Filed by Cardinal Health, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Syncor International Inc.
Commission File No. 000-08640
Date: December 4, 2002
To: All Cardinal Health Employees
From: Bob Walter
Subject: Syncor Acquisition Update
Early in November, we shared with you that, as part of our ongoing due
diligence, we had uncovered certain improper payments made by foreign
subsidiaries of Syncor, the nuclear pharmacy services company we are looking to
acquire. As you may recall, we reported our findings immediately to Syncor,
whose Board of Directors contacted the proper government officials.
Today, we have issued a joint press release with Syncor, announcing our plans to
proceed with this acquisition under a modified merger agreement. I'd like to
take this opportunity to explain how we have come to this decision and why I
believe these matters are behind us.
First, let me reiterate that I am disappointed by what we have learned about
Syncor's international operations in recent weeks, but I believe we have taken
the necessary measures to ensure that in completing this acquisition, we are not
compromising our business, our values, or our reputation. We have walked away
from deals in the past because a company's culture and values did not fit with
ours, even where these deals made strategic sense for us, and we would not
hesitate to do so again. We zealously guard our EPIC Core Values and our
culture and do not take lightly decisions that could compromise them.
Now let me expand on what is described in the attached press release: In
addition to the investigation being done by a special committee of the Syncor
Board of Directors, we expanded our own due diligence activities of Syncor
operations overseas and in the United States, and have participated in
discussions with the federal government. As a result of these measures, along
with the settlements between Syncor and the Department of Justice and the staff
of the Securities and Exchange Commission, we have found nothing that calls into
question Syncor's domestic nuclear pharmacy business.
We remain committed to our strategy of creating better value for customers by
expanding our core set of products and services. Expanding our capabilities
through nuclear pharmacy services provided by Central Pharmacy Services Inc.,
with the addition of Syncor, continues to hold exciting opportunities for
Cardinal Health. I am pleased that we can continue moving forward with the
planned acquisition and once the deal is completed, managing the business in a
manner consistent with Cardinal Health's tradition of operational excellence and
high ethical standards. We can also look forward to welcoming new colleagues to
our company who share our commitment to making this combined business a leading
provider of nuclear pharmacy services.
We know that you will have more questions about this revised agreement and our
acquisition of Syncor. The Cardinal Health-Syncor integration teams will
continue
focusing on all the many areas that will be affected by this merger.
As our integration process advances, we will make sure to keep you informed.
Important Information:
Information regarding the identity of the persons who may, under SEC rules, be
deemed to be participants in the solicitation of stockholders of Syncor
International Corporation ("Syncor") in connection with the proposed merger, and
their interests in the solicitation, is set forth in the definitive proxy
statement/prospectus dated October 16, 2002 mailed to Syncor stockholders on
October 17, 2002 and filed with the SEC as well as supplemental proxy material
dated, mailed and filed with the SEC on November 25, 2002. Additional proxy
materials will be filed with the SEC shortly. Cardinal Health, Inc.
("Cardinal Health") has filed a registration statement on Form S-4 in
connection with the transaction. Investors and security holders of Syncor are
urged to read the definitive proxy statement/prospectus and supplemental proxy
material because it contains important information about Cardinal Health,
Syncor and the transaction. Investors and security holders may obtain a free
copy of the proxy statement/prospectus and the supplemental proxy material, as
well as additional proxy materials when they are filed, at the SEC's web site at
www.sec.gov. A free copy of the proxy statement/prospectus and the supplemental
proxy material, as well as any additional proxy materials once they are filed,
may also be obtained from Cardinal Health or Syncor. Cardinal Health and Syncor
and their respective executive officers and directors may be deemed to be
participants in the solicitation of proxies from the stockholders of Syncor
in favor of the transaction. In addition to the registration statement on Form
S-4 filed by Cardinal Health in connection with the transaction, and the proxy
statement/prospectus and supplemental proxy material mailed to the stockholders
of Syncor in connection with the transaction, as well as any additional proxy
materials once they are filed, each of Cardinal Health and Syncor file annual,
quarterly and special reports, proxy and information statements, and other
information with the SEC. Investors may read and copy any of these reports,
statements and other information at the SEC's public reference room located at
450 5th Street, N.W., Washington, D.C., 20549. Investors should call the SEC at
1-800-SEC-0330 for further information. The reports, statements and other
information filed by Cardinal Health and Syncor with the SEC are also available
for free at the SEC's web site at www.sec.gov. A free copy of these reports,
statements and other information may also be obtained from Cardinal Health or
Syncor. Investors should read the proxy statement/prospectus, the supplemental
proxy materials, as well as any additional proxy materials once they are filed,
carefully before making any voting or investment decision.
