May 13,
2009
PROTECT
YOUR INVESTMENT!
ELECT
YOUR BOARD’S NOMINEES BY VOTING THE
WHITE
PROXY
CARD
Dear
Fellow Stockholders:
As
Chemed’s May 29, 2009 Annual Meeting of Stockholders approaches, your Board of
Directors urges you to vote the
WHITE
proxy card to
elect the Company’s highly qualified nominees. Your Board and
management strongly believe that MMI Investments, L.P. (“MMI”), a dissident
hedge fund that is soliciting proxies to elect five dissident nominees to your
Board, threatens the value of your investment. Accordingly, your
Board urges you not to return any Gold proxy card that MMI may send you, even as
a protest. Since returning a Gold proxy card would revoke any
previously executed
WHITE
proxy card
submitted by you, the best way to prevent MMI from enacting its self-serving
agenda is to simply discard any Gold proxy card you may receive.
If you
have previously submitted a Gold proxy card, you may change any vote you may
have cast in favor of MMI’s nominees and
vote in favor of the Board’s nominees
by signing, dating and returning the
WHITE
proxy card,
or by following
the instructions on the
WHITE
proxy card to
vote by telephone or via the Internet, or by attending the Annual Meeting and
voting your shares in person.
Your Board unanimously believes its
nominees are the right nominees for Chemed.
Your Board’s
nominees include nine of the current members of your Board, as well as two new,
independent and highly qualified individuals, Ernest J. Mrozek and Thomas P.
Rice.
MMI
HAS ONLY ONE OBJECTIVE – SEPARATING CHEMED’S BUSINESSES.
YOUR
BOARD BELIEVES NOW IS
NOT
THE TIME TO DO SO
MMI has
one, and only one, idea for your Company: to separate immediately Chemed’s
businesses – VITAS and Roto-Rooter. We believe that this idea is
extremely short-sighted and threatens the value of your
investment. Your Board and management regularly review the Company’s
businesses and structure in the context of value-creating alternatives that
might be available.
Our most recent review, conducted
with our outside financial and legal advisors, makes it clear that a separation
of Chemed’s businesses is NOT in stockholders’ best interests at this
time. In fact, we determined that executing the separation in the
current market environment would be risky and could impair, rather than create,
value for Chemed’s stockholders.
Your Board and management
have protected stockholder value by prudently maintaining Chemed’s current
corporate structure during the global economic downturn while at the same time
taking the appropriate steps to facilitate a separation of Chemed’s businesses
when conditions
are
right
.
MMI’S
NOMINEES WILL NOT CONTRIBUTE TO VALUE CREATION
We
believe that MMI’s nominees, if elected, would not only seek to carry out the
dissident’s ill-timed, limited strategy of separating Chemed’s businesses, they
would also bring limited relevant experience to the Board. For
example:
|
●
|
Of
MMI’s five nominees,
only one
has
any professional experience in healthcare and
only one
has
any professional experience in residential and commercial cleaning
services.
|
|
●
|
In
contrast to the more than 141% increase in value your Board has delivered
since the announcement of Chemed’s acquisition of VITAS in December 2003,
a compounded annual growth rate of nearly 18%, the only three MMI nominees
with prior public company board experience have overseen significant value
destruction.
1
|
DON’T
LET MMI DISTRACT YOU WITH HALF TRUTHS
AND
DELIBERATE MISCHARACTERIZATIONS
We
believe that MMI has resorted to half truths and mischaracterizations because it
cannot substantiate its assertion that a separation of Chemed’s businesses at
this time would create value for stockholders. Consider the
following:
|
●
|
MMI
has attempted to impugn the integrity and independence of your Board’s
directors by suggestively pointing to directorships and former employment
relationships of certain Board members, despite the fact that none of the
independent directors has been an employee or a director of any Chemed
affiliate for a minimum of nearly ten years. The fact is that
nine of the Board’s 11 nominees are independent under the
director-independence requirements of the New York Stock Exchange (the
“NYSE”) and the Securities and Exchange Commission (the
“SEC”). Accordingly, the Board’s nominees are in full
compliance with both the letter and the spirit of the NYSE and SEC
requirements for director
independence.
|
1
The
stock price of Unisys Corporation has decreased approximately 69% since Clay B.
