TSO3 Inc. Enters into Agreement to be Acquired by Stryker Corporation

QUÉBEC CITY and MYRTLE BEACH, SC, Aug. 12, 2019 /PRNewswire/ – TSO3 Inc. (“TSO3” or the “Company“) (TSX: TOS), an innovator in sterilization technology for medical devices in healthcare settings, announced today that it has entered into a definitive arrangement agreement (the “Arrangement Agreement“) pursuant to which 9402-4874 Québec Inc. (the “Purchaser“), a subsidiary of Stryker Corporation (“Stryker“), will acquire all of the issued and outstanding common shares (the “Shares“) of the Company for $0.43 in cash per Share (the “Purchase Price“), subject to adjustment in the event the transaction expenses are greater than currently anticipated. The Company does not currently expect any adjustment to be made to the Purchase Price and in the event such an adjustment would be required, that it would be minimal. If the Purchase Price is adjusted, the Company will issue a press release setting out such adjustment no later than two (2) business days prior to the special meeting of shareholders (the “Special Meeting“) to be called to approve the transaction. The Purchase Price represents a premium of approximately 18% to the volume weighted average price of the Shares on the Toronto Stock Exchange for the 30 calendar‑day period prior to the date hereof. The purchase of 100% of the equity of TSOrepresents a total enterprise value of approximately $68.4 million (approximately US $51.7million), including existing indebtedness.

R.M. (Ric) Rumble, President and CEO of TSO3, stated: “TSO3‘s board of directors and management believe that this transaction provides the best liquidity opportunity for shareholders. Reaching this conclusion is an important step for TSOas well as current and future customers, as it will provide the expertise and the financial resources to best help TSOachieve its full potential. We look forward towards its successful completion.”

Recommendation of the Board of Directors and Special Committee

The process and negotiations of the transaction with Stryker were supervised by a special committee of the board of directors of TSO3 (the “Board of Directors“) composed solely of independent directors (the “Special Committee“). The transaction has been approved unanimously by the Board of Directors following the unanimous recommendation of the Special Committee. Speaking on behalf of the Special Committee and the Board of Directors, Linda Rosenstockstated: “We are very pleased to be entering into this transaction with Stryker, which has both strong management and a strong balance sheet that will help move TSOforward. The combination of our teams and projects will be beneficial for both companies”.

The Board of Directors and the Special Committee have unanimously, after receiving legal and financial advice, determined that the transaction is in the best interests of TSO3 and is fair to its shareholders. The Board of Directors unanimously recommends that the shareholders vote in favour of the transaction at the Special Meeting.

In connection with the proposed transaction, directors and officers of the Company holding an aggregate of approximately 1.0% of the Shares (on a non-diluted basis) as of the date hereof have agreed to vote their Shares in favour of the transaction.

Transaction Details

The transaction will be implemented by way of a statutory plan of arrangement under the Business Corporations Act(Québec) and is subject to court approval, shareholder approval of at least 662/3% of the votes cast by shareholders present in person or represented by proxy at the Special Meeting, with each shareholder being entitled to one vote per Share and satisfaction of all closing conditions, including the level of inventory of the Company as of closing. Further details regarding the voting requirements applicable to the proposed transaction will be set out in the management information circular to be filed and mailed to shareholders in connection with the transaction.

The Arrangement Agreement contains representations, warranties and covenants customary for transactions of this nature, including a prohibition against the Company soliciting or initiating any inquiries or discussions regarding any other business combination or sale of assets, subject to the fiduciary duty of the Board of Directors in the event that an unsolicited superior proposal is received by the Company and the right in favour of Stryker to match any superior proposal. A termination fee of $3,076,000 is payable to Stryker in certain circumstances, including if Stryker fails to exercise its right to match in the context of a superior proposal and the Company elects to terminate the Arrangement Agreement prior to the Company’s shareholders voting to approve the Arrangement.