[Cardinal Health Logo] [Syncor Logo]
7000 Cardinal Place
Dublin, OH 43017
www.cardinal.com
FOR IMMEDIATE RELEASE
Contacts:
David Verbraska - Media Allan Mayer
Cardinal Health, Inc. Sitrick And Company
(614) 757-3690 (310) 788-2850
Steve Fischbach - Investor Relations Bill Powell - Investor Relations
Cardinal Health, Inc. Syncor International Corp.
(614) 757-7067 (818) 737-4702
CARDINAL HEALTH AND SYNCOR ANNOUNCE AMENDED MERGER AGREEMENT
o EXCHANGE RATIO LOWERED TO 0.47 CARDINAL HEALTH COMMON SHARES PER SYNCOR SHARE
O MERGER TO CREATE LEADING U.S. NUCLEAR PHARMACY SERVICES BUSINESS
O SYNCOR REACHES AGREEMENTS WITH DEPARTMENT OF JUSTICE AND STAFF OF SECURITIES
AND EXCHANGE COMMISSION
O EXTENSIVE DUE DILIGENCE CONFIRMS QUALITY OF CORE OPERATIONS
DUBLIN, OHIO and WOODLAND HILLS, CALIFORNIA - DECEMBER 4, 2002 - Cardinal
Health, Inc. (NYSE: CAH) and Syncor International Corporation (Nasdaq: SCOR)
today announced that they have amended the June 14, 2002 merger agreement
pursuant to which Cardinal Health will acquire Syncor in a stock-for-stock
merger transaction. Under the terms of the revised agreement, Syncor
stockholders will receive 0.47 of a Cardinal Health common share in exchange for
each outstanding share of Syncor common stock. The original merger agreement
had provided for a 0.52 exchange ratio.
Cardinal Health further announced it is satisfied that it can move forward with
the acquisition in a manner that is consistent with its high standards.
Following the acquisition, Syncor's core domestic nuclear pharmacy business and
the Central Pharmacy Services (CPSI) business of Cardinal Health will be
combined, creating a leading provider in the fast growing and profitable nuclear
pharmacy services business and furthering Cardinal Health's strategy of
expanding its breadth of offerings to health care customers.
Syncor also announced today that it had reached separate agreements with the
U.S. Department of Justice (DOJ) and the staff of the U.S. Securities and
Exchange Commission (SEC) related to the previously disclosed improper payments
made by Syncor subsidiaries in certain foreign countries.
"We have taken the steps and the time necessary to be fully satisfied that we
can move forward with the acquisition of Syncor consistent with Cardinal
Health's high standards of conduct," said
-more-
CARDINAL HEALTH AND SYNCOR ANNOUNCE AMENDED MERGER AGREEMENT
PAGE 2
Robert D. Walter, chairman and chief executive officer of Cardinal Health. "As
a result of our further extensive domestic and international due diligence,
which included investigations conducted by outside legal and forensic accounting
teams, and the separate investigation conducted by the Syncor Special Committee,
the issues have been identified and dealt with decisively. We believe that
these actions, in conjunction with the agreements reached with the Department of
Justice and SEC, bring these issues to closure and give us the confidence that
Cardinal Health shareholders will be protected as we move forward to complete
the acquisition."
