| Item 1.01 | Entry into a Material Definitive Agreement. |
On September 1, 2021, Hill-Rom Holdings, Inc., an Indiana corporation (“Hillrom”), Baxter International Inc., a Delaware corporation (the “Company”), and a newly formed merger subsidiary of the Company created as an Indiana corporation (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things, Merger Sub will be merged with and into Hillrom (the “Merger”), with Hillrom surviving the Merger as a wholly owned subsidiary of the Company. At the time the Merger becomes effective (the “Effective Time”), each share of common stock, no par value, of Hillrom (“Hillrom Common Stock”) outstanding immediately prior to the Effective Time (other than certain excluded shares as described in the Merger Agreement) will be cancelled and converted into the right to receive cash in the amount of $156.00 per share (the “Merger Consideration”).
The Board of Directors of Hillrom (the “Hillrom Board”) has unanimously adopted the Merger Agreement and declared advisable the transactions contemplated by the Merger Agreement, including the Merger, and has determined that the Merger Agreement and the transactions contemplated thereby are fair to, and in the best interests of, Hillrom and the holders of Hillrom Common Stock. The closing of the Merger is subject to the approval of the Merger Agreement by the affirmative vote of the holders of at least a majority of the outstanding shares of Hillrom Common Stock entitled to vote (the “Hillrom Shareholder Approval”).
The Board of Directors of the Company has unanimously (a) approved the Merger Agreement and declared advisable the transactions contemplated thereby and (b) determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of the Company. The Board of Directors of Merger Sub has also unanimously (a) adopted the Merger Agreement and declared advisable the transactions contemplated thereby, (b) determined that the Merger Agreement and the transactions contemplated thereby are fair to, and in the best interests of, Merger Sub and the Company (as Merger Sub’s sole shareholder), and (c) resolved to recommend that the Company (as Merger Sub’s sole shareholder) approve the Merger Agreement.
The closing of the Merger is also subject to various customary conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; the receipt of other specified regulatory approvals; the absence of any newly enacted law or order prohibiting the Merger; the accuracy of the representations and warranties contained in the Merger Agreement (generally subject to a material adverse effect qualification); compliance in all material respects with the covenants and agreements in the Merger Agreement; the required regulatory approvals having been obtained without conditions that impose a Burdensome Condition (as defined below); and absence of a Material Adverse Effect (as defined in the Merger Agreement) on the Company since the date of the Merger Agreement.
The Merger Agreement provides that the Company and Hillrom are required to use reasonable best efforts to obtain antitrust and other required regulatory approvals in order to consummate the transactions contemplated by the Merger Agreement, which may include, among other things, (i) agreeing to divestitures, (ii) modifying contractual or commercial relationships and (iii) taking other actions that may change the conduct of the Company’s or Hillrom’s business; however, the Company is not required to take any action that would reasonably be expected to have a material adverse effect on Hillrom and its subsidiaries (taken as a whole), or on the Company and its subsidiaries (including Hillrom and its subsidiaries) (taken as a whole) (assuming for purposes of such analysis that the Company and its subsidiaries were the same size as Hillrom and its subsidiaries) (a “Burdensome Condition”).
Hillrom has made customary representations, warranties and covenants in the Merger Agreement, including, among others, and subject to certain exceptions, covenants (a) to use reasonable best efforts to conduct its business in all material respects in the ordinary course during the period between the execution of the Merger Agreement and the closing of the Merger, (b) not to engage in specified types of actions during this period, (c) to convene and hold a meeting of its shareholders for the purpose of obtaining the Hillrom Shareholder Approval and (d) not to solicit or negotiate alternative proposals or modify in a manner adverse to the Company or Merger Sub the recommendation of the Hillrom Board that Hillrom’s shareholders approve the adoption of the Merger Agreement.
The Merger Agreement contains certain termination rights, including that either party may terminate the Merger Agreement if, subject to certain limitations, the Merger has not closed by June 1, 2022 (subject to an automatic extension to September 1, 2022 and an additional automatic extension to December 1, 2022, if on each such date all of the closing conditions except those relating to regulatory approvals have been satisfied or waived) (the “Outside Date”). Additionally, Hillrom may terminate the Merger Agreement under specified circumstances to accept an unsolicited Superior Proposal (as defined in the Merger Agreement) from a third party and the Company may terminate the Merger Agreement if, before the Hillrom Shareholder Approval has been obtained, the Hillrom Board changes its recommendation that Hillrom’s shareholders approve the adoption of the Merger Agreement.
