electron Common Stock (after aggregating all
shares of Thermo Electron Common Stock that otherwise would be
received by such holder) shall, upon surrender of such
holders Certificate or Certificates, receive from Thermo
Electron an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of: (i) the
fractional share interest (after aggregating all shares of
Thermo Electron Common Stock that would otherwise be received by
such holder) which such holder would otherwise receive,
multiplied by (ii) the closing price of one share of Thermo
Electron Common Stock on the New York Stock Exchange
(NYSE) Composite Transactions Tape ending on
the trading day one day prior to the Effective Time.
(g) Adjustments to Exchange Ratio. The
Exchange Ratio and the Merger Consideration shall be adjusted to
reflect fully the appropriate effect of any stock split,
split-up, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Thermo
Electron Common Stock or Fisher Common Stock), reorganization,
recapitalization, reclassification or other like change with
respect to Thermo Electron Common Stock or Fisher Common Stock
having a record date occurring on or after the date hereof and
prior to the Effective Time.
Section
2.2. Exchange of
Shares and Certificates.
(a) Exchange Agent. At or prior to the
Effective Time, Thermo Electron shall engage an institution
reasonably satisfactory to Fisher (and Thermo Electrons
transfer agent shall be deemed satisfactory to Fisher) to act as
exchange agent in connection with the Merger (the
Exchange Agent), pursuant to an agreement
reasonably satisfactory to Fisher. At the Effective Time, Thermo
Electron shall deposit with the Exchange Agent, in trust for the
benefit of the holders of shares of Fisher Common Stock
immediately prior to the Effective Time, certificates
representing the shares of Thermo Electron Common Stock issuable
pursuant to Section 2.1(a). In addition, Thermo
Electron shall make available by depositing with the Exchange
Agent, as necessary from time to time after the Effective Time,
cash in an amount sufficient to make the payments in lieu of
fractional shares pursuant to Section 2.1(f) and any
dividends or distributions to which holders of shares of Fisher
Common Stock may be entitled pursuant to
Section 2.2(c). All cash and certificates
representing shares of Thermo Electron Common Stock deposited
with the Exchange Agent shall hereinafter be referred to as the
Exchange Fund.
(b) Exchange Procedures. Promptly after the
Effective Time, and in any event within 10 business days after
the Effective Time, Thermo Electron shall cause the Exchange
Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Fisher Common Stock (the
Certificates), which at the Effective Time
were converted into the right to receive the Merger
Consideration pursuant to Section 2.1 hereof,
(i) a letter of transmittal (which shall specify that
delivery shall be effected, and that risk of loss and title to
the Certificates shall pass only upon
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delivery of the Certificates to the Exchange Agent and which
shall be in form and substance reasonably satisfactory to Thermo
Electron and Fisher) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing whole shares of Thermo Electron Common
Stock, cash in lieu of any fractional shares pursuant to
Section 2.1(f)and any dividends or other
distributions payable pursuant to Section 2.2(c).
Upon surrender of Certificates for cancellation to the Exchange
Agent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions
thereto, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificates shall be
entitled to receive in exchange therefor a certificate
representing that number of whole shares of Thermo Electron
Common Stock (after taking into account all Certificates
surrendered by such holder) to which such holder is entitled
pursuant to Section 2.1 (which shall be in
uncertificated book entry form unless a physical certificate is
requested), payment by cash or check in lieu of fractional
shares which such holder is entitled to receive pursuant to
Section 2.1(f) and any dividends or distributions
payable pursuant to Section 2.2(c), and the
Certificates so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of shares of Fisher Common
Stock which is not registered in the transfer records of Fisher,
a certificate representing the proper number of shares of Thermo
Electron Common Stock may be issued to a Person (as defined in
Section 8.3(l)) other than the Person in whose name
the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the Person requesting such issuance shall
pay any transfer or other Taxes (as defined in
Section 3.1(j)(xi)) required by reason of the
issuance of shares of Thermo Electron Common Stock to a Person
other than the registered holder of such Certificate or
establish to the reasonable satisfaction of Thermo Electron that
such Tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.2(b), each
Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive the Merger Consideration
(and any amounts to be paid pursuant to
Section 2.1(f) or Section 2.2(c)) upon
such surrender. No interest shall be paid or shall accrue on any
amount payable pursuant to Section 2.1(f) or
Section 2.2(c).
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect
to shares of Thermo Electron Common Stock with a record date
after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Thermo
Electron Common Stock represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.1(f) hereof, until such
Certificate has been surrendered in accordance with this
Article II. Subject to Applicable Laws, following
surrender of any such Certificate, there shall be paid to the
recordholder thereof, without interest, (i) promptly after
such surrender, the number of whole shares of Thermo Electron
Common Stock issuable in exchange therefor pursuant to this
Article II, together with any cash payable in lieu
of a fractional share of Thermo Electron Common Stock to which
such holder is entitled pursuant to Section 2.1(f)
and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to
such whole shares of Thermo Electron Common Stock and
(ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the
Effective Time and a payment date subsequent to such surrender
payable with respect to such whole shares of Thermo Electron
Common Stock.
(d) No Further Ownership Rights in Fisher Common
Stock. All shares of Thermo Electron Common Stock issued
upon the surrender for exchange of Certificates in accordance
with the terms of this Article II and any cash paid
pursuant to Section 2.1(f) or
Section 2.2(c) shall be deemed to have been issued
(or paid) in full satisfaction of all rights pertaining to the
shares of Fisher Common Stock previously represented by such
Certificates. After the Effective Time, the stock transfer books
of Fisher shall be closed and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Fisher Common Stock which
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they
shall be canceled and exchanged as provided in this
Article II.
