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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
December 13, 1994
(Date of earliest event reported)
National Health Laboratories Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11353 13-3757370
Commission File Number) (IRS Employer Identification No.)
4225 Executive Square, Suite 805, La Jolla, California 92037
(Address of principal executive offices) (Zip Code)
(619) 657-9382
(Registrant's telephone number, including area code)
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Item 5. Other Events.
National Health Laboratories Holdings Inc., a Delaware
corporation ("NHL"), has entered into an Agreement and Plan of
Merger dated as of December 13, 1994 (the "Merger Agreement"),
among NHL, HLR Holdings Inc., a Delaware corporation ("HLR"),
Roche Biomedical Laboratories, Inc., a New Jersey corporation
("RBL"), and (for the purposes set forth therein) Hoffmann-La
Roche Inc., a New Jersey corporation ("Roche"), pursuant to
which, among other things, RBL will be merged with and into NHL,
with NHL being the surviving corporation (the "Merger").
At the effective time of the Merger (the "Effective
Time"), each issued and outstanding share of common stock, par
value $0.01 per share, of NHL (each, an "NHL Share") (other than
NHL Shares held by holders who properly exercise their
dissenters' rights in accordance with the General Corporation Law
of the State of Delaware) will be converted into (a) 0.72 of an
NHL Share and (b) the right to receive $5.60 in cash, without
interest (the "Cash Consideration"). In addition, all shares of
common stock, without par value, of RBL issued and outstanding
immediately prior to the Effective Time (other than treasury
shares, which will be canceled) will be converted into, and
become, that number of newly issued NHL Shares as would, in the
aggregate and after giving effect to the Merger and the treatment
of the employee stock options in connection therewith, equal
49.9% of the total number of NHL Shares outstanding immediately
after the Effective Time. The principal terms of the Merger are
summarized in the joint press release of NHL and Roche issued
December 14, 1994. No fractional shares will be issued in
connection with the Merger and, in lieu thereof, each holder of
NHL Shares who otherwise would be entitled to receive a
fractional NHL Share pursuant to the Merger will be paid an
amount in cash, without interest, equal to such holder's
proportionate interest in the net proceeds from the sale or sales
in the open market by the Exchange Agent to be named pursuant to
the Merger Agreement, on behalf of all such holders, of the
aggregate fractional NHL Shares, if any, that would have been
issued in the Merger.
In connection with the Merger, NHL currently intends to
declare a dividend, payable to holders of record of NHL Shares as
of the third business day prior to the date of the meeting of the
stockholders of NHL for the purpose of voting on the Merger
Agreement, which dividend will consist of 0.16308 of a warrant
per outstanding NHL Share, each such warrant (a "Warrant")
representing the right to purchase one newly issued share of NHL
common stock for $22.00 (subject to adjustments) on the fifth
anniversary of the issuance of the Warrant (the "Expiration
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Date"). In addition, the Merger Agreement provides for the
issuance to and purchase by Roche of Warrants to purchase
8,325,000 NHL Shares (the "Roche Warrants"), the terms of which
will be identical to those of the Warrants dividended to the NHL
stockholders as described above. NHL will have the option,
exercisable by notice 60 days prior to the Expiration Date, to
redeem the Warrants on the Expiration Date for a cash redemption
price per Warrant equal to the average closing price of the NHL
Shares over a specified period prior to the Expiration Date minus
the exercise price of $22.00 per share. NHL currently intends
that fractional Warrants will not be dividended to holders of NHL
Shares, and in lieu thereof, each holder of NHL Shares who
otherwise would be entitled to receive a fractional Warrant will
be paid an amount in cash, without interest, equal to such
holder's proportionate interest in the net proceeds from the sale
or sales in the open market by the Warrant Agent to be named in
the warrant agreement pursuant to which the Warrants will be
issued, on behalf of all such holders, of the aggregate
fractional Warrants, if any, that would have been issued in the
dividend distribution.
