Chemed Corporation Responds to Letter from MMI Investments, L.P.
March 16 2009 - 4:18PM
Business Wire
Chemed Corporation (Chemed) (NYSE:CHE), today announced that it
has responded to the letter sent by MMI Investments, L.P. to the
Board of Directors of Chemed on February 12, 2009.
The Company�s response explains that Chemed has carefully
considered MMI�s proposal and that the Board of Directors of Chemed
continues to believe that the interests of the Company�s
stockholders would be best served by maintaining Chemed�s current
corporate structure at this time. Accordingly, Chemed does not
currently intend to pursue a separation of its two businesses,
VITAS and Roto-Rooter, as MMI has proposed.
The full text of the letter that Chemed sent to MMI follows:
March 16, 2009
MMI Investments, L.P. 1370 Avenue of the Americas New York, NY
10019 Attention: Clay Lifflander
Dear Mr. Lifflander:
We welcome MMI�s interest in Chemed. Together with our outside
advisors, our Board of Directors has carefully reviewed the
structural changes proposed by MMI and we have determined to leave
Chemed�s structure unchanged at this time.
Chemed has a long history of creating value for its stockholders
by prudently managing and monetizing its diverse portfolio of
businesses. The Board has recognized the benefits to Chemed and its
stockholders of strategic divestitures, as evidenced by the Dubois
Chemicals, Omnicare, National Sanitary Supply and Patient Care
transactions. The Board�s management has provided stockholders with
solid and consistent returns. Since the announcement of Chemed�s
acquisition of VITAS in December 2003, Chemed�s stock has
appreciated over 121%, at a compounded annual growth rate of over
15%.
As this track record clearly demonstrates, Chemed�s Board of
Directors is always willing to make structural changes to advance
the interests of the Company�s stockholders. Due to our past
success in unlocking value through spin-offs and other strategic
transactions, the Chemed Board regularly discusses strategic
alternatives for VITAS and Roto-Rooter, including their potential
separation. In fact, we began considering this possibility even
prior to completing our acquisition of VITAS.
We agree with the statement in your letter that, �A spin-off of
one of Chemed's businesses would be relatively simple�given
Chemed's discrete operating structure and minimal shared
resources;� however it is important to note that this statement is
true only because the Board has already positioned Chemed�s
businesses to facilitate such a separation. Although we firmly
believe that our two businesses are currently more valuable to
stockholders together than apart, due to our foresight and
planning, we are well-positioned to separate the businesses if and
when the time is right.
Upon receipt of your letter, the Board worked with our outside
financial advisors, Lazard LLC and J.P. Morgan Securities Inc., and
our outside counsel, Cravath, Swaine & Moore LLP, to refresh
our analysis of Chemed�s current structure and to reconsider a
potential separation of the businesses. This recent review
reconfirmed that executing a separation in the current market
environment, including the current state of the equity and credit
markets, would be risky and could impair, rather than create, value
for Chemed�s current stockholders. Value creation through a
spin-off is dependent on either strong capital markets with demand
for small-cap stocks or a vibrant M&A environment. Based on our
analysis, current stock market valuations and, as you termed it,
the �moribund� state of M&A, we believe that creating two
smaller companies could be value destructive to our
stockholders.
In summary, our track record of value-enhancing transactions and
our actions to position VITAS and Roto-Rooter as distinct
standalone entities demonstrates that the Board has long recognized
the merits of the strategy MMI has proposed. We agree that given
the proper economic circumstances a separation could create
substantial shareholder value. However, we firmly believe that now
is not the right time to implement this strategy.
As has been our practice, the Board of Directors of Chemed will
continue to regularly review the benefits and feasibility of
strategies designed to create shareholder value. Once again, thank
you for your input and for your interest in Chemed.
Sincerely,
Kevin J. McNamara
About Chemed
Listed on the New York Stock Exchange and headquartered in
Cincinnati, Ohio, Chemed Corporation (www.chemed.com) operates two
wholly owned subsidiaries: VITAS Healthcare and Roto-Rooter. VITAS
is the nation's largest provider of end-of-life hospice care and
Roto-Rooter is the nation�s leading provider of plumbing and drain
cleaning services.
Forward Looking Statements
Statements in this press release or in other Chemed
communications may relate to future events or Chemed's future
performance. Such statements are forward-looking statements and are
based on present information Chemed has related to its existing
business circumstances. Investors are cautioned that such
forward-looking statements are subject to inherent risk and that
actual results may differ materially from such forward-looking
statements. Further, investors are cautioned that Chemed does not
assume any obligation to update forward-looking statements based on
unanticipated events or changed expectations.
Chemed (NYSE:CHE)
Historical Stock Chart
From May 2024 to Jun 2024
Chemed (NYSE:CHE)
Historical Stock Chart
From Jun 2023 to Jun 2024