-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JkCsHsWDt0B+R0xl+CNpNlKvmFbWqDfNQVF435dp/ZusP9Tn/LuZf79gcleALNT/ Eg5BBc+W2pnyHb906OcUcg== 0000912057-96-019503.txt : 19960906 0000912057-96-019503.hdr.sgml : 19960906 ACCESSION NUMBER: 0000912057-96-019503 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960904 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CIRCON CORP CENTRAL INDEX KEY: 0000719727 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 953079904 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-36096 FILM NUMBER: 96625563 BUSINESS ADDRESS: STREET 1: 6500 HOLLISTER AVE CITY: SANTA BARBARA STATE: CA ZIP: 93111 BUSINESS PHONE: 8059670404 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CIRCON CORP CENTRAL INDEX KEY: 0000719727 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 953079904 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 6500 HOLLISTER AVE CITY: SANTA BARBARA STATE: CA ZIP: 93111 BUSINESS PHONE: 8059670404 SC 14D9/A 1 FORM 14D-9/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14D-9/A (Amendment No. 5) Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 CIRCON CORPORATION (Name of Subject Company) CIRCON CORPORATION (Name of Person(s) Filing Statement) Common Stock, $.01 par value (Title of Class of Securities) 172736 10 0 (CUSIP Number of Class of Securities) RICHARD A. AUHLL President and Chief Executive Officer Circon Corporation 6500 Hollister Avenue Santa Barbara, California 93117 (805) 685-5100 (Name, address and telephone number of person authorized to receive notice and communications on behalf of person(s) filing statement) Copy to: LARRY W. SONSINI, ESQ. Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304-1050 (415) 493-9300 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Amendment No. 5 supplements the Schedule 14D-9 of Circon Corporation, a Delaware corporation (the "Company"), filed with the Securities and Exchange Commission ("SEC") on August 15, 1996, and as subsequently amended, relating to a Tender Offer Statement on Schedule 14D-1, dated August 2, 1996 (the "Schedule 14D-1"), filed with the SEC by USS Acquisition Corp. (the "Purchaser"), a Delaware corporation and wholly-owned subsidiary of United States Surgical Corporation, a Delaware corporation ("USS"), relating to an offer the ("Offer") by Purchaser to purchase all outstanding Shares at a price of $18.00 per Share, net to the seller in cash, without interest thereon. ITEM 4. THE SOLICITATION OR RECOMMENDATION (a) On August 1, 1996, Leon C. Hirsch, President and Chief Executive Officer of USS, advised Richard A. Auhll, President and Chief Executive Officer of the Company, that USS was commencing the Offer the next day. Neither Mr. Auhll, nor any other member of the Company's senior management or Board of Directors had any other prior notice of the Offer, nor were they aware of USS's intention to make the Offer. On August 5, 1996, the Company's Board of Directors (the "Board") convened a meeting, where the Board, with the assistance of senior management and Wilson Sonsini Goodrich & Rosati ("WSGR"), reviewed the Company's financial performance and the Offer, including its terms and conditions. The Board also discussed potential defensive measures in response to the Offer, including the implementation of a Stockholders Rights Plan. In addition, the Board decided to retain Bear, Stearns & Co. Inc. ("Bear Stearns") to serve as financial advisors to the Company and assist the Board in considering and analyzing the Offer. On August 8, 1996, the Board convened an additional meeting, where the Board continued its analysis of the Offer and the implementation of a Stockholders Rights Plan. The Board also reviewed the Company's financial performance, business strategy and strategic plan. The Board instructed management and the Company's financial advisors to continue examining the Company's strategic plan and to provide the Board with further analyses at the next Board meeting. On August 13, 1996, the Board held an additional meeting to finalize its review of the Offer and to make a recommendation in response to the Offer. In addition, the Board determined that the implementation of a Stockholders Rights Plan would be in the best interests of the Company and its stockholders. The Board unanimously approved the Stockholders Rights Plan previously furnished to the Board and instructed management to implement the Plan. At the August 13, 1996 meeting, the Board determined that the best means for providing value to its stockholders is for the Company to continue to pursue its strategic plan and not to be put up for sale at this time. The Board unanimously concluded that the Offer is inadequate and not in the best interests of the Company and its stockholders. In particular, the Board determined that the Company's strategic plan offers the potential for greater long-term benefits for the Company's stockholders than the Offer based on, among other things, greater opportunities for business expansion, revenue and earnings growth, as well as benefits following the full integration of the business of Cabot Medical Corporation ("Cabot") into the Company. