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NEWS RELEASE
INVACARE, SUBURBAN OSTOMY ANNOUNCE MERGER AGREEMENT
Deal will broaden distribution channels, enhance growth
ELYRIA, OH - (December 17, 1997) - Invacare Corporation (NASDAQ: IVCR), the
world's leading manufacturer and distributor of home health care products and
mobility products for people with disabilities, and Suburban Ostomy Supply Co.,
Inc. (NASDAQ: SOSC), a leading national direct marketing wholesaler of medical
supplies and related products to the home care industry, today announced the
execution of a definitive merger agreement whereby Invacare would acquire for
cash all outstanding shares of Suburban's common stock for $11.75 per share.
This represents an 8 percent premium to yesterday's Suburban closing price of
$10.875.
Invacare's stock closed yesterday at $22.34.
Under the terms of the merger agreement, unanimously approved by both company
Boards, Invacare will initiate a tender offer for all of the outstanding shares
of Suburban to commence within five business days. Once initiated, the offer
will be open for 20 business days unless further extended. Invacare's offer is
contingent upon, among other things, a valid tender of at least two-thirds of
the outstanding shares of Suburban on a fully diluted basis. After consummation
of the tender offer, Invacare will acquire, pursuant to the merger, any
remaining outstanding Suburban shares for the same price per share. It is
anticipated that the proposed merger will be accounted for using purchase
accounting. The transaction is subject to a number of customary conditions
including the receipt of required regulatory approvals. In connection with the
merger agreement, certain shareholders owning, in the aggregate, approximately
45 percent of Suburban's outstanding shares have agreed to tender all of their
shares in the tender offer.
A. Malachi Mixon, III and Herbert P. Gray, Invacare and Suburban's chief
executive officers, respectively, noted that the proposed merger offers
significant opportunities for enhancing sales growth in an increasingly
competitive environment.
"Suburban complements Invacare's industry-leading One Stop Shopping strategy,"
said Mixon. "Suburban's product lines present a $1 billion market opportunity
for Invacare to further serve the dealer/provider channel. Disposable medical
supplies can represent as much as 20 percent of dealer/provider revenues. The
integrated company will leverage customer relationships by combining Invacare's
field sales and Suburban's inside sales organizations. In a rapidly evolving
health care environment that demands increased efficiency, the combination
creates an organization capable of lowering our customers' operating costs and
increasing their cash flow," he added.
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INVACARE, SUBURBAN OSTOMY ANNOUNCE MERGER AGREEMENT - Page Two
Gray said, "Suburban and its management have a high regard for Invacare's growth
and achievements in serving the home health care equipment market. We believe
our business will be strengthened through the addition of a comprehensive line
of home medical equipment products."
Mixon said Suburban will be a core strategic business to Invacare and will be
run as a separate operating group by the current management team, who are based
in Holliston, MA.
"This acquisition is consistent with Invacare's previously stated objective to
augment future growth with strategic acquisitions," said Mixon. "We anticipate
that the acquisition will result in combined revenues exceeding $860 million
with a neutral effect on earnings in 1998, assuming a January 31, 1998 closing."
Gray added, "We believe this transaction will deliver the highest value
available to Suburban's stockholders."
Suburban Ostomy Supply Co., Inc., which completed its initial public offering in
October 1996, is a direct marketing wholesaler of medical supplies and related
products to the home health care industry. The company sells products to over
23,000 customers, including: home medical equipment suppliers and pharmacies;
home health agencies; national home health care chains; and managed care
organizations. Through its direct sales and marketing programs, the company
markets a comprehensive selection of more than 7,000 stock keeping units,
primarily products for ostomy, incontinence, diabetic and wound care.
Invacare's headquarters are in Elyria, OH, with manufacturing plants in the
United States, Australia, Canada, Germany, France, Mexico, New Zealand,
Portugal, Switzerland and the United Kingdom. Products are distributed worldwide
through more than 10,000 professional home care providers, institutions and
retail outlets.
This press release contains forward-looking statements based on current
expectations which are covered under the "safe harbor" provision within the
Private Securities Litigation Reform Act of 1995. Actual results and events
related to the acquisition may differ from those anticipated as a result of
risks and uncertainties which include, but are not limited to, the successful
completion of this transaction, the effective integration of Suburban and its
recent acquisitions and the overall economic, market and industry conditions, as
well as the risks described from time to time in Invacare's and Suburban's
reports as filed with the Securities and Exchange Commission, including their
most recently filed Form 10-K reports.
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