(e) Termination of Exchange Fund. Any portion
of the Exchange Fund which remains undistributed to the holders
of Certificates one year after the Effective Time shall be
delivered to Thermo Electron, upon demand, and any holders of
Certificates who have not theretofore complied with this
Article II shall thereafter
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look only to Thermo Electron for payment of their claim for the
Merger Consideration, any cash in lieu of fractional shares of
Thermo Electron Common Stock pursuant to
Section 2.1(f) and any dividends or distributions
pursuant to Section 2.2(c).
(f) No Liability. None of Thermo Electron,
Merger Sub, Fisher or the Exchange Agent or any of their
respective directors, officers, employees and agents shall be
liable to any Person in respect of any shares of Thermo Electron
Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law. If any Certificate shall not have been
surrendered prior to seven years after the Effective Time, or
immediately prior to such earlier date on which any shares of
Thermo Electron Common Stock, any cash in lieu of fractional
shares of Thermo Electron Common Stock or any dividends or
distributions with respect to Thermo Electron Common Stock
issuable in respect of such Certificate would otherwise escheat
to or become the property of any Governmental Entity (as defined
in Section 3.1(c)(v)), any such shares, cash,
dividends or distributions in respect of such Certificate shall,
to the extent permitted by Applicable Laws, become the property
of the Surviving Corporation, free and clear of all claims or
interests of any Person previously entitled thereto.
(g) Investment of Exchange Fund. The Exchange
Agent shall invest any cash included in the Exchange Fund as
directed by Thermo Electron on a daily basis, provided,
that no such investment or loss thereon shall affect the amounts
payable to former stockholders of Fisher after the Effective
Time pursuant to this Article II. Any interest and
other income resulting from such investment shall become a part
of the Exchange Fund, and any amounts in excess of the amounts
payable pursuant to this Article II shall promptly
be paid to Thermo Electron.
(h) Withholding Rights. Thermo Electron and
the Exchange Agent shall be entitled to deduct and withhold from
any consideration payable pursuant to this Agreement to any
Person who was a holder of Fisher Common Stock immediately prior
to the Effective Time such amounts as Thermo Electron or the
Exchange Agent may be required to deduct and withhold with
respect to the making of such payment under the Code or any
other provision of federal, state, local or foreign Tax law. To
the extent that amounts are so withheld by Thermo Electron or
the Exchange Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Person
to whom such consideration would otherwise have been paid.
(i) Lost, Stolen or Destroyed Certificates.
In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of
Thermo Electron Common Stock as may be required pursuant to
Section 2.1(a), cash for fractional shares pursuant
to Section 2.1(f) and any dividends or distributions
payable pursuant to Section 2.2(c); provided,
however, that Thermo Electron may, in its discretion and
as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver
an agreement of indemnification in form reasonably satisfactory
to Thermo Electron, or a bond in such sum as Thermo Electron may
reasonably direct as indemnity, against any claim that may be
made against Thermo Electron or the Exchange Agent in respect of
the Certificates alleged to have been lost, stolen or destroyed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section
3.1. Representations
and Warranties of Fisher. Except as set forth in the
disclosure schedule dated as of the date of this Agreement and
executed and delivered by Fisher to Thermo Electron concurrently
with or prior to the execution and delivery by Fisher of this
Agreement (the Fisher Disclosure Schedule),
Fisher represents and warrants to Thermo Electron and Merger Sub
as set forth in this Section 3.1. Each disclosure
set forth in the Fisher Disclosure Schedule, and any other
information included in the Fisher Disclosure Schedule, is
identified by reference to, or has been grouped under a heading
referring to, a specific individual subsection of this Agreement
and shall be deemed to be disclosed solely for purposes of, and
shall qualify and be treated as an exception to, such
subsection, except to the extent that disclosure in one
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subsection of the Fisher Disclosure Schedule is specifically
referred to in another subsection of the Fisher Disclosure
Schedule by appropriate cross-reference and except to the extent
that the relevance of a disclosure in one subsection of the
Fisher Disclosure Schedule to another subsection of the Fisher
Disclosure Schedule is reasonably apparent. The parties hereby
agree that no reference to or disclosure of any item or other
matter in the Fisher Disclosure Schedule shall be construed as
an admission or indication that (1) such item or other
matter is material, (2) such item or other matter is
required to be referred to or disclosed in the Fisher Disclosure
Schedule or (3) any breach or violation of Applicable Laws
or any Contract (as defined in Section 8.3(c))
exists or has actually occurred.
(a) Organization, Standing and Corporate Power;
Charter Documents; Subsidiaries.
(i) Organization, Standing and Corporate
Power. Fisher and each of its Subsidiaries (as defined
in Section 8.3(m)) is a corporation or other legal
entity duly organized, validly existing and in good standing
(with respect to jurisdictions which recognize such concept)
under the laws of the jurisdiction in which it is incorporated
or otherwise organized and has the requisite corporate (or
similar) power and authority and all necessary government
approvals to own, lease and operate its properties and to carry
on its business as currently conducted, except for those
jurisdictions in which the failure to have such power, authority
or government approvals and to be so organized, existing or in
good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect (as
defined in Section 8.3(i)) on Fisher and its
Subsidiaries, taken as a whole. Each of Fisher and each of its
Subsidiaries is duly qualified or licensed to do business and is
in good standing (with respect to jurisdictions which recognize
such concept) in each jurisdiction in which the nature or
conduct of its business or the ownership, leasing or operation
of its properties makes such qualification, licensing or good
standing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Fisher and its
Subsidiaries, taken as a whole.
