UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

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

Shockwave Medical, Inc.

(Name of Registrant as Specified In Its Charter)

Not applicable

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

Payment of Filing Fee (Check all boxes that apply):

 

☐	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

 

 

Shockwave Medical, Inc.

5403 Betsy Ross Drive

Santa Clara, California 95054

[●], 2024

Dear Shockwave Medical, Inc. Stockholder:

You are cordially invited to attend a special meeting of stockholders (together with any adjournments or postponements thereof, the “Company Stockholders’ Meeting”) of Shockwave Medical, Inc., a Delaware corporation (“Shockwave,” “we,” “us” or “our”) to be held virtually via live webcast on [●], 2024, at [●], Pacific time (unless the Company Stockholders’ Meeting is adjourned or postponed). You may attend the Company Stockholders’ Meeting virtually via the Internet at [●], where you will also be able to vote by following the procedures set forth in the enclosed proxy statement. Please note that you will not be able to attend the Company Stockholders’ Meeting physically in person. For purposes of attendance at the Company Stockholders’ Meeting, all references in the enclosed proxy statement to “attendance at the Company Stockholders’ Meeting” or “present at the Company Stockholders’ Meeting” mean virtually present at the Company Stockholders’ Meeting. Formal notice of the Company Stockholders’ Meeting, a proxy statement, and a proxy card or voting instruction form accompany this letter.

At the Company Stockholders’ Meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, as the “Merger Agreement”), dated April 4, 2024, by and among Shockwave, Johnson & Johnson, a New Jersey corporation (“Parent”), and Sweep Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”) (such proposal, the “Merger Proposal”). At the Company Stockholders’ Meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger (such proposal, the “Compensation Proposal”). Finally, at the Company Stockholders’ Meeting, you will also be asked to consider and vote on a proposal to adjourn the Company Stockholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Stockholders’ Meeting (such proposal, the “Adjournment Proposal”).

Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Shockwave (the “Merger,” and, together with each of the other transactions contemplated by the Merger Agreement, the “Transactions”), with Shockwave surviving the Merger as a wholly owned subsidiary of Parent. If you are a Shockwave stockholder and the Merger is completed, each of your shares of our common stock, par value $0.001 per share (the “common stock”), will be converted into the right to receive $335.00 in cash (the “Merger Consideration”), without interest and less any applicable withholding of taxes (unless you have properly demanded, and not subsequently withdrawn, failed to perfect or otherwise lost, your appraisal rights under Section 262 of the Delaware General Corporation Law (the “DGCL”)).

Shockwave’s board of directors (the “Shockwave Board”), after careful consideration, including considering the factors more fully described in the enclosed proxy statement, has (1) determined that it is in the best interests of Shockwave and its stockholders, and declared it advisable, for Shockwave to enter into the Merger Agreement and consummate the Transactions, (2) approved the execution and delivery by Shockwave of the Merger Agreement, the performance by Shockwave of its covenants and agreements contained therein and the consummation of the Transactions upon the terms and subject to the conditions set forth in the Merger Agreement, (3) resolved, subject to the terms and conditions of the Merger Agreement, to recommend that all of the Shockwave stockholders adopt the Merger Agreement and

(4) directed that the Merger Agreement and the Transactions be submitted to the Shockwave stockholders for approval and adoption thereby.

The Shockwave Board recommends that you vote (1) “FOR” the Merger Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Company Stockholders’ Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement. The proxy statement also describes the actions and determinations of the Shockwave Board in connection with its evaluation of the Merger Agreement and the Merger. We encourage you to read the proxy statement and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information.

Whether or not you plan to attend the Company Stockholders’ Meeting virtually, please vote as promptly as possible. If you are a stockholder of record, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone by following the instructions on the enclosed proxy card. If you are a stockholder of record and you attend the Company Stockholders’ Meeting and vote online during the meeting, your vote will revoke any proxy that you have previously submitted.

If you hold your shares of our common stock in “street name,” you should instruct your bank, broker or other nominee how to vote your shares of our common stock in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

Your vote is very important, regardless of the number of shares of our common stock that you own. We cannot complete the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of a majority of the outstanding shares of our common stock.

If you have any questions or need assistance voting your shares of our common stock, please contact our Proxy Solicitor:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, NJ 07003

Banks, Brokerage Firms and Stockholders, please call toll free: (855) 928-4486

Email: swav@allianceadvisors.com

On behalf of the Shockwave Board, I thank you for your support and appreciate your consideration of this matter.

