Nutrisystem, Inc. (NASDAQ:NTRI) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry Into a Material Definitive Agreement.
On December 9, 2018, Tivity Health, Inc., a Delaware corporation (“Tivity Health”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Nutrisystem, Inc., a Delaware corporation (“Nutrisystem”), and Sweet Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Tivity Health (“Merger Sub”). The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Nutrisystem, with Nutrisystem surviving as a wholly-owned subsidiary of Tivity Health (the “Merger”).
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of Nutrisystem (“Nutrisystem Shares”) issued and outstanding immediately prior to the Effective Time (other than shares as to which dissenter’s rights have been properly exercised and certain other excluded shares) will be converted into the right to receive (i) $38.75 in cash, without interest (the “Cash Consideration”), and (ii) 0.2141 (the “Exchange Ratio”) shares of common stock, par value $0.001 per share, of Tivity Health (“Tivity Health Shares”) (the “Merger Consideration”), with cash payable in lieu of fractional Tivity Health Shares.
Subject to the terms and conditions of the Merger Agreement, as a result of the Merger:
| · | each option to purchase Nutrisystem Shares under the Nutrisystem equity compensation plan assumed by Tivity Health as a result of the Merger (the “Nutrisystem Stock Plan”) that is outstanding and vested immediately prior to the Effective Time will be cancelled and converted into the right to receive an amount of cash, without interest, and with respect to each Nutrisystem Share underlying such option, equal to the amount by which the per share exercise price of such option is less than the sum of (a) the Cash Consideration and (b) the product of (i) the Exchange Ratio multiplied by (ii) the volume-weighted averages of the trading price per Tivity Health Share on each of the five full consecutive trading days ending on the trading day that is two trading days immediately preceding the date on which the Effective Time occurs (the “Tivity Health Stock Price”) (the “Merger Consideration Value”), except that options with an exercise price equal to or greater than the Merger Consideration Value will be cancelled for no consideration; |
| · | each award of restricted Nutrisystem Shares (“RSAs”) under the Nutrisystem Stock Plan that is outstanding immediately prior to the Effective Time will be converted into an award of restricted Tivity Health Shares having the same terms and conditions (including terms relating to vesting protection and the payout of accrued and future dividends or other distribution equivalents), and relating to a number of Tivity Health Shares equal to the product of (a) the number of Nutrisystem Shares that were subject to such award immediately prior to the Effective Time multiplied by (b) the sum of (i) the Exchange Ratio, plus (ii) the quotient of (x) the Cash Consideration, divided by (y) the Tivity Health Stock Price (the “Equity Award Exchange Ratio”), rounded to the nearest whole number of Tivity Health Shares; and |
| · | each award of performance-based restricted stock units (“PRSUs”) with respect to Nutrisystem Shares under the Nutrisystem Stock Plan that is outstanding immediately prior to the Effective Time will be assumed by Tivity Health and converted as of the Effective Time into a time-vesting restricted unit award, subject to the same terms and conditions as the underlying PRSUs (including terms relating to vesting protection and the payout of accrued and future dividends or other distribution equivalents, and other than with respect to |
performance metrics), and such time-vesting restricted unit award will cover a number of Tivity Health Shares equal to the product of (a) (i) for the PRSUs granted for the 2017-2018 performance period, the number of Nutrisystem Shares that may be earned based on the actual performance as of immediately prior to the Effective Time relative to the previously established performance metrics applicable thereto, and (ii) for all other PRSUs, the maximum number of Nutrisystem Shares that may be earned under such award as of immediately prior to the Effective Time, assuming maximum performance levels are achieved, multiplied by (b) the Equity Award Exchange Ratio, rounded to the nearest whole number of Tivity Health Shares.
Completion of the Merger is subject to customary closing conditions, including (i) the adoption of the Merger Agreement by the holders of at least a majority of the outstanding Nutrisystem Shares entitled to vote thereon at a meeting duly called and held for such purpose (the “Nutrisystem Stockholder Approval”), (ii) there being in effect no law enacted, adopted or promulgated in the United States following the signing of the Merger Agreement or order that prohibits, renders illegal or enjoins the consummation of the Merger, (iii) the expiration or termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iv) the declaration of the effectiveness by the U.S. Securities and Exchange Commission (the “SEC”) of the Registration Statement on Form S-4 to be filed with the SEC by Tivity Health in connection with the registration of the Tivity Health Shares to be issued in the Merger. The obligations of each party to consummate the Merger are also conditioned upon (i) the accuracy of the representations and warranties of the other party as of the closing (subject to customary materiality qualifiers), (ii) the absence of any material breach by the other party of any of its covenants or agreements under the Merger Agreement, and (iii) the absence of a material adverse effect with respect to the other party.