Upon completion of the acquisition, the Syncor operations will be integrated
with Central Pharmacy Services (CPSI) to become the Nuclear Pharmacy Services
business in the Pharmaceutical Technologies and Services (PTS) group of Cardinal
Health. "Both Cardinal Health's CPSI business and Syncor's core domestic
nuclear pharmacy business continue to deliver strong performance," said George
Fotiades, who oversees the PTS group. "Syncor's domestic nuclear pharmaceutical
operations represent an attractive fit with our existing nuclear pharmacy
services offering, and will enhance our relationships with pharmaceutical
manufacturers and biotech companies." Syncor will continue with previously
announced plans to sell its imaging business and further rationalize its
international operations.
The agreement Syncor reached with the DOJ requires Syncor Taiwan, Inc., a
subsidiary of Syncor, to plead guilty to one count under the Foreign Corrupt
Practices Act (FCPA) and to pay a fine of $2 million relating to improper
payments to employees of state-owned health care facilities in Taiwan. The
agreement with the DOJ is subject to court approval of the plea agreement. The
agreement Syncor reached with the staff of the SEC requires Syncor, without
admitting or denying any findings, to consent to the entry of a cease and
desist order prohibiting further violations of the FCPA and to pay a civil
penalty of $500,000 relating to certain activities of Syncor's foreign
subsidiaries. Syncor's board of directors will be required to appoint an
independent consultant to review and make recommendations to improve Syncor's
internal controls, record-keeping and financial reporting policies and
procedures as they relate to the anti-bribery provisions of the FCPA. The
agreement with the staff of the SEC requires approval by the Securities and
Exchange Commission and the civil penalty is subject to court approval.
"I am pleased that we can now focus on merging our domestic operations with
Cardinal Health to create a world-class nuclear pharmacy services offering,"
said Robert Funari, president and chief executive officer, Syncor International.
Cardinal Health and Syncor currently expect to complete the transaction in
December 2002 or January 2003, with Cardinal Health issuing approximately 13
million shares to Syncor stockholders. Completion of the acquisition remains
subject to customary conditions including, among others, approval of the revised
merger agreement by the Syncor stockholders. As previously announced, Syncor
will convene a stockholders meeting on December 6, 2002, for the sole purpose of
adjourning the meeting to a later date so that additional information can be
provided to stockholders. Syncor expects to mail additional information to its
stockholders regarding the revised merger agreement, a new stockholders meeting
date and other important information as soon as the materials are filed and
cleared by the corporation finance division of the SEC.
ABOUT CARDINAL HEALTH
CARDINAL HEALTH, INC. is the leading provider of products and services
supporting the health care industry. Cardinal Health companies develop,
manufacture, package and market products for patient care; develop drug-delivery
technologies; distribute pharmaceuticals, medical-
-more-
CARDINAL HEALTH AND SYNCOR ANNOUNCE AMENDED MERGER AGREEMENT
PAGE 3
surgical and laboratory supplies; and offer consulting and other services that
improve quality and efficiency in health care. Headquartered in Dublin, Ohio,
Cardinal Health employs more than 49,000 people on five continents and produces
annual revenues of more than $44 billion.
ABOUT SYNCOR
SYNCOR INTERNATIONAL CORPORATION is a leading provider of high technology health
care services concentrating on nuclear pharmacy services, medical imaging, niche
manufacturing and radiotherapy. In the nuclear pharmacy services business,
Syncor compounds and dispenses radiopharmaceuticals for diagnostic and
therapeutic use by nuclear medicine departments in hospitals and outpatient
clinics. Syncor distributes these time-critical pharmaceuticals to more than
7,000 U.S.-based customers through an integrated network of 130 domestic and 19
international nuclear pharmacies. Medical imaging services are provided through
an integrated network of 73 domestic and 19 internationally owned or operated
facilities. Syncor announced on June 14, 2002 that it intends to exit the U.S.
medical imaging business. Syncor also owns or operates ten domestic and two
international production facilities for positron emission tomography (PET)
radiopharmaceuticals, and is a party to a series of agreements to make PET
technology more accessible to healthcare providers and patients nationwide. For
more information visit www.syncor.com.