Sincerely,

[signature]

Doug Godshall

President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger, the adoption of the Merger Agreement or any other transaction described in the accompanying proxy statement, or passed upon the adequacy or accuracy of the disclosure in the accompanying proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [●], 2024 and is first being mailed on or about [●], 2024.

PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION

Shockwave Medical, Inc.

5403 Betsy Ross Drive

Santa Clara, California 95054

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD VIRTUALLY VIA THE INTERNET ON [●], 2024

Notice is hereby given that a special meeting of stockholders (including any adjournments or postponements thereof, the “Company Stockholders’ Meeting”) of Shockwave Medical, Inc., a Delaware corporation (“Shockwave,” “we,” “us” or “our”), will be held on [●], 2024, at [●], Pacific time (unless the Company Stockholders’ Meeting is adjourned or postponed). Shockwave stockholders will be able to attend the Company Stockholders’ Meeting via the Internet virtually via live webcast at [●], where you will be also able to vote by following the procedures set forth in the enclosed proxy statement. Please note that you will not be able to attend the Company Stockholders’ Meeting physically in person. For purposes of attendance at the Company Stockholders’ Meeting, all references in the enclosed proxy statement to “attendance at the Company Stockholders’ Meeting” or “present at the Company Stockholders’ Meeting” mean virtually present at the Company Stockholders’ Meeting. The Company Stockholders’ Meeting is being held for the following purposes:

1. To consider and vote on the proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated April 4, 2024, by and among Shockwave, Johnson & Johnson, a New Jersey corporation (“Parent”), and Sweep Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Shockwave (the “Merger”), with Shockwave surviving the Merger as a wholly owned subsidiary of Parent (such proposal, the “Merger Proposal”);

2. To consider and vote on the proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger (such proposal, the “Compensation Proposal”); and

3. To consider and vote on a proposal to adjourn the Company Stockholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Stockholders’ Meeting (such proposal, the “Adjournment Proposal”).

The enclosed proxy statement provides detailed information about the Company Stockholders’ Meeting, the Merger Agreement and the Merger. A summary of the Merger Agreement is included in the proxy statement under the captions “The Merger” and “The Merger Agreement” beginning on page 34, and a copy of the Merger Agreement is attached to the proxy statement as Annex A, each of which are incorporated by reference into this notice.

Only Shockwave stockholders of record as of the close of business on April 22, 2024 are entitled to notice of the Company Stockholders’ Meeting and to vote at the Company Stockholders’ Meeting or any adjournment, postponement or other delay thereof.

Your vote is very important, regardless of the number of shares of our common stock that you own. We cannot complete the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of a majority of the outstanding shares of our common stock.

The Shockwave Board recommends that you vote (1) “FOR” the Merger Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

Whether or not you plan to attend the Company Stockholders’ Meeting virtually, please vote as promptly as possible. If you are a stockholder of record, please sign, date and return, as promptly as possible, the enclosed

proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone by following the instructions on the enclosed proxy card. If you are a stockholder of record, and you attend the Company Stockholders’ Meeting and vote online during the Company Stockholders’ Meeting, your vote will revoke any proxy that you have previously submitted. If you hold your shares of our common stock in “street name,” you should instruct your bank, broker or other nominee how to vote your shares of our common stock in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

Under the General Corporation Law of the State of Delaware (the “DGCL”), any Shockwave stockholder who does not vote in favor of the Merger Proposal will have the right to seek appraisal of the fair value of their shares of our common stock as determined by the Delaware Court of Chancery if the Merger is completed, but only if such stockholder strictly complies with the procedures set forth in Section 262 of the DGCL. These procedures are summarized in the proxy statement under the caption “Appraisal Rights” beginning on page 6. In addition, a copy of Section 262 of the DGCL may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262.

 

By the Order of the Shockwave Board,

[signature]

Hajime Tada

General Counsel and Corporate Secretary

Dated: [●], 2024

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE COMPANY STOCKHOLDERS’ MEETING VIRTUALLY, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS PROMPTLY AS POSSIBLE. You may revoke your proxy or change your vote at any time before it is voted at the Company Stockholders’ Meeting.

If you are a stockholder of record, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone by following the instructions on the enclosed proxy card.

If you hold your shares of our common stock in “street name,” you should instruct your bank, broker or other nominee how to vote your shares of our common stock in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

If you are a stockholder of record, voting online during the Company Stockholders’ Meeting will revoke any proxy that you previously submitted.

If you hold your shares of our common stock through a bank, broker or other nominee, you must obtain a “legal proxy” in order to vote online at the Company Stockholders’ Meeting.

