S-4 1 nt10018921x1_s4.htm S-4

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As filed with the Securities and Exchange Commission on March 2, 2021
Registration No. 333-   
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
STERIS PLC
(Exact Name of Registrant as Specified in its Charter)
Ireland
339113
98-1455064
(State or Other Jurisdiction
of Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
70 Sir John Rogerson’s Quay
Dublin 2 Ireland D02 R296
+353 1 232 2000
(Address, including zip code, and telephone number, including area code,
of registrant’s principal executive offices)
J. Adam Zangerle
STERIS plc
70 Sir John Rogerson’s Quay
Dublin 2 Ireland
+353 1 232 2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
James P. Dougherty
Erin S. de la Mare
Peter C. Zwick
Jones Day
250 Vesey St.
New York, NY 10281
+1 212 326 3939
Jeff Z. Mann
Cantel Medical Corp.
150 Clove Road
Little Falls, NJ 07424
+1 973 890 7220
Igor Kirman
Victor Goldfeld
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, NY 10019
+1 212 403 1000
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
CALCULATION OF REGISTRATION FEE
Title of each class
of securities to be registered
Amount to
be
registered(1)
Proposed
maximum
offering price
per share
Proposed
maximum
aggregate
offering price(2)
Amount of
registration
fee(3)
Ordinary Shares, par value $0.001 per share
14,287,997
N/A
$2,397,332,060
$261,548.93
(1)
Represents the estimated maximum number of ordinary shares, par value $0.001 per share, of STERIS plc, which is referred to as STERIS, issuable upon completion of the mergers described in the proxy statement/prospectus contained herein, calculated as the product of (a) the sum of (i) 42,265,647 shares of common stock, par value $0.10 per share, which is referred to as Cantel Common Stock, of Cantel Medical Corp., which is referred to as Cantel, issued and outstanding as of January 8, 2021 or that may be granted after January 12, 2021 and prior to the completion of the mergers, (ii) 15,480 shares of Cantel Common Stock underlying Cantel’s restricted stock unit awards, which is referred to as Cantel RSU Awards, outstanding as of January 8, 2021 and expected to be paid out in connection with the mergers and (iii) additional shares that are expected to be issued prior to the closing of the mergers in connection with certain obligations of Cantel under prior transaction agreements, multiplied by (b) 0.33787 (the exchange ratio in the mergers).
(2)
Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (a) the product of (x) $73.62 (the average of the high and low prices of shares of Cantel Common Stock as reported on the New York Stock Exchange on February 25, 2021, rounded to the nearest cent) times (y) the estimated number of shares of Cantel Common Stock that may be exchanged for the merger consideration after consummation of the mergers described in the proxy statement/prospectus contained herein, including shares reserved for issuance under equity awards that will be cashed out in the mergers, less (b) the estimated aggregate amount of cash to be paid by the registrant as merger consideration.
(3)
Computed in accordance with Rule 457(f) under the Securities Act to be $261,548.93, which is equal to 0.0001091 multiplied by the proposed maximum aggregate offering price of $2,397,332,060.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this proxy statement/prospectus is not complete and may be changed. STERIS plc may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission, of which the proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus is not an offer to sell and is not soliciting an offer to buy any securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY—SUBJECT TO COMPLETION, DATED MARCH 2, 2021
LETTER TO STOCKHOLDERS OF CANTEL
Dear Stockholders:
On January 12, 2021, Cantel Medical Corp., which is referred to as Cantel, and STERIS plc, Solar New US Holding Co, LLC and Crystal Merger Sub 1, LLC, which are referred to as STERIS, US Holdco and Crystal Merger Sub, respectively, entered into an Agreement and Plan of Merger, as amended on March 1, 2021, which is referred to as the Merger Agreement, providing for the acquisition of Cantel by STERIS by means of a series of mergers, which are referred to as the Mergers, as described more thoroughly in the accompanying proxy statement/prospectus, involving cash-and-stock consideration. After the transactions contemplated by the Merger Agreement are consummated, Cantel will be an indirect wholly owned subsidiary of STERIS.
Cantel stockholders, which are referred to as Cantel Stockholders, as of the close of business on    , 2021 are invited to attend a special meeting of Cantel Stockholders, which is referred to as the Special Meeting, on    , 2021, at     Eastern Time to consider and vote upon a proposal to adopt the Merger Agreement and certain other matters related to the Mergers.
If you are a Cantel Stockholder and the Mergers are completed, you will receive (unless you seek appraisal and comply with all related statutory requirements of the General Corporation Law of the State of Delaware), for each issued and outstanding share of common stock, par value $0.10 per share, of Cantel, which is referred to as Cantel Common Stock, owned by you immediately prior to consummation of the Mergers and as converted into shares of Canyon HoldCo, Inc., a Delaware corporation and direct and wholly owned subsidiary of Cantel in the Pre-Closing Merger (as defined in the accompanying proxy statement/prospectus), (i) 0.33787 ordinary shares, par value $0.001 per share, of STERIS, which is referred to as STERIS Shares, which consideration is referred to as the stock consideration, and (ii) $16.93 in cash, which is referred to as the cash consideration, and together with the stock consideration is referred to as the Merger Consideration. For a description of the Merger Consideration that Cantel Stockholders will receive upon completion of the Mergers, see the section entitled “The Mergers—Consideration to Cantel Stockholders” beginning on page 50 of the accompanying proxy statement/prospectus.
The market value of the stock consideration, but not the cash consideration, will fluctuate with the price of STERIS Shares. Based on the closing price of STERIS Shares on January 11, 2021, the last trading day before the public announcement of the signing of the Merger Agreement, the value of the Merger Consideration payable to Cantel Stockholders upon completion of the Mergers was approximately $84.66 per share of Cantel Common Stock. Cantel stockholders should obtain current stock price quotations for STERIS Shares and Cantel Common Stock. STERIS Shares are traded on the New York Stock Exchange, which is referred to as the NYSE, under the symbol “STE,” and Cantel Common Stock is traded on the NYSE under the symbol “CMD.”
The Mergers (other than the Pre-Closing Merger), taken together, and the Pre-Closing Merger, together with certain related transactions, are each intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which is referred to as the Code, and the Mergers (other than the Pre-Closing Merger), taken together, are also intended to qualify for an exception to the general rule of Section 367(a)(1) of the Code. For a discussion of the material U.S. federal income tax consequences of the Mergers see the information included under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18 of the accompanying proxy statement/prospectus.
STERIS and Cantel cannot complete the Mergers unless, among other things, Cantel Stockholders adopt the Merger Agreement, thereby approving certain of the Mergers, at the Special Meeting.
Your vote is very important. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy via the Internet or by telephone. Please vote promptly whether or not you expect to attend Special Meeting. Submitting a proxy now will not prevent you from being able to attend virtually the Special Meeting if you are otherwise eligible to vote at such meeting.
Charles M. Diker, Mark N. Diker and Diker Management LLC entered into a voting agreement with STERIS, US Holdco and Crystal Merger Sub, which is referred to as the Voting Agreement, pursuant to which they have agreed, among other things, to vote all of the shares of Cantel Common Stock beneficially owned by them (constituting approximately 10.4% of the issued and outstanding shares of Cantel Common Stock as of January 8, 2021), in favor of the adoption of the Merger Agreement, on the terms and subject to the conditions set forth in the Voting Agreement.
Cantel’s Board of Directors has (a) determined that the Merger Agreement and the other transactions contemplated thereby, including the Mergers, are fair to, and in the best interests of, Cantel and its stockholders, (b) unanimously approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Mergers, and (c) unanimously recommends that Cantel stockholders vote “FOR” each of the proposals described in the accompanying proxy statement/prospectus.
The obligations of STERIS and Cantel to complete the Mergers are subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, a copy of which is included as Annex A-1 and Annex A-2 to the accompanying proxy statement/prospectus. The proxy statement/prospectus provides you with detailed information about the Mergers. It also contains or references information about STERIS and Cantel and certain related matters. You are encouraged to read the proxy statement/prospectus carefully and in its entirety. In particular, you should carefully read the section entitled “Risk Factors” beginning on page 31 of the accompanying proxy statement/prospectus for a discussion of risks you should consider in evaluating the Mergers and the issuance of STERIS Shares in connection with the Mergers and how such risks will affect you.
Sincerely,
George L. Fotiades
Chief Executive Officer
Cantel Medical Corp.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Mergers, the adoption of the Merger Agreement, the issuance of STERIS Shares in connection with the Mergers or any other transaction described in the accompanying proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
This document is dated   , 2021, and is first being mailed to stockholders of Cantel on or about   , 2021.

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NOTICE OF SPECIAL MEETING

CANTEL MEDICAL CORP.
NOTICE IS HEREBY GIVEN that a special meeting of stockholders, which is referred to as the Special Meeting, of Cantel Medical Corp., which is referred to as Cantel, will be held on    , 2021     at     Eastern Time. In light of the public health impact of the ongoing COVID-19 pandemic and in order to protect the health and well-being of our stockholders, the Special Meeting will be held virtually via live webcast at www.virtualshareholdermeeting.com/CMD2021SM. There will be no physical in-person meeting. The Special Meeting will be held for the following purposes:
to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of January 12, 2021, as such agreement may be amended from time to time, which is referred to as the Merger Agreement, among Cantel, and STERIS plc, Solar New US Holding Co, LLC, which is referred to as US Holdco, and Crystal Merger Sub 1, LLC, which is referred to as Crystal Merger Sub, as amended on March 1, 2021, which provides for the merger of Grand Canyon Merger Sub, Inc., a Delaware corporation and direct and wholly owned subsidiary of Canyon Newco (as defined below), which is referred to as Canyon Merger Sub, with and into Cantel, with Cantel surviving the merger, which is referred to as the Pre-Closing Merger, followed by the merger of Crystal Merger Sub with and into Canyon HoldCo, Inc., a Delaware corporation and direct and wholly owned subsidiary of Cantel, which is referred to as Canyon Newco, with Canyon Newco surviving the merger, which is referred to as the First Merger, followed by the merger of Canyon Newco with and into US Holdco, with US Holdco surviving the merger, which is referred to as the Second Merger and, collectively with the Pre-Closing Merger and the First Merger, referred to as the Mergers, and the other transactions contemplated by the Merger Agreement, pursuant to which holders of shares of common stock, par value $0.10 per share, of Cantel, which is referred to as Cantel Common Stock, will ultimately receive for each share of Cantel Common Stock (i) 0.33787 ordinary shares, par value $0.001 per share, of STERIS plc, and (ii) $16.93 in cash for each share of Cantel Common Stock held immediately prior to consummation of the Mergers, which proposal is referred to as the Cantel Merger Proposal; and
to consider and vote on a proposal to approve, by a non-binding advisory vote, certain compensation that may be paid or become payable to Cantel’s named executive officers that is based on or otherwise relates to the Mergers, which proposal is referred to as the Compensation Proposal.
Approval of Cantel’s stockholders, who are referred to as Cantel Stockholders, for the Cantel Merger Proposal is required to complete the Mergers. Cantel Stockholders will also be asked to approve the Compensation Proposal. Cantel will transact no other business at the Special Meeting. Under Cantel’s bylaws, whether or not there is a quorum, the chairman of the Special Meeting may adjourn the Special Meeting, and may elect to do so to, among other things, solicit additional proxies if there are not sufficient votes at the time of the Special Meeting in favor of the Cantel Merger Proposal. The record date for the Special Meeting has been set as    , 2021, which is referred to as the Record Date. Only Cantel Stockholders of record as of the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. For additional information, see the section entitled “Special Meeting of Cantel Stockholders” beginning on page 13 of the proxy statement/prospectus accompanying this notice.
Cantel’s Board Of Directors unanimously recommends that you vote “FOR” the Cantel Merger Proposal and “FOR” the Compensation Proposal.
Each of the above-mentioned proposals are described in more detail in the accompanying proxy statement/prospectus, which you should read carefully in its entirety before you vote. A copy of the Merger Agreement is attached as Annex A-1 and Annex A-2 to the accompanying proxy statement/prospectus and a copy of the Voting Agreement is attached as Annex E to the accompanying proxy statement/prospectus.
PLEASE VOTE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. IF YOU LATER DESIRE TO REVOKE OR CHANGE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. FOR FURTHER INFORMATION CONCERNING THE PROPOSALS BEING VOTED UPON, USE OF THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.

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Your vote is important. Approval of the Cantel Merger Proposal by Cantel Stockholders is a condition to the Mergers and requires the affirmative vote of a majority of the shares of Cantel Common Stock outstanding as of the close of business on the Record Date and entitled to vote on the Cantel Merger Proposal. Cantel Stockholders are requested to complete, date, sign and return the enclosed proxy in the envelope provided, which requires no postage if mailed in the United States, or to submit their votes electronically via the Internet or by telephone. Simply follow the instructions provided on the enclosed proxy card. Abstentions will have the same effect as a vote “AGAINST” the Cantel Merger Proposal.
BY ORDER OF THE BOARD OF DIRECTORS,
Jeffrey Z. Mann
Corporate Secretary

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ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates by reference important business and financial information about STERIS plc, which is referred to as STERIS, and Cantel Medical Corp., which is referred to as Cantel, from other documents that STERIS and Cantel have filed with the Securities and Exchange Commission, which is referred to as the SEC, and that are not contained, or delivered with the proxy statement/prospectus. For a listing of documents incorporated by reference herein and additional information on how you can obtain copies of these documents free of charge from STERIS or Cantel, please see the section entitled “Where You Can Find More Information” beginning on page 152. This information is also available for you to review free of charge through the SEC’s website at www.sec.gov.
You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference herein or other information concerning STERIS or Cantel, without charge, upon written or oral request to the applicable company’s executive offices. The respective addresses and telephone numbers of such executive offices are listed below.
For information about STERIS:

STERIS plc
c/o STERIS
Attn: Investor Relations
5960 Heisley Road
Mentor, Ohio 44060
+1 440 354 2600
julie_winter@steris.com
For information about Cantel:

Cantel Medical Corp.
Attn: Investor Relations
150 Clove Road
Little Falls, NJ 07424
1 763 553 3341
investorrelations@cantelmedical.com
If you would like to request documents, please do so by    , 2021, in order to receive them before the special meeting of Cantel’s stockholders.
In addition, if you have questions about the mergers or the accompanying proxy statement/prospectus, would like additional copies of the proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, please contact Cantel’s proxy solicitor:

1407 Broadway, 27th Floor
New York, NY 10018
proxy@mackenziepartners.com
(212) 929-5500 or toll-free (800) 322-2885
For a more detailed description of the information incorporated by reference in the accompanying proxy statement/prospectus and how you may obtain it, see the section captioned “Where You Can Find More Information” beginning on page 152 of the accompanying proxy statement/prospectus.

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ABOUT THIS PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form S-4 filed with the SEC by STERIS (Registration No. 333-    ), constitutes a prospectus of STERIS under Section 5 of the Securities Act with respect to the ordinary shares of STERIS, par value $0.001 per share, which are referred to as the STERIS Shares, to be ultimately issued to existing stockholders of Cantel, who are referred to as the Cantel Stockholders, pursuant to a series of mergers, which are referred to as the Mergers, as described more thoroughly in this proxy statement/prospectus, which are contemplated by the Agreement and Plan of Merger, dated as of January 12, 2021, as amended on March 1, 2021, as such agreement may be further amended from time to time, which is referred to as the Merger Agreement, among STERIS, Cantel, Solar New US Holding Co, LLC, a Delaware limited liability company and wholly owned subsidiary of STERIS, which is referred to as US Holdco, and Crystal Merger Sub 1, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of US Holdco, which is referred to as Crystal Merger Sub. Each of these entities are individually referred to as a Party, and they are collectively referred to as the Parties. This document also constitutes a proxy statement of Cantel under Section 14(a) of the Securities Exchange Act of 1934, as amended, which is referred to as the Exchange Act.
STERIS has supplied all information contained or incorporated by reference herein relating to STERIS, US Holdco and Crystal Merger Sub, and Cantel has supplied all information contained or incorporated by reference herein relating to Cantel, Canyon HoldCo, Inc., a Delaware corporation and direct and wholly owned subsidiary of Cantel, which is referred to as Canyon Newco, and Grand Canyon Merger Sub, Inc., a Delaware corporation and direct and wholly owned subsidiary of Canyon Newco, which is referred to as Canyon Merger Sub. STERIS and Cantel have both contributed information relating to the Mergers contained in this proxy statement/prospectus.
STERIS and Cantel have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference herein, and STERIS and Cantel take no responsibility for, and can provide no assurance as to the reliability of, any information others may give you. This proxy statement/prospectus is dated    , 2021, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein. Further, you should not assume that the information incorporated by reference herein is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Cantel Stockholders nor the issuance of STERIS Shares pursuant to the Merger Agreement will create any implication to the contrary.

