This excerpt taken from the SIRO 10-K filed Jun 1, 2006.
5. Proposed Business Combination with Sirona Dental Systems
On September 26, 2005, the Company announced that it had entered into a definitive agreement to combine its business with Sirona Dental Systems (Sirona). The transaction is structured as a stock-for-stock tax-free exchange in which the Company will issue Sironas parent company 36.97 million new shares of the Companys Common Stock in exchange for 100% of that parents economic interest in Sirona. Sironas owners will have an ownership interest in the combined company of 67%, with current Company shareholders holding the remainder. The Companys shareholders of record as of June 19, 2006 will also receive a $2.50 per share cash dividend, subject to the approval of the combination. This dividend has been declared by the Companys Board of Directors and is expected to be paid on or about June 22, 2006.
Management believes that the transaction will create a global leader in high-tech dental equipment with strong global presence and a breadth of products. It is expected that the merged company will be renamed Sirona Dental Systems, Inc., with corporate headquarters to be located at Sironas facilities in Bensheim, Germany and U.S. headquarters at the Companys facilities in New York.
The merger has been unanimously approved by both companies Boards of Directors and is expected to close on or about June 20, 2006. It is subject to approval by the Companys shareholders and other customary closing conditions. Voting agreements in support of the transaction have been signed by shareholders holding approximately 37% of the Companys issued and outstanding common shares.
Sironas Chief Executive Officer, Jost C. Fischer, will become Chairman, President and Chief Executive Officer of the combined Sirona Dental Systems, Inc. Jeffrey T. Slovin, Schicks President and Chief Executive Officer, will become Executive Vice President of the combined company and Chief Operating Officer of U.S. Operations. Simone Blank, Sironas Chief Financial Officer, will become Executive Vice President and Chief Financial Officer of the combined company.
The transaction will be presented for approval at a special meeting of Company shareholders, to be held on June 14, 2006. If so approved, the transaction is expected to close June 20, 2006. At the meeting, among other matters, the Companys shareholders will be asked to approve an increase in the total number of authorized shares of common stock from 50 million to 95 million and an increase in the total number of authorized shares of preferred stock from 2.5 million to 5 million.
In connection with the shareholders meeting, the Company has filed proxy materials with the Securities and Exchange Commission. In connection with this transaction, the Company has hired an investment banking firm whose fees, approximately $6 million, are payable upon the closing of the transaction.
In connection with the proposed transaction, options to acquire 1,530,000 shares of stock at $25.10 per share were provisionally granted subject to completion of the merger. A portion of that grant was made to the Companys CEO, Jeffrey T. Slovin, and its Executive Vice President, Michael Stone, in the respective amounts of 1,130,000 and 75,000 options. In the event that the merger is completed, but the Companys shareholders do not approve a proposed amendment to the Companys 1996 stock option plan, Mr. Slovin and Mr. Stone would be entitled to receive the economic equivalent of the foregoing options.
During the year ended March 31, 2006 the Company incurred and charged $1.9 million to operations for Sirona-related expenses. Additionally, $0.3 million was charged to operations in connection with other potential acquisitions.
On September 28, 2005, a purported class action complaint was filed in the Delaware Court of Chancery with respect to the proposed combination of the Company and, Sirona. In April 2006 the complaint was dismissed without prejudice.