If you fail to submit your proxy or voting instructions, or to attend the Company Stockholders’ Meeting and vote online during the meeting, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the Company Stockholders’ Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Compensation Proposal or the Adjournment Proposal.

We encourage you to read the accompanying proxy statement and its annexes, including all documents incorporated by reference into the accompanying proxy statement, carefully and in their entirety. If you have any questions concerning the Merger, the Company Stockholders’ Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of our common stock, please contact our Proxy Solicitor:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, NJ 07003

Banks, Brokerage Firms and Stockholders, please call toll free: (855) 928-4486

Email: swav@allianceadvisors.com

TABLE OF CONTENTS

 

		Page
SUMMARY			1
Parties Involved in the Merger (see page 34)			1
The Merger (see page 34)			2
Treatment of Shockwave Equity Awards (see page 79)			2
Financing of the Merger (see page 66)			3
Conditions to the Merger (see page 93)			3
Reasonable Best Efforts (see page 87)			4
Recommendation of the Shockwave Board (see page 46)			5
Opinion of Shockwave’s Financial Advisor – Perella Weinberg Partners LP (see page 51)			5
Interests of Shockwave’s Directors and Executive Officers in the Merger (see page 60)			6
Appraisal Rights (see page 67)			6
U.S. Federal Income Tax Considerations of the Merger (see page 72)			7
No Solicitation (see page 83)			8
Shockwave Board Recommendation Change (see page 85)			9
Termination of the Merger Agreement (see page 94)			9
Termination Fee (see page 96)			11
Fees and Expenses (see page 97)			11
Effect on Shockwave if the Merger is Not Completed (see page 35)			11
The Company Stockholders’ Meeting (see page 25)			11
QUESTIONS AND ANSWERS			14
FORWARD-LOOKING STATEMENTS			24
THE COMPANY STOCKHOLDERS’ MEETING			25
Date, Time and Place			25
Purpose of the Company Stockholders’ Meeting			25
Record Date; Shares Entitled to Vote; Quorum			25
Votes Required; Abstentions and Broker Non-Votes			25
Shares of our Common Stock Held by Shockwave’s Directors and Executive Officers			26
Voting and Proxies			26
Revocability of Proxies			28
Shockwave Board Recommendation			28
Solicitation of Proxies			28
Anticipated Date of Completion of the Merger			29
Appraisal Rights			29
Other Matters			30
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on [●], 2024			30
Householding of Company Stockholders’ Meeting Materials			30
Questions and Additional Information			30
PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT			31
PROPOSAL 2: COMPENSATION PAID TO NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER			32
PROPOSAL 3: ADJOURNMENT OF THE COMPANY STOCKHOLDERS’ MEETING			33
THE MERGER			34
Parties Involved in the Merger			34
Effect of the Merger			35
Effect on Shockwave if the Merger is Not Completed			35
Merger Consideration			36
Background of the Merger			36

 

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Recommendation of the Shockwave Board and Reasons for the Merger			46
Opinion of Shockwave’s Financial Advisor – Perella Weinberg Partners LP			51
Certain Financial Projections			58
Interests of Shockwave’s Directors and Executive Officers in the Merger			60
Quantification of Potential Payments and Benefits to our Named Executive Officers			65
Golden Parachute Compensation			66
Financing of the Merger			66
Closing and Effective Time			67
Appraisal Rights			67
U.S. Federal Income Tax Considerations of the Merger			72
Regulatory Approvals Required for the Merger			75
THE MERGER AGREEMENT			77
Explanatory Note Regarding the Merger Agreement			77
The Merger			77
Certificate of Incorporation and Bylaws			78
Directors and Officers			78
Effect on Capital Stock			78
Treatment of Shockwave Equity Awards			79
Representations and Warranties			80
Conduct of Business			82
No Solicitation			83
The Shockwave Board Recommendation; Shockwave Board Recommendation Change			85
Reasonable Best Efforts			87
Antitrust Filings			87
Public Statements and Disclosure			89
Anti-Takeover Laws			89
Access			89
Section 16(b) Exemption			89
Directors’ and Officers’ Indemnification and Insurance			89
Employee Matters			90
Stockholder Litigation			91
Delisting			91
Company Stockholders’ Meeting			91
Notice of Certain Events			91
Credit Facility; Convertible Notes; Capped Call Transactions			92
Real Estate Matters			92
Joint Venture			92
Conditions to the Merger			93
Termination of the Merger Agreement			94
Effect of Termination			95
Termination Fee			96
Remedies			96
Fees and Expenses			97
Governing Law			97
MARKET PRICES AND DIVIDEND DATA			98
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			99
DEADLINE FOR FUTURE STOCKHOLDER PROPOSALS			102
WHERE YOU CAN FIND MORE INFORMATION			103
MISCELLANEOUS			104
ANNEX A – AGREEMENT AND PLAN OF MERGER			A-1
ANNEX B – OPINION OF PERELLA WEINBERG PARTNERS LP			B-1

 

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THE COMPANY STOCKHOLDERS’ MEETING

The enclosed proxy is solicited on behalf of the Shockwave Board for use at the Company Stockholders’ Meeting.

