Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On August 7, 2017, NxStage Medical,
Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Fresenius Medical Care Holdings, Inc., a New York corporation (“Parent”),
and Broadway Renal Services, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”). Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the
Company (the “Merger”), pursuant to the provisions of the General Corporation Law of the State of Delaware (“DGCL”), with the Company surviving as a wholly-owned subsidiary of Parent.
Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of
common stock of the Company, par value $0.001 per share (each, a “Company Share”) (excluding Company Shares (i) held by the Company (or held in the Company’s treasury), (ii) held by Parent, Merger Sub or any other
wholly-owned Subsidiary of Parent, or (iii) held by stockholders who properly exercise and perfect their respective demands for appraisal of such Company Shares and have neither effectively withdrawn nor lost their rights to such appraisal
under the DGCL) will be canceled and converted into the right to receive an amount in cash equal to $30.00 per Company Share, without interest thereon and subject to any applicable withholding of taxes (the “Merger Consideration”).
Immediately prior to, and contingent upon, the Effective Time, each outstanding Company stock option, Company restricted stock unit, Company restricted share
and Company performance share (collectively, the “Company Equity Awards”) will vest in full (in the case of Company performance shares, with applicable performance conditions deemed satisfied at maximum levels) and will be canceled and
converted into the right to receive an amount in cash equal to the Merger Consideration in respect of each Company Share underlying such Company Equity Award (net of the applicable exercise price, in the case of Company stock options), without
interest thereon and subject to any applicable withholding of taxes.
The consummation of the Merger is conditioned on: (i) adoption of the Merger
Agreement by holders of at least a majority of the issued and outstanding Company Shares (“Company Shareholder Approval”), (ii) the absence of any governmental order or law preventing the Merger or making the consummation of the
Merger illegal, (iii) receipt of regulatory approvals, including the expiration or termination of the applicable waiting periods (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
antitrust notification and approvals in Germany and (iv) other customary closing conditions.
The Merger Agreement generally requires each party to
use its reasonable best efforts to take all actions necessary to obtain all consents and clearances required under any antitrust law, except that Parent is not required (i) to litigate against a governmental entity or (ii) to divest or to
take any other actions with respect to any assets or business of Parent or any of its subsidiaries or the Company, other than, if necessary to obtain antitrust clearances, with respect to certain Company assets. The Company or Parent may terminate
the Merger Agreement if the Merger is not consummated by August 7, 2018 (the “End Date”), which date may be extended, in the sole discretion of Parent, (A) for 90 days, if antitrust approval remains outstanding, but all other
closing conditions described in the Merger Agreement have otherwise been satisfied or waived to the extent possible before the Effective Time, and (B) for an additional 90 days, if antitrust approval remains outstanding after the expiration of
the first extension and Parent is engaged in litigation with a governmental entity regarding antitrust clearance (provided that if (x) Parent voluntarily withdraws from such litigation and, at the time of such withdrawal, such litigation has
not been conclusively resolved in a manner that permits consummation of the Merger or (y) such litigation has been definitively concluded in a manner that does not permit the consummation of the Merger, the date of such cessation or definitive
conclusion shall become the End Date). The Merger Agreement provides that Parent will pay to the Company a termination fee of $100 million (the “Reverse Termination Fee”) if the Merger Agreement is terminated by the Company or Parent
(i) if the End Date and any applicable extension has passed or (ii) if a court or other governmental entity issues a final, nonappealable order or takes any other action that permanently prohibits the Merger from taking place or makes the
consummation of the Merger otherwise illegal (in each case because approval under applicable antitrust laws remains the only unsatisfied closing condition).
The Merger Agreement also includes customary termination provisions for both the Company and Parent, subject, in certain circumstances, to the payment by the
Company of a termination fee of $60 million (the “Termination Fee”). Circumstances in which the Termination Fee would be required to be paid include if the Merger Agreement is terminated (i) by Parent following (x) a change of
recommendation in favor of the Merger by the board of directors of the Company (the “Board”) (or a failure by the Board to reaffirm such recommendation in response to a competing proposal), or (y) a willful breach by the Company of
its non-solicitation obligations, (ii) by the Company in order to enter into an acquisition agreement related to a “Company Superior Proposal” (as defined in the Merger Agreement) or (iii) (x) because the End Date has
passed, the Company has breached a representation or warranty, or the Company Shareholder Approval has not been obtained, in each
case as permitted by the Merger Agreement, (y) after an alternative acquisition proposal has been publicly made and not publicly withdrawn at least ten days prior to the termination, and
(z) within 12 months following such termination, the Company enters into a alternative acquisition agreement or an alternative acquisition is consummated; provided that, in the case of clause (iii), the Company shall not be required to pay the
Termination Fee if the Merger Agreement is terminated due to failure to obtain required antitrust approvals by the End Date and Parent is required to pay the Reverse Termination Fee.
The Merger Agreement includes customary representations, warranties and covenants of the Company, Parent, and Merger Sub. The Company has agreed to use its
commercially reasonable efforts to operate its business in all material respects in the ordinary course between the execution of the Merger Agreement and the Effective Time. The Company has also agreed not to solicit or initiate discussions with
third parties regarding other proposals to acquire the Company and to certain restrictions on its ability to respond to any such proposals, subject to a customary “fiduciary out” provision that allows the Company under certain
circumstances to provide information to and participate in discussions with third parties with respect to unsolicited alternative acquisition proposals if the Board has determined in good faith, after consultation with its financial advisor and
outside legal counsel, that (i) such proposal constitutes or is reasonably expected to lead to a Company Superior Proposal and (ii) the failure to do so would be inconsistent with the Board’s fiduciary duties to the Company’s
stockholders.
The Board has unanimously (i) determined that the Merger Agreement and the Merger are fair to and in the best interests of the
Company’s stockholders, (ii) approved and declared advisable the Merger Agreement and the Merger in accordance with the DGCL, and (iii) resolved to recommend that the stockholders of the Company vote to adopt the Merger Agreement.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement is attached as Exhibit
2.1 to provide investors and the Company’s stockholders with information regarding the terms of the Merger Agreement and is not intended to modify or supplement any factual disclosures about the Company, Merger Sub or Parent or any of their
respective affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement, were made as of specific dates, were made solely for the benefit of the parties to the
Merger Agreement and may not have been intended to be statements of fact, but rather, as a method of allocating risk and governing the contractual rights and relationships among the parties to the Merger Agreement. In addition, such representations,
warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be
viewed as material by the Company’s or Parent’s stockholders. In reviewing the representations, warranties and covenants contained in the Merger Agreement or any descriptions thereof in this summary, it is important to bear in mind that
such representations, warranties and covenants or any descriptions were not intended by the parties to the Merger Agreement to be characterizations of the actual state of facts or conditions of the Company, Merger Sub or Parent or any of their
respective affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures.
For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone and should instead be read in conjunction with the other information contained in the reports, statements and
filings that the Company and Parent publicly file with the Securities and Exchange Commission (the “SEC”). The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for
considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Current Report on Form 8-K not misleading.