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Except for historical information, all other information in this news release
consists of forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied. The most significant
of these uncertainties are described in Syncor's and Cardinal Health's Form
10-K, Form 8-K and Form 10-Q reports (including all amendments to those reports)
and exhibits to those reports, and include (but are not limited to) the costs,
difficulties, and uncertainties related to the integration of acquired
businesses, the loss of one or more key customer or supplier relationships,
changes in the distribution patterns or reimbursement rates for health-care
products and/or services, the costs and other effects of governmental regulation
and legal and administrative proceedings, and general economic and market
conditions. Syncor and Cardinal Health undertake no obligation to update or
revise any forward-looking statements.
Information regarding the identity of the persons who may, under SEC rules, be
deemed to be participants in the solicitation of stockholders of Syncor
International Corporation ("Syncor") in connection with the proposed merger, and
their interests in the solicitation, is set forth in the definitive proxy
statement/prospectus dated October 16, 2002 mailed to Syncor stockholders on
October 17, 2002 and filed with the SEC as well as supplemental proxy material
dated, mailed and filed with the SEC on November 25, 2002. Additional proxy
materials will be filed with the SEC shortly. Cardinal Health, Inc.
("Cardinal Health") has filed a registration statement on Form S-4 in
connection with the transaction. Investors and security holders of Syncor are
urged to read the definitive proxy statement/prospectus and supplemental proxy
material because it contains important information about Cardinal Health, Syncor
and the transaction. Investors and security holders may obtain a free copy of
the proxy statement/prospectus and the supplemental proxy material, as well as
additional proxy materials when they are filed, at the SEC's web site at
www.sec.gov. A free copy of the proxy statement/prospectus and the supplemental
proxy material, as well as any additional proxy materials once they are filed,
may also be obtained from Cardinal Health or Syncor. Cardinal Health and Syncor
and their respective executive officers and directors may be deemed to be
participants in the solicitation of proxies from the stockholders of Syncor in
favor of the transaction. In addition to the registration statement on Form S-4
filed by Cardinal Health in connection with the transaction, and the proxy
statement/prospectus and supplemental proxy material mailed to the stockholders
of Syncor in connection with the transaction, as well as any additional proxy
materials once they are filed, each of Cardinal Health and Syncor file annual,
quarterly and special reports, proxy and information statements, and other
information with the SEC. Investors may read and copy any of these reports,
statements and other information at the SEC's public reference room located at
450 5th Street, N.W., Washington, D.C., 20549. Investors should call the SEC at
1-800-SEC-0330 for further information. The reports, statements and other
information filed by Cardinal Health and Syncor with the SEC are also available
for free at the SEC's web site at www.sec.gov. A free copy of these reports,
statements and other information may also be obtained from Cardinal Health or
Syncor. Investors should read the proxy statement/prospectus, the supplemental
proxy materials, as well as any additional proxy materials once they are filed,
carefully before making any voting or investment decision.
###
SYNCOR PRESS RELEASE
EMPLOYEE Q&A
DECEMBER 4, 2002
WHAT CAUSED CARDINAL HEALTH TO REACH THIS AGREEMENT WITH SYNCOR?
Cardinal Health would never compromise our business, our ethics, or our
reputation. We based our decision to move forward with the acquisition
of Syncor on several important factors:
o We believe the issues uncovered in our due diligence are
isolated and have been addressed through Syncor's decisive
actions and extensive discussions with the U.S. Department of
Justice and the Securities and Exchange Commission.
o The understandings reached between Syncor and the Department
of Justice, and Syncor and the U.S. Securities and Exchange
Commission;
o Our continued due diligence overseas and in the United
States;
o The modified merger agreement; and
o The conclusion that moving forward with this merger is a
sound and safe decision for Cardinal Health.
As we have stated before, we are committed to nuclear pharmacy as a
business strategy. Adding Syncor's nuclear pharmacy capabilities to our
already-established CPSI nuclear pharmacy services is the right thing
for Cardinal Health and our customers.
WHAT STEPS WERE TAKEN TO ALLOW CARDINAL HEALTH TO MAKE THIS DECISION?
In the month since this issue was announced, Cardinal Health has done
everything necessary to make sure this merger does not compromise our
standards - ethical, cultural, operational or financial - in order to
move forward.