Date, Time and Place

We will hold the Company Stockholders’ Meeting on [●], 2024, at [●], Pacific time (unless the Company Stockholders’ Meeting is adjourned or postponed). You can virtually attend, and vote in the Company Stockholders’ Meeting by accessing a virtual live website using the Internet at [●]. Please note that you will not be able to attend the Company Stockholders’ Meeting physically in person. If you are a stockholder of record, instructions on how to attend and participate online are provided on the proxy card. If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker or other nominee, you will need to contact the broker, bank or other nominee that holds your shares of our common stock to obtain your control number in order to vote on the Company Stockholders’ Meeting website. Otherwise, you may participate as a “Guest,” but you may not vote at the Company Stockholders’ Meeting unless you obtain a “legal proxy” from your bank, broker or other nominee. We expect check-in to be available starting around [●], Pacific time, on the day of the Company Stockholders’ Meeting, [●], and you should allow ample time for online check-in proceedings. We will have technicians standing by and ready to assist you with any technical difficulties you may have in accessing the virtual live webcast. If you encounter any difficulties accessing the virtual live webcast during the check-in or meeting time, please call the support team at [●].

Purpose of the Company Stockholders’ Meeting

At the Company Stockholders’ Meeting, we will ask stockholders to vote to approve (1) the Merger Proposal, (2) the Compensation Proposal and (3) the Adjournment Proposal.

Record Date; Shares Entitled to Vote; Quorum

Only stockholders of record as of the Record Date are entitled to notice of the Company Stockholders’ Meeting and to vote at the Company Stockholders’ Meeting. As of the Record Date, there were [●] shares of our common stock outstanding and entitled to vote at the Company Stockholders’ Meeting. A complete list of registered stockholders as of the close of business on the Record Date will be available for inspection during ordinary business hours by stockholders of record ten days prior to the Company Stockholders’ Meeting at our principal business offices at 5403 Betsy Ross Drive, Santa Clara, CA 95054.

The stockholders holding at least a majority of the total voting power of all outstanding shares of our common stock present at the Company Stockholders’ Meeting virtually via the virtual meeting website or represented by proxy and entitled to vote thereat will constitute a quorum at the Company Stockholders’ Meeting. In the event that a quorum is not present at the Company Stockholders’ Meeting, it is expected that the meeting will be adjourned to solicit additional votes.

Votes Required; Abstentions and Broker Non-Votes

Each Shockwave stockholder will be entitled to one vote for each share of our common stock that such stockholder owns at the close of business on the Record Date on each proposal to be acted upon at the Company Stockholders’ Meeting. The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote as of the close of business on the Record Date. As of the Record Date, [●] votes constitute a majority of the outstanding shares of our common stock entitled to vote on the Merger Proposal. Shares deemed not in attendance at the Company Stockholders’ Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee), abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Merger Proposal. Approval of the Merger Proposal by our stockholders is a condition to the closing of the Transactions.

 

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The approval of the Compensation Proposal requires that the affirmative vote of a majority of the total votes cast at the Company Stockholders’ Meeting virtually via the virtual meeting website or represented by proxy and entitled to vote thereon are voted “FOR” the proposal. Accordingly, shares deemed not in attendance at the Company Stockholders’ Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) and broker non-votes will have no effect on the outcome of the Compensation Proposal (assuming a quorum is present). Abstentions will also have no effect on the Compensation Proposal (assuming a quorum is present).

The approval of the Adjournment Proposal, if necessary or appropriate, requires that the affirmative vote of a majority of the total votes cast at the Company Stockholders’ Meeting virtually via the virtual meeting website or represented by proxy and entitled to vote thereon are voted “FOR” the proposal. Accordingly, shares deemed not in attendance at the Company Stockholders’ Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker or other nominee) and broker non-votes will have no effect on the outcome of the Adjournment Proposal (assuming a quorum is present). Abstentions will also have no effect on the Adjournment Proposal (assuming a quorum is present).

