UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed by
the Registrant ý
Filed by
a Party other than the Registrant o
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appropriate box:
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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ORTHOFIX
INTERNATIONAL N.V.
(Name of
Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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maximum aggregate value of transaction:
(5) Total
fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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Filed:
March 2,
2009
Dear
Fellow Orthofix Shareholder:
As you
may know, Orthofix will hold a Special Meeting of Shareholders on April 2, 2009
to consider the proposals of a hedge fund, Ramius LLC. The Board and management
of Orthofix strongly object to this group’s proposals for the Company and we
want you to have the facts. Your Board has a carefully considered and well
thought out business strategy which we believe will create substantial
shareholder value. We urge you
to reject the Ramius solicitation and instead vote the Company’s BLUE proxy
card.
Ramius is
an opportunistic, activist hedge fund that has engaged in numerous proxy
contests over the past several years. Ramius owns just over 5 percent of
Orthofix common shares outstanding, yet Ramius is seeking to gain control of
nearly half of the Company’s Board seats (4 out of 10 seats) with a proposed
slate of inexperienced and problematic directors. It is difficult for
your Board to take instruction from a hedge fund that appears to be unable to
manage its own affairs. For example, according to published reports,
in the last year Ramius was forced to close four of its
funds. Moreover, since beginning this proxy contest, Ramius has
demonstrated that, unlike your Board, they have no plan. At first they wanted to
remove the Company's CEO from the Board, now they don't. Their original
core strategy was to sell our Blackstone Medical subsidiary at any price, now
they say they have “no present plans to pursue [any] specific
strategies.”
We are
seeking your support to prevent Ramius from removing four experienced and highly
qualified Orthofix directors that support the current growth path of Orthofix’s
businesses and replacing them with four nominees handpicked by Ramius that
support an ill-advised program that has now changed several times in the six
months during which Ramius has been buying shares.
Your
Board is committed and has a plan for creating shareholder value. We
urge you to vote AGAINST
the Ramius proposals using our BLUE proxy card and simply discard the gold
Ramius card.
RECENT
DEVELOPMENTS SUPPORT ORTHOFIX’S STRATEGY
Ramius’ proposals threaten to disrupt
the significant progress that new management at Orthofix and Blackstone are
making in executing the Company’s strategic plan. The Company has
announced a number of positive developments recently that contravene many if not
all of the original assertions that Ramius made in its original letter to
you. These include:
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On
February 12, the Company released its full year 2008 results and 2009
guidance, showing substantial improvement in the operating performance of
the spinal implant and biologic business, including increased revenue, a
higher gross profit margin and lower adjusted operating expenses. These
encouraging results followed a number of other recent positive
developments, including:
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On
February 11, Orthofix announced the acceleration of the launch date of
Trinity®
Evolution™,
the next generation adult stem cell-based allograft developed in
collaboration with the Musculoskeletal Transplant Foundation (MTF). The
limited market release is now expected to occur by May 1st
of this year, two months ahead of schedule. This development followed a
December 15, 2008 announcement that Orthofix and MTF had achieved a major
development milestone, which was also ahead of
schedule.
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Orthofix
also initiated the limited market release of two new products, the
Firebird™
pedicle screw system and the PILLAR™ SA
interbody device, both of which are expected to be fully launched in the
first quarter of 2009.
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In
December 2008 Orthofix made a $10 million partial debt repayment, ahead of
the scheduled maturity date, which increased the Company's flexibility in
executing its operating plan.
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In
February 2009, the Company made a second, $7 million, partial debt
repayment and announced a consolidation plan that will create cost savings
and synergies between the operating groups of the
Company.
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WHO
IS RAMIUS?