The Cash Consideration to be paid to stockholders of
NHL in connection with the Merger, which aggregates approximately
$475,000,000, will be financed from three sources:
(i) borrowings by NHL (in the aggregate amount of $288,000,000)
under a credit facility to be entered into by NHL at or prior to
the Effective Time (the "NHL Borrowings"), (ii) a cash
contribution to be made by HLR at the Effective Time (in the
aggregate amount of approximately $136,000,000) and (iii) the
proceeds of the issuance of the Roche Warrants (in the aggregate
amount of approximately $51,000,000). NHL has received a
commitment from Credit Suisse for a credit facility to refinance
NHL's existing indebtedness and to finance the NHL Borrowings.
The consummation of the Merger is subject to certain
conditions, including the approval of the holders of a majority
of the outstanding shares of common stock of NHL, the obtaining
by NHL of sufficient financing to effect the refinancing of NHL's
existing indebtedness, if required, and to finance the NHL
Borrowings and the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Immediately prior to the Merger, NHL intends to enter
into a Stockholder Agreement with HLR and Roche setting forth,
among other things, certain agreements and understandings
regarding the governance of NHL following the Merger, including
the composition of the Board of Directors (which, for an initial
period of one year following the Effective Time, will consist of
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three directors nominated by HLR, three independent directors and
James R. Maher and, thereafter, will be composed of members
selected in accordance with the procedures set forth in the
Stockholder Agreement) and that the approval of HLR, and in
certain cases the approval of a supermajority vote of the Board
of Directors (including a majority of the independent directors
and a majority of the directors appointed by HLR), will be
required for certain actions.
Concurrently with the execution of the Merger
Agreement, HLR, National Health Care Group, Inc., a Delaware
corporation and a stockholder of NHL ("NHCG"), Mafco Holdings
Inc., an indirect parent company of NHCG and (for the purposes
set forth therein) NHL, entered into a Sharing and Call Option
Agreement, dated as of December 13, 1994, which sets forth
certain agreements relating to the NHL Shares held by NHCG,
including NHCG's agreement to vote its NHL Shares in favor of the
Merger and adoption of the Merger Agreement, and pursuant to
which NHL has agreed to provide registration rights to NHCG.
The joint press release of NHL and Roche dated
December 14, 1994, which summarizes the terms of the Merger, is
attached as Exhibit 1 to this report and is incorporated herein
by reference.
The following exhibit is filed with this report:
Exhibit Number Description Page
1 Joint Press Release of the 6
Registrant and Roche Issued
December 14, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
NATIONAL HEALTH LABORATORIES
HOLDINGS INC.
By:
--------------------------
James R. Maher
President and Chief
Executive Officer
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EXHIBIT 1
Press Release
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FOR IMMEDIATE RELEASE
Contacts: Eckart Gwinner
F. Hoffmann-La Roche Ltd., Basel
41-61-688-5889
Paula Evangelista
Hoffmann-La Roche Inc., Nutley
908-253-7660
Mary Ann Dunnell
National Health Laboratories
Holdings Inc.
212-484-7797
NATIONAL HEALTH LABORATORIES AND ROCHE BIOMEDICAL
LABORATORIES ANNOUNCE MERGER
La Jolla, CA, and Nutley, NJ, December 14, 1994 -- National
Health Laboratories Holdings Inc. (NHL) and Hoffmann-La Roche
Inc., a wholly-owned subsidiary of Roche Holding Ltd., Basel,
Switzerland, announced today that they have signed an agreement
to merge their respective clinical laboratory operations.
National Health Laboratories Incorporated, La Jolla, CA, and
Roche Biomedical Laboratories, Inc. (RBL), Burlington, N.C.
Upon completion of the transaction, the new company will
have estimated annual revenues in excess of $1.7 billion,
creating one of the largest clinical laboratories in the world.
Dr. James Powell, current president of RBL, will lead the new
company as the president and chief executive officer. James
Maher, currently chief executive officer of NHL, will serve as
chairman of the Board of Directors, of which Roche will have
three members.
