A Medical Device Daily
RecoverCare (Radnor, Pennsylvania) and MedaSTAT (Louisville, Kentucky) both privately held companies, reported the signing of definitive agreements under which the two companies will combine in a merger-of-equals transaction led by private equity firm Aurora Capital Group (Los Angeles) in partnership with Mark Bidner, Chairman of Hollywood Capital, and Moelis Capital Partners (New York). The terms of the transaction were not disclosed.
The combined company will be known as RecoverCare, and led by Mark Bidner as CEO. The senior management teams of each company will remain with the combined company and will retain significant equity. Joining Bidner are Tom Smith as president and Kevin McKim CEO. The transaction is expected to close by July 31. MedaSTAT and RecoverCare will continue to operate separately until the completion of the transaction.
In other dealmaking activity, Zila (Scottsdale, Arizona) reported that its board has carefully reviewed a non-binding contingent proposal submitted by Intelident Solutions (Tampa, Florida) to Zila on July 7 to acquire all of Zila's common stock for 42 cents per share. The board concluded that the Intelident proposal is not superior to Zila's existing agreement to be acquired by Tolmar (Fort Collins, Colorado) (Medical Device Daily, June 29, 2009).
As previously reported, Zila entered into a definitive merger agreement with Tolmar. Under terms of the agreement, Tolmar agreed to acquire all of the outstanding shares of common stock of Zila for a cash purchase price of 38 cents per share, representing an approximate premium of 18% over the closing price of Zila's shares on June 24, 2009. Total consideration paid by Tolmar includes the purchase of Zila's existing $12 million senior secured convertible debt from the note holders for $5 million pursuant to a note purchase agreement entered into by Tolmar and the note holders. Zila is not a party to the note purchase agreement. The note holders have been free to sell or assign their notes since they were issued in 2006.
Intelident proposed offering price was 10.5% higher than the 38 cents a share offered by Tolmar. Intelident also said it would pay 48 cents a share for Zila's preferred stock, compared to the 44 cents a share offered by Tolmar.
The Zila board said it considered the possibility that Intelident is trying to prevent the Tolmar transaction from being consummated in order for it to be able to acquire Zila's assets out of bankruptcy in a so-called Section 363 transaction as Intelident proposed to Zila as late as June 25. In such a transaction, the board said "Zila's shareholders would likely receive no consideration for their shares."
"It is disconcerting that Intelident sought to make investors believe that it made a no-strings-attached offer to purchase Zila for 42 cents per share when in fact their offer was subject to conditions that cannot be satisfied by Zila and that Intelident appears, at least at this point, unable or not prepared to satisfy," said Dave Bethune, CEO and chairman of Zila. "Our note holders have always had the ability to sell or assign their Zila notes without our knowledge or permission. The board continues to be prepared to review and act upon superior offers for the benefit of its shareholders in accordance with the exercise of its fiduciary duties."