BOSTON, Mar 17, 2009 (BUSINESS WIRE) -- Orthofix International N.V. (NASDAQ: OFIX) (the Company) announced today
it sent a letter to its shareholders, which is included below,
expressing concerns about Ramius, an activist hedge fund seeking to
remove four current members of Orthofix's Board of Directors and replace
them with four of their own hand-picked nominees at a Special Meeting of
Shareholders scheduled for April 2, 2009.
Dear fellow Orthofix shareholder:
In advance of the scheduled April 2, 2009 Special Meeting of
Shareholders of Orthofix, the Board of Directors urges shareholders to
consider carefully the proposals being advanced by Ramius, an activist
hedge fund that has recently shuttered four of its funds. We have
previously communicated our belief that Ramius has exhibited poor
judgment in the nomination of unqualified and problematic individuals to
the Orthofix Board, namely Peter Feld and Steven Lee. Additionally,
Ramius' approach to Orthofix has reflected an inconsistent
decision-making process and we question whether they have any actual
plans to improve value for shareholders. Ramius has offered a weak
response to concerns about its financial integrity, insisting that the
firm has a "long and successful track record" and further, that "this
contest is not about Ramius." The fact is that Ramius is seeking to
control 4 out of 10 Orthofix Board seats, including installing one of
its own employees. Therefore, credible reports by independent sources
and financial writers at institutions such as the Wall Street
Journal, CNBC, and the New York Post noting troubles in
Ramius' operations, are highly relevant to Orthofix shareholders'
decision-making process in this proxy contest. In a challenging business
environment, Orthofix shareholders need sound, steady judgment, not
inconsistent, ill-informed opportunism.
What Ramius Does Not Want You to Know About Their Company's Dismal
Performance, Lack of Plan for Orthofix, and Inconsistent Decision-Making
Process
Ramius' statements to shareholders and their conduct throughout this
proxy contest exhibit a flip-flopping of position on major matters, such
as whether Blackstone should be sold or not. Orthofix shareholders
should question whether Ramius has a plan at all for Orthofix, or
whether they are simply looking to pick a fight in order to maximize
their own short-term gains. Ramius owns only about 5% of Orthofix's
stock, and has been a shareholder for
less than six months, yet it seeks 4 out of 10 Board seats in
this proxy contest. Their statements indicate an uncertainty about their
plans, which the Board of Orthofix finds troubling.
December 2008
When Ramius announced its plans to call a special meeting of
shareholders, forcing a sale of Blackstone was a core part of their
reasoning:
In their December 3, 2008 letter to Orthofix shareholders, Ramius
stated: "we urge the Board to immediately engage a strategic advisor
to explore and execute a sale of Blackstone at the highest possible
price."
Additionally, when Orthofix CEO Alan Milinazzo and CFO Robert Vaters met
with Ramius representatives on December 19, 2008, Ramius stated
unequivocally that the sale of Blackstone was non-negotiable in
their view - a key element of their proposal.
January 2009
By late January, however, Ramius appeared to be already reconsidering
its approach, filing a preliminary proxy statement on January 30, 2009
that said:
"the Ramius Nominees, if elected, will work with the remaining
members of the current Board to evaluate all available options for
Blackstone with a goal of preserving value and stemming further
operating losses." The statement continued, "the Ramius Nominees
will approach the situation, if elected, with an open mind and will
consider all options available to the Company with a common goal of
maximizing shareholder value."
February 2009
Most recently, on February 23, 2009, Ramius filed its definitive proxy
statement and signaled a major departure from their original position on
Blackstone, stating:
"the Ramius Nominees have no present plans to pursue specific
strategies at this time..."
IF RAMIUS HAS NO SPECIFIC PLANS, SHOULD ORTHOFIX SHAREHOLDERS SIMPLY
TRUST THAT THEY WILL FIGURE IT OUT?
Ramius Has Pursued This Proxy Contest in an Erratic and Ill-Informed
Manner and Shareholders Should Question Their Business Judgment
Ramius originally intended to replace CEO Alan Milinazzo on the Board,
then later simply changed their minds. For a firm that cites a
need for good governance practices, their approach to the composition of
the Orthofix Board is erratic. Additionally, on January 20, 2009, Ramius
issued a press release incorrectly suggesting that proxy advisor Risk
Metrics Group (RMG) supported its proposal to replace four members of
the Orthofix Board.
Matters such as board composition and whether the CEO should be retained
are of critical importance to public company governance. Orthofix
shareholders should question what value Ramius will bring in this
challenging business environment when their positions on such matters
shift so dramatically in such a short span of time. Given the financial
difficulties that Ramius has had with its own operations, including
shuttering four funds last year, we question whether they possess the
judgment and skill necessary to bring value to Orthofix shareholders.
Shareholders should note that it was the Wall Street Journal, not
Orthofix, which reported Ramius' internal troubles:
"Ramius manages $10 billion in assets, but like many hedge-fund firms
it's getting smaller. Ramius in recent weeks cut its Hong Kong investing
staff, put a portion of its newly renovated high-rise office space on
Lexington Avenue in New York City on the rental market, and offered its
main hedge-fund investors lower fees and other enticements to keep money
with the firm." Wall Street Journal, "Hedge Fund Ramius Is
Retooling," December 2, 2008.
"Managers have started restructuring their fees, cutting or waiving
fees, changing how often they calculate performance charges, and in some
cases allowing investors to claw back incentive fees if performance
falters. Hedge fund Renaissance Technologies LLC last month reduced its
fixed fees after relatively average performance last year, while peer
Ramius Capital Group offered lower fees if investors committed to
portfolios for years. Wall Street Journal, "Hedge Fund Fees Too
High? Traditional 2%-20% structure questioned as results disappoint,"
January 18, 2009.