In addition to the investigation by the special committee of the Syncor
Board of Directors, we have conducted our own extensive due diligence,
which includes teams conducting further investigation of Syncor
operations overseas and in the United States. We have been very
involved in discussions with the federal government and have found
nothing, as a result of these measures, that calls into question our
decision to proceed with the acquisition of Syncor's nuclear pharmacy
business.
We are confident that as a part of our Pharmaceutical Technologies and
Services business segment, this business will be managed in a manner
consistent with Cardinal Health's tradition of operational excellence
and high ethical standards.
WHY IS SYNCOR JOINING THE PHARMACEUTICAL TECHNOLOGIES AND SERVICES BUSINESS
SEGMENT?
Once the deal with Syncor is final, the combined CPSI-Syncor company
will be called Nuclear Pharmacy Services and will operate under the
Pharmaceutical Technologies and Services business segment. Adding this
expertise to Cardinal Health's business represents much more than
specialty drug distribution. We see Nuclear Pharmacy Services as an
opportunity for broadening our partnering capabilities with
pharmaceutical manufacturers.
WHAT IS THE STATUS OF MONTY AND MOSES FU?
As Syncor announced, Monty Fu, founder and chairman of Syncor
International, and Moses Fu, director, Asia Region - Syncor Overseas
Ltd., remain on paid leave, and Monty has been suspended from
participating in activities conducted by the Syncor Board of Directors.
What are the next steps to closing the deal?
As you know, a meeting for Syncor shareholders to vote on the deal must
be held. This cannot happen until supplemental meeting materials for
the modified merger agreement are filed and then cleared by the SEC. We
expect Syncor to target their shareholder meeting for late December or
January.
HOW LONG, THEN, IS THE INTEGRATION PROCESS EXPECTED TO TAKE?
An integration plan was well underway prior to the November 6
announcement and while we knew these developments might cause a delay,
we remained poised for any outcome. A number of integration work teams,
comprised primarily of CPSI and Syncor executives, as well as
representatives from Cardinal Health, have been working to ensure we
focus appropriately on all the many areas that will be affected by the
integration. These efforts will accelerate as we move toward closing
the deal with Syncor. In the meantime, as we have stated before, until
the merger is complete, things remain business as usual. We must
continue to compete, and there continue to be restrictions on what
proprietary information we can share.
Information regarding the identity of the persons who may, under SEC rules,
be deemed to be participants in the solicitation of stockholders of Syncor
International Corporation ("Syncor") in connection with the proposed merger, and
their interests in the solicitation, is set forth in the definitive proxy
statement/prospectus dated October 16, 2002 mailed to Syncor stockholders on
October 17, 2002 and filed with the SEC as well as supplemental proxy material
dated, mailed and filed with the SEC on November 25, 2002. Cardinal Health, Inc.
("Cardinal Health") has filed a registration statement on Form S-4 in connection
with the transaction. Investors and security holders of Syncor are urged to read
the definitive proxy statement/prospectus and supplemental proxy material
because it contains important information about Cardinal Health, Syncor and the
transaction. Investors and security holders may obtain a free copy of the proxy
statement/prospectus and the supplemental proxy material at the SEC's web site
at www.sec.gov. A free copy of the proxy statement/prospectus and the
supplemental proxy material may also be obtained from Cardinal Health or Syncor.
Cardinal Health and Syncor and their respective executive officers and directors
may be deemed to be participants in the solicitation of proxies from the
stockholders of Syncor in favor of the transaction. In addition to the
registration statement
on Form S-4 filed by Cardinal Health in connection with the transaction, and the
proxy statement/prospectus and supplemental proxy material mailed to the
stockholders of Syncor in connection with the transaction, each of Cardinal
Health and Syncor file annual, quarterly and special reports, proxy and
information statements, and other information with the SEC. Investors may read
and copy any of these reports, statements and other information at the SEC's
public reference room located at 450 5th Street, N.W., Washington, D.C., 20549.
Investors should call the SEC at 1-800-SEC-0330 for further information. The
reports, statements and other information filed by Cardinal Health and Syncor
with the SEC are also available for free at the SEC's web site at www.sec.gov.
A free copy of these reports, statements and other information may also be
obtained from Cardinal Health or Syncor. Investors should read the proxy
statement/prospectus carefully before making any voting or investment decision.