(ii) Charter Documents. Fisher has delivered
or made available to Thermo Electron prior to the execution of
this Agreement complete and correct copies of (A) the
Amended and Restated Certificate of Incorporation of Fisher
(including any certificates of designation), as amended and
currently in effect (the Fisher Charter), and
the By-Laws of Fisher, as amended and currently in effect (the
Fisher By-Laws, and, together with the Fisher
Charter, the Fisher Organizational Documents)
and (B) the articles or certificate of incorporation and
By-Laws or like organizational documents of each of the Fisher
Material Subsidiaries (as defined in
Section 3.1(a)(iii)), as amended and currently in
effect (collectively, the Fisher Subsidiary
Organizational Documents), and each such instrument is
in full force and effect. Fisher is not in material violation of
the Fisher Organizational Documents and no Fisher Material
Subsidiary is in material violation of its Fisher Subsidiary
Organizational Documents.
(iii) Subsidiaries.
Section 3.1(a)(iii) of the Fisher Disclosure
Schedule lists all the Subsidiaries of Fisher which, as of the
date of this Agreement, have annual gross revenues in excess of
$200,000,000 (the Fisher Material
Subsidiaries). Except as set forth in
Section 3.1(a)(iii) of the Fisher Disclosure
Schedule, all the outstanding shares of capital stock of, or
other equity interests in, each Fisher Material Subsidiary have
been validly issued and are fully paid and nonassessable and are
owned directly or indirectly by Fisher, free and clear of all
mortgages, pledges, claims, restrictions, infringements, liens,
charges, encumbrances and security interests and claims of any
kind or nature whatsoever (collectively,
Liens) and free of any other restriction
(including preemptive rights and any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other
ownership interests).
(b) Capital Structure.
(i) The authorized capital stock of Fisher consists of
500,000,000 shares of Fisher Common Stock and
15,000,000 shares of preferred stock, par value
$0.01 per share (Fisher Preferred
Stock). At the close of business on May 1, 2006,
(A) 124,403,412 shares of Fisher Common Stock were
issued and outstanding; (B) 254,975 shares of Fisher
Common Stock were held by Fisher in its treasury; (C) no
shares of Fisher Preferred Stock were issued and outstanding;
(D) warrants to purchase 1,653,585 shares of
Fisher Common Stock were issued and outstanding; (E)
16,255,956 shares of Fisher Common Stock were reserved for
issuance upon conversion of Fishers
(1) 2.50% Convertible Senior Notes due 2023, (2)
Floating Rate
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Convertible Senior Debentures due 2033 and
(3) 3.25% Convertible Senior Subordinated Notes due
2024 (together, the Fisher Convertible
Debentures); (F) 10,530,422 shares of Fisher
Common Stock were reserved for issuance in respect of
outstanding Fisher Options pursuant to the Fisher stock plans
listed in Section 3.1(b)(i) of the Fisher Disclosure
Schedule (which list includes the total aggregate number of
options authorized for issuance under such plans) (the
Fisher Stock Plans); and
(G) 989,130 shares of Fisher Common Stock were
reserved for issuance in respect of outstanding Fisher Stock
Unit Awards pursuant to the Fisher Stock Plans and the Fisher
deferred compensation plans listed in
Section 3.1(b)(i) of the Fisher Disclosure Schedule
(the Fisher Deferred Compensation Plans),
complete and correct copies of which, in each case as amended,
have been filed as exhibits to the Fisher SEC Documents (as
defined in Section 3.1(d)(i)) prior to the date of
this Agreement or made available to Thermo Electron. Each
outstanding share of capital stock of Fisher is duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights.
(ii) All shares of Fisher Common Stock subject to issuance
under the Fisher Stock Plans, the Fisher Deferred Compensation
Plans and the Fisher Purchase Plan, upon issuance on the terms
and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights.
(iii) No bonds, debentures, notes or other evidences of
indebtedness having the right to vote on any matters on which
stockholders of Fisher may vote (Voting Debt)
are issued or outstanding as of the date hereof.
(iv) As of May 1, 2006, there are no securities,
options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Fisher or any
of its Subsidiaries is a party or by which any of them is bound
obligating Fisher or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional
shares of capital stock, Voting Debt or other voting securities
of Fisher or any of its Subsidiaries, or obligating Fisher or
any of its Subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. All outstanding shares of
Fisher Common Stock, all outstanding Fisher Options and Fisher
Stock Unit Awards and all outstanding shares of capital stock of
each Subsidiary of Fisher have been issued and granted in
compliance in all material respects with (A) all applicable
securities laws and all other Applicable Laws and (B) all
requirements set forth in applicable material Contracts.
(v) Since December 31, 2005, and through the date
hereof, other than (A) issuances of Fisher Common Stock
pursuant to the exercise of Fisher Options and the settlement of
Fisher Stock Unit Awards granted under Fisher Stock Plans or
Fisher Deferred Compensation Plans, (B) repurchases of
Fisher Common Stock from employees of Fisher following their
termination pursuant to the terms of their pre-existing stock
option or purchase agreements, (C) issuances of Fisher
Common Stock (consisting of newly-issued shares or shares in
treasury) as contributions of Fisher Common Stock to defined
contribution plans sponsored by Fisher and (D) grants of Fisher
Options and Fisher Stock Unit Awards under Fisher Stock Plans
and Fisher Deferred Compensation Awards, there has been no
increase in (1) the outstanding capital stock of Fisher,
(2) the number of Fisher Options and Fisher Stock Unit
Awards outstanding or (3) the number of other options,
warrants or other rights to purchase Fisher capital stock.
(vi) Neither Fisher nor any of its Subsidiaries is a party
to any currently effective agreement (A) restricting the
purchase or transfer of, (B) relating to the voting of,
(C) requiring the repurchase, redemption or disposition of,
or containing any right of first refusal with respect to,
(D) requiring registration of or (E) granting any
preemptive or antidilutive rights with respect to any capital
stock of Fisher or any of its Subsidiaries or any securities of
the type referred to in Section 3.1(b)(iv) hereof.
