UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Rule 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No.
)
Aspect Medical Systems, Inc.
(Name of Subject Company)
Aspect Medical Systems, Inc.
(Name of Person(s) Filing Statement)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
045235108
(CUSIP Number of Class of Securities)
Nassib G. Chamoun
President and Chief Executive Officer
Aspect Medical Systems, Inc.
One Upland Road
Norwood, MA 02062
(617) 559-7788
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
Copy to:
Susan W. Murley, Esq.
Hal J. Leibowitz, Esq.
Jeffrey A. Hermanson, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
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Check the box if the filing relates solely to preliminary communications made before the
commencement of a tender offer.
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Attached hereto are the following communications:
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Exhibit A
Joint press release of Covidien plc (Covidien) and Aspect Medical Systems,
Inc. (Aspect), dated September 28, 2009, announcing that Covidien and Aspect have signed a
definitive agreement pursuant to which Covidien has agreed to acquire Aspect
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Exhibit B
List of frequently asked questions relating to the proposed acquisition
distributed by Aspect on September 28, 2009
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EXHIBIT A
News Release
Covidien Announces Definitive Agreement to Acquire Aspect Medical Systems, Inc.
DUBLIN, Ireland & NORWOOD, Mass., Sep 28, 2009 (BUSINESS WIRE) Covidien (NYSE: COV) and Aspect
Medical Systems, Inc. (NASDAQ: ASPM) today announced that Covidien has reached a definitive
agreement to acquire Aspect, a global market leader in brain monitoring technology.
The Boards of Directors of both companies have unanimously approved the transaction, pursuant to
which a wholly owned subsidiary of Covidien will pay $12.00 in cash per Aspect share for a total of
approximately $210 million, net of cash and short-term investments acquired. The transaction, which
will take the form of an all cash tender offer followed by a second-step merger, is subject to
customary closing conditions, including receipt of certain regulatory approvals, and is expected to
be completed by the end of calendar 2009.
Founded in 1987, Aspect is recognized as a pioneer and global market leader in brain monitoring,
with 2008 revenues of $99 million. Aspects premier product
Bispectral Index(TM) (BIS(TM))
technology became the first clinically proven and commercially available direct measure of the
effects of anesthetics and sedatives on the brain. Aspect led the way to develop proprietary
technologies that directly measure these effects and ultimately improve the quality and cost
effectiveness of patient care. BIS technology is designed to allow medical professionals to
reliably gauge the precise amount of anesthetic medication required by each patient, resulting in
better overall patient care.
The acquisition of Aspect will allow Covidien to broaden its product offerings and add a market
leading brain monitoring technology to its portfolio, said Pete Wehrly, President, Respiratory &
Monitoring Solutions, Covidien. Aspect will bring us enhanced clinical expertise, a strong
research & development organization and expand our presence in the operating room. The acquisition
is consistent with our strategy of expanding into adjacent market segments and will help us achieve
our mission of enhancing the quality of life for patients and improving outcomes for our
customers.
Joining Covidien provides Aspect with the scale and resources to accelerate growth of BIS and
other Aspect products, to continue to invest in outcomes research, comparative effectiveness and
innovation, and to support the strategy of providing products that are designed to improve patient
outcomes, said Nassib Chamoun, President and Chief Executive Officer, Aspect Medical Systems.
Above all, we are pleased to become part of a company that shares our commitment to evidence-based
medicine and the development of products that help clinicians cost-effectively deliver better
care.
Assuming a December 31, 2009, closing, Covidien expects this transaction to dilute fiscal 2010 GAAP
earnings per share, primarily due to a one-time charge for restructuring. On a non-GAAP basis,
excluding the restructuring charge, the transaction is expected to be slightly dilutive to 2010
earnings per share; however, the underlying strength of Covidiens existing businesses is expected
to offset this dilution. As a result, Covidien does not anticipate this transaction will have a
material impact on its fiscal 2010 sales or operating margin outlook.
Once the transaction has been completed, Covidien will report the Aspect business as part of its
Oximetry and Monitoring product line in the Medical Devices segment.
