UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
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Preliminary
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Confidential, for Use of the
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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ORTHOFIX
INTERNATIONAL N.V.
(Name of
Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Contact:
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Dan
Yarbrough, Vice President of Investor
Relations
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danyarbrough@orthofix.com
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(617)
912-2903
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Orthofix
International Sends Letter to Shareholders
Expressing
Concerns About Ramius
BOSTON,
March 17, 2009 – Orthofix International N.V. (NASDAQ: OFIX) (the Company)
announced today it sent a letter to its shareholders, which is included below,
expressing concerns about Ramius, an activist hedge fund seeking to remove four
current members of Orthofix’s Board of Directors and replace them with four of
their own hand-picked nominees at a Special Meeting of Shareholders scheduled
for April 2, 2009.
Dear
fellow Orthofix shareholder:
In
advance of the scheduled April 2, 2009 Special Meeting of Shareholders of
Orthofix, the Board of Directors urges shareholders to consider carefully the
proposals being advanced by Ramius, an activist hedge fund that has
recently shuttered four of its funds. We have previously communicated
our belief that Ramius has exhibited poor judgment in the nomination of
unqualified and problematic individuals to the Orthofix Board, namely Peter Feld
and Steven Lee. Additionally, Ramius’ approach to Orthofix has reflected an
inconsistent decision-making process and we question whether they have any
actual plans to improve value for shareholders. Ramius has offered a weak
response to concerns about its financial integrity, insisting that the firm has
a “long and successful track record” and further, that “this contest is not
about Ramius.” The fact is that Ramius is seeking to control 4 out of 10
Orthofix Board seats, including installing one of its own employees. Therefore,
credible reports by independent sources and financial writers at institutions
such as the Wall Street
Journal, CNBC, and the New York Post
noting troubles in Ramius’ operations, are highly relevant to Orthofix
shareholders’ decision-making process in this proxy contest. In a challenging
business environment, Orthofix shareholders need sound, steady judgment, not
inconsistent, ill-informed opportunism.
What
Ramius Does Not Want You to Know About Their Company’s Dismal Performance, Lack
of Plan for Orthofix, and Inconsistent Decision-Making Process
Ramius’
statements to shareholders and their conduct throughout this proxy contest
exhibit a flip-flopping of position on major matters, such as whether Blackstone
should be sold or not. Orthofix shareholders should question whether Ramius has
a plan at all for Orthofix, or whether they are simply looking to pick a fight
in order to maximize their own short-term gains. Ramius owns only about 5% of
Orthofix’s stock, and has been a shareholder for less than six
months, yet it seeks 4 out of 10 Board seats in this proxy contest. Their
statements indicate an uncertainty about their plans, which the Board of
Orthofix finds troubling.
December
2008
When
Ramius announced its plans to call a special meeting of shareholders, forcing a
sale of Blackstone was a core part of their reasoning:
In their
December 3, 2008 letter to Orthofix shareholders, Ramius stated: “we urge the Board to immediately
engage a strategic advisor to explore and execute a sale of Blackstone at the
highest possible price.”
Additionally,
when Orthofix CEO Alan Milinazzo and CFO Robert Vaters met with Ramius
representatives on December 19, 2008, Ramius stated unequivocally that the sale
of Blackstone was non-negotiable in their view
– a key element of their proposal.
January
2009
By late
January, however, Ramius appeared to be already reconsidering its approach,
filing a preliminary proxy statement on January 30, 2009 that said:
“the Ramius Nominees, if elected,
will work with the remaining members of the current Board to evaluate all
available options for Blackstone with a goal of preserving value and stemming
further operating losses.” The statement continued, “the Ramius Nominees will approach
the situation, if elected, with an open mind and will consider all options
available to the Company with a common goal of maximizing shareholder
value.”
February
2009
Most
recently, on February 23, 2009, Ramius filed its definitive proxy statement and
signaled a major departure from their original position on Blackstone,
stating:
“the
Ramius Nominees have no present plans to pursue specific strategies at this
time…”
IF
RAMIUS HAS NO SPECIFIC PLANS, SHOULD ORTHOFIX SHAREHOLDERS SIMPLY TRUST THAT
THEY WILL FIGURE IT OUT?
Ramius
Has Pursued This Proxy Contest in an Erratic and Ill-Informed Manner and
Shareholders Should Question Their Business Judgment
Ramius
originally intended to replace CEO Alan Milinazzo on the Board, then later
simply changed their
minds. For a firm that cites a need for good governance practices, their
approach to the composition of the Orthofix Board is erratic. Additionally,
on January 20, 2009, Ramius issued a press release incorrectly suggesting that
proxy advisor Risk Metrics Group (RMG) supported its proposal to replace four
members of the Orthofix Board.
Matters
such as board composition and whether the CEO should be retained are of critical
importance to public company governance. Orthofix shareholders should question
what value Ramius will bring in this challenging business environment when their
positions on such matters shift so dramatically in such a short span of time.