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS REJECT THE OFFER AND NOT TENDER THEIR SHARES PURSUANT TO THE OFFER. A copy of a letter to stockholders communicating the Board's recommendation and a form of press release announcing such recommendation are filed as Exhibits 5 and 6 hereto, respectively, and are incorporated herein by reference. (b) In reaching the conclusions referred to in Item 4(a), the Board of Directors took into account numerous factors, including but not limited to the following: (i) The Board's familiarity with the business, financial condition, prospects and current business strategy of the Company, the nature of the business in which the Company operates and the Board's belief that the Offer does not reflect the long-term values inherent in the Company. In this regard, the Board particularly considered the following: ITEM 4. THE SOLICITATION OR RECOMMENDATION (CONTINUED) - The Company's reputation as a provider of quality products and services and its position in its industry as a technological leader and innovator. - The market share of the Company in the urology and gynecology markets and new products planned for introduction in the future. - The expected growth rates of the markets for urological and gynecological products and the product position of the Company in such markets. - The Company's long-term sales plan, including the effects of products under development and enhancements to current products. - The cost savings and growth impact of the Cabot acquisition which the Company expects to realize, including cost savings from programs already in process and those that are currently planned. - The historical trading price of the Company's Common Stock, including the Board's belief, based in part on the factors referred to above, that the trading price for the Company's Common Stock immediately prior to commencement of the Offer did not reflect the long-term value inherent in the Company. In this regard, the Board noted that the Offer represented a 23% discount from the highest closing price of the Common Stock during the 12-month period preceding the Offer. - The risks inherent in achieving the Company's business plan. (ii) The Company's prospects for future growth and profitability, based on the Company's strategic plan, the various strategic initiatives which have been implemented and investments that have been made over the past several years, including the acquisition of Cabot, and other opportunities that will be available in the future, the availability in the future of certain new products and enhancements to current products in various stages of development, and current conditions in the businesses in which the Company operates. (iii) The opinion of Bear Stearns to the effect that the consideration offered pursuant to the Offer is inadequate from a financial point of view to the stockholders of the Company (excluding USS and its affiliates). A copy of the written opinion of Bear Stearns which sets forth the assumptions made, matters considered and basis for their review is filed as Exhibit 7 hereto and incorporated herein by reference. (iv) The Board's commitment to protecting the best interests of the Company's stockholders. (v) The disruptive effect of the Offer on the Company's employees, suppliers and customers. (vi) The numerous conditions to which the Offer is subject. The Offer is conditioned upon, among other things, the acquisition of Shares pursuant to the Offer and the proposed merger following the Offer having been approved pursuant to Section 203 of the Delaware General Corporation Law ("Section 203") or the Purchaser being satisfied in its sole discretion that Section 203 is otherwise inapplicable to the acquisition of Shares pursuant to the Offer and the proposed merger. In light of the Board's decision discussed above, the Board has determined to take no action which would render Section 203 so inapplicable. In view of the wide variety of factors considered in connection with its evaluation of the Offer, the Board did not find it practicable to, and did not, quantify or otherwise attempt to assign relative weights to the specific factors considered in reaching its respective determinations. On August 30, 1996, USS announced that the expiration of the Offer had been extended to September 30, 1996. That day, the Company issued a press release relating to USS's announcement. A 2 ITEM 4. THE SOLICITATION OR RECOMMENDATION (CONTINUED) copy of this press release is filed as Exhibit 20 to this statement. Also on that day, the Company circulated a letter to its employees regarding the Offer, a copy of which is filed as Exhibit 21 to this statement. