UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☒		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☐		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to §240.14a-12

Apria, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☐		No fee required.
☐		Fee paid previously with preliminary materials.
☒		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

PRELIMINARY PROXY STATEMENT, SUBJECT TO COMPLETION, DATED FEBRUARY 7, 2022

 

 

[●], 2022

Dear Stockholders:

You are cordially invited to attend a special meeting of the stockholders of Apria, Inc. (“Apria”) to be held online via live audio webcast at www.virtualshareholdermeeting.com/APR2022SM on [●], 2022 at [●], Eastern Time (the “special meeting”). For the health and well-being of Apria’s stockholders, employees and directors, the special meeting will be held in a virtual meeting format only, with no physical in-person meeting.

At the special meeting, Apria stockholders will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of January 7, 2022 (as amended or modified from time to time, the “merger agreement”), among Apria, Owens & Minor, Inc. (“Owens & Minor”), and StoneOak Merger Sub Inc. (“Merger Sub”). Subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into Apria, with Apria surviving the merger as an indirect, wholly owned subsidiary of Owens & Minor (the “merger”).

If the merger is completed, Apria’s stockholders will have the right to receive $37.50 in cash, without interest and subject to any applicable withholding taxes, for each share of common stock, par value $0.01 per share, of Apria (“Apria common stock”), other than appraisal shares and owned company shares (each as defined in the accompanying proxy statement), that they own immediately prior to the effective time of the merger, which represents a premium of approximately 26% over Apria’s closing stock price on January 7, 2022, the last trading day prior to the announcement of the execution of the merger agreement. Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of Apria common stock entitled to vote as of the close of business on the record date.

Apria common stock is listed on The NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “APR”. The closing price of Apria common stock on NASDAQ on [●], the latest practicable date before the printing of the accompanying proxy statement, was $[●] per share.

The Apria board of directors has reviewed and considered the terms and conditions of the merger and unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, and (ii) authorized and approved the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger. The Apria board of directors made its determination after consultation with its outside legal counsel and financial advisors and consideration of a number of factors more fully described in the accompanying proxy statement. The Apria board of directors unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement.

At the special meeting, stockholders will also be asked to vote on (i) a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Apria to certain of its named executive officers based on or otherwise relating to the merger, as required by the rules adopted by the U.S. Securities and Exchange Commission (the “named executive officer merger-related compensation proposal”), and (ii) a proposal to adjourn the special meeting from time to time, if necessary or appropriate, as determined in good faith by the Apria board of directors, including for the purpose of soliciting additional votes for the approval of the merger proposal if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement by Apria stockholders (the “adjournment proposal”). The Apria board of directors unanimously recommends that you vote “FOR” each of these proposals.

The Apria board of directors is soliciting your proxy to ensure that a quorum is present and that your shares are represented and voted at the special meeting and any postponement or adjournment thereof.

If your shares are held in “street name,” you should instruct your broker, bank or other nominee how to vote your shares on each proposal in accordance with your voting instruction form.

The merger cannot be completed unless Apria stockholders adopt the merger agreement. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting online, please submit a proxy to vote your shares as promptly as possible to ensure that your shares may be represented and voted at the special meeting. If you attend the special meeting and vote online, your online vote will revoke any proxy previously submitted. If you fail to both return your proxy and attend the special meeting online in person or by proxy, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the adoption of the merger agreement. Similarly, if you hold your shares in “street name” and fail to instruct your broker, bank or other nominee how to vote your shares, your shares will not be counted for purposes of determining whether a quorum is present and will have the same effect as a vote “AGAINST” the adoption of the merger agreement.

The obligations of Apria, Owens & Minor and Merger Sub to complete the merger are subject to the satisfaction or waiver of certain conditions. The accompanying proxy statement contains detailed information about Apria, the special meeting, the merger agreement, the merger, the named executive officer merger-related compensation proposal and the adjournment proposal. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement and incorporated therein by reference. Apria urges you to, and you should, read the entire proxy statement carefully, including the merger agreement and the other annexes and the documents referred to or incorporated by reference in the accompanying proxy statement. You may obtain additional information about Apria from documents it has filed with the U.S. Securities and Exchange Commission.

If you have any questions or need assistance voting your shares of Apria common stock, please contact Innisfree M&A Incorporated, Apria’s proxy solicitor, by calling (877) 750-0854 (toll-free) or (212) 750-5833 (banks and brokers).

Sincerely,

Daniel J. Starck

Chief Executive Officer

Neither the U.S. Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the merger, passed upon the merits of the merger agreement or the merger or determined if the accompanying proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [●], 2022 and, together with the enclosed form of proxy card, is first being mailed to Apria stockholders on or about [●], 2022.

Apria, Inc.

7353 Company Drive

Indianapolis, Indiana 46237

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

DATE & TIME		[●], 2022 at [●], Eastern Time
PLACE		The special meeting of stockholders (the “special meeting”) of Apria, Inc. (“Apria”) will be held online via live audio webcast at www.virtualshareholdermeeting.com/APR2022SM. For the health and well-being of Apria’s stockholders, employees and directors, the special meeting will be held in a virtual meeting format only, with no physical in-person meeting.
ITEMS OF BUSINESS		•  To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of January 7, 2022 (as amended or modified from time to time, the “merger agreement”), among Apria, Owens & Minor, Inc. (“Owens & Minor”) and StoneOak Merger Sub Inc. (“Merger Sub”) (the “merger proposal”); a copy of the merger agreement is attached to the accompanying proxy statement as Annex A and is incorporated therein by reference;   •  To consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Apria to its named executive officers that is based on or otherwise relates to the merger (the “named executive officer merger-related compensation proposal”); and   •  To consider and vote on a proposal to adjourn the special meeting from time to time, if necessary or appropriate, as determined in good faith by the Apria Board, including for the purpose of soliciting additional votes for the approval of the merger proposal if there are insufficient votes at the time of the special meeting to approve the merger proposal (the “adjournment proposal”).
RECORD DATE AND SHARES ENTITLED TO VOTE		Only holders of record of common stock, par value $0.01 per share, of Apria (“Apria common stock”), at the close of business on [●], 2022 (the “record date”) are entitled to notice of, and to vote at, the special meeting and at any adjournment of the special meeting. Each share of Apria common stock will be entitled to one vote.
VOTING BY PROXY		Your vote is very important, regardless of the number of shares you own. The board of directors of Apria (the “Apria Board”) is soliciting your proxy to ensure that a quorum is present and that your shares are represented and voted at the special meeting. For information on submitting your proxy over the Internet, by telephone or by mailing back the traditional proxy card (no extra postage is needed for the provided envelope if mailed in the U.S.), please see the attached proxy statement and enclosed proxy card. If you later decide to vote online at the special meeting, information on revoking your proxy prior to the special meeting is also provided.

RECOMMENDATIONS		The Apria Board unanimously recommends that you vote:   •  “FOR” the merger proposal;   •  “FOR” the named executive officer merger-related compensation proposal; and   •  “FOR” the adjournment proposal.
APPRAISAL		Apria stockholders who do not vote in favor of the merger proposal will have the right to seek appraisal of the fair value of their shares of Apria common stock, as determined in accordance with Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”), if they deliver a demand for appraisal before the vote is taken on the merger agreement and comply with all the requirements of Delaware law, including Section 262 of the DGCL, which are summarized in the accompanying proxy statement. Section 262 of the DGCL is reproduced in its entirety in Annex D to the accompanying proxy statement and is incorporated therein by reference.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING ONLINE, PLEASE SUBMIT A PROXY TO VOTE YOUR SHARES OVER THE INTERNET OR BY TELEPHONE PURSUANT TO THE INSTRUCTIONS CONTAINED IN THESE MATERIALS OR COMPLETE, DATE, SIGN AND RETURN A PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE SUBMITTED. IF YOU DO NOT SUBMIT YOUR PROXY OR VOTE ONLINE AT THE SPECIAL MEETING ON THE MERGER PROPOSAL, IT WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” THE MERGER PROPOSAL. IF YOU HOLD YOUR SHARES IN “STREET NAME” AND DO NOT INSTRUCT YOUR BROKER, BANK OR OTHER NOMINEE HOW TO VOTE YOUR SHARES, IT WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” THE MERGER PROPOSAL.

Your proxy may be revoked at any time before the vote at the special meeting by following the procedures outlined in the accompanying proxy statement.

If your shares are held by a broker, bank or other nominee and you wish to vote online at the special meeting, you must bring to the special meeting a proxy from the broker, bank or other nominee that holds your shares authorizing you to vote in person at the special meeting. Please also bring to the special meeting your account statement evidencing your beneficial ownership of Apria common stock as of the record date.

In order to vote online and examine Apria’s stock list at the special meeting, you will need to log onto www.virtualshareholdermeeting.com/APR2022SM and enter the control number on your proxy card or voting instruction card. If your shares of Apria common stock entitled to vote are registered directly in your name, you are considered the holder of record with respect to such shares of Apria common stock and you have the right to attend the special meeting and vote online. If your shares of Apria common stock entitled to vote are held in a brokerage account or by a bank or other nominee, you are the beneficial owner of such Apria common stock. As such, in order to vote online at the special meeting, you must follow the instructions provided by your bank, brokerage firm or nominee.

The proxy statement of which this notice forms a part provides a detailed description of the merger, the merger agreement, the named executive officer merger-related compensation proposal and the adjournment proposal, and provides specific information concerning the special meeting. Apria urges you to read the proxy statement, including any documents incorporated therein by reference, and its annexes carefully and in their entirety. If you have any questions concerning the merger or the proxy statement, would like additional copies of

the proxy statement or need help voting your shares of Apria common stock, please contact Apria’s proxy solicitor, Innisfree M&A Incorporated.

 

Indianapolis, Indiana

[●], 2022

TABLE OF CONTENTS

 

		Page
SUMMARY TERM SHEET			1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER			15
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			26
THE PARTIES TO THE MERGER			28
THE SPECIAL MEETING			30
THE MERGER PROPOSAL (PROPOSAL 1)			36
Structure of the Merger			36
What Stockholders Will Receive in the Merger			36
Treatment of Apria Equity Awards			36
Effects on Apria if the Merger Is Not Completed			37
Background of the Merger			37
Recommendation of the Apria Board and Reasons for the Merger			46
Opinion of Apria’s Financial Advisor			50
Certain Financial Projections			55
Interests of Apria’s Executive Officers and Directors in the Merger			58
Financing of the Merger			65
Antitrust Review Required for the Merger			67
Support Agreements			68
Material U.S. Federal Income Tax Consequences of the Merger			69
Delisting and Deregistration of Apria Common Stock			69
Appraisal Rights			69
THE MERGER AGREEMENT			74
The Merger			74
Closing and Effectiveness of the Merger			74
Merger Consideration			74
Exchange Procedures			75
Treatment of Apria Equity Awards			76
Representations and Warranties			77
Conduct of Business Pending the Merger			81
Non-Solicitation of Acquisition Proposals			84
Apria Board Recommendation and Change of Recommendation			86
Stockholders Meeting			88
Efforts to Complete the Merger			89
Delisting and Deregistration of Apria Common Stock			91
Takeover Statutes			91
Employee Matters			92
Directors’ and Officers’ Indemnification and Insurance			93
Financing			94
The OIG Consent			96
Conditions to the Closing of the Merger			97
Termination of the Merger Agreement			98
Termination Fee			100
Effect of Termination			100
Amendment and Waiver of the Merger Agreement			100
Specific Performance			101
No Third Party Beneficiaries			101
Governing Law			101
Jurisdiction			101
Waiver of Jury Trial			101

 

i

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION PROPOSAL (PROPOSAL 2)			102
ADJOURNMENT PROPOSAL (PROPOSAL 3)			103
MARKET PRICES OF APRIA COMMON STOCK			104
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			105
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER			108
FUTURE APRIA STOCKHOLDER PROPOSALS			111
MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS			112
WHERE YOU CAN FIND MORE INFORMATION			112
EXHIBIT INDEX			114

 

ANNEXES
Annex A—Agreement and Plan of Merger			A-1
Annex B—Form of Support Agreement			B-1
Annex C—Opinion of Goldman Sachs & Co. LLC			C-1
Annex D—Section 262 of the General Corporation Law of the State of Delaware			D-1

 

ii

SUMMARY TERM SHEET

This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the merger and the other matters being considered at the special meeting of Apria stockholders. Apria urges you to read carefully the remainder of this proxy statement, including the attached annexes, and the other documents referenced in this proxy statement. For additional information on Apria included in documents incorporated by reference into this proxy statement, see the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 112. Page references are included in this summary to direct you to a more complete description of the topics presented below.

Certain Definitions

As used in this proxy statement, unless otherwise noted or the context requires otherwise:

 

•

“Apria” refers to Apria, Inc., a Delaware corporation;

 

•

“Owens & Minor” refers to Owens & Minor, Inc., a Virginia corporation;

 

•

“Merger Sub” refers to StoneOak Merger Sub Inc., a Delaware corporation and an indirect, wholly owned subsidiary of Owens & Minor that exists solely for the purpose of entering into the merger agreement and engaging in the transactions contemplated by the merger agreement;

 

•

“Apria common stock” refers to the common stock, par value $0.01 per share, of Apria;

 

•

“Apria Board” refers to the board of directors of Apria;

 

•

“Holdings LLC” refers to Apria Holdings LLC, a Delaware limited liability company and a stockholder of Apria that owns, as of the record date, approximately [●]% of the outstanding shares of Apria common stock;

 

•

“merger” refers to the merger of Merger Sub with and into Apria with Apria surviving as an indirect, wholly owned subsidiary of Owens & Minor;

 

•

“merger agreement” refer to the Agreement and Plan of Merger, dated as of January 7, 2022, by and among Apria, Owens & Minor, and Merger Sub, as amended or modified from time to time, a copy of which is attached as Annex A to this proxy statement and which is incorporated by reference herein;

 

•

“support agreements” refer to the Support Agreements, dated as of January 7, 2022, by and among Owens & Minor, Merger Sub and each Supporting Apria Stockholder, as amended or modified from time to time, the form of which is attached as Annex B to this proxy statement and which is incorporated by referenced herein;

 

•

“Supporting Apria Stockholder” means each of the following stockholders of Apria that delivered Support Agreements in connection with the execution of the merger agreement: Holdings LLC, Daniel J. Starck and John G. Figuero;

 

•

Apria, following the completion of the merger, is sometimes referred to in this proxy statement as the “surviving corporation.”

 

1

The Parties

Apria (see page 28)

Apria, Inc.

7353 Company Drive

Indianapolis, IN 46237

(800) 990-9799

Apria, Inc. is a provider of integrated home healthcare equipment and related services in the United States. Apria offers a comprehensive range of products and services for in-home care and delivery across three core service lines: (1) home respiratory therapy (including home oxygen and non-invasive ventilation); (2) obstructive sleep apnea treatment (including continuous positive airway pressure and bi-level positive airway pressure devices, and patient support services); and (3) negative pressure wound therapy.

Additionally, Apria supplies a wide range of home medical equipment and other products and services to help improve the quality of life for patients with home care needs. Apria’s revenues are generated through fee-for-service and capitation arrangements with payors for equipment, supplies, services and other items it rents or sells to patients. Through its offerings, Apria also provide patients with a variety of clinical and administrative support services and related products and supplies, most of which are prescribed by a physician as part of a care plan.

The Apria common stock is traded on NASDAQ under the ticker symbol “APR”.

Apria’s principal executive offices are located at 7353 Company Drive, Indianapolis, IN 46237 and Apria’s telephone number is (800) 990-9799. Apria’s corporate web address is www.apria.com. The information provided on the Apria website is not part of this proxy statement and is not incorporated in this proxy statement by reference or by any other reference to Apria’s website provided in this proxy statement.

Additional information about Apria is contained in its public filings with the Securities and Exchange Commission (the “SEC”), which filings are incorporated by reference herein. See the section of this proxy statement entitled “Where You Can Find Additional Information” beginning on page 112.

Owens & Minor (see page 28)

Owens & Minor, Inc.

9120 Lockwood Boulevard

Mechanicsville, Virginia 23116

(804) 723-7000

Owens & Minor, Inc. is a global healthcare solutions company that incorporates product manufacturing, distribution support and innovative technology services to deliver significant and sustained value across the breadth of the industry – from acute care to patients in their home. Operating continuously since 1882 from its headquarters in Richmond, Virginia, Owens & Minor has grown into a FORTUNE 500 company with operations located across North America, Asia, Europe and Latin America. Owens & Minor common stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “OMI”.

Owens & Minor’s principal executive offices are located at 9120 Lockwood Boulevard, Mechanicsville, Virginia 23116 and its telephone number is (804) 723-7000. Owens & Minor’s corporate web address is www.owens-minor.com. The information provided on Owens & Minor website is not part of this proxy statement and is not incorporated in this proxy statement by reference or by any other reference to Owens & Minor’s website provided in this proxy statement.

 

2

Merger Sub (see page 29)

StoneOak Merger Sub Inc.

c/o Owens & Minor, Inc.

9120 Lockwood Boulevard

Mechanicsville, Virginia 23116

(804) 723-7000

Merger Sub, a Delaware corporation and an indirect, wholly owned subsidiary of Owens & Minor, was formed and exists solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its incorporation and activities undertaken in connection with Owens & Minor’s acquisition of Apria. Upon completion of the merger, Merger Sub will merge with and into Apria, and Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at c/o Owens and Minor, Inc., 9120 Lockwood Boulevard, Mechanicsville, Virginia 23116 and its telephone number is (804) 723-7000.

The Special Meeting

Date, Time and Place (see page 30)

The special meeting is scheduled to be held online via live audio webcast at www.virtualshareholdermeeting.com/APR2022SM on [●], 2022 at [●], Eastern Time. For the health and well-being of Apria’s stockholders, employees and directors, the special meeting will be held in a virtual meeting format only, with no physical in-person meeting.

Purpose of the Meeting (see page 30)

At the special meeting, Apria stockholders will be asked to consider and vote on the following proposals:

 

•

a proposal to adopt the merger agreement (the “merger proposal”), which is further described in the sections of this proxy statement entitled “The Merger Proposal (Proposal 1)” and “The Merger Agreement,” beginning on pages 36 and 74, respectively; a copy of the merger agreement is attached to this proxy statement as Annex A and is incorporated herein by reference;

 

•

a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Apria to its named executive officers that is based on or otherwise relates to the merger (the “named executive officer merger-related compensation proposal”), which is further described in the sections of this proxy statement entitled “The Merger Proposal (Proposal 1)—Interests of Apria’s Executive Officers and Directors in the Merger” and “Advisory Vote On Named Executive Officer Merger-Related Compensation Proposal (Proposal 2)” beginning on pages 58 and 102, respectively; and

 

•

a proposal to adjourn the special meeting, from time to time, if necessary or appropriate, as determined in good faith by the Apria Board, including for the purpose of soliciting additional votes for the approval of the merger proposal if there are insufficient votes at the time of the special meeting to approve the merger proposal (the “adjournment proposal”), which is further described in the section of this proxy statement entitled “The Adjournment Proposal (Proposal 3)” beginning on page 103.

The Apria Board has reviewed and considered the terms and conditions of the proposed merger. After consulting with its outside legal counsel and financial advisors and after consideration of various factors more fully described in this proxy statement, the Apria Board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, and (ii) authorized and approved the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger. The Apria Board unanimously recommends that Apria stockholders vote “FOR” the merger proposal, “FOR” the named executive officer merger-related compensation proposal and “FOR” the adjournment proposal.

 

3

The affirmative vote of holders of a majority in voting power of the outstanding shares of Apria common stock entitled to vote as of the close of business on the record date to adopt the merger agreement at the special meeting is a condition to the completion of the merger. If the Apria stockholders fail to approve the merger proposal, the merger will not occur.

Record Date; Stockholders Entitled to Vote (see page 31)

Only holders of record of Apria common stock at the close of business on [●], 2022, the record date for the special meeting (the “record date”), will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting.

Holders of record of Apria common stock are entitled to one vote for each share of Apria common stock they own of record at the close of business on the record date. At the close of business on the record date, there were [●] shares of Apria common stock issued and outstanding, held by approximately [●] holders of record.

Quorum (see page 31)

Under Apria’s bylaws, the presence at the special meeting, in person or by proxy, of the holders of record of a majority in the voting power of the issued and outstanding shares of Apria common stock entitled to vote thereat at the close of business on the record date will constitute a quorum. There must be a quorum for business (other than the adjournment proposal) to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment of the special meeting and may subject Apria to additional expense.

If you attend the special meeting or if you submit (and do not thereafter revoke) a proxy by duly executing and returning a proxy card or by telephone or through the Internet, even if you abstain from voting, your shares of Apria common stock will be counted for purposes of determining whether a quorum is present at the special meeting. In the event that a quorum is not present at the special meeting or additional votes must be solicited to adopt the merger agreement, the meeting may be adjourned or postponed to solicit additional proxies.

Required Vote (see page 31)

The approval of the merger proposal requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of Apria common stock entitled to vote at the close of business on the record date.

Each of Holdings LLC, Daniel J. Starck and John G. Figueroa has entered into a support agreement with Owens & Minor and Merger Sub, pursuant to which such Supporting Apria Stockholder has agreed to vote its or his shares of Apria common stock to approve the merger proposal, subject to the terms and conditions set forth therein. In the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the obligations of Holdings LLC under the support agreement to which it is a party will only extend to shares held by Holdings LLC representing 33% of the total voting power of the outstanding shares of Apria common stock entitled to vote on the merger proposal (rounded down to the nearest whole share). See the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Support Agreements” on page 68.

As of the record date for the special meeting, (i) the Supporting Apria Stockholders collectively owned approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting and (ii) in the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the shares of Apria common stock held by the Supporting Apria Stockholders and subject to the support agreements will constitute approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting.

 

4

Assuming a quorum is present, approval of the named executive officer merger-related compensation proposal (on a non-binding basis) requires the affirmative vote of the holders of a majority in voting power of the shares of Apria common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Approval of the adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the shares of Apria common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.

Voting at the Special Meeting (see page 33)

If your shares are registered directly in your name with Apria’s transfer agent, you are considered a “stockholder of record.” Stockholders of record can vote their shares of Apria common stock in the following four ways:

 

•

By Internet—You may submit your proxy by going to www.proxyvote.com and by following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your proxy card in order to submit a proxy to vote by Internet.

 

•

By Telephone—You may submit your proxy by dialing 1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number included on your proxy card in order to submit a proxy to vote by telephone.

 

•

By Mail—You may submit a proxy to vote by mail by completing and signing the proxy card where indicated and by mailing the card in the envelope that will be provided to you. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity.

 

•

At the Special Meeting (Virtually)—If you are a stockholder of record and prefer to vote your shares online at the special meeting, you will need the control number on your proxy card or voting instruction card to be able to vote during the special meeting and to examine the list of the stockholders entitled to vote at the special meeting during the special meeting. Instructions on how to attend and participate online at the special meeting are posted at www.virtualshareholdermeeting.com/APR2022SM.

Even if you plan to attend the special meeting, Apria encourages you to submit a proxy in advance by Internet, telephone or mail to ensure that your vote will be counted even if you later decide not to attend the special meeting.

If your shares are held by your broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a form from your broker, bank or other nominee seeking instruction from you as to how your shares should be voted. You should instruct your broker, bank or other nominee how to vote your shares on each proposal in accordance with your voting instruction form. If you beneficially own your shares and receive a voting instruction form, you can vote by following the instructions on your voting instruction form. Please refer to information from your bank, broker or other nominee on how to submit voting instructions.

You may revoke your proxy at any time prior to the vote at the special meeting by (i) sending a written statement to that effect to Apria’s Corporate Secretary, (ii) submitting another proxy to vote by Internet or telephone, (iii) submitting a properly signed proxy card with a later date, or (iv) attending the special meeting and voting online. Attendance at the special meeting will not, in and of itself, result in the revocation of a proxy or cause your shares of Apria common stock to be voted. If you hold shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee.

Apria recommends that you submit a proxy to vote your shares as soon as possible, even if you are planning to attend the special meeting to ensure that your shares are represented and voted at the meeting and so that the vote count will not be delayed.

 

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Abstentions and Broker Non-Votes (see page 32)

At the special meeting, abstentions will be counted as present for purposes of determining whether a quorum exists. Abstaining from voting will have the same effect as a vote “AGAINST” the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal.

If no instruction as to how to vote is given (including no instruction to abstain from voting) in an executed, duly returned and not revoked proxy, the proxy will have the same effect as a vote “FOR” the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal.

Broker non-votes are shares held in “street name” by brokers, banks and other nominees that are present or represented by proxy at the special meeting, but with respect to which the broker, bank or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such broker, bank or other nominee does not have discretionary voting power on such proposal. Because, under NASDAQ rules, brokers, banks and other nominees holding shares in “street name” do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Apria common stock held in “street name” does not give voting instructions to the broker, bank or other nominee, then those shares will not be counted as present in person or by proxy at the special meeting. As the vote to approve the merger proposal is based on the total number of shares of Apria common stock outstanding at the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting, if you fail to issue voting instructions to your broker, bank or other nominee, it will have the same effect as a vote “AGAINST” the merger proposal. If you fail to issue voting instructions to your broker, bank or other nominee, it will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal.

Solicitation of Proxies (see page 34)

The Apria Board is soliciting your proxy, and Apria will bear the cost of soliciting proxies. Innisfree M&A Incorporated has been retained to assist with the solicitation of proxies. Innisfree M&A Incorporated will be paid approximately $15,000, plus certain additional per-service fees, and will be reimbursed for certain fees and expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, banks and other nominees to the beneficial owners of shares of Apria common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by Innisfree M&A Incorporated or, without additional compensation, by certain of Apria’s directors, officers and employees.

Adjournment (see page 35)

In addition to the merger proposal and the named executive officer merger-related compensation proposal, Apria stockholders are also being asked to approve the adjournment proposal, which will enable the adjournment of the special meeting from time to time, if necessary or appropriate, as determined in good faith by the Apria Board, including for the purpose of soliciting additional votes in favor of the merger proposal if there are not sufficient votes at the time of the special meeting to approve the merger proposal. If a quorum is not present, the person presiding at the special meeting may adjourn the special meeting from time to time until a quorum is present. If the adjournment is for more than 30 days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you return a proxy and do not indicate how you wish to vote on the adjournment proposal, your shares will be voted in favor of the adjournment proposal.

 

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The Merger

The rights and obligations of the parties to the merger agreement are governed by the specific terms and conditions of the merger agreement and not by any summary or other information in this proxy statement. Therefore, the information in this proxy statement regarding the merger agreement and the merger is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated herein by reference. You are encouraged to read the merger agreement carefully and in its entirety because it is the principal legal agreement that governs the merger.

Structure of the Merger (see page 36)

If the merger is completed, then at the effective time of the merger (the “effective time”), Merger Sub will merge with and into Apria, the separate corporate existence of Merger Sub will cease and Apria will survive the merger as an indirect, wholly owned subsidiary of Owens & Minor.

What Stockholders Will Receive in the Merger (see page 36)

Upon the terms and subject to the conditions of the merger agreement, at the effective time, Apria stockholders will have the right to receive $37.50 in cash, without interest and subject to any applicable withholding taxes, for each share of Apria common stock that they own that is issued and outstanding immediately prior to the effective time of the merger (other than (x) shares of Apria common stock that are held by any person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (“appraisal shares”) and (y) shares of Apria common stock that are (i) held by Apria as treasury stock or owned by Owens & Minor or Merger Sub or (ii) owned by any direct or wholly owned subsidiary of Owens & Minor (other than Merger Sub) or Apria (such shares in clause (y), “owned company shares”)).

Treatment of Apria Equity Awards (see page 36)

The merger agreement provides that outstanding equity-based awards (collectively, the “Apria equity awards”) under (i) the Apria, Inc. 2021 Omnibus Incentive Plan, effective February 10, 2021, (ii) the Second Amended and Restated Apria, Inc. Long-Term Incentive Plan (2019—2021 With Successive Annual Extension Options), effective February 16, 2021 and (iii) the Apria, Inc. 2015 Stock Plan, effective February 8, 2021, as amended by that certain Omnibus Amendment, dated February 12, 2021, as applicable (collectively, the “Apria stock plans”), will be treated as set forth below.

Restricted Stock Units. Immediately prior to the effective time, each Apria restricted stock unit granted pursuant to any Apria stock plan (“Apria RSU”), whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50.

Performance Stock Units. Immediately prior to the effective time, each Apria performance stock unit granted pursuant to any Apria stock plan (“Apria PSU”), whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50, based on attainment of the applicable performance metrics at the greater of target or actual level of performance as of the closing date, as determined in good faith by the Apria Board or a committee thereof in reasonable consultation with Owens & Minor prior to the effective time.

LTIP Awards. Immediately prior to the effective time, each vested Apria long-term incentive plan award granted pursuant to any Apria stock plan (“Apria LTIP Award”) that is outstanding immediately prior to the

 

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effective time (after giving effect to the incremental vesting resulting from the closing, which will be deemed to constitute a “Change of Control” for purposes of such Apria LTIP Award) will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to (i) the number of shares of Apria common stock represented by the Apria LTIP Award deemed earned as of immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing as described above), as determined by the Apria Board or a committee thereof after reasonable consultation with Owens & Minor prior to the effective time multiplied by (ii) $37.50. Any unvested portion of an Apria LTIP Award that is outstanding immediately prior to the effective time after giving effect to the incremental vesting resulting from the closing as described above will be cancelled for no consideration in accordance with the terms of the applicable Apria stock plan.

Stock Appreciation Rights. Immediately prior to the effective time, each Apria stock appreciation right granted pursuant to any Apria stock plan (“Apria SAR”) that is outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to the total value of the payout that would have been earned in accordance with the terms of the applicable governing documents (including any previously unpaid dividends or dividend equivalents thereon, in accordance with such governing documents).

Any consideration payable in respect of Apria equity awards will be paid through the payroll systems of the surviving corporation or an affiliate thereof promptly after the effective time but no later than (i) with respect to Apria equity awards other than Apria LTIP Awards, the second payroll date after the effective time and (ii) with respect to Apria LTIP Awards, no later than required under the terms of the applicable governing documents, including the applicable Apria stock plan. Notwithstanding anything herein to the contrary, with respect to any Apria equity award that constitutes nonqualified deferred compensation subject to Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and that Apria determines prior to the effective time is not eligible to be terminated in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(B), such payment will be made at the earliest time permitted under the applicable Apria stock plan that will not trigger a tax or penalty under Section 409A of the Code.

Recommendation of the Apria Board (see page 46)

The Apria Board has reviewed and considered the terms and conditions of the proposed merger. After consulting with its outside legal counsel and financial advisors and after consideration of various factors, the Apria Board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, (ii) authorized and approved the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger, (iii) resolved that the merger agreement be submitted for adoption at a meeting of the stockholders of Apria in accordance with applicable law, the merger agreement and Apria’s bylaws and (iv) recommended that Apria’s stockholders vote to adopt the merger agreement. Certain factors considered by the Apria Board in reaching its decision to adopt the merger agreement can be found in “The Merger Proposal (Proposal 1)—Recommendation of the Apria Board and Reasons for the Merger” beginning on page 46.

The Apria Board unanimously recommends that the Apria stockholders vote:

 

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“FOR” the merger proposal;

 

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“FOR” the named executive officer merger-related compensation proposal; and

 

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“FOR” the adjournment proposal.

Opinion of Apria’s Financial Advisor (see page 50)

Goldman Sachs & Co. LLC (“Goldman Sachs”) delivered its opinion to the Apria Board that, as of January 7, 2022 and based upon and subject to the factors and assumptions set forth therein, the $37.50 in cash

 

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per share to be paid to the holders of shares of Apria common stock pursuant to the merger agreement was fair from a financial point of view to the holders of shares of Apria common stock. For further information, see the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor” beginning on page 50. The full text of the written opinion of Goldman Sachs, dated January 7, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C.

Goldman Sachs provided advisory services and its opinion for the information and assistance of the Apria Board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Apria common stock should vote with respect to the merger or any other matter. Pursuant to an engagement letter between Apria and Goldman Sachs, Apria has agreed to pay Goldman Sachs a transaction fee that, based on the information available as of the date of the announcement of the merger, is estimated to be approximately $21,100,000, $5,000,000 of which became payable upon the execution of the merger agreement and the remainder of which is contingent upon the consummation of the merger.

Interests of Apria’s Executive Officers and Directors in the Merger (see page 58)

In considering the recommendation of the Apria Board that Apria stockholders vote to approve the merger proposal, Apria stockholders should be aware that certain directors and executive officers of Apria may have interests in the proposed merger that are different from, or in addition to, the interests of Apria stockholders generally and which may create potential conflicts of interest. The Apria Board was aware of these interests and considered them when it adopted the merger agreement and approved the merger.

These interests include:

 

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Apria’s executive officers are entitled to severance protections and benefits under the merger agreement and the related disclosure letter delivered by Apria in connection therewith (the “Apria disclosure letter”) in the event of a termination of employment without “cause” or a resignation for “good reason” within 24 months following the completion of the merger;

 

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pursuant to the merger agreement, immediately prior to the effective time, the Apria RSUs, Apria PSUs and Apria SARs held by Apria’s executive officers and members of the Apria Board will fully vest and be converted into the right to receive cash payments based on the merger consideration;

 

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pursuant to the merger agreement, immediately prior to the effective time, the Apria LTIP Awards held by Apria’s executive officers will partially vest pursuant to their terms and be converted into the right to receive cash payments based on the merger consideration; and

 

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Apria’s directors and officers are entitled to advancement of expenses, indemnification, exculpation and insurance arrangements pursuant to the merger agreement and Apria’s organizational documents and under certain indemnification agreements.

These interests are discussed in more detail in the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Interests of Apria’s Executive Officers and Directors in the Merger,” beginning on page 58.