If you are a stockholder of record and you fail to: (1) return your signed proxy card, (2) grant your proxy electronically over the Internet or by telephone or (3) attend the Company Stockholders’ Meeting and vote online during the meeting, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the Company Stockholders’ Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Compensation Proposal or the Adjournment Proposal (assuming a quorum is present).

If you hold shares of our common stock in “street name,” the failure to instruct your broker on how to vote your shares of our common stock will have the same effect as a vote “AGAINST” the Merger Proposal but, assuming a quorum is present at the Company Stockholders’ Meeting, will not have any effect on the Compensation Proposal or the Adjournment Proposal. Shockwave does not expect any broker non-votes at the Company Stockholders’ Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas each of the proposals to be presented at the Company Stockholders’ Meeting is considered non-routine. As a result, no broker will be permitted to vote your shares of our common stock at the Company Stockholders’ Meeting without receiving instructions.

Shares of our Common Stock Held by Shockwave’s Directors and Executive Officers

As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [●] shares of our common stock, representing approximately [●]% of the shares of our common stock outstanding on the Record Date.

We currently expect that our directors and executive officers will vote all of their respective shares of our common stock: (1) “FOR” the Merger Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

Voting and Proxies

If you are a stockholder of record (that is, if your shares of our common stock are registered in your name with Computershare, our transfer agent), there are four ways to vote:

 

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You may vote over the Internet prior to the Company Stockholders’ Meeting. You may vote your shares of our common stock over the Internet up until 11:59 p.m., Eastern Time, on the day preceding the Company Stockholders’ Meeting by following the instructions on the proxy card. If you vote over the Internet prior to the Company Stockholders’ Meeting, you do not need to vote during the Company Stockholders’ Meeting or by telephone or by mail.

 

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You may vote by telephone prior to the Company Stockholders’ Meeting. You may vote your shares of our common stock by calling the phone number on the proxy card up until 11:59 p.m., Eastern Time on the day preceding the Company Stockholders’ Meeting. If you vote by telephone, you do not need to vote during the Company Stockholders’ Meeting or over the Internet or by mail.

 

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You may vote by mail prior to the Company Stockholders’ Meeting. If you wish to vote your shares of our common stock by mail, please sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope. If you vote by mail, you do not need to vote during the Company Stockholders’ Meeting or over the Internet or by telephone and your mailing must be received prior to the Company Stockholders’ Meeting.

 

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You may vote over the Internet during the Company Stockholders’ Meeting. You may vote your shares of our common stock over the Internet during the Company Stockholders’ Meeting by accessing the Company Stockholders’ Meeting website by following the instructions provided on the proxy card. You can then cast your votes by following the prompts provided by the website. If you attend the Company Stockholders’ Meeting and vote online during the meeting, your vote will revoke any proxy that you have previously submitted.

You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the Internet or by telephone. Based on your proxy cards or Internet and telephone proxies, the proxy holders will vote your shares of our common stock according to your directions.

Voting instructions are included on your proxy card. All shares of our common stock represented by properly signed and dated proxies received in time for the Company Stockholders’ Meeting will be voted at the Company Stockholders’ Meeting in accordance with the instructions of the stockholder. Properly signed and dated proxies that do not contain voting instructions will be voted (1) “FOR” the Merger Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

If you are a beneficial owner and your shares of our common stock are held in “street name” through a bank, broker or other nominee, you may vote:

 

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through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee;

 

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by attending the Company Stockholders’ Meeting and voting online with a “legal proxy” from your bank, broker or other nominee; or

 

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if such a service is provided by your bank, broker or other nominee, electronically over the Internet or by telephone by the deadline provided by your bank, broker or other nominee; provided, that in order to vote over the Internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting instruction form provided by your bank, broker or nominee.

If you do not return your bank’s, broker’s or other nominee’s voting instruction form, do not vote via the Internet or telephone through your bank, broker or other nominee, if possible, or do not attend the Company Stockholders’ Meeting and vote online with a “legal proxy” from your bank, broker or other nominee, it will have the same effect as if you voted “AGAINST” the Merger Proposal, but, assuming a quorum is present at the Company Stockholders’ Meeting, will not have any effect on the Compensation Proposal or the Adjournment Proposal.

Even if you plan to attend the Company Stockholders’ Meeting virtually, you are strongly encouraged to vote your shares of our common stock in advance of the meeting. If you are a record holder or if you obtain a “legal proxy” to vote your shares of our common stock that you beneficially own, you may still vote your shares of our common stock online at the Company Stockholders’ Meeting even if you have previously voted by proxy. If you are present at the Company Stockholders’ Meeting virtually and vote online during the Company Stockholders’ Meeting, your vote will revoke any proxy that you have previously submitted.