ABOUT COVIDIEN
Covidien is a leading global healthcare products company that creates innovative medical solutions
for better patient outcomes and delivers value through clinical leadership and excellence. Covidien
manufactures, distributes and services a diverse range of industry-leading product lines in three
segments: Medical Devices, Pharmaceuticals and Medical Supplies. With 2008 revenue of $10 billion,
Covidien has more than 41,000 employees worldwide in 59 countries, and its products are sold in
over 140 countries. Please visit www.covidien.com to learn more about our business.
ABOUT ASPECT MEDICAL SYSTEMS, INC.
Aspect Medical Systems, Inc. is a global market leader in brain monitoring technology. To date, the
Companys Bispectral Index (BIS) technology has been used to assess approximately 34 million
patients and has been the subject of more than 3,300 published articles and abstracts. BIS
technology is installed in approximately 78 percent of hospitals listed in the July 2009 U.S. News
and World Report ranking of Americas Best Hospitals and in approximately 74 percent of all U.S.
operating rooms. In the last twelve months, BIS technology was used in approximately 19 percent of
all U.S. surgical procedures requiring general anesthesia or deep sedation. Aspect Medical Systems
has OEM agreements with nine leading manufacturers of patient monitoring systems. For more
information, visit Aspects Web site at http://www.aspectmedical.com.
FORWARD-LOOKING STATEMENTS
Any statements contained in this communication that do not describe historical facts may constitute
forward-looking statements as that term is defined in the Private Securities Litigation Reform Act
of 1995. This release contains forward-looking information about Covidiens proposed acquisition of
Aspect Medical Systems, Inc., the timing of the anticipated transaction, the potential benefits of
the anticipated transaction, Aspects clinical trials, products and product candidates and the
potential benefits of such products and product candidates, and expected dilutive effect. Any
forward-looking statements contained herein are based on Covidiens and Aspects managements
current beliefs and expectations, but are subject to a number of risks, uncertainties and changes
in circumstances, which may cause actual results or actions to differ materially from what is
expressed or implied by these statements. The factors that could cause actual future results to
differ materially from current expectations include, but are not limited to, the satisfaction of
conditions to closing the agreement; the ability to successfully integrate Aspects operations and
programs with Covidiens and the time and resources required to do so, the uncertainties inherent
in commercial, research and development activities, decisions by regulatory authorities regarding
whether and when to approve any applications for such product candidates and other matters that
could affect the availability or commercial potential of such product candidates; and competitive
developments. These and other factors are identified and described in more detail in Covidiens and
Aspects filings with the SEC. We caution investors not to place undue reliance on the
forward-looking statements contained in this press release. We disclaim any obligation to update
these forward-looking statements other than as required by law.
NON-GAAP Financial Information
This release contains a non-GAAP financial measure. This non-GAAP financial measure, which is used
a measure of Covidiens performance, should be considered in addition to, not as a substitute for,
or superior to, measures of Covidiens financial performance prepared in accordance with GAAP. A
reconciliation of this non-GAAP financial measure to GAAP is provided in the text of this release.
Covidiens non-GAAP measures may be defined differently than similar terms used by other companies,
and accordingly, care should be exercised in understanding how Covidien defines its non-GAAP
financial measures.
Specifically, any one-time charge for restructuring is excluded from the projected earnings per
share dilution.
Covidien management uses this non-GAAP financial measure to gain an understanding of its
comparative operating performance (when comparing such results with previous periods or forecasts)
and future prospects. This non-GAAP financial measure is also used by Covidiens management in
their financial and operating decision-making because management believes it reflects the
underlying economics of Covidiens ongoing business in a manner that allows meaningful
period-to-period comparisons. Such comparisons may be more meaningful because operating results
presented under GAAP may include, from time to time, items that are not necessarily relevant to
understand Covidiens business and may, in some cases, be difficult to forecast accurately for
future periods. Covidiens management believes that this non-GAAP financial measure provides useful
information to investors and others in understanding and evaluating Covidiens current operating
performance and future prospects in the same manner as management does if they so choose. Non-GAAP
financial measures have limitations, however, because they do not include all items of income and
expense that affect Covidiens operations. Covidiens management compensates for this and other
limitations by also considering Covidiens financial results as determined in accordance with GAAP.
IMPORTANT INFORMATION ABOUT THE TENDER OFFER
This press release is neither an offer to purchase nor a solicitation of an offer to sell shares of
Aspect. Transformer Delaware Corp. (the Merger Sub), an indirect, wholly-owned subsidiary of
Covidien, has not commenced the tender offer for the shares of Aspect stock described in this press
release.