Lifflander began serving on its board of directors; the stock price of
iSECUREtrac has decreased approximately 85% since Peter A. Michel began serving
on its board of directors; and the stock price of The Brink’s Company decreased
approximately 29% during the time Carroll R. Wetzel, Jr. served on its board of
directors.
|
●
|
MMI’s
insinuations about your management’s views on a potential separation of
Chemed’s businesses appear to be deliberate attempts to mislead
stockholders. The reality is that your management team has not
only consistently stated that it would consider a separation transaction
when market and economic
conditions are right,
but it has in fact already positioned Chemed
to separate its businesses at such
time.
|
|
●
|
MMI
has distorted the facts regarding its investment in Chemed, falsely
stating that it has held Chemed stock for over two years, when MMI has
really been a Chemed stockholder for only 13 months. In
addition, you should know that MMI sold more than 22% of its Chemed
holdings in December 2008, which we believe calls into question its
so-called “long-term” interest in the
Company.
|
VOTE
FOR
YOUR
BOARD’S NOMINEES ON THE
WHITE
PROXY CARD
TODAY
Your
Board and management have a track record of creating value for stockholders and
are committed to doing so in the future. With a winning strategy that
favors the creation of value for stockholders, Chemed’s Board and management
have delivered strong stock price performance and unlocked value through a
number of spin-offs and other strategic transactions
2
.
Protect your
investment in Chemed
–
do not expose your
Company’s performance and prospects to the risk of MMI’s short-term,
self-serving agenda.
Your Board is
unanimous in its opposition to MMI
and requests that
you discard any Gold proxy cards you may receive.
We urge all stockholders to vote for
the election of all nominees proposed by the Chemed Board, on the
WHITE
proxy card
TODAY.
On behalf
of the Board of Directors, we thank you for your continued support.
Sincerely,
/s/ Kevin
J.
McNamara /s/
George J. Walsh III
Kevin J.
McNamara
George J. Walsh III
Chief
Executive
Officer Chairman
of the Board
2
The
Dubois Chemicals, Omnicare and National Sanitary Supply transactions, which are
the three largest transactions effected by Chemed, generated total gross
proceeds of approximately $492 million and resulted in pre-tax gains aggregating
approximately $252 million. Since its formation in 1971, Chemed
effected seven other divestitures that generated gross proceeds of approximately
$219 million and resulted in pre-tax gains of approximately $32
million.
Cravath,
Swaine & Moore LLP is acting as legal advisor to Chemed and Lazard Frères
& Co. LLC and J.P. Morgan Securities Inc. are acting as financial
advisors.
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.
Important
Information
Chemed filed with the
SEC
, o
n April 29, 2009,
a definitive proxy statement in
connection with its 2009 annual meeting
, and is mailing the definitive proxy
statement to its stockho
lders.
Investors and security holders are
urged to read the definitive proxy statement relating to the 2009 Annual Meeting
and any other relevant documents filed with the SEC (when available) because
they contain important information. Investors and secur
ity holders may obtain a free copy of
the definitive proxy statement and other documents that Chemed files with the
SEC (when available) at the SEC
’
s website at
www.sec.gov
and Chemed
’
s website at www.chemed.com. In
addi
tion, the definitive
proxy statement and other documents filed by Chemed with the SEC (when
available) may be obtained from Chemed free of charge by directing a request to
Chemed Corporation, Attn: Investor Relations, Chemed Corporation, 2600 Chemed
Cente
r
, 255 East Fifth Street, Cincinnati, OH
45202-4726.