 

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Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Company Stockholders’ Meeting by:

 

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voting online at the Company Stockholders’ Meeting;

 

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submitting a new proxy by telephone up until 11:59 p.m. Eastern Time on the day preceding the Company Stockholders’ Meeting by following the instructions on the proxy card;

 

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submitting a new proxy over the Internet up until 11:59 p.m. Eastern Time on the day preceding the Company Stockholders’ Meeting by following the instructions on the proxy card;

 

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signing a new proxy card with a date later than the date of the previously submitted proxy card and returning it to us by mail, which must be received prior to the Company Stockholders’ Meeting; or

 

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giving our Corporate Secretary a written notice that you want to revoke your proxy via mail at 5403 Betsy Ross Drive Santa Clara, California 95054 up until 11:59 p.m. Eastern Time on the day preceding the Company Stockholders’ Meeting.

If you have submitted a proxy, your appearance at the Company Stockholders’ Meeting virtually, in the absence of voting online during the Company Stockholders’ Meeting or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

If you are a beneficial owner and hold your shares of our common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote online at the Company Stockholders’ Meeting if you obtain a “legal proxy” from your bank, broker or other nominee.

Any adjournment, postponement or other delay of the Company Stockholders’ Meeting, including for the purpose of soliciting additional proxies, will allow stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Company Stockholders’ Meeting as adjourned, postponed or delayed.

Shockwave Board Recommendation

The Shockwave Board, after careful consideration, including considering various factors described in the section of this proxy statement captioned “The Merger — Recommendation of the Shockwave Board and Reasons for the Merger,” has (1) determined that it is in the best interests of Shockwave and its stockholders, and declared it advisable, for Shockwave to enter into the Merger Agreement and consummate the Transactions, (2) approved the execution and delivery by Shockwave of the Merger Agreement, the performance by Shockwave of its covenants and agreements contained therein and the consummation of the Transactions upon the terms and subject to the conditions set forth in the Merger Agreement, (3) resolved, subject to the terms and conditions of the Merger Agreement, to recommend that all of the Shockwave stockholders adopt the Merger Agreement and (4) directed that the Merger Agreement and the Transactions be submitted to the Shockwave stockholders for approval and adoption thereby.

The Shockwave Board recommends that you vote (1) “FOR” the Merger Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

Solicitation of Proxies

The expense of soliciting proxies will be borne by Shockwave. We have retained Alliance Advisors, LLC, a proxy solicitation firm, to solicit proxies in connection with the Company Stockholders’ Meeting at a cost of approximately $17,500, plus expenses. We will also indemnify the Proxy Solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial

 

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owners of shares of our common stock for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Completion of the Merger

Assuming timely satisfaction of necessary closing conditions, including the approval by our stockholders of the Merger Proposal, we anticipate, but cannot guarantee, that the Merger will be consummated by mid-year 2024.

Appraisal Rights

If the Merger is completed and you comply fully with the requirements of Section 262 of the DGCL (“Section 262”), you will be entitled to have your shares of our common stock appraised by the Delaware Court of Chancery and to receive, in lieu of the Merger Consideration, payment in cash of the amount determined by the Delaware Court of Chancery to be the “fair value” of your shares of our common stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid on the amount determined to be fair value as determined by the Delaware Court of Chancery. Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares of our common stock are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

You should be aware that the fair value of your shares of our common stock as determined pursuant to Section 262 could be more than, the same as or less than the value of the Merger Consideration.

Stockholders wishing to exercise the right to seek an appraisal of their shares of our common stock must do ALL of the following:

 

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the stockholder must not vote in favor of the adoption of the Merger Agreement;

 

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the stockholder must deliver to Shockwave a written demand for appraisal before the vote on the Merger Agreement at the Company Stockholders’ Meeting;

 

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the stockholder must continuously hold the shares of our common stock that are subject to the demand from the date of making the demand through the Effective Time (a stockholder will lose appraisal rights if the stockholder transfers such shares of our common stock before the Effective Time); and

 

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the stockholder or the Surviving Corporation must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares of our common stock within 120 days after the Effective Time. The Surviving Corporation is under no obligation to file any petition and has no intention of doing so.

A beneficial owner (as defined in Section 262 of the DGCL) may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares in accordance with the statutory procedures and requirements set forth in Section 262 of the DGCL.

