BOSTON, Feb 19, 2009 (BUSINESS WIRE) -- Orthofix International N.V. (NASDAQ: OFIX) (the Company) announced today
the receipt of a letter, included below, from one of its largest
shareholders, who opposes a proposal by Ramius LLC to make changes to
the Company's Board of Directors, and disagrees with Ramius's desire to
have the Company sell its Blackstone Medical business.
[On Venner Capital SA letterhead]
18 February 2009
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Jeffrey Smith
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Ramius Capital
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599 Lexington Ave.
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New York
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NY 10022
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Dear Mr. Smith:
As you know, I am a major Orthofix shareholder and have been involved
with the Company since 1987, including serving as Chairman of the Board
from 1987 until my retirement from that office in 2006. I am writing in
response to the November 12, 2008 letter that Peter Feld of Ramius LLC
sent to me, which expressed "serious concerns" that Ramius LLC has
regarding Orthofix's acquisition and continued ownership of Blackstone
Medical.
In my two decades as Chairman of the Board, Orthofix expanded to become
one of the leading orthopedic device manufacturers in the world - an
enterprise that will surpass $500 million in gross annual revenue this
year. In addition to owning approximately 905,000 shares in Orthofix, I
also possess a deep understanding of the medical device market. For more
than 30 years, I have specialized in the direct development and
production of plastics and medical components, and have used my
technical expertise to make many successful investments in medical
device companies. Therefore, as both a financier and a medical device
expert, I must strongly disagree with Ramius's assertions about the
Blackstone Medical business.
The acquisition of Blackstone in 2006 occurred near the end of my tenure
on the Orthofix Board. I believed then, as I believe today, that a spine
strategy was critical to Orthofix's future success, and I saw great
promise in the Blackstone Medical portfolio. The Blackstone acquisition
was not without challenges, of course, but the Company has taken
decisive remedial actions and bold steps forward and Blackstone is now,
I believe, poised for a solid 2009 and beyond. Indeed, as the Company
has publicly announced, the Board engaged Morgan Stanley as a strategic
partner months ago to assess the Blackstone business in great detail,
and following that review, unanimously affirmed its commitment to a
strategic plan for Orthofix in which a spine strategy, including
Blackstone, plays a central role.
I had the pleasure of serving on the Orthofix Board with current
Chairman James Gero for a number of years prior to my retirement and I
have great confidence in his stewardship of Orthofix. Mr. Gero has
served on the Board since 1998 after previously serving on the Board of
American Medical Equipment, which was later acquired by Orthofix. He has
an unparalleled knowledge of the Company and the complex industry in
which it operates. He also maintains a large investment in Orthofix
stock - evidencing a personal commitment to and belief in the Company's
success that I, as a shareholder, find compelling. Since succeeding me
as Chairman of the Board, Mr. Gero has overseen the expansion of the
Orthofix Board to encompass leading financial and industry experts,
along with the adoption of best-in-class corporate governance practices
for the Company.
I believe the Board and the management team is already showing exciting
progress in executing on the strategic plan they have put in place. On
February 12, the Company released its Full Year 2008 Results and 2009
Guidance, showing substantial improvement in the operating performance
of the spinal implant and biologic business, along with increased
revenue, a higher gross profit margin and lower adjusted operating
expenses. These encouraging results followed a number of other recent
positive developments, including the February 11 announcement that
Orthofix had accelerated the launch date of Trinity(R)
Evolution(TM), the next generation adult stem cell-based
allograft developed in collaboration with the Musculoskeletal Transplant
Foundation (MTF), which now will launch two months ahead of schedule on
May 1, 2009. Orthofix initiated the limited market release of two new
products, the Firebird(TM) pedicle screw system and the PILLAR(TM)
SA interbody device, both of which are expected to be fully launched in
the first quarter of 2009. Orthofix has also made substantial progress
on its debt obligations, announcing a $10 million partial debt
prepayment on December 17, 2008, and a $7 million prepayment along with
an office consolidation plan on February 10, 2009. These actions will
increase the Company's flexibility in executing its operating plan. I am
confident that more positive developments will occur in the near future.