(vii) Other than in Subsidiaries of Fisher, as of the date
hereof, neither Fisher nor its Subsidiaries directly or
indirectly beneficially owns any securities or other beneficial
ownership interests in any other entity except for
non-controlling investments in entities with an individual book
value of less than $5,000,000 and which are not individually or
in the aggregate material to Fisher and its Subsidiaries, taken
as a whole. There are no outstanding contractual obligations of
Fisher or any of its Subsidiaries to make any loan to, or any
equity or other investment (in the form of a capital
contribution or otherwise) in, any Subsidiary of Fisher or
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any other Person, other than guarantees by Fisher of any
indebtedness or other obligations of any wholly-owned Subsidiary
of Fisher and other than loans made in the ordinary course
consistent with past practice to employees of Fisher and its
Subsidiaries.
(viii) Neither Fisher nor any of its Subsidiaries owns any
shares of capital stock of Thermo Electron or any of its
Subsidiaries.
(c) Authority; Board Approval; Voting Requirements;
No Conflict; Required Filings and Consents.
(i) Authority. Fisher has all requisite
corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Fisher, and the consummation by Fisher of the
transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of
Fisher, and no other corporate proceedings on the part of Fisher
and no stockholder votes are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby,
other than, with respect to approval of this Agreement and the
Merger, the Fisher Stockholder Approval (as defined in
Section 3.1(c)(iii)). This Agreement has been duly
executed and delivered by Fisher. Assuming the due
authorization, execution and delivery of this Agreement by
Thermo Electron and Merger Sub, this Agreement constitutes the
legal, valid and binding obligation of Fisher enforceable
against Fisher in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the rights and remedies of
creditors generally and to general principles of equity
(regardless of whether considered in a proceeding in equity or
at law).
(ii) Board Approval. The Board of Directors
of Fisher has (A) determined that this Agreement and the
Merger are advisable and fair to and in the best interests of
Fisher and its stockholders, (B) duly approved and adopted
this Agreement, the Merger and the other transactions
contemplated hereby, which adoption has not been rescinded or
modified, (C) resolved to recommend this Agreement and the
Merger to its stockholders for approval, and (D) subject to
Section 5.1(b)directed that this Agreement, the
Merger and the transactions contemplated thereby be submitted to
Fishers stockholders for consideration and adoption at a
duly held meeting of such stockholders in accordance with this
Agreement.
(iii) Voting Requirements. The affirmative
vote of holders of a majority of the outstanding shares of
Fisher Common Stock entitled to vote is the only vote of the
holders of any class or series of Fisher capital stock necessary
to approve and adopt this Agreement, approve the Merger and
consummate the Merger and the other transactions contemplated
hereby.
(iv) No Conflict. Except as set forth in
Section 3.1(c)(iv) of the Fisher Disclosure
Schedule, the execution and delivery of this Agreement by Fisher
do not, and the consummation by Fisher of the transactions
contemplated hereby and compliance by Fisher with the provisions
of this Agreement will not, conflict with, result in any
violation or breach of or default (with or without notice or
lapse of time, or both) under, require any consent, waiver or
approval under, give rise to any right of termination or
cancellation or acceleration of any right or obligation or loss
of a benefit under, or result in the creation of any Lien upon
any of the properties or assets of Fisher or any of its
Subsidiaries or any restriction on the conduct of Fishers
business or operations under, (A) the Fisher Organizational
Documents or the Fisher Subsidiary Organizational Documents,
(B) any Contract to which Fisher or any Fisher Subsidiary
is a party or Fisher Permit (as defined in
Section 3.1(g)(i)) or (C) subject to the
governmental filings and other matters referred to in
Section 3.1(c)(v), any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Fisher
or any of its Subsidiaries or their respective properties or
assets, other than, in the case of clauses (B) and
(C), any such conflicts, violations, defaults, rights, losses,
restrictions or Liens, or failure to obtain consents, waivers or
approvals, which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on
Fisher and its Subsidiaries, taken as a whole.
(v) Required Filings or Consents. No consent,
approval, order or authorization or permit of, action by or in
respect of, registration, declaration or filing with, or
notification to, any federal, state, local, foreign or
supranational government, any court, administrative, regulatory
or other governmental agency, commission or authority or any
non-governmental self-regulatory agency, commission or authority
(a Governmental
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Entity) or any other Person is required to be made,
obtained, performed or given to or with respect to Fisher or any
of its Subsidiaries in connection with the execution and
delivery of this Agreement by Fisher or the consummation by
Fisher of the transactions contemplated hereby, except for:
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(A) the filing of a pre-merger notification and report form
by Fisher under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act), all required notifications and
filings under Council Regulation (EC) 139/2004 of the
European Community, as amended (the ECMR) and
any other applicable filings or notifications under the
antitrust, competition or similar laws of any foreign
jurisdiction; |
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(B) the filing with the Securities and Exchange Commission
(the SEC) of: |
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(1) a proxy statement relating to the Fisher
Stockholders Meeting (as defined in
Section 5.1(b)) (such proxy statement, together with
the proxy statement relating to the Thermo Electron
Stockholders Meeting (as defined in
Section 5.1(b), in each case as amended or
supplemented from time to time, the Joint Proxy
Statement); |
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(2) such reports and filings under Section 13(a),
13(d), 14(a), 15(d) or 16(a) of the Securities Exchange Act of
1934, as amended (the Exchange Act) and the
rules and regulations thereunder, as may be required in
connection with this Agreement and the transactions contemplated
hereby; |
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(C) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate
documents with the NYSE and the relevant authorities of other
states in which Fisher is qualified to do business and such
filings as may be necessary in accordance with state securities
or other blue sky laws; |
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(D) the Fisher Stockholder Approval; |
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(E) the consents, approvals, orders or authorizations set
forth in Section 3.1(c)(v)(E) of the Fisher
Disclosure Schedule; and |
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(F) other such consents, approvals, orders or
authorizations, the failure of which to be made or obtained,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Fisher and its
Subsidiaries, taken as a whole. |
(d) SEC Documents; Financial Statements.