Your failure to strictly comply with the procedures specified under the DGCL will result in the loss of your appraisal rights. The DGCL requirements for exercising appraisal rights are described in further detail in the section of this proxy statement captioned “The Merger — Appraisal Rights,” and Section 262, the relevant section of the DGCL regarding appraisal rights, may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262.

 

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Other Matters

At this time, we know of no other matters to be voted on at the Company Stockholders’ Meeting. If any other matters properly come before the Company Stockholders’ Meeting, your shares of our common stock will be voted in accordance with the discretion of the appointed proxy holders.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on [●], 2024

The proxy statement is available at https://ir.shockwavemedical.com/financial-information/sec-filings.

Householding of Company Stockholders’ Meeting Materials

The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single set of proxy materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. A single set of proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders.

We will promptly deliver a separate copy of these proxy materials to any stockholder upon request submitted in writing to us at our principal offices at 5403 Betsy Ross Drive Santa Clara, California 95054 Attn: Investor Relations. You may also orally submit your request by calling (510) 279-4262.

If two or more stockholders sharing the same address are currently receiving multiple copies of proxy materials and would like to receive only one copy for their household, the stockholders should contact their bank, broker or other nominee record holder, or contact us as instructed above.

Questions and Additional Information

If you have any questions concerning the Merger, the Company Stockholders’ Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of our common stock, please contact our Proxy Solicitor:

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor

Bloomfield, NJ 07003

Banks, Brokerage Firms and Stockholders, please call toll free: (855) 928-4486

Email: swav@allianceadvisors.com

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

We are asking you to adopt the Merger Agreement pursuant to which Merger Sub will merge with and into Shockwave, and Shockwave will become a wholly owned subsidiary of Parent.

For a summary of and detailed information regarding this proposal, see the information about the Merger Agreement and the Merger throughout this proxy statement, including the information set forth in the sections of this proxy statement captioned “The Merger” and “The Merger Agreement.” This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. A copy of the Merger Agreement is attached to this proxy statement as Annex A. You are urged to read the Merger Agreement carefully in its entirety.

Under applicable law, we cannot complete the Merger without the affirmative vote in favor of this Merger Proposal by the holders of a majority of the total outstanding shares of our common stock as of the Record Date. If you abstain from voting, fail to cast your vote (online during the Company Stockholders’ Meeting or by proxy), or fail to give voting instructions to your brokerage firm, bank, trust or other nominee, it will have the same effect as a vote against the Merger Proposal.

The Shockwave Board recommends that you vote “FOR” this proposal.

 

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PROPOSAL 2: COMPENSATION PAID TO NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER

In accordance with Section 14A of the Exchange Act, we are asking you to approve a proposal to cast an advisory (non-binding) vote on the compensation that may be paid or become payable to our named executive officers in connection with the proposed Merger. For more detailed information regarding these amounts, please see the section captioned “The Merger — Quantification of Potential Payments and Benefits to our Named Executive Officers” and the accompanying footnotes and related narrative disclosure. As required by those rules, we are asking our stockholders to adopt the following resolution:

RESOLVED, that the stockholders of Shockwave hereby APPROVE, on an advisory (non-binding) basis, the compensation that may be paid or become payable to Shockwave’s named executive officers in connection with the Merger, in each case pursuant to Item 402(t) of Regulation S-K, described in the table in the section captioned “The Merger — Quantification of Potential Payments and Benefits to our Named Executive Officers” and the accompanying footnotes and related narrative discussion.

Effect of Advisory Vote

The vote on this proposal is a vote separate from the votes on the proposal to adopt the Merger Agreement and the proposal to approve adjournment of the virtual special meeting. Accordingly, you may vote to approve either of the other proposals and vote not to approve this proposal, and vice versa. Approval of this proposal is not a condition to completion of the Merger.

Because the vote on this proposal is only advisory in nature, it will not be binding on either Shockwave or Parent, regardless of whether the proposed Merger is completed. Accordingly, since the compensation described herein is contractual with respect to our named executive officers, regardless of the outcome of this advisory vote, such compensation will be payable, subject only to the conditions applicable thereto, if the proposed Merger is completed.

The Shockwave Board recommends that you vote “FOR” this proposal.

