UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported):
May 4, 2009
GEVITY
HR, INC.
(Exact name of registrant
as specified in charter)
Florida
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0-22701
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65-0735612
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(State of
incorporation)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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9000 Town Center Parkway
Bradenton, Florida 34202
(Address of principal
executive offices / Zip Code)
(941)
741-4300
(Registrants
telephone number, including area code)
Not Applicable
(Former name or
former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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x
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Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item 8.01 Other Events
As previously disclosed,
on March 4, 2009, Gevity HR, Inc. (we, us, our, Gevity or the
Company), TriNet Group, Inc. (TriNet) and Gin Acquisition, Inc.,
a wholly owned subsidiary of TriNet (Merger Sub), entered into a Merger
Agreement (the Merger Agreement) pursuant to which Merger Sub will be merged
with and into Gevity (the Merger) with Gevity surviving the Merger and
remaining as a wholly owned subsidiary of TriNet. Also as previously disclosed, on March 13,
2009, a putative class action was commenced in the Circuit Court for Manatee
County, Florida against Gevity, each of Gevitys directors, TriNet and Merger
Sub seeking to enjoin the completion of the Merger, an award of unspecified
monetary damages and the recovery of certain costs incurred by the plaintiff.
On May 4, 2009, we agreed in principle to
settle the putative class action. Under
the terms of the proposed settlement, all claims relating to the Merger
Agreement and the Merger will be dismissed on behalf of the settlement class. The
proposed settlement is subject to certain conditions, including but not limited
to court approval and consummation of the Merger. As part of the proposed
settlement we have agreed to pay up to $290,000 to the plaintiffs counsel for
their fees and expenses, subject to final approval of the settlement and such
fees and expenses by the court. The
proposed settlement will not affect the amount of merger consideration to be
paid to Gevitys shareholders in the Merger or change any other terms of the
Merger or Merger Agreement.
Gevity believes that no
further supplemental disclosure is required under applicable laws; however, to
avoid the risk of the putative class action delaying or adversely affecting the
Merger and to minimize the expense of defending such action, we have agreed,
pursuant to the terms of the proposed settlement, to make certain additional
disclosures, all of which are set forth below.
Information concerning the Merger is contained within, or incorporated
by reference into, our proxy statement dated April 15, 2009 (the Proxy
Statement) and mailed to Gevitys shareholders on or about April 18,
2009. The Proxy Statement is
supplemented by, and should be read as part of, and in conjunction with, the
information filed in this current report on Form 8-K.
Additional Disclosure Regarding the Background of
the Merger
The disclosure in the
section of the Proxy Statement captioned
The Merger Background of
the Merger
is supplemented with the disclosure set forth
below. The new text is underlined and
the deleted text is stricken through.
The fifth paragraph of page 18
of the Proxy Statement is revised as follows:
Following the issuance
of our press release and in accordance with our boards directives, our
financial advisor contacted additional third parties to gauge their interest in
entering into a strategic transaction with us. A total of 16 potential
strategic and financial acquirers were contacted, with six parties ultimately
executing confidentiality agreements with us and ten parties indicating that
they were not interested in pursuing a transaction with us or failing to
respond.
One such party
Of the six
parties with whom we executed confidentiality agreements, two such parties were
considered strategic acquirers, one such party was considered a financial
acquirer and the remaining three parties were considered strategic acquirers
that were controlled by financial acquirers.
One party that was contacted
, which we refer to as
Company D
, indicated that it was not interested in entering
into a strategic transaction with us at that time.
2
The fifth paragraph of page 22
of the Proxy Statement is revised as follows:
Also on February 9,
2009, Company C submitted a revised proposal to acquire us in a cash and stock
transaction, with our shareholders retaining a 32.4% ownership interest in the
combined company. Company C purported to value its proposal at $6.05 per share.
Like Company Cs prior proposal submitted in November 2008, the revised
proposal was valued based on Company Cs estimate of an earnings multiple at
which the combined company would trade following completion of the contemplated
transaction, certain synergies anticipated by Company C to be generated from
the contemplated transaction and the $30.3 million aggregate cash distribution
(or approximately $1.21 per share) our shareholders would receive in the
contemplated transaction (assuming all shareholders would elect to receive cash
consideration). Company C also indicated that the transaction would be financed
in part through funds available under our existing credit agreement (which
would require consent from our existing lenders), with the remainder of the
consideration to consist of shares of Company Cs common stock. In addition,
Company C noted that its proposal was subject to additional due diligence
and required us to reimburse Company C for
certain transaction expenses incurred by Company C in certain circumstances
.
Company C did not submit any proposed revisions to the merger agreement,
although its legal advisors submitted a memorandum outlining key structural
issues that would need to be addressed if any such transaction were to be
completed.