Ramius is
an activist hedge fund that only recently began acquiring Orthofix shares, with
its first purchases in September 2008. Despite being a shareholder
for less than six months and owning just over 5% of our Company’s outstanding
shares, Ramius seeks to replace 40% of the Orthofix Board with its own
hand-picked nominees. In these six short months Ramius has changed
its mind on critical issues:
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Ramius
initially proposed removal of our Company’s CEO from the Board, then
reversed course - a flip-flop of position that shows poor planning and
poor judgment on corporate governance matters;
and
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Ramius
first stated that it was committed to a sale of Blackstone Medical and now
it states that “its nominees have no present plans to pursue
[any] specific strategies.”
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In
addition, Ramius has repeatedly stated that the Company needs to engage a
strategic financial advisor while either being unaware or otherwise ignoring the
fact that the Company has been working with Morgan Stanley since June 2008 –
well before Ramius’ initial investment in the Company.
We
believe that Ramius has clearly demonstrated (and even stated at times) that it
has no plan or strategy with respect to how it is going to enhance shareholder
value for all shareholders.
WE
BELIEVE RAMIUS’ PROPOSED NOMINEES ARE UNQUALIFIED
AND
WILL DISRUPT PROGRESS AT ORTHOFIX
In our
view, two of the nominees that Ramius has recommended for the Orthofix Board are
highly problematic, and shareholders should question the judgment of a firm that
would put forth such nominees. While Ramius apparently believes our
concerns are nothing more than personal attacks, we disagree. The
backgrounds and experience of Ramius’ nominees are critical in assessing whether
they are deserving of board seats and will provide additional value to our
Board. In making your voting decisions, we believe you should
consider the following:
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Peter
A. Feld is a 29-year-old employee of Ramius with no
experience in the health care industry and a strikingly thin (and
disconcerting) record of service on just two public company boards:
Sharper Image, an American retailing icon which filed for bankruptcy and
eventual liquidation shortly after Mr. Feld's departure, and CPI Corp., a
portrait studio company, recently threatened with delisting by the New
York Stock Exchange.
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Steven
J. Lee previously founded and served as CEO of PolyMedica Corporation, and
left the company while it was embroiled in a major Medicare fraud
investigation. After he left, the company was forced to pay $35 million to
settle the lawsuit. We are concerned about the perception that might be
created by Mr. Lee’s presence on our Board, and fear that his presence
would detract from the positive steps we have taken related to Orthofix's
implementation of Integrity Advantage™,
our Corporate Compliance and Ethics
Program.
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Frankly,
the Board is deeply troubled by the respective backgrounds of both Mr. Lee and
Mr. Feld, as well as Ramius’ efforts to impose these two people on our team, our
culture and our organization.
EXPERTS
AGREE THAT WE ARE MAKING PROGRESS
Recently,
two separate industry analysts covering Orthofix pointed out risks associated
with Ramius’ proxy contest:
“Orthofix
is in a position where it must execute its current strategy through 2009 to
achieve its guidance. Ramius, an investment management firm with a
stake in OFIX, has made an aggressive push to hold a special shareholders
meeting to call into questions the suitability of the Blackstone acquisition,
and is attempting to appoint four new individuals to the Orthofix board of
directors. We believe any attempt to divest the Blackstone business
in a fire sale would disrupt Orthofix’s current strategies and limit the
company’s near-term and long-term potential.” Canaccord Adams, February 18,
2009
“On
one hand, we agree that the Ramius proposal to sell the Blackstone unit would
likely result in an immediate increase in shareholder value, but this may not
necessarily be the best long-term strategic move for the company. We
believe management is taking appropriate steps to successfully turn around its
spine business.” Susquehanna International Group, February 24,
2009
RAMIUS
HAS SHOWN NO INTEREST IN AVOIDING
A
DISRUPTIVE AND COSTLY PROXY CONTEST
We have
met with Ramius on a number of occasions since they began purchasing shares of
Orthofix in September 2008. We have indicated to Ramius that we
are willing to negotiate a reasonable compromise that would include board
representation consistent with its short tenure as a shareholder and in line
with the size of its Orthofix holdings (5.5%). However, Ramius
continues to insist on replacing four of our ten directors. Further,
it remains adamant that any representation on our Board include Peter
Feld. Mr. Feld is a 29-year old Ramius employee who is not even
listed as an officer on Ramius LLC’s own website, and does not appear to have
any health care industry experience. Mr. Feld recently served on the
board of Sharper Image just prior to its bankruptcy. Moreover, in
2008, Mr. Feld joined the board of CPI Corp, a portrait studio company that was
recently notified by the New York Stock Exchange (NYSE) that it was in danger of
being delisted. CPI is currently subject to quarterly reviews by the
NYSE’s Listing and Compliance Committee to ensure that the company continues to
follow a plan to restore CPI’s compliance with the exchange’s listing
standards.