Given the financial difficulties that Ramius has had with its own operations,
including shuttering four funds last year, we question whether they possess the
judgment and skill necessary to bring value to Orthofix
shareholders.
Shareholders
should note that it was the Wall Street Journal, not
Orthofix, which reported Ramius’ internal troubles:
“Ramius
manages $10 billion in assets, but like many hedge-fund firms it’s getting
smaller. Ramius in recent weeks cut its Hong Kong investing staff, put a portion
of its newly renovated high-rise office space on Lexington Avenue in New York
City on the rental market, and offered its main hedge-fund investors lower fees
and other enticements to keep money with the firm.” Wall Street Journal, “Hedge
Fund Ramius Is Retooling,” December 2, 2008.
“Managers
have started restructuring their fees, cutting or waiving fees, changing how
often they calculate performance charges, and in some cases allowing investors
to claw back incentive fees if performance falters. Hedge fund Renaissance
Technologies LLC last month reduced its fixed fees after relatively average
performance last year, while peer Ramius Capital Group offered lower fees if
investors committed to portfolios for years. Wall Street Journal, “Hedge
Fund Fees Too High? Traditional 2%-20% structure questioned as results
disappoint,” January 18, 2009.
The
current business environment is challenging for all companies. Among hedge
funds, however, Ramius has been noted for poor decision-making prior to the
bankruptcy of Lehman Brothers.
In an
interview with CNBC
days before Lehman’s bankruptcy, Ramius founder Peter Cohen defended the firm
staying with Lehman despite questioning from the interviewer, saying about
Lehman, “we went through our drill in terms of our exposure to them, and spoke
to them about the status of their finances, and we’re comfortable”. CNBC, September 11,
2008.
Ramius
has asserted, “this contest is not about Ramius.” No doubt they would prefer
that Orthofix shareholders not focus on Ramius’ recent track record of activism
and the performance of the companies over which they have asserted control.
Sharper Image is a prime example. In addition to installing Peter Feld on the
Sharper Image Board of Directors shortly before that company filed for
bankruptcy protection (and giving Mr. Feld what is apparently the bulk of his
corporate governance experience with a five-month stint at Sharper Image),
Ramius was the source of management and Board turnover at Sharper Image in 2006,
supporting Jerry Levin in replacing founder Richard Thalheimer. Sharper Image
filed for bankruptcy protection last year after suffering massive
losses.
“An angry
round of finger-pointing is escalating at Sharper Image, the retailer whose
hedge fund front man Jerry Levin is being criticized for failing to revive the
firm - and is now trying to buy it at a bargain. Meanwhile, ousted founder
Richard Thalheimer is looking smart - and $25 million richer - after dumping his
Sharper Image stake last year. Among the losers in the stock sale: Levin and
Ramius Capital, the hedge fund that installed him as a director in 2006 to help
turn around the retailer which filed for bankruptcy in February.…A group of
disgruntled investors, backed by Ramius, grabbed seats on the board. Months
later, in September 2006, they booted founder and CEO Thalheimer, and replaced
him with Levin - a well-known executive who has run the likes of Revlon and
Sunbeam…. Last week, Levin stepped down as chairman after telling the board he
might team up with a group of investors to buy parts of the company or its
assets. That rubs the former execs the wrong way, with Thalheimer saying the man
who failed to revive the onetime hip retailer is ‘now bidding on the company on
the cheap in bankruptcy.’” New
York Post, “Sharper Image Feud is Heating Up,” April 14,
2008.
Shareholders
Should Look Closely at Ramius and Question its Commitment to
Orthofix
With
Ramius closing four of its funds and taking dramatic steps like lowering fees in
order to keep investors from leaving the firm, Orthofix shareholders should
carefully consider whether the Ramius proposals are designed to do anything more
than serve Ramius’ own objectives.
In their
March 9, 2009 letter to Orthofix shareholders, Ramius proposed a meeting with
Orthofix’s independent directors who are not up for election at the upcoming
special meeting. While the March 9th letter
and press release was the first time we had heard of this request from Ramius,
shareholders should understand that we contacted Ramius that same day, and the
meeting it requested took place within 48 hours. Ramius, however, arrived at the
meeting without a new proposal for these directors. These independent directors
– and all members of the Board and senior management of Orthofix – remain ready
and willing to meet with Ramius just as we have continually offered to meet
throughout this proxy contest process.
Finally,
while the Orthofix Board has objected to the nomination of Peter Feld and Steven
Lee because of their poor qualifications and problematic tenure with other
companies, we have repeatedly offered to interview J. Michael Egan and Charles
Orsatti to determine whether either or both may have qualifications that suit
them for service with Orthofix. Ramius has simply ignored
these offers by Orthofix to interview Messrs. Egan and Orsatti. We
question, therefore, whether Ramius is truly interested in finding common ground
that will benefit all
Orthofix shareholders, or whether they are simply pursuing this contest to serve
their own objectives.
