Employee Town Hall
October 28, 2014
CONTENTS ARE CONFIDENTIAL
Filed by Wright Medical Group, Inc.
pursuant to Rule to Rule 425
Under the Securities Act of 1933
Deemed filed pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Wright Medical Group, Inc.
Commission File No. 001-35823 |
Forward-Looking Statements
CONTENTS ARE CONFIDENTIAL
2
This presentation includes forward-looking statements. These forward-looking statements
generally can be identified by the use of words such as anticipate,
expect, plan, could, may, will, believe, estimate, forecast, goal, project, and other words of similar
meaning. Forward-looking statements in this presentation include, but are not limited to,
statements about the benefits of the transaction; potential synergies and cost savings and the
timing thereof; future financial and operating results; the expected timing of the completion of
the transaction; the combined companys plans, objectives, expectations and intentions with
respect to future operations, products and services, the approvable status and anticipated
final PMA approval of Wrights Augment® Bone Graft product, and the positive effects such
final approval is anticipated to have on the combined business. Each forward-looking
statement contained in this presentation is subject to risks and uncertainties that could cause
actual results to differ materially from those expressed or implied by such statement. Applicable
risks and uncertainties include, among others, uncertainties as to the timing of the transaction;
uncertainties as to whether Tornier shareholders and Wright shareholders will approve the
transaction; the risk that competing offers will be made; the possibility that various closing
conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to
grant approval for the consummation of the transaction, or the terms of such approval; the effects of
disruption from the transaction making it more difficult to maintain relationships with
employees, customers, vendors and other business partners; the risk that shareholder litigation in
connection with the transaction may result in significant costs of defense, indemnification and
liability; other business effects, including the effects of industry, economic or political
conditions outside of Wrights or Torniers control; the failure to realize synergies and cost-savings
from the transaction or delay in realization thereof; the businesses of Wright and Tornier may not be
combined successfully, or such combination may take longer, be more difficult,
time-consuming or costly to accomplish than expected; operating costs and business
disruption following completion of the transaction, including adverse effects on employee retention
and on Wrights and Torniers respective business relationships with third parties;
transaction costs; actual or contingent liabilities; the adequacy of the combined companys capital
resources; failure or delay in ultimately obtaining FDA approval of Wrights Augment® Bone
Graft for commercial sale in the United States, failure to achieve the anticipated benefits
from approval of Augment® Bone Graft, and the risks identified under the heading Risk Factors in
Wrights Annual Report on Form 10-K, filed with the SEC on February 24, 2014, and
Torniers Annual Report on Form 10-K, filed with the SEC on February 21, 2014, as well
as both companies subsequent Quarterly Reports on Form 10-Q and other information filed by each
company with the SEC. Wright and Tornier caution investors not to place considerable reliance on
the forward-looking statements contained in this presentation. You are encouraged to
read Wrights and Torniers filings with the SEC, available at www.sec.gov, for a discussion of
these and other risks and uncertainties. The forward-looking statements in this presentation speak
only as of the date of this presentation, and Wright and Tornier undertake no obligation to
update or revise any of these statements. Wrights and Torniers businesses are subject
to substantial risks and uncertainties, including those referenced above. Investors, potential
investors, and others should give careful consideration to these risks and
uncertainties. |
Wright
and Tornier use non-GAAP financial measures, including EBITDA, as adjusted. Their
respective management teams believe that the presentation of these measures
provides useful information to investors and that these measures may assist
investors in evaluating their respective company's operations, period over
period. EBITDA is calculated by adding back to net income charges for
interest, income taxes and depreciation and amortization expenses. While it is not
possible to reconcile the adjusted EBITDA forecast in this presentation to the
nearest metric under U.S. generally accepted accounting principles (GAAP) of
the combined business without unreasonable effort, the adjusted EBITDA
forecast excludes non-cash stock based compensation expense and
non-operating income and expense, as well as the expected impact of such items as
transaction and transition costs, impacts from the sale of Wrights OrthoRecon
business and costs associated with distributor conversions and
non-competes, all of which may be highly variable, difficult to predict
and of a size that could have substantial impact on the combined company's
reported results of operations for a period. Investors should consider these
non-GAAP measures only as a supplement to, not as a substitute for or as
superior to, measures of financial performance prepared in accordance with
GAAP. Use of Non-GAAP Financial Measures
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CONTENTS ARE CONFIDENTIAL |
Additional Information And Where To Find It
In connection with the proposed merger, Tornier plans to file with the U.S.
Securities and Exchange Commission (SEC) a registration statement on Form
S-4 that will include a joint proxy statement of Wright and Tornier that also
constitutes a prospectus of Tornier. Wright and Tornier will make the joint
proxy statement/prospectus available to their respective shareholders.