The first, second, third
and fourth full paragraphs on page 25 of the Proxy Statement are revised
as follows:
Our board met on February 25,
2009 to discuss the latest round of bids and the desirability of completing a
strategic transaction. At this meeting, management updated our board on our
three-year strategic plan, including the risks to achieving the plan over this
period of time, given existing economic conditions and their impact on our
client base, and the resulting effect on our expected results for the first
quarter of 2009.
The risks to achieving our three-year plan
included, among others, the uncertainty surrounding our ability to fully
achieve planned SUTA price increases due to managements efforts to balance our
financial objectives with client retention in a difficult economic environment,
the reduction of our total worksite employees due to the negative effects of
general economic conditions on our client base, continued downward pressure on
our professional service fees due to general economic conditions and increasing
competitive pressures and lower than anticipated cost savings for the renewal
of our employment practices liability insurance.
After discussion, our board directed
management to review our three-year plan and to advise our board and our
advisors of potential sensitivities to the plan in light of the existing
economic environment and our financial results expected for the first quarter
of 2009.
Also at this meeting, our
board was updated as to the status of negotiations with the bidders. Our board discussed the various proposals and
it was
noted that Company Cs proposal was
a complex transaction
and
due, in part,
to the fact Company Cs proposal would require a registration statement for
stock issued by the company surviving the merger to be filed with the SEC that
contained financial and business information with respect to Gevity, Company C
and the combined company. Our board also
noted that Company Cs proposal was subject to financing and that Company Cs
proposed financing for the transaction was dependent on obtaining financing
from Gevitys existing lenders and using Gevitys existing cash on its balance
sheet. In addition, our board discussed
the fact
that the value of the transaction to Gevitys shareholders was
uncertain because it was based in significant part on
3
Company Cs estimate of the earnings multiples at
which the combined company would trade following completion of the transaction,
which uncertainty was compounded by Company Cs status as a privately held
company. Our board also noted that Company Cs proposal was subject to
significant closing risk, would take substantial time to complete and would
require the consent of Gevitys lenders or the receipt of other financing. In
addition, our board noted that the length of time necessary to negotiate the
principal terms of a transaction with Company C might jeopardize our ability to
complete an all-cash transaction with Company F or General Atlantic and TriNet.
Our board also discussed
the state of the discussions with Company D, the likely timing for the receipt
of a definitive proposal from Company D and the risks to the strategic process
of waiting several weeks for Company D to finalize a definitive proposal.
In
addition, our board discussed the equity and debt financing that Company D
would require to complete a transaction and the challenges that Company D would
face in its ability to raise the funds necessary to complete a transaction with
us given then current economic conditions.
Our board also noted that
Company Fs proposal, as reflected in its proposed revisions to the merger
agreement, was significantly more conditional than the proposal submitted by
General Atlantic and TriNet. In addition, our board discussed General
Atlantics and TriNets proposed financing arrangements, noting that General
Atlantic had agreed to provide a commitment letter, which was intended to
provide TriNet with sufficient funds to complete a transaction with us if the
Comerica debt financing was not available to TriNet.
After further discussion,
our board determined that pursuing a transaction with General Atlantic and
TriNet was more favorable to our shareholders than pursuing a transaction with
Company C, Company D or Company F or remaining an independent company or
pursuing any other strategic alternatives based on, among other things, the
potential value of such alternatives, the risks and uncertainties associated
with pursuing those other alternatives, and the assessment by our board of the
risks associated with remaining independent particularly in view of the
challenging economic environment
.
,
including the prospects of further reductions in our total worksite employees
due to the negative effects of general economic conditions on our client base,
the continued downward pressure on our professional service fees due to general
economic conditions and increasing competitive pressures, the fact that we
expected to achieve lower than anticipated cost savings for the renewal of our
employment practices liability insurance, and the challenges that we faced in
achieving any meaningful increase in the trading price of our stock over the
term of our three-year plan.
In
assessing the potential value of remaining independent, our board considered
and discussed, among other things, our financial condition, results of
operations, management, competitive position, business and prospects, current
economic, industry and market conditions
and
, both on a historical and on a prospective basis, the
trading price
of our common stock
.
, the impact of the
downturn in general economic conditions on our client base and the substantial
uncertainty regarding our 2009 financial results.
Our board instructed management and our
advisors to have further discussions with General Atlantic and TriNet to
determine whether agreement could be reached on a transaction. We did not,
however, enter into an exclusivity agreement with General Atlantic and TriNet
relating to a potential transaction.
