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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 21)
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NEIGHBORCARE, INC.
(Name of Subject Company)
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NEIGHBORCARE, INC.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.02 Per Share
(including the Associated Series B Junior
Participating Preferred Stock Purchase Rights)
(Title of Class of Securities)
64015Y-10-4
(CUSIP Number of Class of Securities)
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John F. Gaither, Jr., Esq.
Senior Vice President, General Counsel and Secretary
NeighborCare, Inc.
601 East Pratt Street, 3rd Floor
Baltimore, MD 21202
(410) 528-7404
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
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With copies to:
Mark Gordon, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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The purpose of this amendment is to amend and supplement Items 3 and 4
in the Solicitation/Recommendation Statement on Schedule 14D-9 previously
filed by NeighborCare, Inc., a Pennsylvania corporation ("NeighborCare" or the
"Company") on June 14, 2004 (as thereafter amended, including by this amendment,
the "Schedule 14D-9").
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Item 3 of the Schedule 14D-9 is hereby amended by adding the following at
the end thereof:
CHANGE OF CONTROL SEVERANCE PAYMENTS. No officers of NeighborCare
are entitled to severance payments solely upon a change of control of
the Company. However, the officers are entitled to payments pursuant to
their respective employment agreements (as described above) in the event
they are terminated, or if they terminate their employment for good
reason, following a change of control. The following shows the amounts
that would be payable to the officers in the event they are terminated
following a change of control:
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TOTAL
NAME POSITION SEVERANCE(1)
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John J. Arlotta Chairman, President and Chief
Executive Officer $3,600,000
John L. Kordash Vice Chairman and Executive
Vice President $ 550,000
John F. Gaither, Jr. Senior Vice President and
General Counsel $ 590,000
Robert A. Smith Senior Vice President and
Chief Operating Officer $ 360,000
Richard W. Hunt Senior Vice President and
Chief Financial Officer $ 520,000
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TOTAL $5,620,000
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(1) Under their respective employment agreements, the executives
are entitled to be "grossed up" for excise taxes under Section 4999
of the Internal Revenue Code of 1986, as amended (if any), such
that the effect of such excise taxes, if any, is not borne by the
executive. The amounts in this column reflect the net amounts that
the executive would receive after giving effect to such gross-ups
and related excise taxes, if any, but before any income tax or
other applicable tax.
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Item 3 of the Schedule 14d-9 is hereby further amended by adding the
following disclosure at the end of the section entitled "Certain Effects
of the $34.75 Offer and Merger":
VALUE OF OPTIONS. Our directors and executive officers hold or
beneficially own options to purchase Shares. In the merger, these
options will be cancelled in exchange for a cash payment equal to the
difference between the $34.75 per share transaction price and the
relevant exercise price of the option, multiplied by the number of
Shares subject to the relevant option. The following shows the
aggregate amounts to be received in the merger by the Company's
directors and executive officers in respect of their options:
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Robert H. Fish $ 8,684,926
(Director)
James D. Dondero
(Director) $ 1,020,989
James H. Bloem
(Director) $ 1,020,989
James E. Dalton, Jr.
(Director) $ 1,020,989
Dr. Philip P. Gerbino
(Director) $ 75,443
Arthur J. Reimers
(Director) $ None
Phyliss R. Yale
(Director) $ None
John J. Arlotta $14,760,000
John L. Kordash $ 3,312,500
John F. Gaither, Jr. $ 1,987,500
Robert A. Smith $ 1,159,375
Richard W. Hunt $ None
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All Directors and
Executive Officers
as a Group : $33,042,710
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
The second bullet point in factor (i) of Item 4(c) of the Schedule 14d-9 is
hereby amended to read in its entirety as follows:
o That, based on an analysis of the current trading ranges of comparable
companies and upon other factors (including matters referred to in
factor (vi) below), the $34.75 offer price represents a substantial
premium to the likely unaffected trading ranges for the Shares that
would be likely to prevail at the present time in the absence of the
Offer. The Board considered this analysis of likely current unaffected
trading ranges because the Board noted that there had been no
unaffected trading in the Shares for more than 14 months to use as a
basis for comparison.
Factor (vi) of Item 4(c) of the Schedule 14d-9 is hereby amended to read
in its entirety as follows:
(vi) The Board's view that despite its confidence in management and in
NeighborCare's ongoing value-creation initiatives and marketplace
opportunities, NeighborCare would continue to face a number of risks
and uncertainties that could adversely affect both its short-term
and long-term prospects, including:
o the risks and uncertainties created by the Omnicare tender offer;
o and risks and uncertainties associated with the industry in which
NeighborCare operates, including risks associated with regulatory
change.
In this regard, the Board was advised that very preliminary analysis
from management of the results of operations for the fiscal quarter
ended June 30, 2005 indicated that NeighborCare's fiscal year 2005
earnings per share could be up to 10% lower than the earnings per
share reflected in management's projections. Due to the timing and
preliminary nature of this information, management has not made a
determination to change its projections.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this amendment is true, complete and
correct.
NEIGHBORCARE, INC.
By: /s/ John F. Gaither, Jr.
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John F. Gaither, Jr.
Senior Vice President,
General Counsel and Secretary
Dated: July 26, 2005
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