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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
GENESIS HEALTH VENTURES, INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania 1-11666 06-1132947
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification Number)
101 East State Street
Kennett Square, Pennsylvania 19348
(Address, including zip code, of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 444-6350
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Item 5. Other Events.
On April 26, 1998, Genesis Health Ventures, Inc., a Pennsylvania
corporation ("Genesis") and its wholly-owned subsidiary V Acquisition
Corporation, a Delaware corporation ("Newco"), entered into an Agreement and
Plan of Merger (the "Merger Agreement") with Vitalink Pharmacy Services, Inc., a
Delaware corporation ("Vitalink"). Pursuant to the Merger Agreement, Vitalink
will merge with and into Newco, and Newco shall be the surviving corporation
(the "Merger"). Each share of Vitalink Common Stock, par value .01 per share,
(the "Vitalink Common Stock") will be converted in the Merger into the right to
receive (i) .045 shares of Genesis Series G Cumulative Convertible Preferred
Stock, par value .01 per share, ("Genesis Preferred"), (ii) $22.50 in cash, or
(iii) a combination of cash and shares of Genesis Preferred (collectively, the
"Merger Consideration"), subject to statutory appraisal rights. The Genesis
Preferred will have an initial annual dividend of 5.9375%. The total
consideration to be paid to stockholders of Vitalink to acquire their shares
(including shares which may be issued upon the exercise of outstanding options)
is approximately $600 million, of which approximately 50% will be paid in cash
and 50% in Genesis Preferred. As a result of the Merger, Genesis will assume
approximately $90,000,000 of indebtedness Vitalink has outstanding.
Vitalink provides pharmacy services to nursing facilities and other
institutions. Vitalink services approximately 172,000 beds, operates 57
pharmacies (including four regional infusion pharmacies) in 36 states, and other
pharmacy related businesses which, among other things, specialize in
pharmaceutical dispensing of individual medications, pharmacy consulting (drug
regimen review of potential medication interaction as well as regulatory
compliance with medication and administration guidelines), infusion therapy and
other ancillary products and services. Manor Care, Inc., a Delaware corporation
("Manor") presently owns approximately 50% of the outstanding Vitalink Common
Stock. Subsequent to the consummation of the Merger, assuming Vitalink
shareholders other than Manor elect to receive cash, Manor will own on a
fully-diluted basis, approximately 18% of the outstanding Genesis common stock,
par value $.02, (the "Genesis Common Stock").
The conditions precedent to the parties' obligation to consummate the
transaction include the following: (i) all permits and consents necessary to be
obtained prior to the consummation of the transaction shall have been obtained;
(ii) the transaction shall have been duly approved by the shareholders of
Vitalink and Genesis; (iii) the agreements, representations and warranties of
the parties contained in the Merger Agreement shall be true and correct in all
material respects on the closing date; (iv) Genesis shall have received
financing sufficient to fund the cash portion of the Merger consideration; (v)
there shall not have been any material adverse change in the business, assets,
condition, or results of operations of Vitalink or Genesis; (vi) the applicable
waiting period under the Hart-Scott Rodino Anti-Trust Improvements Act of 1976,
as amended, shall have expired or been terminated; (vii) holders of not more
than 10% of the Vitalink Common Stock shall have demanded payment pursuant to
Section 262 of the Delaware General Corporation Law, as amended; and (viii) the
shareholders rights plan between Genesis and Mellon Securities Trust Company
shall have been amended in order to exempt the issuance of the Genesis
Preferred.
The Merger Agreement may be terminated and the transaction abandoned
(i) by the mutual agreement of the parties; (ii) by either party if the
transactions are not consummated by November 30, 1998, which period may be
extended by either party up to 30 days so long as such extension is requested in
connection with an attempt to obtain certain governmental consents or approvals;
(iii) by either party in the event any court or governmental agency prohibits
the consummation of the Merger; (iv) by either party in the event their
shareholders fail to approve the Merger; (v) by the non-breaching party upon the
occurrence of an uncured material breach; (vi) by Vitalink in order to enter
into a superior acquisition proposal from a third party, if the failure to enter
into such transaction would constitute a breach by the Vitalink board of
directors of a fiduciary duty to its shareholders; (vii) by Genesis or Vitalink
if either parties board of directors withdraw or modify its recommendation to
its shareholders to approve the Merger; or (viii) by Vitalink in the event
Genesis fails, on or prior to July 10, 1998, to waive its obligation to obtain
financing in connection with the Merger. In the event the Merger and the
transactions contemplated thereby are not consummated, Vitalink and Manor have
agreed to make certain payments to each other.