Financing of the Merger (see page 65)

Owens & Minor has obtained debt financing commitments pursuant to that certain Commitment Letter, dated as of January 7, 2022 (as amended and restated by that certain Amended and Restated Commitment Letter, dated as of January 27, 2022, and as further amended, restated, amended and restated, supplemented or otherwise modified, the “debt commitment letter”) for the transactions contemplated by the merger agreement, the aggregate proceeds of which will be used (i) to pay the consideration for the merger, (ii) to repay in full all outstanding indebtedness of Apria and its subsidiaries under Apria’s existing U.S. credit facility, (iii) to pay the

 

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fees, costs and expenses related to the merger and the refinancing of Apria’s existing U.S. credit facility and (iv) for working capital and general corporate purposes. JPMorgan Chase Bank, N.A. and the other lenders party to the debt commitment letter (the “commitment parties”), have committed to provide, upon the terms and subject to the conditions set forth in the debt commitment letter, (x) a term loan B facility in an aggregate principal amount of $1.9 billion and (y) an increase to their revolving credit commitments under Owens & Minor’s existing credit agreement in an aggregate principal amount of $150 million (which existing credit agreement currently provides for borrowing capacity of $300 million). The consummation of the merger is not subject to any financing conditions.

Antitrust Review Required for the Merger (see page 67)

As further discussed in the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Antitrust Review Required for the Merger” beginning on page 67, completion of the merger is conditioned upon the expiration or early termination of the waiting period (and any extension thereof) applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). Under the merger agreement, each of Apria and Owens & Minor has agreed to use their respective reasonable best efforts to, among other things, consummate the merger in the most expeditious manner reasonably practicable.

Under the HSR Act, the merger may not be completed until notifications have been filed with and certain information has been furnished to the Antitrust Division of the Department of Justice (the “Antitrust Division”) and the Federal Trade Commission (the “FTC”) and all statutory waiting period requirements have been satisfied. Apria and Owens & Minor filed notifications with the Antitrust Division and the FTC on January 24, 2022.

While Apria has no reason to believe it will not be possible to complete the antitrust reviews in a timely manner, there is no certainty that these reviews will be completed within the period of time contemplated by the merger agreement or that the completion of any of such reviews would not be conditioned upon actions that would be materially adverse to Apria or Owens & Minor, or that a challenge to the merger will not be made.

Material U.S. Federal Income Tax Consequences of the Merger (see page 108)

The exchange of Apria common stock for cash pursuant to the merger generally will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state and local and other tax laws. You should read the section of this proxy statement entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 108. The tax consequences of the merger to you will depend on your particular circumstances. You should consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Appraisal Rights (see page 69)

Stockholders are entitled to appraisal rights under the General Corporation Law of the State of Delaware (the “DGCL”) in connection with the merger, provided that such stockholders comply with the requirements of Section 262 of the DGCL. Any stockholder who does not vote in favor of the merger proposal and who otherwise complies with the requirements of Section 262 has the right to seek appraisal of his, her or its shares of Apria common stock and to receive payment in cash for the “fair value” of his, her or its shares of Apria common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be fair value. The ultimate amount stockholders receive in an appraisal proceeding may be less than, equal to or more than the amount a stockholder would have received under the merger agreement.

To exercise appraisal rights, a stockholder must deliver a written demand for appraisal to Apria before the vote is taken on the adoption of the merger agreement, must not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement and must continue to hold the shares of Apria common stock of record

 

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from the date of making the demand for appraisal through the effective time of the merger. As such, merely voting against, abstaining or failing to vote on the proposal to adopt the merger agreement will not preserve your right to appraisal under the DGCL. A stockholder’s failure to strictly comply with the procedures specified under the DGCL will result in the loss of such stockholder’s appraisal rights. See the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Appraisal Rights” beginning on page 69 and the text of the Delaware appraisal right statute reproduced in its entirety as Annex D to this proxy statement. Only a stockholder of record may submit a demand for appraisal. If you hold your shares of Apria common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such bank, brokerage firm or nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly.

Expected Timing of the Merger

Apria expects to complete the merger during the first half of 2022. However, the merger is subject to antitrust review and various other conditions, and it is possible that factors outside of the control of Apria or Owens & Minor could result in the merger being completed at a later time, or not at all. There may be a substantial amount of time between the special meeting and the completion of the merger. Apria expects to complete the merger promptly following the receipt of all required clearances and approvals and the satisfaction or, to the extent permitted, waiver of the other conditions to the consummation of the merger.

Non-Solicitation of Acquisition Proposals (see page 84)

Until the earlier of the effective time and the valid termination of the merger agreement, Apria is subject to restrictions on its ability to solicit third party proposals relating to alternative transactions or to provide information to and engage in discussions or negotiations with a third party in relation to an alternative transaction (subject to certain exceptions prior to the approval of the merger proposal by Apria stockholders at the special meeting).

Specifically, except as expressly permitted by the merger agreement, Apria has agreed to, and has agreed to cause each of its subsidiaries to, and has agreed to instruct and use its reasonable best efforts to cause its and their respective representatives to (i) upon the execution of the merger agreement, immediately cease any solicitation, discussions or negotiations with any persons that may be ongoing with respect to a takeover proposal (as defined below), cease providing any information with respect to Apria and its subsidiaries to such person and request the prompt return or destruction of all confidential information concerning Apria and its subsidiaries in such person’s possession or control and (ii) until the earlier of the effective time and the valid termination of the merger agreement, not, directly or indirectly:

 

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initiate, solicit or knowingly encourage (including by way of furnishing non-public information) the submission of any inquiries regarding, or the making of any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal;

 

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engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information in connection with, or for the purpose of, encouraging any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal;

 

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execute or enter into any letter of intent, memorandum of understanding, agreement in principle, license agreement, merger agreement, acquisition agreement or other similar agreement (other than, for the avoidance of doubt, an acceptable confidentiality agreement (as defined below)) relating to a takeover proposal; or

 

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resolve or agree to do any of the foregoing.

The parties have agreed that, notwithstanding the foregoing non-solicitation restrictions, if at any time prior to the adoption of the merger agreement by Apria’s stockholders, Apria or any of its representatives receives a

 

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bona fide takeover proposal (as defined in the section of this proxy statement entitled “The Merger Agreement—Non-Solicitation of Acquisition Proposals”), which takeover proposal was made or renewed after the date of the merger agreement and did not result from any material breach of the non-solicitation restrictions described above, Apria and its representatives may contact such person or group of persons making the takeover proposal solely to clarify the terms and conditions thereof or to request that such takeover proposal made orally be made in writing. If the Apria Board or any committee thereof determines in good faith, after consultation with its financial advisor(s) and outside legal counsel, that such takeover proposal constitutes or would reasonably be expected to result in or lead to a superior proposal (as defined in the section of this proxy statement entitled “The Merger Agreement—Non-Solicitation of Acquisition Proposals”), and that failure to take such action would be inconsistent with its directors’ fiduciary duties under applicable law, Apria and any of its representatives may:

 

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enter into an acceptable confidentiality agreement with the person or group of persons making the takeover proposal;

 

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furnish, pursuant to an acceptable confidentiality agreement, information (including non-public information) with respect to Apria and its subsidiaries to the person or group of persons who has made such takeover proposal and its or their respective representatives (provided that Apria reasonably promptly provides (and, in any event, within twenty-four hours) to Owens & Minor any non-public information concerning Apria or any of its subsidiaries that is provided to any person given such access which was not previously provided to Owens & Minor or its representatives); and

 

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following the execution of an acceptable confidentiality agreement, engage in or otherwise participate in discussions or negotiations regarding such takeover proposal with and providing information and other access to the person or group of persons making such takeover proposal and its or their representatives.

Conditions to the Closing of the Merger (see page 97)

Each party’s obligation to effect the merger is subject to the satisfaction or waiver of various conditions, which include the following:

 

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the merger agreement has been adopted by the affirmative vote (in person or by proxy) of the holders of a majority of the outstanding shares of Apria common stock entitled to vote at a meeting of the stockholders of Apria;

 

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the waiting period (and any extension thereof) applicable to the consummation of the merger under the HSR Act shall have either expired or early termination thereof shall have been granted, and no voluntary agreement between Owens & Minor, Merger Sub or Apria and any governmental authority not to consummate the merger shall be in effect; and

 

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no judgment enacted, promulgated, issued, entered, amended or enforced by any governmental authority of competent jurisdiction or any applicable law shall be in effect or shall have been entered or enacted, in each case, enjoining, making illegal or otherwise prohibiting consummation of the merger;

 

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Apria’s, Owens & Minor’s and Merger Sub’s respective representations and warranties in the merger agreement shall be true and correct as of the date of the merger agreement and as of the effective time in the manner described in the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger” beginning on page 97;

 

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each of Apria, Owens & Minor and Merger Sub has complied with or performed in all material respects its respective obligations required to be complied with or performed by it under the merger agreement prior to the closing in the manner described in the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger” beginning on page 97; and

 

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the delivery of an officer’s certificate by each of Apria and Owens & Minor certifying that the conditions with respect to accuracy of representations and warranties and compliance with obligations, agreements and covenants under the merger agreement.

 

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In addition, Owens & Minor and Merger Sub are not obligated to effect the merger under the merger agreement if there is an action pending in a U.S. federal district court that has been instituted by the U.S. Department of Justice or Federal Trade Commission seeking a judgment to prevent, prohibit or make illegal the consummation of the merger pursuant to an antitrust law.

Termination of the Merger Agreement (see page 98)

Apria or Owens & Minor may terminate the merger agreement under the following circumstances:

 

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by the mutual written consent of Apria and Owens & Minor;

 

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if the merger has not been consummated on or prior to July 7, 2022 (the “outside date”) (provided, that the right to terminate the merger agreement under this clause shall not be available to any party if the breach by such party of its representations and warranties set forth in the merger agreement or the failure of such party to perform any of its obligations under the merger agreement has been a principal cause of or primarily resulted in the merger not being consummated by the outside date);

 

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if any restraint enjoining, making illegal or otherwise prohibiting consummation of the merger is in effect and has become final and non-appealable (provided that the right to terminate the merger agreement under this clause will not be available to any party if the breach by such party of its representations and warranties set forth in the merger agreement or the failure of such party to perform any of its obligations under the merger agreement has been a principal cause of the issuance or entry of such restraint (or if the issuance or entry of such restraint resulted principally from such breach) or if such party has failed to use the required efforts to prevent the issuance or entry or issuance of and to remove such restraint in accordance with its obligations with to use certain efforts to consummate the merger (as described in the section of this proxy statement entitled “The Merger Agreement—Efforts to Complete the Merger” beginning on page 89)); or

 

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if a meeting of the stockholders of Apria to vote on the adoption of the merger agreement has been held (including any adjournments or postponements thereof) and has concluded and the approval of Apria’s stockholders of the merger agreement shall not have been obtained.

Owens & Minor may terminate the merger agreement:

 

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if Apria breaches any of its representations or warranties or fails to perform any of its covenants or agreements set forth in the merger agreement, which breach or failure to perform would give rise to the failure to satisfy certain conditions to closing in the merger agreement, and such breach or failure is incapable of being cured prior to the outside date, or if capable of being cured by the outside date, Apria shall not have cured the breach or failure to perform within twenty calendar days (but in no event later than the outside date) following receipt by Apria of written notice of such breach or failure to perform (provided that neither Owens & Minor nor Merger Sub is then in breach of any of its representations or warranties or has failed to perform any of its covenants or agreements such that Apria may terminate the merger agreement pursuant to its right described below to terminate the merger agreement in the event Owens & Minor or Merger Sub breaches certain of its representations or warranties or fails to perform certain covenants or agreements and thereafter is unable or does not timely cure such breaches or failures); or

 

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if the Apria Board or a committee thereof shall have made an adverse recommendation change (as described in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation” beginning on page 86).

Apria may terminate the merger agreement:

 

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if Owens & Minor or Merger Sub breaches any of its representations or warranties or fails to perform any of its covenants or agreements set forth in the merger agreement, which breach or failure to perform would give rise to a failure to satisfy certain conditions to closing in the merger agreement and

 

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such breach or failure is incapable of being cured prior to the outside date, or if capable of being cured by the outside date, Owens & Minor and Merger Sub shall not have cured the breach or failure to perform within twenty calendar days (but in no event later than the outside date) following receipt by Owens & Minor or Merger Sub of written notice of such breach or failure to perform (provided Apria is not then in breach of any of its representations or warranties or has failed to perform any of its covenants or agreements such that Owens & Minor may terminate the merger agreement pursuant to its right described above to terminate the merger agreement in the event Apria breaches certain of its representations or warranties or fails to perform certain covenants or agreements and thereafter is unable or does not timely cure such breach or failure); or

 

•

if, prior to obtaining the approval of Apria’s stockholders of the adoption of the merger agreement, the Apria Board has authorized Apria to concurrently enter into a company acquisition agreement providing for a superior proposal (as described above in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation” beginning on page 86), subject to Apria’s payment prior to or concurrently with such termination (and as a condition to such termination) of the Apria termination fee (as described below in the section of this proxy statement entitled “The Merger Agreement—Termination Fee” beginning on page 100).

Termination Fee (see page 100)

Upon termination of the merger agreement, under certain specified circumstances, Apria may be required to pay a termination fee of $41,970,000 to Owens & Minor pursuant to the terms and conditions of the merger agreement. See the section of this proxy statement entitled “The Merger Agreement—Termination Fee” beginning on page 100 for a discussion of the circumstances under which Apria will be required to pay a termination fee.

Directors’ and Officers’ Indemnification and Insurance (see page 93)

Owens & Minor has agreed that from and after the effective time, it will cause, unless otherwise required by law, the certificate of incorporation and bylaws of the surviving corporation to contain provisions no less favorable to indemnitees with respect to limitation of liabilities of directors and officers and indemnification than were in Apria’s organizational documents as in effect as of the date of the merger agreement, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the indemnitees. Additionally, for the six-year period commencing immediately after the effective time, the surviving corporation will maintain in effect Apria’s current directors’ and officers’ liability insurance and fiduciary liability insurance covering acts or omissions occurring at or prior to the effective time with respect to those individuals who are currently (and any additional individuals who prior to the effective time become) covered by Apria’s directors’ and officers’ liability insurance and fiduciary liability insurance policies on terms and scope with respect to such coverage, and in amount, no less favorable to such individuals than those of such policy in effect on the date of the merger agreement (or Owens & Minor may substitute therefor policies, issued by reputable insurers, of at least the same coverage with respect to matters existing or occurring prior to the effective time, including a “tail” policy), subject to the cost limitations set forth in the merger agreement.

Delisting and Deregistration of Apria Common Stock (see page 91)

As promptly as practicable following the completion of the merger, Apria common stock will be delisted from NASDAQ and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Market Prices of Apria Common Stock (see page 104)

The closing sales price of Apria common stock on [●], 2022, the latest practicable date before the printing of this proxy statement, was $[●] per share. The closing sales price of Apria common stock on NASDAQ on January 7, 2022, the last trading day prior to the announcement of the execution of the merger agreement, was $29.72 per share. You are urged to obtain current market quotations for Apria common stock when considering whether to approve the merger proposal.

 

14

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following are brief answers to certain questions that you may have regarding the merger, the special meeting and the proposals being considered at the special meeting. Apria urges you to carefully read the remainder of this proxy statement because the information in this section does not provide all of the information that might be important to you with respect to the merger and the special meeting. Additional important information is also contained in the annexes attached to this proxy statement and the documents referred to or incorporated by reference into this proxy statement.

 

Q.	Why am I receiving these proxy materials?

 

A.

On January 7, 2022, Apria entered into a merger agreement providing for the merger of Merger Sub with and into Apria, pursuant to which Apria will survive the merger as an indirect, wholly owned subsidiary of Owens & Minor. A copy of the merger agreement is attached to this proxy statement as Annex A and is incorporated by reference herein. In order to complete the merger, Apria stockholders must vote to adopt the merger agreement. The approval of the merger proposal by Apria’s stockholders is a condition to the consummation of the merger. See the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger” beginning on page 97. You are receiving this proxy statement in connection with the solicitation by Apria of proxies of Apria stockholders in favor of the merger proposal.

You are also being asked to vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Apria to its named executive officers that is based on or otherwise relates to the merger and on a proposal to adjourn the special meeting, from time to time, if necessary or appropriate, as determined in good faith by the Apria Board, including for the purpose of soliciting additional votes for the approval of the merger proposal if there are insufficient votes at the time of the special meeting to approve the merger proposal.

This proxy statement, which you should read carefully, contains important information about the merger, the merger agreement, the special meeting and the matters to be voted on thereat. The enclosed materials allow you to submit a proxy to vote your shares without attending the special meeting and to ensure that your shares are represented and voted at the special meeting.

Your vote is very important. Even if you plan to attend the special meeting, you are encouraged to submit a proxy as soon as possible.

 

Q.	What is the proposed transaction?

 

A.

If the merger proposal is approved by Apria stockholders and the other conditions to the consummation of the merger contained in the merger agreement are satisfied or waived, Merger Sub will merge with and into Apria. Apria will be the surviving corporation in the merger and will become privately held as an indirect, wholly owned subsidiary of Owens & Minor.

 

Q.	What will I receive in the merger if it is completed?

 

A.

Under the terms of the merger agreement, if the merger is completed, you will be entitled to receive $37.50 in cash, without interest and subject to any applicable withholding taxes, for each share of Apria common stock you own (other than any appraisal shares and owned company shares) immediately prior to the effective time of the merger, which represents a premium of approximately 26% over Apria’s closing stock price on January 7, 2022, the last trading day prior to the announcement of the execution of the merger agreement. For example, if you own 100 shares of Apria common stock (other than any appraisal shares and owned company shares) immediately prior to the effective time of the merger, you will be entitled to receive $3,750.00 in cash in exchange for such shares, without interest and subject to any applicable withholding taxes. You will not be entitled to receive shares in the surviving corporation or in Owens & Minor.

 

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Q.	Where and when is the special meeting, and who may attend?

 

A.

The special meeting will be held online via live audio webcast at www.virtualshareholdermeeting.com/APR2022SM on [●], 2022 at [●], Eastern Time. You will need the control number on your proxy card or voting instruction card to be able to vote or ask questions during the special meeting. Instructions on how to attend and participate online at the special meeting are posted at www.virtualshareholdermeeting.com/APR2022SM. If you are an Apria stockholder as of the record date (or a proxy thereof), you should enter your control number and follow the prompt to log in.

Online check-in will begin at [●], Eastern Time on [●], 2022 and you should allow ample time for the online check-in proceedings. Technicians will be standing by and ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the special meeting log-in page.

 

Q.	Why is the special meeting a virtual, online meeting?

 

A.

To support the health and well-being of Apria’s stockholders, employees and directors, the special meeting will be a virtual meeting of stockholders where stockholders will participate by accessing a website using the internet. There will not be a physical meeting location. In light of the continuing public health and safety concerns related to COVID-19, Apria believes that hosting a virtual meeting will facilitate stockholder attendance and participation at the special meeting by enabling stockholders to participate remotely from any location around the world. The special meeting will be governed by certain Rules of Conduct of Meeting, which will be posted at www.virtualshareholdermeeting.com/APR2022SM in advance of the meeting. Apria has designed the virtual special meeting to provide the same rights and opportunities to participate as stockholders would have at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform.

 

Q.	Who can vote at the special meeting?

 

A.

All Apria stockholders of record as of the close of business on [●], 2022, the record date for the special meeting, are entitled to receive notice of, attend and vote at the special meeting or any adjournment thereof. Each share of Apria common stock is entitled to one vote on all matters that come before the meeting. At the close of business on the record date, there were [●] shares of Apria common stock issued and outstanding, held by approximately [●] holders of record.

 

Q.	What matters will be voted on at the special meeting?

 

A.	At the special meeting, you will be asked to consider and vote on the following proposals:

 

•

the merger proposal;

 

•

the named executive officer merger-related compensation proposal; and

 

•

if necessary or appropriate, as determined in good faith by the Apria Board, including because there are insufficient votes at the time of the special meeting to approve the merger proposal, the adjournment proposal.

 

Q.	What is the position of the Apria Board regarding the merger?

 

A.

After consulting with its outside legal counsel and financial advisors and after consideration of various factors, the Apria Board has unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, (ii) authorized and approved the execution, delivery and performance of the merger agreement

 

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and the transactions contemplated thereby, including the merger, and (iii) resolved that the merger agreement be submitted for adoption at a meeting of the stockholders of Apria in accordance with applicable law, the merger agreement and Apria’s bylaws.

 

Q.	How does the Apria Board recommend that I vote on the proposals?

 

A.	Apria’s Board unanimously recommends that you vote:

 

•

“FOR” the merger proposal;

 

•

“FOR” the named executive officer merger-related compensation proposal; and

 

•

“FOR” the adjournment proposal.

 

Q.	What vote is required to approve the merger proposal?

 

A.	The merger proposal will be approved if stockholders holding a majority in voting power of the outstanding shares of Apria common stock entitled to vote as of the close of business on the record date vote “FOR” the proposal.

 

Q.	What vote is required to approve the named executive officer merger-related compensation proposal (on a non-binding, advisory basis) and the adjournment proposal?

 

A.

Assuming a quorum is present, the named executive officer merger-related compensation proposal will be approved if the holders of a majority in voting power of the shares of Apria common stock present in person or represented by proxy at the special meeting and entitled to vote thereon vote “FOR” the named executive officer merger-related compensation proposal.

The adjournment proposal will be approved if holders of a majority in voting power of the shares of Apria common stock present in person or represented by proxy at the special meeting and entitled to vote thereon vote “FOR” the adjournment proposal.

 

Q.	Do you expect the merger to be taxable to Apria stockholders?

 

A.

The exchange of Apria common stock for cash in the merger generally will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state, local or other tax laws. You should read the section of this proxy statement entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 108. The tax consequences of the merger to you will depend on your particular circumstances. You should consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

 

Q.	What other effects will the merger have on Apria?

 

A.

If the merger is completed, Apria common stock will be delisted from NASDAQ and deregistered under the Exchange Act, and Apria will no longer be required to file periodic reports with the SEC with respect to Apria common stock, in each case in accordance with applicable law, rules and regulations. Following the completion of the merger, Apria common stock will no longer be publicly traded and you will no longer have any interest in Apria’s future earnings or growth. In addition, each share of Apria common stock (other than appraisal shares and company owned shares) you hold immediately prior to the effective time of the merger will represent only the right to receive $37.50 in cash, without interest and subject to any applicable withholding taxes. Apria will also become an indirect, wholly owned subsidiary of Owens & Minor at the effective time.

 

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Q.	When is the merger expected to be completed?

 

A.

Assuming timely satisfaction of necessary closing conditions, including the approval by Apria’s stockholders of the merger proposal, the parties to the merger agreement expect to complete the merger in the first half of 2022. However, Apria cannot assure that the merger will be completed by any particular date, if at all. Because the merger is subject to a number of conditions, including the receipt of the approval by Apria’s stockholder of the merger proposal and expiration or early termination of the waiting period applicable to the merger under the HSR Act, the exact timing of the merger cannot be determined at this time and there is no guarantee that the merger will be completed.

 

Q.	What happens if the merger is not completed?

 

A.

If the merger proposal is not approved by Apria stockholders, or if the merger is not completed for any other reason, Apria stockholders will not receive any payment for their shares of Apria common stock in connection with the merger. Instead, Apria will remain an independent public company and shares of Apria common stock will continue to be listed and traded on NASDAQ. Apria may be required to pay Owens & Minor a termination fee of $41,970,000 if the merger agreement is terminated under certain specified circumstances pursuant to the terms of the merger agreement. See the section of this proxy statement entitled “The Merger Agreement—Termination Fee” beginning on page 100 for a discussion of the circumstances under which Apria will be required to pay a termination fee.

 

Q:	Are any Apria stockholders already committed to vote in favor of any of the proposals to be considered and voted on at the special meeting?

 

A:

Yes. Each of Holdings LLC, Daniel J. Starck and John G. Figueroa (each, a “Supporting Apria Stockholder”) have entered into a support agreement with Owens & Minor and Merger Sub (each, a “support agreement”), pursuant to which such Supporting Apria Stockholder has agreed to vote its or his shares of Apria common stock to approve the merger proposal, subject to the terms and conditions set forth therein. In the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the obligations of Holdings LLC under the support agreement to which it is a party will only extend to shares held by Holdings LLC representing 33% of the total voting power of the outstanding shares of Apria common stock entitled to vote on the merger proposal (rounded down to the nearest whole share). See the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Support Agreements” on page 68.

As of the record date for the special meeting, (i) the Supporting Apria Stockholders collectively owned approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting and (ii) in the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the shares of Apria common stock held by the Supporting Apria Stockholders and subject to the support agreements will constitute approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting.

 

Q.	How will Apria’s directors and executive officers vote on the merger proposal?

 

A.

Each of Daniel J. Starck, the Chief Executive Officer of Apria, and John G. Figueroa, the Chairman of the Apria Board, have entered into a support agreement, pursuant to which he has agreed to vote his shares of Apria common stock to approve the merger proposal. Each of the other directors and officers of Apria have informed Apria that, as of the date of this proxy statement, they intend to vote in favor of the merger proposal, although none of such directors and executive officers is obligated to do so.

At the close of business on the record date, the directors and executive officers of Apria collectively owned [●] shares of Apria common stock, representing approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting.

 

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Q.	Do any of Apria’s directors or executive officers have interests in the merger that may differ from or be in addition to my interests as a stockholder?

 

A.

Yes. In considering the recommendation of the Apria Board with respect to the merger proposal, you should be aware that Apria’s directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Apria’s stockholders generally. The Apria Board was aware of and considered these differing interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in unanimously recommending that the merger agreement be adopted by the Apria stockholders. See the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Interests of Apria’s Executive Officers and Directors in the Merger.”

 

Q.	Why am I being asked to consider and vote on the named executive officer merger-related compensation proposal?

 

A.

SEC rules require Apria to seek the approval of its stockholders on a non-binding, advisory basis with respect to certain payments that will or may be made to Apria’s named executive officers in connection with the merger. Approval of the named executive officer merger-related compensation proposal is not required to complete the merger.

 

Q.	Who is soliciting my vote? Who will pay for the cost of this proxy solicitation?

 

A.	The Apria Board is soliciting your vote, and Apria will bear the cost of soliciting proxies.

Innisfree M&A Incorporated has been retained to assist with the solicitation of proxies. Innisfree M&A Incorporated will be paid approximately $15,000, plus certain additional per-service fees, and will be reimbursed for certain fees and expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, banks and other nominees to the beneficial owners of shares of Apria common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by Innisfree M&A Incorporated or, without additional compensation, by certain of Apria’s directors, officers and employees.

 

Q.	What do I need to do now? If I am going to attend the special meeting, should I still submit a proxy?

 

A.

Carefully read and consider the information contained in and incorporated by reference into this proxy statement, including the attached annexes. Whether or not you expect to attend the special meeting online, Apria requests that you submit a proxy to vote your shares as promptly as possible to ensure that your shares may be represented and voted at the special meeting.

 

Q.	How do I vote if my shares are registered directly in my name?

 

A.	If your shares are registered directly in your name with Apria’s transfer agent, you are considered a “stockholder of record.” Stockholders of record can vote their shares of Apria common stock in the following four ways:

 

•

By Internet—You may submit your proxy by going to www.proxyvote.com and by following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your proxy card in order to submit a proxy to vote by Internet.

 

•

By Telephone—You may submit your proxy by dialing 1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number included on your proxy card in order to submit a proxy to vote by telephone.

 

19

•

By Mail—You may submit a proxy to vote by mail by completing and signing the proxy card where indicated and by mailing the card in the envelope that will be provided to you. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity.

 

•

At the Special Meeting (Virtually)—If you are a stockholder of record and prefer to vote your shares online at the special meeting, you will need the control number on your proxy card or voting instruction card to be able to vote during the special meeting and to examine the list of the stockholders entitled to vote at the special meeting during the special meeting. Instructions on how to attend and participate online at the special meeting are posted at www.virtualshareholdermeeting.com/APR2022SM.

Even if you plan to attend the special meeting, you are encouraged to submit a proxy in advance by Internet, telephone or mail to ensure that your shares will be represented and voted at the special meeting if you later decide not to attend the special meeting. Telephone and Internet facilities for the submission of a proxy to vote shares will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on [●], 2022. Proxy cards must be received no later than [●], 2022 in order to ensure that your shares are voted.

 

Q.	How do I vote if my shares are held in the name of my broker, bank or other nominee?

 

A.

If your shares are held by your broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a form from your broker, bank or other nominee seeking instruction from you as to how your shares should be voted. If you beneficially own your shares and receive a voting instruction form, you can vote by following the instructions on your voting instruction form. Please refer to information from your bank, broker or other nominee on how to submit voting instructions.

 

Q.	What is a proxy?

 

A.

A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of Apria common stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Apria common stock is called a “proxy card.”

 

Q:	If a stockholder gives a proxy, how are the shares voted?

 

A.

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way you indicate. When submitting a proxy by mail, Internet or telephone, you may specify whether your shares would be voted “FOR” or “AGAINST” or to abstain from voting on all, some or none of the proposals to come before the special meeting.

If you properly sign and return your proxy card or submit your proxy by telephone or through the Internet but do not include instructions on how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted as recommended by the Apria Board with respect to the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal and, accordingly, will have the same effect as a vote “FOR” each such proposal.

 

Q.	Can I change or revoke my proxy after it has been submitted?

 

A.	Yes. You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the stockholder of record, you may change or revoke your proxy by:

 

•

sending a written statement to that effect to Apria’s Corporate Secretary, which statement must be received no later than [●], 2022;

 

20

•

submitting a new proxy by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m. (Eastern Time) on [●], 2022;

 

•

submitting a properly signed proxy card with a later date; or

 

•

attending the special meeting and voting online.

If you hold shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee. You may also change your vote or revoke your proxy in person at the special meeting if you obtain a proxy, executed in your favor, from the stockholder of record (broker, bank or other nominee) giving you the right to vote the shares.

If you submit a proxy or provide instructions to vote your shares and do not thereafter revoke such proxy or change such instructions in accordance with one of the methods set forth above, your shares will be represented and voted at the special meeting.

 

Q.	How many shares of Apria common stock must be present to constitute a quorum for the meeting? What if there is no quorum?

 

A.

Under Apria’s bylaws, the presence at the special meeting, in person or by proxy, of the holders of record of a majority in voting power of the voting power of the issued and outstanding shares of Apria common stock entitled to vote thereat at the close of business on the record date will constitute a quorum. There must be a quorum for business (other than the adjournment proposal) to be conducted at the special meeting. If a quorum is not present, the person presiding at the special meeting may adjourn the special meeting from time to time until a quorum is present. Failure of a quorum to be present at the special meeting will necessitate an adjournment or postponement of the special meeting and may subject Apria to additional expense. If the adjournment is for more than 30 days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting.

As of the close of business on the record date, there were [●] shares of Apria common stock outstanding. Accordingly, holders of record of at least [●] shares of Apria common stock must be present or represented by proxy at the special meeting to constitute a quorum.

 

Q.	What if I abstain from voting on any proposal?

 

A.

If you attend the special meeting or if you submit (and do not thereafter revoke) a proxy by duly executing and returning a proxy card, by telephone or through the Internet, even if you abstain from voting, your shares of Apria common stock will still be counted for purposes of determining whether a quorum is present at the special meeting, but will not be voted on the proposals. As a result, if you abstain from voting at the meeting or mark “ABSTAIN” on your proxy card or otherwise indicate that you are abstaining from voting when you submit your proxy by telephone or through the Internet, your abstention from voting will have the same effect as a vote “AGAINST” the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal.

 

Q.	Will my shares be voted if I do not sign and return my proxy card, submit a proxy to vote by telephone or over the Internet or attend and vote in person at the special meeting?

 

A.

If you are a stockholder of record of Apria and you do not attend the special meeting, sign and return your proxy card by mail, or submit your proxy by telephone or over the Internet, your shares will not be voted at the special meeting and will not be counted as present for purposes of determining whether a quorum exists. The failure to submit a proxy or otherwise attend and vote your shares at the special meeting will have no effect on the outcome of the named executive officer merger-related compensation proposal (assuming that a quorum exists) or the adjournment proposal. However, the vote to approve the merger proposal is based on

 

21

the total number of shares of Apria common stock outstanding as of the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to submit a proxy or otherwise vote your shares at the special meeting, it will have the same effect as a vote “AGAINST” the merger proposal.

You will have the right to receive the merger consideration if the merger proposal is approved and the merger is completed even if your shares are not voted at the special meeting. However, if your shares are not voted at the special meeting, it will have the same effect as a vote “AGAINST” the merger proposal.

 

Q.	What is a broker non-vote?

 

A.

Broker non-votes are shares held in “street name” by brokers, banks and other nominees that are present or represented by proxy at the special meeting, but with respect to which the broker, bank or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such broker, bank or other nominee does not have discretionary voting power on such proposal. Because, under NASDAQ rules, brokers, banks and other nominees holding shares in “street name” do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Apria common stock held in “street name” does not give voting instructions to the broker, bank or other nominee, then those shares will not be counted as present in person or by proxy at the special meeting. As a result, it is expected that there will not be any broker non-votes in connection with any of the three proposals described in this proxy statement.

The failure to issue voting instructions to your broker, bank or other nominee will have no effect on the outcome of the named executive officer merger-related compensation proposal (assuming that a quorum exists) or adjournment proposal. However, the vote to approve the merger proposal is based on the total number of shares of Apria common stock outstanding at the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to issue voting instructions to your broker, bank or other nominee, it will have the same effect as a vote “AGAINST” the merger proposal. If you fail to issue voting instructions to your broker, bank or other nominee, it will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal.

 

Q.	Will my shares held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record?

 

A.