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QUESTIONS AND ANSWERS ABOUT THE MERGERS AND THE SPECIAL MEETING
The following are answers to certain questions that you may have regarding the mergers and the special meeting of stockholders of Cantel, which is referred to as the Special Meeting. STERIS and Cantel urge you to read carefully the remainder of this document, because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to, and the documents incorporated by reference in, this document.
Q:
Why am I receiving this proxy statement/prospectus?
A:
You are receiving this proxy statement/prospectus because you were a stockholder of record of Cantel on    , 2021, which is referred to as the Record Date. On January 11, 2021 (U.S. Eastern Time), the board of directors of STERIS, which is referred to as the STERIS Board of Directors, and the board of directors of Cantel, which is referred to as the Cantel Board of Directors, unanimously approved the Merger Agreement, pursuant to which STERIS will acquire Cantel by means of a series of mergers, which are referred to as the Mergers, as described more thoroughly in the section “The Mergers—Transaction Structure on page 50. The Merger Agreement, which governs the terms of the Mergers, is attached to this proxy statement/prospectus as Annex A-1 and Annex A-2.
The Merger Agreement must be adopted by the stockholders of Cantel, who are referred to as Cantel Stockholders, in accordance with the General Corporation Laws of the State of Delaware, which is referred to as the DGCL, in order for the Mergers to be consummated. Cantel is holding the Special Meeting to obtain that approval. Cantel Stockholders will also be asked to vote on the Compensation Proposal, as defined below, at the Special Meeting.
Q:
When and where will the special meeting take place?
A:
The Special Meeting will be held on    , 2021, at     Eastern Time. In light of the public health impact of the ongoing coronavirus pandemic, which is referred to as COVID-19, and in order to protect the health and well-being of the Cantel Stockholders, the Special Meeting will be held virtually via live webcast at www.virtualshareholdermeeting.com/CMD2021SM.
Q:
What matters will be considered at the Special Meeting?
A:
The Cantel Stockholders will be asked to:
consider and vote on a proposal to adopt the Merger Agreement, which provides for, among other things, that the merger of Canyon Merger Sub, with and into Cantel, with Cantel surviving the merger, which is referred to as the Pre-Closing Merger, followed by the merger of Crystal Merger Sub with and into Canyon Newco, with Canyon Newco surviving the merger, which is referred to as the First Merger, followed by the merger of Canyon Newco with and into US Holdco, with US Holdco surviving the merger, which is referred to as the Second Merger, and, collectively with the Pre-Closing Merger and the First Merger, referred to as the Mergers, which proposal is referred to as the Cantel Merger Proposal; and
consider and vote on a proposal to approve, by a non-binding advisory vote, certain compensation that may be paid or become payable to Cantel’s named executive officers that is based on or otherwise relates to the Mergers, which proposal is referred to as the Compensation Proposal.
Q:
Is my vote important?
A:
Yes. The Mergers cannot be completed unless the Merger Agreement is adopted by holders representing a majority of the outstanding shares of common stock, par value $0.10 per share of Cantel, which is referred to as Cantel Common Stock, entitled to vote thereon at the Special Meeting. Only Cantel Stockholders as of the close of business on the Record Date are entitled to vote at the Special Meeting. The Cantel Board of Directors unanimously recommends that such Cantel Stockholders vote “FOR” the approval of the Cantel Merger Proposal and “FOR” the approval of the Compensation Proposal.
Q:
If my shares of Cantel Common Stock are held in “street name” by my bank, broker or other nominee, will my bank, broker, or other nominee automatically vote those shares for me?
A:
No. If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee,
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which is referred to as holding shares in “street name,” your bank, broker or other nominee cannot vote your shares on any of the proposals at the Special Meeting without instructions from you.
Under the rules of the New York Stock Exchange, which is referred to as the NYSE, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the NYSE determines to be “non-routine.” Under the NYSE rules, brokers are not permitted to vote on any matters to be considered at the Special Meeting. As a result, your shares will not be voted on any matter unless you affirmatively instruct your broker, bank or nominee to vote your shares in one of the ways indicated by your broker, bank or other nominee.
A “broker non-vote” occurs when a broker submits a proxy that states that the broker does not vote for some or all of the proposals because the broker has not received instructions from the beneficial owners on how to vote on the proposals and does not have discretionary authority to vote in the absence of instructions. Because brokers will not have discretionary authority to vote on any of the proposals at the Special Meeting, no “broker non-votes” can occur at the Special Meeting.
Q:
What stockholder vote is required for the approval of each proposal brought before the Special Meeting? What will happen if I fail to vote or abstain from voting on each proposal?
A:
The Cantel Merger Proposal. Approval of the Cantel Merger Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock outstanding as of the close of business on the Record Date and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINST” the Cantel Merger Proposal.
The Compensation Proposal. Approval of the Compensation Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock present in person virtually or by proxy at the Special Meeting and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINSTthe Compensation Proposal.
Q:
What will Cantel Stockholders receive if the Mergers are completed?
A:
At the effective time of the Pre-Closing Merger, each share of Cantel Common Stock issued and outstanding immediately prior to the effective time of the Pre-Closing Merger will be automatically converted into the right to receive one share of common stock of Canyon Newco, which is referred to as Canyon Newco Common Stock. At the effective time of the First Merger, each share of Canyon Newco Common Stock issued and outstanding immediately prior to the effective time of the First Merger will be converted into the right to receive cash consideration of $16.38 and stock consideration of 0.33787 of STERIS Shares, which collectively with such cash consideration is referred to as the Merger Consideration. For more information regarding the Merger Consideration see the section entitled “The Merger—Consideration to Cantel Stockholders” beginning on page 50.
Q:
What will the holders of Cantel equity awards receive in the Mergers?
A:
Each award of restricted stock units corresponding to Cantel Common Stock, which is referred to as a Cantel RSU Award (other than an award held by a non-employee director of Cantel), will be converted into a STERIS restricted stock unit award, which is referred to as a STERIS RSU Award, based on an equity award exchange ratio that is intended to preserve the value of the award immediately before and after the conversion, with performance-based vesting Cantel RSU Awards converting based on 100% of the target number of shares of Cantel Common Stock covered by the award and subject to service-based vesting following the Mergers. Each Cantel RSU Award held by a non-employee director of Cantel will be converted into the right to receive the Merger Consideration in respect of each share of Cantel Common Stock covered by such Cantel RSU Award.
Q:
How does the Cantel Board of Directors recommend that I vote?
A:
The Cantel Board of Directors recommends that Cantel Stockholders vote “FOR” the approval of the Cantel Merger Proposal and “FOR” the approval of the Compensation Proposal. For more information
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regarding how the Cantel Board of Directors recommends that Cantel Stockholders vote, see the section entitled “Recommendation of the Cantel Board of Directors and Reasons for the Mergers beginning on page 56.
Q:
What is named executive officer compensation and why are Cantel Stockholders being asked to vote on it?
A:
As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, which were enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Cantel is required to provide Cantel Stockholders an opportunity to vote to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Cantel’s named executive officers that is based on or otherwise relates to the Mergers. Cantel urges Cantel Stockholders to read the section entitled “The Mergers—Interests of Cantel Directors and Executive Officers in the Mergers” beginning on page 74.
Q:
How will STERIS fund the cash portion of the Merger Consideration?
A:
STERIS intends to fund the cash consideration of the Merger Consideration, as well as the refinancing, prepayment, replacement, redemption, repurchase, settlement upon conversion, discharge or defeasance of certain existing indebtedness of Cantel and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, through the incurrence of approximately $2.1 billion of new indebtedness. STERIS intends to incur this indebtedness through the issuance of senior notes and the entry into a new term loan agreement, although all or a portion of the expected $2.1 billion of new indebtedness may be initially obtained through a bridge loan pursuant to a bridge facility commitment previously obtained by STERIS. However, there can be no assurance that STERIS will be able to execute such financing transactions on favorable terms or at all.
Q:
Who is entitled to vote at the special meeting?
A:
   , 2021 is the Record Date for the Special Meeting. All stockholders of record of Cantel Common Stock as of the close of business on the Record Date are entitled to receive notice of, and to vote at, the Special Meeting, provided that those shares remain outstanding on the date of the Special Meeting. Virtual attendance at the Special Meeting is not required to vote. See the section entitled “Questions and Answers About the Mergers and the Special Meetings—How can I vote my shares without attending the Special Meeting?” beginning on page 5 for instructions on how to vote your shares without attending the Special Meeting.
Q:
What is a proxy?
A:
If you are a stockholder of record of Cantel Common Stock as of the close of business on the Record Date, and you vote via the Internet, by telephone or by signing, dating and returning your proxy card in the enclosed postage-paid envelope, you designate two of Cantel’s officers as your proxies at the Special Meeting, each with full power to act without the other and with full power of substitution. These two officers are Charles M. Diker and Jeffrey Z. Mann.
Q:
How many votes do I have?
A:
Each Cantel Stockholder of record is entitled to one vote for each share of Cantel Common Stock held of record by him, her or it as of the close of business on the Record Date.
Q:
What constitutes a quorum for the special meeting?
A:
A quorum is the minimum number of stockholders necessary to hold a valid meeting. A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of shares of Cantel Common Stock outstanding and entitled to vote on the Record Date are present in person virtually or represented by proxy at the Special Meeting. All shares of Cantel Common Stock represented by proxy are counted as present for purposes of establishing a quorum, including abstentions. Under the NYSE rules, brokers who hold shares in “street name” for a beneficial owner of such shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner. However, brokers are not allowed to exercise their voting discretion
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with respect to the approval of proposals that the NYSE determines to be “non-routine” and will not vote on such proposals if the broker has not received instructions from beneficial owners on how to vote such beneficial owners shares on the “non-routine” proposal. Under the NYSE rules, brokers are not permitted to vote on any of the matters to be considered at the Special Meeting. As a result, shares of Cantel Common Stock will not be voted on any matter unless Cantel Stockholders affirmatively instruct the bank, broker or other nominee how to vote its shares in one of the ways indicated by such bank, broker or other nominee.
Q:
What will happen to Cantel as a result of the Mergers?
A:
As result of the Mergers, Cantel will become a wholly owned indirect subsidiary of STERIS. In connection with the Mergers, Cantel incorporated Canyon Newco and Canyon Newco incorporated Canyon Merger Sub. At the effective time of the Pre-Closing Merger, Canyon Merger Sub will merge with and into Cantel with Cantel surviving the merger as a direct and wholly owned subsidiary of Canyon Newco, and in exchange for issued and outstanding shares of Cantel Common Stock, each Cantel Stockholder will receive the right to receive an equal number of shares of Canyon Newco Common Stock. Immediately following the Pre-Closing Merger, Cantel will convert from a Delaware corporation to a Delaware limited liability company, which is referred to as the Pre-Closing Conversion. Following the Pre-Closing Conversion and at the effective time of the First Merger, Crystal Merger Sub will merge with and into Canyon Newco, with Canyon Newco surviving the merger as a direct and wholly owned subsidiary of US Holdco, and immediately following the First Merger, at the effective time of the Second Merger, Canyon Newco will merge with and into US Holdco, with US Holdco surviving the merger and remaining a wholly owned subsidiary of STERIS. As a result of the Pre-Closing Merger, the First Merger and the Second Merger, which are collectively referred to as the Mergers, Cantel will become a direct and wholly owned subsidiary of US Holdco and an indirect wholly owned subsidiary of STERIS.
Q:
I own shares of Cantel Common Stock. What will happen to those shares as a result of the Mergers?
A:
If the Mergers are completed, (a) your shares of Cantel Common Stock will be converted into an equal number of shares of Canyon Newco Common Stock and will be cancelled and (b) your shares of Canyon Newco Common Stock will then be cancelled and thereafter represent only the right to receive, on the terms and subject to the conditions set forth in the Merger Agreement, the applicable per share Merger Consideration. See the section entitled “The Merger—Consideration to Cantel Stockholders” beginning on page 50.
Q:
Where will the STERIS Shares that Cantel Stockholders receive in the Mergers be publicly traded?
A:
Assuming the Mergers are completed, the STERIS Shares issued in connection with the First Merger will be listed and traded on the NYSE.
Q:
What happens if the Mergers are not completed?
A:
If the Merger Agreement is not adopted by Cantel Stockholders or if the Mergers are not completed for any other reason, shares of Cantel Common Stock will remain outstanding and will not be converted into shares of Canyon Newco Common Stock and Cantel Stockholders will not receive any Merger Consideration. Cantel will remain an independent public company and the Cantel Common Stock will continue to be listed and traded on the NYSE. Additionally, if the Merger Agreement is not adopted by Cantel Stockholders or the Mergers are not completed for any other reason, STERIS will not issue STERIS Shares or pay cash consideration to Cantel Stockholders. If the Merger Agreement is terminated under specified circumstances, Cantel (depending on the circumstances) may be required to pay to STERIS a termination fee. See the section entitled “The Merger Agreement—Termination Fee” on page 92.
Q:
How can I vote my shares virtually at the Special Meeting?
A:
Shares of Cantel Common Stock held directly in your name as stockholder of record as of the close of business on the Record Date may be voted virtually at the Special Meeting. If you choose to vote your shares of Cantel Common Stock virtually at the Special Meeting, you will need the sixteen-digit control number included on your proxy card or on the instructions accompanying the proxy statement/prospectus
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mailed to you in order to enter the Special Meeting. Even if you plan to virtually attend the Special Meeting, the Cantel Board of Directors recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to virtually attend the Special Meeting.
If your shares of Cantel Common Stock are held in “street name,” then the bank, broker or other nominee is considered the stockholder of record for purposes of voting at the Special Meeting. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your bank, broker or other nominee. For directions on how to vote shares held beneficially in street name, please refer to the voting instruction card provided by your bank, broker or other nominee.
Q:
How can I vote my shares without attending the Special Meeting?
A:
If you hold your shares of Cantel Common Stock directly as the stockholder of record you may direct your vote by proxy without virtually attending the Special Meeting. You can vote by proxy via the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card.
Cantel Stockholders whose shares are held in “street name” by a bank, broker, nominee, fiduciary or other custodian should refer to the proxy card, voting instruction form or other information forwarded by such bank, broker, nominee, fiduciary or other custodian for instructions on how to vote their shares.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares of Cantel Common Stock are registered directly in your name with Cantel’s transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held by a bank, in a stock brokerage account or other nominee, then you are considered the beneficial owner of those shares, which are considered to be held in street name. Access to proxy materials is being provided to you by your bank, broker or other nominee who is considered the stockholder of record with respect to those shares.
Q:
If a stockholder gives a proxy, how will the shares of Cantel Common Stock covered by the proxy be voted?
A:
If you provide a proxy, regardless of whether you provide that proxy via the Internet, by telephone or by completing and returning the enclosed proxy card, the individuals named on the enclosed proxy card will vote your shares of Cantel Common Stock in the way that you indicate when providing your proxy in respect of the shares of Cantel Common Stock you hold in Cantel. When completing the Internet or telephone process or the proxy card, you may specify whether your shares of Cantel Common Stock should be voted for or against, or abstain from voting on, all, some or none of the specific items of business to come before the Special Meeting.
Q:
How will my shares be voted if I return a blank proxy?
A:
If you sign, date and return your proxy and do not indicate how you want your shares of Cantel Common Stock to be voted, then your shares of Cantel Common Stock will be voted “FOR” the approval of the Cantel Merger Proposal and “FOR” the approval of the Compensation Proposal.
Q:
Can I change my vote after I have submitted my proxy?
A:
Yes. If you are a stockholder of record of Cantel Common Stock as of the close of business on the Record Date, whether you vote via the Internet, by telephone or mail, you can change or revoke your proxy before it is voted at the Special Meeting in one of the following ways:
submit a new proxy card bearing a later date;
vote again via the Internet or by telephone at a later time;
give written notice before the Special Meeting to the Secretary of Cantel, who is referred to as the Cantel Corporate Secretary, at the address listed for Cantel in the section entitled “Where You Can Find More Information” beginning on page 152, stating that you are revoking your proxy; or
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virtually attend the Special Meeting and vote your shares at the Special Meeting. Please note that your virtual attendance at the Special Meeting will not alone serve to revoke your proxy.
If you are a beneficial owner of Cantel Common Stock as of the close of business on the Record Date, you must follow the instructions of your bank, broker or other nominee to revoke or change your voting instructions.
Q:
Where can I find the voting results of the Special Meeting?
A:
The preliminary voting results will be announced at the Special Meeting. In addition, within four business days following the Special Meeting, Cantel intends to report the final voting results in a Current Report on Form 8-K filed with the SEC. If the final voting results have not been certified within such four-business-day period, Cantel will report the preliminary voting results in a Current Report on Form 8-K at that time and will file an amendment to the Current Report on Form 8-K to report the final voting results within four business days of the date that the final results are certified.
Q:
If I do not favor the adoption of the Merger Agreement as a Cantel Stockholder, what are my rights?
A:
Under the DGCL, record holders of Cantel Common Stock who do not vote in favor of the Cantel Merger Proposal and who otherwise properly exercise and perfect, and do not otherwise lose, their appraisal rights in accordance with Section 262 of the DGCL will be entitled to seek appraisal for, and obtain payment in cash for, the judicially determined fair value of, their shares of Cantel Common Stock, in lieu of receiving shares of Canyon Newco Common Stock as a result of the Pre-Closing Merger and, therefore, the Merger Consideration as a result of the First Merger. The “fair value” could be higher or lower, or the same as, consideration payable as a result of the Pre-Closing Merger or the First Merger. Cantel Stockholders who wish to exercise the right to seek an appraisal of their shares must so advise Cantel by submitting a written demand for appraisal in the form described in this proxy statement/prospectus prior to the vote on the approval of the Cantel Merger Proposal at the Special Meeting and must otherwise follow the procedures prescribed by Section 262 of the DGCL. A person having a beneficial interest in shares of Cantel Common Stock held of record in the name of another person, such as your bank, broker or other nominee, must act promptly to cause the record holder to follow the steps summarized in this proxy statement/prospectus in a timely manner to perfect appraisal rights.
The full text of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus. Cantel Stockholders are encouraged to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising and perfecting the right to seek appraisal, Cantel Stockholders who are considering exercising and perfecting that right are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions may result in a waiver of, or inability to exercise, appraisal rights. For more information regarding appraisal rights, see the section entitled “Appraisal Rights of Cantel Stockholders” beginning on page 17.
Q:
Are there any risks that I should consider as a Cantel Stockholder in deciding how to vote?
A:
Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 31. You also should read and carefully consider the risk factors of Cantel and STERIS contained in the documents that are incorporated by reference herein.
Q:
Are any Cantel Stockholders already committed to vote in favor of the proposals?
A:
Yes. On January 12, 2021, Charles M. Diker, Mark N. Diker and Diker Management, LLC entered into a voting and support agreement, which is referred to as the Voting Agreement, with STERIS, US Holdco and Crystal Merger Sub, pursuant to which they have agreed, among other things, to vote all of the shares of Cantel Common Stock beneficially owned by them (constituting approximately 10.4% of the issued and outstanding shares of Cantel Common Stock as of January 8, 2021), excluding certain shares of Cantel Common Stock that are subject to a pre-existing 10b5-1 trading plan, in favor of the adoption of the Merger Agreement, on the terms and subject to the conditions set forth in the Voting Agreement as discussed in more detail in the section entitled “Voting Agreement” beginning on page 12.
Q:
What happens if I sell my shares of Cantel Common Stock before the Special Meeting?
A:
The Record Date for Cantel Stockholders entitled to vote at the Special Meeting is earlier than the date of the Special Meeting. If you transfer your shares of Cantel Common Stock after the Record Date but before
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the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting but will have transferred the right to receive shares of Canyon Newco Common Stock and the per share Merger Consideration in connection with the Mergers to the person to whom you transferred your shares of Cantel Common Stock.
Q:
What are the material U.S. federal income tax consequences of the Pre-Closing Merger and the Pre-Closing Conversion to me?
A:
For U.S. federal income tax purposes, it is intended that the Pre-Closing Merger and the Pre-Closing Conversion, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The obligation of Cantel to complete the transaction is conditioned upon the receipt of an opinion from Wachtell, Lipton, Rosen & Katz (or if Wachtell, Lipton, Rosen & Katz is unwilling or unable to provide such tax opinion, at the election of STERIS, from Jones Day) to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Pre-Closing Merger and the Pre-Closing Conversion, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. On the basis of such opinion that the Pre-Closing Merger and the Pre-Closing Conversion, taken together, qualify as a reorganization, U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger”), of Cantel Common Stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the conversion of the shares of Cantel Common Stock in the Pre-Closing Merger into the equal number of shares of Canyon Newco Common Stock.
The U.S. federal income tax consequences of the Pre-Closing Merger and the Pre-Closing Conversion, taken together, to non-U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger”) are expected to be similar to the U.S. federal income tax consequences to U.S. holders, subject to certain exceptions.
Holders of Cantel Common Stock should read the information included under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18 for a more detailed discussion of the material U.S. federal income tax consequences of the Pre-Closing Merger followed by the Pre-Closing Conversion, and such holders are urged to consult with their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the Pre-Closing Merger followed by the Pre-Closing Conversion.
Q:
What are the material U.S. federal income tax consequences of the First Merger and the Second Merger to me?
A:
For U.S. federal income tax purposes, it is intended that the First Merger and the Second Merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a)(1) of the Code will not apply to cause the transaction to result in gain recognition by holders of Canyon Newco Common Stock that exchange their shares of Canyon Newco Common Stock for the Merger Consideration (other than any such holder who would be treated as a “five-percent transferee shareholder” (within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii)) of STERIS following the Mergers and who does not enter into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8 or that enters into such agreement but does not comply with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain). The obligation of Cantel to complete the First Merger and the Second Merger is conditioned upon the receipt of an opinion from Wachtell, Lipton, Rosen & Katz (or if Wachtell, Lipton, Rosen & Katz is unwilling or unable to provide such tax opinion, at the election of STERIS, from Jones Day) to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the First Merger and the Second Merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and will not result in gain recognition to the holders of Canyon Newco Common Stock pursuant to Section 367(a)(1) of the Code (assuming that in the case of any such holder who would be treated as a “five-percent transferee shareholder” of STERIS within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii), such shareholder enters into a five-year gain recognition agreement in the form
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provided in Treasury Regulations Section 1.367(a)-8(c) and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain).
On the basis of such opinion that the First Merger and the Second Merger, taken together, qualify as a reorganization and that Section 367(a) does not generally apply to require gain recognition, and assuming that, in the case of any holder who would be treated as a “five-percent transferee shareholder” (within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii)) of STERIS following the Mergers, such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8 and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain), U.S. holders that surrender shares of Canyon Newco Common Stock in exchange for the Merger Consideration generally will recognize gain, but not loss, in an amount equal to the lesser of: (i) the cash consideration (excluding cash received in lieu of fractional STERIS Shares, if any) received by such U.S. holder in the First Merger and (ii) the excess, if any, of (a) the sum of the cash consideration (excluding cash received in lieu of fractional STERIS Shares, if any) plus the fair market value of the STERIS Shares (including any fractional STERIS Shares deemed received) received by such U.S. holder in the First Merger, over (b) such U.S. holder’s tax basis in its shares of Canyon Newco Common Stock surrendered. In addition, a U.S. holder generally will recognize gain or loss with respect to any cash received in lieu of fractional STERIS Shares.
The U.S. federal income tax consequences of the First Merger and the Second Merger, taken together, to non-U.S. holders are expected to be similar to the U.S. federal income tax consequences to U.S. holders, except that any gain required to be recognized on the receipt of the Merger Consideration (including cash in lieu of fractional STERIS Shares) will be subject to U.S. federal income tax only in limited circumstances.
Holders of Cantel Common Stock should read the information included under the section titled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18 for a more detailed discussion of the material U.S. federal income tax consequences of the First Merger and the Second Merger, and such holders are urged to consult with their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the First Merger and the Second Merger.
Q:
When are the Mergers expected to be completed?
A:
Subject to the satisfaction or waiver of the closing conditions described in the section entitled “The Merger Agreement—Conditions to Closing” beginning on page 89, including the adoption of the Merger Agreement by Cantel Stockholders at the Special Meeting, the Mergers are expected to close by June 30, 2021. However, it is possible that factors outside the control of both companies could result in the Mergers being completed at a later time, or not being completed at all.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
Cantel has retained MacKenzie Partners, Inc., which is referred to as MacKenzie, to assist in the solicitation process. Cantel will pay MacKenzie a fee of approximately $30,000, as well as reasonable and documented out-of-pocket expenses. Cantel also has agreed to indemnify MacKenzie against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
Q:
What are the conditions to completion of the Mergers?
A:
In addition to the approval of the Cantel Merger Proposal by Cantel Stockholders as described above, completion of the Mergers is subject to the satisfaction of a number of other conditions, including, among others: the expiration or termination of the waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which is referred to as the HSR Act, as well as certain other antitrust and foreign direct investment laws, the absence of any governmental order or law prohibiting the consummation of the Mergers, the approval to list STERIS Shares issuable in connection with the Mergers on the NYSE, the accuracy of the representations and warranties under the Merger Agreement (subject to certain materiality qualifiers), STERIS’s and Cantel’s performance of their respective obligations under the Merger Agreement in all material respects, the absence of a material adverse effect for STERIS (as described in the Merger Agreement), the absence of a material adverse effect for Cantel (as described in the Merger Agreement), and Cantel having received a written opinion of Wachtell, Lipton, Rosen & Katz (or if
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Wachtell, Lipton, Rosen & Katz is unwilling or unable to provide such tax opinion, at the election of STERIS, from Jones Day) to the effect that (i) the Pre-Closing Merger and the Pre-Closing Conversion, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) the First Merger and Second Merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and (iii) the First Merger and the Second Merger, taken together, will not result in gain recognition to the stockholders of Canyon Newco pursuant to Section 367(a)(1) of the Code (assuming that in the case of any such stockholder who would be treated as a “five-percent transferee shareholder” of STERIS within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii), such STERIS shareholder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8(c) and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain). For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Mergers, see the section entitled “The Merger Agreement—Conditions to Closing” beginning on page 89.
Q:
I am a Cantel Stockholder. How do I exchange my shares of Cantel Common Stock for the Merger Consideration?
A:
At the effective time of the Pre-Closing Merger, your shares of Cantel Common Stock will automatically be (i) converted into an equal number of shares of Canyon Newco Common Stock and (ii) cancelled, such that you will no longer hold any shares of Cantel Common Stock following the Pre-Closing Merger. As promptly as practicable after the effective time of the First Merger, the exchange agent appointed by STERIS, which is referred to as the Exchange Agent, will mail to each holder of shares of Canyon Newco Common Stock that are evidenced by certificates or shares of Canyon Newco Common Stock in book-entry form, which is referred to as Book-Entry Canyon Newco Common Stock, entitled to receive Merger Consideration (a) a letter of transmittal or transfer of the Book-Entry Canyon Newco Common Stock to the Exchange Agent and (b) instructions advising such stockholder how to surrender its shares of Canyon Newco Common Stock or transfer the Book-Entry Canyon Newco Common Stock to the Exchange Agent in exchange for the Merger Consideration. You should read these instructions carefully. Assuming that you properly complete and submit a letter of transmittal in accordance with its instructions and surrender your shares of Canyon Newco Common Stock for cancellation, you will not need to take any further action in order to receive the Merger Consideration. More information on the documentation you are required to deliver to the exchange agent can be found in the section entitled “The Merger Agreement—Exchange Agent” beginning on page 81.
Q:
What equity stake will Cantel Stockholders hold in STERIS immediately following the Mergers?
A:
Based on the number of issued and outstanding STERIS Shares and Cantel Common Stock as of January 8, 2021, and the exchange ratio of 0.33787 STERIS Shares for each share of Cantel Common Stock, holders of Cantel Common Stock would hold, in the aggregate, approximately 14.3% of the issued and outstanding STERIS Shares immediately following the closing of the Mergers, which is referred to as the Closing. The exact equity stake of Cantel Stockholders in STERIS immediately following the Mergers will depend on the number of STERIS Shares and Cantel Common Stock issued and outstanding immediately prior to the Mergers, as provided in the section entitled “The Mergers—Consideration to Cantel Stockholders” beginning on page 50.
Q:
I am a Cantel Stockholder. Will the STERIS Shares issued in the Mergers receive a dividend?
A:
After the Closing, STERIS Shares issued in connection with the Mergers will carry with them the right to receive the same dividends on the STERIS Shares as all other holders of STERIS Shares, for any dividend the record date for which occurs after the Mergers are completed.
STERIS has paid a quarterly dividend on the STERIS Shares since it became the parent of the STERIS group in 2019 and STERIS’s predecessors paid dividends prior to 2019. STERIS last declared a dividend on February 2, 2021, in an amount of $0.40 per STERIS Share, which is to be paid on March 25, 2021 to shareholders of STERIS Shares, who are referred to as STERIS Shareholders, of record as of the close of business on February 24, 2021. Any future STERIS dividends will remain subject to approval by the STERIS Board of Directors and there can be no assurance any will be approved.
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Q:
What should I do now?
A:
You should read this proxy statement/prospectus carefully in its entirety, including the annexes, and return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope or submit your voting instructions via the Internet or by telephone as soon as possible so that your shares of Cantel Common Stock will be voted in accordance with your instructions.
Q:
Whom do I call if I have questions about the Special Meeting or the Mergers?
A:
If you have questions about the Special Meeting or the Mergers, or desire additional copies of this proxy statement/prospectus or additional proxies, you may contact MacKenzie, toll-free at (800) 322-2885 or collect at (212) 929-5500.
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SUMMARY
This summary highlights selected information contained in this proxy statement/prospectus and does not contain all of the information that may be important to you. We urge you to read this entire proxy statement/prospectus, including the Annexes, the documents incorporated by reference and other documents referred to in this document, carefully and in full. The page references have been included in this summary to direct you to a more complete description of the topics presented below. You may obtain the information incorporated by reference into this document without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 152.
Information About the Companies (Page 43)
STERIS plc
70 Sir John Rogerson’s Quay
Dublin 2 Ireland D02 R296
Phone: +353 1 232 2000
STERIS plc is a public limited company incorporated under the laws of Ireland on December 22, 2016. It became the parent company of the STERIS group of companies on March 28, 2019, in connection with a redomiciliation from the United Kingdom to Ireland, which is referred to as the Redomiciliation. STERIS’s registered office is located in Dublin, Ireland and its U.S. administrative offices are located in Mentor, Ohio. STERIS is a leading provider of infection prevention and other procedural products and services. STERIS offers its Customers a unique mix of innovative capital equipment products, such as sterilizers and washers, surgical tables, lights and equipment management systems and connectivity solutions such as operating room integration; consumable products including detergents and gastrointestinal endoscopy accessories and other products and services, including equipment installation and maintenance, microbial reduction of medical devices, instrument and scope repair solutions, laboratory services and outsourced instrument reprocessing.
STERIS Shares are listed on the NYSE, trading under the symbol “STE.”
Cantel Medical Corp.
150 Clove Road
Little Falls, New Jersey 07424
Phone: (973) 890-7220
Cantel Medical Corp. is a leading provider of infection prevention products and services in the healthcare market, specializing in the following reportable segments: Medical, Life Sciences, Dental and Dialysis. Most of Cantel’s equipment, consumables and supplies are used to help prevent the occurrence or spread of infections. Cantel operates in four segments through wholly-owned subsidiaries in the U.S. and internationally. Cantel’s products include specialized medical device reprocessing systems for endoscopy and renal dialysis, advanced water purification equipment, sterilants, disinfectants and cleaners, sterility assurance monitoring products for hospitals and dental clinics, disposable infection control products primarily for dental and GI endoscopy markets, instruments and instrument reprocessing workflow systems serving the dental industry, dialysate concentrates, hollow fiber membrane filtration and separation products. Additionally, Cantel provides technical service for its products.
Shares of Cantel Common Stock are listed on the NYSE, trading under the symbol “CMD.”
Solar New US Holding Co, LLC
5960 Heisley Road
Mentor, Ohio 44060
Phone: (440) 354-2600
US Holdco, whose legal name is Solar New US Holding Co, LLC, serves primarily as a holding company, holding all of the membership interests in Solar New US Parent Co, LLC. In addition, US Holdco makes loans to and collects interest from affiliates.
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Crystal Merger Sub 1, LLC
5960 Heisley Road
Mentor, Ohio 44060
Phone: (440) 354-2600
Crystal Merger Sub, whose legal name is Crystal Merger Sub 1, LLC, is a direct, wholly owned subsidiary of US Holdco. Upon the completion of the First Merger, Crystal Merger Sub will cease to exist. Crystal Merger Sub was formed in Delaware on January 7, 2021 for the sole purpose of effectuating the First Merger.
Canyon HoldCo, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Phone: (973) 890-7220
Canyon Newco, whose legal name is Canyon HoldCo, Inc., is a Delaware corporation and direct and wholly owned subsidiary of Cantel. At the effective time of the Pre-Closing Merger, Canyon Merger Sub will merge with and into Cantel with Cantel surviving the Pre-Closing Merger as a direct and wholly owned subsidiary of Canyon Newco. Upon the completion of the First Merger, Canyon Newco will survive the First Merger as a direct and wholly owned subsidiary of US Holdco. Upon the completion of the Second Merger, Canyon Newco will cease to exist. Canyon Newco was incorporated for the purpose of facilitating the Mergers.
Grand Canyon Merger Sub, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Phone: (973) 890-7220
Canyon Merger Sub, whose legal name is Grand Canyon Merger Sub, Inc., is a Delaware corporation and direct and wholly owned subsidiary of Canyon Newco. Upon completion of the Pre-Closing Merger, Canyon Merger Sub will cease to exist. Canyon Merger Sub was incorporated for the sole purpose of effectuating the Pre-Closing Merger.
The Mergers and the Merger Agreement (Page 79)
The terms and conditions of the Mergers are contained in the Merger Agreement, which is attached as Annex A-1 and Annex A-2 to this proxy statement/prospectus and is incorporated herein by reference. We encourage you to carefully read the Merger Agreement in its entirety because it is the principal document governing the Mergers and the other transactions contemplated by the Merger Agreement.
Upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the DGCL and the Delaware Limited Liability Company Act, which is referred to as the DLLCA, STERIS will acquire Cantel through a multi-step process:
first, immediately prior to the First Merger, (a) Canyon Merger Sub will merge with and into Cantel with Cantel surviving the merger as a direct and wholly owned subsidiary of Canyon Newco in the Pre-Closing Merger and (b) immediately following the effective time of the Pre-Closing Merger, Cantel will convert from a Delaware corporation to a Delaware limited liability company in the Pre-Closing Conversion;
immediately following the Pre-Closing Conversion, Crystal Merger Sub will merge with and into Canyon Newco, with Canyon Newco surviving the merger as a direct and wholly owned subsidiary of US Holdco in the First Merger;
immediately after the effective time of the First Merger, Canyon Newco will merge with and into US Holdco, with US Holdco, which is referred to as the Surviving Company, surviving the merger and remaining an indirect wholly owned subsidiary of STERIS.
Voting Agreement (Page 94)
On January 12, 2021, STERIS, US Holdco, Crystal Merger Sub, Charles M. Diker, Mark N. Diker and Diker Management LLC entered into the Voting Agreement. Subject to the terms and conditions contained
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therein, the Voting Agreement requires each of Charles M. Diker, Mark N. Diker and Diker Management LLC who, collectively, beneficially owned approximately 10.4% of the outstanding shares of Cantel Common Stock as of January 8, 2021, to vote their respective beneficially owned shares of Cantel Common Stock in favor of the adoption of the Merger Agreement.
Recommendation of the Cantel Board of Directors (Page 56)
The Cantel Board of Directors recommends that Cantel Stockholders vote “FOR” the approval of the Cantel Merger Proposal and “FOR” the approval of the Compensation Proposal. For more information regarding how the Cantel Board of Directors recommends that Cantel Stockholders vote, see the section entitled “Recommendation of the Cantel Board of Directors and Reasons for the Merger” beginning on page 56.
Opinion of Cantel’s Financial Advisor (Page 60)
Cantel retained Centerview Partners LLC, which is referred to as Centerview, as financial advisor to Cantel in connection with Cantel’s evaluation of strategic alternatives including with respect to the Mergers and the transactions contemplated by the Merger Agreement. In connection with this engagement, the Cantel Board of Directors requested that Centerview evaluate the fairness, from a financial point of view, to the holders of shares of Cantel Common Stock, other than (a) shares of Cantel Common Stock owned by any subsidiary of Cantel, STERIS, US Holdco, Crystal Merger Sub or by any of the respective subsidiaries or (b) Dissenting Shares (as defined in section entitled “The Merger—Consideration to Cantel Stockholders”), which shares are collectively referred to as Excluded Shares, of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. On January 11, 2021, Centerview rendered to the Cantel Board of Directors its oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 12, 2021, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of shares of Cantel Common Stock (other than Excluded Shares) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
The full text of Centerview’s written opinion, dated January 12, 2021, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Cantel Board of Directors (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of a transaction, including the transactions contemplated by the Merger Agreement, and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Cantel Common Stock (other than Excluded Shares) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview’s opinion did not address any other term or aspect of the Merger Agreement or the transactions contemplated by the Merger Agreement and does not constitute a recommendation to any Cantel Stockholder or any other person as to how such Cantel Stockholder or other person should vote with respect to the Mergers or otherwise act with respect to the transactions contemplated by the Merger Agreement or any other matter.
The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.
Special Meeting of Cantel Stockholders (Page 45)
The Special Meeting will be held on    , 2021 at     Eastern Time. In light of the public health impact of COVID-19 pandemic and in order to protect the health and well-being of our stockholders, the Special Meeting will be held virtually via live webcast at www.virtualshareholdermeeting.com/CMD2021SM. There will be no physical in-person meeting. The purpose of the Special Meeting is to consider and vote on the Cantel Merger Proposal and the Compensation Proposal.
Approval of the Cantel Merger Proposal is a condition to the obligations of STERIS and Cantel to complete the Mergers. The obligations of STERIS and Cantel to complete the Mergers are not conditioned upon approval by the Cantel Stockholders of the Compensation Proposal.
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Only holders of record of issued and outstanding shares of Cantel Common Stock as of the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. You may cast one vote for each share of Cantel Common Stock that you owned as of the close of business on the Record Date.
A quorum of Cantel Stockholders is necessary to hold a valid meeting. A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of shares of Cantel Common Stock issued and outstanding and entitled to vote on the record date are present in person virtually or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum, including abstentions. Shares of Cantel Common Stock held in street name will be counted as present for the purpose of determining the existence of a quorum at the Special Meeting so long as a stockholder has given the broker or other nominee voting instructions on at least one of the proposals brought before the Special Meeting. The proposals for consideration at the Special Meeting are considered “non-routine” matters under NYSE Rule 452, and, therefore, no broker non-votes can occur at the meeting. A stockholder’s shares will not be counted as present for the purpose of determining the existence of a quorum if no instructions have been provided on how to vote on any such proposals.
Approval of the Cantel Merger Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock outstanding as of the close of business on the record date and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINST” the proposal.
Approval of the Compensation Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock present in person virtually or by proxy at the Special Meeting and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINST” the proposal.
Under the NYSE rules, brokers who hold shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the NYSE rules determine to be “non-routine.” With respect to non-routine matters, a broker does not have discretionary authority to vote in the absence of instructions and will not vote on proposals if the broker has not received instructions from the beneficial owners on how to vote on the proposals. Under the NYSE rules, brokers are not permitted to vote on any of the matters to be considered at the Special Meeting. As a result, if you are the beneficial owner of shares of Cantel Common Stock held of record by your bank, broker or nominee, your shares will not be voted on any matter unless you affirmatively instruct your bank, broker or nominee how to vote your shares in one of the ways indicated by your bank, broker or other nominee. See the section entitled “Questions and Answers about the Mergers and the Special Meeting—If my shares of Cantel Common Stock are held in “street name” by my bank, broker or other nominee, will my bank, broker, or other nominee automatically vote those shares for me?” beginning on page 1.
Interests of Cantel Directors and Executive Officers in the Mergers (Page 74)
When considering the foregoing recommendation of the Cantel Board of Directors that you vote to approve the Cantel Merger Proposal, Cantel Stockholders should be aware that Cantel’s directors and executive officers may have interests in the Mergers that are different from, or in addition to, Cantel Stockholders more generally. In (1) evaluating and negotiating the Merger Agreement, (2) approving the Merger Agreement and the Mergers and (3) recommending that the Merger Agreement be adopted by Cantel Stockholders, the Cantel Board of Directors was aware of and considered these interests, among other matters, to the extent that these interests existed at the time. These interests include the following:
at the Effective Time, each Cantel RSU Award held by an executive officer or director will receive the treatment described in section entitled “The Mergers—Interests of Cantel Directors and Executive Officers in the Mergers—Treatment of Cantel RSU Awards” beginning on page 74;
eligibility of Cantel’s executive officers to receive severance payments and benefits (including equity award vesting acceleration) under the Cantel Executive Severance and Change in Control Plan and Make-Whole Agreements with Cantel, as described in more detail in section entitled “The Mergers—Interests of Cantel Directors and Executive Officers in the Mergers” beginning on page 74; and
continued indemnification and directors’ and officers’ liability insurance to be provided by the Surviving Company.
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If the Cantel Merger Proposal is approved, the shares of Cantel Common Stock held by Cantel directors and executive officers will be treated in the same manner as outstanding shares of Cantel Common Stock held by all other Cantel Stockholders. For more information, see section entitled “The Mergers—Interests of Cantel Directors and Executive Officers in the Mergers” beginning on page 74.
Conditions to the Completion of the Mergers (Page 89)
Under the Merger Agreement, the respective obligations of each Party to effect the Mergers are subject to the satisfaction or waiver of the following conditions:
Cantel Stockholders having adopted the Merger Agreement, which is referred to as the Cantel Stockholder Approval;
A governmental entity not issuing any temporary restraining order, preliminary or permanent injunction or other order preventing consummation of the Mergers and no law having been enacted or promulgated by any governmental entity of competent jurisdiction which prohibits or makes illegal the consummation of the Mergers;
Any applicable waiting period relating to the Mergers under the HSR Act or other regulatory laws shall have expired or been terminated and any pre-closing approvals or clearances required thereunder shall have been obtained; and
The STERIS Shares to be issued in the First Merger must have been approved for listing on the NYSE (subject to official notice of issuance).
In addition, each of the Parties’ obligations to effect the Mergers are also subject to the satisfaction or waiver of the following additional conditions:
Representations and warranties of the Parties being true and correct as specified in the Merger Agreement;
Each of the Parties having performed or complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Merger Agreement at or prior to the Closing; and
Since the date of the Merger Agreement, neither STERIS nor Cantel having undergone a material adverse effect.
Under the Merger Agreement, the obligation of Cantel to effect the Mergers is also subject to Cantel having received the tax opinion referred to in the section entitled “The Merger Agreement—Conditions to Closing” beginning on page 89.
No-Solicitation (Page 85)
Under the terms of the Merger Agreement, Cantel has agreed that it will not initiate, solicit, knowingly encourage, knowingly facilitate, or engage in discussions or negotiations regarding any competing acquisition proposal or engage in discussions with any person or entity with respect to any competing acquisition proposal, except as required by the duties of the members of the Cantel Board of Directors under applicable laws, waive, terminate, modify or release any person or entity from any provision of any “standstill” or similar agreement, approve or recommend any competing acquisition proposal or withdraw, or modify or qualify, in a manner adverse to STERIS, the recommendation of the Cantel Board of Directors to vote in favor of the Cantel Merger Proposal.
In addition, the Merger Agreement requires Cantel to immediately cease, and cause its and its subsidiaries’ representatives, directors, officers and employees to cease any and all existing discussions or negotiations with respect to any competing proposal or potential competing proposal.
Change of Recommendation (Page 86)
Subject to certain restrictions in the Merger Agreement, the Cantel Board of Directors is entitled to withdraw, modify or qualify its recommendation, prior to the approval of the Cantel Merger Proposal, (i) in response to a intervening event or (ii) following receipt of a Superior Proposal (as defined in “The Merger Agreement—No-Solicitation”).
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However, prior to making a change of recommendation, Cantel must provide STERIS prior written notice advising STERIS that it intends to effect a change of recommendation, specifying the reasons and, if requested by STERIS, Cantel will make its representatives reasonably available to negotiate with STERIS and Cantel must consider in good faith any proposal by STERIS to amend the terms and conditions of the Merger Agreement in a manner that would obviate the need to effect the change of recommendation.
Termination of the Merger Agreement (Page 91)
The Merger Agreement may be terminated and the Mergers and the other transactions contemplated by the Merger Agreement abandoned (except as otherwise provided below, whether before or after receipt of the Cantel Stockholder Approval), as follows:
by mutual written consent of STERIS and Cantel;
by either STERIS or Cantel, prior to the effective time of the First Merger, if there has been a breach by the other Party of any representation, warranty, covenant or agreement set forth in the Merger Agreement, which breach would result in the conditions to the consummation of the Mergers not being satisfied (and such breach is not curable prior to October 12, 2021, which is referred to as the Outside Date, or if curable prior to the Outside Date, has not been cured within the earlier of (i) thirty calendar days after the receipt of notice thereof by the defaulting Party from the non-defaulting Party or (ii) three business days before the Outside Date). However, the Merger Agreement may not be terminated by any Party if such Party (or STERIS, US Holdco and Crystal Merger Sub if STERIS is seeking to terminate) is then in a terminable breach of any representation, warranty, covenant or agreement set forth in the Merger Agreement;
by either STERIS or Cantel, if the effective time of the First Merger has not occurred by midnight Eastern time on the Outside Date (this right to terminate may not be exercised by a Party whose breach of any representation, warranty, covenant or agreement in the Merger Agreement is the cause or resulted in, the effective time of the First Merger not occurring prior to the Outside Date). However, if on October 12, 2021, the only conditions to closing that have not been satisfied or waived (other than those that by their nature are to be satisfied at the Closing, which conditions shall be capable of being satisfied) are conditions relating to HSR Act clearance, other required filings and clearances under foreign antitrust laws or foreign direct investment laws, the absence of certain proceedings under antitrust laws or foreign direct investment laws, and the absence of any orders or injunctions under antitrust laws or foreign direct investment laws, the Outside Date will be automatically extended by three months to January 12, 2022, and the Outside Date may be further extended by either STERIS or Cantel, by written notice delivered to the other Party prior to January 12, 2022, by an additional three months to April 12, 2022 (provided that this termination right will not be available to any Party that has breached in any material respect its obligations under the Merger Agreement in any manner that proximately contributed to the failure of the Closing to occur on or prior to the Outside Date);
by either Cantel or STERIS if a governmental entity of competent jurisdiction issued a final, non-appealable order, injunction, decree or ruling permanently restraining, enjoining or otherwise prohibiting the consummation of the Mergers such that the closing conditions regarding a governmental entity of competent jurisdiction prevent the consummation of the Mergers; provided, that, the Party seeking to terminate the Merger Agreement must have complied in all material respects with its obligations under the Merger Agreement with respect to preventing the entry of and to removing such order, injunction, decree or ruling;
by either Cantel or STERIS, if Cantel Stockholder Approval has not been obtained at the Special Meeting or at any adjournment or postponement thereof;
by STERIS, if, prior to the receipt of Cantel Stockholder Approval, (i) a Change of Recommendation (as defined below) occurs, (ii) a tender or exchange offer constituting a Competing Proposal (as defined below) has been commenced (within the meaning of Rule 14d-2 under the Exchange Act) and Cantel does not communicate to its stockholders, within ten business days after such commencement, that Cantel recommends rejecting such tender or exchange offer (or shall have withdrawn any such rejection thereafter) or (iii) Cantel commits a material breach of certain provisions of the Merger Agreement (and such breach is not curable, or if curable, has not been cured within ten business days after the receipt of notice thereof by Cantel from STERIS); or
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by Cantel, prior to obtaining Cantel Stockholder Approval, to enter into a definitive agreement providing for a superior proposal, provided that Cantel shall have paid the termination fee simultaneously with or prior to such termination.
Termination Fees (Page 92)
The Merger Agreement requires Cantel to pay STERIS a termination fee of $127.4 million if:
STERIS or Cantel terminates the Merger Agreement due to failure to receive Cantel Stockholder Approval at the Special Meeting or at any adjournment or postponement thereof, a Competing Proposal is disclosed and not publicly withdrawn prior to the Special Meeting, and Cantel consummates a transaction for the Competing Proposal within 12 months of the Merger Agreement being terminated;
STERIS terminates the Merger Agreement prior to the receipt of Cantel Stockholder Approval, due to (a) a Change of Recommendation, (b) a tender or exchange offer constituting a Competing Proposal having been commenced (within the meaning of Rule 14d-2 under the Exchange Act) and Cantel shall not have communicated to its stockholders, within ten business days after such commencement, a statement disclosing that Cantel recommends rejection of such tender or exchange offer, or (c) Cantel having committed a material breach of certain provisions of the Merger Agreement (and such breach is not curable, or if curable, is not cured within ten business days after the receipt of the notice thereof by Cantel from STERIS); or
Cantel terminates the Merger Agreement in order to enter into a definitive agreement for a Superior Proposal.
Regulatory Approvals (Page 72)
Closing is subject to the requirements of the HSR Act and the rules and regulations promulgated by the Federal Trade Commission, which is referred to as the FTC, which prevent transactions such as the First Merger from being completed until (i) certain information and materials are furnished to the Department of Justice, which is referred to as the DOJ, and the FTC and (ii) the 30-day waiting period is terminated or expires. If the FTC or the DOJ issues a request for additional information and documents, which is referred to as the Second Request, prior to the expiration of the initial waiting period, the parties must observe a second 30-day waiting period, which would begin to run only after both parties have substantially complied with the Second Request, unless the waiting period is terminated earlier or the parties otherwise agree to extend the waiting period.
STERIS and Cantel filed their required HSR Act filings on January 27, 2021 and, to facilitate continued dialogue with the FTC, STERIS voluntarily withdrew its required HSR Act filing on February 26, 2021 and refiled its required HSR Act filing on March 1, 2021.
Closing is further subject to certain notifications and/or approvals from applicable governmental authorities outside of the U.S. and the parties are not required to consummate the Mergers before the applicable waiting periods have expired or been terminated, or clearance obtained, in each applicable jurisdiction.
STERIS and Cantel also intend to make all required filings under the Securities Act of 1933, which is referred to as the Securities Act, and the Exchange Act relating to the Mergers and obtain all other approvals and consents, which may be necessary to give effect to the Mergers.
Appraisal Rights of Cantel Stockholders (Page 73)
Under the DGCL, subject to the closing of the Mergers, record holders of Cantel Common Stock who do not vote in favor of the Cantel Merger Proposal and who otherwise properly exercise and perfect, and do not lose, their appraisal rights in accordance with Section 262 of the DGCL will be entitled to seek appraisal for, and obtain payment in cash for the judicially determined fair value of, their shares of Cantel Common Stock, in lieu of receiving shares of Canyon Newco Common Stock as a result of the Pre-Closing Merger and, therefore, the Merger Consideration as a result of the First Merger. The “fair value” could be higher or lower than, or the same as, the consideration payable as a result of the Pre-Closing Merger or the First Merger. Cantel Stockholders who wish to exercise the right to seek an appraisal of their shares must so advise Cantel by submitting a written demand for appraisal in the form described in this proxy statement/prospectus prior to the vote on the approval of the Cantel Merger Proposal at the Special Meeting and must otherwise follow the procedures prescribed by
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Section 262 of the DGCL. If you have a beneficial interest in shares of Cantel Common Stock held of record in the name of another person, such as your bank, broker or other nominee, you must act promptly to cause the record holder to follow the steps summarized in this proxy statement/prospectus in a timely manner to perfect your appraisal rights.
The full text of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus. Cantel Stockholders are encouraged to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising and perfecting the right to seek appraisal, Cantel Stockholders who are considering exercising and perfecting that right are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions may result in a waiver of, or the inability to exercise, appraisal rights. For more information regarding appraisal rights, see the section entitled “Appraisal Rights of Cantel Stockholders” beginning on page 73.
Litigation Relating to the Mergers (Page 73)
Under the terms of the Merger Agreement, each Party is required to provide the other Party prompt oral notice of any litigation brought by any stockholder of that Party against such Party, any of its subsidiaries and/or any of their respective directors relating to the Mergers, the Merger Agreement or any of the transactions contemplated thereby. Each Party is required to give the other Party the opportunity to participate (at such other Party’s expense) in the defense or settlement of any such litigation, and no such settlement may be agreed to without the other Party’s prior written consent, which consent may not be unreasonably withheld, conditioned or delayed.
Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger (Page 96)
For U.S. federal income tax purposes, it is intended that the Pre-Closing Merger and the Pre-Closing Conversion, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The obligation of Cantel to complete the Pre-Closing Merger and the Pre-Closing Conversion is conditioned upon the receipt of an opinion from Wachtell, Lipton, Rosen & Katz (or if Wachtell, Lipton, Rosen & Katz is unwilling or unable to provide such tax opinion, at the election of STERIS, from Jones Day) to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Pre-Closing Merger and the Pre-Closing Conversion, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. On the basis of such opinion that the Pre-Closing Merger and the Pre-Closing Conversion, taken together, qualify as a reorganization, U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger”) of Cantel Common Stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the conversion of the shares of Cantel Common Stock in the Pre-Closing Merger into the equal number of shares of Canyon Newco Common Stock.
The U.S. federal income tax consequences of the Pre-Closing Merger and the Pre-Closing Conversion, taken together, to non-U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger”) are expected to be similar to the U.S. federal income tax consequences to U.S. holders, subject to certain exceptions.
Holders of Cantel Common Stock should read the information included under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 96 for a more detailed discussion of the material U.S. federal income tax consequences of the Pre-Closing Merger followed by the Pre-Closing Conversion, and such holders are urged to consult with their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the Pre-Closing Merger followed by the Pre-Closing Conversion.
For U.S. federal income tax purposes, it is intended that the First Merger and the Second Merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a)(1) of the Code will not apply to cause the transaction to result in gain recognition by holders of Canyon Newco Common Stock that exchange their shares of Canyon Newco Common Stock for the Merger Consideration (other than any such holder of Canyon Newco Common Stock who would be treated as a
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“five-percent transferee shareholder” (within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii)) of STERIS following the Mergers and who does not enter into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8, or that enters into such agreement but does not comply with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain). The obligation of Cantel to complete the First Merger and the Second Merger is conditioned upon the receipt of an opinion from Wachtell, Lipton, Rosen & Katz (or if Wachtell, Lipton, Rosen & Katz is unwilling or unable to provide such tax opinion, at the election of STERIS, from Jones Day) to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the First Merger and the Second Merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and will not result in gain recognition to the holders of Canyon Newco Common Stock pursuant to Section 367(a)(1) of the Code (assuming that in the case of any such holder who would be treated as a “five-percent transferee shareholder” of STERIS within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii), such shareholder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8(c) and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain).
On the basis of such opinion that the First Merger and the Second Merger, taken together, qualify as a reorganization and that Section 367(a) does not generally apply to require gain recognition, and assuming that, in the case of any holder who would be treated as a “five-percent transferee shareholder” (within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii)) of STERIS following the transaction, such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8 and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain, a U.S. holder of shares of Canyon Newco Common Stock who receives the Merger Consideration in the First Merger generally will recognize gain (but not loss) equal to the lesser of: (i) the cash consideration (excluding cash received in lieu of fractional STERIS Shares, if any) received by such U.S. holder in the First Merger and (ii) the excess, if any, of (a) the sum of the cash consideration (excluding cash received in lieu of fractional STERIS Shares, if any) plus the fair market value of the STERIS Shares (including any fractional STERIS Shares deemed received) received by such U.S. holder in the First Merger, over (b) such U.S. holder’s tax basis in its shares of Canyon Newco Common Stock surrendered. In addition, a U.S. holder generally will recognize gain or loss with respect to any cash received in lieu of fractional STERIS Shares. However, if the First Merger and the Second Merger, taken together, do not qualify as a reorganization, the surrender of Canyon Newco Common Stock by U.S. holders in exchange for the Merger Consideration pursuant to the First Merger will be treated as a fully taxable exchange with respect to both STERIS Shares and the cash portion of the Merger Consideration. In addition, even if the First Merger and the Second Merger, taken together, qualify as a reorganization pursuant to Section 368(a) of the Code, but certain requirements of Section 367(a) of the Code are not satisfied, the First Merger and the Second Merger, taken together, will be treated as a taxable exchange for U.S. holders where gain, but not loss, is required to be recognized.
The U.S. federal income tax consequences of the First Merger and the Second Merger, taken together, to non-U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger”) are expected to be similar to the U.S. federal income tax consequences to U.S. holders, except that any gain required to be recognized on the receipt of the Merger Consideration (including cash in lieu of fractional STERIS Shares) will be subject to U.S. federal income tax only in limited circumstances.
Holders of Cantel Common Stock should read the information included under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 96 for a more detailed discussion of the material U.S. federal income tax consequences of the First Merger and the Second Merger, and such holders are urged to consult with their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the First Merger and the Second Merger.
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Material Ireland Tax Consequences of the First Merger (Page 109)
The First Merger should not be taxable under Irish law, except in circumstances where a Cantel Stockholder (only to the extent it relates to Irish tax consequences, as defined in the section entitled “Material Ireland Tax Consequences of the First Merger”) is either resident in Ireland or holds Cantel Common Stock (or Canyon Newco Common Stock immediately following the Pre-Closing Merger) in connection with a branch or agency in Ireland. For more information, see the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 109.
Comparison of Stockholders’ and Shareholders’ Rights (Page 129)
The rights of Cantel Stockholders who receive STERIS Shares as a result of the Mergers will be governed by Irish law rather than Delaware law, and STERIS’s Memorandum and Articles of Association, which is referred to as the STERIS Constitution, rather than by the Restated Certificate of Incorporation of Cantel, which is referred to as the Cantel Certificate of Incorporation, the amended and restated bylaws of Cantel, which is referred to as the Cantel Bylaws, and, together with the Cantel Certificate of Incorporation, referred to as the Cantel Governing Documents, and the corporate governance guidelines of Cantel. As a result, these Cantel Stockholders will have different rights once they become shareholders of STERIS due to both the differences in the governing documents of STERIS and Cantel, and the differences between Irish and Delaware corporate law. The key differences are described in the section entitled “Comparison of Stockholders’ and Shareholders’ Rights” beginning on page 129.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF STERIS
The selected historical financial data and selected historical balance sheet data set out below for each of the fiscal years ended March 31, 2020, 2019 and 2018 and as of March 31, 2020 and 2019 are derived from STERIS’s audited condensed consolidated financial statements as of and for the fiscal years then ended contained in STERIS’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020, which is incorporated by reference in this proxy statement/prospectus. The selected historical financial data and selected historical balance sheet data set out below for each of the fiscal years ended March 31, 2017 and 2016 and as of March 31, 2018, 2017 and 2016 are derived from STERIS’s audited condensed consolidated financial statements for such fiscal years contained in certain other of STERIS’s Annual Reports on Form 10-K filed with the SEC, which are not incorporated by reference in this proxy statement/prospectus. The selected historical financial data and selected historical balance sheet set out below for the nine months ended December 31, 2020 and 2019 and as of December 31, 2020 are derived from STERIS’s unaudited condensed consolidated financial statements for the periods then ended contained in STERIS’s Quarterly Report on Form 10-Q for the nine months ended December 31, 2020, which is incorporated by reference in this proxy statement/prospectus. The selected historical balance sheet set out below as of December 31, 2019 is derived from STERIS’s unaudited condensed consolidated financial statements contained in STERIS’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, which is not incorporated by reference in this proxy statement/prospectus.
The information set forth below is a summary that should be read together with the historical audited consolidated financial statements of STERIS and the related notes thereto as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in each of the reports mentioned above. Historical results are not necessarily indicative of any results to be expected in the future. For more information, see the section entitled “Where You Can Find More Information” beginning on page 152.
(in thousands, except per
share data)
Nine Months Ended
December 31,
Years Ended March 31,
 