(i) Fisher has filed with the SEC all registration
statements, prospectuses, reports, schedules, forms, statements,
certifications and other documents (including exhibits and all
other information incorporated by reference therein) presently
required to be so filed by Fisher since January 1, 2004
(excluding the Joint Proxy Statement, the Fisher SEC
Documents). As of their respective dates, the Fisher
SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the
Securities Act), or the Exchange Act, as the
case may be, to the extent in effect, the Sarbanes-Oxley Act of
2002 (SOX) and the rules and regulations of
the SEC promulgated thereunder applicable to such Fisher SEC
Documents, and none of the Fisher SEC Documents, when filed,
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
to the extent corrected by a subsequently filed Fisher SEC
Document filed with the SEC prior to the date hereof. No
Subsidiary of Fisher is subject to the periodic reporting
requirements of the Exchange Act.
(ii) Each of the principal executive officer of Fisher and
the principal financial officer of Fisher (or each former
principal executive officer of Fisher and each former principal
financial officer of Fisher, as applicable) has made all
certifications required by
Rule 13a-14 or
15d-14 under the
Exchange Act or Sections 302 and 906 of SOX and the rules
and regulations of the SEC promulgated thereunder with respect
to the Fisher SEC Documents. For purposes of the preceding
sentence, principal executive officer and
principal financial officer shall have the meanings
given to such terms in SOX. Neither Fisher nor any of its
Subsidiaries has
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outstanding, or has arranged any outstanding, extensions
of credit to directors or executive officers within the
meaning of Section 402 of SOX.
(iii) The financial statements of Fisher included in the
Fisher SEC Documents, including each Fisher SEC Document filed
after the date hereof until the Effective Time, comply, as of
their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with United States generally
accepted accounting principles (GAAP)
(except, in the case of unaudited statements, as permitted by
Form 10-Q
or 8-K or other
applicable rules of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial
position of Fisher and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments
which are not material). The financial books and records of
Fisher and its Subsidiaries, taken as a whole, are true and
correct in all material respects.
(iv) Except as reflected or reserved against in the balance
sheet of Fisher, dated December 31, 2005, included in the
Form 10-K filed by
Fisher with the SEC on February 21, 2006 (including the
notes thereto, the Fisher Balance Sheet) and
except as set forth in Section 3.1(d)(iv) of the
Fisher Disclosure Schedule, neither Fisher nor any of its
Subsidiaries has any liabilities or obligations of any nature
(whether absolute, accrued, known or unknown, contingent or
otherwise) nor, to the Knowledge (as defined in
Section 8.3(h)) of Fisher, does any basis exist
therefor, other than liabilities or obligations that
(A) were incurred since January 1, 2006 in the
ordinary course of business consistent with past practice and
individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect on
Fisher and its Subsidiaries, taken as a whole,
(B) individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse
Effect on Fisher and its Subsidiaries, taken as a whole or
(C) were incurred pursuant to this Agreement or the
transactions contemplated hereby.
(v) Neither Fisher nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any joint
venture, off-balance sheet partnership or any similar contract
or arrangement (including without limitation any contract or
arrangement relating to any transaction or relationship between
or among Fisher and any of its Subsidiaries, on the one hand,
and any unconsolidated Affiliate (as defined in
Section 8.3(a)), including without limitation any
structured finance, special purpose or limited purpose entity or
Person, on the other hand, or any off-balance sheet
arrangement (as defined in Item 303(a) of
Regulation S-K of
the SEC)), where the result, purpose or intended effect of such
contract or arrangement is to avoid disclosure of any material
transaction involving, or material liabilities of, Fisher or any
of its Subsidiaries in Fishers or such Subsidiarys
published financial statements or other Fisher SEC Documents.
(vi) No material contract (as such term is
defined in Item 601(b)(10) of
Regulation S-K of
the SEC) filed as an exhibit to the Fisher
Form 10-K has been
amended or modified, except for amendments or modifications
which have been filed as an exhibit to a subsequently dated
Fisher SEC Document or are not required to be filed with the SEC.
(e) Information Supplied. None of the
information supplied or to be supplied by or on behalf of Fisher
for inclusion or incorporation by reference in (i) the
registration statement on
Form S-4 to be
filed with the SEC by Thermo Electron in connection with the
issuance of Thermo Electron Common Stock in the Merger
(including any amendments or supplements, the
Form S-4)
will, at the time the
Form S-4 becomes
effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein
not misleading or (ii) the Joint Proxy Statement will, at
the date it is first mailed to Fishers stockholders or at
the time of the Fisher Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Joint Proxy Statement and the
Form S-4 will
comply as to form in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing provisions
of this Section 3.1(e), no
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representation or warranty is made by Fisher with respect to
information or statements made or incorporated by reference in
the Form S-4 or
the Joint Proxy Statement which were not supplied by or on
behalf of Fisher.
(f) Absence of Certain Changes or Events.