No. Because any shares you may hold in “street name” will be deemed to be held by a different stockholder than any shares you hold of record, any shares held in “street name” will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card (or submit a proxy by telephone or through the Internet) for each of those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in an individual retirement account must be voted under the rules governing the account.

 

Q.	Am I entitled to exercise appraisal rights under the DGCL instead of receiving the merger consideration for my shares of Apria common stock?

 

A.

Yes. If you are a record holder of Apria common stock, you are entitled to exercise appraisal rights under Section 262 of the DGCL in connection with the merger if you comply with the requirements of Section 262 of the DGCL. See the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Appraisal Rights” beginning on page 69. In addition, a copy of Section 262 of the DGCL is attached to this proxy statement as Annex D.

 

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Failure to strictly comply with all procedures required by Section 262 of the DGCL will result in a loss of your right to appraisal. You are encouraged to read these provisions carefully and in their entirety and, in view of their complexity, to promptly consult with your legal and financial advisors if you wish to pursue your appraisal rights in connection with the merger.

 

Q.	What happens if I sell my shares of Apria common stock before the completion of the merger?

 

A.

If you transfer your shares of Apria common stock and the merger is completed, you will lose your right to receive the merger consideration or to exercise appraisal rights with respect to such shares. In order to receive the merger consideration in respect of any shares, you must hold such shares of Apria common stock through the completion of the merger.

 

Q.	Should I send in my evidence of ownership now?

 

A.

No. After the merger is completed, if you are a stockholder of record and hold your shares of Apria common stock in certificated form, you will receive transmittal materials from the paying agent for the merger with detailed written instructions for exchanging your shares of Apria common stock for the consideration to be paid to former Apria stockholders in connection with the merger. If you are a stockholder of record and hold your shares of Apria common stock in book-entry form, only if required by the paying agent, will you receive transmittal materials from the paying agent for the merger with detailed written instructions for exchanging your shares of Apria common stock for the consideration to be paid to former Apria stockholders in connection with the merger. If you are the beneficial owner of shares of Apria common stock held in “street name,” you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of such shares.

 

Q.	What does it mean if I get more than one proxy card or voting instruction card?

 

A.

If your shares are registered differently or are held in more than one account, you will receive more than one proxy card or voting instruction card. Please complete and return all of the proxy cards or voting instruction cards you receive (or submit each of your proxies over the Internet or by telephone) to ensure that all of your shares are voted.

 

Q.	What is householding and how does it affect me?

 

A.

The SEC’s proxy rules permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies. While Apria does not household, a number of brokerage firms with account holders who are Apria stockholders household proxy materials, delivering a single set of proxy materials to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker. You can request, and Apria will promptly deliver, a separate copy of the proxy statement by writing to its Secretary at Apria’s principal executive offices, which are located at 7353 Company Drive, Indianapolis, Indiana 46237 or by calling (800) 990-9799.

 

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Q.	What will the holders of outstanding Apria equity awards receive in the merger?

 

A.	The merger agreement provides that outstanding Apria equity awards will be treated as set forth below.

Restricted Stock Units. Immediately prior to the effective time, each Apria RSU granted pursuant to any Apria stock plan whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50.

Performance Stock Units. Immediately prior to the effective time, each Apria PSU granted pursuant to any Apria stock plan, whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50, based on attainment of the applicable performance metrics at the greater of target or actual level of performance as of the closing date, as determined in good faith by the Apria Board or a committee thereof in reasonable consultation with Owens & Minor prior to the effective time.

LTIP Awards. Immediately prior to the effective time, each vested Apria LTIP Award granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing, which will be deemed to constitute a “Change of Control” for purposes of such Apria LTIP Award) will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to (i) the number of shares of Apria common stock represented by the Apria LTIP Award deemed earned as of immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing as described above), as determined by the Apria Board or a committee thereof after reasonable consultation with Owens & Minor prior to the effective time multiplied by (ii) $37.50. Any unvested portion of an Apria LTIP Award that is outstanding immediately prior to the effective time after giving effect to the incremental vesting resulting from the closing as described above will be cancelled for no consideration in accordance with the terms of the applicable Apria stock plan.

Stock Appreciation Rights. Immediately prior to the effective time, each Apria SAR granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to the total value of the payout that would have been earned in accordance with the terms of the applicable governing documents (including any previously unpaid dividends or dividend equivalents thereon, in accordance with such governing documents).

The treatment of Apria equity awards is described in more detail in the section of this proxy statement entitled “The Merger Agreement—Treatment of Apria Equity Awards.”

 

Q.	When will Apria announce the voting results of the special meeting, and where can I find the voting results?

 

A.

Apria intends to announce the preliminary voting results at the special meeting, and will report the final voting results of the special meeting in a Current Report on Form 8-K filed with the SEC within four business days after the meeting. All reports that Apria files with the SEC are publicly available when filed.

 

Q:	Where can I find more information about Apria?

 

A:	You can find more information about Apria from various sources described in the section of this proxy statement entitled “Where You Can Find Additional Information” beginning on page 112.

 

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Q:	Who can help answer my other questions?

 

A:

If you have questions about the merger, require assistance in submitting your proxy or voting your shares, or need additional copies of this proxy statement or the enclosed proxy card, please contact Innisfree M&A Incorporated, which is acting as the proxy solicitation agent for Apria in connection with the merger, or Apria.

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll free: (877) 750-0854

Banks and Brokers may call collect: (212) 750-5833

or

Apria, Inc.

7353 Company Drive

Indianapolis, Indiana 46237

If your broker, bank or other nominee holds your shares, you should also call your broker, bank or other nominee for additional information.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and businesses of Apria. These statements include, but are not limited to, statements regarding Apria’s expectations regarding the merger and the future performance and financial results of Apria’s business and other non-historical statements. Some of these statements can be identified by terms and phrases such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Apria cautions readers of this communication that such “forward looking statements”, wherever they occur in this communication or in other statements attributable to Apria, are necessarily estimates reflecting the judgment of Apria’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements.”

Factors that could cause Apria’s actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the risks detailed in Apria’s filings with the SEC, including in its most recent filings on Forms 10-K and 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

 

•

the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement;

 

•

the inability to complete the merger due to the failure to obtain stockholder approval for the merger or the failure to satisfy other conditions to the completion of the merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the merger;

 

•

risks related to disruption of management’s attention from Apria’s ongoing business operations due to the merger;

 

•

the effect of the announcement of the merger on Apria’s relationships with its customers, suppliers and other third parties, as well as its operating results and business generally;

 

•

the potential the potential difficulties in employee retention as a result of the merger;

 

•

Apria may be adversely affected by other economic, business, and/or competitive factors;

 

•

the risk that the merger will not be consummated in a timely manner or at all;

 

•

the amount of the costs, fees, expenses and charges related to the merger agreement or the merger and the risk of exceeding the expected costs;

 

•

the failure of Owens & Minor and Merger Sub to obtain the necessary debt financing arrangements set forth in the debt commitment letter received in connection with the merger;

 

•

the risk that the merger agreement may be terminated in circumstances that require Apria to pay Owens & Minor a termination fee;

 

•

the outcome of any legal proceedings that may be instituted against Apria and others related to the merger agreement or the transactions contemplated thereby;

 

•

the fact that, if the merger is completed, stockholders will forgo the opportunity to realize the potential long-term value of the successful execution of Apria’s current strategy as an independent company;

 

•

risks that Apria’s stock price may decline significantly if the merger is not completed; and

 

•

the possibility that Owens & Minor could, at a later date, engage in unspecified transactions, including restructuring efforts, special dividends or the sale of some or all of Apria’s assets to one or more purchasers, that could conceivably produce a higher aggregate value than that available to stockholders in the merger.

 

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Additional factors that could cause Apria’s actual outcomes or results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” sections of Apria’s Annual Report on Form 10-K for the period ended December 31, 2020 and Quarterly Reports on Form 10-Q for the periods ended June 30, 2021 and September 30, 2021, as such factors may be further updated from time to time in Apria’s other filings with the SEC. These reports are or will be accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Apria’s filings with the SEC.

Apria undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

 

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THE PARTIES TO THE MERGER

Apria

Apria, Inc.

7353 Company Drive

Indianapolis, IN 46237

(800) 990-9799

Apria, Inc. is a provider of integrated home healthcare equipment and related services in the United States. Apria offers a comprehensive range of products and services for in-home care and delivery across three core service lines: (1) home respiratory therapy (including home oxygen and non-invasive ventilation); (2) obstructive sleep apnea treatment (including continuous positive airway pressure and bi-level positive airway pressure devices, and patient support services); and (3) negative pressure wound therapy.

Additionally, Apria supplies a wide range of home medical equipment and other products and services to help improve the quality of life for patients with home care needs. Apria’s revenues are generated through fee-for-service and capitation arrangements with payors for equipment, supplies, services and other items it rents or sells to patients. Through its offerings, Apria also provide patients with a variety of clinical and administrative support services and related products and supplies, most of which are prescribed by a physician as part of a care plan.

The Apria common stock is traded on NASDAQ under the ticker symbol “APR”.

Apria’s principal executive offices are located at 7353 Company Drive, Indianapolis, IN 46237 and Apria’s telephone number is (800) 990-9799. Apria’s corporate web address is www.apria.com. The information provided on the Apria website is not part of this proxy statement and is not incorporated in this proxy statement by reference or by any other reference to Apria’s website provided in this proxy statement.

Additional information about Apria is contained in its public filings with the SEC, which filings are incorporated by reference herein. See the section of this proxy statement entitled “Where You Can Find Additional Information” beginning on page 112.

Owens & Minor

Owens & Minor, Inc.

9120 Lockwood Boulevard

Mechanicsville, Virginia 23116

(804) 723-7000 

Owens & Minor, Inc. is a global healthcare solutions company that incorporates product manufacturing, distribution support and innovative technology services to deliver significant and sustained value across the breadth of the industry — from acute care to patients in their home. Operating continuously since 1882 from its headquarters in Richmond, Virginia, Owens & Minor has grown into a FORTUNE 500 company with operations located across North America, Asia, Europe and Latin America. Owens & Minor common stock is traded on the NYSE under the ticker symbol “OMI”.

Owens & Minor’s principal executive offices are located at 9120 Lockwood Boulevard, Mechanicsville, Virginia 23116 and its telephone number is (804) 723-7000. Owens & Minor’s corporate web address is www.owens-minor.com. The information provided on Owens & Minor website is not part of this proxy statement and is not incorporated in this proxy statement by reference or by any other reference to Owens & Minor’s website provided in this proxy statement.

 

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Merger Sub

StoneOak Merger Sub Inc.

c/o Owens & Minor, Inc.

9120 Lockwood Boulevard

Mechanicsville, Virginia 23116

(804) 723-7000

Merger Sub, a Delaware corporation and an indirect, wholly owned subsidiary of Owens & Minor, was formed and exists solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its incorporation and activities undertaken in connection with Owens & Minor’s acquisition of Apria. Upon completion of the merger, Merger Sub will merge with and into Apria, and Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at c/o Owens and Minor, Inc., 9120 Lockwood Boulevard, Mechanicsville, Virginia 23116 and its telephone number is (804) 723-7000.

 

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THE SPECIAL MEETING

This proxy statement is being provided to Apria stockholders as part of a solicitation by the Apria Board of proxies for use at the special meeting, to be held at the time and place specified below, and at any properly convened meeting following an adjournment or postponement of the special meeting.

Date, Time and Place

The special meeting is scheduled to be held online via live audio webcast at www.virtualshareholdermeeting.com/APR2022SM on [●], 2022 at [●], Eastern Time. For the health and well-being of Apria’s stockholders, employees and directors, the special meeting will be held in a virtual meeting format only, with no physical in-person meeting.

Purpose of the Special Meeting

At the special meeting, Apria stockholders will be asked to consider and vote on the following proposals:

 

•

the merger proposal, which is further described in the sections of this proxy statement entitled “The Merger Proposal (Proposal 1)” and “The Merger Agreement,” beginning on pages 36 and 74, respectively; a copy of the merger agreement is attached to this proxy statement as Annex A and is incorporated herein by reference;

 

•

the named executive officer merger-related compensation proposal, which is further described in the sections of this proxy statement entitled “The Merger Proposal (Proposal 1)—Interests of Apria’s Executive Officers and Directors in the Merger” and “Advisory Vote On Named Executive Officer Merger-Related Compensation Proposal (Proposal 2)” beginning on pages 58 and 102, respectively; and

 

•

the adjournment proposal, which is further described in the section of this proxy statement entitled “The Adjournment Proposal (Proposal 3)” beginning on page 103.

The adoption of the merger agreement by the affirmative vote of holders of a majority in voting power of the outstanding shares of Apria common stock entitled to vote as of the close of business on the record date is a condition to the completion of the merger. If the Apria stockholders fail to approve the merger proposal, the merger will not occur.

The vote on the named executive officer merger-related compensation proposal is a vote separate and apart from the vote to approve the merger proposal. Accordingly, a stockholder may vote to approve the merger proposal and vote not to approve the named executive officer merger-related compensation proposal, and vice versa. Because the vote on the named executive officer merger-related compensation proposal is only advisory in nature, it will not be binding on Apria, Owens & Minor or the surviving corporation. Accordingly, because Apria is contractually obligated to pay such merger-related compensation, the compensation will be payable, subject only to the conditions applicable thereto, if the merger proposal is approved, regardless of the outcome of the advisory vote.

Other than the matters described above, Apria does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof, and Apria has agreed in the merger agreement that no other matters (other than customary procedural matters) shall be brought before the special meeting.

Recommendation of the Apria Board

The Apria Board has unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, and (ii) authorized and approved the execution, delivery and performance of the merger agreement and the

 

30

transactions contemplated thereby, including the merger. The Apria Board made its determination after consultation with its outside legal counsel and financial advisors and consideration of a number of factors more fully described in the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Recommendation of the Apria Board and Reasons for the Merger” beginning on page 46.

The Apria Board unanimously recommends that the Apria stockholders vote “FOR” the merger proposal, “FOR” the named executive officer merger-related compensation proposal and “FOR” the adjournment proposal.

Record Date; Stockholders Entitled to Vote

Only holders of record of Apria common stock at the close of business on [●], 2022, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting.

Holders of record of Apria common stock are entitled to one vote for each share of Apria common stock they own of record at the close of business on the record date. At the close of business on the record date, there were [●] shares of Apria common stock issued and outstanding, held by approximately [●] holders of record.

Quorum

Under Apria’s bylaws, the presence at the special meeting, in person or by proxy, of the holders of record of a majority in voting power of the voting power of the issued and outstanding shares of Apria common stock entitled to vote thereat at the close of business on the record date will constitute a quorum. There must be a quorum for business (other than the adjournment proposal) to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment or postponement of the special meeting and may subject Apria to additional expense.

If you attend the special meeting or if you submit (and do not thereafter revoke) a proxy by duly executing and returning a proxy card or by telephone or through the Internet, even if you abstain from voting, your shares of Apria common stock will be counted for purposes of determining whether a quorum is present at the special meeting. In the event that a quorum is not present at the special meeting or additional votes must be solicited to adopt the merger agreement, the meeting may be adjourned or postponed to solicit additional proxies.

Required Vote

The approval of the merger proposal requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of Apria common stock entitled to vote at the close of business on the record date.

Each of Holdings LLC, Daniel J. Starck and John G. Figueroa has entered into a support agreement with Owens & Minor and Merger Sub, pursuant to which such Supporting Apria Stockholder has agreed to vote its or his shares of Apria common stock to approve the merger proposal, subject to the terms and conditions set forth therein. See the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Support Agreements” on page 68. In the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the obligations of Holdings LLC under the support agreement to which it is a party will only extend to shares held by Holdings LLC representing 33% of the total voting power of the outstanding shares of Apria common stock entitled to vote on the merger proposal (rounded down to the nearest whole share). As of the record date for the special meeting, (i) the Supporting Apria Stockholders collectively owned approximately [●]% of the outstanding shares of Apria

 

31

common stock entitled to vote at the special meeting and (ii) in the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the shares of Apria common stock held by the Supporting Apria Stockholders and subject to the support agreements will constitute approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting.

Assuming a quorum is present, approval of the named executive officer merger-related compensation proposal (on a non-binding basis) requires the affirmative vote of the holders of a majority in voting power of the shares of Apria common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Approval of the adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the shares of Apria common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.

Abstentions and Broker Non-Votes

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. At the special meeting, abstentions will be counted as present for purposes of determining whether a quorum exists. Abstaining from voting will have the same effect as a vote “AGAINST” the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal.

If no instruction as to how to vote is given (including no instruction to abstain from voting) in an executed, duly returned and not revoked proxy, the proxy will have the same effect as a vote “FOR” the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal.

Broker non-votes are shares held in “street name” by brokers, banks and other nominees that are present or represented by proxy at the special meeting, but with respect to which the broker, bank or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such broker, bank or other nominee does not have discretionary voting power on such proposal. Because, under NASDAQ rules, brokers, banks and other nominees holding shares in “street name” do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Apria common stock held in “street name” does not give voting instructions to the broker, bank or other nominee, then those shares will not be permitted under NASDAQ rules to be voted at the special meeting, and thus will not be counted as present in person or by proxy at the special meeting. The vote to approve the merger proposal is based on the total number of shares of Apria common stock outstanding at the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to issue voting instructions to your broker, bank or other nominee, it will have the same effect as a vote “AGAINST” the merger proposal, but will have no effect on the approval of the named executive officer merger-related compensation proposal or the adjournment proposal.

Failure to Vote

If you are a stockholder of record and you do not attend the special meeting, sign and return your proxy card by mail or submit your proxy by telephone or over the Internet, your shares will not be voted at the special meeting, will not be counted as present in person or by proxy at the special meeting and will not be counted as present for purposes of determining whether a quorum exists.

As discussed above, under NASDAQ rules, brokers and other record holders do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement. Accordingly, if you are the beneficial owner of shares held in “street name” and you do not issue voting instructions to your broker, bank or other nominee, your shares will not be voted at the special meeting and will not be counted as present in

 

32

person or by proxy at the special meeting or counted as present for purposes of determining whether a quorum exists.

A failure to vote will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal, assuming that a quorum exists. However, the vote to approve the merger proposal is based on the total number of shares of Apria common stock outstanding at the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to vote your shares, it will have the same effect as a vote “AGAINST” the merger proposal.

Voting by Apria’s Directors and Executive Officers

Each of Daniel J. Starck, the Chief Executive Officer of Apria, and John G. Figueroa, the Chairman of the Apria Board, have entered into a support agreement, pursuant to which he has agreed to vote his shares of Apria common stock to approve the merger proposal, subject to the terms and conditions set forth therein. Each of the other directors and officers of Apria have informed Apria that, as of the date of this proxy statement, they intend to vote in favor of the merger proposal, although none of such directors and executive officers is obligated to do so.

At the close of business on the record date, the directors and executive officers of Apria collectively owned [●] shares of Apria common stock, representing approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting.

Voting at the Special Meeting

If your shares are registered directly in your name with Apria’s transfer agent, you are considered a “stockholder of record.” Stockholders of record can vote their shares of Apria common stock in the following four ways:

 

•

By Internet—You may submit your proxy by going to www.proxyvote.com and by following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your proxy card in order to submit a proxy to vote by Internet.

 

•

By Telephone—You may submit your proxy by dialing 1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number included on your proxy card in order to submit a proxy to vote by telephone.

 

•

By Mail—You may submit a proxy to vote by mail by completing and signing the proxy card where indicated and by mailing the card in the envelope that will be provided to you. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity.

 

•

At the Special Meeting (Virtually)—If you are a stockholder of record and prefer to vote your shares online at the special meeting, you will need the control number on your proxy card or voting instruction card to be able to vote during the special meeting and to examine the list of the stockholders entitled to vote at the special meeting during the special meeting. Instructions on how to attend and participate online at the special meeting are posted at www.virtualshareholdermeeting.com/APR2022SM.

Even if you plan to attend the special meeting, you are encouraged to submit a proxy in advance by Internet, telephone or mail to ensure that your shares will be represented and voted at the special meeting if you later decide not to attend the special meeting. Telephone and Internet facilities for the submission of a proxy to vote shares will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on [●], 2022. Proxy cards must be received no later than [●], 2022 in order to ensure that your shares are voted.

 

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If your shares are held by your broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a form from your broker, bank or other nominee seeking instruction from you as to how your shares should be voted. You should instruct your broker, bank or other nominee how to vote your shares on each proposal in accordance with your voting instruction form. If you beneficially own your shares and receive a voting instruction form, you can vote by following the instructions on your voting instruction form. Please refer to information from your bank, broker or other nominee on how to submit voting instructions.

Stockholders who are entitled to vote at the special meeting (and their duly appointed proxies) may attend the special meeting. You will need the control number on your proxy card or voting instruction card to be able to vote or ask questions during the special meeting and to be able to examine the list of the stockholders entitled to vote at the special meeting during the special meeting. Instructions on how to attend and participate online at the special meeting are posted at www.virtualshareholdermeeting.com/APR2022SM. If you are an Apria stockholder as of the record date (or a proxy thereof), you should enter your control number and follow the prompt to log in.

Online check-in will begin at [●], Eastern Time on [●], 2022 and you should allow ample time for the online check-in proceedings. Technicians will be standing by and ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the special meeting log-in page.

Revocation of Proxies

You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the stockholder of record, you may change or revoke your proxy by:

 

•

sending a written statement to that effect to Apria’s Corporate Secretary, which statement must be received no later than [●], 2022;

 

•

submitting a new proxy by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m. (Eastern Time) on [●], 2022;

 

•

submitting a properly signed proxy card with a later date; or

 

•

attending the special meeting and voting online.

If you hold shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee. You may also change your vote or revoke your proxy in person at the special meeting if you obtain a proxy, executed in your favor, from the stockholder of record (broker, bank or other nominee) giving you the right to vote the shares.

If you submit a proxy or provide instructions to vote your shares and do not thereafter revoke such proxy or change such instructions in accordance with one of the methods set forth above, your shares will be represented and voted at the special meeting in accordance with your instructions.

Solicitation of Proxies

The Apria Board is soliciting your vote, and Apria will bear the cost of soliciting proxies. Innisfree M&A Incorporated has been retained to assist with the solicitation of proxies. Innisfree M&A Incorporated will be paid approximately $15,000, plus certain additional per-service fees, and will be reimbursed for certain fees and expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, banks and other nominees to the beneficial owners of shares of Apria common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by Innisfree M&A Incorporated or, without additional compensation, by certain of Apria’s directors, officers and employees.

 

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Adjournment

In addition to the merger proposal and the named executive officer merger-related compensation proposal, Apria stockholders are also being asked to approve the adjournment proposal, which will enable the adjournment of the special meeting from time to time, if necessary or appropriate, as determined in good faith by the Apria Board, including for the purpose of soliciting additional votes in favor of the merger proposal if there are not sufficient votes at the time of the special meeting to approve the merger proposal. If a quorum is not present, the person presiding at the special meeting may adjourn the special meeting from time to time until a quorum is present. If the adjournment is for more than 30 days, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you return a proxy and do not indicate how you wish to vote on the adjournment proposal, your shares will be voted in favor of the adjournment proposal.

The Apria Board unanimously recommends a vote “FOR” the adjournment proposal, if necessary or appropriate, to solicit additional proxies.

Other Information

You should not send documents representing Apria common stock with the proxy card. If the merger is completed, the paying agent for the merger will send you transmittal materials and instructions for exchanging your shares of Apria common stock for the consideration to be paid to former Apria stockholders in connection with the merger.

Questions

If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Innisfree M&A Incorporated, Apria’s proxy solicitor, by calling (888) 750-5834 (toll-free) or (212) 750-5833 (banks and brokers).

 

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THE MERGER PROPOSAL

(PROPOSAL 1)

The discussion of the merger in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and hereby is incorporated by reference into this proxy statement.

Structure of the Merger

Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, at the effective time, Merger Sub will merge with and into Apria, the separate corporate existence of Merger Sub will cease and Apria will survive the merger as an indirect, wholly owned subsidiary of Owens & Minor.

What Stockholders Will Receive in the Merger

At the effective time, each outstanding share of Apria common stock (other than appraisal shares and owned company shares) will be automatically converted into the right to receive $37.50 in cash, without interest and subject to any applicable withholding taxes. After the merger is completed, holders of shares of Apria common stock will have only the right to receive a cash payment in respect of their shares of Apria common stock, and will no longer have any rights as holders of Apria common stock, including voting or other rights.

Any owned company shares outstanding as of immediately prior to the effective time will be cancelled at the effective time.

Treatment of Apria Equity Awards

The merger agreement provides that outstanding Apria equity awards will be treated as set forth below.

Restricted Stock Units. Immediately prior to the effective time, each Apria RSU granted pursuant to any Apria stock plan whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50.

Performance Stock Units. Immediately prior to the effective time, each Apria PSU granted pursuant to any Apria stock plan, whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50, based on attainment of the applicable performance metrics at the greater of target or actual level of performance as of the closing date, as determined in good faith by the Apria Board or a committee thereof in reasonable consultation with Owens & Minor prior to the effective time.

LTIP Awards. Immediately prior to the effective time, each vested Apria LTIP Award granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing, which will be deemed to constitute a “Change of Control” for purposes of such Apria LTIP Award) will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to (i) the number of shares of Apria common stock represented by the Apria LTIP Award deemed earned as of immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing as described above), as determined by the Apria Board or a committee thereof after reasonable consultation with Owens & Minor prior to the effective time multiplied by (ii) $37.50. Any unvested portion of an Apria LTIP Award that is outstanding immediately prior to the effective time after giving effect to the incremental vesting resulting from the closing as described above will be cancelled for no consideration in accordance with the terms of the applicable Apria stock plan.

 

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Stock Appreciation Rights. Immediately prior to the effective time, each Apria SAR granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to the total value of the payout that would have been earned in accordance with the terms of the applicable governing documents (including any previously unpaid dividends or dividend equivalents thereon, in accordance with such governing documents).

Any consideration payable in respect of Apria equity awards will be paid through the payroll systems of the surviving corporation or an affiliate thereof promptly after the effective time but no later than (i) with respect to Apria equity awards other than Apria LTIP Awards, the second payroll date after the effective time and (ii) with respect to Apria LTIP Awards, no later than required under the terms of the applicable governing documents, including the applicable Apria stock plan. Notwithstanding anything herein to the contrary, with respect to any Apria equity award that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that Apria determines prior to the effective time is not eligible to be terminated in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(B), such payment will be made at the earliest time permitted under the applicable Apria stock plan that will not trigger a tax or penalty under Section 409A of the Code.

Effects on Apria if the Merger Is Not Completed

If the merger proposal is not approved by Apria stockholders or if the merger is not completed for any other reason, Apria stockholders will not receive any payment for their shares in connection with the merger. Instead, Apria will remain an independent public company and shares of Apria common stock will continue to be listed and traded on NASDAQ. In addition, if the merger is not completed, Apria expects that management will operate Apria’s business in a manner similar to that in which it is being operated today and that Apria stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the competitive industry in which Apria operates and adverse economic conditions.

Furthermore, if the merger is not completed, and depending on the circumstances that would have caused the merger not to be completed, it is likely that the price of Apria’s common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of Apria’s common stock would return to the price at which it trades as of the date of this proxy statement.

Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of Apria common stock. If the merger is not completed, the Apria Board will continue to evaluate and review Apria’s business operations, properties, share buyback policy and capitalization, among other things, make such changes as are deemed appropriate, and continue to seek to identify strategic alternatives to enhance stockholder value. If the merger proposal is not approved by Apria stockholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to Apria will be offered or that Apria’s business, prospects or results of operation will not be adversely impacted.

Further, upon termination of the merger agreement, under certain specified circumstances, Apria may be required to pay a termination fee of $41,970,000 to Owens & Minor pursuant to the terms and conditions of the merger agreement. See the section of this proxy statement entitled “The Merger Agreement—Termination Fee” beginning on page 100 for a discussion of the circumstances under Apria will be required to pay a termination fee.

Background of the Merger

In February 2021, Apria consummated its initial public offering (the “IPO”) in which shares of Apria common stock were priced at $20.00 per share. Prior to the IPO, Apria and the Apria Board, together with their legal and financial advisors, reviewed and evaluated certain strategic alternatives to an initial public offering, including the potential sale of Apria and a potential “go-public” transaction through a business combination with

 

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a special purpose acquisition company. Following discussions between Apria and certain potential strategic acquirers and special purpose acquisition companies, no formal proposals had emerged other than a preliminary proposal from a special purpose acquisition company (“Party A”) valuing Apria at an enterprise value of approximately $1.9 billion. Based on, among other things, the small size of the trust of Party A, Party A not having entered into any forward purchase agreements providing for capital from its sponsor or other investors and Party A not otherwise having any committed financing, Party A’s proposal was unlikely to be consummated or, if consummated, was unlikely to be consummated on terms as favorable as the terms set forth in its preliminary proposal. The Apria Board determined that further discussions with Party A, other special purpose acquisition companies or other potential strategic acquirers were unlikely to maximize stockholder value and that it would be in the best interests of Apria and its stockholders to cease such discussions and instead pursue the IPO.

Since the consummation of the IPO in February 2021, on an ongoing basis, Apria and the Apria Board, together with their legal and financial advisors, have continued to review and evaluate strategic opportunities and alternatives with a view to enhancing stockholder value. Such opportunities and alternatives have included, among other things, remaining as a stand-alone entity, acquisitions and strategic partnerships with other companies and other transactions to further Apria’s strategic objectives.

As part of these ongoing evaluations, Goldman Sachs & Co. LLC (“Goldman Sachs”) has periodically met with the Apria Board and Apria’s management and advised Apria with respect to such strategic opportunities and alternatives. Apria has had a longstanding relationship with Goldman Sachs and retained Goldman Sachs to act as its lead financial advisor in connection with the proposed merger. Apria selected Goldman Sachs based on its experience in transactions similar to the merger, qualifications, expertise and reputation and its knowledge of Apria and its business and the industries in which Apria conducts its business.

In the ordinary course of business, members of Apria’s senior management from time to time meet with investment banks and other companies to, among other things, discuss potential transactions and enhance their knowledge of the markets in which Apria operates. On June 15, 2021, a representative of BofA Securities, Inc. (“BofA Securities”), an existing lender to Apria and an investment bank with which members of Apria’s senior management have met in the past, contacted members of Apria’s senior management to request a meeting to discuss a potential transaction. Later that day, members of Apria’s senior management met telephonically with the representative of BofA Securities, during which meeting the representative of BofA Securities indicated that it was acting on behalf of Owens & Minor and that members of Owens & Minor’s senior management were interested in meeting with members of Apria’s senior management to discuss a potential transaction between Owens & Minor and Apria.

On June 28, 2021, members of Apria’s senior management met via remote communication with members of Owens & Minor’s senior management and representatives of BofA Securities to discuss high-level details of Apria’s and Owens & Minor’s respective business performance, outlook and culture. The members of Owens & Minor’s senior management also indicated that Owens & Minor was interested in exploring a potential transaction with Apria but did not provide any details around the terms of any potential transaction.

Later on June 28, 2021, members of Apria’s senior management met via remote communication with members of the Apria Board and a representative of Simpson Thacher & Bartlett LLP, Apria’s outside counsel (“Simpson Thacher”) to discuss Owens & Minor’s interest in a potential transaction. Following discussion, the members of the Apria Board directed Apria’s senior management to contact Goldman Sachs to assist Apria in responding to Owens & Minor.

On June 30, 2021, members of Apria’s senior management met via remote communication with members of the Apria Board and representatives of Goldman Sachs and Simpson Thacher to discuss Owens & Minor’s interest in a potential transaction. Following discussion, the members of the Apria Board directed Goldman Sachs to inform BofA Securities that Apria was willing to hold a follow-up meeting to discuss the strategic rationale of a potential transaction.

 

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On July 3, 2021, a representative of Goldman Sachs informed a representative of BofA Securities that Apria was willing to hold a follow-up meeting to discuss the strategic rationale of a potential transaction.

On July 19, 2021, Daniel J. Starck, Chief Executive Officer of Apria, met via remote communication with members of the Apria Board to discuss Owens & Minor’s interest in a potential transaction. Following discussion, the members of the Apria Board reiterated their support of Mr. Starck and other members of Apria’s senior management holding a follow-up meeting with Owens & Minor to discuss the strategic rationale of a potential transaction.

On July 22, 2021, members of Apria’s and Owens & Minor’s senior management, together with representatives of Goldman Sachs, BofA Securities and Evercore Group L.L.C. (“Evercore”), a financial advisor to Owens & Minor, met via remote communication to discuss additional high-level details of Apria’s business performance and outlook as well as Owens & Minor’s strategic objectives and continued interest in a potential transaction with Apria.

On August 4, 2021, a representative of BofA Securities delivered to a representative of Goldman Sachs a letter setting forth Owens & Minor’s indication of interest to acquire Apria for a purchase price of $32.00 to $33.00 in cash per share of Apria common stock. The letter also specified that Owens & Minor would finance the transaction with cash on hand and incremental debt capacity and that the transaction would not be subject to a financing contingency. Owens & Minor also specified in the letter several areas of due diligence it would like to complete in furtherance of the potential transaction.

On August 10, 2021, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance to discuss, among other things, the August 4, 2021 indication of interest letter from Owens & Minor. Representatives of Simpson Thacher reviewed with the Apria Board its fiduciary duties, including in connection with a potential transaction of the type contemplated by Owens & Minor’s indication of interest. Representatives of Goldman Sachs reviewed with the Apria Board the discussions with Owens & Minor and its advisors to date, the market price of Apria common stock, the valuation implied by the proposed purchase price and Owens & Minor’s potential ability to finance a transaction at different valuations. The Apria Board then discussed Owens & Minor’s indication of interest, including potential responses. During such discussion, Neil Simpkins, in his capacity as a manager of Holdings LLC, noted that Holdings LLC was supportive of a strategy that maximizes value to Apria’s stockholders, whether through a potential transaction or through continued execution of Apria’s strategic plan as a standalone company. Following discussion, the Apria Board directed Goldman Sachs to inform BofA Securities that the purchase price offered did not reflect sufficient value to warrant further exploration of a potential transaction and that Owens & Minor would need to propose a higher purchase price before the Apria Board would consider further exploring a potential transaction.