2020
2019
2020
2019
2018
2017
2016
Statements of Income Data:
 
 
 
 
 
 
 
Revenues, net
$2,233,988
$2,207,904
$3,030,895
$2,782,170
$2,619,996
$2,612,756
$2,238,764
Net income attributable to common shareholders
$308,549
$284,289
$407,605
$304,051
$290,915
$109,965
$110,763
Net income per common share-basic
$3.62
$3.35
$4.81
$3.59
$3.42
$1.29
$1.57
Shares used in computing net income per common share-basic
85,153
84,740
84,778
84,577
85,028
85,473
70,698
Net income per common share-diluted
$3.59
$3.32
$4.76
$3.56
$3.39
$1.28
$1.56
Shares used in computing net income per common share-diluted
85,851
85,630
85,641
85,468
85,713
86,094
71,184
Cash dividends per common share
$1.17
$1.08
$1.45
$1.33
$1.21
$1.09
$0.98
Balance Sheets Data:
 
 
 
 
 
 
 
Total assets
$6,580,780
$5,335,581
$5,425,582
$5,073,071
$5,200,334
$4,924,455
$5,346,416
Long-term indebtedness
1,713,199
1,136,964
1,150,521
1,183,227
1,316,001
1,478,361
1,567,796
Total liabilities
2,702,588
1,939,515
2,018,858
1,887,273
1,983,034
2,114,422
2,307,524
Total shareholders’ equity
3,866,990
3,382,680
3,393,876
3,177,810
3,205,960
2,798,602
3,023,034
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CANTEL
The selected historical financial data and selected historical balance sheet data set out below for the fiscal years ended July 31, 2020, 2019 and 2018 and as of July 31, 2020 and 2019 are derived from Cantel’s audited condensed consolidated financial statements for the fiscal years then ended contained in Cantel’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020, which is incorporated by reference in this proxy statement/prospectus. The selected historical financial data and selected historical balance sheet data set out below for the fiscal years ended July 31, 2017 and 2016 and as of July 31, 2018, 2017 and 2016 are derived from Cantel’s audited condensed consolidated financial statements for such fiscal years contained in certain other of Cantel’s Annual Reports on Form 10-K filed with the SEC, which are not incorporated by reference in this proxy statement/prospectus. The selected historical financial data and selected historical balance sheet set out below for the three months ended October 31, 2020 and 2019 and as of October 31, 2020 are derived from Cantel’s unaudited condensed consolidated financial statements for the periods then ended contained in Cantel’s Quarterly Report on Form 10-Q for the three months ended October 31, 2020, which is incorporated by reference in this proxy statement/prospectus. The selected historical balance sheet set out below as of October 31, 2019 is derived from Cantel’s unaudited condensed consolidated financial statements contained in Cantel’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2019, which is not incorporated by reference in this proxy statement/prospectus.
The information set forth below is a summary that should be read together with the historical audited consolidated financial statements of Cantel and the related notes thereto as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in each of the reports mentioned above. Historical results are not necessarily indicative of any results to be expected in the future. For more information, see the section entitled “Where You Can Find More Information” beginning on page 152.
(in thousands, except per share data)
Three Months Ended
October 31,
Years Ended July 31,
 
2020
2019
2020
2019
2018
2017
2016
Statements of Income Data:
 
 
 
 
 
 
 
Net sales
$297,029
$257,246
$1,016,048
$918,155
$871,922
$770,157
$664,755
Net income attributable to common shareholders(1)
$24,464
$5,767
$13,708
$55,042
$91,041
$71,378
$59,953
Net income per common share-basic
$0.58
$0.14
$0.32
$1.32
$2.18
$1.71
$1.44
Shares used in computing net income per common share-basic
42,184
42,022
42,238
41,700
41,567
41,468
41,344
Net income per common share-diluted
$0.57
$0.14
$0.32
$1.32
$2.18
$1.71
$1.44
Shares used in computing net income per common share-diluted
42,958
42,168
42,309
41,757
41,635
41,543
41,390
Cash dividends per common share
$0.105
$0.20
$0.17
$0.14
$0.12
Balance Sheets Data:
 
 
 
 
 
 
 