Investors are urged to read the joint proxy statement/prospectus when it becomes
available, because it will contain important information. The registration
statement, definitive joint proxy statement/prospectus and other documents
filed by Tornier and Wright with the SEC will be available free of charge at
the SECs website (www.sec.gov) and from Tornier and Wright. Requests for copies of the joint proxy
statement/prospectus and other documents filed by Wright with the SEC may be made
by contacting Julie D. Tracy, Senior Vice President and Chief Communications
Officer by phone at (901) 290-5817 or by email at
julie.tracy@wmt.com, and
request
for
copies
of
the
joint
proxy
statement/prospectus
and
other
documents
filed
by
Tornier may be made by contacting Shawn McCormick, Chief Financial Officer by phone
at (952) 426-7646 or by email at
shawn.mccormick@tornier.com. Wright,
Tornier, their respective directors, executive officers and employees may be deemed to be participants in
the solicitation of proxies from Wrights and Torniers respective
shareholders in connection with the proposed transaction. Information about
the directors and executive officers of Wright and their ownership of Wright stock is
set forth in Wrights annual report on Form 10-K for the fiscal year ended
December 31, 2013, which was filed with the SEC on February 24, 2014 and its
proxy statement for its 2014 annual meeting of stockholders, which was filed
with the SEC on March 31, 2014. Information regarding Torniers directors and
executive officers is contained in Torniers annual report on Form
10-K for the fiscal year ended December 29, 2013, which was filed with the SEC on
February 21, 2014, and its proxy statement for its 2014 annual general meeting of
shareholders, which was filed with the SEC on May 16, 2014. These documents
can be obtained free of charge from the sources indicated above. Certain
directors, executive officers and employees of Wright and Tornier may have direct or indirect interest in the
transaction
due
to
securities
holdings,
vesting
of
equity
awards
and
rights
to
severance
payments.
Additional
information regarding the participants in the solicitation of Wright and Tornier
shareholders will be included in the joint proxy statement/prospectus.
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4 |
Agenda
Yesterdays Announcements
Who Is Tornier?
Why this combination?
What happens after today?
How are we planning for the future?
Leaderships commitment to you
Conclusion & Summary
Q&A
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Augment
is approvable for ankle and/or hindfoot fusion
indications!!!
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Augment
®
Bone
Graft
is
approvable
for
ankle
and/or
hindfoot fusion indications
Approvable
letter
indicates
that
FDA
determined
Augment
®
Bone
Graft to be safe and effective as an alternative to autograft for ankle
and/or hindfoot fusion indications
Final approval subject to customary preapproval inspections
Assuming
satisfactory
completion
of
this
activity
and
receipt
of
a
final
approval order from the FDA, commercial sale and distribution of
Augment
®
Bone
Graft
can
begin
in
the
U.S.
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A
Breakthrough Biologic! 8
Nothing else like it
on the market
Further accelerate
growth
Bone repair, soft
tissue indications
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Unique solution for
ankle and/or hindfoot
Breakthrough
biologic
Platform for future
growth opportunities |
Challenging Third Quarter
Revenue fell short of expectations
Net
sales
for
Q3:
$71.3
million
up
24%
vs.
last
year
Normalizing for acquisitions, up 8% vs. last year
Total ankle sales growth of 25%
Slower growth rate than anticipated in our U.S. business
Increasing focus on core products and improving execution
Anticipating continued growth: new reps and acquired products
Continued strong growth from total ankle
International business strong; some short-term challenges
Supply planning
Negative currency rate impact
Updated our revenue guidance
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Yesterdays Announcement to Combine
THE Premier Global Extremities-Biologics Company
Comprehensive Upper & Lower Extremity Product Portfolio
Accelerated Opportunities to Grow FASTER
Lower, Upper, & Bio
Three of Highest Growth Areas
Expanded
Scale and Scope
Double our revenue to over $600M while maintaining our focus
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Generate long-term value for our
customers, employees, and shareholders |
Important notes on the Announcement
Wright
&
Tornier
leaders
thrilled
once in a life time
opportunity and very bright future!
Business as usual
through the transaction close
Wright Medical Group N.V.