Equally
as troubling to our board is that Ramius has nominated Steven Lee, the former
President, CEO and Chairman of the Board of PolyMedica, a company he left in
2002 following the initiation of a Medicare fraud investigation by the U.S.
Department of Justice that ultimately led to PolyMedica paying $35 million in
fines to settle allegations of misconduct. Given the progress
that Orthofix has made in preventing just such problems through the
implementation of its Integrity Advantage program, we believe shareholders
should carefully consider Ramius’ judgment in its selection of nominees,
including Mr. Feld and Mr. Lee, and whether supporting its effort to replace 40
percent of the Orthofix Board with its hand-picked nominees is in the best
interest of your investment in Orthofix.
Despite
these concerns, and consistent with our governance practices, we have publicly
and privately offered to meet with the two other Ramius nominees in a good faith
effort to determine whether either of them may be qualified to serve on the
Board, and to perhaps avoid a costly and distracting proxy
contest. However, we have yet to receive a response from Ramius
regarding these offers.
We have
also offered to share certain confidential information with Ramius in order to
better explain our position with regard to Blackstone and other matters. In
return we would, of course, require that Ramius agree to certain non-disclosure
and non-divestiture requirements to remain in compliance with SEC regulations.
They have refused this offer, however, and we believe they have done so in order
to remain flexible in their trading of Orthofix stock – a position that seems
inconsistent with a shareholder that intends to take a long-term interest in the
Company. While we do not know whether disclosure of additional
information to Ramius would have resolved its concerns, we are deeply troubled
by their unwillingness to become fully informed prior to engaging in an
expensive and distracting proxy contest.
Ramius
has refused every overture that Orthofix has made to try to avoid a costly and
disruptive proxy contest. It is now clear that this special meeting will occur a
mere two months before Orthofix’s regularly-scheduled annual meeting of
shareholders, which happens at the same time every year. Ramius knew the timing
of the regular annual meeting, and chose to pursue a costly special meeting
regardless. We believe this is a terrible waste of shareholder
resources.
ORTHOFIX
IS COMMITTED TO BEST-IN-CLASS
CORPORATE
GOVERNANCE
The
Orthofix Board of Directors includes leading financial and industry experts, and
has adopted best-in-class corporate governance practices for the Company. In
particular:
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Our
Board of Directors is not staggered, with all directors standing for
re-election at each annual meeting of
shareholders;
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We
do not have a shareholder rights plan, commonly referred to as a “poison
pill”, that would impede an acquisition of the
Company;
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The
Company’s Chairman and CEO roles are separated;
and
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All
of the members of the Board’s Audit, Compensation, and Nominating &
Corporate Governance committees are
independent.
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Particularly
in these challenging economic times, the Board and management team of Orthofix
are focused on maximizing value for all of the Company’s shareholders, rather
than focusing solely on the interests of any single group.
WE
URGE YOU TO SUPPORT YOUR BOARD. PLEASE VOTE THE BLUE PROXY CARD AS
RECOMMENDED BY YOUR BOARD AND REJECT THE RAMIUS PROGRAM.
Sincerely,
Orthofix
Board of Directors
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For
assistance in voting your shares, please call
 199
Water Street, 26th
Floor
New
York, NY 10038
Toll
free (800) 323-4133
Banks
and Brokerage Firms please call (212)
440-9800
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