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1(F) The "Board Compensation," "Remuneration of Officers," "Report of the Compensation Committee" and "Compensation Committee Interlocks and Insider Participation" sections of the Proxy Exhibit 2(F) Article Ninth of Certificate of Incorporation, as amended Exhibit 3(F) Article V of the Bylaws Exhibit 4(F) Form of Indemnification Agreement Exhibit 5*(F) Letter to Stockholders regarding Board's Recommendation Exhibit 6(F) Press Release Announcing Board's Recommendation Exhibit 7(F) Opinion of Bear, Stearns & Co. Inc. Exhibit 8*(F) Summary of Stockholders Rights Plan Exhibit 9(F) Press Release of the Company dated August 5, 1996 Exhibit 10(F) Letter to Employees Regarding the Offer Exhibit 11(F) Complaint of William Steiner against the Company, its Directors and certain of its officers, filed on or about August 15, 1996 Exhibit 12(F) Complaint of Charles Miller against the Company, its Directors and certain of its officers, filed on or about August 15, 1996 Exhibit 13(F) Complaint of F. Richard Manson against the Company, its Directors and certain of its officers, filed on or about August 15, 1996 Exhibit 14(F) Press Release of the Company dated August 19, 1996 Exhibit 15(F) Management Retention Plan Exhibit 16(F) Sales Force Retention Plan Exhibit 17(F) Managers, Professionals and Key Contributors Retention Plan Exhibit 18(F) Press Release of the Company dated August 27, 1996 Exhibit 19(F) Letter to Employees Regarding the Retention Plans Exhibit 20(F) Press Release of the Company dated August 30, 1996 Exhibit 21 Letter to Employees Regarding the Offer
- ------------------------ * Included in copy mailed to stockholders (F) Previously filed 3 SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: September 2, 1996 CIRCON CORPORATION By: /s/ Richard A. Auhll Richard A. Auhll PRESIDENT AND CHIEF EXECUTIVE OFFICER
4 EX-21 2 EXHIBIT 21 Exhibit 21 [Letterhead] Dear Fellow Employees: I am writing to give you an update on the U.S. Surgical Corporation (USSC) hostile tender offer, and to clear up some misconceptions you may have encountered. 1. CURRENT SITUATION We are not surprised that today USSC was forced to "extend" and not consummate its August 2 hostile takeover offer because several of the conditions of its offer could not be met. Without the approval of our Board of Directors, this hostile offer has very little chance of success due to our defensive positions. Our Board has already rejected it. Current circumstances have encouraged short term speculation in our stock. We believe in time we will attract more shareholders interested in the strategic value of this Company. As a practical matter, the extension of the offer extends this period of distraction for all of us at Circon. Let me reiterate what I said to you earlier this week: WE NEED YOU TO REMAIN FOCUSED. The best thing we can do for ourselves and our Company is to continue to work hard to serve our customers. We have a strategic plan in place which will reward stockholders with greater value than they can obtain through tendering their shares in this offer. Now, I would like to give you important background information and clear up any misconceptions or misinformation you may have encountered. TENDERED vs OWNED SHARES USSC still owns only 1.0 million shares of Circon stock. By comparison, I own nearly 1.6 million shares. A "tendered share" is an offer to sell a share to USSC. However, USSC has several means of not actually buying a tendered share. One way is to unilaterally "extend" the time when they would actually buy the tendered stock. They can also unilaterally withdraw the offer to buy any stock at any time. Thus, there is a big difference between a share owned by USSC and a share tendered to USSC. NUMBER OF SHARES TENDERED We were not surprised, for several reasons, that 63% of the outstanding shares were tendered to USSC. First of all, the selling stockholders also have the right to cancel their tender at any time, so they had nothing to lose by mailing theirs to USSC. Also, the activity in Circon has attracted a number of short term speculators. Moreover, in these situations it is not unusual to have a high percentage tendered. For instance, when Moore made a hostile offer for Wallace Computer, it obtained tenders for 73.5% of all stock just before it FAILED in its attempt. TIMING The U.S. Surgical offer now expires on September 30th. But it is very common for these offers to be extended once, twice, even half a dozen times. That