Upon commencement of the tender offer, the Merger Sub will file with the SEC a tender offer
statement on Schedule TO and related exhibits, including the offer to purchase, letter of
transmittal, and other related documents. Following commencement of the tender offer, Aspect will
file with the SEC a tender offer solicitation/recommendation statement on Schedule 14D-9. These
documents will contain important information about Covidien, Aspect, the transaction and other
related matters. Investors and security holders are urged to read each of these documents carefully
when they are available.
Investors and security holders will be able to obtain free copies of the tender offer statement,
the tender offer solicitation/recommendation statement and other documents filed with the SEC by
the Merger Sub and Aspect through the web site maintained by the SEC at www.sec.gov. In addition,
investors and security holders will be able to obtain free copies of these documents by contacting:
Covidien
Investor Relations
508-452-4650
investor.relations@covidien.com
or
Aspect Medical Systems
Investor Relations
1-617-559-7000
bis_info@aspectms.com
SOURCE: Covidien
COVIDIEN
Eric Kraus
Senior Vice President
Corporate Communications
508-261-8305
eric.kraus@covidien.com
or
Coleman Lannum, CFA
Vice President
Investor Relations
508-452-4343
cole.lannum@covidien.com
or
Bruce Farmer
Vice President
Public Relations
508-452-4372
bruce.farmer@covidien.com
or
Brian Nameth
Director
Investor Relations
508-452-4363
brian.nameth@covidien.com
or
ASPECT
J. Neal Armstrong
Vice President and CFO
617-559-7162
EXHIBIT B
Aspect FAQs
General
Q. Why is Covidien acquiring Aspect?
A. The acquisition will allow Covidien to broaden its product offerings and add a market leading
brain monitoring technology to its portfolio. The acquisition is consistent with Covidiens
strategy of expanding into adjacent market segments with the goal of enhancing the quality of life
for patients and improving outcomes for customers. At the same time, Covidien provides Aspect with
the scale and resources to accelerate growth of BIS and other Aspect products, to continue to
invest in outcomes research, comparative effectiveness and innovation, and to support the strategy
of providing products that are designed to improve patient outcomes. Both companies share a
commitment to evidence-based medicine and the development of products that help clinicians
cost-effectively deliver better care.
Q. What are the terms of the agreement?
A. Directors of both companies have unanimously approved the transaction, pursuant to which a
wholly owned subsidiary of Covidien will pay $12.00 in cash per Aspect Medical share for a total of
approximately $210 million, net of cash and short-term investments acquired. The transaction,
which will take the form of an all cash tender offer followed by a second-step merger, is subject
to customary closing conditions, including receipt of certain regulatory approvals, and is expected
to be completed by the end of calendar 2009.
It will be business as normal during this transition period and that there will be no change
to our strategic relationships during this time.
Q. Will Covidien make any changes to Aspects operations or people?
A. No operational changes occur at this time, as we are two separate companies. Covidien greatly
respects what Aspects employees have accomplished and looks forward to a great future together.
Once the acquisition has been completed and Covidien better understands Aspects business, we
expect some changes as we bring the organizations together.
Employee Note:
All questions that reference pay, compensation, service time and benefits will be deferred until
after the close of the acquisition. Once the acquisition is complete, we will be better able to
answer these questions.
Following the close of the acquisition we will be holding meetings to discuss the impact of this
acquisition on employees. In addition to group meetings, we will discuss terms and conditions of
employment with each employee privately.
Sales Reps
Q. Should I continue to sell to my customers?
A. Yes, you should continue business as usual.
Q. Will my customers be transferred to Covidien? Will I be able to keep all of my existing
accounts?
A. It is our goal to retain all of Aspects customers. All territories, accounts and quotes will
remain unchanged through the end of the current plan year.
Q. How should I interact with customers?
A. You should continue business as usual. In your discussions with our customers and healthcare
professionals, it is important that you not speculate about the announcement and its expected
impact on Aspect or provide any additional details you may have heard at the all employee meeting
or read in employee materials. If you receive a customer question about the transaction, please
refer them directly to Sales Management.
Q. How should I interact with the Covidien rep in my area?
A. The two companies will continue business as usual. Please treat all interactions with Covidien
as you would any other external company. Do not share any company confidential data or anything
that is not in the public domain at this time.