The Merger Agreement contains representations and warranties and covenants of the parties customary for a transaction of this nature. During the period from the date of the Merger Agreement until the Effective Time, each of Tivity Health and Nutrisystem has agreed, subject to certain exceptions, to certain covenants relating to, among other things, (i) the conduct of their respective businesses and (ii) the use of their respective reasonable best efforts to obtain governmental and regulatory approvals. In addition, subject to certain exceptions, Nutrisystem has agreed to covenants relating to (i) the submission of the Merger Agreement to Nutrisystem’s stockholders at a special meeting thereof for adoption and (ii) the recommendation by the board of directors of Nutrisystem in favor of the adoption by the Nutrisystem stockholders of the Merger Agreement.
During the period from the date of the Merger Agreement until the Effective Time, each party has agreed not to declare or pay any dividends to its stockholders.
In addition, Nutrisystem has agreed to certain non-solicitation obligations relating to alternative acquisition proposals. Nutrisystem further agreed not to, subject to certain exceptions, provide non-public information to, or engage in discussions or negotiations with, third parties regarding alternative acquisition proposals. However, prior to the time when the Nutrisystem Stockholder Approval is obtained, Nutrisystem may, in certain circumstances and in compliance with certain obligations, provide non-public information to, and participate in discussions or negotiations with third parties with respect to alternative acquisition proposals that were not solicited in violation of the Merger Agreement and, subject to compliance with certain other obligations, change its recommendation that Nutrisystem’s stockholders adopt the Merger Agreement and/or terminate the Merger Agreement to enter into a definitive agreement with respect to an acquisition proposal that constitutes a Superior Proposal (as defined in the Merger Agreement).
The Merger Agreement contains certain termination rights for Tivity Health and Nutrisystem, including, among others, the right of either party to terminate the Merger Agreement if (i) the Merger has not been consummated on or prior to June 9, 2019, (ii) any court or other governmental authority of competent jurisdiction has issued an order or taken any other actions permanently restraining, enjoining or otherwise prohibiting the Merger, and such order or other action has become final and nonappealable, (iii) the Nutrisystem Stockholder Approval is not obtained at a meeting of Nutrisystem stockholders called for the purpose of adopting the Merger Agreement or (iv) the other party breaches its representations, warranties or covenants in a manner that results in the failure of the related closing condition to be satisfied (subject to a cure period in certain circumstances). In addition, prior to the receipt of the Nutrisystem Stockholder Approval, (i) Nutrisystem may terminate the Merger Agreement in order to enter into a definitive agreement for an acquisition proposal that constitutes a Superior Proposal and (ii) Tivity Health may terminate the Merger Agreement as a result of Nutrisystem’s board of directors changing its recommendation with respect to the Merger Agreement. The Merger Agreement also provides that under specified circumstances, including a termination by Nutrisystem to enter into a definitive agreement for an acquisition proposal that constitutes a Superior Proposal or a termination by Tivity Health as a result of the Nutrisystem’s board of directors changing its recommendation with respect to the Merger Agreement, Nutrisystem will pay Tivity Health a termination fee of $45,000,000.
The Merger Agreement governs the contractual rights between the parties in relation to the Merger. 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, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. A copy of the Merger Agreement has been included to provide Tivity Health stockholders, Nutrisystem stockholders and other persons with information regarding its terms and is not intended to provide any factual information about Tivity Health or Nutrisystem. The representations, warranties and covenants contained in the Merger Agreement have been made solely for the purposes of the Merger Agreement and as of specific dates; are solely for the benefit of the parties to the Merger Agreement; are not intended as statements of fact to be relied upon by Tivity Health stockholders, Nutrisystem stockholders or other persons, but rather as a way of allocating the risk between the parties in the event the statements therein prove to be inaccurate; have been modified or qualified by certain confidential disclosures that were made between the parties in connection with the negotiation of the Merger Agreement, which disclosures are not reflected in the Merger Agreement itself; may no longer be true as of a given date; and may apply standards of materiality in a way that is different from what may be viewed as material by Tivity Health stockholders, Nutrisystem stockholders or other persons. Tivity Health stockholders, Nutrisystem stockholders and other persons are not third-party beneficiaries under the Merger Agreement (except, following the Effective Time, with respect to Nutrisystem stockholders’ right to receive the Merger Consideration and the right of holders of Nutrisystem equity awards to receive the consideration provided for such equity awards to the Merger Agreement and certain other limited obligations) and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Tivity Health, Nutrisystem or Merger Sub. 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 Tivity Health’s or Nutrisystem’s public disclosures. Nutrisystem 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.
Item 8.01 Other Events.
On December 10, 2018, Tivity Health and Nutrisystem issued a joint press release announcing the execution of the Merger Agreement. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
NOTE ON FORWARD LOOKING STATEMENTS
This communication contains certain statements that are “forward-looking” statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based upon current expectations and include all statements that are not historical statements of fact and those regarding the intent, belief or expectations, including, without limitation, statements that are accompanied by words such as “will,” “expect,” “outlook,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” or other similar words, phrases or expressions and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the proposed merger, integration and transition plans, synergies, opportunities and anticipated future performance. Readers of this communication should understand that these statements are not guarantees of performance or results. Many risks and uncertainties could affect actual results and cause them to vary materially from the expectations contained in the forward-looking statements.