often happens when the company making the offer does not get enough shares tendered and does not obtain the desired conditions. PAGE 2 AUGUST 30, 1996 - -------------------------------------------------------------------------------- An extension could also happen because, in the end, it will be very difficult for U.S. Surgical to succeed without gaining the approval of the Board. So they could keep extending their offer to try to increase the pressure on us. The process could go on for quite a long time. Moore Corporation recently dropped its effort to take over Wallace Computer Services after a year of trying. Earlier this year, Hasbro turned back a hostile bid form Mattel, and Alumax turned back one from Kaiser Aluminum. 2. BACKGROUND INFORMATION CIRCON STOCKHOLDERS RIGHTS PLAN On August 15, Circon announced a Stockholders Rights Plan to protect all of its stockholders against coercive and abusive offers. These plans are becoming increasingly common these days and are already in place in many of the Fortune 500 companies. What our plan means is this: if USSC or any other stockholder, acquires more than 15 percent of all our shares without Board approval, then every other stockholder, except USSC, essentially has the right to purchase additional Circon shares at half the market price. Also, under certain conditions, Circon shareholders could also buy USSC stock at half the market price. The importance of this stockholders rights plan is that it makes it very expensive -- prohibitively expensive -- for someone to take over Circon without the approval of the Board of Directors. EMPLOYEE RETENTION PLAN On August 27, Circon announced an Employee Retention Plan to retain certain key Circon employees by providing them with retention benefits payable upon their remaining with the Company for a specified period, and certain severance benefits payable upon an involuntary termination of employment, following a change in control of the Company. We were limited as to how many employees could be put onto the Plan, but all employees benefit through our existing severance policy. The key to our business is attracting and retaining a highly skilled workforce. The Board determined that it is in the best interest of Circon and its stockholders to assure that the Company will have the continued dedication of our employees with the possibility, threat, or occurrence of a change in control of the Company. This Plan is designed to help Circon retain its employees, thereby enabling successful pursuit of its strategic plan. LAWSUITS It is very common these days for hostile bidders and others to file lawsuits to try and pressure the Board. Just look at recent offers. The Wallace and Hasbro Boards were sued within days after their rejection of bids. Lawsuits are an every day part of business. I would not be surprised that if the Board had accepted the USSC offer, it would have been sued by many shareholders as well. PAGE 3 AUGUST 30,1996 - -------------------------------------------------------------------------------- 3. CONCLUSION This was an unsolicited offer. We have never said Circon was for sale. We are not trying to sell the Company. We did not even know the offer was coming. I was informed of the offer for the first time the night before it was made. There are a number of other things that could happen going forward. I am not going to try to list them all here. We have retained expert financial and legal advisors to help us prevail, no matter what USSC does. The important point is that the Board's position is this: we have a great future ahead of us. That future is going to create a lot of value for our stockholders. We do not need to sell the Company to create this value for our stockholders. Lastly, in a situation like this, success is often the best defense. The better we perform, the more investors will believe in our strategic plan, and in our ability to make it happen. As you know, we have had a bumpy ride in the last few months - for a lot of reasons I do not need to rehash here. That is why our stock price has dropped to a point where USSC can make a low-ball offer look like a big premium. I hope you also know, we are making good progress and feel very good about our chances of getting back on our growth track in the near future. I suspect that is one reason why USSC is so interested in Circon. The fact that we are getting back on track is due to a lot of hard work from all of our team. I and all members of the Board, are deeply appreciative of the effort and ingenuity you have put into Circon. But this is not the time to let up. Now, more than ever, our performance really matters. Sincerely, CIRCON CORPORATION /s/ Richard A. Auhll RICHARD A. AUHLL President Chairman of the Board -----END PRIVACY-ENHANCED MESSAGE-----