The current business environment is challenging for all companies. Among
hedge funds, however, Ramius has been noted for poor decision-making
prior to the bankruptcy of Lehman Brothers.
In an interview with CNBC days before Lehman's bankruptcy, Ramius
founder Peter Cohen defended the firm staying with Lehman despite
questioning from the interviewer, saying about Lehman, "we went through
our drill in terms of our exposure to them, and spoke to them about the
status of their finances, and we're comfortable". CNBC, September
11, 2008.
Ramius has asserted, "this contest is not about Ramius." No doubt they
would prefer that Orthofix shareholders not focus on Ramius' recent
track record of activism and the performance of the companies over which
they have asserted control. Sharper Image is a prime example. In
addition to installing Peter Feld on the Sharper Image Board of
Directors shortly before that company filed for bankruptcy protection
(and giving Mr. Feld what is apparently the bulk of his corporate
governance experience with a five-month stint at Sharper Image), Ramius
was the source of management and Board turnover at Sharper Image in
2006, supporting Jerry Levin in replacing founder Richard Thalheimer.
Sharper Image filed for bankruptcy protection last year after suffering
massive losses.
"An angry round of finger-pointing is escalating at Sharper Image, the
retailer whose hedge fund front man Jerry Levin is being criticized for
failing to revive the firm - and is now trying to buy it at a bargain.
Meanwhile, ousted founder Richard Thalheimer is looking smart - and $25
million richer - after dumping his Sharper Image stake last year. Among
the losers in the stock sale: Levin and Ramius Capital, the hedge fund
that installed him as a director in 2006 to help turn around the
retailer which filed for bankruptcy in February....A group of disgruntled
investors, backed by Ramius, grabbed seats on the board. Months later,
in September 2006, they booted founder and CEO Thalheimer, and replaced
him with Levin - a well-known executive who has run the likes of Revlon
and Sunbeam.... Last week, Levin stepped down as chairman after telling
the board he might team up with a group of investors to buy parts of the
company or its assets. That rubs the former execs the wrong way, with
Thalheimer saying the man who failed to revive the onetime hip retailer
is 'now bidding on the company on the cheap in bankruptcy.'" New York
Post, "Sharper Image Feud is Heating Up," April 14, 2008.
Shareholders Should Look Closely at Ramius and Question its
Commitment to Orthofix
With Ramius closing four of its funds and taking dramatic steps like
lowering fees in order to keep investors from leaving the firm, Orthofix
shareholders should carefully consider whether the Ramius proposals are
designed to do anything more than serve Ramius' own objectives.
In their March 9, 2009 letter to Orthofix shareholders, Ramius proposed
a meeting with Orthofix's independent directors who are not up for
election at the upcoming special meeting. While the March 9th
letter and press release was the first time we had heard of this request
from Ramius, shareholders should understand that we contacted Ramius
that same day, and the meeting it requested took place within 48 hours.
Ramius, however, arrived at the meeting without a new proposal for these
directors. These independent directors - and all members of the Board
and senior management of Orthofix - remain ready and willing to meet
with Ramius just as we have continually offered to meet throughout this
proxy contest process.
Finally, while the Orthofix Board has objected to the nomination of
Peter Feld and Steven Lee because of their poor qualifications and
problematic tenure with other companies, we have repeatedly offered to
interview J. Michael Egan and Charles Orsatti to determine whether
either or both may have qualifications that suit them for service with
Orthofix. Ramius has simply ignored these
offers by Orthofix to interview Messrs. Egan and Orsatti. We
question, therefore, whether Ramius is truly interested in finding
common ground that will benefit all Orthofix shareholders, or
whether they are simply pursuing this contest to serve their own
objectives.
Support Your Board and Oppose Ramius' Attempts to Derail Orthofix's
Progress
Ramius is an opportunistic, activist hedge fund that seeks to gain
control of nearly half of the Company's Board seats, despite the fact
that they own just over 5 percent of Orthofix common shares outstanding. Ramius
has been a holder of Orthofix shares for less than six months,
but seeks 4 out of 10 Board seats. Most concerning, they themselves have
admitted that their Board nominees "haveno present plans to
pursue [any] specific strategies". Orthofix is on the right track
today. Reject Ramius' attempts to derail this progress. Vote the
Company's BLUE proxy card.
Sincerely,
Orthofix Board of Directors
For assistance in voting your shares, please call
Georgeson
199 Water Street, 26th Floor
New York, NY 10038
Toll free (800) 323-4133
Banks and Brokerage Firms please call (212) 440-9800
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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
Orthofix International N.V. ("Orthofix") has filed a definitive proxy
statement, dated February 26, 2009, with the SEC in connection with a
special general meeting of shareholders of Orthofix to be held on April
2, 2009 at which Ramius Capital and certain of its affiliates propose to
make changes to the composition of Orthofix's board of directors.
SHAREHOLDERS ARE URGED TO READ ORTHOFIX'S DEFINITIVE PROXY MATERIALS AND
ANY OTHER RELEVANT SOLICITATION MATERIALS FILED BY ORTHOFIX WITH THE SEC
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and shareholders
may obtain a free copy of the proxy statement and other materials filed
by Orthofix with the SEC at the SEC's website at www.sec.gov,
at Orthofix's website at www.orthofix.com,
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 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 (whether through
ownership of Orthofix securities or otherwise), is set forth in
Orthofix's definitive proxy statement dated February 26, 2009, which may
be obtained free of charge at the SEC's website at www.sec.gov,
Orthofix's website at www.orthofix.com,
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).
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