The Company intends to mail a management information circular in the upcoming weeks to its shareholders and expects to hold the Special Meeting in September 2019. Completion of the transaction is anticipated to occur in the fourth quarter of 2019, subject to satisfaction of all closing conditions. Details of the terms of the transaction will be set out in the Arrangement Agreement and the management information circular, which will be available under the profile of TSO3 at

Fairness Opinions

Piper Jaffray & Co (“Piper Jaffray“), retained by the Company as lead financial advisor, and Desjardins Capital Markets (“Desjardins“), retained by the Special Committee as financial advisor, each provided an opinion to the Board of Directors to the effect that as at August 12, 2019, subject to the assumptions, qualifications and limitations provided therein, the consideration to be received by the shareholders pursuant to the transaction is fair, from a financial point of view, to such shareholders. The fairness opinions will be included in the management information circular to be mailed to shareholders in connection with the approval of the transaction.


Piper Jaffray is acting as lead financial advisor to TSO3 and Desjardins is acting as financial advisor to the Special Committee. Lavery de Billy L.L.P. is serving as legal counsel to TSO3, Nexsen Pruet, LLC is serving as U.S. legal counsel to TSOand Stikeman Elliott LLP is serving as legal counsel to the Special Committee and the Board.

Ropes & Gray LLP is serving as principal legal counsel to the Purchaser and Stryker and Blake, Cassels & Graydon LLP is serving as their Canadian legal counsel.

About TSO3

Founded in 1998, TSO3‘s activities encompass the sale, production, maintenance, research, development and licensing of sterilization processes, related consumable supplies and accessories for heat-sensitive medical devices. The Company designs products for sterile processing areas in the hospital environment that offer an advantageous replacement solution to other low temperature sterilization processes currently used in hospitals. TSOalso offers services related to the maintenance of sterilization equipment and compatibility testing of medical devices with such processes.

For more information about TSO3, visit the Company’s website at

Forward looking statements

Certain statements set forth in this press release may constitute “forward-looking statements” within the meaning of applicable securities laws, including, but not limited to, statements with respect to the timing, outcome and completion of the proposed transaction with the Purchaser and Stryker, the anticipated benefits of such transaction, any adjustment to the Purchase Price, the Purchaser, Strykeror TSO3‘s plans, objectives, expectations and intentions, court and shareholder approvals, the ability of the parties to the Arrangement Agreement to complete the transaction, the anticipated timing of the Special Meeting and the operations of the Purchaser, Stryker and TSO3 post-transaction. There can be no assurance that the proposed transaction will be completed, or that it will be completed on the terms and conditions contemplated in this press release. The proposed transaction could be modified or terminated. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release.

Each forward-looking statement contained in this press release is subject to known and unknown risks and uncertainties and other unknown factors that could cause actual results to differ materially from historical results and those expressed or implied by such statement. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes”, “belief”, “expects”, “intends”, “anticipates”, “will”, or “plans” to be uncertain and forward-looking. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risks and uncertainties inherent in the nature of the proposed transaction include, without limitation, the failure of the parties to obtain the necessary shareholder and court approvals or to otherwise satisfy the conditions to the completion of the transaction; failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; significant transaction costs or unknown liabilities; the occurrence of events that may give rise to a right of one or both of the Company and Stryker to terminate the Arrangement Agreement; the failure to realize the expected benefits of the transaction; and general economic conditions. Failure to obtain the necessary shareholder and court approvals, or the failure of the parties to otherwise satisfy the conditions to the completion of the transaction or to complete the transaction, may result in the transaction not being completed on the proposed terms, or at all. In addition, if the transaction is not completed, and the Company continues as an independent entity, there are risks that the announcement of the proposed transaction and the dedication of substantial resources of the Company to the completion of the transaction could have an impact on its business and strategic relationships (including with future and prospective employees, customers, suppliers and partners), operating results and activities in general, and could have an adverse effect on the Company’s current and future operations, financial condition and prospects. Furthermore, the failure of the Company to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in it being required to pay a fee to Stryker, the result of which could have a material adverse effect on its financial position and results of operations and its ability to fund growth prospects and current operations. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of TSO3, which could in turn also impact the completion of transaction, are described in details in the reports filed from time to time by TSOwith securities authorities in Canada. Investors are encouraged to read TSO3‘s filings available on its website at and on SEDAR at, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this press release, and TSO3 undertakes no obligation to update or revise any of these statements, whether as a result of new information, future events or otherwise, except as required by law.

All amounts in this press release are in Canadian dollars unless otherwise specified.


Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

Related Articles

Back to top button