Total assets
$2,040,503
$1,906,046
$2,071,754
$1,070,366
$963,708
$786,373
$694,532
Long-term debt(2)
1,038,375
911,125
1,113,375
233,000
200,000
126,000
116,000
Total liabilities
1,282,122
1,173,855
1,342,155
408,829
354,841
262,441
240,162
Total stockholders’ equity
758,381
732,191
729,599
661,537
608,867
523,932
454,370
(1)
Excludes participating securities for three months ended October 31, 2019.
(2)
Includes convertible debt at par value of $168,000 as of October 31, 2020 and July 31, 2020.
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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following table presents selected unaudited pro forma condensed combined financial data referred to throughout as “pro forma financial data”, “pro forma balance sheet data”, or “pro forma statements of income data” of STERIS after giving effect to the Mergers and other transaction accounting adjustments detailed below. The information under “Selected Pro Forma Statements of Income Data” in the table below gives effect to the Mergers as if it they been consummated on April 1, 2019, the beginning of the earliest period for which unaudited pro forma financial data have been presented. STERIS’s fiscal year ends on March 31, while Cantel’s fiscal year ends on July 31. The unaudited pro forma balance sheet data and statements of income data have been prepared utilizing period ends that differ by fewer than 93 days, as permitted by Regulation S-X. The unaudited pro forma balance sheet data combines the interim unaudited condensed consolidated balance sheet of STERIS as of December 31, 2020 and the interim unaudited condensed consolidated balance sheet of Cantel as of October 31, 2020. The unaudited pro forma statement of income data for the fiscal year ended March 31, 2020 combines the audited consolidated statement of income of STERIS for the fiscal year ended March 31, 2020 with the consolidated statements of income of Cantel for the four quarterly periods ended January 31, 2020 and the consolidated statement of income of Dental Holding, LLC for the eight months ended September 30, 2019. Cantel completed the acquisition of Hu-Friedy Mfg. Co LLC, which is referred to as Hu-Friedy, from Dental Holding, LLC on October 1, 2019. The historical consolidated statement of income of Cantel for the four quarterly periods ended January 31, 2020 was determined by adding Cantel’s unaudited consolidated statement of income for the six months ended January 31, 2020 to Cantel’s audited consolidated statement of income for the fiscal year ended July 31, 2019, and subtracting Cantel’s unaudited consolidated statement of income for the six months ended January 31, 2019. The consolidated statement of income of Hu-Friedy was determined by subtracting Hu-Friedy’s unaudited consolidated statement of income for the month ended January 31, 2019 from the unaudited consolidated statement of income for the nine months ended September 30, 2019. The unaudited pro forma statement of income data for the nine months ended December 31, 2020 combines the unaudited consolidated statement of income of STERIS for the nine months ended December 31, 2020 with the consolidated statements of income of Cantel for the three quarterly periods ended October 31, 2020. The consolidated statements of income of Cantel for the three quarterly periods ended October 31, 2020 were determined by adding Cantel’s unaudited consolidated statement of income for the three months ended October 31, 2020 to Cantel’s audited consolidated statement of income for the fiscal year ended July 31, 2020, and subtracting Cantel’s unaudited consolidated statement of income for the six months ended January 31, 2020.
The values for such periods then ended are based upon, derived from and should be read in conjunction with the historical audited financial statements of Cantel for the fiscal year ended July 31, 2020, which are available in Cantel’s Annual Report on Form 10-K for the fiscal years ended July 31, 2020 and 2019, and the historical unaudited financial statements of Cantel for the periods ended January 31, 2020, April 30, 2020 and October 31, 2020, which are available in Cantel’s Quarterly Reports on Form 10-Q for the respective quarterly periods then ended. The values for the Hu-Friedy eight months ended September 30, 2019 are based upon, derived from and should be read in conjunction with the historical unaudited financial statements of Hu-Friedy for the nine months ended September 30, 2019, which are available in Cantel’s Current Report on Form 8-K filed on March 2, 2021. This pro forma financial data was prepared using the acquisition method of accounting with STERIS considered the accounting acquirer of Cantel and with Cantel considered the accounting acquirer of Hu-Friedy. See the section entitled “The Merger—Accounting Treatment of the Merger” beginning on page 78.
The pro forma adjustments, which are referred to as Transaction Accounting Adjustments, are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. The Transaction Accounting Adjustments have been made solely for the purpose of providing the pro forma financial data. STERIS estimated the fair value of certain Cantel assets and liabilities based on a preliminary valuation analysis, due diligence information, information presented in Cantel’s SEC filings and other publicly available information. Until the Mergers are completed, both companies are limited in their ability to share certain information.
The information presented below should be read in conjunction with the historical consolidated financial statements and related notes of STERIS and Cantel filed by each with the SEC, and incorporated by reference into this proxy statement/prospectus, and with the pro forma financial data of STERIS and Cantel, including the related notes, appearing in the section entitled “Unaudited Pro Forma Condensed Combined Financial Data” beginning on page 115. The pro forma financial data are presented for illustrative purposes only and are not necessarily indicative of results that actually would have occurred or that may occur in the future had the
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Mergers been completed on the dates indicated, or the future operating results or financial position of STERIS following the Mergers. Future results may vary significantly from the results reflected below because of various factors, including those discussed in the section entitled “Risk Factors” beginning on page 31.
Pro Forma Statements of Income Data
(in thousands, except per STERIS share amounts)
Nine Months
Ended
December 31, 2020
Year Ended
March 31, 2020
Net Revenues
$2,992,106
$4,178,905
Net Income from continuing operations attributable to STERIS Shareholders
271,952
138,406
Net income from continuing operations per STERIS Share-basic
$2.73
$1.40
Net income from continuing operations per STERIS Share-diluted
$2.71
$1.38
Weighted-average number of STERIS Shares outstanding-basic
99,441
99,066
Weighted-average number of STERIS Shares outstanding-diluted
100,336
100,092
Pro Forma Balance Sheet Data
(in thousands)
As of
December 31,
2020
Pro forma balance sheet data:
 
Total assets
$12,199,516
Long-term indebtedness
$3,518,703
Total debt
$3,518,703
Total equity
$6,909,784
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL DATA
The following table shows, for the year ended March 31, 2020 for STERIS and for the year ended July 31, 2020 for Cantel, historical and pro forma equivalent per share data for STERIS Shares and historical and pro forma combined per share data for Cantel Common Stock. The information in the table is derived from each of STERIS’s and Cantel’s respective historical consolidated financial statements incorporated by reference herein, as well as the unaudited pro forma financial statements included elsewhere herein. The pro forma equivalent per share data and the pro forma combined per share data assume that STERIS, with a fiscal year that ends on March 31, acquired Cantel, with a fiscal year that ends on July 31, and are to be read as if the Mergers had been completed on April 1, 2020.
The pro forma equivalent information shows the effect of the Mergers from the perspective of a holder of Cantel Common Stock. The pro forma combined data below is presented for illustrative purposes only. The pro forma adjustments to the income statement data are based on the assumption that the Mergers were completed on April 1, 2019, and the pro forma adjustments to the balance sheet data are based on the assumption that the Mergers were completed on December 31, 2020.
Either company’s actual historical financial condition or results of operations may have been different had the companies always been combined. You should not rely on this information as being indicative of the historical financial condition and results of operations that would have actually been achieved or of the future results of STERIS after completion of the Mergers.
You should read the information below together with the historical consolidated financial statements and related notes of each of STERIS and Cantel, which are incorporated by reference in this proxy statement/prospectus, and with the information under the heading “Unaudited Pro Forma Condensed Combined Financial Data” beginning on page 115.
 
As of/
For the Nine Months
Ended
December 31,
2020
As of/
For the Year
Ended
March 31,
2020
STERIS Historical per Common Share Data:
 
 
Net income from operations—basic
$3.62
$4.81
Net income from operations—diluted
3.59
4.76
Cash dividends per share
1.17
1.45
Book value(1)
$45.41
$40.03
 
As of/
For the Three Months
Ended
October 31,
2020
As of/
For the Year
Ended
July 31,
2020
Cantel Historical per Common Share Data:
 
 
Net income from operations—basic
$0.58
$0.32
Net income from operations—diluted
0.57
0.32
Cash dividends per share
0.105
Book value(1)
$17.98
$17.27
 
As of/
For the Nine Months
Ended
December 31,
2020
As of/
For the Year
Ended
March 31,
2020
Unaudited Pro Forma Combined per STERIS Share Data(2):
 
 
Net income from continuing operations—basic
$2.73
$1.40
Net income from continuing operations—diluted
2.71
1.38
Cash dividends per share(3)
1.17
1.45
Book value(1)
$69.37
N/A
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As of/
For the Nine Months
Ended
December 31,
2020
As of/
For the Year
Ended
March 31,
2020
Unaudited Pro Forma Combined per Cantel Equivalent Share Data(2):
 
 
Net income from continuing operations— basic(4)(5)
$0.92
$0.47
Net income from continuing operations—diluted(4)(5)
0.92
0.47
Cash dividends paid(3)
0.40
0.49
Book value(3)(4)(5)
$23.44
N/A
(1)
Calculated by dividing stockholders’ equity by average ordinary shares outstanding excluding share equivalents.
(2)
Calculated based on the information contained in the section titled “Unaudited Pro Forma Condensed Combined Financial Data” contained in this proxy statement/prospectus.
(3)
Pro forma combined dividends per share is the same as STERIS’s historical dividend per share paid, and is not presented as an indication of future dividend policy for STERIS after completion of the Mergers, which will be determined by the STERIS Board of Directors following the completion of the Mergers.
(4)
Amounts calculated by multiplying unaudited pro forma combined per share amounts by the exchange ratio in the Mergers of 0.33787 STERIS Shares for each share of Cantel Common Stock. The exchange ratio does not include the $16.93 per share of Cantel Common Stock constituting the cash portion of the Merger Consideration, as defined below.
(5)
The information shows how each share of Cantel Common Stock would have participated in STERIS’s net income from continuing operations, cash dividends and book value if the Mergers had occurred on April 1, 2019, in the case of net income and cash dividends per share data, and as of December 31, 2020, in the case of book value per share data. The pro forma book value per share is not meaningful as of March 31, 2020, as purchase accounting adjustments were calculated as of December 31, 2020.
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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND DATA
STERIS Market Price and Dividend Information
STERIS Shares are listed on the NYSE under the symbol “STE.” STERIS has declared a quarterly cash dividend during each of the last three fiscal quarters.
You should obtain current market quotations for STERIS Shares, as the market price of STERIS Shares will fluctuate between the date of this proxy statement/prospectus and the date on which the Mergers are completed, at times in between and thereafter. You can obtain these quotations from publicly available sources.
The declaration of dividends, whether before or after the Mergers, is at the discretion of the STERIS Board of Directors. Any determination to pay dividends on STERIS Shares in the future will be at the discretion of the STERIS Board of Directors and dependent upon then-existing conditions, including STERIS’s operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that the STERIS Board of Director may deem relevant.
Under the Merger Agreement, STERIS has agreed that, until the completion of the Mergers, it will not authorize or pay any dividend or other distribution in respect of any STERIS Shares, except for dividends and distributions paid or made on a pro rata basis by STERIS in the ordinary course of business consistent with past practice or by a wholly owned STERIS subsidiary to STERIS or another wholly owned STERIS subsidiary.
Cantel Market Price and Dividend Information
Cantel Common Stock is listed on the NYSE under the symbol “CMD”.
You should obtain current market quotations for shares of Cantel Common Stock, as the market price of Cantel Common Stock will fluctuate between the date of this proxy statement/prospectus and the date on which the Mergers are completed, at times in between and thereafter. You can obtain these quotations from publicly available sources.
Cantel has not paid any dividends on Cantel Common Stock during the last four fiscal quarters and does not intend to do so prior to the completion of the Mergers. Under the Merger Agreement, Cantel has agreed that, until the completion of the Mergers, it will not authorize or pay any dividend on or make any other distribution with respect to its outstanding shares of capital stock, except for dividends and distributions paid or made on a pro rata basis by a Cantel subsidiary in the ordinary course of business consistent with past practice or by a wholly owned Cantel subsidiary to Cantel or another wholly owned Cantel subsidiary.
Comparison of STERIS and Cantel Market Prices and Implied Value of Share Value of the Stock Consideration
The following table sets forth the closing sale price per STERIS Share and per share of Cantel Common Stock as reported on the NYSE on January 11, 2021, the last trading day prior to the public announcement of the Mergers, and on March 1, 2021, the last practicable trading day before the filing of this proxy statement/prospectus with the SEC. The table also shows the estimated implied value of the stock consideration proposed for each share of Cantel Common Stock as of the same two dates. This implied value was calculated by multiplying the closing price of a STERIS Share on the relevant date by the exchange ratio of 0.33787 STERIS Shares for each share of Cantel Common Stock. The value of the cash consideration will be $16.93 irrespective of the price per STERIS Share as of any date following the signing of the Merger Agreement on January 12, 2021.
 