These risks and uncertainties include, among other things: the timing and likelihood of, and any conditions or requirements imposed in connection with, obtaining required stockholder or regulatory approval of the proposed transaction; the possibility that the closing conditions to the proposed transaction may not be satisfied or waived; delay in closing the proposed transaction or the possibility of non-consummation of the proposed transaction; the risk that expected benefits, synergies and growth opportunities of the proposed transaction may not be achieved in a timely manner or at all, including that the proposed transaction may not be accretive within the expected timeframe or to the extent anticipated; the occurrence of any event that could give rise to termination of the merger agreement; the risk that stockholder litigation in connection with the proposed transaction may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability; the risk that Tivity Health and Nutrisystem will be unable to retain or hire key personnel; the ability to successfully integrate Nutrisystem’s business with Tivity Health following the closing; the risk that the significant indebtedness incurred to fund the purchase price may limit Tivity Health’s ability to adapt to changes in the economy or market conditions, expose the company to interest rate risk for the variable rate indebtedness and require a substantial portion of cash flows from operations to be dedicated to the payment of indebtedness; and the risk that disruption from the proposed transaction may adversely affect Tivity Health’s and Nutrisystem’s business and their respective relationships with customers, vendors or employees. For additional information about factors that could cause actual results
to differ materially from those described in the forward-looking statements, please refer to both Tivity Health’s and Nutrisystem’s filings with the SEC. Except as required by law, neither Tivity Health nor Nutrisystem undertakes any obligation to update forward-looking statements made by it to reflect new information, subsequent events or circumstances.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction, Tivity Health expects to file with the SEC a registration statement of Tivity Health on Form S-4 (the “registration statement”) that will include a proxy statement of Nutrisystem and that will also constitute a prospectus of Tivity Health (the “proxy statement/prospectus”). Nutrisystem expects to mail the proxy statement/prospectus to its stockholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT INFORMATION FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT TIVITY HEALTH, NUTRISYSTEM AND THE PROPOSED TRANSACTION. The registration statement and other documents filed by Tivity Health with the SEC may be obtained free of charge at Tivity Health’s website at http://www.tivityhealth.com or at the SEC’s website at http://www.sec.gov. These documents may also be obtained free of charge from Tivity Health by requesting them by mail at Tivity Health, Inc., 701 Cool Springs Boulevard, Franklin, Tennessee 37067, Attention: Investor Relations, or by telephone at (615) 614-4576. The proxy statement/prospectus and other documents filed by Nutrisystem with the SEC may be obtained free of charge at Nutrisystem’s website at http://www.nutrisystem.com or at the SEC’s website at http://www.sec.gov. These documents may also be obtained free of charge from Nutrisystem by requesting them by mail at Nutrisystem, Inc. 600 Office Center Drive, Fort Washington, Pennsylvania 19034, Attention: Investor Relations, or by telephone at (215) 346-8136.
PARTICIPANTS IN SOLICITATION
Tivity Health and Nutrisystem and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about Tivity Health’s directors and executive officers is available in Tivity Health’s proxy statement for Tivity Health’s 2018 annual meeting of stockholders filed with the SEC on April 13, 2018 on Schedule 14A. Information about Nutrisystem’s directors and executive officers is available in Nutrisystem’s proxy statement for Nutrisystem’s 2018 annual meeting of stockholders filed with the SEC on March 26, 2018 on Schedule 14A. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the transaction when they become available. Investors should read the proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Tivity Health or Nutrisystem as indicated above.
NO OFFER OR SOLICITATION
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
| Exhibit Number | Description |
| 2.1 | Agreement and Plan of Merger by and among Tivity Health, Inc., Sweet Acquisition, Inc. and Nutrisystem, Inc., dated as of December 9, 2018.* |
| 99.1 | Joint Press Release of Tivity Health, Inc. and Nutrisystem, Inc. dated as of December 10, 2018. |
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* The schedules and exhibits have been omitted to Item 601(b)(2) of Regulation S-K.Nutrisystem, Inc. agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request. |
NUTRI SYSTEM INC /DE/ ExhibitEX-2.1 2 dp99453_ex0201.htm EXHIBIT 2.1 Exhibit 2.1 AGREEMENT AND PLAN OF MERGER DATED AS OF DECEMBER 9,…To view the full exhibit click here
About Nutrisystem, Inc. (NASDAQ:NTRI)
Nutrisystem, Inc. (Nutrisystem) is a provider of weight management products and services, including nutritionally balanced weight loss programs, multi-day kits available at retail locations and digital tools to support weight loss. The Company’s program customers purchase monthly food packages containing four-week meal plan consisting supply of breakfasts, lunches, dinners and snacks and flex meal plan recipes, which they supplement with fresh fruits, vegetables and dairy. Its customers order on an auto-delivery basis (Auto-Delivery), where it sends approximately four-week meal plan on an ongoing basis until notified of a customer’s cancellation. The Company offers its pre-selected favorites food pack or personalized plans, where customers can hand pick their entire menu or customize plans to their dietary preference. Its meal plans feature approximately 150 menu options at different price points, including frozen and ready-to-go entrees, desserts, snacks and shakes.