Q. Will Covidien reps carry Aspects products?
A. The two companies will continue business as usual until close.
Customer Service Phone Reps
Q. Should I answer the phone differently? Starting when?
A. There is no need to change the way you answer the phone at this point. After the close of the
acquisition, you will be advised of any change.
Q. What should I tell callers who ask me about the sale?
A. Covidien has entered into a definitive agreement to purchase Aspect Medical Systems, Inc. How
may I direct your call?
If a member of the news media, refer call to:
Emily Anderson
617-559-7032 (office)
617-515-2000 (cell)
Suppliers, partners, etc.
Q. Will Covidien continue to use the same supplier, vendors, etc?
A. We expect that existing relationships with partners, suppliers and all other stakeholders will
remain unchanged at this time as a result of this transaction.
Q. Will the terms and conditions of any agreements I currently have with Aspect be honored by
Covidien?
A. We expect that existing relationships with partners, suppliers and all other stakeholders will
remain unchanged at this time as a result of this transaction
Q. Will you inform us if the acquisition is final?
A. Yes.
Customers
Q. Should I continue to deal with my same Aspect sales representative?
A. Yes, you should continue to work with your Aspect sales representative.
Q. Do I continue to send my invoice payments to the same place?
A. Yes, for the time being.
Q. Will the terms and conditions of any agreements I currently have with Aspect be honored by
Covidien?
A. We expect that existing relationships with partners, suppliers and all other stakeholders will
remain unchanged at this time as a result of this transaction
Q. Can I count on the continuity of supply for my orders?
A. Yes.
Q. Will you inform us if the acquisition is final?
A. Yes.
FORWARD LOOKING STATEMENTS
Any statements contained in this communication that do not describe historical facts may constitute
forward-looking statements as that term is defined in the Private Securities Litigation Reform Act
of 1995. This communication contains forward-looking information about Covidiens proposed
acquisition of Aspect Medical Systems, Inc., the timing of the anticipated transaction, the
potential benefits of the anticipated transaction, Aspects clinical trials, products and product
candidates and the potential benefits of such products and product candidates, and expected
dilutive effect. Any forward-looking statements contained herein are based on Covidiens and
Aspects managements current beliefs and expectations, but are subject to a number of risks,
uncertainties and changes in circumstances, which may cause actual results or actions to differ
materially from what is expressed or implied by these statements. The factors that could cause
actual future results to differ materially from current expectations include, but are not limited
to, the satisfaction of conditions to closing the agreement; the ability to successfully integrate
Aspects operations and programs with Covidiens and the time and resources required to do so, the
uncertainties inherent in commercial, research and development activities, decisions by regulatory
authorities regarding whether and when to approve any applications for such product candidates and
other matters that could affect the availability or commercial potential of such product
candidates; and competitive developments. These and other factors are identified and described in
more detail in Covidiens and Aspects filings with the SEC. We caution investors not to place
undue reliance on the forward-looking statements contained in this communication. We disclaim any
obligation to update these forward-looking statements other than as required by law.
IMPORTANT INFORMATION ABOUT THE TENDER OFFER
This communication is neither an offer to purchase nor a solicitation of an offer to sell shares of
Aspect. Transformer Delaware Corp. (the Merger Sub), an indirect, wholly-owned subsidiary of
Covidien, has not commenced the tender offer for the shares of Aspect stock described in this
communication.
Upon commencement of the tender offer, the Merger Sub will file with the SEC a tender offer
statement on Schedule TO and related exhibits, including the offer to purchase, letter of
transmittal, and other related documents. Following commencement of the tender offer, Aspect will
file with the SEC a tender offer solicitation/recommendation statement on Schedule 14D-9. These
documents will contain important information about Covidien, Aspect, the transaction and other
related matters. Investors and security holders are urged to read each of these documents carefully
when they are available.
Investors and security holders will be able to obtain free copies of the tender offer statement,
the tender offer solicitation/recommendation statement and other documents filed with the SEC by
the Merger Sub and Aspect through the web site maintained by the SEC at www.sec.gov. In addition,
investors and security holders will be able to obtain free copies of these documents by contacting:
Aspect Medical Systems, Investor Relations, 1-617-559-7000, bis_info@aspectms.com.
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