In connection with the Merger, Genesis and Manor entered into a Voting
Agreement dated as of April 26, 1998 (the "Voting Agreement") pursuant to which
Manor granted to Genesis an irrevocable proxy (the "Proxy"). Manor currently
owns approximately 50% of the outstanding Vitalink Common Stock. Under the
Voting Agreement, Manor agrees to vote (or cause to be voted) its shares in any
circumstance in which the vote or approval of the shareholders of Vitalink is
sought (i) in favor of adoption and approval of the Merger Agreement and the
Merger and the terms thereof and each of the other actions contemplated by the
Merger Agreement; (ii) against any action or agreement that would result in (A)
any merger, reorganization, recapitalization, or liquidation of Vitalink, (B)
any new member being elected to the Vitalink board of directors, or (C) a breach
of any covenant, representation or warranty or any other obligation or agreement
of Vitalink contained in the Merger Agreement; and (iii) against any action,
agreement or transaction that is intended or could reasonably be expected to
facilitate a person other than Genesis in acquiring Vitalink or to impede,
interfere with, delay, postpone, discourage or materially adversely affect the
consummation of the Merger. Under the Agreement, Manor irrevocably grants to
Genesis and appoints Genesis its proxy to vote the shares owned by Manor in the
manner described above.
Genesis and Manor have also entered into a rights agreement (the
"Rights Agreement") imposing certain standstill obligations upon Manor until the
earlier of April 26, 2005, or a board change of Genesis. Manor has agreed to not
(i) acquire additional Genesis voting securities unless Manor owns less than 15%
of the voting securities (including all instruments and equity convertible into
voting securities) of Genesis; (ii) participate in or otherwise solicit any vote
of Genesis shareholders in opposition to the boards recommendation or call a
special meeting of the shareholders of Genesis; (iii) assist, encourage or
induce any person to acquire voting securities of Genesis; (iv) commence or
announce any intention to commence a tender offer for any shares of Genesis
stock; (vi) act alone or in concert with others to control or influence the
management of Genesis; or (vii) arrange or participate in any financing for any
transaction referred to in (i) through (vi) above. Regarding any matter
submitted to a vote of the Genesis shareholders at any time prior to April 26,
2001 (other than with respect to a change in control),
Manor has further agreed take action to vote in its shares in accordance with
the recommendation of the Genesis board of directors. In connection with the
Rights Agreement, Genesis has agreed to appoint one nominee of Manor as a member
of the Genesis board of directors. The Rights Agreement also grants Manor the
right to require Genesis to register 25% or more of its Genesis Preferred and
the underlying common stock, $.02 par value, in certain circumstances beginning
one year after the effective date of the Merger.
Genesis and Vitalink publicly announced the Merger in a press release
dated April 27, 1998, a copy of which is attached hereto as Exhibit 99.1.
On and after April 29, 1998, certain shareholders of Vitalink filed
suit in Delaware state court against Vitalink and certain of its officers and
directors, Genesis, and Manor alleging, among other things, that Vitalink and
Manor have breached certain fiduciary duties to the Vitalink shareholders in
connection with the Merger Agreement and the transactions contemplated thereby,
and that Genesis has knowingly aided and abetted the alleged breach. The
shareholders mentioned above are seeking to enjoin Manor, Vitalink, and Genesis
from proceeding with the Merger and the transactions contemplated thereby.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
The following exhibits are being filed as part of this report:
Number Title
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99.1 Press release dated April 27, 1998.
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.
GENESIS HEALTH VENTURES, INC.
By: /s/ George V. Hager, Jr.
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George V. Hager, Jr.
Senior Vice President and
Chief Financial Officer
Date: May __, 1998