Support
Your Board and Oppose Ramius’ Attempts to Derail Orthofix’s
Progress
Ramius is
an opportunistic, activist hedge fund that seeks to gain control of nearly half
of the Company’s Board seats, despite the fact that they own just over 5 percent
of Orthofix common shares outstanding. Ramius has been a holder of
Orthofix shares for less than six months, but seeks 4 out of 10 Board
seats. Most concerning, they themselves have admitted that their Board nominees
“have no present plans to pursue [any]
specific strategies”. Orthofix is on the right track today. Reject
Ramius’ attempts to derail this progress. Vote the Company’s BLUE proxy
card.
Sincerely,
Orthofix
Board of Directors
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For
assistance in voting your shares, please call
 199
Water Street, 26th
Floor
New
York, NY 10038
Toll
free (800) 323-4133
Banks
and Brokerage Firms please call (212)
440-9800
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About
Orthofix
Orthofix
International, N.V., a global medical device company, offers a broad line of
minimally invasive surgical, and non-surgical, products for the spine,
orthopedic, and sports medicine market sectors that address the lifelong
bone-and-joint health needs of patients of all ages–helping them achieve a more
active and mobile lifestyle. Orthofix’s products are widely distributed around
the world to orthopedic surgeons and patients via Orthofix’s sales
representatives and its subsidiaries, including BREG, Inc. and Blackstone
Medical, Inc., and via partnerships with other leading orthopedic product
companies. In addition, Orthofix is collaborating in R&D partnerships with
leading medical institutions such as the Orthopedic Research and Education
Foundation, Rutgers University, the Cleveland Clinic Foundation, Texas Scottish
Rite Hospital for Children and National Osteoporosis Institute. For more
information about Orthofix, please visit www.orthofix.com.
Forward-Looking
Statements
This
communication contains certain forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements,
which may include, but are not limited to, statements concerning the
projections, financial condition, results of operations and businesses of
Orthofix and its subsidiaries and are based on management's current expectations
and estimates and involve risks and uncertainties that could cause actual
results or outcomes to differ materially from those contemplated by the
forward-looking statements.
Factors
that could cause or contribute to such differences may include, but are not
limited to, risks relating to the expected sales of its products, including
recently launched products, unanticipated expenditures, changing relationships
with customers, suppliers and strategic partners, risks relating to the
protection of intellectual property, changes to the reimbursement policies of
third parties, changes to and interpretation of governmental regulation of
medical devices, the impact of competitive products, changes to the competitive
environment, the acceptance of new products in the market, conditions of the
orthopedic industry and the economy, corporate development and market
development activities, including acquisitions or divestitures, unexpected costs
or operating unit performance related to recent acquisitions and other factors
described in our annual report on Form 10-K and other periodic reports filed by
the Company with the Securities and Exchange Commission.
Important
Additional Information
Orthofix
International N.V. (“Orthofix”) has filed a definitive proxy
statement, dated February 26, 2009, with the SEC in connection with a
special general meeting of shareholders of Orthofix to be held on April 2, 2009
at which Ramius Capital and certain of its affiliates propose to make changes to
the composition of Orthofix's board of directors. SHAREHOLDERS ARE URGED TO READ
ORTHOFIX'S DEFINITIVE PROXY MATERIALS AND ANY OTHER RELEVANT SOLICITATION
MATERIALS FILED BY ORTHOFIX WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Investors and shareholders may obtain a free copy of the proxy
statement and other materials filed by Orthofix with the SEC at the SEC's
website at www.sec.gov, at
Orthofix's website at www.orthofix.com, or
by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY 10038 or by
calling (212) 440-9800 (bankers and brokers) or toll-free (800) 323-4133 (all
others).
Orthofix
and its directors and certain executive officers are participants in the
solicitation of proxies in connection with the special general meeting of
shareholders. The names of such persons are: James F. Gero, Peter J. Hewett,
Jerry C. Benjamin, Charles W. Federico, Dr. Guy J. Jordan, Ph.D., Thomas J.
Kester, CPA, Alan W. Milinazzo, Maria Sainz, Dr. Walter P. von Wartburg, Kenneth
R. Weisshaar, Robert S. Vaters, Michael Simpson, Bradley R. Mason, Raymond C.
Kolls, J.D., and Michael M. Finegan. Information regarding such participants, as
well as each such person's respective interests in Orthofix (whether through
ownership of Orthofix securities or otherwise), is set forth in
Orthofix's definitive proxy statement dated February 26, 2009,
which may be obtained free of charge at the SEC's website at www.sec.gov,
Orthofix's website at www.orthofix.com, or
by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY 10038 or by
calling (212) 440-9800 (bankers and brokers) or toll-free (800) 323-4133 (all
others).