Later on August 10, 2021, representatives of Goldman Sachs informed BofA Securities that Owens & Minor’s proposed purchase price did not reflect sufficient value to warrant further exploration of a potential transaction and that Owens & Minor would need to propose a higher purchase price before the Apria Board would consider further exploring a potential transaction.

On August 13, 2021, a representative of BofA Securities delivered to a representative of Goldman Sachs a letter setting forth Owens & Minor’s revised indication of interest to acquire Apria for an increased purchase price of $34.50 to $36.00 in cash per share of Apria common stock. The letter noted that the proposal was otherwise subject to the same terms outlined in the August 4^th indication of interest letter.

On August 25, 2021, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance. Representatives of Goldman Sachs reviewed with the Apria Board the revised indication of interest received from Owens & Minor, including the valuation implied by the proposed purchase price and Owens & Minor’s ability to propose an

 

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increased purchase price in light of the debt financing that would be required in order to do so. Members of Apria’s senior management also reviewed the process of preparing a draft standalone financial plan, including the key expectations and assumptions that would be taken into account. Following discussion, the Apria Board directed Apria’s senior management to further develop the draft financial plan in order to better assess the merits in further exploring the revised indication of interest from Owens & Minor.

On August 27, 2021, the chief executive officer of a strategic party (“Party B”) contacted Mr. Starck to discuss Apria’s interest in exploring a potential business combination with Party B. Mr. Starck told Party B’s chief executive officer that he would discuss this with members of the Apria Board.

On August 31, 2021, Mr. Starck met with members of the Apria Board to discuss Party B’s interest in exploring a potential business combination with Party B. Following discussion, the members of the Apria Board directed Mr. Starck to ask Party B for more details of the potential business combination contemplated by Party B if Party B continued to express interest in a potential business combination.

On September 10, 2021, a representative of Party B’s financial advisor met with Mr. Starck to express Party B’s interest in exploring a potential strategic transaction with Apria and to further discuss Apria’s interest in exploring a potential business combination with Party B. Mr. Starck agreed to meet with members of Party B’s management to discuss a potential business combination and seek more details of the potential business combination contemplated by Party B.

On September 17, 2021, members of Party B’s management and representatives of Party B’s financial advisor met with members of Apria’s senior management to discuss, among other things, the financial performance and cultures of both companies and the strategic rationale of a potential strategic transaction between Party B and Apria. The members of Apria’s senior management informed the members of Party B’s management and the representatives of Party B’s financial advisor that Party B would need to provide additional detail around a proposed transaction in order for Apria and the Apria Board to evaluate any potential transaction between Party B and Apria.

On September 18, 2021, members of the Apria Board met with Mr. Starck and representatives of Goldman Sachs to discuss Owens & Minor’s August 13^th indication of interest and Party B’s interest in a potential strategic transaction. Following discussion, the members of the Apria Board and Mr. Starck directed representatives of Goldman Sachs to contact representatives of BofA Securities and Evercore to again request that Owens & Minor increase its proposed purchase price in light of, among other things, the strength of Apria’s standalone prospects and recent increases in the market price of Apria’s common stock. Later that day, a representative of Goldman Sachs contacted representatives of BofA Securities and Evercore to again request that Owens & Minor increase its proposed purchase price in light of, among other things, the strength of Apria’s standalone prospects and recent increases in the market price of Apria’s common stock.

On September 22, 2021, a representative of BofA Securities spoke to a representative of Goldman Sachs and indicated that Owens & Minor was ceasing to pursue a potential transaction because Owens & Minor did not believe that it could propose a sufficiently high purchase price beyond what it offered in its revised indication of interest and was instead focused on pursuing other strategic opportunities. Following this discussion, the representative of Goldman Sachs informed Mr. Starck that Owens & Minor was ceasing to pursue a potential transaction.

On September 23, 2021, Mr. Starck met with members of the Apria Board to discuss, among other things, Owens & Minor ceasing to pursue a potential transaction and Party B’s interest in a potential strategic transaction with Apria. Following discussion, the members of the Apria Board directed Mr. Starck to direct Goldman Sachs to ask Party B for more details of the potential business combination contemplated by Party B. In the following weeks, representatives of Goldman Sachs met with representatives of Party B’s financial advisor to seek more details of the potential business combination contemplated by Party B.

 

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On October 27, 2021, Mr. Starck met with members of the Apria Board and representatives of Goldman Sachs to discuss the strategic rationale of a potential strategic transaction between Party B and Apria. Following discussion, the members of the Apria Board directed Goldman Sachs to reiterate to Party B that Party B would need to provide additional detail around a proposed transaction in order for Apria and the Apria Board to evaluate any potential transaction and that Apria would not have further discussions with Party B absent such additional detail. Following that meeting, a representative of Goldman Sachs reiterated to the representative of Party B’s financial advisor that Party B would need to provide additional detail around a proposed transaction in order for Apria and the Apria Board to evaluate any potential transaction between Party B and Apria and that Apria would not have further discussions with Party B absent such additional detail.

On November 16, 2021, a representative of Evercore discussed with a representative of Goldman Sachs that, notwithstanding the passage of time since their prior discussions, Owens & Minor continued to perceive strategic merit in Apria’s business and remained interested in a potential transaction with Apria and also sought a meeting with Mr. Simpkins to discuss, among other things, whether Holdings LLC would be opposed to a potential transaction between Owens & Minor and Apria. The representative of Goldman Sachs informed the representative of Evercore that he would discuss this with Apria.

Later on November 16, 2021, the representative of Goldman Sachs informed John G. Figueroa, Chairman of the Apria Board, Mr. Starck and Mr. Simpkins of Owens & Minor’s continued interest in a potential transaction with Apria and its request for a meeting with Mr. Simpkins. Following discussion, Mr. Figueroa and Mr. Starck were supportive of Mr. Simpkins meeting with Owens & Minor.

On November 18, 2021, Edward A. Pesicka, Chief Executive Officer of Owens & Minor, and Mr. Simpkins met for breakfast, during which they discussed, among other things, trends in the healthcare industry and Owens & Minor’s strategic plan. During this discussion, Mr. Pesicka indicated that Owens & Minor remained interested in a potential transaction with Apria and asked Mr. Simpkins whether Holdings LLC would be opposed to a potential transaction between Owens & Minor and Apria. Mr. Simpkins informed Mr. Pesicka that Holdings LLC would support whatever decision was made by the full Apria Board and that he would discuss this with the rest of the Apria Board. Promptly following the breakfast, Mr. Simpkins informed Mr. Figueroa and Mr. Starck of the matters discussed with Mr. Pesicka, including Owens & Minor’s continued interest in a potential transaction with Apria.

Later on November 18, 2021, members of the Apria Board, including its Chairman, met with Mr. Starck and representatives of Goldman Sachs to discuss Owens & Minor’s continued interest in a potential transaction with Apria. Following discussion, the members of the Apria Board and Mr. Starck directed Goldman Sachs to inform Owens & Minor’s financial advisors that the Apria Board would be willing to review a revised indication of interest if Owens & Minor could get to a higher valuation than the one proposed in the indication of interest delivered on August 13, 2021. Following the meeting, a representative of Goldman Sachs informed a representative of Evercore that the Apria Board would be willing to review a revised indication of interest if Owens & Minor could get to a higher valuation than the one proposed in the indication of interest delivered on August 13, 2021.

On November 20, 2021, a representative of Evercore delivered to a representative of Goldman Sachs a letter setting forth Owens & Minor’s revised indication of interest to acquire Apria for a purchase price of $34.50 to $36.00 in cash per share of Apria common stock, but noted the potential for an increased valuation in the event incremental areas of value were to be identified in due diligence.

On November 21, 2021, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance. The Chairman of the Apria Board reviewed with the Apria Board the revised indication of interest from Owens & Minor and the discussions that members of Apria’s senior management had had with Party B, including the fact that no formal proposal had materialized from Party B. Following discussion among the Apria Board of the considerations in

 

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determining whether to engage in further discussions with Owens & Minor regarding a potential transaction, including the indication by Owens & Minor in their proposal that they could further increase their proposed valuation range, the Apria Board authorized Apria’s senior management to negotiate and enter into a confidentiality agreement to facilitate further discussions with Owens & Minor regarding a potential transaction.

On November 30, 2021, Mr. Starck and Mr. Pesicka met for dinner, during which they discussed, among other things, the culture and values of Apria and Owens & Minor and Owens & Minor’s continued conviction in the strategic rationale of a potential transaction between Apria and Owens & Minor.

On December 1, 2021, Apria and Owens & Minor entered into a confidentiality agreement, pursuant to which Owens & Minor agreed to, among other things, an 18-month standstill on acquisitions of Apria securities and public proposals to acquire Apria, which standstill would terminate upon certain events, including the entry by Apria into a definitive agreement for the sale of a majority of Apria to a third party.

Also on December 1, 2021, members of Apria’s senior management and members of Owens & Minor’s senior management, together with representatives of Goldman Sachs and Evercore, met to discuss preliminary due diligence relating to, among other things, Apria’s business, operations and financial performance. From December 2021 through the signing of the merger agreement, Owens & Minor conducted additional due diligence, which included access to documentary materials in a virtual data room, virtual presentations and diligence sessions with Apria management and other customary due diligence.

On December 7, 2021, the Apria Board met in person with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance. Members of Apria’s senior management reviewed with the Apria Board a preliminary draft of its budget for Apria’s 2022 fiscal year, including its key assumptions, which budget would form the basis of the financial projections being prepared by members of Apria’s senior management. Representatives of Goldman Sachs and Simpson Thacher updated the Apria Board on the status of Owens & Minor’s due diligence. Representatives of Goldman Sachs also reviewed with the Apria Board, in the context of its consideration of other strategic alternatives that were available to Apria in addition to a potential transaction with Owens & Minor, the discussions between Apria and certain potential strategic acquirers and special purpose acquisition companies prior to Apria’s IPO, which the Apria Board had determined at the time of the IPO were unlikely to lead to strategic alternatives that maximized stockholder value and which Goldman Sachs advised were unlikely to result in a different conclusion at this time for a variety of reasons, including lack of strategic fit and different strategic priorities between such parties and Apria.

On December 11, 2021, a representative of Evercore delivered to a representative of Goldman Sachs a letter setting forth Owens & Minor’s revised indication of interest to acquire Apria for an increased purchase price of $36.00 to $37.00 in cash per share of Apria common stock.

On December 14, 2021, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance. Representatives of Goldman Sachs reviewed with the Apria Board the revised indication of interest from Owens & Minor. Members of Apria’s senior management presented its draft financial projections to the Apria Board, which were comprised of the draft budget for Apria’s 2022 fiscal year that had been presented at the Apria Board’s December 7^th meeting and draft financial projections for the 2023 and 2024 fiscal years, and answered the Apria Board’s questions regarding such projections and its underlying assumptions, following which the Apria Board unanimously approved the financial projections as presented to the Apria Board at such meeting.

On December 15, 2021, representatives of Kirkland & Ellis LLP, Owens & Minor’s outside counsel (“Kirkland & Ellis”), sent representatives of Simpson Thacher a draft merger agreement for the proposed transaction. Among other things, the draft merger agreement proposed a covenant requiring both parties to use reasonable best efforts to obtain antitrust approval but no express obligation on Owens & Minor to make

 

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divestitures or take other actions to secure such approval and gave Apria the ability to terminate the merger agreement to accept a superior proposal subject to Apria paying a termination fee equal to 3.5% of transaction equity value.

On December 20, 2021, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance. Representatives of Simpson Thacher discussed with the Apria Board its fiduciary duties in the context of a potential sale of the company and reviewed with the Apria Board the material terms of the draft merger agreement, including Owens & Minor’s request that Holdings LLC and certain directors and officers enter into support agreements that would require them to, among other things, vote all of their shares of Apria common stock in favor of the merger proposal. Representatives of Goldman Sachs reviewed with the Apria Board preliminary financial information and analyses with respect to Apria.

On December 23, 2021, representatives of Simpson Thacher sent representatives of Kirkland & Ellis a revised draft of the merger agreement reflecting, among other things, a covenant requiring Owens & Minor to make divestitures and take any other actions necessary to consummate the merger unless it would result in a material adverse effect on the combined businesses of Apria and Owens & Minor and their respective subsidiaries, the ability for either party to extend the “outside date” in the event that certain antitrust-related closing conditions have not been satisfied, a termination fee of 2.75% of transaction equity value and a “reverse” termination fee of 5.5% of the transaction equity value that would be payable by Owens & Minor in the event that the merger agreement is terminated under circumstances where certain antitrust-related closing conditions have not been satisfied.

On December 29, 2021, representatives of Kirkland & Ellis sent representatives of Simpson Thacher a revised draft of merger agreement reflecting, among other things, no express obligation on Owens & Minor to make divestitures and take any other actions necessary to obtain antitrust approval, a closing condition regarding certain non-antitrust regulatory matters, a fixed “outside date” that is six months from the date of the signing of the merger agreement, a termination fee of 3.2% of transaction equity value and no “reverse” termination fee.

On December 30, 2021, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher in attendance. Prior to the meeting, a representative of Apria furnished to the Apria Board a disclosure statement provided by Goldman Sachs, which identified prior or current engagements or relationships between Goldman Sachs and Owens & Minor and Blackstone and certain of its affiliates and portfolio companies, as discussed in further detail in the section entitled “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor” beginning on page 50. A representative of Goldman Sachs reviewed the disclosure statement with the Apria Board. A representative of Simpson Thacher also reviewed with the Apria Board the prior or current engagements or relationships between Simpson Thacher and Owens & Minor and Blackstone. The representative of Simpson Thacher provided the Apria Board with an update on material changes in the terms of the merger agreement since they were last presented to the Apria Board on December 20, 2021, including the new closing condition relating to certain non-antitrust regulatory matters. Following discussion, the Apria Board directed Simpson Thacher to reject the new closing condition and to inform Kirkland & Ellis that the Apria Board would not continue discussions regarding a potential transaction if the closing condition were not removed. The Apria Board then met in executive session without the presence of Apria’s senior management. The Apria Board and its advisors then discussed Owens & Minor’s expressed interest in discussing post-closing employment arrangements for certain members of Apria’s senior management. Following discussion, in light of the most recent purchase price and other terms proposed by Owens & Minor, the Apria Board was willing to permit Mr. Starck discussing his post-closing employment arrangements with Owens & Minor but directed Mr. Starck not to have any discussions until the key terms of the merger, including the purchase price, were finalized. The Apria Board also directed representatives of Goldman Sachs to continue to seek a higher purchase price from Owens & Minor in light of Apria’s standalone value and to inform representatives of Evercore that Mr. Starck had expressed willingness to

 

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continue employment with Apria following the transaction but that discussions with Mr. Starck would be permitted only following the finalization of the key terms of the merger, including the purchase price.

Later on December 30, 2021, representatives of Simpson Thacher spoke with representatives of Kirkland & Ellis regarding the merger agreement and informed them of the Apria Board’s unwillingness to continue discussions regarding a potential transaction absent the removal of the closing condition regarding certain non-antitrust regulatory matters. Also on December 30, 2021, representatives of Goldman Sachs informed representatives of Evercore that, in addition to removing the closing condition regarding certain non-antitrust regulatory matters, the Apria Board believed that Owens & Minor’s last indication of interest continued to reflect insufficient value and that Owens & Minor would need to submit a revised indication of interest proposing a higher valuation. The representatives of Goldman Sachs also informed the representatives of Evercore that Mr. Starck had expressed willingness to continue employment with Apria following the transaction but that discussions with Mr. Starck would be permitted only following the finalization of the key terms of the merger, including the purchase price.

On December 31, 2021, a representative of Evercore delivered to a representative of Goldman Sachs a letter setting forth Owens & Minor’s revised indication of interest to acquire Apria for a purchase price of $37.00 in cash per share of Apria common stock. The revised indication of interest also noted that Owens & Minor would no longer seek a closing condition regarding certain non-antitrust regulatory matters.

In January 2022, Apria engaged Citigroup Global Markets Inc. (“Citigroup”) to act as an additional financial advisor in connection with a potential sale of Apria. As part of Apria’s ongoing evaluations of strategic alternatives, Citigroup has periodically met with the Apria Board and Apria’s management and advised Apria with respect to such strategic opportunities and alternatives. Apria has had a longstanding relationship with Citigroup and retained Citigroup to act as an additional financial advisor in connection with the proposed merger to assist Apria in, among other things, evaluating Owens & Minor’s contemplated financing. Apria selected Citigroup based on its experience in transactions similar to the merger, qualifications, expertise and reputation and its knowledge of Apria and its business and the industries in which Apria conducts its business and its experience in the debt and equity capital markets. Citibank was not requested to render a fairness opinion relating to the merger with Owens & Minor.

On January 2, 2022, members of the Apria Board, including its Chairman, met with members of Apria’s senior management and representatives of Goldman Sachs and Simpson Thacher to review the revised indication of interest. Following discussion, the members of the Apria Board were supportive of Goldman Sachs seeking a purchase price of $38.00 in cash per share of Apria common stock. Following the meeting, a representative of Goldman Sachs contacted a representative of Evercore to seek a purchase price of $38.00 in cash per share of Apria common stock.

Later on January 2, 2022, representatives of Simpson Thacher sent representatives of Kirkland & Ellis a revised draft of the merger agreement reflecting, among other things, a covenant requiring Owens & Minor to make divestitures and take any other actions necessary to consummate the merger unless it would result in a material adverse effect on the combined businesses of Apria and Owens & Minor and their respective subsidiaries, no closing condition regarding certain non-antitrust regulatory matters, a fixed “outside date” that is six months from the date of the signing of the merger agreement with the ability to extend such date in the event certain regulatory-related closing conditions have not been satisfied and a termination fee of 2.9% of transaction equity value.

Also on January 2, 2022, representatives of Kirkland & Ellis sent representatives of Simpson Thacher a draft support agreement that Owens & Minor proposed Holdings LLC, Mr. Starck and John G. Figueroa, Chairman of the Apria Board, execute in connection with the execution of the merger agreement that would require them to, among other things, vote all of their shares of Apria common stock in favor of the merger proposal. Representatives of Simpson Thacher provided the draft support agreement to Richards, Layton & Finger, P.A. (“Richards Layton”), outside counsel to Holdings LLC.

 

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On January 3, 2022, a representative of Evercore verbally confirmed to a representative of Goldman Sachs that Owens & Minor would increase its purchase price to $37.50 in cash per share of Apria common stock and indicated that such purchase price reflected Owens & Minor’s best and final proposal. Later on January 3, 2022, Apria permitted Owens & Minor to discuss with Mr. Starck the terms of his post-closing employment, and Mr. Starck met with Mr. Pesicka via remote communication to discuss the role and responsibilities of Mr. Starck’s post-closing employment, but the compensation and other terms and conditions of Mr. Starck’s post-closing employment were not discussed.

In the morning of January 4, 2022, representatives of Kirkland & Ellis discussed with representatives of Simpson Thacher certain terms of the draft merger agreement, including the covenant requiring Owens & Minor to make divestitures and take any other actions necessary to consummate the merger. Later in the day on January 4, 2022, representatives of Kirkland & Ellis sent representatives of Simpson Thacher a revised draft of merger agreement reflecting, among other things, the removal of the “outside date” extension.

On January 5, 2022, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs, Citigroup and Simpson Thacher in attendance. Representatives of Goldman Sachs updated the Apria Board on the progress of the potential transaction. A representative of Simpson Thacher provided the Apria Board with an update on the changes to the key terms of the draft merger agreement and also updated the Apria Board on Owens & Minor’s request that Holdings LLC, Mr. Starck and Mr. Figueroa execute support agreements in connection with the execution of the merger agreement, of which the Apria Board was supportive.

From January 5, 2022, until the approval of the merger agreement by the Apria Board, Simpson Thacher and Kirkland & Ellis continued to exchange drafts of the merger agreement and related documents, and Kirkland & Ellis and Richards Layton exchanged several drafts of the support agreement.

On January 6, 2022, Mr. Starck and Mr. Pesicka met for dinner, during which they discussed, among other things, trends in the healthcare industry, the potential combined business and the post-closing role and responsibilities of Mr. Starck and other members of senior management, but the compensation and other terms and conditions of Mr. Starck’s and other members of senior management’s post-closing employment were not discussed.

In the evening of January 7, 2022, the Apria Board met via remote communication with members of Apria’s senior management and representatives of Goldman Sachs, Citigroup and Simpson Thacher in attendance. A representative of Simpson Thacher provided the Apria Board with an update on the final draft of the merger agreement, the support agreement and the other documentation related to the merger. At the request of the Apria Board, Goldman Sachs reviewed with the Apria Board its financial analysis of the merger consideration and delivered to the Apria Board an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated January 7, 2022, to the effect that, as of the date of its written opinion and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Goldman Sachs as set forth in its applicable written opinion, the merger consideration of $37.50 per share in cash to be paid to the holders of the shares of Apria common stock pursuant to the merger agreement was fair from a financial point of view to such holders of shares of Apria common stock. The full text of the written opinion of Goldman Sachs is attached to this proxy statement as Annex C and is incorporated by reference in this proxy statement in its entirety. See also the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor” beginning on page 50. A representative of Simpson Thacher then described the resolutions before the Apria Board. After discussion by the Apria Board, the Apria Board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, (ii) authorized and approved the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger, (iii) resolved that the merger agreement be submitted for adoption at a meeting of the stockholders of Apria in accordance with applicable law, the merger agreement and Apria’s bylaws and (iv) recommended that Apria stockholders vote to adopt and approve the merger agreement and approve the merger.

 

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Following the approval of the Apria Board of the merger and the merger agreement, later in the evening of January 7, 2022, Apria and Owens & Minor finalized and executed the merger agreement and other documentation related to the proposed transaction. Concurrently with the execution of the merger agreement, Owens & Minor delivered an executed debt commitment letter providing for the committed debt financing related to the merger and Holdings LLC, Mr. Starck and Mr. Figueroa delivered executed support agreements.

On January 10, 2022, prior to commencement of trading of Apria common stock on NASDAQ, Apria and Owens & Minor issued a joint press release announcing the proposed transaction.

Recommendation of the Apria Board and Reasons for the Merger

The Apria Board recommends that you vote “FOR” the merger proposal.

At a meeting of the Apria Board held on January 7, 2022, the Apria Board, acting in consultation with its outside legal counsel and financial advisors, unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders, (ii) authorized and approved the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger, (iii) resolved that the merger agreement be submitted for adoption at a meeting of the stockholders of Apria in accordance with applicable law, the merger agreement and Apria’s bylaws and (iv) recommended that Apria stockholders vote to adopt and approve the merger agreement and approve the merger.

When you consider the Apria Board’s recommendation, you should be aware that Apria’s directors may have interests in the merger that may be different from, or in addition to, the interests of Apria stockholders generally. These interests are described in the section entitled “The Merger Proposal (Proposal 1)—Interests of Apria Executive Officers and Directors in the Merger.”

In the course of reaching its decision, the Apria Board consulted with Apria’s senior management and financial and legal advisors and considered a number of potentially positive factors with respect to the merger and the other transactions contemplated by the merger agreement, including, among others, the following (not necessarily in order of relative importance):

 

•

Merger consideration. The Apria Board considered the $37.50 per share in cash to be paid as merger consideration in relation to (i) the price at which Apria’s common stock was offered in the IPO, (ii) the Apria Board’s estimate of the current and future value of Apria as an independent entity and (iii) the market price of Apria’s common stock on January 7, 2022, the last trading day prior to the meeting of the Apria Board where it approved the merger.

 

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Premium. The Apria Board considered that the $37.50 per share in cash to be paid as merger consideration represents a premium of approximately 26% over the $29.72 per share closing price of Apria’s stock on January 7, 2022, the last trading day prior to the meeting of the Apria Board where it approved the merger.

 

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Cash consideration. The Apria Board considered the fact that the merger consideration would be paid solely in cash, which enables Apria’s stockholders to realize value that has been created at Apria while eliminating long-term business and execution risk.

 

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Strategic alternatives. The Apria Board considered the potential values, benefits, risks and uncertainties facing Apria stockholders associated with possible strategic alternatives to the merger (including potential alternative acquisitions and scenarios involving the possibility of remaining independent), and the timing and likelihood of accomplishing such alternatives, taking into account the fact that Apria had engaged in a number of discussions in the past few years, including with a number of potential acquirers prior to its IPO. The Apria Board also considered its alternatives in light of the

 

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risks associated with remaining an independent, standalone company. Based on the foregoing, the Apria Board considered that none of these options, on a risk-adjusted basis, was reasonably likely to create value for Apria stockholders greater than the merger consideration.

 

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Fairness opinion. The Apria Board considered the financial presentation by Goldman Sachs and the oral opinion of Goldman Sachs rendered to the Apria Board on January 7, 2022, which was subsequently confirmed by delivery of a written opinion, dated January 7, 2022, to the Apria Board to the effect that, as of the date of such opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Goldman Sachs as set forth in its written opinion, the merger consideration of $37.50 per share in cash to be received by holders of shares of Apria common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The Goldman Sachs opinion is more fully described in “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor” and the full text of such opinion is attached to this proxy statement as Annex C.

 

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Negotiations with Owens & Minor. The Apria Board considered the benefits that it and its advisors were able to obtain during its extensive negotiations with Owens & Minor and that the merger agreement was the product of arm’s-length negotiations and contained terms and conditions that were, in the Apria Board’s view, advisable and favorable to Apria and its stockholders.

 

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Timing of Owens & Minor’s offer. The Apria Board considered the timing of the merger and the risk that if Apria did not accept Owens & Minor’s offer at the time that it did, the Apria Board might not have had another opportunity to do so.

 

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Apria’s current condition. The Apria Board considered information with respect to its financial condition, results of operations, competitive position and business strategy, on both a historical and prospective basis, as well as current industry, regulatory, economic and market conditions, trends and cycles.

 

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Apria’s future prospects. The Apria Board considered Apria’s future prospects if it were to remain independent, including the competitive landscape and the business, financial and execution risks, its relationships with customers and suppliers, and the risks associated with continued independence discussed below.

 

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Risks associated with continued independence. While the Apria Board remained supportive of Apria’s strategic plan and optimistic about its prospects on a standalone basis, it also considered the risks associated with operating as a standalone company, including the potential execution risks associated with the strategic plan, the achievability of meeting financial projections and the potential risk associated with the possibility that even if its strategic plan were successfully executed, the market may not reflect such execution in Apria’s stock price.

 

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Economic conditions. The Apria Board considered the current state of the economy, debt financing markets and uncertainty surrounding forecasted economic conditions both in the near term and the long term, which could reduce its net revenue or profitability.

 

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Merger agreement. The Apria Board considered, in consultation with its counsel, the terms of the merger agreement, including:

 

•

the representations, warranties and covenants of the parties, the conditions to the parties’ obligations to complete the merger and their ability to terminate the merger agreement;

 

•

the fact that the consummation of the merger is not conditioned on Owens & Minor’s ability to obtain financing;

 

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the fact that Apria has sufficient operating flexibility to conduct its business in the ordinary course between the execution of the merger agreement and the consummation of the merger;

 

•

the fact that the definition of “material adverse effect” has a number of customary exceptions and is generally a very high standard as applied by courts;

 

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•

the right of Apria and the Apria Board to respond to a competing superior proposal from any bidder prior to obtaining the Apria stockholder approval if the Apria Board determines in good faith, after consultation with its financial advisor(s) and outside legal counsel, that such acquisition proposal constitutes a superior proposal and that failure to change its recommendation with respect to such proposal and terminate the merger agreement to enter a definitive agreement with respect to such superior proposal would be inconsistent with the directors’ fiduciary duties under applicable law, subject to certain notice requirements and “matching rights” in favor of Owens & Minor, provided that Apria pay Owens & Minor a termination fee of $41,970,000;

 

•

the belief of the Apria Board that, although the termination fee provisions might have the effect of discouraging competing third-party proposals, such provisions are customary for transactions of this type, and its belief that the $41,970,000 termination fee was reasonable in the context of comparable transactions and the likelihood that a fee of such size would not be a meaningful deterrent to alternative acquisition proposals;

 

•

the Apria Board’s right to change its recommendation in connection with an intervening event prior to obtaining the Apria stockholder approval if the Apria Board has determined in good faith, after consultation with its financial advisor(s) and outside legal counsel, that the failure to make such change in recommendation would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law, subject to certain notice requirements and “matching rights” in favor of Owens & Minor; and

 

•

Apria’s right, under specified circumstances, to specifically enforce Owens & Minor’s obligations under the merger agreement.

 

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Financing. The Apria Board considered the fact that Owens & Minor has obtained committed debt financing for the merger from a reputable financial institution, as well as the fact that Owens & Minor must use reasonable best efforts to consummate the debt financing and that such funding provides an amount sufficient to cover the aggregate merger consideration and all fees and expenses required to be paid by Owens & Minor, Merger Sub and the surviving corporation in connection with the merger and the financing, the refinancing of any outstanding indebtedness of Apria and all other payment obligations of Owens & Minor, Merger Sub and the surviving corporation in connection therewith.

 

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Likelihood of consummation. The Apria Board considered the likelihood that the merger would be completed, in light of, among other things, the conditions to the merger and the absence of a financing condition, the relative likelihood of obtaining required antitrust approval, and the remedies available to Apria under the merger agreement, as well as the level of commitment by Owens & Minor to obtain the antitrust approval and to agree to any conditions imposed by regulators in connection with securing such approval, including its general commitment to use reasonable best efforts to take any and all steps necessary, proper and advisable to secure such approval and its commitment to propose, negotiate, commit to, agree to and effect, by consent decree, hold separate orders or otherwise, the sale, divesture, disposition, or license of any assets, properties, products, rights, services or businesses of Owens & Minor, Apria or any of their respective subsidiaries or any interest therein, to the extent such transaction would not have a materially adverse effect on the combined businesses of Owens & Minor, Apria and their respective subsidiaries, taken as a whole.

 

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Owens & Minor’s reputation. The Apria Board considered the favorable business reputation and capabilities of Owens & Minor and its management, and Owens & Minor’s general ability to complete acquisition transactions.

 

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Appraisal rights. The Apria Board considered the fact that stockholders who do not vote to adopt the merger agreement and who comply with the requirements of the DGCL will have the right to dissent from the merger and to demand appraisal of the fair value of their shares under the DGCL.

 

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Stockholders’ ability to reject the merger. The Apria Board considered the fact that the merger is subject to the adoption of the merger agreement by a majority in voting power of the outstanding shares of Apria common stock as of the close of business on the record date.

 

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In the course of reaching its decision, the Apria Board also considered a number of potentially negative factors with respect to the merger and the other transactions contemplated by the merger agreement including, among others, the following (not necessarily in the order of relative importance):

 

•

Participation in future gains. The Apria Board considered the fact that Apria will no longer exist as an independent public company and Apria stockholders will forgo any future increase in Apria’s value that might result from its earnings or possible growth as an independent company. The Apria Board was optimistic about its prospects on a standalone basis, but concluded that the premium reflected in the merger consideration constituted fair compensation for the loss of the potential stockholder benefits that could be realized by its strategic plan, particularly on a risk-adjusted basis and in light of the achievability of its financial projections.

 

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Regulatory risk. The Apria Board considered the risk that the completion of necessary antitrust review, the completion of which is beyond Apria’s control, may be delayed, conditioned or denied.

 

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Risks associated with a failure to consummate the merger. The Apria Board considered the fact that there can be no assurance that all conditions to the parties’ obligations to consummate the merger will be satisfied and as a result the possibility that the merger might not be completed. The Apria Board noted the fact that, if the merger is not completed, (i) it will have incurred significant risk, transaction expenses and opportunity costs, including the possibility of disruption to its operations, diversion of management and employee attention, employee attrition and a potentially negative effect on its business and customer relationships, (ii) depending on the circumstances that caused the merger not to be completed, it is likely that the price of the Apria common stock will decline, potentially significantly, and (iii) the market’s perception of Apria could be adversely affected.

 

•

Financing risk. The Apria Board considered the risk that, while the merger agreement is not subject to any financing condition, if Owens & Minor fails to obtain sufficient financing, the merger is unlikely to be consummated.

 

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Restrictions on the operation of its business. The Apria Board considered the restrictions on the conduct of its business prior to the completion of the merger, including restrictions on realizing certain business opportunities or taking certain actions with respect to its operations it would otherwise take absent the pending merger.

 

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Non-solicitation provision. The Apria Board considered the fact that the merger agreement precludes Apria from actively soliciting alternative proposals.

 

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Termination fee. The Apria Board considered the possibility that the $41,970,000 termination fee payable to Owens & Minor in certain circumstances might have the effect of discouraging alternative acquisition proposals or reducing the price of such proposals.

 

•

Tax treatment. The Apria Board considered the fact that any gains arising from the receipt of the merger consideration would generally be taxable to Apria stockholders that are U.S. holders for U.S. federal income tax purposes.

 

•

Stockholder litigation. The Apria Board considered the impact on Apria of potential stockholder litigation in connection with the merger.

While the Apria Board considered potentially positive and potentially negative factors, the Apria Board concluded that, overall, the potentially positive factors outweighed the potentially negative factors. Accordingly, the Apria Board unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of Apria and its stockholders.