(i) Since January 1, 2006 through the date hereof,
except as and to the extent disclosed in the Fisher SEC
Documents filed prior to the date of this Agreement and except
for liabilities incurred pursuant to this Agreement or the
transactions contemplated hereby:
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(A) Fisher and its Subsidiaries have conducted their
business only in the ordinary course consistent with past
practice; |
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(B) there has not been any split, combination or
reclassification of any of Fishers capital stock or any
declaration, setting aside or payment of any dividend on, or
other distribution (whether in cash, stock or property) in
respect of, in lieu of or in substitution for, shares of
Fishers capital stock; |
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(C) except as required by a change in GAAP, there has not
been any change in accounting methods, principles or practices
by Fisher; and |
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(D) there has not been any action taken by Fisher or any of
its Subsidiaries that, if taken during the period from the date
of this Agreement through the Effective Time, would constitute a
breach of Section 4.1(a), other than actions in
connection with entering into this Agreement. |
(ii) Since January 1, 2006 through the date hereof,
there have not been any changes, circumstances or events that,
individually or in the aggregate, have had, or would reasonably
be expected to have, a Material Adverse Effect on Fisher and its
Subsidiaries, taken as a whole.
(g) Compliance with Applicable Laws; Permits;
Litigation.
(i) Fisher, its Subsidiaries and employees hold all
authorizations, permits, licenses, certificates, easements,
concessions, franchises, variances, exemptions, orders,
consents, registrations, approvals and clearances of all
Governmental Entities (including all authorizations under the
Federal Food, Drug and Cosmetic Act of 1938, as amended (the
FDCA), and the regulations of the
U.S. Food and Drug Administration (the
FDA) promulgated thereunder) and third
Persons which are required for Fisher and its Subsidiaries to
own, lease and operate its properties and other assets and to
carry on their respective businesses in the manner described in
the Fisher SEC Documents filed prior to the date hereof and as
they are being conducted as of the date hereof (the
Fisher Permits), and all Fisher Permits are
valid and in full force and effect, except where the failure to
have, or the suspension or cancellation of, or the failure to be
valid or in full force and effect of, any such Fisher Permits,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Fisher and its
Subsidiaries, taken as a whole.
(ii) Fisher and its Subsidiaries are, and have been at all
times since January 1, 2004, in compliance with the terms
of the Fisher Permits and all laws, statutes, orders, rules,
regulations, policies or guidelines promulgated, or judgments,
decisions or orders entered by any Governmental Entity (all such
laws, statutes, orders, rules, regulations, policies,
directives, guidelines, judgments, decisions and orders,
collectively, Applicable Laws) relating to
Fisher and its Subsidiaries or their respective businesses,
assets or properties, except where the failure to be in
compliance with the terms of the Fisher Permits or such
Applicable Laws, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on
Fisher and its Subsidiaries, taken as a whole. Since
January 1, 2004, neither Fisher nor any of its Subsidiaries
has received any written notification from any Governmental
Entity (A) asserting that Fisher or any of its Subsidiaries
is not in compliance with, or at any time since such date has
failed to comply with, Applicable Laws (except for any such lack
of compliance which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on
Fisher and its Subsidiaries, taken as a whole) or
(B) threatening to revoke any Fisher Permit (except for any
such revocation which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on
Fisher and its Subsidiaries, taken as a whole) nor, to the
Knowledge of Fisher, does any basis exist therefor. As of the
date hereof, no investigation or review by any Governmental
Entity is pending or, to the Knowledge of Fisher, has been
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threatened in writing against Fisher or any of its Subsidiaries
which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Fisher and its
Subsidiaries, taken as a whole.
(iii) Fisher is, and has been, in compliance in all
material respects with the provisions of SOX applicable to it.
(iv) Except as and to the extent disclosed in the Fisher
SEC Documents filed prior to the date of this Agreement,
including the notes to the financial statements included
therein, no action, audit, demand, claim, suit, proceeding,
requirement or investigation by any Governmental Entity, and no
suit, action, mediation, arbitration or proceeding by any
Person, against or affecting Fisher or any of its Subsidiaries
or any of their respective properties, including Intellectual
Property (as defined in Section 8.3(g)), is pending
or, to the Knowledge of Fisher, threatened which, individually
or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Fisher and its Subsidiaries, taken as
a whole.
(v) Neither Fisher nor any of its Subsidiaries is, or at
any time since January 1, 2004 has been, subject to any
outstanding order, injunction or decree which, individually or
in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on Fisher and its Subsidiaries,
taken as a whole.
(h) Labor and Other Employment Matters.
(i) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Fisher, its Subsidiaries, taken as a whole (A) no work
stoppage, slowdown, lockout, labor strike, material arbitrations
or other material labor disputes against Fisher or any of its
Subsidiaries are pending or, to the Knowledge of Fisher,
threatened, (B) no unfair labor practice charges,
grievances or complaints are pending or, to the Knowledge of
Fisher, threatened against Fisher or any of its Subsidiaries,
(C) neither Fisher nor any of its Subsidiaries is
delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for
any services performed for it or amounts required to be
reimbursed to such employees, (D) neither Fisher nor any of
its Subsidiaries is liable for any payment to any trust or other
fund or to any Governmental Entity with respect to unemployment
compensation benefits, social security or other benefits or
obligations for employees, (E) no employee of Fisher, at
the officer level or above, has given written notice to Fisher
or any of its Subsidiaries that any such employee intends to
terminate his or her employment with Fisher or any of its
Subsidiaries, (F) to the Knowledge of Fisher, no employee
of Fisher or any of its Subsidiaries is in any respect in
violation of any term of any employment contract, nondisclosure
agreement, common law nondisclosure obligations, non-competition
agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by
Fisher or any of its Subsidiaries because of the nature of the
business conducted or presently proposed to be conducted by
Fisher or any of its Subsidiaries or to the use of trade secrets
or proprietary information of others, (G) neither Fisher
nor any of its Subsidiaries is a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental
Entity relating to employees or employment practices and
(H) Fisher and its Subsidiaries are in compliance with all
Applicable Laws, agreements, contracts, policies, plans and
programs relating to employment, employment practices,
compensation, benefits, hours, terms and conditions of
employment and the termination of employment, including but not
limited to any obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988, as amended (the
WARN Act), or any other comparable Applicable
Law.
