Merge defends its commitment to purchase Amicasnails down funding
Merge said its proposal represents a 13 percent premium to the previously-announced offer from a newly-formed affiliate of Thoma Bravo for $5.35 cash per share.
In press statements issued Feb. 22 and a supplement to its earlier definitive proxy materials related to the Thoma Bravo merger filed by Amicas with the Securities and Exchange Commission, Amicas expressed its doubt about Merge’s commitment and ability to close its proposed acquisition. Merge, in response, said it is “fully committed and is prepared to complete the Amicas transaction.”
The Milwaukee-based Merge reported that it has not requested a financing “out” in its proposed merger agreement, and under those terms, Merge would be “liable to Amicas for almost $18.6 million in cash—not merely $10 million as suggested by the Amicas announcements—if it breached its obligations due to its inability to fund the transaction.”
In addition to the proceeds of the Morgan Stanley financing commitment and cash already available at the two companies, Merge also has established an account with $40 million of pre-funded proceeds from its mezzanine investors. A portion of such pre-funded proceeds will be placed in escrow pursuant to the proposed merger agreement with Amicas, according to Merge.
Today, Merge paid a non-refundable commitment fee to Morgan Stanley for its financing commitment. Merge has incurred several million dollars of non-refundable fees and expenses related to its proposed acquisition of Amicas. Merge said its board of directors believes that these expenditures and the cash breakup fee, which would become payable if Merge were to breach its obligations under the merger agreement, demonstrate its commitment to the consumation of its proposed Amicas acquisition.
According to the company, there has also been “some confusion” about when the company entered the proposal process. “Although characterized by Amicas as an ‘eleventh hour attempt,’ as noted in AMICAS’ proxy statement supplement, Merge approached Amicas almost 18 months ago to strike such a deal and has continued that effort ever since. Merge remains ready to finalize a definitive merger agreement with Amicas that would provide for the commencement of a negotiated tender offer promptly after Thoma Bravo has waived its match rights and various other conditions are met,” Merge said.
The company also noted the importance of clarifying the status of Amicas’ stockholder litigation. On Feb. 17, the Massachusetts Superior Court enjoined Amicas “from holding a shareholder meeting on February 19 that would require Amicas shareholders to vote on whether to approve the [Thoma Bravo transaction].” The order also addressed several other points relevant to the Merge proposal, including:
- The Amicas stockholder meeting has been ordered “adjourned pending further order of the Court;”
- The Court found evidence that Amicas’ initial proxy statement filed on Jan. 19 “contains materially deficient disclosures concerning the merger;" and
- Plaintiffs had “demonstrated a substantial likelihood of succeeding on the merits of their claims for breach of fiduciary duty” against Amicas and its directors.
Despite the complications, Merge said it is in “the best interest of each company’s stockholders, customers and employees to bring Merge and Amicas together.”