The foregoing discussion is not intended to be an exhaustive list of the information and factors considered by the Apria Board in its consideration of the merger, but includes the material positive factors and material negative factors considered by the Apria Board in that regard. In view of the number and variety of factors, the

 

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Apria Board did not find it practicable to, nor did it attempt to, make specific assessments of, quantify, or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, individual members of the Apria Board may have given different weights to different factors. Based on the totality of the information presented, the Apria Board collectively reached the unanimous decision to authorize and approve the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger, in light of the factors described above and other factors that the members of the Apria Board felt were appropriate.

Portions of this explanation of Apria’s reasons for the merger and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinion of Apria’s Financial Advisor

Goldman Sachs rendered its opinion to the Apria Board that, as of January 7, 2022 and based upon and subject to the factors and assumptions set forth therein, the $37.50 in cash per share to be paid to the holders of shares of Apria common stock pursuant to the merger agreement was fair from a financial point of view to the holders of shares of Apria common stock.

The full text of the written opinion of Goldman Sachs, dated January 7, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Apria Board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of Apria common stock should vote with respect to the merger, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things: (i) the merger agreement; (ii) Apria’s annual report to stockholders and Annual Report on Form 10 K for the fiscal year ended December 31, 2020; (iii) Apria’s Registration Statement on Form S-1, including the prospectus contained therein dated February 10, 2021, relating to the IPO of shares of Apria common stock; (iv) Apria’s Registration Statement on Form S-1, including the prospectuses contained therein dated June 9, 2021 and November 10, 2021, relating to follow-on public offerings of shares of Apria common stock; (v) Apria’s interim reports to stockholders and Quarterly Reports on Form 10-Q; (vi) certain other communications from Apria to its stockholders; (vii) certain publicly available research analyst reports for Apria; and (viii) certain internal financial analyses and forecasts for Apria prepared by its management, as approved for Goldman Sachs’ use by Apria (the “Forecasts”).

Goldman Sachs also held (i) discussions with members of the senior management of Apria regarding their assessment of the past and current business operations, financial condition, and future prospects of Apria; (ii) reviewed the reported price and trading activity for the Apria common stock; (iii) compared certain financial and stock market information for Apria with similar information for certain other companies the securities of which are publicly traded; and (iv) performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with Apria’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with Apria’s consent that the Forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Apria. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Apria or any of its subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental,

 

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regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the merger will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of Apria to engage in the merger or the relative merits of the merger as compared to any strategic alternatives that may be available to Apria; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, Apria or any other alternative transaction. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the $37.50 in cash per share to be paid to the holders of Apria common stock pursuant to the merger agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the merger agreement or the merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Apria; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Apria, or class of such persons in connection with the merger, whether relative to the $37.50 in cash per share to be paid to the holders of shares of Apria common stock pursuant to the merger agreement or otherwise. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions, as in effect on, and the information made available to it as of, the date of the written opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its written opinion based on circumstances, developments or events occurring after the date of its written opinion. In addition, Goldman Sachs does not express any opinion as to the prices at which shares of Apria’s common stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Apria, Owens & Minor or the merger, or as to the impact of the merger on the solvency or viability of Apria or Owens & Minor, or the ability of Apria or Owens & Minor to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Apria Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. 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 5, 2022 and is not necessarily indicative of current market conditions.

Following Goldman Sachs’ presentation to the Apria Board on January 7, 2022 (the “January 7 Presentation”), members of Apria’s management identified an error in the amount of depreciation and amortization reflected in the Forecasts for 2022 through 2024. See footnote 1 to the “Financial Projections” table in the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Certain Financial Projections” beginning on page 55 for more information. The Forecasts were utilized to calculate estimates of unlevered free cash flow for Apria that were used in the illustrative discounted cash flow analysis presented in the January 7 Presentation. This therefore resulted in an incorrect calculation of the range of illustrative present values derived from the discounted cash flow analysis. Goldman Sachs subsequently performed such analysis, as of January 7, 2022, using the corrected forecasts of the management of Apria (the “Corrected Forecasts”). Such subsequent analysis performed by Goldman Sachs does not address any circumstances, developments or events occurring after January 7, 2022, which is the date of the written opinion of Goldman Sachs, and Goldman Sachs’ opinion set forth in its written opinion letter was provided only as of such date. Based upon and subject to the foregoing,

 

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on January 21, 2022, Goldman Sachs confirmed to the Apria Board that, had Goldman Sachs performed its financial analysis set forth in the presentation on January 7, 2022 using the Corrected Forecasts, there would have been no change to the conclusion set forth in the written opinion of Goldman Sachs.

For certain of the analyses described below, Goldman Sachs used the following financial metrics reflected in the Forecasts provided by management: (i) Adjusted EBITDA, which is calculated as net income before the impact of interest income, interest expense, income taxes, and depreciation and amortization as well as other non-recurring items typically identified in Apria’s financial statements, and (ii) Adjusted EBITDA Less Patient Equipment Capex, which is calculated as Adjusted EBITDA minus patient equipment received less the net book value of dispositions of patient equipment. In addition, Goldman Sachs also used the following financial metric, which was derived by Goldman Sachs using information provided by management in the Forecasts and Corrected Forecasts and approved for Goldman Sachs’ use by management: Unlevered Free Cash Flow, which is calculated as Adjusted EBITDA less estimated cash taxes (net of the benefit of tax credits), capital expenditures and other cash flow items.

Implied Premia Analysis.

Goldman Sachs calculated the implied premia represented by the price per share of Apria common stock of $37.50 relative to (i) $30.18, the closing price per share of Apria common stock on January 5, 2022, two trading days before Goldman Sachs rendered its opinion; (ii) $38.11, the highest closing trading price per share of Apria common stock since the consummation of the IPO on February 11, 2021; (iii) $30.79, the volume weighted average price (“VWAP”) of shares of Apria common stock over the one-month period ended January 5, 2022; (iv) $31.74, the VWAP of shares of Apria common stock over the three-month period ended January 5, 2022; (v) $32.56, the VWAP of shares of Apria common stock over the six-month period ended January 5, 2022; and (vi) $30.14, the VWAP of shares of Apria common stock since the IPO on February 11, 2021. The results of these calculations and comparisons are as follows:

 

Reference price per share of Apria common stock		Implied premium represented by the $37.50 in cash per share of Apria common stock
January 5, 2022 closing price of $30.18			24.3	%
Highest closing price since IPO of $38.11			(1.6	)%
1-Month VWAP of $30.79			21.8	%
3-Month VWAP of $31.74			18.1	%
6-Month VWAP of $32.56			15.2	%
VWAP since IPO of $30.14			24.4	%

Illustrative Present Value of Future Share Price Analysis

Goldman Sachs performed an analysis of the implied present value of an illustrative future value per share of Apria common stock, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity as a function of such company’s financial multiples. Using the Forecasts, Goldman Sachs first calculated illustrative implied future enterprise values of Apria as of September 30 for each of fiscal years 2021, 2022 and 2023 by applying (x) enterprise value to next-twelve-month (“NTM”) Adjusted EBITDA Less Patient Equipment Capex multiples ranging from 9.5x to 11.5x to (y) the estimated NTM Adjusted EBITDA Less Patient Equipment Capex for the NTM beginning on September 30, 2021, September 30, 2022 and September 30, 2023, respectively. The enterprise value to NTM Adjusted EBITDA Less Patient Equipment Capex multiples used in this analysis were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, current and historical NTM Adjusted EBITDA Less Patient Equipment Capex multiples for Apria. Goldman Sachs then subtracted the net debt of Apria as of September 30, 2021, as provided by management of Apria, from the respective illustrative implied future enterprise values in order to derive a range of illustrative implied future equity values for Apria as of September 30 for each of fiscal

 

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years 2021, 2022 and 2023. Goldman Sachs then divided such illustrative implied future equity values by the number of fully-diluted shares of Apria common stock outstanding (using the treasury stock method) as of January 5, 2022, as provided by management of Apria, to derive a range of implied future share prices as of September 30, 2021, September 30, 2022 and September 30, 2023, respectively. Goldman Sachs then discounted such implied future share prices back to September 30, 2021 using an illustrative discount rate of 8.8%, reflecting an estimate of Apria’s cost of equity. Goldman Sachs derived such discount rate by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for Apria, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied present values of $29.72 to $37.16 per share of Apria common stock.

Illustrative Discounted Cash Flow Analysis.

Using the Forecasts and the Corrected Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Apria. Using discount rates ranging from 7.5% to 9%, reflecting estimates of Apria’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2021 (i) estimates of Unlevered Free Cash Flow for Apria for the fourth quarter of fiscal year 2021 through the end of fiscal year 2031 as reflected in the Forecasts and the Corrected Forecasts and (ii) a range of illustrative terminal values for Apria, which were calculated by applying perpetuity growth rates ranging from 0.0% to 2.0%, to a terminal year estimate of the free cash flow to be generated by Apria, as reflected in the Forecasts and the Corrected Forecasts (which analysis implied exit terminal year Adjusted EBITDA Less Patient Equipment Capex multiples ranging from 5.5x to 9.2x). In addition, using discount rates ranging from 7.5% to 9%, reflecting an estimate of Apria’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2021 the estimated benefits of Apria’s net operating losses for the fourth quarter of fiscal year 2021 through the end of fiscal year 2031, as reflected in the Forecasts and the Corrected Forecasts.

Goldman Sachs derived the discount rates referenced above by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including Apria’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for Apria, as well as certain financial metrics for the United States financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Forecasts and the Corrected Forecasts, as applicable, and market expectations regarding long-term real growth of gross domestic product and inflation.

Goldman Sachs derived ranges of illustrative enterprise values for Apria by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Apria the net debt of Apria as of September 30, 2021, as provided by the management of Apria, to derive a range of illustrative equity values for Apria. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully-diluted shares of Apria common stock outstanding (using the treasury stock method) as of January 5, 2022, as provided by the management of Apria, to derive a range of illustrative present values per share of Apria common stock. Using the Forecasts, and as set forth in the January 7 Presentation, this analysis indicated a range of illustrative present values per share of Apria common stock ranging from $31.74 to $43.99, and using the Corrected Forecasts, this analysis indicated a range of illustrative present values per share of Apria common stock ranging from $32.16 to $44.43.

Premia Paid Analysis

Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for transactions announced during the period from January 2017 through December 2021 that involved the acquisition of all of the outstanding equity of a U.S. public company with an enterprise value of $500,000,000 to $2,000,000,000. For such period, using publicly available information, Goldman Sachs calculated the median, 25th percentile and 75th percentile premiums of the price paid in 250 transactions relative to the target’s last undisturbed closing stock price prior to announcement of the transaction. This analysis indicated a median

 

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premium of 16%, a 25th percentile premium of 7% and a 75th percentile premium of 25% during such period. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of 7% to 25% to the undisturbed closing price per share of Apria common stock of $30.18 as of January 5, 2022, and calculated a range of implied equity values per share of Apria common stock of $32.29 to $37.73 per share of Apria common stock.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Apria or Owens & Minor or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs providing its opinion to Apria’s board of directors as to the fairness from a financial point of view, as of the date of the opinion, of the $37.50 in cash per share to be paid to the holders of shares of Apria common stock pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Apria, Owens & Minor, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arm’s-length negotiations between Apria and Owens & Minor and was approved by the Apria Board. Goldman Sachs provided advice to Apria during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to Apria or the Apria Board or that any specific amount of consideration constituted the only appropriate consideration for the merger.

As described in the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Recommendation of the Apria Board and Reasons for the Merger” beginning on page 46, Goldman Sachs’ opinion to the Apria Board was one of many factors taken into consideration by the Apria Board in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Apria, Owens & Minor, any of their respective affiliates and third parties, including Blackstone Inc., a significant stockholder of Apria (“Blackstone”), or any currency or commodity that may be involved in the transaction contemplated by the merger agreement. Goldman Sachs acted as financial advisor to Apria in connection with, and participated in certain of the negotiations leading to, the merger. Goldman Sachs has provided certain financial advisory and/or underwriting services to Apria and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as left lead bookrunner with respect to the IPO in February 2021; and as a bookrunner with respect to follow-on public offerings of shares of Apria common stock in June 2021 and November 2021. During the two-year period ended January 5, 2022, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking

 

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Division to Apria and/or its affiliates of approximately $8,800,000 (excluding compensation received from Blackstone and its affiliates other than Apria). During the two-year period ended January 5, 2022, the Investment Banking Division of Goldman Sachs has not been engaged by Owens & Minor or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Blackstone and its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as left lead bookrunner with respect to a public offering of 4.25% Notes due 2026 (aggregate principal amount $750,000,000) by Blue Yonder Group, Inc., a portfolio company of funds associated with Blackstone, in July 2020; as lead arranger with respect to the floating rate securitization (aggregate principal amount $630,000,000) entered into by Blackstone Real Estate Advisors, an affiliate of Blackstone, in August 2020; as a bookrunner with respect to the term loan B facility (aggregate principal amount $1,670,000,000) and the 4.75% secured notes due 2027 (aggregate principal amount $375,000,000) issued by the Michaels Companies, Inc., a portfolio company of funds associated with Blackstone, in September 2020; as financial advisor to Rothesay Life plc, a portfolio company of funds associated with Blackstone, with respect to the sale of Blackstone’s equity interest in October 2020; as financial advisor to BioMed Realty Trust Inc., a portfolio company of funds associated with Blackstone, with respect to its recapitalization into a new fund affiliated with Blackstone in November 2020; as financial advisor to Change Healthcare Inc., a portfolio company of funds associated with Blackstone, with respect to its pending sale to UnitedHealth Group announced in January 2021; as left lead bookrunner with respect to a term loan repricing and add on (aggregate principal amount $1,460,000,000) by BME Group Holding BV, a portfolio company of funds associated with Blackstone, in March 2021; as financial advisor to a consortium of Blackstone Infrastructure Partners, an affiliate of Blackstone, and B&J Holdings Limited with respect to the consortium’s recommended offer to acquire Applegreen plc in March 2021; as left lead bookrunner with respect to a follow-on public offering of the equity of TaskUS LLC, a portfolio company of funds associated with Blackstone, in October 2021; as a bookrunner for Medline Industries Inc, a portfolio company of funds associated with Blackstone, with respect to its bridge financing completed in October 2021; and as financial advisor to Aqua Finance Inc., a portfolio company of funds associated with Blackstone, with respect to its pending sale to Apollo, announced in November 2021. During the two-year period ended January 5, 2022, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Blackstone and/or its affiliates and portfolio companies of approximately $352,000,000, as determined by Goldman Sachs based on its books and records. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Apria, Owens & Minor and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation. Affiliates of Goldman Sachs & Co. LLC also may have co-invested with Blackstone and its affiliates from time to time and may have invested in limited partnership units of affiliates of Blackstone from time to time and may do so in the future.

The Apria Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to a letter agreement dated January 5, 2022, Apria engaged Goldman Sachs to act as its financial advisor in connection with the merger. The engagement letter between Apria and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $21,100,000, $5,000,000 of which became payable upon execution of the merger agreement and the reminder of which is contingent upon consummation of the merger. In addition, Apria has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Certain Financial Projections

In its press releases announcing quarterly and annual earnings, Apria has from time to time publicly provided certain projections as to its future financial results (which projections may also be included in investor presentations from time to time). Apria does not otherwise, as a matter of course, publicly disclose projections as to its future financial results. However, Apria’s senior management prepared and provided to the Apria Board at

 

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its meeting on December 14, 2021 certain non-public financial forecasts based on management’s reasonable best estimates, judgments and assumptions with respect to Apria’s future financial performance at the time such forecasts were prepared, which we refer to as the “Financial Projections”. The Financial Projections were approved by Apria for Goldman Sachs’s use for purposes of its financial analyses summarized above under “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor”. Goldman Sachs expressed no view or opinion as to these financial projections or the assumptions on which they were based. A summary of the Financial Projections is set forth below:

Financial Projections⁽¹⁾

 

(US$ in millions, except per share data)		2021E				2022E				2023E				2024E
Net Revenue		$	1,136			$	1,200			$	1,260			$	1,321
Adjusted EBITDA(2)		$	232			$	240			$	254			$	272
Patient Equipment Capex(3)		$	91			$	103			$	107			$	123
Adjusted EBITDA Less Patient Equipment Capex		$	141			$	137			$	147			$	149
Unlevered Free Cash Flow(4)		$	95			$	85			$	109			$	107

 

(1)

Subsequent to the announcement of the merger, on January 14, 2022, as part of an ongoing process to refine its preliminary budget for 2022, members of Apria’s management identified an error in the amount of depreciation and amortization reflected in the Financial Projections for 2022 through 2024. During the preparation of the Financial Projections, Apria’s management increased the amount of projected Patient Equipment Capex reflected in the Financial Projections for 2022 through 2024 as a result of an expected change in Apria’s equipment leasing and ownership practices; however, a concomitant increase in depreciation (and decrease in cash taxes) was erroneously not reflected in the Financial Projections. This error does not affect any of the figures reflected above except Unlevered Free Cash Flow for 2022, 2023 and 2024, which would have been $88, $110 and $109, respectively, as a result of the decrease in cash taxes. Because of this error, Goldman Sachs reviewed its financial analyses and, if the correct amount of cash taxes had been taken into account, the discounted cash flow analysis reflected in Goldman Sachs’s financial analyses would have resulted in a range of illustrative present values per share of Apria common stock of $32.16 to $44.43 (rather than $31.74 to $43.99), as more fully described in the section of the proxy statement entitled “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor”. Nevertheless, on January 21, 2022, Goldman Sachs confirmed to the Apria Board that, had Goldman Sachs performed its financial analyses using the corrected Financial Projections, there would have been no change to the conclusion set forth in the written opinion of Goldman Sachs.

(2)	“Adjusted EBITDA” is defined as net income before the impact of interest income, interest expense, income taxes, and depreciation and amortization as well as other non-recurring items typically identified in Apria’s financial statements.

(3)	“Patient Equipment Capex” is defined as the patient equipment received less the net book value of dispositions of patient equipment.

(4)

“Unlevered Free Cash Flow” is defined as EBIT (which is Adjusted EBITDA less depreciation and amortization), less estimated cash taxes, plus depreciation and amortization, less capital expenditures and other cash flow items. The calculation of Unlevered Free Cash Flow was not expressly included in the Financial Projections but was derived from the Financial Projections and is included for reference.

The Financial Projections were not prepared with a view to public disclosure and are included in this proxy statement only because the Financial Projections were made available to Owens & Minor in the course of its due diligence and to Goldman Sachs for use in connection with its financial analyses summarized above under “The Merger Proposal (Proposal 1)—Opinion of Apria’s Financial Advisor.” The Financial Projections were not prepared with a view to compliance with generally accepted accounting principles as applied in the United States (“GAAP”), the published guidelines of the SEC regarding projections and forward-looking statements or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Financial Projections were prepared by, and are the responsibility of,

 

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Apria’s management. Deloitte & Touche LLP (“Deloitte”) has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the Financial Projections and, accordingly, Deloitte does not express an opinion or any other form of assurance with respect thereto. The Deloitte report incorporated by reference in this proxy statement relates to Apria’s previously issued financial statements. It does not extend to the Financial Projections and should not be read to do so. The Financial Projections were prepared solely for internal use of Apria and are subjective in many respects.

The Financial Projections are forward-looking statements. Although this summary of the Financial Projections is presented with numerical specificity, the Financial Projections reflect numerous variables, assumptions and estimates as to future events made by Apria’s management that it believed were reasonable at the time the Financial Projections were prepared, taking into account the relevant information available to management at the time. However, such variables, assumptions and estimates are inherently uncertain and many of which are beyond the control of Apria’s management. Because the Projections cover multiple years, by their nature, they become less predictive with each successive year. This information is not fact and should not be relied upon as being necessarily indicative of actual future results. Important factors that may affect actual results and cause the Financial Projections not to be achieved include, among other things, risks related to the COVID-19 public health emergency, product and related recalls, ongoing supply chain disruptions, the profitability of Apria’s capitation arrangements, renegotiation or termination of Apria’s contracts, reimbursements by payors, Apria’s reliance on relatively few vendors, competition in the home healthcare industry, the inherent risk of liability in the provision of healthcare services, and reductions in Medicare and Medicaid and commercial payor reimbursement rates. For information on factors that may cause Apria’s future results to materially vary, see the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements.”

In addition, the Financial Projections do not take into account any circumstances or events occurring after the date that they were prepared and do not give effect to the merger. As a result, there can be no assurance that the Financial Projections will be realized, and actual results may be materially better or worse than those contained in the Financial Projections. The inclusion of this information should not be regarded as an indication that the Apria Board, Apria, Goldman Sachs, Owens & Minor, Owens & Minor’s representatives and affiliates or any other recipient of this information considered, or now considers, the Financial Projections to be necessarily predictive of actual future results. The summary of the Financial Projections is not included in this proxy statement in order to induce any stockholder to vote in favor of the merger proposal or any of the other proposals to be voted on at the special meeting.

Except to the extent required by applicable federal securities laws, Apria does not intend, and expressly disclaims any responsibility, to update or otherwise revise the Financial Projections to reflect circumstances existing after the date when Apria prepared the Financial Projections or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the assumptions underlying the Projections are shown to be in error. By including in this document a summary of certain financial projections, neither Apria nor any of its representatives or advisors (including Goldman Sachs) nor Owens & Minor or its representatives and affiliates makes any representation to any person regarding the ultimate performance of Apria or the surviving corporation compared to the information contained in such financial forecasts and should not be read to do so.

Certain of the measures included in the Financial Projections may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Apria may not be comparable to similarly titled amounts used by other companies. The non-GAAP financial measures were relied upon by Goldman Sachs for purposes of its financial analyses and opinion and by the Apria Board in connection with its consideration of the merger. Financial measures provided to a financial advisor in connection with a business combination transaction are excluded from the definition of non-GAAP financial measures and therefore are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would

 

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otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not relied upon by Goldman Sachs for purposes of its financial analyses and opinion or by the Apria Board in connection with its consideration of the merger. Accordingly, a reconciliation of the financial measures is not included herein.

Interests of Apria’s Executive Officers and Directors in the Merger

In considering the recommendation of the Apria Board that you vote to approve the merger proposal, you should be aware that, aside from their interests as Apria stockholders, Apria’s directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Apria stockholders generally, which may create potential conflicts of interest. These interests are described in more detail below and, with respect to the named executive officers of Apria, are quantified in the “Golden Parachute Compensation” table below. The Apria Board was aware of these interests and considered them when it adopted the merger agreement and approved the merger. The calculations set forth herein are based on the outstanding Apria equity awards as of January 31, 2022 and do not reflect any issuances or forfeitures that may be made or occur, any dividends or dividend equivalents that may be accrued, or any Apria equity awards that have vested or are expected to vest in accordance with their terms prior to April 15, 2022.

With respect to the directors serving on the Apria Board, these interests relate to the impact of the transaction on the directors’ outstanding Apria equity awards and the provision of indemnification, the advancement of expenses, exculpation and insurance arrangements pursuant to the merger agreement and Apria’s certificate of incorporation and bylaws, which reflect that such directors may be subject to claims arising from their service on the Apria Board, subject in all respects to the limitations set forth in the merger agreement. In addition, Owens & Minor has agreed in the merger agreement to perform the indemnification agreements between Apria and the directors serving on the Apria Board, subject in all respects to the limitations set forth in the merger agreement. The aggregate amount that would become payable to the directors serving on the Apria Board (other than Daniel J. Starck, whose respective interests are as an executive officer are further described below) in settlement of their unvested Apria equity awards as of January 31, 2022 if the effective time is April 15, 2022, based on the price per share of Apria common stock of $37.50, is estimated to be approximately $2,839,942.

Apria’s current executive officers are: Daniel J. Starck, Debra L. Morris, Robert P. Walker, Michael-Bryant Hicks, Angela Fyfe, Mark E. Litkovitz and Celina M. Scally. References to “executive officers” in this section also include Raoul Smyth who, effective March 31, 2021, ceased to be an executive officer of Apria.

With respect to Apria’s executive officers, these interests are described in more detail below, assuming the merger occurs and, where applicable, the executive officer experiences a qualifying termination of employment on April 15, 2022:

 

•

accelerated vesting of equity awards under Apria’s 2021 Omnibus Incentive Plan held by the executive officers as of January 31, 2022, in the aggregate amount of approximately $7,194,602 for all executive officers (other than Mr. Smyth), based on the price per share of Apria common stock of $37.50;

 

•

partially accelerated vesting of Apria LTIP Awards held by the executive officers as of January 31, 2022 in the aggregate amount of approximately $572,421 for all executive officers, based on the price per share of Apria common stock of $37.50;

 

•

accelerated vesting of Apria SAR awards held by the executive officers as of January 31, 2022 under Apria’s 2015 Stock Plan, in the aggregate amount of approximately $12,129,666 (including the payment of any related dividend equivalents) for all executive officers (other than Mr. Smyth), based on the price per share of Apria common stock of $37.50;

 

•

possible cash severance payments and other termination benefits following a qualifying termination of employment as set forth in Apria disclosure letter for each of Apria’s executive officers, in an aggregate amount of approximately $8,410,545 for all executive officers (other than Mr. Smyth); and

 

58

•

the provision of indemnification, advancement of expenses and insurance arrangements pursuant to the merger agreement and Apria’s certificate of incorporation and bylaws, and performance under indemnification agreements between Apria and its executive officers.

Treatment of Director and Executive Officer Common Stock

As is the case for any stockholder of Apria, Apria’s directors and executive officers will receive $37.50 in cash, without interest, and less any applicable withholding taxes, for each share of Apria common stock (other than appraisal shares and owned company shares) that they own at the effective time. For information regarding beneficial ownership of Apria common stock by each of Apria’s current directors, Apria’s named executive officers and all directors and executive officers as a group, see the section of this proxy statement entitled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 105.

Treatment of Director and Executive Officer Equity Awards

As described in the section of this proxy statement entitled “The Merger Agreement—Treatment of Apria Equity Awards” beginning on page 76, the merger agreement provides that each Apria RSU, each Apria PSU, each Apria LTIP Award and each Apria SAR will be treated as set forth below.

 

•

Restricted Stock Units. Immediately prior to the effective time, each Apria RSU granted pursuant to any Apria stock plan, whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50.

 

•

Performance Stock Units. Immediately prior to the effective time, each Apria PSU granted pursuant to any Apria stock plan, whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50, based on attainment of the applicable performance metrics at the greater of target or actual level of performance as of the closing date, as determined in good faith by the Apria Board or a committee thereof in reasonable consultation with Owens & Minor prior to the effective time.

 

•

LTIP Awards. Immediately prior to the effective time, each vested Apria LTIP Award granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing, which will be deemed to constitute a “Change of Control” for purposes of such Apria LTIP Award) will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to (i) the number of shares of Apria common stock represented by the Apria LTIP Award deemed earned as of immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing as described above), as determined by the Apria Board or a committee thereof after reasonable consultation with Owens & Minor prior to the effective time multiplied by (ii) $37.50. Any unvested portion of an Apria LTIP Award that is outstanding immediately prior to the effective time after giving effect to the incremental vesting resulting from the closing as described above will be cancelled for no consideration in accordance with the terms of the applicable Apria stock plan.

 

•

Stock Appreciation Rights. Immediately prior to the effective time, each Apria SAR granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to the total value of the payout that would have

 

59

been earned in accordance with the terms of the applicable governing documents (including any previously unpaid dividends or dividend equivalents thereon, in accordance with such governing documents).

Payments for Unvested Equity Awards

The following table sets forth the amounts that each of Apria’s directors, named executive officers and all other executive officers as a group would receive with respect to unvested Apria RSUs, Apria PSUs, Apria LTIP Awards and Apria SARs, assuming the completion of the merger occurs on April 15, 2022. The numbers set forth below do not attempt to forecast any grants, additional issuances, dividends, additional deferrals or forfeitures of equity-based awards following January 31, 2022. The calculations set forth in the table below are based on outstanding Apria equity awards as of January 31, 2022 and the merger consideration of $37.50. Depending on when the effective time occurs, certain Apria equity awards shown in the table below may vest in accordance with their terms.

Estimated Payments for Unvested Equity Awards Table

 

Executive Officers and Directors		Aggregate Amount Payable for Unvested Apria RSUs ($)(1)				Aggregate Amount Payable for Unvested Apria PSUs ($)(2)				Aggregate Amount Payable for Unvested Apria LTIP Awards ($)(3)				Aggregate Amount Payable for Unvested Apria SARs ($)(4)
Directors (excluding Daniel J. Starck)
John G. Figueroa			189,713				—				—				—
Michael Audet			—				—				—				—
John R. Murphy			189,713				—				—				850,832
Norman C. Payson, M.D.			—				—				—				—
Devon Rinker			—				—				—				—
Neil P. Simpkins			—				—				—				—
Lynn Shapiro Snyder			189,713				—				—				850,832
Mike S. Zafirovski			189,713				—				—				—
Teresa Kline			189,713				—				—				—
Susannah Gray			189,713				—				—				—
Named Executive Officers
Daniel J. Starck			1,027,613				2,055,225				169,607				4,530,051
Debra L. Morris			450,563				901,125				84,803				2,264,253
Robert P. Walker			132,788				265,575				63,602				850,832
Mark E. Litkovitz			132,788				265,575				63,602				850,832
Raoul Smyth(5)			—				—				63,602				—
All Other Executive Officers as a Group(6) (3 persons)			654,450				1,308,900				127,205				3,633,698

 

(1)

This amount includes the estimated value that each executive officer or director would receive in respect of unvested Apria RSUs based on the merger consideration and the assumed closing of the merger on April 15, 2022 on a “single-trigger” basis, pursuant to the terms of the merger agreement solely as a result of the closing of the merger.

(2)

This amount includes the estimated value that each executive officer or director would receive in respect of unvested Apria PSUs assuming achievement of the maximum performance level based on the merger consideration and the assumed closing of the merger on April 15, 2022 on a “single-trigger” basis, pursuant to the terms of the merger agreement solely as a result of the closing of the merger.

 

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(3)

This amount includes the estimated value that each executive officer or director would receive in respect of incremental vesting of Apria LTIP Awards resulting from the closing assuming achievement of the maximum performance level and maximum potential payout thereunder based on the merger consideration and the assumed closing of the merger on April 15, 2022 on a “single-trigger” basis, pursuant to the terms of the merger agreement solely as a result of the closing of the merger.

(4)

This amount includes the estimated value that each executive officer or director would receive in respect of unvested Apria SARs, including any previously unpaid dividends or dividend equivalents, based on the merger consideration and the assumed closing of the merger on April 15, 2022 on a “single-trigger” basis, pursuant to the terms of the merger agreement solely as a result of the closing of the merger.

(5)	Effective March 31, 2021, Mr. Smyth ceased to be a named executive officer of Apria.

(6)	This group consists of Michael-Bryant Hicks, Angela Fyfe and Celina M. Scally.

Severance Benefits

Each Apria executive officer is eligible for severance under the merger agreement and the related Apria disclosure letter upon a termination by Owens & Minor or any of its affiliates without “cause” or by the executive officer for “good reason” (in each case, unless otherwise set forth below, as defined in the executive officer’s applicable employment agreement or severance agreement) within 24 months following the effective time as follows:

 

•

200% of base salary plus target annual bonus (250% for Mr. Starck), with such amount to be paid in substantially equal payments over 24 months (30 months in the case of Mr. Starck) in accordance with the payroll practices of Owens & Minor or its applicable affiliate;

 

•

a prorated annual bonus for the year of termination based on the greater of actual performance achieved and target performance levels, with such amount to be paid in lump sum within 30 days of such qualifying termination;

 

•

cash payments equal to the cost of providing continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for 18 months (24 months for Mr. Starck), payable in substantially equal payments over 18 months and, in the case of Mr. Starck, 24 months; and

 

•

any outstanding equity awards will immediately vest in full and become exercisable (if applicable).

If any Apria executive officer receives any payments as described above or otherwise that constitute “parachute payments” within the meaning of Section 280G of the Code, and would be subject to the excise tax imposed by Section 4999 of the Code, Apria may implement a 280G modified net cutback, pursuant to which such payments shall be either (i) delivered in full or (ii) delivered to such lesser extent that would result in no portion of such payments being subject to the excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable taxes and the excise tax imposed by Section 4999 of the Code, results in the receipt by the executive officer on an after-tax basis, of the greatest amount of benefits.

The definition of “Good Reason” will be amended and restated in its entirety for each of Msses. Morris and Scally and Messrs. Hicks and Litkovitz to mean the occurrence of any of the following, subject to standard notice and cure provisions:

 

•

any material reduction in the executive officer’s combined annual base salary and target level bonus percentage, except for a general one-time “across-the-board” salary reduction not exceeding 10% which is imposed simultaneously on all executive officers of the Company;

 

•

the Company requires the executive officer to be based at an office location which will result in an increase of more than 30 miles in the executive officer’s one-way commute, or

 

•

the Company does not permit the executive officer to continue to serve in his or her current role or a position with substantially similar duties, authorities or responsibilities of Apria or of substantially the

 

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same business after a corporate reorganization, or another mutually acceptable senior executive position.

For the avoidance of doubt, (i) the consummation of the merger and/or (ii) the failure to remain an officer of a public company will not, in and of itself, constitute “good reason” for purposes of the applicable employment or severance agreement for such executive officers.

Indemnification and Insurance

The merger agreement provides that from and after the effective time, the surviving corporation will, and Owens & Minor will cause the surviving corporation to, in each case to the fullest extent permissible by applicable law: (i) indemnify and hold harmless each individual who at the effective time is, or at any time prior to the effective time was, a director or officer of Apria or of a subsidiary of Apria or was serving at the request of Apria or such subsidiary as a director, officer, employee or agent of another person (each such person, an “indemnitee”) with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs and expenses in connection with any action based on or arising out of (A) the fact that an indemnitee is or was a director or officer of Apria or such subsidiary or was serving at the request of Apria or such subsidiary as a director, officer, employee or agent of another person or (B) acts or omissions by an indemnitee in such indemnitee’s capacity as a director or officer of Apria or such subsidiary or taken at the request of Apria or such subsidiary, in each case of clauses (A) and (B), at, or at any time prior to, the effective time; and (ii) assume (in the case of the surviving corporation, in the merger without any further action) all obligations of Apria and such subsidiaries to the indemnitees in respect of indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the effective as provided in the organizational documents of Apria and its subsidiaries, in each case, as in effect on the date of the merger agreement or in the agreements in effect as of the date of the merger agreement providing for indemnification between Apria or any of its subsidiaries and any indemnitee as set forth in Apria disclosure letter.