STERIS Shares
Cantel Common Stock
Implied Per Share Value of
Stock Consideration
January 11, 2021
200.46
84.66
67.73
March 1, 2021
177.77
75.80
60.06
The market prices of STERIS Shares and Cantel Common Stock have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate prior to, and in the case of STERIS Shares, after the completion of the Mergers. No assurance can be given concerning the market prices of STERIS Shares or Cantel Common Stock before completion of the Mergers or of STERIS Shares after completion of the Mergers. The exchange ratio is fixed in the Merger Agreement, but the market price of STERIS Shares (and
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therefore the value of the stock consideration) when received by Cantel Stockholders after the Mergers are completed could be greater than, less than or the same as shown in the table above. Accordingly, these comparisons may not provide meaningful information to Cantel Stockholders in determining whether to approve the Cantel Merger Proposal. Cantel Stockholders are encouraged to obtain current market quotations for STERIS Shares and Cantel Common Stock and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference herein. For more information, see the section entitled, “Where You Can Find More Information” beginning on page 152.
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 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the meaning of the federal securities laws about STERIS, Cantel and the proposed transaction. Forward-looking statements speak only as to the date the statement is made and may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “outlook,” “impact,” “potential,” “confidence,” “improve,” “optimistic,” “deliver,” “orders,” “backlog,” “comfortable,” “trend”, and “seeks,” or the negative of such terms or other variations on such terms or comparable terminology. These forward-looking statements are based on our respective management’s current expectations, estimates or forecasts about our businesses, the industries in which we operate and current beliefs and assumptions of management and are subject to uncertainty and changes in circumstances. Readers of this communication should understand that these statements are not guarantees of performance or results. Many important factors could affect actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this communication. No assurances can be provided as to any result or the timing of any outcome regarding matters described in STERIS’s or Cantel’s securities filings or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, cost reductions, business strategies, earnings or revenue trends or future financial results. Unless legally required, STERIS and Cantel do not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized. These risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:
the failure to obtain the Cantel Stockholder Approval;
the possibility that the closing conditions to the Mergers may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval and any conditions imposed on the combined entity in connection with consummation of the Mergers;
delay in closing the Mergers or the possibility of non-consummation of the Mergers;
the risk that the cost savings and any other synergies from the Mergers may not be fully realized or may take longer to realize than expected, 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 shareholder/stockholder litigation in connection with the proposed transaction may affect the timing or occurrence of the proposed transactions or result in significant costs of defense, indemnification and liability;
risks related to the disruption of the proposed transaction to STERIS, Cantel and their respective managements;
risks relating to the value of STERIS Shares to be issued in the proposed transaction;
the effect of announcement of the proposed transaction on STERIS’s and Cantel’s ability to retain and hire key personnel and maintain relationships with Customers, suppliers and other third parties;
the impact of the COVID-19 pandemic on STERIS’s or Cantel’s operations, performance, results, prospects, or value;
STERIS’s ability to achieve the expected benefits regarding the accounting and tax treatments of the Redomiciliation;
STERIS’s ability to achieve the expected benefits regarding the accounting and tax treatments of the First Merger and Second Merger;
operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected following the Redomiciliation;
STERIS’s ability to meet expectations regarding the accounting and tax treatment of the Tax Cuts and Jobs Act, which is referred to as the TCJA or the possibility that anticipated benefits resulting from the TCJA will be less than estimated;
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changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for U.S. federal tax purposes;
the potential for increased pressure on pricing or costs that leads to erosion of profit margins;
the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated;
the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services or otherwise affect STERIS’s or Cantel’s performance, results, prospects or value;
the potential of international unrest, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs;
the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s or Cantel’s products and services;
the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products or in the provision of services;
the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS’s and Cantel’s businesses, industry or initiatives including, without limitation, those matters described in STERIS’s and Cantel’s respective Annual Reports on Form 10-K for the year ended March 31, 2020 and July 31, 2020, respectively, and other securities filings, may adversely impact STERIS’s and/or Cantel’s performance, results, prospects or value;
the impact on STERIS and its operations, or tax liabilities, after completion of the Mergers, of Brexit or the exit of other member countries from the EU, and STERIS’s ability to respond to such impacts;
the impact on STERIS, Cantel and their respective operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the U.S. administration or Congress, or of any responses thereto;
the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, or of restructuring plans will not be realized or will be other than anticipated;
the effects of contractions in credit availability, as well as the ability of STERIS’s and Cantel’s Customers and suppliers to adequately access the credit markets when needed;
STERIS’s ability to complete the acquisition of Cantel, including the fulfillment of closing conditions and obtaining financing, on terms satisfactory to STERIS or at all; and
other risks described in STERIS’s and Cantel’s respective most recent Annual Reports on Form 10-K and other reports filed with the SEC.
Readers are cautioned not to place undue reliance on any forward-looking statements included in this communication, which speak only as of the date of this communication. STERIS and Cantel undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law. This cautionary statement is applicable to all forward-looking statements contained in this communication.
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RISK FACTORS
In addition to the other information contained in or incorporated by reference herein, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 29, Cantel Stockholders should carefully consider the following risks before deciding how to vote with respect to the proposals to be considered and voted on at the Special Meeting. Cantel Stockholders should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference herein, particularly the risk factors contained in STERIS’s and Cantel’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. See the section entitled “Where You Can Find More Information beginning on page 152.
Risks Relating to the Mergers
Because the market price of STERIS Shares may fluctuate, Cantel Stockholders cannot be certain of the precise value of any Merger Consideration they may receive in the Mergers.
At the time the Mergers are completed, each issued and outstanding share of Cantel Common Stock (other than Excluded Shares) will be ultimately converted, taking into account the Pre-Closing Merger, into the right to receive the Merger Consideration. The exchange ratio for the Merger Consideration is fixed, and there will be no adjustment to the stock consideration for changes in the market price of STERIS Shares or shares of Cantel Common Stock prior to the completion of the Mergers. If the Mergers are completed, there will be a time lapse between each of the date of this proxy statement/prospectus, the date on which Cantel Stockholders vote to approve the proposals at the Special Meeting, and the date on which Cantel Stockholders entitled to receive the Merger Consideration actually receive such Merger Consideration. The market value of shares of Cantel Common Stock may fluctuate during and after these periods as a result of a variety of factors (many of which are outside of STERIS’s or Cantel’s control), including general market and economic conditions, changes in STERIS’s business, operations and prospects and regulatory considerations. Such factors are difficult to predict and in many cases may be beyond the control of STERIS and Cantel. Consequently, at the time Cantel Stockholders must decide whether to adopt the Merger Agreement, they will not know the actual market value of any stock consideration they will receive when the Mergers are completed. The actual value of any stock consideration received by Cantel Stockholders at the completion of the Mergers will depend on the market value of STERIS Shares at the time of Closing. This market value may differ, possibly materially, from the market value of STERIS Shares at the time the Merger Agreement was entered into or at any other time. Cantel Stockholders should obtain current stock quotations for STERIS Shares before voting their shares of Cantel Common Stock. For additional information about the per share Merger Consideration, see the section entitled “The Merger Agreement—Payment of Merger Consideration” beginning on page 80.
The market price of STERIS Shares may continue to fluctuate after the Mergers.
Upon completion of the Mergers, holders of Cantel Common Stock will become holders of STERIS Shares. The market price of STERIS Shares may fluctuate significantly following completion of the Mergers and holders of Cantel Common Stock could lose some or all of the value of their investment in STERIS Shares. In addition, the stock market has experienced significant price and volume fluctuations in recent times, which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the STERIS Shares, regardless of STERIS’s actual operating performance.
Cantel Stockholders will have a reduced ownership and voting interest in STERIS after completion of the Mergers and will exercise less influence over management.
Currently, Cantel Stockholders have the right to vote in the election of the Cantel Board of Directors and the power to approve or reject any matters requiring stockholder approval under the DGCL and the Cantel Certificate of Incorporation and the Cantel Bylaws. Upon completion of the Mergers, each Cantel Stockholder who receives STERIS Shares in the Mergers will become a shareholder of STERIS with a percentage ownership of STERIS that is smaller than the Cantel Stockholders’ current percentage ownership of Cantel. Based on the number of issued and outstanding shares of Cantel Common Stock and STERIS Shares as of January 8, 2021 and an exchange ratio of 0.33787 with 42,265,647 shares of Cantel Common Stock in the aggregate converted in to the right to receive the Merger Consideration, Cantel Stockholders are expected to become owners of approximately 14.3% of the outstanding STERIS Shares after the Closing, without giving effect to any STERIS Shares held by Cantel Stockholders prior to the completion of the Mergers. Even if all former Cantel
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Stockholders voted together on all matters presented to Cantel Stockholders from time to time, the former Cantel Stockholders would exercise significantly less influence over STERIS after completion of the Mergers relative to their influence over Cantel prior to the completion of the Mergers, and thus would have a less significant impact on the election of the STERIS Board of Directors and on the approval or rejection of future STERIS proposals submitted to a stockholder vote.
STERIS Shares received by the Cantel Stockholders as a result of the Mergers will have different rights from shares of Cantel Common Stock.
Upon completion of the Mergers, Cantel Stockholders will no longer be stockholders of Cantel and will become shareholders of STERIS. There will be important differences between the current rights of Cantel Stockholders and the rights to which such stockholders will be entitled as shareholders of STERIS. See the section entitled “Comparison of Stockholders’ and Shareholders’ Rights” beginning on page 129 for a discussion of the different rights associated with the STERIS Shares.
Cantel Stockholders will be forfeiting all rights with respect to their shares of Cantel Common Stock other than the right to receive the Merger Consideration or to receive the fair value of their shares of Cantel Common Stock in an appraisal proceeding, including the right to participate directly in any earnings or future growth of Cantel.
If the Mergers are completed, Cantel Stockholders will cease to have any equity interest in Cantel and will not participate in its earnings or any future growth, except indirectly through ownership of STERIS Shares received as part of the Merger Consideration.
The market price of STERIS Shares may be affected by factors different from those that historically have affected shares of Cantel Common Stock.
Upon completion of the Mergers, Cantel Stockholders will become holders of STERIS Shares. The businesses of STERIS differ from those of Cantel in certain respects, and, accordingly, the financial position or results of operations and/or cash flows of STERIS after completion of the Mergers, as well as the market price of STERIS Shares, may be affected by factors different from those currently affecting the financial position or results of operations and/or cash flows of Cantel. Following the completion of the Mergers, Cantel will be part of a larger company with other lines of business and a broader geographic footprint, so decisions affecting Cantel may be made in respect of the larger combined business as a whole rather than the Cantel businesses individually. For a discussion of the business of STERIS and Cantel and of some important factors to consider in connection with those businesses, see the section entitled “Information About the Companies” beginning on page 43, and the documents incorporated by reference in the section entitled “Where You Can Find More Information” beginning on page 152, including, in particular, in the sections entitled “Risk Factors” in STERIS’s Annual Report on Form 10-K for the year ended March 31, 2020 and Cantel’s Annual Report on Form 10-K for the year ended July 31, 2020.
The Merger Agreement limits Cantel’s ability to pursue alternatives to the Mergers, may discourage certain other companies from making favorable alternative transaction proposals and, in specified circumstances, could require Cantel to pay STERIS a termination fee.
Pursuant to the Merger Agreement, Cantel has agreed not to, among other things, (i) solicit proposals relating to certain alternative transactions, (ii) engage in discussions or negotiations or provide non-public information in connection with any proposal for an alternative transaction from a third party or (iii) approve or enter into any agreements providing for any such alternative transaction, in each case, subject to certain exceptions to permit members of the Cantel Board of Directors to comply with their duties as directors under applicable law. Notwithstanding these “no-shop” restrictions, prior to obtaining the Cantel Stockholder Approval, under specified circumstances, the Cantel Board of Directors may change its recommendation of the transaction, and Cantel may also terminate the Merger Agreement to accept a Superior Proposal upon payment of the termination fee described below.
The Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, Cantel may be required to pay to STERIS a termination fee of $127.4 million. See “The Merger Agreement—No-Solicitation” and “The Merger Agreement—Termination of the Merger Agreement” beginning on pages 85 and 91, respectively.
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These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Cantel from considering or proposing such an acquisition, even if the potential competing acquirer was prepared to pay consideration with a higher per share value than the value proposed to be received or realized in the Mergers, or might result in a potential competing acquirer proposing to pay a lower per share value than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the Merger Agreement.
If the Merger Agreement is terminated and Cantel determines to seek another business combination, Cantel may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Mergers contemplated by the Merger Agreement.
Cantel may waive one or more of the closing conditions without re-soliciting stockholder approval.
Cantel may determine to waive, in whole or in part, one or more of the conditions to its obligations to complete the Mergers. Cantel currently expects to evaluate the materiality of any waiver and its effect on Cantel Stockholders in light of the facts and circumstances at the time to determine whether any amendment of this proxy statement/prospectus or any resolicitation of proxies is required in light of such waiver. Any determination as to whether to waive any condition to the Mergers, and as to whether to resolicit stockholder approval and/or amend this proxy statement/prospectus as a result of such waiver, will be made by Cantel at the time of such waiver based on the facts and circumstances as they exist at that time.
The Merger Agreement may be terminated in accordance with its terms and the Mergers may not be completed.
The Merger Agreement is subject to a number of conditions that must be fulfilled in order to complete the Mergers. Those conditions include, among others: the adoption of the Merger Agreement by Cantel Stockholders, the expiration or termination of the waiting period applicable to the Mergers under the HSR Act, as well as certain other antitrust and foreign direct investment laws, the absence of certain governmental orders or laws prohibiting consummation of the Mergers, the approval to list STERIS Shares issuable in connection with the Mergers on the NYSE, the accuracy of the representations and warranties under the Merger Agreement (subject to materiality standards set forth in the Merger Agreement), STERIS’s and Cantel’s performance of their respective obligations under the Merger Agreement in all material respects, the absence of a material adverse effect for STERIS (as described in the Merger Agreement), the absence of a material adverse effect for Cantel (as described in the Merger Agreement) and Cantel’s receipt of a written opinion of Wachtell, Lipton, Rosen & Katz (or if Wachtell, Lipton, Rosen & Katz is unwilling or unable to provide such tax opinion, at the election of STERIS, from Jones Day) regarding the U.S. federal income tax treatment of the transaction. These conditions to the closing of the Mergers may not be fulfilled in a timely manner or at all, and, accordingly, the Mergers may be delayed or may not be completed.
In addition, if the Mergers are not completed by the Outside Date, which under certain circumstances may be automatically extended to January 12, 2022, and further optionally extended to April 12, 2022, in each case if required regulatory approvals have not been obtained, either STERIS or Cantel may choose not to proceed with the Mergers, and can mutually decide to terminate the Merger Agreement at any time. In addition STERIS and Cantel may elect to terminate the Merger Agreement in certain other circumstances. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 91.
Failure to complete the Mergers or delays could negatively impact the price of STERIS Shares and the price of shares of Cantel Common Stock, as well as STERIS’s and Cantel’s respective future business and financial results.
The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Mergers, including, without limitation, regulatory approvals and the approval of the acquisition by Cantel Stockholders. There can be no assurance that all of the conditions to the Mergers will be so satisfied or waived. If the conditions to the Mergers are not satisfied or waived, STERIS and Cantel will be unable to complete the Mergers and the Merger Agreement may be terminated. Furthermore, the delay in the fulfillment of such conditions could result in unanticipated expenditures of funds and other resources and/or reduce the benefits of the acquisition of Cantel, even if ultimately consummated.
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If the Mergers are delayed or not completed for any reason, STERIS’s and Cantel’s respective business and financial results may be adversely affected as follows:
STERIS and Cantel may experience negative reactions from the financial markets, including negative impacts to the market price of STERIS Shares and shares of Cantel Common Stock;
the manner in which Customers, vendors, business partners and other third parties perceive STERIS and Cantel may be negatively impacted which in turn could affect STERIS’s and Cantel’s marketing operations or their ability to compete for new business or obtain renewals in the marketplace more broadly;
STERIS and Cantel may experience negative reactions from employees; and
STERIS and Cantel will have expended time and resources that could otherwise have been spent on STERIS’s and Cantel’s existing business and the pursuit of other opportunities that could have been beneficial to each company, and STERIS’s and Cantel’s ongoing business and financial results may be adversely affected.
In addition to the above risks, if the Merger Agreement is terminated and Cantel seeks an alternative transaction, Cantel Stockholders cannot be certain that Cantel will be able to find a party willing to engage in a transaction on more attractive terms than the Mergers. If the Merger Agreement is terminated under the specified circumstances, Cantel may be required to pay to STERIS a termination fee. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 91.
STERIS and Cantel will be subject to business uncertainties while the Mergers are pending, which could adversely affect their respective businesses.
Uncertainty about the effect of the Mergers on employees and Customers may have an adverse effect on STERIS and Cantel. These uncertainties may impair STERIS’s and Cantel’s ability to attract, retain and motivate key personnel until the Mergers are completed and for a period of time thereafter, and could cause Customers and others that deal with STERIS and/or Cantel to seek to change those existing business relationships. Employee retention at Cantel may be particularly challenging during the pendency of the Mergers, as employees may experience uncertainty about their roles with STERIS following the Mergers. In addition, the Merger Agreement restricts STERIS and Cantel from entering into certain corporate transactions and taking other specified actions without the consent of the other Party, and generally requires Cantel to continue its operations in the ordinary course, until completion of the Mergers. These restrictions may prevent STERIS and Cantel from pursuing attractive business opportunities that may arise prior to the completion of the Mergers. Please see the section entitled “The Merger Agreement—Conduct of Business Pending the First Merger,” beginning on page 83, for a description of the restrictive covenants to which STERIS and Cantel are subject.
Directors and executive officers of Cantel may have interests in the Mergers that are different from, or in addition to, the interests of Cantel Stockholders.
Directors and executive officers of Cantel may have interests in the Mergers that are different from, or in addition to, the interests of Cantel Stockholders generally. These interests include, among others, the treatment of outstanding equity and equity-based awards pursuant to the Merger Agreement; potential severance and other benefits upon a qualifying termination in connection with the Mergers; and rights to ongoing indemnification and insurance coverage. These interests are described in more detail in the section entitled “The Mergers—Interests of Cantel Directors and Executive Officers in the Mergers” beginning on page 74.
The Mergers may not be accretive, and may be dilutive, to STERIS’s earnings per share and cash flow from operations per share, which may negatively affect the market price of STERIS Shares.
The Mergers may not be accretive, and may be dilutive, to STERIS’s earnings per share and cash flow from operations per share. Earnings per share and cash flow from operations per share in the future are based on preliminary estimates that may materially change. In addition, future events and conditions could decrease or delay any accretion, result in dilution or cause greater dilution than is currently expected, including:
adverse changes in market conditions;
production levels;
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operating results;
competitive conditions;
laws and regulations affecting STERIS;
capital expenditure obligations;
higher than expected integration costs;
lower than expected synergies; and
general economic conditions.
Any dilution of, or decrease or delay of any accretion to, STERIS’s earnings per share or cash flow from operations per share could cause the price of the STERIS Shares to decline.
STERIS and Cantel will incur significant transaction and merger-related costs in connection with the Mergers, which may be in excess of those anticipated by Cantel or STERIS.
Each of STERIS and Cantel has incurred and will incur substantial expenses in connection with the negotiation and completion of the transaction contemplated by the Merger Agreement, including the costs and expenses of filing, printing and mailing this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the Mergers.
STERIS and Cantel expect to continue to incur a number of non-recurring costs associated with completing the Mergers, and combining the operations of the two companies and achieving desired synergies. These fees and costs have been, and will continue to be, substantial. The substantial majority of non-recurring expenses will consist of transaction costs related to the Mergers and include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, fees paid to banks and other financial institutions in conjunction with obtaining financing and other related costs, severance and benefit costs and filing fees.
STERIS and Cantel will also incur transaction fees and costs related to formulating and implementing integration plans, costs to consolidate facilities and systems and employment-related costs. STERIS and Cantel will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Mergers and the integration of the two companies’ businesses. Although STERIS and Cantel each expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow STERIS and Cantel to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. See the risk factor entitled “The integration of Cantel into STERIS may not be as successful as anticipated below.
The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results of STERIS following the completion of the Mergers.
Many of these costs will be borne by STERIS and/or Cantel even if the Mergers are not completed.
Lawsuits may be filed against Cantel, STERIS and the members of the Cantel Board of Directors challenging the adequacy of the disclosures made in the proxy statement/prospectus and an adverse ruling in one or more of these lawsuits may prevent the Mergers from being completed.
Lawsuits arising out of the Mergers may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of any potential future lawsuits. A preliminary injunction could delay or jeopardize the completion of the Mergers, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of the Mergers.
The opinion of Centerview will not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the Mergers.
Cantel has received an opinion from Centerview in connection with the signing of the Merger Agreement, but has not requested and obtained, and does not intend to request, an updated opinion from Centerview as of the date of this proxy statement/prospectus. Changes in the operations and prospects of STERIS or Cantel, general market and economic conditions and other factors that may be beyond the control of STERIS or Cantel, and on which Centerview’s opinion was based, may significantly alter the value of STERIS or Cantel or the prices of
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STERIS Shares or of the shares of Cantel Common Stock by the time the Mergers are completed. The opinion does not speak as of the time the Mergers will be completed or as of any day other than the dates referenced in such opinion. Because Cantel does not currently anticipate asking Centerview to update its opinion, the opinion will not address the fairness of the per share Merger Consideration or aggregate Merger Consideration, as applicable, from a financial point of view at the time the Mergers are completed. The Cantel Board of Director’s recommendation that Cantel Stockholders vote “FOR” approval of the Cantel Merger Proposal and other Merger-related matters, however, is made as of the date of this proxy statement/prospectus. For a description of the opinion that Cantel received from Centerview, please see the section entitled “The Mergers—Opinion of Cantel’s Financial Advisor” beginning on page 60. A copy of the opinion of Centerview is attached as Annex B to this proxy statement/prospectus and is incorporated by reference herein in its entirety.
Completion of the Mergers may trigger change in control or other provisions in certain agreements to which Cantel is a party.
Completion of the Mergers may trigger change in control or other provisions in certain agreements to which Cantel is a party. If STERIS and Cantel are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if STERIS and Cantel are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Cantel.
STERIS expects to incur a substantial amount of debt to complete the Mergers. STERIS’s debt after completion of the Mergers may limit its financial and business flexibility.
STERIS intends to fund the cash consideration of the Merger Consideration, as well as the refinancing, prepayment, replacement, redemption, repurchase, settlement upon conversion, discharge or defeasance of certain existing indebtedness of Cantel and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, through the incurrence of approximately $2.1 billion of new indebtedness. STERIS intends to incur this indebtedness through the issuance of senior notes and the entry into a new term loan agreement, although all or a portion of the expected $2.1 billion of new indebtedness may be initially obtained through a bridge loan pursuant to a bridge facility commitment previously obtained by STERIS. As of October 31, 2020, Cantel had approximately $1.0 billion of long-term indebtedness, including convertible debt, outstanding. As of December 31, 2020, STERIS had approximately $1.7 billion of long-term indebtedness outstanding. STERIS’s ability to repay these obligations will depend on, among other things, STERIS’s and Cantel’s financial position and performance, as well as prevailing market conditions and other factors beyond STERIS’s control. There can be no assurance that STERIS will be able to execute such financing transactions on favorable terms or at all.
STERIS’s increased indebtedness after completion of the Mergers could have important consequences to holders of STERIS Shares, including Cantel Stockholders immediately prior to the effective time of the First Merger who receive STERIS Shares in the First Merger, including:
increasing STERIS’s vulnerability to general adverse economic and industry conditions;
limiting STERIS’s ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;
requiring the use of a substantial portion of STERIS’s cash flow from operations for the payment of principal and interest on its indebtedness, thereby reducing its ability to use its cash flow to fund working capital, acquisitions, capital expenditures and general corporate requirements, including dividend payments and stock repurchases;
limiting STERIS’s flexibility in planning for, or reacting to, changes in its business and its industry; and
putting STERIS at a disadvantage compared to its competitors with less indebtedness.
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The pro forma financial data and unaudited forecasted financial information included in this proxy statement/prospectus is presented for illustrative purposes only and does not represent the actual financial position or results of operations of STERIS following the completion of the Mergers. Future results of STERIS or Cantel may differ, possibly materially, from the pro forma financial data and unaudited forecasted financial information presented in this proxy statement/prospectus.
The pro forma financial data and unaudited forecasted financial information contained in this proxy statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates and do not represent the actual financial position or results of operations of STERIS and Cantel prior to the Mergers or that of STERIS after completion of the Mergers for several reasons. Specifically, we have not completed the detailed valuation analyses to arrive at the final estimates of the fair values of the assets to be acquired and liabilities to be assumed and the related allocation of purchase price and the pro forma financial data does not reflect the effects of transaction-related costs and integration costs. See the sections entitled “Selected Unaudited Pro Forma Condensed Combined Financial Data and “Comparative Historical and Unaudited Pro Forma Per Share Financial Data” beginning on pages 23 and 25, respectively. In addition, the Mergers and post-merger integration process may give rise to unexpected liabilities and costs, including costs associated with the defense and resolution of transaction-related litigation or other claims. Unexpected delays in completing the Mergers or in connection with the post-merger integration process may significantly increase the related costs and expenses incurred by STERIS. The actual financial positions and results of operations of STERIS and Cantel prior to the Mergers and that of STERIS after completion of the Mergers may be different, possibly materially, from the pro forma financial data or forecasted financial information included in this proxy statement/prospectus. In addition, the assumptions used in preparing the pro forma financial data and forecasted financial information included in this proxy statement/prospectus may not prove to be accurate and may be affected by other factors. Any significant changes in the market price of STERIS Shares may cause a significant change in the purchase price used for STERIS’s accounting purposes and pro forma financial data contained in this proxy statement/prospectus.
The integration of Cantel into STERIS may not be as successful as anticipated.
The Mergers involve numerous operational, strategic, financial, accounting, legal, tax and other risks; potential liabilities associated with the acquired businesses; and uncertainties related to design, operation and integration of Cantel’s internal control over financial reporting. Difficulties in integrating Cantel into STERIS may result in Cantel performing differently than expected, in operational challenges or in the failure to realize anticipated expense-related efficiencies. STERIS’s and Cantel’s existing businesses could also be negatively impacted by the Mergers. Potential difficulties that may be encountered in the integration process include, among other factors:
the inability to successfully integrate the business of Cantel into STERIS in a manner that permits STERIS to achieve the full revenue and cost savings anticipated from the Mergers;
complexities associated with managing the larger, more complex, integrated business;
not realizing anticipated operating synergies or incurring unexpected costs to realize such synergies;
integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services;
potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Mergers;
loss of key employees;
integrating relationships with Customers, vendors and business partners;
performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Mergers and integrating Cantel’s operations into STERIS; and
the disruption of, or the loss of momentum in each, company’s ongoing business or inconsistencies in standards, controls, procedures and policies.
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STERIS’s results may suffer if it does not effectively manage its expanded operations following the Mergers.
Following completion of the Mergers, STERIS’s success will depend, in part, on its ability to manage its expansion, which poses numerous risks and uncertainties, including the need to integrate the operations and business of Cantel into its existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with Customers, vendors and business partners.
Even if STERIS and Cantel complete the Mergers, STERIS may fail to realize all of the anticipated benefits of the proposed Mergers, or those benefits may take longer to realize than expected.
The success of the proposed Mergers will depend, in part, on STERIS’s ability to realize the anticipated benefits and cost savings from combining STERIS’s and Cantel’s business, including the approximately $110 million in annualized pre-tax cost synergies that STERIS expects to realize within the first four fiscal years after the completion of the Mergers. The anticipated benefits and cost savings of the Mergers may not be realized fully or at all, may take longer to realize than expected, may require more non-recurring costs and expenditures to realize than expected or could have other adverse effects that STERIS does not currently foresee. Some of the assumptions that STERIS has made such as with respect to anticipated operating synergies or the costs associated with realizing such synergies, significant long-term cash flow generation, and the continuation of STERIS’s investment grade credit profile, may not be realized. The integration process may, for each of STERIS and Cantel, result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies. There could be potential unknown liabilities and unforeseen expenses associated with the Mergers that were not discovered in the course of performing due diligence.
Uncertainties associated with the Mergers may cause a loss of management personnel and other employees, which could adversely affect the future business and operations of STERIS.
STERIS and Cantel are dependent on the experience and industry knowledge of their officers and other employees to execute their business plans. Each company’s success until the Mergers and STERIS’s success after the Mergers will depend in part upon the ability of STERIS and Cantel to retain management personnel and other employees. Current and prospective employees of STERIS and Cantel may experience uncertainty about their roles within STERIS following the Mergers, which may have an adverse effect on the ability of each of STERIS and Cantel to attract or retain management and other personnel. Accordingly, no assurance can be given that STERIS will be able to attract or retain management, personnel and other employees of STERIS and Cantel have previously been able to attract or retain their own employees.
The market price of STERIS Shares may decline in the future as a result of the sale of the STERIS Shares held by former Cantel Stockholders or current STERIS Shareholders.
Based on the number of shares of Cantel Common Stock outstanding as of January 8, 2021 (other than Excluded Shares), STERIS expects to issue up to approximately 14,287,997 million STERIS Shares to Cantel Stockholders in the Mergers. Following their receipt of STERIS Shares as stock consideration in the Mergers, former Cantel Stockholders may seek to sell STERIS Shares delivered to them. Other STERIS Shareholders may also seek to sell STERIS Shares held by them following, or in anticipation of, completion of the Mergers. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of STERIS Shares, may affect the market for, and the market price of, STERIS Shares in an adverse manner.
After completion of the Mergers, STERIS will record goodwill and other intangible assets that could become impaired and result in material non-cash changes to STERIS’s results of operation in the future.
The Mergers will be accounted for as an acquisition by STERIS in accordance with accounting principles generally accepted in the U.S., which is referred to as GAAP. Under the acquisition method of accounting, the assets and liabilities of Cantel and its subsidiaries will be recorded, as of completion, at their respective fair values and added to those of STERIS. The reported financial condition and results of operations of STERIS for periods after completion of the Mergers will reflect Cantel balances and results after completion of the Mergers, but will not be restated retroactively to reflect the historical financial position or results of operations of Cantel and its subsidiaries for periods prior to the Mergers. See the section entitled “Selected Unaudited Pro Forma Condensed Combined Financial Data beginning on page 23.
Under the acquisition method of accounting, the total purchase price will be allocated to Cantel’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of
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the Mergers. The excess of the purchase price over those fair values will be recorded as goodwill. STERIS and Cantel expect that the Mergers will result in the creation of goodwill based upon the application of the acquisition method of accounting. To the extent the value of goodwill or intangible becomes impaired, STERIS may be required to incur material non-cash charges relating to such impairment. STERIS’s operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
If the Pre-Closing Merger and the Pre-Closing Conversion, taken together, are not treated as a “reorganization” for U.S. federal income tax purposes, the Pre-Closing Merger will be treated as a fully taxable transaction to holders of Cantel Common Stock with respect to the conversion of Cantel Common Stock into Canyon Newco Common Stock pursuant to the Pre-Closing Merger.
Although Cantel expects to receive a tax opinion from counsel to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Pre-Closing Merger and the Pre-Closing Conversion, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, neither Cantel nor STERIS has applied for, or expects to obtain, a ruling from the IRS with respect to the U.S. federal income tax consequences of the Pre-Closing Merger and the Pre-Closing Conversion. No assurance can be given that the IRS will agree with the conclusions reached in such opinion or that it will not challenge the U.S. federal income tax consequences of the Pre-Closing Merger and the Pre-Closing Conversion or that any such challenge will not be sustained by a court. If the Pre-Closing Merger and the Pre-Closing Conversion, taken together, do not qualify as a reorganization for U.S. federal income tax purposes, the conversion of Cantel Common Stock into Canyon Newco Common Stock in the Pre-Closing Merger will generally be treated as a fully taxable transaction for such purposes and U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18) will generally recognize gain or loss on the conversion of the shares of Cantel Common Stock into the equal number of shares of Canyon Newco Common Stock pursuant to the Pre-Closing Merger. Any such gain or loss required to be recognized by non-U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18) will be subject to U.S. federal income tax only in limited circumstances.
For additional discussion of material U.S. federal income tax consequences of the Pre-Closing Merger and the Pre-Closing Conversion, see the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18.
If the First Merger and the Second Merger, taken together, are not treated as a “reorganization” for U.S. federal income tax purposes, the First Merger will be treated as a fully taxable transaction to holders of Canyon Newco Common Stock with respect to the exchange of Canyon Newco Common Stock for the Merger Consideration pursuant to the First Merger.
Although Cantel expects to receive a tax opinion from counsel to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the First Merger and the Second Merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, neither Cantel nor STERIS has applied for, or expects to obtain, a ruling from the Internal Revenue Service, which is referred to as the IRS, with respect to the U.S. federal income tax consequences of the First Merger and the Second Merger. No assurance can be given that the IRS will agree with the conclusions reached in such opinion or that it will not challenge the U.S. federal income tax consequences of the First Merger and the Second Merger or that any such challenge will not be sustained by a court. If the First Merger and the Second Merger, taken together, do not qualify as a reorganization for U.S. federal income tax purposes, the exchange will generally be treated as a fully taxable transaction for such purposes and U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18) will generally recognize gain or loss on their exchange of Canyon Newco Common Stock for the Merger Consideration pursuant to the First Merger. Any such gain or loss required to be recognized by non-U.S. holders (as defined in the discussion under the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18) will be subject to U.S. federal income tax only in limited circumstances.
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For additional discussion of material U.S. federal income tax consequences of the First Merger and the Second Merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18.
Even if the First Merger and the Second Merger, taken together, qualify as a reorganization under Section 368(a) of the Code, but the requirements of Section 367(a) of the Code are not met, U.S. holders of Canyon Newco Common Stock may be required to recognize a greater amount of gain (but will not be allowed to recognize any loss) with respect to the exchange of Canyon Newco Common Stock for the Merger Consideration pursuant to the First Merger.
Section 367(a) of the Code generally requires a U.S. holder of stock in a U.S. corporation to recognize gain (but not loss) when such stock is exchanged for stock of a non-U.S. corporation in an exchange that would otherwise qualify for nonrecognition treatment, unless certain conditions are satisfied. Although it is currently expected that these conditions will be satisfied, U.S. holders are cautioned that the potential application of Section 367(a) of the Code to the First Merger and the Second Merger is complex and depends on factors that cannot be determined until the closing of the First Merger and the Second Merger and the interpretation of legal authorities and facts relating to the First Merger and the Second Merger. Accordingly, there can be no assurance that the IRS will not take the position that Section 367(a) applies to cause U.S. holders to recognize the full amount of any gain as a result of the First Merger and the Second Merger or that a court will not agree with such a position of the IRS in the event of litigation. U.S. holders should consult with their tax advisors regarding the potential application of Section 367(a) of the Code in their particular situation.
For additional discussion of material U.S. federal income tax consequences of the First Merger and the Second Merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Pre-Closing Merger, the Pre-Closing Conversion, the First Merger and the Second Merger” beginning on page 18.
Cantel Stockholders who are resident or ordinarily resident for tax purposes in Ireland may be subject to Irish capital gains tax on the cancellation of their shares of Canyon Newco Common Stock.
Cantel Stockholders (only to the extent it relates to Irish tax consequences, as defined in the section entitled “Material Ireland Tax Consequences of the First Merger”) that are resident or ordinarily resident for tax purposes in Ireland, or Cantel Stockholders that use, hold or acquire their shares of Cantel Common Stock (or Canyon Newco Common Stock immediately following the Pre-Closing Merger) for the purposes of a trade carried on by that person in Ireland through a branch or agency, or otherwise for the purposes of a branch or agency in Ireland will, subject to the availability of any exemptions and reliefs, generally be subject to Irish tax on taxable gains arising on the cancellation of their shares of Canyon Newco Common Stock pursuant to the First Merger. The receipt by a Cantel Stockholder of cash only (e.g., if they do not vote in favor of the adoption of the Merger Agreement at the Special Meeting) will be treated as a disposal of his or her shares of Cantel Common Stock for the purposes of Irish capital gains tax or corporation tax on taxable gains (as applicable), which is referred to as Irish CGT, and such holder which is resident or ordinarily resident for tax purposes in Ireland or who holds Cantel Common Stock in connection with a branch or agency in Ireland may, subject to the availability of any exemptions and reliefs, realize a taxable gain (or allowable loss).
It is anticipated that the First Merger should be treated as a ‘scheme of reconstruction or amalgamation’ for Irish CGT purposes and, subject to certain conditions, the following treatment should apply:
The receipt by such a Cantel Stockholder of STERIS Shares and cash will be treated as a part disposal of his or her shares of Canyon Newco Common Stock for Irish CGT purposes in respect of the cash consideration received. This may, subject to the availability of any exemptions and reliefs, give rise to a taxable gain (or allowable loss) for the purposes of Irish CGT in respect of the cash received.
The STERIS Shares received should be treated as the same asset as the cancelled shares of Canyon Newco Common Stock and as acquired at the same time and for the same consideration as those cancelled shares of Canyon Newco Common Stock, with the historic base cost for Irish CGT purposes adjusted for the part of the consideration attributable to the part disposal in respect of the receipt of cash.
For additional discussion of certain Irish tax consequences of the First Merger, see the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 20.
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Transfers of STERIS Shares, other than by means of the transfer of book-entry interests through the Depository Trust Company, which is referred to as DTC, may be subject to Irish stamp duty.
It is expected that for the majority of transfers of STERIS Shares, there will not be any Irish stamp duty. Transfers of STERIS Shares effected by means of the transfer of book-entry interests through DTC are not subject to Irish stamp duty. However, if you hold your STERIS Shares directly rather than beneficially through DTC, any transfer of your STERIS Shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired).
A STERIS Shareholder who directly holds STERIS Shares may transfer such STERIS Shares into his or her own broker account to be held through DTC (or vice versa) without giving rise to Irish stamp duty provided that there is no change in the ultimate beneficial ownership of the STERIS Shares as a result of the transfer and the transfer is not in contemplation of a sale of the STERIS Shares by a beneficial owner to a third party.
Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty could adversely affect the price of your STERIS Shares.
For additional discussion of certain Irish tax consequences of the First Merger, see the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 20.
In certain limited circumstances, dividends paid by STERIS may be subject to Irish dividend withholding tax.
In certain limited circumstances, Irish dividend withholding tax, which is referred to as DWT, (which applies at a rate of 25%), may arise in respect of dividends, if any, paid on STERIS Shares. A number of exemptions from DWT exist, including exemptions pursuant to which shareholders resident in the U.S., U.K. and in the countries listed in Annex D attached to this proxy statement/prospectus, which are collectively referred to as Relevant Territories and individually as a Relevant Territory, may be entitled to exemptions from DWT.
See the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 20 for further information on the operation of DWT generally and the relevant exemptions – in particular, please note the requirement to complete certain relevant Irish Revenue Commissioners DWT forms, which are referred to as DWT Forms, in order to qualify for many of the exemptions.
Dividends paid in respect of STERIS Shares that are owned by a U.S. resident and held through DTC should not be subject to DWT provided that the address of the beneficial owner of such STERIS Shares in the records of the broker holding such STERIS Shares is recorded as being in the United States (and such broker has further transmitted the relevant information to a qualifying intermediary appointed by STERIS).
Dividends paid in respect of STERIS Shares that are held outside of DTC by a person who is a resident of the U.S. should not be subject to DWT if such STERIS Shareholder has provided a completed IRS Form 6166 or a valid DWT Form to STERIS’s transfer agent to confirm its U.S. residence and claim an exemption.
STERIS Shareholders resident in other Relevant Territories may also be eligible for exemption from DWT on dividends paid in respect of their STERIS Shares provided that they satisfy the conditions of one of the exemptions including the requirement to furnish valid DWT Forms to their brokers (in respect of shares held through DTC) (and such broker has further transmitted the relevant information to a qualifying intermediary appointed by STERIS) or to STERIS’s transfer agent (in respect of shares held outside of DTC).
However, other STERIS Shareholders may be subject to DWT, which if you are such a STERIS Shareholder could adversely affect the price of your STERIS Shares. For additional discussion of certain Irish tax consequences of the First Merger, see the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 20.
Dividends received from STERIS by Irish resident and certain other STERIS Shareholders may be subject to Irish income tax.
STERIS Shareholders that are entitled to an exemption from DWT on dividends received from STERIS should not be subject to Irish income tax in respect of those dividends, unless they have some connection with Ireland other than their shareholding in STERIS (for example, they are resident in Ireland). STERIS Shareholders who are not resident nor ordinarily resident in Ireland but who are not entitled to an exemption from DWT should generally have no further liability to Irish income tax on those dividends which suffer DWT.
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For additional discussion of certain Irish tax consequences of the First Merger, see the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 20.
STERIS Shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.
Irish capital acquisitions tax, which is referred to as CAT (currently levied at a rate of 33%), could apply to a gift or inheritance of STERIS Shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because STERIS Shares will be regarded as property situated in Ireland. Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of €335,000 in respect of taxable gifts or inheritances received from their parents. The person who receives the gift or inheritance has primary liability for CAT.
For additional discussion of certain Irish tax consequences of the First Merger, see the section entitled “Material Ireland Tax Consequences of the First Merger” beginning on page 20.
STERIS cannot ensure you that it will be able to continue paying dividends at or above the rates currently paid by STERIS prior to completion of the Mergers.
After completion of the Mergers, STERIS Shareholders may not receive dividends at the same rate they received dividends prior to the completion of the Mergers for various reasons, including the following:
STERIS may not have enough cash to pay such dividends due to changes in STERIS’s cash requirements, capital spending plans, cash flow or financial position;
decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the STERIS Board of Directors;
STERIS may desire to retain cash to maintain or improve its credit ratings; and
the amount of dividends that STERIS subsidiaries may distribute to STERIS may be subject to restrictions imposed by state or other laws and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.
After completion of the Mergers, STERIS Shareholders (including Cantel Stockholders following the Closing) will have no contractual or other legal right to dividends that have not been declared by the STERIS Board of Directors.
The ongoing COVID-19 pandemic could materially impact the implementation of the Mergers, and may impact the success of the integration of Cantel into STERIS.
The COVID-19 pandemic and the resulting government mandates have had a significant impact on the global stock market and on both STERIS’s and Cantel’s operations. For as long as it continues, and in the event there is another widespread regional, national or global health epidemic or pandemic, the uncertainty may impact our ability to implement the Mergers. Additionally, the COVID-19 pandemic and the resulting government mandates and/or pandemic-related travel restrictions may cause operational challenges that result in difficulties in integrating Cantel into STERIS. As a result, STERIS may fail to realize the anticipated synergies from the Mergers. STERIS and Cantel expect that the impact of the COVID-19 pandemic and government mandates on the success of the Mergers will largely depend on the extent and duration of the pandemic, the governmental and public actions taken in response, and the effect the pandemic will have on the U.S. economy.
Risks Relating to STERIS’s Business
You should read and consider the other risk factors specific to STERIS’s businesses that will also affect STERIS after completion of the Mergers. These risks are described in Part 1, Item 1A of STERIS’s Annual Report on Form 10-K for the 2020 fiscal year and in other documents that are incorporated by reference herein. See the section entitled “Where You Can Find More Information” beginning on page 152 for the location of information incorporated by reference in this proxy statement/prospectus.
Risks Relating to Cantel’s Business
You should read and consider the other risk factors specific to Cantel’s businesses that will also affect STERIS after completion of the Mergers. These risks are described in Part 1, Item 1A of Cantel’s Annual Report on Form 10-K for the 2020 fiscal year and in other documents that are incorporated by reference herein. See the section entitled “Where You Can Find More Information” beginning on page 152 for the location of information incorporated by reference in this proxy statement/prospectus.
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INFORMATION ABOUT THE COMPANIES
STERIS plc
70 Sir John Rogerson’s Quay
Dublin 2 Ireland D02 R296
Phone: +353 1 232 2000
STERIS plc is a public limited company incorporated under the laws of Ireland on December 22, 2016. It became the parent company of the STERIS group of companies on March 28, 2019, in connection with the Redomiciliation. STERIS’s registered office is located in Dublin, Ireland and its U.S. administrative offices are located in Mentor, Ohio. STERIS is a leading provider of infection prevention and other procedural products and services. STERIS offers its Customers a unique mix of innovative capital equipment products, such as sterilizers and washers, surgical tables, lights and equipment management systems and connectivity solutions such as operating room integration; consumable products including detergents and gastrointestinal endoscopy accessories and other products and services, including equipment installation and maintenance, microbial reduction of medical devices, instrument and scope repair solutions, laboratory services and outsourced instrument reprocessing.
STERIS is segmented by Customer, with three reporting segments: Healthcare, Applied Sterilization Technologies (AST) and Life Sciences. Through these three segments STERIS serves hospitals and surgery centers, medical device manufacturers and pharmaceutical manufacturers.
STERIS Shares are listed on the NYSE, trading under the symbol “STE.”
Cantel Medical Corp.
150 Clove Road
Little Falls, New Jersey 07424
Phone: (973) 890-7220
Cantel Medical Corp. is a leading provider of infection prevention products and services in the healthcare market, specializing in the following reportable segments: Medical, Life Sciences, Dental and Dialysis. Most of Cantel’s equipment, consumables and supplies are used to help prevent the occurrence or spread of infections. Cantel’s products include specialized medical device reprocessing systems for endoscopy and renal dialysis, advanced water purification equipment, sterilants, disinfectants and cleaners, sterility assurance monitoring products for hospitals and dental clinics, disposable infection control products primarily for dental and GI endoscopy markets, instruments and instrument reprocessing workflow systems serving the dental industry, dialysate concentrates, hollow fiber membrane filtration and separation products. Additionally, Cantel provides technical service for its products. Cantel operates in four segments through wholly-owned subsidiaries in the U.S. and internationally.
Shares of Cantel Common Stock are listed on the NYSE, trading under the symbol “CMD.”
Solar New US Holding Co, LLC
5960 Heisley Road
Mentor, Ohio 44060
Phone: (440) 354-2600
US Holdco, whose legal name is Solar New US Holding Co, LLC, serves primarily as a holding company, holding all of the membership interests in Solar New US Parent Co, LLC. In addition, US Holdco makes loans to and collects interest from affiliates.
Crystal Merger Sub 1, LLC
5960 Heisley Road
Mentor, Ohio 44060
Phone: (440) 354-2600
Crystal Merger Sub, whose legal name is Crystal Merger Sub 1, LLC, is a direct, wholly owned subsidiary of US Holdco. Upon the completion of the First Merger, Crystal Merger Sub will cease to exist. Crystal Merger Sub was formed in Delaware on January 7, 2021 for the sole purpose of effectuating the First Merger.
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Canyon HoldCo, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Phone: (973) 890-7220
Canyon Newco, whose legal name is Canyon HoldCo, Inc., is a Delaware corporation and direct and wholly owned subsidiary of Cantel. At the effective time of the Pre-Closing Merger, Canyon Merger Sub will merge with and into Cantel with Cantel surviving the Pre-Closing Merger as a direct and wholly owned subsidiary of Canyon Newco. Upon the completion of the First Merger, Canyon Newco will survive the First Merger as a direct and wholly owned subsidiary of US Holdco. Upon the completion of the Second Merger, Canyon Newco will cease to exist. Canyon Newco was incorporated for the purpose of facilitating the Mergers.
Grand Canyon Merger Sub, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Phone: (973) 890-7220
Canyon Merger Sub, whose legal name is Grand Canyon Merger Sub, Inc., is a Delaware corporation and a direct and wholly owned subsidiary of Canyon Newco. Upon completion of the Pre-Closing Merger, Canyon Merger Sub will cease to exist. Canyon Merger Sub was incorporated for the sole purpose of effectuating the Pre-Closing Merger.
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SPECIAL MEETING OF CANTEL STOCKHOLDERS
Date, Time and Place
The Special Meeting will be held on    , 2021 at      Eastern Time. In light of the public health impact of COVID-19 and in order to protect the health and well-being of our stockholders, the Special Meeting will be held virtually via live webcast at www.virtualshareholdermeeting.com/CMD2021SM. There will be no physical in-person meeting.
Purpose of the Special Meeting
The purpose of the Special Meeting is as follows:
to consider and vote on the Cantel Merger Proposal; and
to consider and vote on the Compensation Proposal.
Cantel will transact no other business at the Special Meeting.
Recommendation of the Cantel Board of Directors
The Cantel Board of Directors recommends that Cantel Stockholders vote:
1.
FOR” the Cantel Merger Proposal; and
2.
FOR” the Compensation Proposal.
See the section entitled “The Mergers—Recommendation of the Cantel Board of Directors and Reasons for the Mergers” beginning on page 56.
Record Date
Only holders of record of issued and outstanding shares of Cantel Common Stock as of the close of business on    , 2021, the Record Date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting.
Quorum; Abstentions and Broker Non-Votes; Required Votes
A quorum of Cantel Stockholders is necessary to hold a valid meeting. A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of shares of Cantel Common Stock outstanding and entitled to vote on the Record Date are present in person virtually or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum, including abstentions. Under the NYSE rules, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of proposals that the NYSE determines to be “non-routine” and will not vote on such proposals if the broker has not received instructions from the beneficial owners on how to vote on the proposals. Under the NYSE rules, brokers are not permitted to vote on any of the matters to be considered at the Special Meeting. As a result, if you are the beneficial owner of shares of Cantel Common Stock held of record by your bank, broker or nominee, your shares will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in one of the ways indicated by your bank, broker or other nominee.
If you submit a properly executed proxy card, even if you do not vote for some or all of the proposals or vote to “ABSTAIN” in respect of some or all of the proposals, your shares of Cantel Common Stock will be counted for purposes of calculating whether a quorum is present at the Special Meeting with respect to each matter to be considered at the Special Meeting. Executed but unvoted proxies will be voted in accordance with the recommendations of the Cantel Board of Directors. If additional votes must be solicited to approve the Cantel Merger Proposal, the Special Meeting will be adjourned to solicit additional proxies. Shares of Cantel Common Stock held in street name will be counted as present for the purpose of determining the existence of a quorum at the Special Meeting so long as a stockholder has given the broker or other nominee voting instructions on at least one of the proposals brought before the Special Meeting. The proposals for consideration at the Special
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Meeting are considered “non-routine” matters under NYSE Rule 452, and, therefore, no broker non-votes can occur at the Special Meeting. Cantel Stockholder’s shares will not be counted as present for the purpose of determining the existence of a quorum if no instructions have been provided on how to vote on any such proposals.
Approval of the Cantel Merger Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock outstanding as of the close of business on the record date and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINST” the Cantel Merger Proposal.
Approval of the Compensation Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock present in person virtually or by proxy at the Special Meeting and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINST” the Compensation Proposal.
The matters to be voted on at the Special Meeting are described in the section entitled “Cantel Special Meeting Proposals” beginning on page 49.
Under the Cantel Bylaws, whether or not there is a quorum, the chairman of the Special Meeting may adjourn the Special Meeting, and may elect to do so to, among other things, solicit additional proxies if there are not sufficient votes at the time of the Special Meeting in favor of the Cantel Merger Proposal.
Methods of Voting
Cantel Stockholders holding shares directly as stockholders of record may vote via the Internet by going to the web address provided on the enclosed proxy card and following the instructions for Internet voting; by telephone using the toll-free telephone number listed on the enclosed proxy card; or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
Cantel Stockholders of record may vote their shares while attending the meeting virtually or by submitting their proxies:
via the Internet until 11:59 p.m. Eastern Time on    , 2021;
by telephone until 11:59 p.m. Eastern Time on    , 2021; or
by completing, signing and returning your proxy or voting instruction card via mail. If you vote by mail, your proxy card must be received by 11:59 p.m. Eastern Time on     , 2021.
Cantel Stockholders whose shares are held in “street name” by a bank, broker, nominee, fiduciary or other custodian should refer to the proxy card, voting instruction form or other information forwarded by their bank, broker, nominee, fiduciary or other custodian for instructions on how to vote their shares.
Voting Virtually at the Meeting