(ii) As of the date hereof,
(A) neither Fisher nor any of its Subsidiaries is a party
to, or otherwise bound by, any collective bargaining agreement
or any other agreement, work rules or practices with a labor
union, labor organization or works council, which, in the case
of any
non-U.S. agreement,
work rules or practices with a labor union, labor organization
or works council are material to Fisher and its Subsidiaries,
taken as a whole, nor are any such agreements, work rules or
practices presently being negotiated;
(B) no employee of Fisher or any of its Subsidiaries is
represented by any labor union, labor organization or works
council in his or her capacity as an employee of Fisher or any
of its Subsidiaries;
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(C) no labor union, labor organization or works council or
group of employees of Fisher or any of its Subsidiaries has made
a pending demand for recognition or certification to Fisher or
any of its Subsidiaries, and there are no representation or
certification proceedings or petitions seeking a representation
proceeding presently pending or, to the Knowledge of Fisher,
threatened to be brought or filed with the National Labor
Relations Board (NLRB) or any other
comparable foreign, state or local labor relations tribunal or
authority; and
(D) to the Knowledge of Fisher, no labor union, labor
organization or works council is seeking to organize or
represent any employees of Fisher or any of its Subsidiaries.
(i) Benefit Plans.
(i) Section 3.1(i)(i)(A) of the Fisher
Disclosure Schedule sets forth a true and complete list of each
material bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock
option or other equity compensation, phantom stock,
stock-related or performance award, retirement, vacation,
severance or termination pay, change in control, retention,
disability, death benefit, hospitalization, medical, life
insurance, loan, disability, and other similar material plan,
arrangement, agreement or understanding, including, without
limitation, each employee benefit plan (or similar
plan) within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
(ERISA) or any other comparable Applicable
Law, whether or not subject to ERISA or such comparable
Applicable Law, and any material employment agreement,
consulting agreement, termination or severance agreement (such
plans, agreements, arrangements or understandings, except any
plan which is a Multiemployer Plan (as defined in
Section 8.3(j)), collectively, Benefit
Plans) with or for the benefit of any current or
former employee, officer or director of Fisher or any of its
Subsidiaries or ERISA Affiliates (as defined in
Section 3.1(i)(v)) or with respect to which Fisher
or any of its Subsidiaries or ERISA Affiliates have any material
obligations or liabilities, including each material Benefit Plan
that has been adopted or maintained by Fisher, any of its
Subsidiaries or any Affiliate, whether formally or informally,
or with respect to which Fisher, any of its Subsidiaries or any
Affiliate will or may have any material liability, for the
benefit of employees or consultants of Fisher or any of its
Subsidiaries who perform services outside the United States
(collectively, the Fisher Benefit Plans).
With respect to the Fisher Benefit Plans, no event has occurred,
and there exists no condition or set of circumstances, which
would reasonably be expected to have a Material Adverse Effect
on Fisher and its Subsidiaries, taken as a whole, under ERISA,
the Code or any other Applicable Laws. Neither Fisher, nor any
of its Subsidiaries, nor, to the Knowledge of Fisher, any other
Person, has any express commitment, whether legally enforceable
or not, to modify, change or terminate any Fisher Benefit Plan,
other than with respect to a modification, change or termination
required by ERISA or the Code, or any other Applicable Law or
administrative changes that do not increase the liabilities or
obligations under any such plans. Fisher has delivered or made
available to Thermo Electron true, correct and complete copies
of all Fisher Benefit Plans and, with respect thereto, if
applicable, all amendments, trust agreements, insurance
contracts, other funding vehicles, determination letters issued
by the Internal Revenue Service (the IRS),
the most recent annual reports (Form 5500 series) filed
with the IRS and the most recent actuarial report or other
financial statement relating to such Fisher Benefit Plan.
(ii) Each Fisher Benefit Plan has been, in all material
respects, administered and operated in accordance with its
terms, with the applicable provisions of ERISA, the Code and
other Applicable Laws and with the terms of all applicable
collective bargaining agreements. Each Fisher Benefit Plan,
including any material amendments thereto, that is required to
obtain approval by, or registration or qualification for special
tax status with, the appropriate taxation, social security or
supervisory authorities in the relevant country, state,
territory or the like (each, an Approval) has
received such Approval (or there remains a period of time in
which to obtain such Approval retroactive to the date of any
material amendment that has not previously received such
Approval), and no event has occurred which would reasonably be
expected to result in the revocation of such Approval or the
imposition of material sanctions by such authorities. Without
limiting the generality of the foregoing, each Fisher Benefit
Plan that is intended to be qualified under Section 401(a)
of the Code has obtained a favorable determination letter from
the IRS that the Fisher Benefit Plan is so qualified and all
related trusts are exempt from U.S. federal income taxation
under Section 501(a) of the Code, and, to the
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Knowledge of Fisher, nothing has occurred, whether by action or
by failure to act, which would reasonably be expected to cause
the loss of such qualification or exemption.
(iii) As of the date hereof to the Knowledge of Fisher, no
oral or written representation or commitment with respect to any
material aspect of any Fisher Benefit Plan has been made to an
employee or former employee of Fisher or any of its Subsidiaries
by an authorized Fisher employee that is not materially in
accordance with the written or otherwise pre-existing terms and
provisions of such Fisher Benefit Plans. As of the date hereof,
to the Knowledge of Fisher, neither Fisher nor any of its
Subsidiaries has entered into any agreement, arrangement or
understanding, whether written or oral, with any trade union,
works council or other employee representative body or any
material number or category of its employees which would
prevent, restrict or materially impede the implementation of any
layoff, redundancy, severance or similar program within its or
their respective workforces (or any part of them).