Owens & Minor has agreed that, without limiting the foregoing, from and after the effective time, it will cause, unless otherwise required by law, the certificate of incorporation and bylaws of the surviving corporation to contain provisions no less favorable to indemnitees with respect to limitation of liabilities of directors and officers and indemnification than were in Apria’s organizational documents as in effect as of the date of the merger agreement, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the indemnitees. In addition, from the effective time, the surviving corporation will advance any expenses (including fees and expenses of legal counsel) of any indemnitee under the indemnification provisions in the merger agreement as incurred to the fullest extent permitted under applicable law. However, the person to whom expenses are advanced must provide an undertaking to repay such expenses if it is ultimately determined that such indemnitee was not entitled to indemnification under the merger agreement.

Neither Owens & Minor nor the surviving corporation will settle, compromise or consent to the entry of any judgment in any threatened or actual litigation, claim or proceeding relating to any acts or omissions covered under the indemnification provisions above for which indemnification has been sought by an indemnitee under the merger agreement, unless such settlement, compromise or consent includes an unconditional release of such indemnitee from all liability arising out of such claim or such indemnitee otherwise consents in writing to such settlement, compromise or consent.

For the six-year period commencing immediately after the effective time, the surviving corporation will maintain in effect Apria’s current directors’ and officers’ liability insurance and fiduciary liability insurance covering acts or omissions occurring at or prior to the effective time with respect to those individuals who are currently (and any additional individuals who prior to the effective time become) covered by Apria’s directors’ and officers’ liability insurance and fiduciary liability insurance policies on terms and scope with respect to such coverage, and in amount, no less favorable to such individuals than those of such policy in effect on the date of the merger agreement (or Owens & Minor may substitute therefor policies, issued by reputable insurers, of at

 

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least the same coverage with respect to matters existing or occurring prior to the effective time, including a “tail” policy) (but in no event shall the surviving corporation be required to expend in any one year an amount in excess of 350% of the annual premium currently payable by Apria with respect to such current policy). Apria will have the right prior to the effective time to purchase a six-year prepaid “tail policy” on terms and conditions providing at least substantially equivalent benefits as the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by Apria and its subsidiaries with respect to matters existing or occurring prior to the effective time, covering without limitation the transactions contemplated by the merger agreement, so long as premium under such policy does not exceed six times the annual premium cap described above. If such prepaid “tail policy” has been obtained by Apria, it will be deemed to satisfy all obligations to obtain insurance pursuant to this paragraph and the surviving corporation shall use its reasonable best efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder.

The indemnification and insurance provisions of the merger agreement are intended to benefit, and are enforceable by, the indemnified persons and their respective heirs or representatives.

Continuation of Employee Compensation and Benefit Levels

Under the merger agreement, for a period beginning at the effective time and ending 12 months following the effective time, Owens & Minor has agreed to provide, or to cause the surviving corporation to provide, to each employee of Apria, including Apria’s executive officers, who continue to be employed by the surviving corporation immediately following the effective time (“continuing employee”) with (i) an annual base salary or base wage rate (as applicable) that is no less favorable than that provided to such continuing employee immediately prior to the effective time, (ii) target short-term incentive and commissions opportunities that are no less favorable than those provided to such continuing employee immediately prior to the effective time and (iii) employee benefit plans and arrangements (other than the severance benefits pursuant to the Apria disclosure letter (as described above), defined benefit pension, defined contribution employer contributions, nonqualified deferred compensation, retiree or post-termination health or welfare benefit, equity or equity-based compensation and retention or change in control-related compensation or benefits (the “specified arrangements”)) that, on a group basis, are substantially comparable in the aggregate to the employee benefit plans and arrangements provided to continuing employees immediately prior to the effective time (other than the specified arrangements). For a period beginning at the effective time and ending 24 months following the effective time, Owens & Minor has agreed to provide severance benefits pursuant to the Apria disclosure letter to the continuing employees specified therein (see the section of this proxy statement entitled “The Merger Proposal (Proposal 1)—Interests of Apria’s Executive Officers and Directors in the Merger—Severance Benefits” on page 61).

Other Interests

As of the date of this proxy statement, other than the arrangements discussed in this proxy statement, none of Apria’s executive officers has entered into any agreement with Owens & Minor regarding employment with, or compensation from, or equity participation or reinvestment in, the surviving corporation or Owens & Minor on a going-forward basis following the completion of the merger. However, Owens & Minor (or its representatives) and some or all of Apria’s executive officers may from time to time have discussions with respect to, or enter into, such arrangements.

280G Mitigation Actions

Apria may, in consultation with Owens & Minor, take certain actions before the effective time to mitigate the amount of potential “excess parachute payments” for “disqualified individuals” (each as defined in Section 280G of the U.S. Internal Revenue Code of 1986, as amended). Prior to the execution of the merger agreement, Apria approved the accelerated payout in 2021 of Mr. Hicks’ 2021 cash incentive bonus payment to mitigate the amount of Mr. Hicks’ potential excess parachute payments. As of the date of this proxy statement,

 

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Apria has not approved any additional specific actions to mitigate the potential impact of Sections 280G and 4999 of the Code on Apria and any disqualified individuals, respectively. No executive officer is entitled to receive gross-ups or tax reimbursements from Apria with respect to any potential excise taxes.

Potential Merger-Related Payments to Named Executive Officers

The following table sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for Apria’s named executive officers based on the merger, assuming that (i) the merger was completed on April 15, 2022, which is the latest practicable date to determine such amounts, (ii) each named executive officer experiences a qualifying termination of employment immediately following the completion of the merger, (iii) each named executive officer’s base salary rate, target annual bonus and benefits levels remain unchanged from those in effect as of the date of this proxy statement, (iv) each named executive officer’s Apria equity awards remain unchanged as of January 31, 2022 and (v) the merger consideration of $37.50. The actual amounts payable would depend on the date of termination, the manner of the termination and the terms of the agreements in effect at such time. The calculations in the table below neither include amounts that Apria’s named executive officers were already entitled to receive or were vested in as of the date of this proxy statement, nor do they include amounts under contracts, agreements, plans or arrangements to the extent they do not discriminate in scope, terms or operation in favor of the named executive officers and that are available generally to all the salaried employees of the Company. Additionally, the calculations do not reflect any possible reductions under the Section 280G modified net cutback provisions described above in the section entitled “The Merger Proposal (Proposal 1)—Interests of Apria’s Executive Officers and Directors in the Merger—Severance Benefits” on page 61). These amounts do not include any amounts payable in respect of any issuances or forfeitures of Apria equity awards that may be made or occur, or any dividends or dividend equivalents that may be accrued, after January 31, 2022 and prior to the completion of the Merger, and do not reflect any Apria equity awards that have vested or are expected to vest in accordance with their terms prior to the completion of the merger. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

Golden Parachute Compensation

 

Name		Cash ($)(1)				Equity ($)(2)				Pension/ NQDC ($)				Perquisites /Benefits ($)(3)				Tax Reimbursement ($)(4)				Other ($)(5)				Total ($)(6)
Daniel J. Starck			3,849,561				7,782,496				—				—				—				—				11,632,147
Debra L. Morris			2,059,770				3,700,744				—				—				—				—				5,760,514
Robert P. Walker			1,284,126				1,312,797				—				—				—				—				2,596,923
Mark E. Litkovitz			1,216,998				1,312,797				—				—				—				—				2,529,795
Raoul Smyth(7)			—				63,602				—				—				—				—				63,602

 

(1)

This amount includes the estimated total cash severance payments that may be provided by Owens & Minor or its affiliates upon a termination without “cause” or resignation for “good reason” within 24 months following the effective time (comprised of (a) two times and, in the case of Mr. Starck, two and a half times, the sum of the current salary plus target annual incentive compensation, payable in substantially equal payments over 24 months and, in the case of Mr. Starck, 30 months, (b) an annual bonus for the year of termination, prorated based on the period beginning on January 1, 2022 and ending on April 15, 2022, based on the greater of actual performance achieved and target performance levels (assuming the target levels of performance for purposes of this table), with such amount to be paid in lump sum within 30 days of such qualifying termination, and (c) a cash payment equal to the cost of providing continuation coverage under COBRA, such amount as determined by Owens & Minor, for 18 months and, in the case of Mr. Starck, 24 months, payable in substantially equal payments over 18 months and, in the case of Mr. Starck, 24 months), pursuant to the Apria disclosure letter. The receipt of this amount is subject to the executive officer’s execution and non-revocation of a general release and continued compliance with certain restrictive covenants set forth in the applicable executive officer’s employment or severance agreement. Such

 

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restrictive covenants generally include (i) customer and employee non-solicitation and employee no-hire obligations during employment and for either one or two years after termination of employment, (ii) indefinite confidentiality obligations and (iii) non-compete obligations for one year after termination of employment.

All components of the cash severance amount are “double-trigger” (i.e., they are contingent upon a qualifying termination of employment during the 24-month period following the completion of the merger). The estimated amount of each component of the cash severance payment is set forth in the table below.

 

Name		Cash Severance ($)				Prorated Annual Bonus ($)				Cash Payment in Lieu of COBRA ($)
Daniel J. Starck			3,575,000				224,384				50,267
Debra L. Morris			1,900,000				136,644				23,126
Robert P. Walker			1,162,800				83,626				37,700
Mark E. Litkovitz			1,124,550				69,322				23,126
Raoul Smyth			—				—				—

 

(2)

This amount includes the estimated value of unvested Apria RSUs, Apria PSUs (based on achievement of the maximum performance level) and Apria SARs, the vesting of which would be accelerated immediately prior to the effective time. This amount also includes the estimated value of incremental vesting of Apria LTIP Awards based on achievement of the maximum performance level and maximum payout thereunder. The value set forth in the “Equity” column in the table above attributable to each type of accelerated Apria equity award held by Apria’s named executive officers is “single-trigger” (i.e., they vest and become payable solely as a result of the closing of the merger) and set forth above in the section entitled “—Payments for Unvested Equity Awards.”

(3)	None of the named executive officers have any perquisites or benefits that would be paid out upon a qualifying termination following completion of the merger.

(4)	Apria has no obligation to any named executive officer to offset golden parachute excise taxes under the Code or to reimburse the named executive officer for related taxes.

(5)	None of the named executive officers have any other benefits that would be paid out upon a qualifying termination following completion of the merger.

(6)	Includes the aggregate dollar value of the sum of all estimated amounts reported in the preceding columns.

(7)	Effective March 31, 2021, Mr. Smyth ceased to be a named executive officer of Apria.

Financing of the Merger

The total funds needed to complete the merger (including the funds to pay Apria equityholders and to repay outstanding indebtedness required to be repaid as a result of the merger) are expected to be approximately $1,832.4 million, including (x) approximately $1,452.2 million to be paid to Apria equityholders pursuant to the merger based on the number of shares of Apria common stock and Apria equity awards outstanding as of January 31, 2022 and (y) approximately $380.2 million to repay outstanding indebtedness under that certain Credit Agreement, dated as of June 21, 2019 (the “Apria credit agreement”), among Apria Healthcare Group Inc., the guarantors party thereto, Citizens Bank, N.A., as administrative agent and the lenders party thereto, as amended, based on the amount of outstanding indebtedness under the Apria credit agreement as of January 31, 2022, which funds are expected to be funded through debt financing by Owens & Minor (the “debt financing”).

In connection with the entry into the merger agreement, Owens & Minor has obtained debt financing commitments to finance the transactions contemplated by the merger agreement and pay related fees and expenses pursuant to the debt commitment letter.

The proceeds of the debt financing will be used (i) to pay the consideration for the merger, (ii) to repay or refinance all indebtedness required to be repaid or reduced at the closing, including outstanding indebtedness under the Apria credit agreement, (iii) pay any fees required to be paid by Owens & Minor in connection with the debt financing or the transactions contemplated by the merger agreement on the closing date (the amounts required to be paid in clauses (i) to (iii), the “required amount”) and (iv) for working capital and general corporate purposes.

 

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The obligations of the commitment parties to provide the debt financing under the debt commitment letter are subject to a number of conditions, including (i) the substantially concurrent consummation of the merger in all material respects in accordance with the merger agreement, without giving effect to certain material amendments or waivers absent the consent of the lead arrangers, (ii) that certain specified representations and warranties in the merger agreement will be true and correct, subject to certain materiality qualifiers as set forth in the debt commitment letter, (iii) the consummation of the refinancing of Apria’s existing U.S. credit facility prior to, or substantially concurrently with, the initial borrowings under the debt facilities, (iv) the delivery of certain audited, unaudited and pro forma financial statements, (v) the execution of certain definitive debt documentation consistent with the debt commitment letter, (vi) subject to customary limitations, the execution of certain definitive documentation to perfect the administrative agent’s security interest in the collateral as provided in the debt commitment letter, (vii) the receipt of documentation and other information about the borrowers and guarantors required under applicable “know your customer” and anti-money laundering rules and regulations, (viii) payment of all applicable invoiced fees and expenses, (ix) the completion of the required marketing period of 15 consecutive business days following the date on which the lead arrangers have received certain required financial information and (x) that no change, event, fact, condition, development, effect or occurrence shall have occurred that would constitute a “material adverse effect” (as defined in the merger agreement).

The obligations of the commitment parties to provide the debt financing under the debt commitment letter will terminate at the earlier of (i) five business days after the outside date (as defined in the section of this proxy statement entitled “The Merger Agreement—Termination of the Merger Agreement” starting on page 98), (ii) the termination by Apria of the merger agreement prior to the consummation of the merger or (iii) the consummation of the merger without the use of the debt financing under the debt commitment letter.

Owens & Minor has agreed that it will, and will cause its subsidiaries and use its reasonable best efforts to cause its and their respective representatives to, use its and their reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and obtain the debt financing on the terms and subject only to the conditions expressly set forth in the debt commitment letter, including using reasonable best efforts to (i) maintain in effect the debt commitment letter in accordance with the terms and subject to the conditions thereof until the transactions contemplated by the merger agreement are consummated or the merger agreement is validly terminated, (ii) satisfy or obtain a waiver on a timely basis of all conditions applicable to Owens & Minor and its affiliates set forth in the debt commitment letter that are within its or its affiliates’ control, (iii) negotiate and enter into definitive agreements with respect to the debt financing on the terms and subject only to the conditions set forth in the debt commitment letter, (iv) consummate the debt financing on or prior to the closing date, (v) enforce its rights under the debt commitment letter and (vi) comply with its obligations under the debt commitment letter.

If any portion of the debt financing becomes unavailable on the terms and conditions contemplated in the debt commitment letter or any of the debt financing has expired or been withdrawn, terminated, repudiated or rescinded, in whole or in part, for any reason (unless such portion of the debt financing is not reasonably required to consummate the transactions contemplated by the merger agreement), Owens & Minor has agreed to promptly notify Apria and use its reasonable best efforts to (x) arrange and obtain, as promptly as practicable following the occurrence of such event, alternative financing from the same or alternative sources (the “alternative financing”) in an amount sufficient to consummate the transactions contemplated by the merger agreement, including payment of the required amount, with terms and conditions not materially less favorable in the aggregate to Owens & Minor than those set forth in the debt commitment letter (including the “market flex” terms contained in the debt commitment letter as in effect on the date of such debt commitment letter) and (y) obtain a debt financing commitment letter (including any associated fee letter and/or engagement letter) with respect to such alternative financing, of which true, correct and complete copies shall be promptly provided to Apria upon execution thereof (which fee letter and/or engagement letter may be redacted with respect to any interest rates, fee amounts, pricing caps and other similar economic terms (including “market flex” terms) set forth therein (none of which would adversely affect the conditionality, enforceability, or availability of such alternative financing or reduce the aggregate principal amount thereof)). The alternative financing (A) will be sufficient to

 

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pay, when added to the remaining debt financing (if any) and cash on hand of Owens & Minor and its subsidiaries, the required amount and (B) will not include conditions or contingencies that would reasonably be expected to (1) materially impair, delay or prevent the closing or (2) make materially less likely to occur the funding of the debt financing (or satisfaction of the conditions to the debt financing) on the closing.

Antitrust Review Required for the Merger

Under the merger agreement, each of Apria and Owens & Minor has agreed to use their respective reasonable best efforts to, among other things, consummate the merger in the most expeditious manner reasonably practicable. Completion of the merger is conditioned upon the expiration or early termination of the waiting period (and any extension thereof) applicable to the consummation of the merger under the HSR Act.

United States Antitrust

Under the HSR Act, the merger may not be completed until notifications have been filed with and certain information has been furnished to the Antitrust Division and the FTC and all statutory waiting period requirements have been satisfied. Apria and Owens & Minor filed notifications with the Antitrust Division and the FTC on January 24, 2022.

At any time before or after the completion of the merger, the Antitrust Division, the FTC or foreign antitrust authorities could take action under the U.S. or foreign antitrust laws, including seeking to prevent the merger, to rescind the merger or to clear the merger subject to the divestiture of assets of Apria or Owens & Minor or subject to other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest including without limitation seeking to enjoin the completion of the transactions or permitting completion subject to the divestiture of assets of Apria or Owens & Minor or other remedies. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the transactions on antitrust grounds will not be made or, if such challenge is made, that it would not be successful.

General

Under the merger agreement, Apria and Owens & Minor have both agreed to use their reasonable best efforts to complete the merger, including obtaining any requisite antitrust approval. With respect to any approvals relating to antitrust laws, Apria and Owens & Minor have also agreed to (i) supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act and (ii) use their reasonable best efforts to avoid or eliminate each and every impediment and obtain all consents under any such antitrust laws that may be required by any foreign or U.S. federal, state or local governmental authority pursuant thereto, in each case with competent jurisdiction, so as to enable the parties hereto to consummate the transactions contemplated by the merger agreement prior to the outside date. Neither Apria nor its subsidiaries shall, without the express written consent of Owens & Minor, take or agree to take any action relating to any objections asserted by any governmental authority with respect to the transactions under any antitrust laws with respect to its business or operations.

Further, Owens & Minor has agreed that it will, and will cause each of its subsidiaries to, take any and all steps necessary, proper or advisable to (x) resolve, avoid, or eliminate impediments or objections, if any, that may be asserted with respect to the transactions contemplated by the merger agreement under any antitrust law or (y) avoid the entry of, effect the dissolution of, and have vacated, modified, suspended, eliminated, lifted, reversed or overturned, any decree, decision, determination, order or judgment entered or issued, or that becomes reasonably foreseeable to be entered or issued, that would, or would reasonably be expected to, prevent, restrain, enjoin, prohibit, make unlawful, restrict or delay the consummation of the contemplated transactions, so as to enable Owens & Minor to close the contemplated transactions expeditiously (but in no event later than the outside date), including: (i) proposing, negotiating, committing to, agreeing to and effecting, by consent decree, hold separate orders or otherwise, the sale, lease, divesture, disposition, or license (or holding separate pending

 

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such disposition) of any assets, operations, rights, product lines, licenses, properties, products, rights, services or businesses of Owens & Minor or any of its subsidiaries, or Apria or its subsidiaries or any interest therein, (ii) otherwise taking or committing or agreeing to restrictions or actions that after the effective time would limit Owens & Minor’s or its subsidiaries’ or Apria’s or its subsidiaries’ freedom of action or operations with respect to, or its or their ability to retain, any assets, operations, rights, product lines, licenses, properties, products, rights, services or businesses of Owens & Minor or its subsidiaries or Apria or its subsidiaries or any interest or interests therein, (iii) otherwise agreeing to any other structural or conduct remedy with respect to Owens & Minor or its subsidiaries or Apria or its subsidiaries or any interest therein, and (iv) agreeing to enter into, modify or terminate existing contractual relationships, contractual rights or contractual obligations, and promptly effecting the sale, lease, license, divestiture, disposal and holding separate of, assets, operations, rights, product lines, licenses, properties, products, rights, services or businesses of Owens & Minor or its subsidiaries or Apria or its subsidiaries or any interest or interests therein and the entry into agreements with, and submission to orders of, the relevant governmental authority giving effect thereto or to such restrictions or actions (such actions, individually or collectively, a “regulatory remedy”). However, Owens & Minor and its affiliates are not required to agree, commit or effect any regulatory remedy, that, individually or in the aggregate, would reasonably be expected to result in a material adverse effect on the combined businesses of Owens & Minor, Apria and their subsidiaries, taken as a whole.

While Apria has no reason to believe it will not be possible to complete the antitrust reviews in a timely manner, there is no certainty that these reviews will be completed within the period of time contemplated by the merger agreement or that the completion of any of such reviews would not be conditioned upon actions that would be materially adverse to Apria or Owens & Minor, or that a challenge to the merger will not be made. If a challenge is made, the results of such challenge cannot be predicted. Private parties or U.S. state attorneys general may also bring actions under the antitrust and other laws under certain circumstances. Further, antitrust reviews do not constitute an endorsement or recommendation of the merger.

Support Agreements

Simultaneously with the execution and delivery of the merger agreement, each of Holdings LLC, John G. Figueroa and Daniel J. Starck entered into a support agreement with Owens & Minor and Merger Sub, pursuant to which such Supporting Apria Stockholder agreed, subject to the terms and conditions set forth therein, to vote its or his shares of Apria common stock: (i) in favor of the adoption and approval of the merger agreement and the approval of the merger; (ii) against certain acquisition proposals; and (iii) against any other action that is intended or could reasonably be expected to impede or interfere with or materially delay the merger or the other transactions contemplated by the merger agreement. In the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the obligations of Holdings LLC under the support agreement to which it is a party will only extend to shares held by Holdings LLC representing 33% of the total voting power of the outstanding shares of Apria common stock entitled to vote on the merger proposal (rounded down to the nearest whole share). Subject to the terms and conditions set forth in the support agreements, each Supporting Apria Stockholder, in its capacity as a stockholder of Apria, will also be prohibited from (i) soliciting proposals relating to certain alternative transactions or (ii) participating in any discussions or negotiations regarding, or furnish any non-public information relating to Apria in connection with, any proposal for an alternative transaction, to the same extent that Apria is prohibited from taking such actions under the merger agreement. The form of support agreement entered into by each of the Supporting Apria Stockholders is attached hereto as Annex B and is incorporated by reference herein.

As of the record date for the special meeting, (i) the Supporting Apria Stockholders collectively owned approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting and (ii) in the event that the Apria Board makes an “adverse recommendation change” (as defined in the section of this proxy statement entitled “The Merger Agreement—Apria Board Recommendation and Change of Recommendation”) in accordance with the merger agreement, the shares of Apria common stock held by the

 

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Supporting Apria Stockholders and subject to the support agreements will constitute approximately [●]% of the outstanding shares of Apria common stock entitled to vote at the special meeting

Material U.S. Federal Income Tax Consequences of the Merger

The exchange of Apria common stock for cash in the merger generally will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state and local and other tax laws. In general, a U.S. holder (as defined in the section of this proxy statement entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 108) whose shares of Apria common stock are converted into the right to receive cash in the merger will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and the U.S. holder’s adjusted tax basis in such shares at the time of the exchange. Gain or loss will be determined separately for each block of shares of Apria common stock (i.e., shares of Apria common stock acquired at the same cost in a single transaction). The determination of the actual tax consequences of the merger to a holder of Apria common stock will depend on the holder’s specific situation.

The tax consequences of the merger to you will depend on your particular circumstances. You should read the section of this proxy statement entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 108 and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Delisting and Deregistration of Apria Common Stock

As promptly as practicable following the completion of the merger, the Apria common stock currently listed on NASDAQ will cease to be listed on NASDAQ and will be deregistered under the Exchange Act.

Appraisal Rights

If the merger is completed, Apria stockholders will be entitled to appraisal rights under Section 262 of the DGCL, provided that they strictly comply with the requirements of Section 262 of the DGCL.

Under the DGCL, if you do not wish to accept the merger consideration of $37.50 for each share of Apria common stock (other than appraisal shares and company owned shares) provided for in the merger agreement, you have the right to seek appraisal of your shares of Apria common stock and to receive payment in cash for the “fair value” of your shares of Apria common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be fair value, provided that you strictly comply with the requirements of Section 262 of the DGCL. The “fair value” of your shares of Apria common stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the $37.50 per share that you are otherwise entitled to receive under the terms of the merger agreement. These rights are known as appraisal rights. Apria stockholders who do not vote in favor of the merger proposal and who properly demand appraisal for their shares in compliance with the provisions of Section 262 of the DGCL and who do not thereafter fail to perfect, withdraw or otherwise lose such rights will be entitled to appraisal rights. Strict compliance with the statutory procedures in Section 262 of the DGCL is required. Failure to timely and properly comply with the statutory requirements will result in the loss of your appraisal rights.

This section is intended only as a brief summary of certain provisions of the Delaware statutory procedures that a stockholder must follow in order to demand and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements and the law pertaining to appraisal rights under the DGCL, and is qualified in its entirety by reference to Section 262 of the DGCL, the full text of which appears in Annex D to this proxy statement and is incorporated into this proxy statement by reference. The following summary does not constitute any legal or other advice, nor does it constitute a

 

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recommendation that stockholders exercise their appraisal rights under Section 262 of the DGCL. All references in Section 262 of the DGCL and in this summary to a “stockholder” or a “holder” are to the record holder of the shares of Apria common stock as to which appraisal rights are asserted.

Under Section 262 of the DGCL, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation must, not less than 20 days before the meeting, notify the stockholders who were stockholders of record on the record date for notice of such meeting with respect to shares for which appraisal rights are available that appraisal rights will be available. A copy of Section 262 of the DGCL must be included with such notice. This proxy statement constitutes Apria’s notice to Apria’s stockholders that appraisal rights are available in connection with the merger and the full text of Section 262 of the DGCL is attached to this proxy statement as Annex D, in compliance with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 of the DGCL contained in Annex D. Failure to comply timely and properly with the requirements of Section 262 of the DGCL will result in the loss of your appraisal rights under the DGCL. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of Apria common stock, Apria believes that if a stockholder is considering exercising such rights, such stockholder should seek the advice of legal counsel.

Any stockholder wishing to demand appraisal of his, her or its shares of Apria common stock must deliver to Apria at the address in the next paragraph below a written demand for appraisal of his, her or its shares of Apria common stock before the vote is taken to approve the merger proposal, which written demand must reasonably inform it of the identity of the stockholder and that the stockholder intends to demand appraisal of his, her or its shares of Apria common stock. A stockholder’s failure to deliver to Apria the written demand for appraisal prior to the taking of the vote on the merger proposal at the special meeting of stockholders will result in the loss of appraisal rights. A stockholder seeking to perfect appraisal rights must not vote or submit a proxy in favor of the merger proposal. A stockholder who submits a proxy and who wishes to exercise appraisal rights must either submit a proxy containing instructions to vote “AGAINST” the merger proposal or abstain from voting on the merger proposal. Voting against or abstaining from voting or failing to vote on the merger proposal by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote on the merger proposal. A stockholder seeking to exercise appraisal rights must hold of record the shares of Apria common stock on the date the written demand for appraisal is made and must continue to hold the shares of Apria common stock of record through the effective time. A stockholder will lose his, her or its appraisal rights if the stockholder transfers the shares for which it is seeking appraisal rights before the effective time.

All demands for appraisal should be addressed to Apria, Inc., Attention: General Counsel, 7353 Company Drive, Indianapolis, IN 46237, and must be delivered to Apria before the vote is taken to approve the merger proposal at the special meeting, and must be executed by, or on behalf of, the record holder of the shares of Apria common stock.

Only a holder of record of shares of Apria common stock is entitled to demand an appraisal of the shares registered in that holder’s name. Accordingly, a demand for appraisal must be executed by or on behalf of the record stockholder. The demand must state that the stockholder intends to demand appraisal of the stockholder’s shares in connection with the merger. The demand cannot be made by the beneficial owner. A beneficial owner of shares of Apria common stock held in “street name” who wishes to exercise appraisal rights should take such actions as may be necessary to ensure that a timely and proper demand for appraisal is made by the record holder of the shares. The beneficial holder must have the registered owner, such as a bank, brokerage firm, fiduciary (such as a trustee, custodian or guardian) or other nominee, submit the required demand in respect of those shares of Apria common stock. If the shares are held through a brokerage firm, bank or other nominee that in turn holds the shares through a central securities depository nominee, a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record stockholder. If you hold your shares of Apria common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee.

 

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If the shares of Apria common stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner or owners. A record owner, such as a bank, brokerage firm or other nominee, who holds shares of Apria common stock as a nominee for others, may exercise his, her or its right of appraisal with respect to the shares of Apria common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of Apria common stock as to which appraisal is sought. Where no number of shares of Apria common stock is expressly mentioned, the demand will be presumed to cover all shares of Apria common stock held in the name of the record owner. If a stockholder holds shares of Apria common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record owner. Stockholders who hold their shares in brokerage accounts or other nominee forms and who wish to exercise appraisal rights are urged to consult with their brokers or other nominees to determine the appropriate procedures for the making of a demand for appraisal by such a nominee.

Within 10 days after the effective time, the surviving corporation in the merger must give notice of the date that the merger became effective to each of Apria’s record stockholders who has submitted a demand in compliance with Section 262 of the DGCL and who did not vote in favor of the merger proposal. At any time within 60 days after the effective time of the merger, any stockholder who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the stockholder’s demand and accept the consideration specified by the merger agreement for that stockholder’s shares of Apria common stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective date of the merger will require written approval of Apria, as the surviving corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that the foregoing will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the consideration specified by the merger agreement within 60 days after the effective time of the merger. If a petition for appraisal is filed and the surviving corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholder’s right to appraisal in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only payment of the “fair value” of such stockholder’s shares of Apria common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be fair value. The fair value of the shares of Apria common stock determined in any such appraisal proceeding could be less than, equal to or more than the consideration offered pursuant to the merger agreement.

Within 120 days after the effective time, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL and is entitled to appraisal rights under Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of Apria common stock held by all such stockholders. Upon the filing of the petition by a stockholder, service of a copy of such petition will be made upon the surviving corporation. None of Owens & Minor, Merger Sub or Apria, as the surviving corporation, has any obligation to file or cause the filing of such a petition or has any present intention to do so, and holders should not assume that any of the foregoing will file a petition. If a petition for appraisal is not timely filed, then the right to appraisal will cease. Accordingly, it is the obligation of the holders of Apria common stock

 

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to initiate all necessary petitions to perfect their appraisal rights in respect of shares of Apria common stock within the time prescribed in Section 262 of the DGCL and the failure of a stockholder to file such a petition within the period specified in Section 262 of the DGCL will result in the loss of appraisal rights.

Any stockholder who has properly complied with the requirements of Section 262 of the DGCL and who did not vote in favor of the merger proposal is, within 120 days after the effective date of the merger, entitled upon written request to receive from the surviving corporation a statement setting forth the aggregate number of shares of Apria common stock not voted in favor of the merger proposal and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be mailed within 10 days after such written request has been received by the surviving corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person who is the beneficial owner of shares of Apria common stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition for appraisal or request from the surviving corporation such statement.

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, then the surviving corporation will be obligated, within 20 days after receiving service of a copy of the petition, to file in the office of the Delaware Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares of Apria common stock and with whom agreements as to the value of their shares of Apria common stock have not been reached. After notice to stockholders who have demanded appraisal from the Register in Chancery, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery will conduct a hearing upon the petition and determine those stockholders who have complied with Section 262 of the DGCL and who have become entitled to the appraisal rights provided by Section 262 of the DGCL. Upon application by the surviving corporation or any stockholder entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial on the appraisal prior to final determination of the stockholders entitled to an appraisal. The Delaware Court of Chancery may require stockholders who have demanded payment for their shares of Apria common stock to submit their stock certificates to the Register in Chancery for notation of the pendency of the appraisal proceedings; and if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder. In addition, the Delaware Court of Chancery will dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of Apria common stock entitled to appraisal exceeds 1% of the outstanding shares of Apria common stock, or (2) the value of the consideration provided in the merger for such total number of shares of Apria common stock exceeds $1,000,000.

The Delaware Court of Chancery will then conduct an appraisal proceeding to determine the fair value of the shares of Apria common stock as of the effective time of the merger exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. When the fair value has been determined, the Delaware Court of Chancery will direct the payment of such value, together with interest, if any, on the amount so determined to be the fair value by the surviving corporation to the stockholders entitled thereto. Payment will be so made to holders of shares represented by certificates upon surrender to the surviving corporation of the certificates representing such stock and, in the case of holders of uncertificated stock, forthwith. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest will accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time.

 

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You should be aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a sale transaction, such as the merger, is not an opinion as to fair value under Section 262 of the DGCL. Although Apria believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Moreover, none of Owens & Minor, Merger Sub or Apria, as the surviving corporation, anticipates offering more than the merger consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair value” of a share of Apria common stock is less than or equal to the merger consideration. In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which could be ascertained as of the date of the merger which throw any light on future prospects of the merged corporation. Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

Costs of the appraisal proceeding (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal proceeding, to be charged pro rata against the value of all shares of Apria common stock entitled to appraisal. Any stockholder who demanded appraisal rights will not, after the effective time, be entitled to vote shares of Apria common stock subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares of Apria common stock, other than with respect to payment as of a record date prior to the effective time. If no petition for appraisal is filed within 120 days after the effective time, or if the stockholder otherwise fails to perfect, validly withdraws or otherwise loses such holder’s right to appraisal, then the right of that stockholder to appraisal will cease and that stockholder’s shares of Apria common stock will be deemed to have been converted at the effective time into the right to receive the $37.50 per share cash payment (without interest and subject to any applicable withholding taxes) for his, her or its shares of Apria common stock pursuant to the merger agreement.

Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL will result in the loss of a stockholder’s appraisal rights.

In view of the complexity of Section 262 of the DGCL, Apria stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

 

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THE MERGER AGREEMENT

The following discussion sets forth the material provisions of the merger agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated by reference herein. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement and not by this discussion, which is summary by nature. This discussion is not complete and is qualified in its entirety by reference to the complete text of the merger agreement. You are encouraged to read the merger agreement carefully in its entirety, as well as this proxy statement and any documents incorporated by reference herein, before making any decisions regarding the merger. This section is not intended to provide you with any factual information about Apria. Such information can be found elsewhere in this proxy statement and in the public filings made by Apria with the SEC, as described in the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 112.

The Merger

Upon the terms and subject to the conditions of the merger agreement and in accordance with the DGCL, at the effective time, Merger Sub will merge with and into Apria, the separate corporate existence of Merger Sub will cease, and Apria will continue as the surviving corporation and an indirect, wholly owned subsidiary of Owens & Minor. The merger will have the effects set forth in the merger agreement and the relevant provisions of the DGCL.

Closing and Effectiveness of the Merger

The closing of the merger (the “closing” and the date of such closing, the “closing date”) will take place on the third business day following the date on which the conditions to closing (described in the section of this proxy statement entitled “The Merger Agreement—Conditions to the Closing of the Merger” beginning on page 97) (other than those conditions which by their terms are required to be satisfied or waived at the closing but subject to the satisfaction or waiver of such conditions) have been satisfied or, if permissible, waived by the party entitled to the benefit of the same (in its sole discretion), or at such other place, time and date or manner as Owens & Minor and Apria may agree in writing. However, if Owens & Minor’s marketing period in respect of the debt financing (described in the section of this proxy statement entitled “The Merger Agreement—Financing—Marketing Period and Efforts” beginning on page 94) has not ended at the time when the closing would otherwise be required to occur, the closing will occur on the earlier of (a) a business day before or during the marketing period specified by Owens & Minor on two business days’ prior written notice to Apria and (b) the business day following the expiration of the marketing period (subject, in each case, to the satisfaction or waiver of all of the conditions to closing (other than those conditions which by their terms are required to be satisfied or waived at the closing, but subject to the satisfaction or waiver of such conditions)), or at such other date and time as Owens & Minor and Apria mutually agreed upon in writing. In no event will the closing occur less than three business days after the conditions to closing have been satisfied.

At the closing, Apria and Owens & Minor will file a certificate of merger in accordance with the relevant provisions of the DGCL. The merger will become effective at the time that the certificate of merger has been accepted for filing by the Secretary of State of the State of Delaware or, to the extent permitted by applicable law, at such later time as is agreed to by the parties prior to the filing of such certificate of merger and specified in the certificate of merger.

Merger Consideration

Each share of Apria common stock issued and outstanding immediately prior to the effective time (other than appraisal shares and owned company shares) will be converted automatically into the right to receive $37.50 in cash, without interest and subject to any applicable withholding taxes (the “merger consideration”). After the merger is completed, holders of shares of Apria common stock will have only the right to receive the merger consideration, and will no longer have any rights as holders of Apria common stock.

 

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Shares of Apria common stock held by Apria as treasury stock or owned by Owens & Minor or Merger Sub, in each case, prior to the effective time will be automatically cancelled without payment at the effective time. Shares of Apria common stock owned by any direct or wholly owned subsidiary of Owens & Minor (other than Merger Sub) or Apria will be converted into such number of shares of common stock of the surviving corporation such that the ownership percentage of any such subsidiary in the surviving corporation following the effective time will equal the ownership percentage of such subsidiary in Apria prior to the effective time, and any such shares of Apria common stock will be automatically cancelled without payment at the effective time.

Shares of Apria common stock that are outstanding immediately prior to the effective time and that are held by any person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the DGCL will not be converted into the right to receive the merger consideration, but instead shall be canceled and shall represent the right to receive only those rights provided under Section 262 of the DGCL less any withholding or deduction required under applicable law. However, if any such person fails to perfect or otherwise waives, withdraws or loses the right to appraisal under Section 262 of the DGCL, then such appraisal shares will be deemed to have been converted as of the effective time into, and shall represent only the right to right to receive, the merger consideration, without interest thereon.

Apria will give prompt written notice to Owens & Minor of any demands received by the Apria for appraisal of any shares of Apria common stock, and Owens & Minor will have the right to participate in, and after the effective time, direct all negotiations and actions with respect to such demands. Prior to the effective time, Apria will not, without the prior written consent of Owens & Minor, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing. Pursuant to the merger agreement, each of Owens & Minor, Merger Sub, Apria, the surviving corporation, their respective affiliates and the paying agent will be entitled to deduct and withhold from the amounts otherwise payable under the merger agreement such amounts as are required to be deducted and withheld with respect to the making of such payment by applicable law. To the extent amounts are so withheld or deducted and paid over to the appropriate governmental authority, such amounts shall be treated for all purposes of the merger agreement as having been paid to the person in respect of which such deduction and withholding was made.

See the section of this proxy statement entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 108. You should consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Exchange Procedures

Prior to the closing date, Owens & Minor will designate a bank or trust company reasonably acceptable to Apria to act as agent (the “paying agent”) for the payment of the merger consideration and, in connection therewith, prior to the closing date will enter into an agreement with the paying agent in a form reasonably acceptable to Apria. At or prior to the effective time, Owens & Minor will deposit, or cause to be deposited, with the paying agent an amount in cash sufficient to pay the aggregate merger consideration (the “exchange fund”).

Promptly after the effective time, Owens & Minor and the surviving corporation will cause the paying agent to mail to each person who was, at the effective time, a holder of record of shares of Apria common stock (other than appraisal shares and owned company shares) (A) a letter of transmittal (which will specify that delivery will be effected, and risk of loss and title to the certificates or book entry shares, as applicable, will pass, in the case of certificates, only upon delivery of the certificates to the paying agent, and which will be in such form and shall have such other customary provisions (including customary provisions regarding delivery of an “agent’s message” with respect to book entry shares) as Owens & Minor and Apria may reasonably agree in writing prior to the closing date) and (B) instructions for use in effecting the surrender of the certificates or book entry shares in exchange for payment of the merger consideration. Upon (1) surrender of a certificate for cancelation to the paying agent, together with such letter of transmittal (and such other customary documents as may reasonably be

 

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required by the paying agent) or (2) in the case of book entry shares, receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of transfer as the paying agent may reasonably request), the holder of such certificate or book entry share will be entitled to receive in exchange therefor the merger consideration for each share of Apria common stock formerly represented by such certificate or book entry share (provided, with respect to any holder of Apria common stock who provides such documentation and information prior to the closing date, the paying agent will pay the merger consideration for each share of Apria common stock for which such documentation and information has been provided as soon as reasonably practicable on or after the closing date).

At any time following the first anniversary of the closing date, the surviving corporation will be entitled to require the paying agent to deliver to it any portion of the exchange fund which has not been disbursed to holders of certificates or book entry shares, and thereafter such holders shall be entitled to look only to Owens & Minor for, and Owens & Minor will remain liable for, payment of their claims for the merger consideration. Until surrendered, each certificate and book entry share will be deemed at any time after the effective time to represent only the right to receive the merger consideration.

If payment of the merger consideration is to be made to a person other than the person in whose name the surrendered certificate or book entry share is registered, it will be a condition of payment that (x) the certificate or book entry share so surrendered will be properly endorsed or will otherwise be in proper form for transfer, (y) the person requesting such payment will have paid any transfer and other taxes required by reason of the payment of the merger consideration to a person other than the registered holder of such certificate or book entry share surrendered and will have established to the reasonable satisfaction of the surviving corporation that such tax either has been paid or is not applicable, and (z) the respective holder and the person requesting such payment represent and agree that such person (or its tax owner) is the beneficial owner of such merger consideration for all tax purposes.

The merger consideration paid in respect of shares of Apria common stock upon the surrender for exchange of certificates or book entry shares in accordance with the terms of the merger agreement will be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Apria common stock previously represented by such certificates or book entry shares. From and after the effective time, the holders of certificates that represented ownership of shares of Apria common stock and book entry shares outstanding immediately prior to the effective time will cease to have any rights with respect to such shares, except as otherwise provided for in the merger agreement or by applicable law.

Treatment of Apria Equity Awards

The merger agreement provides that outstanding Apria equity awards will be treated as set forth below.

Restricted Stock Units. Immediately prior to the effective time, each Apria RSU granted pursuant to any Apria stock plan whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50.

Performance Stock Units. Immediately prior to the effective time, each Apria PSU granted pursuant to any Apria stock plan, whether vested or unvested, that is outstanding immediately prior to the effective time will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to $37.50, based on attainment of the applicable performance metrics at the greater of target or actual level of performance as of the closing date, as determined in good faith by the Apria Board or a committee thereof in reasonable consultation with Owens & Minor prior to the effective time.

 

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LTIP Awards. Immediately prior to the effective time, each vested Apria LTIP Award granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing, which will be deemed to constitute a “Change of Control” for purposes of such Apria LTIP Award) will be cancelled and will be automatically converted into the right to receive, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to (i) the number of shares of Apria common stock represented by the Apria LTIP Award deemed earned as of immediately prior to the effective time (after giving effect to the incremental vesting resulting from the closing as described above), as determined by the Apria Board or a committee thereof after reasonable consultation with Owens & Minor prior to the effective time multiplied by (ii) $37.50. Any unvested portion of an Apria LTIP Award that is outstanding immediately prior to the effective time after giving effect to the incremental vesting resulting from the closing as described above will be cancelled for no consideration in accordance with the terms of the applicable Apria stock plan.

Stock Appreciation Rights. Immediately prior to the effective time, each Apria SAR granted pursuant to any Apria stock plan that is outstanding immediately prior to the effective time, whether vested or unvested, will be cancelled and will be automatically converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, from Owens & Minor or the surviving corporation equal to the total value of the payout that would have been earned in accordance with the terms of the applicable governing documents (including any previously unpaid dividends or dividend equivalents thereon, in accordance with such governing documents).

Any consideration payable in respect of Apria equity awards will be paid through the payroll systems of the surviving corporation or an affiliate thereof promptly after the effective time but no later than (i) with respect to Apria equity awards other than Apria LTIP Awards, the second payroll date after the effective time and (ii) with respect to Apria LTIP Awards, no later than required under the terms of the applicable governing documents, including the applicable Apria stock plan. Notwithstanding anything herein to the contrary, with respect to any Apria equity award that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that Apria determines prior to the effective time is not eligible to be terminated in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(B), such payment will be made at the earliest time permitted under the applicable Apria stock plan that will not trigger a tax or penalty under Section 409A of the Code.

Representations and Warranties

The merger agreement contains representations and warranties that Apria, on the one hand, and Owens & Minor and Merger Sub, on the other hand, have made to one another (in some cases, as of specific dates) relating to Apria’s and their respective businesses. The assertions embodied in those representations and warranties were made solely for purposes of the merger agreement, and may be subject to important qualifications and limitations (including through the use of exceptions for certain matters disclosed by the party that made the representations and warranties to the other party) agreed to by the parties in connection with negotiating the terms of the merger agreement. Accordingly, Apria stockholders should not rely on representations and warranties as characterizations of the actual state of facts or circumstances, and should bear in mind that the representations and warranties were made solely for the benefit of the parties to the merger agreement, were negotiated for purposes of governing contractual rights and relationships and allocating contractual risk among the parties to the merger agreement as of specific dates, rather than to establish matters as facts, and may be subject to contractual standards of materiality different from those generally applicable to stockholders. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be reflected in Apria’s public disclosures. None of the representations and warranties will survive the closing of the merger, and, therefore, they will have no legal effect under the merger agreement after the effective time. This description of the representations and warranties is included to provide Apria stockholders with information regarding the terms of the merger agreement. The representations and warranties in the merger agreement and their description in this proxy statement should be read in conjunction with the other information contained in Apria’s reports, statements and filings publicly filed with the SEC.

 

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Apria’s representations and warranties relate to, among other things:

 

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its due organization, valid existence, good standing, corporate power, qualification to do business and similar corporate matters, and its certificate of incorporation and bylaws;

 

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its subsidiaries’ due organization, valid existence, good standing, corporate power, qualification to do business and similar corporate matters, and Apria’s subsidiaries’ certificates of incorporation and bylaws or similar organizational or governing documents;

 

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its and its subsidiaries’ capitalization, capital structure and equity securities;

 

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its corporate power and authority to enter into and perform Apria’s obligations under the merger agreement and consummate the merger and the other transactions contemplated thereby, and the enforceability and due execution and delivery of the merger agreement;

 

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the absence of conflicts with its (and its subsidiaries’) organizational documents (assuming that stockholder approval is obtained) as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

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the absence of conflicts with laws or judgments applicable to Apria or any of its subsidiaries (assuming that certain regulatory filings are made, certain regulatory consents are obtained and stockholder approval is obtained) as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

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the absence of conflicts with and violations, defaults, increased rights or the acceleration of performance required under, certain contracts to which Apria or any of its subsidiaries is a party, or the creation of certain liens on Apria’s or any of its subsidiaries’ material properties or assets (assuming that certain regulatory filings are made, certain regulatory consents are obtained and stockholder approval is obtained) in each case as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

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consents or approvals of, and filings, licenses, permits, authorizations, declarations and registrations with governmental authorities necessary to enter into and deliver the merger agreement, perform thereunder and consummate the transactions contemplated thereby;

 

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accuracy and sufficiency of reports and financial statements filed with the SEC; the absence of undisclosed liabilities; and disclosure controls and procedures and internal controls over financial reporting;

 

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the representation that since December 31, 2020 through the date of the merger agreement (a) except for the execution and performance of the merger agreement and the discussions and negotiations related thereto, the business of Apria and its subsidiaries has been carried on and conducted in the ordinary course of business in all material respects (other than in connection with certain modifications, suspensions, alterations and/or measures related to the COVID-19 pandemic) and (b) there has not been any material adverse effect or any event, change or occurrence that would, individually or in the aggregate, reasonably be expected to have a material adverse effect;

 

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the representation that since September 30, 2021 to the date of the merger agreement, subject to certain exceptions, neither Apria nor any of its subsidiaries has taken any action that is outside the ordinary course of business or would violate an agreement to preserve substantially intact its business organization and material business relationships;

 

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the absence of certain pending or, to Apria’s knowledge, threatened legal or administrative actions by or against Apria or any of its subsidiaries, outstanding judgements imposed upon Apria or any of its subsidiaries by or before any governmental authority, settlements to which Apria or any of its subsidiaries is a party or to Apria’s knowledge, investigations or reviews pending or threatened by any governmental authority with respect to Apria or any of its subsidiaries;

 

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compliance with applicable laws, judgements and permits issued from governmental authorities;

 

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the effectiveness of certain permits from governmental authorities, and the continued effectiveness and non-contravention of, and absence of consents or approvals required under, such permits at and following closing;

 

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certain tax matters;

 

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labor and employment matters affecting Apria or its subsidiaries, including Apria’s benefit plans;

 

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environmental matters;

 

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intellectual property;

 

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data protection and privacy and compliance with laws, policies, industry standards and contractual requirements relating to privacy, data protection or security of personal information;

 

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the absence of anti-takeover agreements or plans and the inapplicability of anti-takeover statutes to the merger;

 

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real property, real property leases and tangible property;

 

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Apria’s and its subsidiaries’ material contracts;

 

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insurance policies and related matters;

 

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healthcare regulatory matters and compliance;

 

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U.S. Food and Drug Administration regulatory matters and compliance;

 

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the stockholder approval required to adopt the merger agreement;

 

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the accuracy of information in this proxy statement;

 

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the Apria Board’s receipt of an opinion from Goldman Sachs regarding the fairness, from a financial point of view, of the merger consideration to be received by holders of shares of Apria common stock (other than appraisal shares and owned company shares);

 

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broker’s, finder’s, financial advisor’s or other similar fees;

 

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government contracts and compliance with governmental contracts; and

 

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interested party transactions.

Some of Apria’s representations and warranties are qualified as to materiality or by exceptions related to circumstances or events or occurrences that would not reasonably be expected to prevent or delay Apria’s consummation of the transactions contemplated by the merger agreement or related to a material adverse effect with respect to Apria taken as a whole. Under the merger agreement, “material adverse effect” with respect to Apria means any effect, change, event, fact, circumstance, development or occurrence that has or would be reasonably expected to have a material adverse effect on the business, results of operations, assets, or financial condition of Apria taken as a whole; provided, however, that none of the following shall be deemed either alone or in combination to constitute a material adverse effect, and none of the following shall be taken into account in determining whether a material adverse effect has occurred or would reasonably be expected to occur: any effect, change, event, fact, circumstance or occurrence to the extent resulting from or arising in connection with (provided, that with respect to the first, second, third and sixth bullet points below, to the extent that Apria and Apria’s subsidiaries, taken as a whole, are disproportionately affected thereby as compared with other participants in the industries in which Apria and its subsidiaries operate (in which case the incremental disproportionate impact or impacts may be taken into account in determining whether there has been a material adverse effect)):

 

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general conditions (or changes therein) or other circumstances or developments in the industries or markets in which Apria operates;

 

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generally affecting the economy or the financial, debt, capital, credit or securities markets, including changes in interest or exchange rates after the date of the merger agreement;

 

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changes in law or in GAAP or other accounting standards after the date of the merger agreement;

 

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any changes in political, business or regulatory conditions;

 

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acts of war (whether or not declared), sabotage, armed hostilities, civil disobedience, civil unrest or terrorism (including cyberterrorism), or any escalation or worsening of any such acts of war (whether or not declared), sabotage, armed hostilities, civil disobedience, civil unrest or terrorism;

 

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volcanoes, tsunamis, earthquakes, hurricanes, tornados or other natural disasters;

 

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pandemics (including the COVID-19 pandemic) or any law or directive (including any COVID-19 measures), issued by a governmental authority, the Centers for Disease Control and Prevention or the World Health Organization providing for business closures or “sheltering-in-place” that arise out of, an epidemic, pandemic or disease outbreak (including the COVID-19 pandemic);

 

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any decline in the market price, or change in trading volume, of the capital stock of Apria (but not the underlying cause of any such decline or change);

 

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any failure to meet any internal or public projections, forecasts, guidance, estimates, milestones, budgets or internal or published financial or operating predictions of revenue, earnings, cash flow or cash position (but not the underlying cause of any such failure);

 

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the negotiation, execution, announcement or performance of the merger agreement or the announcement, pendency or performance of any of the transactions contemplated by the merger agreement, including the impact thereof on the relationships with customers, suppliers, distributors, insurers, payors, partners, other third parties with whom Apria has a relationship, any stockholder (direct or derivative) action in respect of the merger agreement or any of the transactions contemplated thereby (it being understood that the foregoing clause in this bullet point shall not apply with respect to a representation or warranty contained in the merger agreement to the extent that the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of the merger agreement or the consummation of the transactions contemplated thereby or the performance of obligations under the merger agreement); or

 

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any action or omission taken at the direction of Owens & Minor.

Owens & Minor and Merger Sub also make a number of representations and warranties to Apria regarding various matters pertinent to the merger. The topics covered by these representations and warranties include the following:

 

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due organization, valid existence, good standing, corporate power, qualification to do business and similar corporate matters;

 

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corporate power and authority to execute and deliver and perform their obligations under the merger agreement and consummate transactions contemplated thereby, and the enforceability and due execution and delivery of the merger agreement;

 

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the absence of conflicts with their respective organizational documents as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

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the absence of conflicts with laws or judgments applicable to Owens & Minor, Merger Sub or any of their respective subsidiaries (assuming that certain regulatory filings are made and certain regulatory consents are obtained) as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

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the absence of conflicts with, and violations, defaults, and accelerations of obligations under, certain contracts to which Owens & Minor, Merger Sub or any of their subsidiaries is a party (assuming that

 

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certain regulatory filings are made and certain regulatory consents are obtained) in each case as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

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consents or approvals of, and filings, licenses, permits, authorizations, declarations and registrations with governmental authorities necessary to enter into and deliver the merger agreement, perform thereunder and consummate the transactions contemplated thereby;

 

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Owens & Minor’s indirect ownership of all of the outstanding capital stock of Merger Sub, the absence of any liabilities or obligations of Merger Sub other than those incident to its formation and pursuant to the transaction contemplated by the merger agreement and the operations of Merger Sub;

 

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the debt financing, the debt commitment letter and the sufficiency of funds to complete the merger and the other transactions contemplated by the merger agreement;

 

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the solvency of the surviving corporation and each of its subsidiaries immediately following the effective time (subject to certain identified assumptions);

 

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broker’s, finder’s, financial advisor’s or other similar fees or commissions;

 

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accuracy of information supplied by or on behalf of Owens & Minor or Merger Sub for inclusion in or incorporation by reference in this proxy statement;

 

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the absence of certain pending, or to the knowledge of Owens & Minor, threatened actions against Owens & Minor or Merger Sub;

 

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ownership by Owens & Minor or Merger Sub of Apria common stock; and

 

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non-reliance on Apria estimates, projections, forecasts, forward-looking information and certain business and strategic plans information.

Some of Owens & Minor’s and Merger Sub’s representations and warranties are qualified as to materiality or by exceptions related to any effect, change, event, fact, circumstance or occurrence that, individually or in the aggregate, would reasonably be expected to prevent or materially delay or materially impair the consummation by Owens & Minor or Merger Sub of any of the transactions contemplated by the merger agreement.

The representations and warranties of each of the parties to the merger agreement will expire upon the completion of the merger or the termination of the merger agreement.

Conduct of Business Pending the Merger

Apria has agreed to restrictions on the operation of its business until the earlier of the effective time or the valid termination of the merger agreement. Except (i) as required by applicable law or judgment, (ii) in response to or in connection with COVID-19 or any COVID-19 measures (as defined in the merger agreement), (iii) as expressly required or expressly permitted by the merger agreement or (iv) as set forth in Apria disclosure letter, unless Owens & Minor otherwise expressly provides consent in writing in advance of Apria taking or omitting to take any action (such consent not to be unreasonably withheld or delayed), (a) Apria will use commercially reasonable efforts to, and will cause its subsidiaries to use their commercially reasonable efforts to, carry on their respective business in the ordinary course of business and (b) Apria will, and will cause its subsidiaries to, use its commercially reasonable efforts to preserve its and each of its subsidiaries’ business organization substantially intact and preserve existing relations with employees, customers, suppliers, licensors, licensees, governmental authorities and other persons with whom Apria or any of its subsidiaries has material business relationships.

Further, except (i) as required by applicable law or judgment, (ii) as expressly required by the merger agreement, (iii) as set forth in Apria disclosure letter relating to the merger agreement or (iv) in response to or in

 

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connection with COVID-19 or any COVID-19 measures, until the effective time (or such earlier date on which the merger agreement may be validly terminated), unless Owens & Minor otherwise expressly consents in writing in advance (such consent not to be unreasonably withheld, conditioned or delayed), Apria will not:

 

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issue, sell, pledge dispose of, encumber or grant any shares of its capital stock or other equity or voting interests, or Apria securities or any other securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of its capital stock or other equity or voting interests, or any rights, warrants or options to purchase any shares of its capital stock or other equity or voting interests (except pursuant to the exercise or settlement of any Apria equity awards in accordance with their terms as in effect as of the date of the merger agreement), or take any action to cause to be vested and no longer subject to forfeiture (as applicable), any Apria equity awards that are otherwise unvested or otherwise subject to forfeiture;

 

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redeem, purchase or otherwise acquire any of its outstanding shares of capital stock or other equity or voting interests, or any rights, warrants or options to acquire any shares of its capital stock or other equity or voting interests (other than pursuant to the cashless exercise of any Apria SAR or net withholding in connection with the settlement of any other Apria equity award, in each case, in accordance with its terms as in effect as of the date of the merger agreement);

 

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establish a record date for, declare, set aside for payment, authorize or pay any dividend on, or any other distribution in respect of, any shares of its capital stock or other equity or voting interests;

 

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split, combine, subdivide or reclassify any shares of its capital stock or other equity or voting interests;

 

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incur, assume, or otherwise become liable for any indebtedness, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Apria or any of its wholly owned subsidiaries, guarantee any such indebtedness or any debt securities of another person or enter into any “keep well” or other agreement to maintain any financial statement condition of another person, except for indebtedness incurred under the Apria credit facility or any other indebtedness incurred that does not exceed $3,000,000 in the aggregate;

 

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enter into any swap or hedging transaction or other derivative agreements except for intercompany indebtedness among Apria and its wholly owned subsidiaries;

 

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make any loans, capital contributions or advances to any person other than to Apria or any wholly owned subsidiary of Apria or their directors or employees in the ordinary course of business;

 

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sell, assign, license, transfer or lease to any person, or mortgage or otherwise encumber or subject to any lien (other than permitted liens), in a single transaction or series of related transactions, any of its properties or assets (other than intellectual property, which is covered in the tenth succeeding bullet below) that have a current value in excess of $500,000, except the sublease of leased real property, dispositions of inventory in the ordinary course of business consistent with past practice and dispositions of obsolete, surplus or worn out assets or assets that are no longer used or useful in the conduct of the business of Apria or any of its subsidiaries in the ordinary course;

 

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make or authorize capital expenditures for property, plant and equipment, except (A) as expressly contemplated by the capital expenditure budget of Apria set forth in Apria disclosure letter, or (B) otherwise in an aggregate amount for all such capital expenditures made pursuant to this clause (B) not to exceed $5,000,000 per quarter;

 

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make any acquisition (including by merger) of the capital stock or a material portion of the assets of any other person (other than any acquisition of inventory in the ordinary course of business) or any capital contributions or investments (including through any loans or advances) in any other person;

 

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except as required pursuant to the terms of any existing Apria employee benefit, employment, compensation or severance plan or agreement (each, an “Apria plan”) (as in effect on the date of the merger agreement): (i) increase or decrease the level of base compensation, wages, bonuses, incentive

 

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compensation, pension, severance or termination pay or any other compensation or benefits, payable or to become payable to any current or former director, officer, employee or individual independent contractor of Apria or any of its subsidiaries; (ii) establish, adopt, enter into, terminate, modify or amend in any respect any Apria plan, including any employment, severance or retention agreement or arrangement (or any benefit or compensation plan, policy, program, contract, agreement or arrangement that would have been an Apria plan if in effect on the date of the merger agreement); (iii) take any action to accelerate any rights or benefits under any Apria plan, including any action to accelerate the vesting or funding or payment of any compensation or benefit payable or to become payable to any current or former director, officer, employee or individual independent contractor of Apria or any of its subsidiaries; (iv) hire or engage any individual to be employed or engaged by Apria or any of its subsidiaries with an annual base salary or wages (or in the case of independent contractors, fees) of $250,000 or more or terminate (other than for cause), furlough, or temporarily layoff any such individual with an annual base salary or wages (or in the case of independent contractors, fees) of $250,000 or more; (v) grant, announce or pay to any current or former director, officer, employee or individual independent contractor of Apria or any of its subsidiaries any bonus, benefit, severance or termination pay or other compensation (including any retention or transaction bonus); (vi) promote, demote, change the employee grade or title of or otherwise materially alter the role of any director, officer, employee or individual independent contractor of Apria or any of its subsidiaries with target annual compensation of $250,000 or more (even if any such action does not affect the individual’s compensation or benefits); (vii) implement any employment actions which would trigger the notice requirements of the WARN Act; or (viii) unless required by law, negotiate, modify, terminate or enter into any collective bargaining agreement, or voluntarily recognize any labor union, works council, or other labor organization, or group of employees as the bargaining representative of any employees of Apria;

 

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waive or release any noncompetition, non-solicitation, nondisclosure, noninterference, non-disparagement, or other restrictive covenant obligation of any current or former employee or independent contractor with annual base compensation (including target bonus, if applicable) of $150,000 or more;

 

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make any material changes in financial accounting methods, principles or practices materially affecting the consolidated assets, liabilities or results of operations of Apria and its subsidiaries, except to the extent as may be required by GAAP, by Regulation S X under the Securities Act, or by any governmental authority or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization);

 

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amend the organizational documents of Apria or any of its subsidiaries;

 

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settle, or offer or propose to settle, any action made or pending against Apria, other than the settlement of any action in the ordinary course of business that require payments by Apria or any of its subsidiaries (net of insurance proceeds) in an amount not to exceed, individually or in the aggregate, $500,000 (provided, however, that the foregoing clause shall not permit Apria or any of its subsidiaries to settle any action that would involve injunctive or equitable relief, impose any restrictions or changes on the business or operations of Apria or any of its subsidiaries (or, following the closing, on Owens & Minor or any of its affiliates), involve any admission of any wrongdoing by Apria or any of its subsidiaries, or involve any material license, cross license or similar arrangement with respect to intellectual property or settle or propose to settle any transaction litigation, the treatment of which is separately addressed in the merger agreement);

 

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make, change or revoke any material tax election; change any tax accounting period; adopt or change any method of tax accounting; file any amended material tax return; consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment (other than pursuant to an automatic extension of time to file a tax return obtained in the ordinary course of business); enter into any material tax allocation, indemnity or sharing agreement (other than any such agreement entered into in the ordinary course of business the primary purpose of which does not relate to taxes); enter into

 

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any closing agreement with any governmental authority with respect to any material amount of taxes; settle any material tax liability, claim, audit or assessment; or surrender any right to any material refund, credit, offset or other reduction in taxes, in each case to the extent such action would reasonably be expected to increase the taxes of Apria or any of its subsidiaries in any taxable period (or portion thereof) beginning after the closing date;

 

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other than in the ordinary course of business, (x) modify, amend, terminate, let lapse or waive any rights or claims under any material contract in any material respect; (y) enter into any contract that (i) relates to joint ventures, partnerships or certain similar arrangements, (ii) is a collective bargaining agreement or similar agreement, or (iii) contains terms providing for (a) restrictions on the ability of Apria or any of its affiliates to engage in certain lines of business or sell certain products or to certain customers, or certain other similar restrictions, (b) “most favored nations” agreements, (c) minimum purchase obligations or (d) exclusive relations burdening Apria or any of its affiliates, other than any contract entered into in connection with the taking of any action permitted by the other clauses in the bullet points in this “Conduct of Business Pending the Merger” section; or (z) enter into any agreement that contains a change in control or similar provision in favor of the other party or parties thereto that would require a material payment to, or give rise to any material rights to, such other party or parties in connection with the consummation of the transactions contemplated by the merger agreement (including in combination with any other event or circumstance) or any subsequent change in control of Owens & Minor or any of its affiliates (including Apria);

 

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sell, assign, transfer, convey, license (as licensor), waive material rights, fail to maintain in any material respect or otherwise dispose of any material intellectual property, except for non-exclusive licenses entered into in the ordinary course of business; fail to maintain any material issued patents or registrations in Apria intellectual property registrations, other than due to statutory expirations; or disclose any trade secrets of Apria or any of its subsidiaries, other than in the ordinary course of business and pursuant to reasonable confidentiality agreements or arrangements;

 

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adopt a plan or agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring or other reorganization of Apria;

 

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enter into or amend any interested party transaction;

 

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enter into any joint venture, strategic alliance, partnership, sharing of profit arrangement or similar arrangement;

 

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materially change the nature or scope of its business, or abandon or discontinue any existing lines of business, in each case, outside of the ordinary course of its existing business; or

 

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authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions.

The parties have agreed that nothing contained in the merger agreement is intended to give Owens & Minor, directly or indirectly, the right to control or direct Apria’s or its subsidiaries’ operations prior to the effective time, and nothing contained in the merger agreement is intended to give Apria, directly or indirectly, the right to control or direct Owens & Minor’s or its subsidiaries’ operations.

Non-Solicitation of Acquisition Proposals

Until the earlier of the effective time and the valid termination of the merger agreement, Apria is subject to restrictions on its ability to solicit third-party proposals relating to alternative transactions or to provide information to and engage in discussions or negotiations with a third party in relation to an alternative transaction (subject to certain exceptions prior to the approval of the merger proposal by Apria stockholders at the special meeting).

Specifically, except as expressly permitted by the merger agreement, Apria has agreed to, and has agreed to cause each of its subsidiaries to, and has agreed to instruct and use its reasonable best efforts to cause its and their

 

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respective representatives to (i) upon the execution of the merger agreement, immediately cease any solicitation, discussions or negotiations with any persons that may be ongoing with respect to a takeover proposal (as defined below), cease providing any information with respect to Apria and its subsidiaries to such person and request the prompt return or destruction of all confidential information concerning Apria and its subsidiaries in such person’s possession or control and (ii) until the earlier of the effective time and the valid termination of the merger agreement, not, directly or indirectly:

 

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initiate, solicit or knowingly encourage (including by way of furnishing non-public information) the submission of any inquiries regarding, or the making of any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal;

 

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engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information in connection with, or for the purpose of, encouraging any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal;

 

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execute or enter into any letter of intent, memorandum of understanding, agreement in principle, license agreement, merger agreement, acquisition agreement or other similar agreement (other than, for the avoidance of doubt, an acceptable confidentiality agreement (as defined below)) relating to a takeover proposal; or

 

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resolve or agree to do any of the foregoing.