Shares of Cantel Common Stock held directly in your name as stockholder of record as of the close of business on the Record Date may be voted virtually at the Special Meeting. If you choose to vote your shares of Cantel Common Stock virtually at the Special Meeting, you will need the sixteen-digit control number included on your proxy card or on the instructions accompanying the proxy statement/prospectus mailed to you in order to enter the Special Meeting. Even if you plan to virtually attend the Special Meeting, the Cantel Board of Directors recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to virtually attend the Special Meeting.
If your shares of Cantel Common Stock are held in “street name,” then the bank, broker or other nominee is considered the stockholder of record for purposes of voting at the Special Meeting. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your bank, broker or other nominee. For directions on how to vote shares held beneficially in street name, please refer to the voting instruction card provided by your bank, broker or other nominee.
Voting by Proxy
If you hold your shares of Cantel Common Stock directly as the stockholder of record you may direct your vote by proxy without virtually attending the Special Meeting. You can vote by proxy via the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card.
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Cantel Stockholders whose shares of Cantel Common Stock are held in “street name” by a bank, broker, nominee, fiduciary or other custodian should refer to the proxy card, voting instruction form or other information forwarded by their bank, broker, nominee, fiduciary or other custodian for instructions on how to vote their shares of Cantel Common Stock.
Questions About Voting
If you have any questions about how to vote or direct a vote in respect of your shares of Cantel Common Stock, you may contact MacKenzie, Cantel’s proxy solicitor, via email at proxy@mackenziepartners.com or at:
(800) 322-2885 toll-free for Cantel Stockholders; and
(212) 929-5500 collect for banks and brokers.
Revocability of Proxies
If you are a Cantel Stockholder of record as of the close of business on the Record Date, whether you vote via the Internet, by telephone or mail, you can change or revoke your proxy before it is voted at the Special Meeting in one of the following ways:
submit a new proxy card bearing a later date;
vote again via the Internet or by telephone at a later time;
give written notice before the Special Meeting to the Cantel Corporate Secretary at the address listed for Cantel in the section entitled “Where You Can Find More Information”, beginning on page 152, stating that you are revoking your proxy; or
virtually attend the Special Meeting and vote your shares of Cantel Common Stock at the Special Meeting. Please note that your virtual attendance at the Special Meeting will not alone serve to revoke your proxy.
If you are a beneficial owner of Cantel Common Stock as of the close of business on the Record Date, you must follow the instructions of your bank, broker or other nominee to revoke or change your voting instructions.
Proxy Solicitation Costs
The enclosed proxy card is being solicited on behalf of the Cantel Board of Directors. In addition to solicitation by mail, Cantel’s directors, officers and employees may solicit proxies in person, by telephone or by electronic means. These persons will not be specifically compensated for doing this.
Cantel has retained MacKenzie to assist in the solicitation process. Cantel will pay MacKenzie a fee of approximately $30,000, as well as reasonable and documented out-of-pocket expenses. Cantel also has agreed to indemnify MacKenzie against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
Cantel will ask banks, brokers and other custodians, nominees and fiduciaries to forward the proxy solicitation materials to the beneficial owners of shares of Cantel Common Stock held of record as of the close of business on the Record Date by such nominee holders. Cantel will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to beneficial owners of Cantel Common Stock.
Other Information
The matters to be considered at the Special Meeting are of great importance to Cantel Stockholders. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference into this proxy statement/prospectus and submit your proxy via the Internet or by telephone or complete, date, sign and promptly return the enclosed proxy card in the enclosed postage-paid envelope. If you submit your proxy via the Internet or by telephone, you do not need to return the enclosed proxy card.
Vote of Cantel’s Directors and Executive Officers
As of November 2, 2020, Cantel directors and executive officers, and their affiliates, as a group, were entitled to vote or had shared power to vote a total of 4,522,560 shares of Cantel Common Stock, or approximately 10.7% of the total shares of Cantel Common Stock issued and outstanding as of
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November 2, 2020. Two such directors, Charles M. Diker and Mark N. Diker, have entered into the Voting Agreement with STERIS, US Holdco and Crystal Merger Sub, pursuant to which they have agreed, among other things, to vote all of the shares of Cantel Common Stock beneficially owned by them (constituting approximately 10.4% of the issued and outstanding shares of Cantel Common Stock as of January 8, 2021), in favor of the Cantel Merger Proposal and other items, on the terms and subject to the conditions set forth in the Voting Agreement. For more information, see the section entitled “Voting Agreement” beginning on page 94.
Cantel currently expects that all of its directors and executive officers will vote their shares “FOR” the Cantel Merger Proposal and “FOR” the Compensation Proposal.
Attending the Special Meeting
You are entitled to attend the Special Meeting virtually only if you were a Cantel Stockholder of record as of the close of business on the Record Date or you held your shares of Cantel Common Stock beneficially in the name of a bank, broker or other nominee as of the Record Date or you hold a valid proxy for the Special Meeting.
If you were a Cantel Stockholder of record at the close of business on the Record Date and wish to attend the Special Meeting, please so indicate on the appropriate proxy card or as prompted by the Internet or telephone voting system. You will need the sixteen-digit control number included on your individual proxy card or on the instructions accompanying your proxy statement/prospectus in order to enter the Special Meeting. If you do not present such sixteen-digit control number, you might not be admitted to the Special Meeting.
If a bank, broker or other nominee is the record owner of your shares of Cantel Common Stock, you will not be permitted to virtually attend the Special Meeting unless you first obtain a legal proxy issued in your name from the record owner and register in advance to participate in the Special Meeting. To register, you must forward a copy of such legal proxy, along with your email address, to Broadridge. You will receive confirmation of your registration, with a control number and additional instructions on how to vote at the Special Meeting, by email from Broadridge. You are encouraged to request a legal proxy from your bank, broker or other nominee promptly as the process can be lengthy.
Results of the Special Meeting
The preliminary voting results will be announced at the Special Meeting. In addition, within four business days following the Special Meeting, Cantel intends to report the final voting results in a Current Report on Form 8-K filed with the SEC. If the final voting results have not been certified within such four-business-day period, Cantel will report the preliminary voting results in a Current Report on Form 8-K at that time and will file an amendment to the Current Report on Form 8-K to report the final voting results within four business days of the date that the final results are certified.
CANTEL STOCKHOLDERS SHOULD CAREFULLY READ THIS PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE CANTEL MERGER PROPOSAL AND THE OTHER MATTERS TO BE VOTED ON AT THE SPECIAL MEETING.
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CANTEL SPECIAL MEETING PROPOSALS
The Cantel Merger Proposal
It is a condition to the completion of the Mergers that Cantel Stockholders adopt the Merger Agreement and approve the transactions contemplated by the Merger Agreement. The consideration that Cantel Stockholders will receive upon completion of the Mergers is subject to potential adjustments, as set forth in the Merger Agreement, which are described in the section entitled “The Merger Agreement—Merger Consideration” beginning on page 80.
The approval by such Cantel Stockholders of the Cantel Merger Proposal is required by Section 251 of the DGCL and is a condition to the completion of the Mergers.
Approval of the Cantel Merger Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock outstanding as of the close of business on the Record Date and entitled to vote. Abstentions will have the same effect as a vote “AGAINST” the proposal.
The Cantel Board of Directors recommends that you vote FOR” the Cantel Merger Proposal.
Compensation Proposal
As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, which were enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Cantel is required to provide its stockholders an opportunity to vote to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Cantel’s named executive officers that is based on or otherwise relates to the Mergers, as described in the section entitled “The Mergers Interests of Cantel Directors and Executive Officers in the Mergers” beginning on page 74. Accordingly, Cantel Stockholders are being provided the opportunity to cast an advisory vote on such potential payments.
As an advisory vote, this proposal is not binding upon Cantel or the Cantel Board of Directors and approval of the Compensation Proposal is not a condition to the completion of the Mergers. Because the executive compensation to be paid in connection with the Mergers is based on the terms of the Merger Agreement as well as contractual arrangements with Cantel’s named executive officers, such compensation will be payable, regardless of the outcome of this advisory vote, if the Merger Agreement is adopted (subject only to the contractual conditions applicable thereto). However, Cantel seeks the support of its stockholders and believes that stockholder support is appropriate because Cantel has a comprehensive executive compensation program designed to link the compensation of its executives with Cantel’s performance and the interests of Cantel Stockholders. Accordingly, Cantel Stockholders are being asked to vote on the following resolution:
RESOLVED, that the stockholders of Cantel approve, on an advisory, non-binding basis, certain compensation that may be paid or become payable to the named executive officers of Cantel that is based on or otherwise relates to the Mergers, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading “The Mergers—Interests of Cantel Directors and Executive Officers in the Mergers” in the proxy statement/prospectus.
Approval of the non-binding Compensation Proposal requires the affirmative vote of a majority of the shares of Cantel Common Stock present in person virtually or by proxy at the Special Meeting and entitled to vote on the proposal. Abstentions will have the same effect as a vote “AGAINST” the proposal.
The Cantel Board of Directors recommends that you vote “FOR” the Compensation Proposal.
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THE MERGERS
This discussion of the Mergers is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A-1 and Annex A-2 and incorporated by reference herein in its entirety. You should read the entire Merger Agreement carefully as it is the legal document that governs the Mergers.
Transaction Structure
Upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the DGCL and the Delaware Limited Liability Company Act, which is referred to as the DLLCA, STERIS will acquire Cantel through a multi-step process:
first, immediately prior to the First Merger, (a) Canyon Merger Sub will merge with and into Cantel with Cantel surviving the merger as a direct and wholly owned subsidiary of Canyon Newco in the Pre-Closing Merger and (b) immediately following the effective time of the Pre-Closing Merger, Cantel will convert from a Delaware corporation to a Delaware limited liability company in the Pre-Closing Conversion;
immediately following the Pre-Closing Conversion, Crystal Merger Sub will merge with and into Canyon Newco, with Canyon Newco surviving the merger as a direct and wholly owned subsidiary of US Holdco in the First Merger;
immediately after the First Merger, Canyon Newco will merge with and into US Holdco in the Second Merger, with US Holdco as the Surviving Company.
Unless STERIS and Cantel otherwise agree, the closing of the Mergers will take place on the date that is five business days after the satisfaction or waiver of the conditions set forth in the Merger Agreement, described below under the section “The Merger Agreement—Conditions to Closing (other than those conditions that, by their terms, are required to be satisfied at the Closing, but subject to the satisfaction or, if permissible, waiver of those conditions at the Closing).
At the effective time of the Pre-Closing Merger, each share of Cantel Common Stock (other than any Dissenting Shares (as defined below)) will be automatically converted into one share of Canyon Newco Common Stock and all Canyon Newco Common Stock then owned by Cantel will be cancelled and cease to exist, and no consideration shall be delivered in exchange therefor, such that as of immediately after the effective time of the Pre-Closing Merger, all shares of Canyon Newco Common Stock shall be held by the holders of Cantel Common Stock as of immediately prior to the effective time of the Pre-Closing Merger. From and after the effective time of the Pre-Closing Merger, all certificates representing Cantel Common Stock shall be deemed for all purposes to represent the number of shares of Canyon Newco Common Stock into which they were converted.
Consideration to Cantel Stockholders
As a result of the First Merger, each share of Canyon Newco Common Stock issued and outstanding immediately prior to the First Merger (other than Dissenting Shares, as defined below, and any share of Canyon Newco Common Stock held by Cantel, STERIS or any of their subsidiaries) will be converted into the right to receive (i) $16.93 in cash and (ii) 0.33787 STERIS Shares. Shares of Canyon Newco Common Stock held by Cantel, STERIS or any of their subsidiaries will be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor. From and after the effective time of the First Merger, all such shares of Canyon Newco Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each applicable holder of such shares of Canyon Newco Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration.
Stockholders of Canyon Newco Common Stock will not receive any fractional STERIS Shares. Instead, they will be entitled to receive, in lieu of such fractional shares, an amount in cash, without interest, equal to the product of the average of the volume-weighted average price per STERIS Share on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by the Parties) on each of the 10 consecutive trading days ending immediately prior to the Closing Date multiplied by the fraction of STERIS Shares to which such holder would otherwise be entitled.
If the Mergers are completed, Cantel Stockholders who do not vote in favor of the Cantel Merger Proposal at the Special Meeting, who continuously hold their shares of Cantel Common Stock through the effective time
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of the Pre-Closing Merger and who properly demand, and do not lose their right to seek, appraisal of their shares of Cantel Common Stock in compliance with the requirements of Section 262 of the DGCL will be entitled to exercise appraisal rights in connection with the Pre-Closing Merger under Section 262 of the DGCL. This means that holders of shares of Cantel Common Stock who may exercise appraisal rights and who also have properly exercised, perfected and not waived, effectively withdrawn or otherwise lost those appraisal rights are entitled to have their shares of Cantel Common Stock appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Cantel Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Pre-Closing Merger or the First Merger, together with interest (subject to certain exceptions) to be paid on the amount determined to be fair value, if any, as determined by the Delaware Court of Chancery, so long as those holders comply exactly with the procedures established by Section 262 of the DGCL. For additional information about appraisal rights, see the section entitled “Appraisal Rights of Cantel Stockholders” contained in this proxy statement/prospectus and the text of Section 262 of the DGCL attached hereto as Annex C.
If, between the date of the Merger Agreement and the effective time of the First Merger, the number of issued and outstanding shares of Cantel Common Stock, Canyon Newco Common Stock or STERIS Shares changes by reason of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Cantel Common Stock, Canyon Newco Common Stock or STERIS Shares, as applicable), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change, the Merger Consideration shall be adjusted appropriately.
Based upon the closing sale price of STERIS Shares on NYSE of $    on    , 2021, the last practicable trading date prior to the date of this proxy statement/prospectus, the value of the Merger Consideration was approximately $     .
Background on the Mergers
From time to time, as part of Cantel’s ongoing efforts to strengthen its overall business and enhance value for its stockholders, customers and other stakeholders, Cantel’s management and the Cantel Board of Directors evaluate strategic alternatives for Cantel’s business, taking into account Cantel’s performance, strategy, risks and position, as well as economic, regulatory, competitive and other conditions. As part of this effort, Mr. Charles M. Diker, Chairman of the Cantel Board of Directors, and Mr. George L. Fotiades, the Chief Executive Officer and a member of the Cantel Board of Directors, regularly engage in discussions with the Chief Executive Officers of other companies across Cantel’s business segments, including Medical, Dental and Life Sciences.
From time to time over the past several years, Mr. Fotiades and Mr. Walter M Rosebrough, Jr., the President and Chief Executive Officer and a member of the STERIS Board of Directors, have had informal discussions regarding developments within each company’s respective businesses, including in February and March 2020. During the course of these discussions, Mr. Rosebrough had on multiple occasions expressed to Mr. Fotiades an interest in exploring a strategic business combination transaction between the two companies. No substantive or specific transaction terms were discussed during any such discussions.
Between April and August 2020, various strategic and financial parties reached out to Cantel, either directly or through Centerview to express possible interest in an acquisition of Cantel, or certain of its divisions.
During the STERIS Board of Directors meeting held in July, 2020, certain members of STERIS management presented information to the STERIS Board of Directors regarding, among other things, Cantel as potential acquisition target of STERIS.
On September 28, 2020, Mr. Rosebrough called Mr. Fotiades to discuss STERIS’s continued interest in pursuing a potential acquisition of Cantel by STERIS. On September 29, 2020, Mr. Fotiades informed Mr. Rosebrough that he intended to have a discussion with the Cantel Board of Directors regarding strategic options for Cantel at a meeting scheduled for October 7, 2020.
Prior to the October 7, 2020 Cantel Board of Directors meeting, Mr. Fotiades discussed the inbound interest received from various parties, including STERIS’s interest, with Mr. Diker and Mr. Alan R. Batkin, Lead Independent Director of Cantel. In light of these conversations and the outreach from these parties earlier in the year, the three directors believed that it would be beneficial to discuss the inbound expressions of interest with the full Cantel Board of Directors. During a meeting of the Cantel Board of Directors on October 7, 2020, the Cantel Board of Directors authorized Centerview to continue discussions with STERIS, and other select parties,
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to explore potential strategic transactions. During the course of October and November, Centerview engaged in discussions with five strategic counterparties, including STERIS (the “Strategic Bidders”) and two private equity counterparties (the “Financial Bidders”).
On October 8, 2020, Mr. Rosebrough and Mr. Fotiades held a telephonic discussion during which Mr. Fotiades confirmed that the Cantel Board of Directors was interested in continuing discussions with STERIS, among others.
On October 12, 2020, representatives of Centerview and representatives of Guggenheim Securities LLC (“Guggenheim”), STERIS’s financial advisor, discussed potential preliminary diligence and process considerations for the parties to assess further interest in a potential transaction.
On October 13, 2020, Mr. Rosebrough called Mr. Fotiades to express his disappointment that Cantel had elected to pursue a process with multiple bidders instead of exclusively with STERIS. Mr. Rosebrough expressed preliminary interest in participating in the proposed process, but agreed to follow up shortly to confirm.
On October 15, 2020, Mr. Rosebrough called Mr. Fotiades to confirm that STERIS was interested in continuing the discussions and would participate in a process if that was what the Cantel Board of Directors decided to pursue.
Between October 19, 2020 and November 14, 2020, Cantel entered into confidentiality agreements with a total of five prospective buyers, including three of the Strategic Bidders (including a confidentiality agreement entered with STERIS on October 26, 2020) and both Financial Bidders. The other two Strategic Bidders declined to enter into confidentiality agreements with Cantel. During this time, one of the parties that had reached out between April and August 2020 and that had previously communicated its interest to Mr. Fotiades in acquiring Cantel’s medical business, indicated that it was not prepared to proceed with an acquisition of the entire company.
On October 22, 2020, Cantel pre-announced the estimated revenue range for its first fiscal quarter, ending on October 31, 2020, of $290 - $295 million, an increase of approximately 25% sequentially from the prior quarter and a year over year increase of approximately 14% on a reported basis. The intraday high for Cantel Common Stock on the NYSE was $53.16 per share, and the closing price per share of Cantel Common Stock on that date was $51.82 per share, an increase of approximately 8.1% over the previous day’s closing price.
On October 27, 2020, during a meeting of the STERIS Board of Directors, representatives of Guggenheim gave a presentation to the STERIS Board of Directors concerning, among other things, Cantel as a potential acquisition target of STERIS.
On November 5, 2020, the Cantel Board of Directors convened a telephonic conference, which also was attended by representatives of Centerview and Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”), Cantel’s legal counsel. Mr. Diker, explained to the Cantel Board of Directors that senior management of Cantel, in consultation with Centerview, had determined to seek approval from the Cantel Board of Directors to initiate a process involving the potential sale of the company. Mr. Fotiades provided additional background on his discussions with Centerview and the prospective buyers who had shown interest in participating in such a process. Representatives of Wachtell Lipton advised the Cantel Board of Directors of their fiduciary and confidentiality obligations in connection with a potential offer by any participants in the process. Representatives of Centerview then provided additional detail regarding each of the parties who had expressed interest in participating in the potential sale process.
On November 11, 2020, Mr. Fotiades and other members of Cantel’s senior management participated in a management presentation to members of STERIS’s senior management by videoconference. In addition to Mr. Fotiades, the videoconference was attended by Peter Clifford, Cantel’s President and Chief Operating Officer, Shaun Blakeman, Cantel’s Senior Vice President and Chief Financial Officer, and Seth M. Yellin, Cantel’s Executive Vice President and Chief Growth Officer.
Between November 16, 2020 and November 20, 2020, at the direction of the Cantel Board of Directors, representatives of Centerview distributed a process letter regarding preliminary indications of interests to
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two Strategic Bidders, including STERIS (the third Strategic Bidder that had signed a confidentiality agreement had by this time indicated that it was not interested in pursuing a potential transaction), and both Financial Bidders. Each of the counterparties were also provided access to a virtual data room with limited public and private information about Cantel.
On December 2, 2020, STERIS submitted a letter of intent to Cantel, which contemplated an all-stock acquisition at a fixed exchange ratio of 0.325 STERIS Shares per share of Cantel Common Stock and implied a purchase price of $62.66 per share based on STERIS’s closing price as of December 1, 2020. Cantel did not receive indications of interest from the other Strategic Bidder or the Financial Bidders.
On December 4, 2020, Mr. Fotiades informed Mr. Rosebrough that Cantel had rejected STERIS’s offer. In response, Mr. Rosebrough asked Mr. Fotiades to schedule a phone call to further discuss STERIS’s offer.
On December 5, 2020, Mr. Fotiades and Mr. Rosebrough had a telephonic discussion in which Mr. Rosebrough asked Mr. Fotiades for guidance as to the changes to STERIS’s proposal that would be required for the Cantel Board of Directors to approve a transaction with STERIS. Mr. Fotiades responded that Cantel was expecting a value per share of Cantel Common Stock at a premium to its 52-week high, which was then approximately $79.50 per share.
On December 7, 2020, Mr. Rosebrough called Mr. Fotiades to inform him that STERIS would be submitting an offer at $75 per share the following day.
On December 8, 2020, Cantel announced its earnings for its first quarter of fiscal year 2021. Cantel reported first quarter 2021 net sales of $297 million, up 15.5% compared to the prior year. The intraday high for Cantel Common Stock on the NYSE was $76 per share, and the closing price per share of Cantel Common Stock on that date was $75.10 per share, an increase of approximately 22% over the previous day’s closing price. In the afternoon of December 8, 2020, STERIS submitted a revised letter of intent to Cantel, which valued Cantel Common Stock at $75 per share and contemplated mixed consideration consisting of between 60% and 75% stock consideration and 40% and 25% cash consideration. The revised letter of intent stated that STERIS’s offer was conditioned upon Cantel granting STERIS a 45-day exclusivity period in which to finalize and enter into definitive documentation for the proposed transaction. Later that day, Messrs. Diker, Fotiades and Batkin discussed the new inbound offer.
On December 9, 2020, the Cantel Board of Directors convened a telephonic conference, which also was attended by representatives of Centerview. Centerview provided an update to the Cantel Board of Directors regarding the sale process and the revised offer received by STERIS. The Cantel Board of Directors discussed STERIS’s offer in light of the significant increase in the price per share of Cantel Common Stock that occurred following Cantel’s first quarter earnings announcement. Representatives of Centerview reviewed with the directors Cantel’s historical and projected financials and referred to these financials in its financial analysis of various strategic alternatives, including separate analysis of Cantel’s Medical, Dental and Life Sciences businesses. Centerview also provided a pro forma financial profile of the combined company giving effect to the STERIS transaction. Messrs. Diker and Fotiades discussed next steps and Cantel’s strategy in responding to STERIS’s revised offer and request for exclusivity. After discussion, the Cantel Board of Directors authorized the continuation of discussions with STERIS and authorized Mr. Fotiades to make a counter proposal to Mr. Rosebrough of a purchase price of $83 per share of Cantel Common Stock in exchange for an exclusivity and diligence period of four weeks.
On the evening of December 9, 2020, Mr. Fotiades called Mr. Rosebrough to relay the counter proposal approved by the Cantel Board of Directors. Mr. Fotiades requested that STERIS’s final offer be made to Cantel in writing no later than December 11, 2020.
On December 11, 2020, Mr. Rosebrough informed Mr. Fotiades that STERIS was prepared to raise its offer to a purchase price of $78.75 per share of Cantel Common Stock, but that STERIS could not increase its offer any further. Mr. Rosebrough indicated that the consideration would consist of approximately 80% stock consideration and 20% cash consideration. The closing price per share of Cantel Common Stock on the NYSE on that date was $74.46 per share. Mr. Rosebrough indicated that STERIS would aim to negotiate and announce a definitive merger agreement with Cantel by the time of the J.P. Morgan 39th Annual Healthcare Conference, scheduled for January 11, 2021 through January 14, 2021 (the “J.P. Morgan Conference”).
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On December 12, 2020, the Cantel Board of Directors convened a telephonic conference. Mr. Fotiades informed the Cantel Board of Directors of his discussion with Mr. Rosebrough. Mr. Fotiades also informed the Cantel Board of Directors of the targeted announcement date during the week of January 11, 2021. After discussion, the Cantel Board of Directors authorized Mr. Fotiades to pursue the revised proposal and continue the discussions with STERIS.
On December 13, 2020, STERIS submitted a further revised letter of intent to Cantel, which reflected the revised offer communicated by Mr. Rosebrough of a purchase price of $78.75 per share of Cantel Common Stock, consisting of 80% stock consideration and 20% cash consideration. The letter of intent contained a request to enter into a 30-day exclusivity period. STERIS indicated that it would work with Cantel to enter into a definitive agreement within that period.
On December 15, 2020, Cantel and STERIS entered into an exclusivity agreement that would remain in effect through January 11, 2021.
On December 16, 2020, an expanded virtual data room with additional information about Cantel was opened, and access was granted to STERIS and its advisors.
Between December 16, 2020 and January 4, 2021, STERIS and Cantel undertook reciprocal due diligence investigations, including through diligence meetings between members of management of each company on commercial, operational, legal, tax and financial topics.
On December 29, 2020, the audit committee of the STERIS Board of Directors met by videoconference with members of management and Guggenheim to discuss aspects of the proposed merger consideration that STERIS would pay in connection with a transaction with Cantel.
On January 2, 2021, Wachtell Lipton sent to Jones Day (“Jones Day”), STERIS’s legal counsel, an initial draft of the proposed merger agreement.
On January 4, 2021, the audit committee of the STERIS Board of Directors conducted a videoconference that was attended by all other STERIS Directors, members of STERIS management, and Guggenheim. Guggenheim presented a preliminary financial analysis of the proposed transaction with Cantel and STERIS management reviewed its preliminary cost synergy analysis.
On January 5, 2021, Jones Day sent to Wachtell Lipton a revised draft of the merger agreement, containing a number of proposed changes, including revisions restricting the Cantel Board of Director’s ability to change its recommendation in support of a transaction with STERIS, increasing the size of a termination fee payable by Cantel under certain circumstances, revising the regulatory clearance framework and expanding Cantel’s cooperation requirements (including with respect to financing). The revised draft also contemplated that Mr. Diker, Mr. Mark N. Diker, a member of the Cantel Board of Directors, and Diker Management LLC would enter into a voting agreement pursuant to which they would agree to vote in favor of and take other actions in furtherance of the transaction in their capacities as Cantel Stockholders. The revised draft also rejected Cantel’s proposal that STERIS add one member of the Cantel Board of Directors to the STERIS Board of Directors following the closing of the Mergers.
On January 6, 2021, the Cantel Board of Directors convened a telephonic conference, which was attended by representatives of Centerview, to discuss the status of discussions with respect to the proposed transaction with STERIS. Members of management reviewed with the Cantel Board of Directors the results of the commercial, operational, tax, financial and legal due diligence on STERIS that had been conducted to date, including through virtual meetings held between management members of both companies. The Cantel Board of Directors and Centerview discussed the financial terms of STERIS’s proposal in light of the price per share of Cantel Common Stock and Cantel’s diligence findings with respect to STERIS.
On January 6, 2021, Mr. Fotiades contacted Mr. Rosebrough to inform him that the Cantel Board of Directors would be willing to entertain a proposal with a purchase price of at least $85 per share of Cantel Common Stock.
On the morning January 8, 2021, Wachtell Lipton sent Jones Day a revised draft of the merger agreement. In addition, throughout the course of January 8, Cantel provided additional information regarding employee and other due diligence matters.
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On the evening of January 8, 2021, the STERIS Board of Directors met by videoconference to discuss the status of discussions between the parties and to review the terms of the proposed merger agreement. The meeting was also attended by members of the STERIS senior management, U.S. and Irish outside legal counsel, and Guggenheim. During the meeting, the STERIS Board of Directors discussed their fiduciary duties and the transaction terms with legal counsel, discussed the strategic fit and integration of Cantel with management, and discussed the financial analysis of the transaction with Guggenheim.
On the morning of January 9, 2021, Mr. Rosebrough contacted Mr. Fotiades to inform him that STERIS would be willing to increase its proposed merger consideration to $84.00, consisting of approximately 80% stock consideration and 20% cash consideration, per share of Cantel Common Stock.
Later on January 9, 2021, the Cantel Board of Directors convened a telephonic conference, which was attended by representatives of Centerview and Wachtell Lipton. Mr. Fotiades informed the Cantel Board of Directors of his discussion with Mr. Rosebrough. After the discussion, the Cantel Board of Directors authorized Mr. Fotiades to make a counterproposal to Mr. Rosebrough of $85.75 per share of Cantel Common Stock.
Later on January 9, 2021, Mr. Rosebrough informed Mr. Fotiades that STERIS would be willing to increase its proposed merger consideration to $84.50 (based on the closing price of STERIS Shares on the NYSE of $202.81 on January 8, 2021), consisting of 0.33332 STERIS Shares and $16.90 in cash per share of Cantel Common Stock, subject to the satisfactory resolution of certain key outstanding issues.
Throughout the day on January 9, 2021, representatives of Wachtell Lipton and Jones Day held calls to discuss the key outstanding issues. Throughout the course of January 9, Cantel continued to provide additional information regarding employee and other due diligence matters, and representatives of Wachtell Lipton, Jones Day and members of the management teams of both STERIS and Cantel met to discuss matters related to the merger agreement.
Early in the day on January 10, 2021, Jones Day and Wachtell Lipton continued to exchange drafts of the merger agreement and have discussions regarding the proposed terms. Later in the day, Mr. Jeff Z. Mann, Cantel’s Senior Vice President and General Counsel, and Mr. J. Adam Zangerle, STERIS’s Senior Vice President and General Counsel, held a telephonic discussion and sought to reach mutual agreement on the remaining key outstanding issues, but were unable to do so ahead of the parties’ respective board meetings scheduled for later that evening.
In the evening of January 10, 2021, the STERIS Board of Directors convened a videoconference, which was attended by representatives of Guggenheim and Jones Day, to discuss the status of the negotiations and the apparent impasse that had been reached between the parties. During the meeting Mr. Zangerle informed the STERIS Board of Directors of his discussion with Mr. Mann. Following that meeting, Mr. Rosebrough contacted Mr. Fotiades to inform him that STERIS would be pausing its engagement with Cantel on the proposed transaction because STERIS did not believe the parties would be in a position to reach mutual agreement on each of the remaining key outstanding issues and be prepared to announce the transaction ahead of the Needham Virtual Growth Conference (the “Needham Conference”), at which Mr. Rosebrough was scheduled to speak at on January 11, 2021.
Mr. Fotiades informed the Cantel Board of Directors of his discussion with Mr. Rosebrough during a telephonic conference that had been convened in the evening of January 10, 2021 to discuss the proposed transaction with STERIS and the key outstanding issues, which was attended by representatives of Centerview and Wachtell Lipton. The Cantel Board of Directors discussed this information and instructed Mr. Fotiades to respond that Cantel was prepared to accept STERIS’s proposal with respect to the regulatory clearance framework and reach agreement on the remaining issues in order to announce the transaction the following morning, but could not assure STERIS that it would remain interested in pursuing a transaction with STERIS if agreement was not reached in that timeframe. Mr. Fotiades telephoned Mr. Rosebrough to pass along this message and also expressed concern that certain members of the press had made inbound inquiries with respect to a possible transaction between STERIS and Cantel. Mr. Rosebrough responded that STERIS would not be in a position to reach agreement and sign definitive documents within that time period. Mr. Rosebrough also noted the pendency of the Needham Conference and the J.P. Morgan Conference. Later in the evening of January 10, 2021, Mr. Mann telephoned Mr. Zangerle. Mr. Zangerle suggested to Mr. Mann that there was a possibility that STERIS would be interested to resume negotiations later during the week.
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After receiving direction from STERIS management, on January 11, 2021, a representative of Jones Day informed a representative of Wachtell Lipton that STERIS wished to reengage with Cantel regarding the proposed transaction. The Jones Day representative later called a representative of Wachtell Lipton and noted that, in light of market movements that day, STERIS would be willing to increase the Merger Consideration from $84.50 to $84.66 (based on the closing price of STERIS Shares on the NYSE of $200.46 on January 11, 2021), consisting of 0.33787 STERIS Shares and $16.93 in cash per share of Cantel Common Stock, subject to the resolution of all other key outstanding issues in line with STERIS’s prior proposal. The parties agreed to target announcement of the transaction on the morning of January 12, 2021. Following this time, Jones Day and Wachtell Lipton continued to exchange drafts of the merger agreement and have discussions regarding the proposed terms and ultimately reached resolutions with respect to the remaining issues.
Later on January 11, 2021, the Cantel Board of Directors convened a telephonic conference, which was attended by representatives of Centerview and Wachtell Lipton. The Cantel Board of Directors discussed the implied value of the Merger Consideration to be received by holders of shares of Cantel Common Stock, Cantel’s standalone prospects and the synergies expected to result from the transaction. Wachtell Lipton provided a summary of the proposed Merger Agreement and discussed with the Cantel Board of Directors various legal matters relevant to the consideration of the proposed Merger Agreement by the Cantel Board of Directors. Members of management briefed the Cantel Board of Directors on the findings and conclusions of the due diligence process. Representatives of Centerview reviewed with the Cantel Board of Directors Centerview’s financial analysis of the Merger Consideration, and rendered to the Cantel Board of Directors an oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 12, 2021, that as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing its opinion, the Merger Consideration to be paid to holders of shares of Cantel Common Stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Centerview’s opinion is more fully described below under the caption “The Mergers—Opinion of Cantel’s Financial Advisor” beginning on page 60 of this proxy statement/prospectus and the full text of the written opinion of Centerview, which set forth the factors, assumptions, limitations and qualifications in such opinion, is attached as Annex B hereto. After further consideration, the Cantel Board of Directors unanimously resolved that the Merger Agreement and the transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of Cantel Stockholders. The Cantel Board of Directors then unanimously voted to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, and resolved to recommend that Cantel Stockholders approve the Merger Agreement. The Cantel Board of Directors authorized the appropriate officers of Cantel to finalize, execute and deliver the Merger Agreement and related documentation.
In the evening of January 11, 2021, Eastern Time, the STERIS Board of Directors convened a videoconference, which was attended by representatives of Guggenheim and Jones Day, and unanimously approved the terms of the Merger Agreement.
In the early morning of January 12, 2021, Cantel and STERIS executed the Merger Agreement and STERIS, Charles M. Diker, Mark N. Diker and Diker Management LLC executed the Voting Agreement. The execution of the Merger Agreement was announced later that morning.
Recommendation of the Cantel Board of Directors and Reasons for the Mergers
By unanimous vote, the Cantel Board of Directors, at a special meeting held on January 11, 2021: (a) resolved that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers, are fair and in the best interests of Cantel and Cantel Stockholders; (b) approved and declared advisable the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Mergers on the terms and subject to the conditions set forth in the Merger Agreement, in accordance with the requirements of the DGCL and directed that the Merger Agreement be submitted for adoption at the Special Meeting; and (c) resolved to recommend that Cantel Stockholders adopt the Merger Agreement and approve the transactions contemplated by the Merger Agreement, including the Mergers. The Cantel Board of Directors unanimously recommends that you vote “FOR” the Cantel Merger Proposal and “FOR” Compensation Proposal.
In evaluating the Mergers, the Cantel Board of Directors consulted with Cantel’s senior management team, as well as Cantel’s outside legal and financial advisors, and, in reaching its decision to approve the Merger
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Agreement and declare its advisability and to recommend that Cantel Stockholders vote in favor of the Cantel Merger Proposal, the Cantel Board of Directors considered a number of factors, including, but not limited to, the following:
Strategic and Financial Considerations.
The Merger Consideration to be paid by STERIS of 0.33787 STERIS Shares and $16.93 in cash implied an equity value of $84.66 per share of Cantel Common Stock, based on the closing stock price of STERIS Shares on January 11, 2021, the last full trading day before the date of the Merger Agreement.
The implied equity value of the Merger Consideration at the purchase price of 0.33787 STERIS Shares and $16.93 in cash per share of Cantel Common Stock:
represents a premium of 14.6% to the 30-day volume weighted average price of Cantel Common Stock as of January 11, 2021; and
is equal to the closing price per share of Cantel Common Stock on January 11, 2021, which was the 52-week high price per share of Cantel Common Stock as of January 11, 2021.
There are risks and uncertainties in executing Cantel’s strategic plans and achieving Cantel’s standalone financial projections, including the risks and uncertainties described in the “risk factors” set forth in Cantel’s Annual Report on Form 10-K for the year ended July 31, 2020, whereas the Merger Consideration consists of a fixed cash component, providing Cantel Stockholders with certainty of value and liquidity upon completion of the Mergers for such portion of the Merger Consideration, along with a significant stock component, providing Cantel Stockholders with participation in the upside potential of a larger, more diversified company (including any resulting synergies) or with liquidity should any Cantel Stockholder not wish to retain its STERIS Shares.
The exchange ratio for the Merger Consideration represents a fixed number of STERIS Shares, which affords the Cantel Stockholders who receive STERIS Shares the opportunity to benefit from any increase in the trading price of STERIS Shares following the announcement of the Mergers.
The Merger Consideration ultimately to be paid to Cantel Stockholders will include cash, which provides immediate liquidity and certainty of value to Cantel Stockholders, and freely tradable STERIS Shares.
The Mergers would bring together STERIS’s and Cantel’s franchises to create a stronger global business serving a broader set of customers. Cantel’s largest business, its Medical portfolio, will strengthen and expand STERIS’s Endoscopy offerings, adding a full suite of high-level disinfection consumables, capital equipment and services, as well as additional single-use accessories. Cantel’s Dental business extends STERIS into a new customer segment where there is an increasing focus on infection prevention protocols and processes.
Cantel and STERIS expect to realize annualized pre-tax cost synergies of approximately $110 million within the first four fiscal years after the combination, with approximately 50% achieved in the first two years. Cost synergies are expected to be primarily driven by cost reductions in redundant public company and back-office overhead, commercial integration, product manufacturing and service operations.
The fact that Cantel had conducted a process involving discussions with other parties regarding a possible transaction, as described in the section entitled “—Background on the Mergers” beginning on page 51.
The fact that the Merger Consideration reflected robust, arm’s length negotiations between Cantel and STERIS and their respective advisors, and the belief of the Cantel Board of Directors that the Merger Consideration represents the best proposal and economic value available to Cantel Stockholders.
The Cantel Board of Directors considered information with respect to STERIS’s financial condition, results of operations, business, competitive position and business prospects and risks,
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both on a historical and prospective basis, as well as current industry, economic and market conditions and trends. In considering STERIS’s condition and prospects, the Cantel Board of Directors reviewed information regarding STERIS’s historical performance and received reports from Cantel’s senior management team regarding its due diligence review of STERIS’s business and legal affairs and STERIS’s management.
The Cantel Board of Directors considered the fact that the Mergers are intended to qualify as “reorganizations” within the meaning of Section 368(a) of the Code.
Terms of the Merger Agreement. The Cantel Board of Directors, with the assistance of legal advisors, reviewed the terms of the Merger Agreement, including:
the ability of the Cantel Board of Directors, subject to specified limitations, to respond to and engage in discussions or negotiations regarding unsolicited third-party acquisition proposals under certain circumstances and, ultimately, to terminate the Merger Agreement in order to accept a superior proposal under specified circumstances;
the fact that the Cantel Board of Directors has the right, in accordance with the Merger Agreement and prior to the Cantel Stockholder Approval being obtained, to change its recommendation to the Cantel Stockholders that they vote in favor of the Cantel Merger Proposal if the Cantel Board of Directors determines in good faith after consultation with Cantel’s outside legal counsel that, as a result of a Superior Proposal or certain intervening events, the failure to change its recommendation would be inconsistent with its fiduciary duties to Cantel Stockholders under applicable law; and
Cantel’s right to terminate the Merger Agreement under certain circumstances, including in order to accept and enter into a definitive agreement with respect to a Superior Proposal in certain circumstances, subject to providing STERIS an opportunity to match such proposal prior to taking such action, and payment to STERIS of a termination fee of $127.4 million if the Merger Agreement is so terminated, which amount the Cantel Board of Directors believes to be reasonable under the circumstances and taking into account the range of such termination fees in similar transactions.
Likelihood of Completion. The likelihood that the Mergers will be consummated, based on, among other things, the limited number of conditions to the Mergers, the absence of a financing condition or similar contingency that is based on STERIS’s ability to obtain financing, the absence of a requirement for STERIS to obtain shareholder approval of the issuance of STERIS Shares to Cantel Stockholders, the relative likelihood of obtaining required regulatory approvals, the remedies available under the Merger Agreement to Cantel in the event of various breaches by STERIS, and STERIS’s reputation in the health care industry, its financial capacity to complete an acquisition of this size and its prior track record of successfully completing acquisitions, which the Cantel Board of Directors believed supported the conclusion that a transaction with STERIS could be completed relatively quickly and in an orderly manner.
Regulatory Matters. The Cantel Board of Directors considered the regulatory clearances that would be required as a condition to the Mergers and the prospects and anticipated timing of obtaining those clearances.
Opinion of Financial Advisor. The Cantel Board of Directors considered the oral opinion of Centerview rendered to the Cantel Board of Directors on January 11, 2021, which was subsequently confirmed by delivery of a written opinion dated January 12, 2021, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the Cantel Stockholders (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under “The Mergers—Opinion of Cantel’s Financial Advisor beginning on page 60.
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The Cantel Board of Directors also considered a number of potentially negative factors in its deliberations concerning the Merger Agreement and the Mergers, including:
The possibility that the Mergers might not be completed on a timely basis or at all as a result of the failure to receive the required regulatory clearances or satisfy other closing conditions, which could divert Cantel management attention and resources from the operation of Cantel’s business and increase expenses from an unsuccessful attempt to complete the Mergers.
The costs to be incurred in connection with the Mergers, regardless of whether the Mergers are completed and the risks and contingencies relating to the announcement and pendency of the Mergers and the risks and costs to Cantel if the transactions are not completed on a timely basis or at all.
The uncertainty about the effect of the Mergers, regardless of whether the Mergers are completed, on Cantel’s employees, customers and other parties, may impair Cantel’s ability to attract, retain and motivate key personnel, and could cause customers, suppliers and others to seek to change existing business relationships with Cantel.
The exchange ratio for the Merger Consideration represents a fixed number of STERIS Shares, which means the market value of the STERIS Shares received by Cantel Stockholders at the completion of the Mergers may differ, possibly materially, from the market value of STERIS Shares at the time the Merger Agreement was entered into or at any other time, including the possibility that such value could become lower if the trading price of STERIS Shares declines between the announcement and completion of the Mergers.
The risk that adverse changes to the business, assets, liabilities, condition (financial or otherwise) or operating results of Cantel or STERIS could result in a failure to complete the Mergers.
The potential difficulties of integrating the businesses of STERIS and Cantel and the risk that all or some portion of the potential benefits of the Mergers (including the anticipated cost and operating synergies) might not be realized or might take longer to realize than expected.
The fact that, under the terms of the Merger Agreement, prior to the completion of the Mergers or termination of the Merger Agreement, Cantel is required to use reasonable best efforts to conduct its business only in the ordinary course, and is subject to specified restrictions on its ability to conduct its business, including in respect of entering into or terminating material contracts, settling litigation or increasing the compensation of its employees.
Cantel’s inability to solicit competing acquisition proposals and the possibility that the termination fee payable by Cantel upon termination of the Merger Agreement could discourage other potential acquirers from making a competing offer to purchase Cantel and cause significant cash flow difficulties for Cantel if it were required to pay the termination fee of $127.4 million to STERIS.
The risk of significant selling pressure on the price of STERIS Shares immediately following the closing of the First Merger if a significant number of Cantel Stockholders seek to sell the STERIS Shares they received as Merger Consideration.
In the judgment of Cantel’s Board of Directors, however, these potential risks were more than offset by the potential benefits of the Mergers discussed above.
The foregoing discussion of the information and factors considered by the Cantel Board of Directors is not intended to be exhaustive, but includes the material factors that the Cantel Board of Directors considered. In reaching its decision to approve the Merger Agreement, the Mergers, and the other transactions contemplated by the Merger Agreement, the Cantel Board of Directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Cantel Board of Directors considered all these factors as a whole, and overall considered the factors to be favorable to, and to support, its determination. The Cantel Board of Directors conducted an overall review of the factors described above, and reached the consensus that the Merger Agreement, the Mergers, and the other transactions contemplated by the Merger Agreement are fair to, advisable to, and in the best interests of, Cantel and Cantel Stockholders.
In considering the recommendation of the Cantel Board of Directors to adopt the Merger Agreement, Cantel Stockholders should be aware that the executive officers and directors of Cantel have certain interests in the
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Mergers that may be different from, or in addition to, the interests of Cantel Stockholders generally, as more fully described below under the section captioned “—Interests of Cantel Directors and Executive Officers in the Mergers.” The Cantel Board of Directors was aware of these interests and considered them when adopting the Merger Agreement and recommending that Cantel Stockholders vote in favor of the Cantel Merger Proposal.
Opinion of Cantel’s Financial Advisor
On January 11, 2021, Centerview rendered to the Cantel Board of Directors its oral opinion, subsequently confirmed in a written opinion dated January 12, 2021, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of shares of Cantel Common Stock (other than Excluded Shares) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
The full text of Centerview’s written opinion, dated January 12, 2021, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety to the full text of Centerview’s written opinion attached as Annex B. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Cantel Board of Directors (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of a transaction, including the transactions contemplated by the Merger Agreement, and Centerview’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Cantel Common Stock (other than Excluded Shares) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview’s opinion did not address any other term or aspect of the Merger Agreement or the transactions contemplated by the Merger Agreement and does not constitute a recommendation to any Cantel Stockholder or any other person as to how such Cantel Stockholder or other person should vote with respect to the Mergers or otherwise act with respect to the transactions contemplated by the Merger Agreement or any other matter.
The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.
In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:
a draft of the Merger Agreement dated January 11, 2021, which is referred to in this summary of Centerview’s opinion as the Draft Merger Agreement;
Annual Reports on Form 10-K of Cantel for the years ended July 31, 2020, July 31, 2019 and July 31, 2018 and Annual Reports on Form 10-K of STERIS for the years ended March 31, 2020, March 31, 2019 and March 31, 2018;
certain interim reports to Cantel Stockholders and STERIS Shareholders and Quarterly Reports on Form 10-Q of Cantel and STERIS;
certain publicly available research analyst reports for Cantel and STERIS;certain other communications from Cantel to its stockholders and STERIS to its shareholders;
certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Cantel, including certain financial forecasts, analyses and projections relating to Cantel prepared by management of Cantel and furnished to Centerview by Cantel for purposes of Centerview’s analysis, which are referred to as the Cantel Forecast, and which are collectively referred to as the Cantel Data;
certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of STERIS, which are collectively referred to as the STERIS Data;
certain financial forecasts, analyses and projections relating to STERIS prepared by management of Cantel and furnished to Centerview by Cantel for purposes of Centerview’s analysis, which are referred to as the STERIS Forecasts; and
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certain cost savings and operating synergies of approximately $110 million projected by management of STERIS to result from the transactions contemplated by the Merger Agreement and furnished to Centerview by Cantel for purposes of Centerview’s analysis, which are referred to as the Synergies.
Centerview also participated in discussions with members of the senior management and representatives of Cantel regarding their assessment of the Cantel Data (including the Cantel Forecast), and the STERIS Forecasts and members of the senior management and representatives of STERIS regarding their assessment of the STERIS Data and the Synergies, and the strategic rationale for the transactions contemplated by the Merger Agreement. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for Cantel and STERIS and compared that data with similar data for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant. Centerview also compared certain of the proposed financial terms of the transactions contemplated by the Merger Agreement with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant, and conducted such other financial studies and analyses and took into account such other information as Centerview deemed appropriate.
Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with Cantel’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at Cantel’s direction, that the Cantel Data (including, without limitation, the Cantel Forecast) and the STERIS Forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Cantel as to the matters covered thereby, and that the STERIS Data and the Synergies were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of STERIS as to the matters covered thereby; and Centerview relied, at Cantel’s direction, on the Cantel Data (including, without limitation, the Cantel Forecast), the STERIS Data, the STERIS Forecasts and the Synergies for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the Cantel Data (including, without limitation, the Cantel Forecast), the STERIS Forecasts, the STERIS Data and the Synergies or the assumptions on which they were based. In addition, at Cantel’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Cantel or STERIS, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Cantel or STERIS. Centerview assumed, at Cantel’s direction, that the final executed Merger Agreement would not differ in any respect material to Centerview’s analysis or opinion from the Draft Merger Agreement reviewed by Centerview. Centerview also assumed, at Cantel’s direction, that the transactions contemplated by the Merger Agreement will be consummated on the terms set forth in the Merger Agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion, and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the transactions contemplated by the Merger Agreement, no delay, limitation, restriction, condition or other change, including any divestiture requirements or amendments or modifications, will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview also assumed that the transactions contemplated by the Merger Agreement will have certain tax consequences as described in discussions with representatives of Cantel. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Cantel or STERIS, or the ability of Cantel or STERIS to pay their respective obligations when they come due, or as to the impact of the transactions contemplated by the Merger Agreement on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.
Centerview’s opinion expressed no view as to, and did not address, Cantel’s underlying business decision to proceed with or effect the transactions contemplated by the Merger Agreement, or the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative business strategies or transactions that might be available to Cantel or in which Cantel might engage. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of the shares of Cantel Common Stock (other than Excluded Shares) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. For purposes of its opinion, Centerview was not
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asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the Merger Agreement or the transactions contemplated by the Merger Agreement, including, without limitation, the structure or form of the transactions contemplated by the Merger Agreement, or any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with or otherwise contemplated by the transactions contemplated by the Merger Agreement, including, without limitation, the fairness of the transactions contemplated by the Merger Agreement or any other term or aspect of the transactions contemplated by the Merger Agreement to, or any consideration to be received in connection therewith by, or the impact of the transactions contemplated by the Merger Agreement on, the holders of any other class of securities, creditors or other constituencies of Cantel or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Cantel or any party, or class of such persons in connection with the transactions contemplated by the Merger Agreement, whether relative to the Merger Consideration to be paid to the holders of the shares of Cantel Common Stock (other than Excluded Shares) pursuant to the Merger Agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview expressed no view or opinion as to what the value of STERIS Shares actually will be when issued pursuant to the First Merger or the prices at which the shares of Cantel Common Stock or STERIS Shares will trade or otherwise be transferable at any time, including following the announcement or consummation of the transactions contemplated by the Merger Agreement. Centerview’s opinion does not constitute a recommendation to any Cantel Stockholder or any other person as to how such Cantel Stockholder or other person should vote with respect to the Mergers or otherwise act with respect to the transactions contemplated by the Merger Agreement or any other matter. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Cantel Board of Directors (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transactions contemplated by the Merger Agreement. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.
Summary of Centerview’s Financial Analysis
The following is a summary of the material financial analyses prepared and reviewed with the Cantel Board of Directors in connection with Centerview’s opinion, dated January 12, 2021. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of Cantel or STERIS. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Cantel, STERIS or any other party to the transactions contemplated by the Merger Agreement. None of Cantel, STERIS or Centerview, or any other person, assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Cantel or STERIS do not purport to be appraisals or reflect the prices at which Cantel or STERIS may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to
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substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before January 11, 2021 (the last trading day before the public announcement of the Merger Agreement) and is not necessarily indicative of current market conditions.
Cantel
Selected Public Company Analysis
Centerview reviewed and compared certain financial information, ratios and multiples for Cantel to corresponding financial information, ratios and multiples for publicly traded companies that Centerview deemed comparable, based on its experience and professional judgment, to Cantel, which selected publicly traded companies are referred to in this summary of Centerview’s opinion as the selected Cantel comparison companies. The selected companies consisted of:
Conmed Corporation (NYSE: CNMD)
Dentsply Sirona Inc (NASDAQ: XRAY)
Envista Holdings Corporation (NYSE: NVST)
Integra LifeSciences Holdings Corporation (NASDAQ: IART)
Merit Medical Systems, Inc. (NASDAQ: MMSI)
STERIS
Teleflex Incorporated (NYSE: TFX)
Although none of the selected Cantel comparison companies is directly comparable to Cantel, these companies were selected, among other reasons, because they are publicly traded companies with certain operational and financial characteristics, which, for purposes of its analyses, Centerview considered to be similar to those of Cantel. However, because none of the selected Cantel comparison companies is exactly the same as Cantel, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the business, financial and operating characteristics and prospects of Cantel and the selected Cantel comparison companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.
Using publicly available information obtained from SEC filings and other data sources and closing stock prices as of January 11, 2021, Centerview calculated, for each selected Cantel comparison company the following figures, ratios and multiples: (i) market value of common equity (determined using the treasury stock method and taking into account outstanding in-the-money options, other equity awards and other convertible securities, as applicable), (ii) enterprise value (calculated as the market value of common equity determined using the treasury stock method and taking into account outstanding in-the-money options, other equity awards and other convertible securities, as applicable, plus debt and less cash, after giving effect to certain adjustments for minority interest and contingent consideration), (iii) enterprise value as a multiple of Wall Street research analyst consensus estimated earnings before interest, taxes, depreciation and amortization, or EBITDA, for calendar year 2021 (calculated as the EBITDA adjusted for any acquisition-related costs and expenses, restructuring-related costs and expenses, gains or losses related to divested businesses or assets, and losses on disposal of fixed assets, which is referred to as a company’s Estimated 2021 EBITDA), (iv) projected revenue growth for the calendar year 2021 to calendar year 2022, (v) EBITDA margin for calendar year 2021 (calculated as EBITDA for the relevant period divided by revenue for the same period) and (vi) net leverage ratio as a multiple of such company’s latest twelve months, or LTM EBITDA. These analyses resulted in a median multiple of enterprise value to Estimated 2021 EBITDA of 18.8x, a median revenue growth percentage of 6%, a median EBITDA margin percentage of 23% and a median net leverage ratio of 2.4x, in each case, for such selected Cantel comparison companies.
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The resulting data were as follows:
 