In summary, I wholeheartedly supported the Blackstone acquisition at its
inception, and I believe the current Board and management team are
implementing a wise strategic plan. I remain convinced that a spine
strategy in which Blackstone plays a central role will be a crucial
driver of success for Orthofix. This letter will, therefore, serve as
notice that you do not have my support.
Yours sincerely,
/s/ Robert Gaines-Cooper
Group Chairman
Venner Capital SA
Cc: Orthofix International N.V. Board of Directors
About Orthofix
Orthofix International, N.V., a global medical device company, offers a
broad line of minimally invasive surgical, and non-surgical, products
for the spine, orthopedic, and sports medicine market sectors that
address the lifelong bone-and-joint health needs of patients of all
ages-helping them achieve a more active and mobile lifestyle. Orthofix's
products are widely distributed around the world to orthopedic surgeons
and patients via Orthofix's sales representatives and its subsidiaries,
including BREG, Inc. and Blackstone Medical, Inc., and via partnerships
with other leading orthopedic product companies. In addition, Orthofix
is collaborating in R&D partnerships with leading medical institutions
such as the Orthopedic Research and Education Foundation, Rutgers
University, the Cleveland Clinic Foundation, Texas Scottish Rite
Hospital for Children and National Osteoporosis Institute. For more
information about Orthofix, please visit www.orthofix.com.
Forward-Looking Statements
This communication contains certain forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements, which may include, but are not limited to, statements
concerning the projections, financial condition, results of operations
and businesses of Orthofix and its subsidiaries and are based on
management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ
materially from those contemplated by the forward-looking statements.
Factors that could cause or contribute to such differences may include,
but are not limited to, risks relating to the expected sales of its
products, including recently launched products, unanticipated
expenditures, changing relationships with customers, suppliers and
strategic partners, risks relating to the protection of intellectual
property, changes to the reimbursement policies of third parties,
changes to and interpretation of governmental regulation of medical
devices, the impact of competitive products, changes to the competitive
environment, the acceptance of new products in the market, conditions of
the orthopedic industry and the economy, corporate development and
market development activities, including acquisitions or divestitures,
unexpected costs or operating unit performance related to recent
acquisitions and other factors described in our annual report on Form
10-K and other periodic reports filed by the Company with the Securities
and Exchange Commission.
Important Additional Information
Ramius Capital and certain of its affiliates have filed a preliminary
proxy statement with the SEC in connection with a special general
meeting of shareholders at which Ramius proposes to make changes to the
composition of Orthofix's board of directors. Orthofix intends to file
with the SEC a proxy statement in opposition to Ramius' proposals.
SHAREHOLDERS ARE URGED TO READ ORTHOFIX'S DEFINITIVE PROXY MATERIALS AND
ANY OTHER RELEVANT SOLICITATION MATERIALS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and shareholders may obtain (when they are available) a free
copy of proxy statements filed with the SEC by Orthofix at the SEC's
website at www.sec.gov
or by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY
10038 or by calling (212) 440-9800 (bankers and brokers) or toll-free
(800) 323-4133 (all others).
Orthofix International N.V. and its directors and certain executive
officers are participants in the solicitation of proxies in connection
with the special general meeting of shareholders. The names of such
persons are: James F. Gero, Peter J. Hewett, Jerry C. Benjamin, Charles
W. Federico, Dr. Guy J. Jordan, Ph.D., Thomas J. Kester, CPA, Alan W.
Milinazzo, Maria Sainz, Dr. Walter P. von Wartburg, Kenneth R.
Weisshaar, Robert S. Vaters, Michael Simpson, Bradley R. Mason, Raymond
C. Kolls, J.D., and Michael M. Finegan. Information regarding such
participants, as well as each such person's respective interests in
Orthofix by security holdings or otherwise, is set forth in Orthofix's
Revocation Solicitation Statement dated January 12, 2009, which may be
obtained free of charge at the SEC's website at www.sec.gov
and Orthofix's website at www.orthofix.com.
More current information regarding such persons, as well as each such
person's respective interests in Orthofix by security holdings or
otherwise, will be set forth in the definitive proxy statement materials
to be filed with the SEC and distributed to shareholders by Orthofix as
described above.
SOURCE: Orthofix International N.V.
Orthofix International N.V.
Dan Yarbrough, 617-912-2903
Vice President of Investor Relations
danyarbrough@orthofix.com
Copyright Business Wire 2009