As a result of the proposed merger, current shareholders of
National Health Laboratories will have a 50.1 percent interest
and Roche a 49.9 percent interest in the new company. Shares of
the new company will be traded on the New York Stock Exchange,
with approximately 121.8 million shares outstanding.
Terms of the Transaction
Under the terms of the proposed merger:
o National Health Laboratories' shareholders will receive
a 50.1 percent interest in the company and approximately
$475 million in cash. Each National Health Laboratories
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share will be exchanged for 0.72 shares of the new
company's stock and a payment of $5.60 in cash.
In addition, NHL expects to declare a dividend, which
will be payable to holders of record of NHL Common Stock
three business days prior to the effectiveness of the
merger, and will consist of warrants to purchase shares
of the new company's stock at $22 per share. These
warrants, which will be exercisable after five years,
will be distributed at a rate of approximately 0.163
warrant per share of NHL Common Stock, or an aggregate
of 13.8 million warrants.
o Roche will contribute its laboratory business--Roche
Biomedical Laboratories--and $186.7 million in cash to
the new company, and in return will receive a 49.9
percent interest in the new company and approximately
8.3 million warrants to purchase shares in the new
company, under terms identical to those for NHL
shareholders.
The transaction is subject to financing. NHL has received a
commitment from Credit Suisse for a credit facility to refinance
debt and provide funds to facilitate this transaction.
The merger is conditioned on, among other things, a favorable
vote by a majority of National Health Laboratories shareholders
and is subject to expiration of the waiting periods under the Hart
Scott Rodino Antitrust Improvements Act.
Currently, MacAndrews & Forbes Holdings Inc. owns
approximately 24 percent of National Health Laboratories'
outstanding shares and has agreed to vote in favor of the merger.
Following the merger, it will own approximately 12 percent of the
new company.
Rationale for the Transaction
As a result of joining forces, the new company will have the
opportunity to realize increased efficiencies through economies of
scale, and to achieve significantly enhanced geographical presence
throughout the United States, thereby accelerating the advancement
of state-of-the-art laboratory testing on a national basis.
"After careful study by both companies and their financial
advisors, we determined that this merger of equals will benefit
the shareholders of both NHL and Roche," said James Maher, chief
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executive officer of National health Laboratories. "We are very
excited about the business opportunities it presents. The
combination is designed to create a highly efficient company with
substantial earnings leverage. It will, in particular, make the
new company significantly more competitive in a swiftly changing
and ever more demanding health care marketplace."
Jean-Luc Belingard, head of the Roche Diagnostics Division
and member of the Roche Corporate Executive Committee, Basel,
Switzerland, stated, "The combination of these two laboratory
organizations will result in the creation of an industry leader.
Our strong management team will be in a superior position to
respond proactively to critical issues such as managed care.
Roche thereby maintains its commitment to the clinical laboratory
business and achieves a significantly enhanced strategic position
in this field."
National Health Laboratories Incorporated (NYSE:NH) had 1993
revenues of $761 million, and its revenues for the first three
quarters of this year, ending September 30th, were $638 million,
with operating income of $83 million. NHL operates 22 full-
service laboratories which provide a broad range of testing
services to physicians and managed care organizations, hospitals,
clinics, nursing homes and other clinical laboratories in 45
states.
Roche Biomedical Laboratories had 1993 revenues of
$712 million. For the first three quarters of 1994, revenues
totalled $550 million, with operating income of $55 million. RBL
is one of the leading clinical laboratory networks in the U.S. At
their 17 major laboratories, RBL annually performs millions of
diagnostic tests for physicians, clinics, hospitals and industrial
companies. RBL offers more than 1,600 different clinical assays,
from routine blood analysis to more sophisticated technologies.
RBL is a subsidiary of Hoffmann-La Roche Inc., which is a member
of the Roche Group, a leading research-intensive health care
company worldwide.
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