Amid a $1.7 billion buyout offer from Smith & Nephew (FTSE:SN, NYSE:SNN), ArthroCare (NSDQ:ARTC) set aside $15 million to help retain its employees.
In a memo filed with the SEC, ArthroCare offered employees a "transition incentive" for meeting certain conditions associated with the merger. Employees may be eligible for a lump sum bonus following the close of the deal, worth as much as 25% of their base salary as of February 2.
Employees must stay on for at least 60 days after the acquisition closes and must abide by conditions such as remaining in good standing and abiding by confidentiality obligations, according to the memo.
"The Board of Directors has authorized $15 million for the Transition Incentive Plan and all other transition incentives that may be provided to other employees," ArthroCare said in the SEC filing. "If, however, the transaction does not close in a timely manner, the amount of the transition incentive paid to each employee may be reduced on a prorated basis such that the total amount paid to all employees does not exceed $15 million."
Smith & Nephew early this month announced that had made a $1.7 billion offer for ArthroCare or $48.25 per share, a price-tag that, at the time, represented a premium of about 6.3% on ARTC shares. With the recent surge in ARTC value, Smith & Nephew’s offer represents an ever-smaller premium over the company’s value.
The share-spike may lure other buyers to scoop ArthroCare up before Smith & Nephew can close the deal, analysts have speculated. Industry titans such as Johnson & Johnson (NYSE:JNJ) and Stryker (NYSE:SYK) are among the most likely to get into the game and attempt to out-bid Smith & Nephew, analysts said.
ARTC shares closed last night at $48.94, up 0.5% on the day.