The third paragraph on page 27 of the Proxy
Statement is revised as follows:
On March 4, 2009, Company Fs legal
advisors provided King & Spalding with proposed revisions to the
merger agreement, which improved upon certain aspects of Company Fs prior
proposal but was still more conditional than General Atlantics and TriNets
proposal
.
as Company Fs proposal
continued to provide Company F with the right not to close a
4
transaction upon the bankruptcy of certain companies
with which we conduct business and with the right to terminate the merger
agreement and pay us a reverse termination fee as liquidated damages upon the
occurrence of certain events related to regulatory approval of the transaction.
Company F also indicated that it required more
time to complete its due diligence and would not be in a position to sign a
definitive agreement until the end of the day on March 6, 2009 at the
earliest. Our board directed our management and advisors to inform General
Atlantic and TriNet that another bidder had submitted a higher offer and to
request that General Atlantic and TriNet increase their proposed price.
Gevity Projected Financial Information
The disclosure on page 37
of the Proxy Statement in the section captioned
Gevity
Projected Financial Information
is supplemented with the disclosure
set forth below:
Gevity Management 2012 and 2013
Projections
These projections for our
2012 and 2013 fiscal years were presented to our board at its meeting on February 25,
2009.
($ in thousands)
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2012
Estimate
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2013
Estimate
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Gross Profit
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$
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140,930
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$
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147,271
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Total Operating Expenses (1)
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$
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119,045
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$
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124,402
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(1)
Includes cash executive bonus
compensation throughout projected period.
Opinion of Our Financial Advisor
The disclosure on page 34
of the Proxy Statement in the sections captioned
Opinion of
our Financial AdvisorDiscounted Cash Flow Analysis
and
Opinion of our Financial AdvisorMiscellaneous
is
supplemented with the disclosure set forth below. The new text is underlined and the deleted
text is stricken through.
Credit Suisse performed
a discounted cash flow analysis of Gevity to calculate the estimated present
value of the unlevered, after-tax free cash flows that Gevity could generate
during fiscal years 2009 through 2013 based on both the Gevity management plan and
certain sensitivities to the Gevity management plan. Credit Suisse calculated
terminal values for Gevity by applying a range of terminal value EBITDA
multiples of 2.0x to 5.0x to Gevitys fiscal year 2013 estimated EBITDA. The
present value of the cash flows and terminal values was then calculated using
discount rates ranging from 17.0% to 21.0%
,
which range was derived taking into account, among other things, a weighted
average cost of capital calculation
.
This analysis indicated the following implied per share equity reference
ranges for Gevity based on the Gevity management plan and certain sensitivities
to the Gevity management plan, as compared to the per share merger
consideration:
Implied Per Share Equity Reference Ranges for Gevity
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Per Share
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Gevity Management Plan
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Gevity Management Plan Sensitivity
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Merger Consideration
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$3.45 - $5.60
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$2.80
- $4.60
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$
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4.00
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5
Miscellaneous
Gevity has agreed to pay
Credit Suisse
a customary fee
for its financial advisory services in
connection with the merger
, a significant portion
an aggregate fee of $3.0 million, $1.0 million of which was paid in
connection with the rendering of Credit Suisses opinion and $2.0 million
of which is contingent upon the consummation of the merger.
Credit Suisse
also became entitled to receive a fee upon the rendering of its opinion.
In addition, Gevity has agreed to reimburse
Credit Suisse for its reasonable expenses, including reasonable fees and
expenses of its legal counsel, and to indemnify Credit Suisse and certain
related parties for certain liabilities and other items, including liabilities
under the federal securities laws, arising out of or related to its
engagement.
Additional Information and Where to Find it
In connection with the Merger, Gevity filed a definitive proxy
statement with the SEC on April 15, 2009.
INVESTORS AND SECURITY HOLDERS OF GEVITY ARE ADVISED TO READ THE PROXY
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
MERGER. The Proxy Statement has been mailed to shareholders of Gevity. Investors and security holders may obtain a
free copy of the Proxy Statement, and other documents filed by Gevity with the
SEC, at the SECs web site at http://www.sec.gov. In addition, the documents filed by Gevity
with the SEC may be obtained free of charge by contacting Gevity at Gevity HR, Inc.,
Attn: Investor Relations, 9000 Town Center Parkway, Bradenton, Florida 34202,
Telephone: 1-800-243-8489, extension 4034. Gevitys filings with the SEC are
also available on its website at gevity.com.
The Company and its directors, executive officers and other members of
its management and employees may be deemed to be participants in the
solicitation of proxies from the Companys shareholders with respect to the
Merger. Information about the Companys executive officers and directors and
their ownership of the Companys common shares is set forth in the Proxy Statement
which was filed with the SEC on April 15, 2009.
6
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 thereunto duly
authorized.
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GEVITY HR, INC.
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(Registrant)
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Dated:
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May 4, 2009
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By :
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/s/ Edwin E. Hightower, Jr
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Name:
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Edwin E. Hightower, Jr.
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Title:
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Senior Vice President and Chief Legal Officer
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7
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