Enterprise Value /
Estimated 2021
EBITDA
Conmed Corporation
22.0x
Dentsply Sirona Inc
16.1x
Envista Holdings Corporation
16.8x
Integra LifeSciences Holdings Corporation
18.0x
Merit Medical Systems, Inc.
18.8x
Teleflex Incorporated
24.5x
STERIS
20.3x
Mean
19.5x
Median
18.8x
Based on its experience and professional judgment, for purposes of its analysis, Centerview selected a reference range of multiples of enterprise value to Estimated 2021 EBITDA of 15.0x to 17.5x. In selecting this reference range, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics of Cantel and the selected companies that could affect their public trading values in order to provide a context in which to consider the results of the quantitative analysis. Centerview applied the EBITDA multiple reference range to Cantel’s own calendar year 2021 estimated EBITDA of $278 million as set forth in the Cantel Data to derive a range of implied enterprise values for Cantel. Centerview subtracted from this range of implied enterprise values the face value of Cantel’s net debt as of December 31, 2020 as set forth in the Cantel Data to derive a range of implied equity values for Cantel. Centerview then divided these implied equity values by the number of fully-diluted outstanding shares of Cantel Common Stock as of January 8, 2021, as set forth in the Cantel Data, to derive a range of implied per share equity values. Centerview also applied the EBITDA multiple reference range to the Estimated 2021 EBITDA of Cantel of $256 million to derive a range of implied per share equity values for each share. The results of this analyses are summarized as follows: based on Cantel’s own calendar year 2021 estimated operating EBITDA of Cantel, as set forth in the Cantel Data, Centerview calculated an implied per share equity value range of approximately $76 to $91, rounded to the nearest dollar, and based on the Estimated 2021 EBITDA of Cantel, Centerview calculated an implied per share of Cantel Common Stock equity value range of approximately $69 to $82, rounded to the nearest dollar. Centerview then compared these ranges to the implied value of the Merger Consideration of $84.66 per share of Cantel Common Stock, which is based on the cash consideration of $16.93 and an implied value of $67.73 in stock consideration (based upon an exchange ratio of 0.33787 and the closing price of STERIS Shares as of January 11, 2021) per share of Cantel Common Stock, which is referred to as the Implied Value, to be paid to the holders of shares of Cantel Common Stock (other than Excluded Shares) pursuant to the Merger Agreement.
Selected Transaction Analysis
Centerview reviewed and compared certain information relating to the following selected transactions involving target companies serving the Medical, Dental, or Life Sciences markets with similar business characteristics and financial profiles to Cantel (which are referred to as the selected transactions in this Summary of Centerview Financial Analysis) that Centerview, based on its experience and professional judgment, deemed relevant to consider in relation to Cantel and the Mergers and the other transactions contemplated by the Merger Agreement.
Although none of the selected transactions is directly comparable to the Mergers and the other transactions contemplated by the Merger Agreement, the transactions listed below were chosen by Centerview because, among other reasons, their participants, size or other factors, for purposes of Centerview’s analysis, may be considered similar to the Mergers and the other transactions contemplated by the Merger Agreement. Centerview used its experience, expertise and knowledge of these industries to select transactions that involved companies with certain operational, business or financial characteristics that, for purposes of this analysis, may be considered similar to those of Cantel. However, because none of the selected transactions used in this analysis is identical or directly comparable to the Mergers and the other transactions contemplated by the Merger Agreement, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative
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results of the selected precedent transaction analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the operational, business or financial characteristics of Cantel and each target company as well as the Mergers and the other transactions contemplated by the Merger Agreement and the selected transactions that could affect the transaction values of each in order to provide a context in which to consider the results of the quantitative analysis.
Using publicly available information obtained from SEC filings and other data sources, Centerview calculated, for each selected transaction, among other things, (i) the enterprise value implied for the applicable target company based on the consideration payable in the applicable selected transactions, as a multiple of the target company’s EBITDA for the most recently ended twelve months prior to the announcement of such selected transaction, or LTM EBITDA (in the case of Key Surgical, LTM EBIT as disclosed in SEC filings) and (ii) the enterprise value implied for the applicable target company based on the consideration payable in the applicable selected transactions, as a multiple of the target company’s EBITDA for the twelve months following the announcement of such selected transaction, or NTM EBITDA. This analysis resulted in a median multiple of enterprise value to LTM EBITDA of 15.9x and a median multiple of enterprise value to NTM EBITDA of 15.0x for such selected transactions.
The resulting data were as follows:
Announce
Date
Target
Acquiror
EV / LTM
EBITDA
EV / NTM
EBITDA
10/6/20
Key Surgical
STERIS
17.0x
n.a.
7/30/19
Hu-Friedy Mfg. Co.
Cantel Medical Corp.
16.1x
n.a.
5/2/19
Acelity, Inc.
3M Company
15.2x
13.7x
11/20/18
BTG plc
Boston Scientific Corporation
14.5x
15.0x
6/6/18
Advanced Sterilization Products
Fortive Corporation
13.8x
n.a.
4/23/17
C.R. Bard, Incorporated
Becton, Dickinson and Company
19.7x
18.4x
12/19/16
BSN Medical
Svenska Cellulosa Aktiebolaget (SCA)
13.6x
n.a.
12/2/16
Vascular Solutions, Inc.
Teleflex Incorporated
25.8x
19.3x
2/1/16
Sage Products, LLC
Stryker Corporation
21.0x
n.a.
9/15/15
Sirona Dental Systems, Inc.
Dentsply International Inc.
16.3x
14.1x
10/13/14
Synergy Health plc
STERIS
13.0x
11.8x
10/5/14
Carefusion Corporation
Becton, Dickinson and Company
13.9x
12.1x
9/15/14
Nobel Biocare Holding AG
Danaher Corporation
15.7x
15.0x
2/2/14
Arthrocare Corporation
Smith & Nephew plc
18.9x
15.5x
Mean
 