(iv) There are no material unresolved claims or disputes
under the terms of, or in connection with, any Fisher Benefit
Plan (other than routine undisputed claims for benefits), and no
action, legal or otherwise, has been commenced or threatened
with respect to any material claim or otherwise in connection
with a Fisher Benefit Plan.
(v) With respect to each Funded Retirement Plan (as defined
in this Section 3.1(i)(v)) of Fisher or any of its
Subsidiaries, the aggregate fair market value of the assets of
such Funded Retirement Plan was, as of the most recently
computed actuarial valuation of such plan, equal to or greater
than the aggregate value of its liabilities assessed on an
ongoing basis and calculated in accordance with the actuarial
methods and assumptions used in such valuation pursuant to such
Funded Retirement Plan and Applicable Law and GAAP. For purposes
of this Agreement, Funded Retirement Plan
means, with respect to a party, a Benefit Plan that is a
pension plan within the meaning of Section 3(2)
of ERISA that is subject to ERISA and under which the assets to
satisfy the benefit obligations are legally segregated from the
general assets of such party or any of its Subsidiaries and are
not subject to the creditors of such party or any of its
Subsidiaries. None of Fisher or any other Person or entity under
common control within the meaning of Section 414(b), (c),
(m) or (o) of the Code (an ERISA
Affiliate) with Fisher has incurred, or is reasonably
expected to incur, any liability to a Funded Retirement Plan
under Title IV of ERISA (other than for contributions not
yet due) or to the Pension Benefit Guaranty Corporation (other
than for payment of premiums not yet due) that, when aggregated
with other such liabilities, would reasonably be expected to
result in a material liability of Fisher and its Subsidiaries,
taken as a whole, which liability has not been fully paid.
(vi) Section 3.1(i)(vi) of the Fisher
Disclosure Schedule sets forth a true and complete list of each
Multiemployer Plan to which Fisher or any ERISA Affiliate of
Fisher contributes or is required to contribute, or to which, or
with respect to which, Fisher or any ERISA Affiliate of Fisher
has any material liability. If any Fisher Multiemployer Plan is
subject to Title IV of ERISA, then, (A) neither Fisher
nor any ERISA Affiliate of Fisher has made or suffered a
complete withdrawal or a partial
withdrawal, as such terms are respectively defined in
Sections 4203 and 4205 of ERISA (or any liability resulting
therefrom has been satisfied in full), (B) no event has
occurred that presents a material risk of a complete or partial
withdrawal, (C) neither Fisher nor any ERISA Affiliate of
Fisher has any contingent liability under Section 4204 of
ERISA, (D) no circumstances exist that present a material
risk that any such plan will go into reorganization, and
(E) to the best of Fishers Knowledge, the aggregate
withdrawal liability of Fisher and each ERISA Affiliate of
Fisher computed as if a complete withdrawal by Fisher and any
ERISA Affiliate of Fisher had occurred under each such Fisher
Benefit Plan on the date hereof, would not reasonably be
expected to result in a material liability to Fisher. No Fisher
Benefit Plan subject to ERISA is a plan that has two or more
contributing sponsors at least two of whom are not under common
control, within the meaning of Section 4063 of ERISA.
(vii) No Fisher Benefit Plan provides health benefits
(whether or not insured) with respect to employees or former
employees of Fisher or any of its Subsidiaries after retirement
or other termination of service (other than coverage mandated by
Applicable Laws or benefits, the full cost of which is borne by
the employee or former employee).
A-15
(viii) Neither the negotiation and execution of this
Agreement nor the consummation of the transactions contemplated
hereby will (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any
Fisher Benefit Plan (for this purpose, Fisher Benefit Plan
(other than with respect to those Plans that are Fisher Foreign
Plans) shall be determined without regard to whether any plan,
agreement, policy, understanding or arrangement is material
despite the use of such qualifier in
Section 3.1(i)(i) for purposes of the definitions of
Benefit Plan and Fisher Benefit Plan) that will or may result in
any payment (whether of severance pay or otherwise),
acceleration of payment, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund
benefits with respect to any employee or former employee of
Fisher or any of its Subsidiaries or limit the ability to amend,
terminate or receive a reversion of assets from any Fisher
Benefit Plan or related trust. There is no contract, agreement,
plan or arrangement with an employee or former employee of
Fisher to which Fisher or any of its Subsidiaries is a party as
of the date of this Agreement that, individually or collectively
and as a result of the transaction contemplated hereby (whether
alone or upon the occurrence of any additional or subsequent
events) would reasonably be expected to give rise to the payment
of any amount that would not be deductible pursuant to
Sections 280G or 162(m) of the Code.
(ix) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Fisher and its Subsidiaries, taken as a whole, with respect to
each Fisher Benefit Plan established or maintained outside of
the United States for the benefit of employees of Fisher or any
Subsidiary of Fisher residing outside the United States (each, a
Fisher Foreign Plan): (i) each Fisher
Foreign Plan is in compliance with the applicable provisions of
the laws and regulations regarding employee benefits, mandatory
contributions and retirement plans of each jurisdiction
applicable to such Fisher Foreign Plan; (ii) each Fisher
Foreign Plan required to be registered has been registered and
has been maintained in good standing with applicable regulatory
authorities and (iii) the fair market value of the assets
of each funded Fisher Foreign Plan, the liability of each
insurer for any Fisher Foreign Plan funded through insurance or
the book reserve established for any Fisher Foreign Plan,
together with any accrued contributions, is sufficient to
procure or provide for the accrued benefit obligations, as of
the Closing Date, with respect to all current and former
participants in such plan according to the actuarial assumptions
and valuations most recently used to determine employer
contributions to such Fisher Foreign Plan and no transaction
contemplated by this Agreement shall cause such assets or
insurance obligations to be