The parties have agreed that, notwithstanding the foregoing non-solicitation restrictions, if at any time prior to the adoption of the merger agreement by Apria’s stockholders, Apria or any of its representatives receives a bona fide takeover proposal, which takeover proposal was made or renewed after the date of the merger agreement and did not result from any material breach of the non-solicitation restrictions described above, Apria and its representatives may contact such person or group of persons making the takeover proposal solely to clarify the terms and conditions thereof or to request that such takeover proposal made orally be made in writing. If the Apria Board or any committee thereof determines in good faith, after consultation with its financial advisor(s) and outside legal counsel, that such takeover proposal constitutes or would reasonably be expected to result in or lead to a superior proposal (as defined below), and that failure to take such action would be inconsistent with its directors’ fiduciary duties under applicable law, Apria and any of its representatives may:

 

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enter into an acceptable confidentiality agreement with the person or group of persons making the takeover proposal;

 

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furnish, pursuant to an acceptable confidentiality agreement, information (including non-public information) with respect to Apria and its subsidiaries to the person or group of persons who has made such takeover proposal and its or their respective representatives (provided that Apria reasonably promptly provides (and, in any event, within twenty-four hours) to Owens & Minor any non-public information concerning Apria or any of its subsidiaries that is provided to any person given such access which was not previously provided to Owens & Minor or its representatives); and

 

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following the execution of an acceptable confidentiality agreement, engage in or otherwise participate in discussions or negotiations regarding such takeover proposal with and providing information and other access to the person or group of persons making such takeover proposal and its or their representatives.

Apria has agreed that it will promptly (and in any event within two business days) notify Owens & Minor in writing in the event that Apria or any of its subsidiaries or their respective representatives receives any proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal and will disclose to Owens & Minor the material terms and conditions of any such inquiry, proposal or offer and, the identity of the person or group of persons making such inquiry, proposal or offer (and provide Owens & Minor with a copy of any such proposal or offer and copies of any written materials related thereto exchanged between Apria and any

 

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person), and Apria will keep Owens & Minor informed on a reasonably prompt basis (and in any event within two business days of any such change or event) of the status, details and any material developments with respect to any such takeover proposal (including any changes to the terms thereof). Notwithstanding anything to the contrary in the foregoing, Apria will not be required to disclose the identity of any person or group of persons if expressly prohibited by a confidentiality agreement in existence prior to the date of the merger agreement.

In this proxy statement, “takeover proposal” means any proposal or offer from any person or group (other than Owens & Minor and its subsidiaries) relating to, in a single transaction or series of related transactions, any direct or indirect: (i) acquisition or exclusive license of 20% or more of the consolidated assets of Apria and its subsidiaries (based on the fair market value thereof, as determined in good faith by the Apria Board or any committee thereof), including through the acquisition of equity interests in or other capital stock of one or more subsidiaries of Apria owning such assets, (ii) issuance or acquisition of 20% or more of the outstanding Apria common stock, (iii) tender offer or exchange offer that if consummated would result in any person or group beneficially owning 20% or more of the outstanding Apria common stock, or (iv) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving Apria pursuant to which such person or group (or the stockholders of any person) would acquire, directly or indirectly, 20% or more of the consolidated assets of Apria and its subsidiaries (based on the fair market value thereof, as determined in good faith by the Apria Board or any committee thereof), 20% or more of the outstanding capital stock of Apria or 20% or more of the aggregate voting power of Apria or of the surviving entity in a merger, consolidation, share exchange or other business combination involving Apria or the resulting direct or indirect parent of Apria or such surviving entity; provided, however, that the merger agreement and the transactions contemplated by the merger agreement shall not be deemed a takeover proposal.

In this proxy statement, “superior proposal” means any bona fide written takeover proposal of the types described in clauses (i) through (iv) of the definition of “takeover proposal” above, in each case, that the Apria Board or any committee thereof has determined in its good faith judgment is reasonably likely to be consummated in accordance with its terms and would, if consummated, result in a transaction that is more favorable to Apria’s stockholders from a financial point of view than the transactions contemplated by the merger agreement, in each case, after taking into account all such factors and matters deemed relevant by the Apria Board, including legal, regulatory, financial, financing or other aspects of such proposal and of the merger agreement (provided that, for purposes of the definition of “superior proposal”, the references to “20%” in the definition of takeover proposal shall be deemed to be references to “80%”).

In this proxy statement, “acceptable confidentiality agreement” means a confidentiality agreement with terms not materially less favorable in the aggregate to Apria than those contained in the existing confidentiality agreement between Apria and Owens  & Minor.

Apria Board Recommendation and Change of Recommendation

Under the terms of the merger agreement, subject to the exceptions described below, the Apria Board has agreed to recommend that the Apria stockholders vote in favor of the merger proposal. Apria has further agreed that the neither the Apria Board nor any committee thereof will: (i) withhold, withdraw or qualify (or modify in a manner adverse to Owens & Minor), or publicly propose to withhold, withdraw or qualify (or modify in a manner adverse to Owens & Minor), the recommendation that Apria’s stockholder adopt and approve the merger agreement and approve the merger (or fail to include such recommendation in this proxy statement) (any such action, an “intervening event adverse recommendation change”); (ii) following the public disclosure of a takeover proposal, fail to publicly reaffirm such recommendation upon a written request therefor by Owens & Minor by ten business days following a written request by Owens & Minor; (iii) recommend the approval or adoption of, or approve or adopt, or publicly propose to recommend, approve or adopt, any takeover proposal; or (iv) fail to publicly recommend against such tender or exchange offer or fail to publicly reaffirm the recommendation that Apria’s stockholder adopt and approve the merger agreement and approve the merger

 

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within ten business days of a tender or exchange offer relating to securities of Apria having been commenced (each of the actions in clauses (i) to (iv), an “adverse recommendation change”).

Notwithstanding the foregoing limitations but subject to Apria’s compliance with the provisions below, prior to obtaining the approval of Apria’s stockholders of the merger but not after, the Apria Board or any committee thereof may: (i) make an adverse recommendation change or (ii) cause Apria to enter into a company acquisition agreement with respect to a takeover proposal that did not result from any material breach of the non-solicitation restrictions described above and terminate the merger agreement, in either case, if the Apria Board or any committee thereof has determined in good faith, after consultation with its financial advisor(s) and outside legal counsel, that (x) in the case of clause (I) above, the adverse recommendation change is made in response to an intervening event, and failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law, and (y) in the case of (A) clause (I) above where such adverse recommendation change is made in response to a takeover proposal or (B) clause (II) above, such takeover proposal constitutes a superior proposal.

Apria has agreed that the Apria Board or any committee thereof will not, and will cause Apria not to, take any action set forth in clauses (i) or (ii) above, unless prior to taking such actions:

 

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Apria has first given Owens & Minor at least three business days’ prior written notice of its intention to take such action (which notice (i) in the case of actions to be taken in connection with a superior proposal, will specify the identity of the party making such superior proposal and the material terms and conditions thereof and shall include copies of all documents related thereto and (ii) in the case of actions to be taken in connection with a intervening event, will specify the nature of the intervening event in reasonable detail);

 

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Apria has negotiated, and has caused its representatives to negotiate, in good faith with Owens & Minor during such three business day notice period, to the extent Owens & Minor wishes to negotiate, to enable Owens & Minor to propose in writing an offer to effect revisions to the terms of the merger agreement such that (i) in the case of actions to be taken in connection with a superior proposal, it would cause such superior proposal to no longer constitute a superior proposal and (ii) in the case of actions to be taken in connection with an intervening event, it would eliminate the need of the Apria Board to effect such adverse recommendation change in connection with such intervening event;

 

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following the end of such three business day notice period, the Apria Board or any committee thereof will have considered in good faith such offer, and will have determined in good faith after consultation with its financial advisor(s) and outside legal counsel that (i) in the case of actions to be taken in connection with a superior proposal, the superior proposal would continue to constitute a superior proposal if the revisions proposed in any such revised offer by Owens & Minor were to be given effect and (ii) in the case of actions taken in connection with an intervening event, the failure to effect such adverse recommendation change would continue to be inconsistent with the directors’ fiduciary duties under applicable law; and

 

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solely in the case of actions to be taken in connection with a superior proposal, in the event of any change to the financial or other material terms of such superior proposal, Apria has given Owens & Minor an additional one business days’ prior written notice of the type described in the first bullet above, and following delivery of such notice, Apria has complied with the requirements set forth in the second and third bullets above (with each reference in such bullet points to a “three business day notice period” instead being a reference to such “one business day notice period”).

Any purported termination of the merger agreement in connection with a superior proposal pursuant to the four bullet points immediately above will be of no force and effect unless the termination is otherwise in accordance with the merger agreement (as described in the section of this proxy statement entitled “The Merger Agreement—Termination of the Merger Agreement”) and Apria pays (or causes to be paid) Owens & Minor the

 

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Apria termination fee (as defined in the section of this proxy statement entitled “The Merger Agreement—Termination Fee”) prior to or concurrently with such termination.

An “intervening event” means an event, development or change in circumstances arising or occurring after the date of the merger agreement that materially affects Apria and its subsidiaries, taken as a whole, and which was not known to, or not reasonably foreseeable by, the Apria Board as of or prior to the date of the merger agreement (or if known to or reasonably foreseeable by the Apria Board, the consequence of which were neither known to nor reasonably foreseeable by the Apria Board as of or prior to the date of the merger agreement). None of the following, however, will constitute an intervening event: (i) the receipt, existence or terms of a takeover proposal, (ii) clearance of the merger under the HSR Act or (iii) the fact, in each case in and of itself, that Apria meets or exceeds any internal or published projections, forecasts or estimates of its revenue, earnings or other financial performance or results of operations for any period ending on or after the date of the merger agreement, or changes in and of itself after the date of the merger agreement in the market price or trading volume of Apria common stock or the credit rating of Apria (but any underlying cause of any of the foregoing may constitute an intervening event).

The parties have agreed that nothing described above or otherwise in the merger agreement will prohibit Apria, the Apria Board or any committee thereof from (i) taking and disclosing to the stockholders of Apria a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act, or (ii) making any disclosure to its stockholders that is required by applicable law or if the Apria Board determines, in good faith, after consultation with outside counsel, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law. Any such action that would otherwise constitute an adverse recommendation change will be subject to the terms of the merger agreement, including the requirements with respect to adverse recommendation changes described above.

Stockholders Meeting

Apria has agreed to take all action in accordance with applicable law, Apria’s certificate of incorporation and bylaws and the rules of the NASDAQ to establish a record date for, duly call, give notice of, convene and hold a meeting of the holders of Apria common stock to vote on the adoption of the merger agreement on a date selected by Apria, in consultation with Owens & Minor, as promptly as reasonably practicable, for the purpose of obtaining the approval of Apria’s stockholders of the adoption of the merger agreement.

Apria may not postpone, recess or adjourn such stockholder meeting without the prior written consent of Owens & Minor, except that Apria may postpone, recess or adjourn such meeting in its sole discretion (i) to the extent required by applicable law, (ii) if as of the time for which such stockholder meeting is originally scheduled, (A) Apria has not received proxies representing a sufficient number of shares of Apria common stock to obtain the approval of its stockholders of the adoption of the merger agreement, allow reasonable additional time to solicit additional proxies or (B) there are insufficient shares of Apria common stock represented (either in person or by proxy) and voting to constitute a quorum necessary to conduct the business of such stockholder meeting or (iii) to allow reasonable additional time for the filing and dissemination of any supplemental or amended disclosure which the Apria Board has determined in good faith after consultation with outside counsel is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by Apria’s stockholders prior to such stockholder meeting to the extent so determined to be necessary; provided, further that, other than in accordance with clause (i) above, such stockholder meeting may not be postponed, recessed or adjourned pursuant to the immediately preceding proviso to a date that is more than 30 calendar days after the date on which such stockholder meeting was originally scheduled (as set forth in this proxy statement), and, in any event, to a date not fewer than three business days prior to the outside date, without the prior written consent of Owens & Minor. Notwithstanding the foregoing, Apria will, at the request of Owens & Minor, to the extent permitted by law, adjourn such stockholder meeting to a date specified by Owens & Minor for the absence of a quorum or if Apria has not received proxies representing a sufficient number of shares of Apria common stock to obtain the approval of the stockholders of Apria of the adoption of

 

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the merger agreement; provided that Apria will not be required to adjourn such stockholder meeting more than two times in accordance with this sentence, and no such adjournment in accordance with this sentence will be required to be for a period exceeding ten business days.

In addition, Apria has agreed that, through the Apria Board (or a duly authorized committee thereof), but subject to the right of the Apria Board to make an adverse recommendation change, (i) include its recommendation to Apria stockholders to vote to adopt the merger agreement in this proxy statement and (ii)  use reasonable best efforts to solicit from its stockholders proxies in favor of the adoption of the merger agreement.

Efforts to Complete the Merger

General

Each of the parties to the merger agreement have agreed that they will cooperate with the other parties thereto and use (and will cause their respective subsidiaries to use) their respective reasonable best efforts (unless, with respect to any action, another standard of performance is expressly provided for in the merger agreement) to promptly: (i) take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other parties to the merger agreement in doing, all things necessary, proper or advisable to cause the conditions to closing to be satisfied as promptly as reasonably practicable and to consummate and make effective, in the most expeditious manner reasonably practicable, the transactions contemplated by the merger agreement, including preparing and filing promptly and fully all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents; (ii) obtain all approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations from any governmental authority or third party necessary, proper or advisable to consummate the transactions; and (iii) execute and deliver any additional instruments necessary to consummate the transactions contemplated by the merger agreement, other than, in the case of each of clauses (i) through (iii), with respect to filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, approvals, consents, registrations, permits, authorizations and other confirmations relating to antitrust laws, which are addressed below.

Antitrust

Apria, Owens & Minor and Merger Sub each have also agreed to (i) make an appropriate filing of a notification and report form pursuant to the HSR Act within ten business days after the date of the merger agreement and other required antitrust approvals with respect to the transactions contemplated by the merger agreement as soon as practicable and advisable no later than by or before the closing date, and (ii) supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act. Further, each party agrees to use its reasonable best efforts to avoid or eliminate each and every impediment and obtain all consents under any such antitrust laws that may be required by any foreign or U.S. federal, state or local governmental authority pursuant thereto, in each case with competent jurisdiction, so as to enable the parties hereto to consummate the transactions contemplated by the merger agreement prior to the outside date (as defined below in the section of this proxy statement entitled “The Merger Agreement—Termination of the Merger Agreement”). Neither Apria nor its subsidiaries shall, without the express written consent of Owens & Minor, take or agree to take any action relating to any objections asserted by any governmental authority with respect to the transaction contemplated by the merger agreement under any antitrust laws with respect to its business or operations.

Communications with Governmental Entities

Apria, Owens & Minor and Merger Sub each have also agreed to use its reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing or submission with a governmental authority in connection with the transactions and in connection with any investigation or other inquiry by or

 

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before a governmental authority relating to the transactions contemplated by the merger agreement, including any proceeding initiated by a private person, and (ii) subject to applicable laws relating to the exchange of information, and to the extent reasonably practicable, consult with the other parties with respect to information relating to the other parties and their respective subsidiaries, as the case may be, that appears in any filing made with, or written materials submitted to, any third person or any governmental authority in connection with the transactions contemplated by the merger agreement.

The parties have also agreed that, to the extent reasonably practicable, all relevant telephone calls and meetings with a governmental authority regarding the transactions will include representatives of Owens & Minor and Apria, and each party must inform the other of any material communications with a governmental authority relating to any antitrust laws. Except as otherwise restricted by the merger agreement, Owens & Minor and Apria (or their outside counsel) will have the right to review in advance all written materials submitted or oral communications made to any governmental authority in connection with the transactions, in each case to the extent such materials or communications are related to any antitrust laws. Without limiting the foregoing, each party will provide to the other (or the others’ representatives), upon request, copies of all material correspondence between such party and any antitrust authority relating to such filings.

The parties have also agreed that, notwithstanding the foregoing, Owens & Minor will following consultation with Apria and after giving due consideration to its views and acting reasonably and in good faith direct and control all aspects of each party’s efforts to gain regulatory clearance either before any governmental authority or in any action brought to enjoin the transactions contemplated by the merger agreement pursuant to any antitrust laws, including the right to “pull and refile” any filing under the HSR Act (upon good faith consultation with Apria).

In the event that any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a governmental authority or private party challenging the merger or any other transaction contemplated by the merger agreement, or any other agreement contemplated thereby, each of Owens & Minor, Merger Sub and Apria will, and Owens & Minor will cause each of its subsidiaries to, cooperate in all respects with each other and use its respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the merger, and Owens & Minor and Merger Sub must defend, at their cost and expense, any action or actions, whether judicial or administrative, in connection with the transactions contemplated by the merger agreement. Notwithstanding the foregoing, Apria will not be required to agree to any term or take any action in connection with its obligations under this paragraph that is not conditioned upon consummation of the merger.

Actions by and Restrictions on Owens & Minor

Owens & Minor has agreed, notwithstanding anything to the contrary set forth above or otherwise in the merger agreement, and in furtherance and not in limitation of the foregoing, that it will, and will cause each of its subsidiaries to, take any and all steps necessary, proper or advisable to (x) resolve, avoid, or eliminate impediments or objections, if any, that may be asserted with respect to the transactions contemplated by the merger agreement under any antitrust law or (y) avoid the entry of, effect the dissolution of, and have vacated, modified, suspended, eliminated, lifted, reversed or overturned, any decree, decision, determination, order or judgment entered or issued, or that becomes reasonably foreseeable to be entered or issued, that would, or would reasonably be expected to, prevent, restrain, enjoin, prohibit, make unlawful, restrict or delay the consummation of the contemplated transactions, so as to enable Owens & Minor to close the contemplated transactions expeditiously (but in no event later than the outside date), including:

 

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proposing, negotiating, committing to, agreeing to and effecting, by consent decree, hold separate orders or otherwise, the sale, lease, divesture, disposition, or license (or holding separate pending such disposition) of any assets, operations, rights, product lines, licenses, properties, products, rights, services or businesses of Owens & Minor or any of its subsidiaries, or Apria or its subsidiaries or any interest therein,

 

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otherwise taking or committing or agreeing to restrictions or actions that after the effective time would limit Owens & Minor’s or its subsidiaries’ or Apria’s or its subsidiaries’ freedom of action or operations with respect to, or its or their ability to retain, any assets, operations, rights, product lines, licenses, properties, products, rights, services or businesses of Owens & Minor or its subsidiaries or Apria or its subsidiaries or any interest or interests therein,

 

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otherwise agreeing to any other structural or conduct remedy with respect to Owens & Minor or its subsidiaries or Apria or its subsidiaries or any interest therein, or

 

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agreeing to enter into, modify or terminate existing contractual relationships, contractual rights or contractual obligations, and promptly effecting the sale, lease, license, divestiture, disposal and holding separate of, assets, operations, rights, product lines, licenses, properties, products, rights, services or businesses of Owens & Minor or its subsidiaries or Apria or its subsidiaries or any interest or interests therein and the entry into agreements with, and submission to orders of, the relevant governmental authority giving effect thereto or to such restrictions or actions (such actions described in this bullet point and the three bullet points above, individually or collectively, a “regulatory remedy”). However, Owens & Minor and its affiliates are not required to agree, commit or effect any regulatory remedy, that, individually or in the aggregate, would reasonably be expected to result in a material adverse effect on the combined businesses of Owens & Minor, Apria and their subsidiaries, taken as a whole.

However, neither the foregoing nor anything in the merger agreement requires any of Owens & Minor or any of its affiliates to agree or otherwise be required to agree, commit or effect any regulatory remedy, that, individually or in the aggregate, would reasonably be expected to result in a material adverse effect on the combined businesses of Owens & Minor, Apria and their subsidiaries, taken as a whole.

Owens & Minor and Merger Sub have agreed that neither Owens & Minor nor Merger Sub nor any of Owens & Minor’s subsidiaries will, and Owens & Minor will cause each of its subsidiaries not to, take any action, including acquiring or agreeing to acquire, including by merging with or into or consolidating with, or by purchasing a portion of the assets of or equity in, or by any other manner, any business or any person, corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets, properties or equity interests, if the entering into of a definitive agreement relating to, or the consummation of such acquisition, merger or consolidation or such other action could reasonably be expected to: (i) impose any material delay in the obtaining of, or materially increase the risk of not obtaining, any consents of any governmental authority necessary to consummate the transactions contemplated by the merger agreement or the expiration or termination of any applicable waiting period; (ii) materially increase the risk of any governmental authority seeking or entering an order prohibiting the consummation of the transactions contemplated by the merger agreement; or (iii) materially increase the risk of not being able to remove any such order on appeal or otherwise.

Under the merger agreement, Owens & Minor is solely responsible for and pay all filing fees payable to governmental authorities under any antitrust law.

Delisting and Deregistration of Apria Common Stock

Owens & Minor will use its reasonable best efforts to, and prior to the Closing, Apria shall use its reasonable best efforts to cooperate with Owens & Minor to, cause the Apria common stock to be de-listed from the NASDAQ and de-registered under the Exchange Act as soon as reasonably practicable following the effective time.

Takeover Statutes

Each of Apria and Owens & Minor have agreed to (i) take all actions necessary to ensure that no “business combination,” “control share acquisition,” “fair price,” “moratorium” or other anti-takeover laws (“takeover

 

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laws”) is or becomes applicable to any of the transactions contemplated by the merger agreement and refrain from taking any actions that would cause the applicability of such laws and (ii) if the restrictions of any takeover law become applicable to any of the transactions contemplated by the merger agreement, take all action reasonably necessary to ensure that the transactions contemplated by the merger agreement may be consummated as promptly as practicable on the terms contemplated by the merger agreement and otherwise lawfully minimize the effect of such takeover law on the transactions contemplated by the merger agreement.

Employee Matters

Under the merger agreement, for a period beginning at the effective time and ending 12 months following the effective time, Owens & Minor has agreed to provide, or to cause the surviving corporation to provide, to each employee of Apria including Apria’s executive officers, who continue to be employed by the surviving corporation immediately following the effective time (“continuing employee”) with (i) an annual base salary or base wage rate (as applicable) that is no less favorable than that provided to such continuing employee immediately prior to the effective time, (ii) target short-term incentive and commissions opportunities that are no less favorable than those provided to such continuing employee immediately prior to the effective time and (ii) employee benefit plans and arrangements (other than the severance benefits pursuant to the Apria disclosure letter (but, for the avoidance of doubt, including severance benefits and payments for all continuing employees who are not covered in Apria disclosure letter), defined benefit pension, defined contribution employer contributions, nonqualified deferred compensation, retiree or post-termination health or welfare benefit, equity or equity-based compensation and retention or change in control-related compensation or benefits (the “specified arrangements”)) that, on a group basis, are substantially comparable in the aggregate to the employee benefit plans and arrangements provided to continuing employees immediately prior to the effective time (other than the specified arrangements). For a period beginning at the effective time and ending 24 months following the effective time, Owens & Minor has agreed to provide severance benefits pursuant to the Apria disclosure letter to the continuing employees specified therein.

Under the merger agreement and the Apria disclosure letter, Apria may grant retention bonuses in good faith in accordance with commercially reasonable practices, with payments thereunder not to exceed $150,000 individually and $7,000,000 in the aggregate. Any individual eligible for severance benefits pursuant to the Apria disclosure letter is not eligible to receive a retention bonus.

In addition, the merger agreement provides that Owens & Minor will, or will cause the surviving corporation to, (i) use commercially reasonable efforts to waive any pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods under any group health benefit plan of the surviving corporation or any of its subsidiaries which continuing employees and their eligible dependents will be eligible to participate from and after the effective time and in the plan year in which the effective time occurs, except to the extent such conditions would not have been satisfied or waived under comparable Apria group health plans immediately prior to the effective time, (ii) use commercially reasonable efforts to give each continuing employee credit for the plan year in which the effective time occurs towards applicable co-payments, deductibles and similar expenses paid by a continuing employee (and their covered, eligible dependents) during the plan year in which the effective time for purposes of satisfying such year’s deductible and co-payment limits for medical expenses under the relevant group health benefit plans in which they will be eligible to participate from and after the effective time and in the plan year in which the effective time occurs and (iii) to the extent that it would not result in a duplication of benefits and to the same extent that such service was recognized for the same purpose under a similar Apria plan, give each continuing employee credit for such continuing employee’s service with Apria for purposes of eligibility to participate, level of vacation and severance benefits and vesting (other than with respect to future equity awards) under each applicable plan of the surviving corporation in which such continuing employees participate after the effective time as if such service had been performed with the surviving corporation.

Under the merger agreement, Owens & Minor has generally agreed to honor Apria’s benefit plans, agreements, arrangements and policies in accordance with their respective terms.

 

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Directors’ and Officers’ Indemnification and Insurance

The merger agreement provides that from and after the effective time, the surviving corporation will, and Owens & Minor will cause the surviving corporation to, in each case to the fullest extent permissible by applicable law: (i) indemnify and hold harmless each individual who at the effective time is, or at any time prior to the effective time was, a director or officer of Apria or of a subsidiary of Apria or was serving at the request of Apria or such subsidiary as a director, officer, employee or agent of another person (each such person, an “indemnitee”) with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs and expenses in connection with any action based on or arising out of (A) the fact that an indemnitee is or was a director or officer of Apria or such subsidiary or was serving at the request of Apria or such subsidiary as a director, officer, employee or agent of another person or (B) acts or omissions by an indemnitee in such indemnitee’s capacity as a director or officer of Apria or such subsidiary or taken at the request of Apria or such subsidiary, in each case of clauses (A) and (B), at, or at any time prior to, the effective time; and (ii) assume (in the case of the surviving corporation, in the merger without any further action) all obligations of Apria and such subsidiaries to the indemnitees in respect of indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the effective as provided in the organizational documents of Apria and its subsidiaries, in each case, as in effect on the date of the merger agreement or in the agreements in effect as of the date of the merger agreement providing for indemnification between Apria or any of its subsidiaries and any indemnitee as set forth in Apria disclosure letter.

Owens & Minor has agreed that, without limiting the foregoing, from and after the effective time, it will cause, unless otherwise required by law, the certificate of incorporation and bylaws of the surviving corporation to contain provisions no less favorable to indemnitees with respect to limitation of liabilities of directors and officers and indemnification than were in Apria’s organizational documents as in effect as of the date of the merger agreement, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the indemnitees. In addition, from the effective time, the surviving corporation will advance any expenses (including fees and expenses of legal counsel) of any indemnitee under the indemnification provisions in the merger agreement as incurred to the fullest extent permitted under applicable law. However, the person to whom expenses are advanced must provide an undertaking to repay such expenses if it is ultimately determined that such indemnitee was not entitled to indemnification under the merger agreement.

Neither Owens & Minor nor the surviving corporation will settle, compromise or consent to the entry of any judgment in any threatened or actual litigation, claim or proceeding relating to any acts or omissions covered under the indemnification provisions above for which indemnification has been sought by an indemnitee under the merger agreement, unless such settlement, compromise or consent includes an unconditional release of such indemnitee from all liability arising out of such claim or such indemnitee otherwise consents in writing to such settlement, compromise or consent.

For the six-year period commencing immediately after the effective time, the surviving corporation will maintain in effect Apria’s current directors’ and officers’ liability insurance and fiduciary liability insurance covering acts or omissions occurring at or prior to the effective time with respect to those individuals who are currently (and any additional individuals who prior to the effective time become) covered by Apria’s directors’ and officers’ liability insurance and fiduciary liability insurance policies on terms and scope with respect to such coverage, and in amount, no less favorable to such individuals than those of such policy in effect on the date of the merger agreement (or Owens & Minor may substitute therefor policies, issued by reputable insurers, of at least the same coverage with respect to matters existing or occurring prior to the effective time, including a “tail” policy) (but in no event shall the surviving corporation be required to expend in any one year an amount in excess of 350% of the annual premium currently payable by Apria with respect to such current policy). Apria will have the right prior to the effective time to purchase a six-year prepaid “tail policy” on terms and conditions providing at least substantially equivalent benefits as the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance maintained by Apria and its subsidiaries with respect to matters existing or occurring prior to the effective time, covering without limitation the transactions contemplated by the

 

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merger agreement, so long as premium under such policy does not exceed six times the annual premium cap described above. If such prepaid “tail policy” has been obtained by Apria, it will be deemed to satisfy all obligations to obtain insurance pursuant to this paragraph and the surviving corporation shall use its reasonable best efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder.

The indemnification and insurance provisions of the merger agreement are intended to benefit, and are enforceable by, the indemnified persons and their respective heirs or representatives.

Financing

Apria Indebtedness

Apria has agreed to deliver to Owens & Minor, (a) at least three business days prior to the closing, a draft of a customary payoff letter from the administrative agent and/or collateral agent under the Apria credit agreement, which will (i) set forth the aggregate amounts required to satisfy in full all such indebtedness outstanding under such credit agreement on the closing date and (ii) evidence release and termination of all security interests in respect thereof, and (b) on or prior to the closing date, an executed copy of the payoff letter and, subject to the receipt of the applicable payoff amounts, customary lien release documentation from the administrative agent and/or collateral agent under the Apria credit agreement.

Marketing Period and Efforts

Under the merger agreement, Apria has agreed to allow Owens & Minor a period of 18 consecutive business days to market the debt financing. This marketing period is a period commencing on or after the date Owens & Minor receives the required financial information (as defined below in the section of this proxy statement entitled “The Merger Agreement—Financing—Apria’s Cooperation”), provided that (i) the marketing period will be deemed to automatically end on any earlier date on which the debt financing is consummated or the applicable proceeds have been deposited into escrow and Owens & Minor will have obtained the net proceeds contemplated by the debt financing and (ii) the marketing period will be deemed not to have commenced if, prior to the completion of such 18 consecutive business day period, (A) Apria’s auditor has withdrawn its audit opinion with respect to any annual audited financial statements constituting required financial information, in which case the marketing period will not commence unless and until a new unqualified audit opinion is issued with respect to such financial statements for the applicable periods by such auditor or another independent public accounting firm of recognized national standing, or (B) Apria has announced, or the Apria Board has determined, that a restatement of any historical financial information constituting certain required financial information is required, in which case the marketing period will be deemed not to commence unless and until such restatement has been completed and the required financial information has been amended to reflect such restatement or Apria subsequently determines in writing or issues a public statement that no restatement is required in accordance with GAAP.

Owens & Minor has agreed that it will, and will cause its subsidiaries and use its reasonable best efforts to cause its and their respective representatives to, use its and their reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and obtain the debt financing on the terms and subject only to the conditions expressly set forth in the debt commitment letter, including using reasonable best efforts to (i) maintain in effect the debt commitment letter in accordance with the terms and subject to the conditions thereof until the transactions contemplated by the merger agreement are consummated or the merger agreement is validly terminated, (ii) satisfy or obtain a waiver on a timely basis of all conditions applicable to Owens & Minor and its affiliates set forth in the debt commitment letter that are within its or its affiliates’ control, (iii) negotiate and enter into definitive agreements with respect to the debt financing on the terms and subject only to the conditions set forth in the debt commitment letter, (iv) consummate the debt financing on or prior to the closing date, (v) enforce its rights under the debt commitment letter and (vi) comply with its obligations under the debt commitment letter.

 

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Apria’s Cooperation

Apria has agreed to use reasonable best efforts to provide prior to closing, and to cause Apria’s subsidiaries to use reasonable best efforts to provide prior to closing, to Owens & Minor, in each case at the sole cost and expense of Owens & Minor, such cooperation as is customary for the available financing (as defined below) that is reasonably requested by Owens & Minor in connection with the arrangement of such financing, including using reasonable best efforts to:

 

•

reasonably cooperate with the debt financing sources’ due diligence, to the extent customary and not unreasonably interfering with the business and operations of Apria and its subsidiaries;

 

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upon reasonable advance notice cause the appropriate senior officers of Apria and its subsidiaries to participate in a reasonable number of lender meetings, road shows, due diligence sessions and sessions with rating agencies in connection with the available financing;

 

•

provide such financial and other pertinent information regarding Apria and its subsidiaries as may be reasonably requested by Owens & Minor and reasonably assist with the marketing efforts of Owens & Minor for all or any portion of the available financing, including reasonable assistance with the preparation of documents customarily required in connection with obtaining financing of the type contemplated by the debt commitment letter (including any offering of non-convertible debt securities or private placement of non-convertible debt securities pursuant to Rule 144A under the Securities Act);

 

•

provide customary authorization letters to the debt financing sources authorizing the distribution of information relating to Apria and its subsidiaries to prospective lenders;

 

•

furnish to the debt financing source at least three business days prior to the closing date all documentation and other information relating to Apria and its subsidiaries required by regulatory authorities under applicable “know your customer,” beneficial ownership and anti-money laundering rules and regulations, including the PATRIOT Act, to the extent required by the debt commitment letter;

 

•

request that Apria’s independent auditors provide consent for use of their audit reports relating to the financial statements of Apria in any materials relating to the available financing as necessary and customary for financings similar to the available financing and use commercially reasonable efforts to provide any customary information requested by such accounting firm to enable it to comply with such request;

 

•

take such corporate actions as will be reasonably requested by Owens & Minor (which actions shall not be effective prior to the closing) by persons that will remain officers or directors of Apria and its subsidiaries after the closing to authorize and permit the consummation of the available financing (including (subject to and contingent upon the closing) executing agreements to pledge, grant security interests in, and otherwise grant liens on, the assets of Apria and its subsidiaries);

 

•

execute and deliver a customary certificate of the chief financial officer (or other comparable officer) of Apria and its subsidiaries in customary form with respect to financial information constituting certain required financial information that is included in the offering materials used in connection with the offer and sale of notes, bonds or other securities as reasonably requested by the debt financing sources; and

 

•

request and facilitate the independent auditors of Apria to (A) provide comfort letters (including “negative assurance” comfort and change period comfort) with respect to financial information relating to Apria and its subsidiaries as reasonably requested by Owens & Minor as necessary and customary for financings similar to the available financing and (B) participate in accounting due diligence sessions.

“Available financing” means the debt financing and financings of the type contemplated by the debt commitment letter and, solely for purposes of the financing cooperation provisions of the merger agreement, one or more offerings or private placements of non-convertible debt securities to be issued or incurred in lieu of any portion of the debt financing contemplated by the debt commitment letter.

 

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