 
16.8x
15.0x
Median
 
 
15.9x
15.0x
Based on its analysis and other considerations that Centerview deemed relevant in its professional judgment and experience, Centerview selected reference ranges of multiples of enterprise value to LTM EBITDA of 16.0x to 19.0x and of enterprise value to NTM EBITDA of 14.5x to 18.0x. In selecting these ranges, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of Cantel and the companies included in the selected transactions as well as the Mergers and the other transactions contemplated by the Merger Agreement and the selected transactions and other factors that could affect each transaction or the public trading, acquisition or other values of such companies or Cantel in order to provide a context in which to consider the results of the quantitative analysis.
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Centerview applied these reference ranges to Cantel’s enterprise value as a multiple of its LTM EBITDA of $193 million and as a multiple of its NTM EBITDA of $278 million, respectively, each as set forth in the Cantel Data, to derive ranges of implied enterprise values for Cantel. Centerview subtracted from these ranges of implied enterprise values the face value of Cantel’s net debt as of December 31, 2020 (including expected change of control costs related to contingent consideration payments that may become due under the terms of prior Cantel transaction agreements and make-whole payments payable to holders of Cantel’s 3.25% senior unsecured convertible notes due 2025) as set forth in the Cantel Data to derive a range of implied equity values for Cantel. Centerview then divided these implied equity values by the number of fully-diluted outstanding shares of Cantel Common Stock as of January 8, 2021 as set forth in the Cantel Data to derive a range of implied per share equity value for each share of approximately $53 to $65 based on LTM EBITDA, rounded to the nearest dollar, and a range of implied per share equity value for each share of approximately $72 to $93 based on NTM EBITDA, rounded to the nearest dollar. Centerview then compared these ranges to the Implied Value, to be paid to the holders of shares of Cantel Common Stock (other than Excluded Shares) pursuant to the Merger Agreement.
Discounted Cash Flow Analysis
Centerview performed a discounted cash flow analysis of Cantel based on the Cantel Forecast, which is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.
In performing this analysis, Centerview calculated a range of illustrative equity values for Cantel by applying a discount rate range of 9.25% to 10.00% (reflecting Centerview’s analysis of Cantel’s weighted average cost of capital) and the mid-year convention to (a) Cantel’s management plan forecast as of January 4, 2021 of after-tax unlevered free cash flows of Cantel for the fiscal half-year ending July 31, 2021 and for the fiscal years 2022 through 2025 utilizing the Cantel Forecast at the direction of Cantel and assumptions discussed with Cantel management and (b) a range of illustrative terminal values for Cantel, calculated by Centerview applying perpetuity growth rates ranging from 3.75% to 4.50%, which Centerview selected based on its professional judgment, to Cantel’s after-tax unlevered free cash flows for the terminal year. Centerview then divided these implied equity values by the number of fully-diluted outstanding shares of Cantel Common Stock as of January 8, 2021, as set forth in the Cantel Data, to derive a range of implied per share equity value of approximately $67 to $91, rounded to the nearest dollar. Centerview then compared these ranges to the implied value of the Merger Consideration of $84.66 per share based on a cash consideration of $16.93 and $67.73 stock consideration per share (based upon an exchange ratio of 0.33787 and the closing price of STERIS Shares as of January 11, 2021), to be paid to the holders of shares of Cantel Common Stock (other than Excluded Shares) pursuant to the Merger Agreement.
Other Factors
Centerview noted for the Cantel Board of Directors certain additional factors solely for informational purposes, including, among other things, the following:
Historical Stock Price Trading Analysis. Centerview reviewed the historical closing trading prices of the shares of Cantel Common Stock for the 52-week period prior to January 11, 2021, which reflected low and high closing trading prices during such 52-week period of $22 and $85 per share, rounded to the nearest dollar.
Analyst Price Target Analysis. Centerview reviewed stock price targets for the shares of Cantel Common Stock reflected in publicly available Wall Street research analyst reports as of January 11, 2021, which indicated low and high analyst stock price targets ranging from $62 to $100 per share.
Premiums Paid Analysis. Centerview reviewed the control premiums paid or payable in certain change of control transactions involving publicly traded target companies for which premium data was available in order to compare the premium paid over the company’s present and historical share prices to that paid in past transactions (for transactions valued between $100 million and $10 billion, with 50-100% stock consideration and target pro forma ownership between 15%-30%). Based on the analysis above and other considerations that Centerview deemed relevant in its professional judgment, Centerview applied 25th-75th percentile one-day prior and 30-day volume weighted average price,
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which is referred to as VWAP, offer premiums paid or payable of 13-38% and 16-38%, respectively, to per share of Cantel Common Stock price of $84.66 and its 30-day VWAP of $73.86, as of January 11, 2021, which resulted in implied price ranges of $96 to $117 per share and $86 to $102 per share, rounded to the nearest dollar.
STERIS
Illustrative Selected Companies Information
Centerview reviewed and compared the market price and implied trading multiples of the STERIS Shares with the market prices and implied trading multiples of the publicly traded securities of certain public companies in the medical devices sector, which selected publicly traded companies are referred to in this summary of Centerview’s opinion as the selected STERIS comparison companies, in each case based on publicly available research analyst estimates for STERIS and such selected STERIS comparison companies.
The selected STERIS comparison companies reviewed included the following:
Boston Scientific Corporation (NYSE: BSX)
Cantel
Coloplast A/S (DKK: COLO.B)
Hill-Rom Holdings, Inc.(NYSE: HRC)
Integra Life Sciences Holdings Corporation (NASDAQ: IART)
Smith & Nephew plc (NYSE: SNN)
Sotera Health Company (NASDAQ: SHC)
Teleflex Incorporated (NYSE: TFX)
Using publicly available information obtained from SEC filings and other data sources and closing stock prices as of January 11, 2021, Centerview calculated, for each selected STERIS comparison company, its equity market value as a multiple of its Estimated 2021 EBITDA.
The resulting data were as follows:
Cantel
Enterprise Value /
Estimated 2021
EBITDA
Boston Scientific Corporation
17.8x
Cantel
17.9x
Coloplast A/S
27.2x
Hill-Rom Holdings, Inc
13.7x
Integra Life Sciences Holdings Corporation
18.0x
Smith & Nephew plc
14.4x
Sotera Health Company
19.4x
Teleflex Incorporated
24.5x
Mean
19.1x
Median
17.9x
Based on its experience and professional judgment, for purposes of its analysis, Centerview selected a reference range of multiples of enterprise value to Estimated 2021 EBITDA of 18.0x to 21.0x. In selecting this reference range, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics of STERIS and the selected STERIS comparison companies that could affect their public trading values in order to provide a context in which to consider the results of the quantitative analysis. Centerview applied the EBITDA multiple reference range Cantel’s estimate of calendar year 2021 operating EBITDA of STERIS of $925 million, as set forth in the STERIS Forecasts prepared by management of Cantel, to derive a range of implied per STERIS Share equity value of approximately $176 to $208.
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Discounted Cash Flow Analysis
Centerview performed a discounted cash flow analysis of STERIS based on the STERIS Forecasts prepared by management of Cantel. In performing this analysis, Centerview calculated a range of illustrative equity values for STERIS by applying a discount rate range of 7.50% to 8.25% (reflecting Centerview’s analysis of STERIS’s weighted average cost of capital) and the mid-year convention to (a) after-tax unlevered free cash flows of STERIS for the fiscal quarter ending March 31, 2021 and fiscal years 2022 through 2026 utilizing the STERIS Forecasts prepared by management of Cantel at the direction of Cantel and assumptions discussed with Cantel management and (b) a range of illustrative terminal values for STERIS, calculated by Centerview applying perpetuity growth rates ranging from 3.75% to 4.50%, which Centerview selected based on its professional judgment, to STERIS’s after-tax unlevered free cash flows for the terminal year, in each case, utilizing the STERIS Forecasts prepared by the management of Cantel. Centerview then divided these implied equity values by the number of fully-diluted outstanding STERIS Shares as of January 8, 2021, as set forth in the STERIS Data, to derive a range of implied per STERIS Share equity value of approximately $158 to $239, rounded to the nearest dollar.
Other Factors
Centerview noted for the Cantel Board of Directors certain additional factors solely for informational purposes, including, among other things, the following:
Historical Stock Price Trading Analysis. Centerview reviewed the historical closing trading prices of the STERIS Shares for the 52-week period prior to January 11, 2021, which reflected low and high closing trading prices during such 52-week period of $108 to $203 per STERIS Share.
Analyst Price Target Analysis. Centerview reviewed stock price targets for the STERIS Shares reflected in publicly available Wall Street research analyst reports as of January 11, 2021, which indicated low and high analyst stock price targets ranging from $200 to $217 per STERIS Share.
General
The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.
Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Cantel Board of Directors in its evaluation of the transactions contemplated by the Merger Agreement. Consequently, the analyses described above should not be viewed as determinative of the views of the Cantel Board of Directors or management of Cantel with respect to the Merger Consideration or as to whether the Cantel Board of Directors would have been willing to determine that a different consideration was fair. The Merger Consideration was determined through arm’s-length negotiations between Cantel and STERIS and was approved by the Cantel Board of Directors. Centerview provided advice to Cantel during these negotiations. Centerview did not, however, recommend any specific amount of consideration to Cantel or the Cantel Board of Directors or that any specific amount of consideration constituted the only appropriate consideration for the transactions contemplated by the Merger Agreement.
Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, Centerview was engaged to provide financial advisory services to Cantel, including in connection with certain strategic matters, for which Centerview did not receive compensation during such period. In the two years prior to the date of its written opinion, Centerview had not been engaged to provide financial advisory or other services to STERIS, and Centerview did not receive any compensation from STERIS during such period. Centerview may provide investment banking and other services to or with respect to Cantel or STERIS or their respective affiliates in the future, for which Centerview may receive compensation. Certain (i) of Centerview’s and its affiliates’ respective affiliates, directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or
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other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Cantel, STERIS, or any of their respective affiliates, or any other party that may be involved in the transactions contemplated by the Merger Agreement.
The Cantel Board of Directors selected Centerview as its financial advisor in connection with a transaction, including the transactions contemplated by the Merger Agreement, based on Centerview’s advising the Cantel Board of Directors on strategic matters for approximately the past two years and Centerview’s strong knowledge of Cantel and the industries in which Cantel competes. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transactions contemplated by the Merger Agreement.
In connection with Centerview’s services as the financial advisor to the Cantel Board of Directors, Cantel has agreed to pay Centerview an aggregate fee of approximately $67 million, $2.5 million of which was payable upon the rendering of Centerview’s opinion and the remainder of which is payable contingent upon consummation of the Mergers. In addition, Cantel has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.
Certain Unaudited Prospective Financial Information Prepared by Cantel
Summary of the Cantel Forecast
Cantel does not, as a matter of course, publicly disclose long-term consolidated forecasts as to future performance, earnings or other results given, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. In connection with the Cantel Board of Directors’ consideration of the transactions contemplated by the Merger Agreement, Cantel’s management prepared the Cantel Forecast based on certain unaudited financial projections regarding Cantel’s future performance for the years 2021 through 2025 on a standalone basis without giving effect to the Mergers and provided the Cantel Forecast to the Cantel Board of Directors. The Cantel Forecast also was provided by Cantel management to STERIS, and to Centerview in connection with its analyses and opinion described in the section “The MergersOpinion of Cantel’s Financial Advisor” beginning on page 60. The Cantel Forecast is based upon the internal financial model that Cantel’s management has historically used in connection with strategic planning.
The summaries of these projections are being included in this proxy statement/prospectus to give Cantel Stockholders access to non-public information that was provided to the Cantel Board of Directors in the course of evaluating the Mergers, and are not intended to influence your decision whether to vote in favor of the Cantel Merger Proposal or any other proposal at the Special Meeting. The inclusion of this information should not be regarded as an indication that any of Cantel, STERIS or their respective advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future performance or events, or that it should be construed as financial guidance, and such summary projections set forth below should not be relied on as such.
While presented with numeric specificity, the Cantel Forecast reflects numerous estimates and assumptions that are inherently uncertain and may be beyond the control of Cantel, including, among others, Cantel’s assumptions about healthcare markets, manufacturing and sales volume and growth levels, operating results, the success of key commercial initiatives and new product introductions, competitive conditions, technology, availability of capital resources, levels of capital expenditures, and other contractual obligations, supply and demand for, and the price of, infection prevention and control products and services, and other products or services, and other matters described in the sections entitled “Cautionary Statement Concerning Forward-Looking Statements,” “Where You Can Find More Information” and “Risk Factors,” beginning on pages 29, 152 and 31, respectively. The Cantel Forecast reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Neither Cantel nor STERIS can give any assurance that the Cantel Forecast and Cantel’s underlying estimates and assumptions will be realized. In addition, since the Cantel Forecast covers multiple years, such information by its nature becomes more speculative with each successive year. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected.
The Cantel Forecast was not prepared by Cantel with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the
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Public Company Accounting Oversight Board for preparation and presentation of prospective financial information. Neither of Cantel’s nor STERIS’s independent registered public accounting firm, nor any other independent accountants, has compiled, examined or performed any procedures with respect to the Cantel Forecast contained herein, nor have they expressed any opinion or any other form of assurance on such informa