led by Bob Palmisano as CEO
and Torniers Dave Mowry as COO
Pascal will continue to serve as Wrights COO until close and
will continue to stay highly involved through transition
Both
Boards
of
Directors
voted
unanimously
to
combine
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Excitement
about the Deal
Familiar Name
and
Leadership
Unanimous
Decision
Business As
Usual |
Where
We Will Operate 12
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2
nd
Floor
B
building
expansion
Staying in
Tennessee
Cherry Road
Expansion
Memphis: U.S. Headquarters
Wright Operations Center: Arlington
Lower Extremity and Biologics U.S. HQ: Memphis Augment
team continue to be based in Franklin
Upper Extremity U.S. HQ: Torniers Minnesota facility
Incorporated in The Netherlands |
Key
Products Recent Strategic Initiatives
Extremities company with leadership position in
Upper Extremities --
shoulder
NASDAQ:
TRNX
www.tornier.com
HQ in Netherlands; operations run out of U.S.,
France and Ireland
2013 revenue: $311M
Products sold in 45 countries
1,076 employees globally
Aequalis Ascend
Flex Shoulder
System
Latitude EV
Elbow Prosthesis
Salto Talaris Total
Ankle Prosthesis
CannuLink
Intraosseous
Fixation System
Business Mix
Company Summary
Transitioned US Sales organization into separate
dedicated Upper and dedicated Lower Extremity
reps, including a significant portion from Distributor
to Direct
Global commercial launch of Aequalis Ascend Flex
convertible shoulder system (July 2013)
First and only Japanese Reversed Shoulder
approval received and commercial launch underway
Integration of OrthoHelix (acquired in 4Q12)
Tornier at a Glance
13
*2013 revenue
CONTENTS ARE CONFIDENTIAL
59%
19%
17%
5%
Sports Med &
Biologics
Large Joint
Lower Extremity
Upper Extremity
59%
41%
US
International |
Summing
Up: Compelling Strategic Rationale THE Premier High-Growth
Extremities-Biologics Company 14
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Once integrated, anticipate combined revenues growing
in mid-teens and adj. EBITDA
margins approaching 20% in 3-4 years Further
enhanced
by
final
FDA
premarket
approval
of
Augment
®
Bone
Graft, a platform technology for future new product development
Leading technologies & specialized sales forces addressing continuum of
care through innovative solutions
Three cornerstones: Total Ankle, Shoulder Replacement, Biologics
Uniquely positioned in fastest growth areas of orthopaedics
|
Comprehensive Upper & Lower Extremity Product
Portfolio
15
*2013 revenue
CONTENTS ARE CONFIDENTIAL
UPPER EXTREMITIES
LOWER EXTREMITIES
~10% of Revenue
59% of Revenue
~62% of Revenue
19% of Revenue
BIOLOGICS |
We
speak a common language 16
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We can
achieve more as one company! 17
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EMPLOYEES
Larger, dynamic organization enhances career growth
opportunities
CUSTOMERS
Combined products, sales, distribution, medical education and
relationships expands our reach
PATIENTS
Dedicated R&D will power innovation across combined portfolio
to enhance outcomes
SHAREHOLDERS
Significant potential upside & future growth prospects expected
from a larger, stronger, combined organization |
What
does this mean for employees TODAY? 18
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Close in 2015:
Deal is expected to close in the first half of 2015 and will
require regulatory and shareholder approvals
Business as Usual: Customer Service is our Number One Priority
Execute
on operational objectives and individual goals
No Immediate Changes:
Your role, responsibilities, salary and benefits
remain the same; you may be requested to assist in integration planning.
Transaction itself will not create any changes to 2014 bonus and benefit
programs.
We will follow our normal process for reviewing and updating our bonus
and benefit programs for 2015.
Until close, we remain independent companies and should continue
to compete as vigorously as we did before the announcement
|
Significant Resources Dedicated to the Combination that will:
How are we planning for the integration?
Vitally important that planning efforts do not distract us from
remaining productive and executing on our objectives
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Identify best practices to leverage combined strengths,
maximize growth and deliver best-in-class service
Reposition and align strategic vision for both entities and
prepare
for
a
successful
Day
One
following
the
close
Pro-actively communicate as information becomes available
|
We expect to realize cost synergies totaling $40 million to $45 million
from the following areas
some examples:
Multiple ERP systems
Tornier
outsources
most
of
its
foot
and
ankle
manufacturing
we
have
a world class manufacturing facility
We can eliminate duplicate public expenses, such as audit fees and
stock exchange listing fees
These decisions have yet to be made
We understand the uncertainty this creates
Were asking for your patience
We do not have all of the answers yet
Synergies and Timing
We will communicate as much as we can,
as fast as we can
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Commitment to open & transparent communication
Future opportunity to meet with Tornier leadership
We will provide ongoing, frequent and timely updates:
In-person, department meetings
Written communication
Human Resources office hours
Management team is dedicated to obtaining answers to your questions
Additional resources for employees:
Frequently Asked Questions (FAQs)
Email:
winningtogether@wmt.com
Intranet:
https://sharepoint.wmt.com/sites/winningtogether
Website:
www.ExtremitiesLeader.com
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A
bright & exciting future as new Wright Medical! 22
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Premier High-
Growth Extremities-
Biologics Company
Accelerated Growth
Opportunities
Significant Scale
and Scope
Better Serves Customers
Increases Employee Development Opportunities
Satisfies Shareholders |
Q&A
CONTENTS ARE CONFIDENTIAL |