Asensus Surgical (NYSE:ASCX) and Karl Storz issued an SEC filing today defending the proxy statement surrounding their planned merger.
On June 7, the companies agreed to a deal in which Karl Storz acquires the surgical robot maker for 35¢ per share in cash. Asensus’ board unanimously approved the agreement and the company filed a definitive proxy statement on July 5. That statement called for a special meeting of stockholders scheduled for Aug. 7.
After filing the proxy statement, Asensus says it received a number of demand letters from purported stockholders. Those letters, the company says, allege disclosure deficiencies in the proxy statement. Asensus refutes the allegations made by those stockholders.
“The company denies that it has violated any laws or breached any duties to the company’s stockholders, denies all allegations in the demand letters, and believes no supplemental disclosures to the proxy statement were or are required under any applicable law, rule or regulation,” the statement said.
However, Asensus decided to voluntarily supplement its proxy statement with new disclosures. The company said it took this decision to eliminate the burden and expense of potential litigation, to moot claims under the demand letters, to avoid a potential delay or disruption for the merger and to provide additional information to stockholders.
Asensus said its disclosures comply fully with the applicable law. Nothing in the disclosures reflects an admission of the legal necessity or materiality under applicable law, the company added.
The seven disclosures center around confidentiality agreements, the use of consultants financial advisors and certain contacts with companies.
More on the Asensus disclosures
Disclosure 1 covers meetings held between Asensus CEO Anthony Fernando representatives of three global medical device manufacturers. Discussions centered around the possibility of strategic collaborations. In connection with those discussions, the company entered into a confidentiality agreement with three companies and a financial sponsor. None contained a standstill provision.
Disclosure 3 modified the company’s description of its engagement with Jefferies as a financial advisor. Asensus engaged Jefferies to offer financial advice and assistance in connection with a sale or other transaction. The only offer the company received related to this was its letter of intent from Karl Storz.
Disclosure 4 covered discussions around the activities of management over the two years prior to finding a buyer. That included the discussions with the companies in Disclosure 1. The Asensus board also formed a transaction committee for a number of reasons outlined in the filing.
Disclosure 5 outlined contact between Fernando and the companies engaged in Disclosure 1. Representatives from three companies congratulated Asensus’ CEO on the proposed letter of intent from Karl Storz. The company said none demonstrated any interest in any potential transaction.
Disclosure 6 amended a statement of Jefferies’ calculated terminal values by adding “per the management of Asensus.”
Disclosure 7 clarified that cash flow values were derived from a weighted average cost of capital calculation.