 

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PROPOSAL 3: ADJOURNMENT OF THE COMPANY STOCKHOLDERS’ MEETING

We are asking you to approve a proposal to adjourn the Company Stockholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Stockholders’ Meeting. If stockholders approve this Adjournment Proposal, we could adjourn the Company Stockholders’ Meeting and any adjourned session of the Company Stockholders’ Meeting and use the additional time to solicit additional votes, including proxies from stockholders that have previously returned properly executed proxies voting against approval of the Merger Proposal. Among other things, approval of the Adjournment Proposal could mean that, even if we had received proxies representing a sufficient number of votes against approval of the Merger Proposal such that the proposal to adopt the Merger Agreement would be defeated, we could adjourn the Company Stockholders’ Meeting without a vote on the approval of the Merger Proposal and seek to convince the stockholders of those shares of our common stock to change their votes to votes in favor of approval of the Merger Proposal. Additionally, we could seek to adjourn the Company Stockholders’ Meeting if a quorum is not present or otherwise at the discretion of the chairman of the Company Stockholders’ Meeting.

We do not anticipate calling a vote on this proposal if the Merger Proposal is approved by a majority of the outstanding shares of our common stock as of the Record Date.

The Shockwave Board recommends that you vote “FOR” this proposal.

 

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THE MERGER

This discussion of the Merger Agreement and the Merger in this proxy statement is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A, which is incorporated into this proxy statement by reference. You should read and consider the Merger Agreement, which is the legal document that governs the Merger, carefully and in its entirety.

Parties Involved in the Merger

Shockwave Medical, Inc.

5403 Betsy Ross Drive

Santa Clara, California 95054

(510) 279-4262

Shockwave is a medical device company focused on developing and commercializing novel technologies that transform the care of patients with cardiovascular disease. Shockwave aims to establish a new standard of care for the treatment of calcified cardiovascular disease (“atherosclerosis”) through its differentiated and proprietary local delivery of sonic pressure waves, which is referred to as intravascular lithotripsy (“IVL”). Shockwave’s IVL system (our “IVL System”), which leverages Shockwave’s IVL technology (our “IVL Technology”), is a minimally invasive, easy-to-use, and safe way to improve outcomes for patients with calcified cardiovascular disease. Additionally, Shockwave aims to transform the standard of care for patients suffering from refractory angina with our coronary sinus reducer (the “Reducer”) technology, an innovative technology that creates a permanent, controlled narrowing of the coronary sinus.

Shockwave’s principal executive offices are located at 5403 Betsy Ross Drive Santa Clara, California 95054, and its telephone number is (510) 279-4262. Shockwave maintains a website at www.shockwavemedical.com. Information included on or accessible through Shockwave’s website does not constitute a part of this proxy statement and, therefore, is not incorporated herein by reference.

Shockwave’s common stock is listed on Nasdaq under the symbol “SWAV.”

Johnson & Johnson

One Johnson & Johnson Plaza

New Brunswick, New Jersey 08933

(732) 524-0400

Parent is a holding company, with operating companies conducting business in virtually all countries of the world. Parent’s primary focus is products related to human health and well-being. Parent and its subsidiaries have approximately 134,400 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the healthcare field.

Parent’s principal executive offices are located at One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933, and its telephone number is (732) 524-0400. Parent maintains a website at www.jnj.com. Information included on or accessible through Parent’s website does not constitute a part of this proxy statement and, therefore, is not incorporated herein by reference.

Parent’s common stock, par value $1.00, is listed on the New York Stock Exchange under the symbol “JNJ.”

Sweep Merger Sub, Inc.

One Johnson & Johnson Plaza

New Brunswick, New Jersey 08933

(732) 524-0400

 

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Merger Sub is a Delaware corporation and a wholly owned subsidiary of Parent that was formed solely for the purpose of entering into a merger agreement and consummating the transactions contemplated thereby. Merger Sub has not conducted any business operations other than in connection with its formation, the maintenance of its existence and the transactions contemplated by the Merger Agreement. Upon the consummation of the transactions contemplated by the Merger Agreement, Merger Sub will cease to exist.

Merger Sub’s principal executive offices are located at One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933, and its telephone number is (732) 524-0400.

Effect of the Merger

Upon the terms and subject to the conditions of the Merger Agreement, at the Effective Time, Merger Sub will merge with and into Shockwave, and Shockwave will continue as the Surviving Corporation and a wholly owned subsidiary of Parent. As a result of the Merger, our common stock will no longer be publicly traded, will be delisted from Nasdaq and will be deregistered under the Exchange Act, and Shockwave will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation.

The Effective Time will occur upon the filing and acceptance of the certificate of merger with the Secretary of State of the State of Delaware, or at such later date and time as is agreed upon in writing by the parties and specified in the certificate of merger.

Effect on Shockwave if the Merger is Not Completed

If the Merger Agreement is not adopted by our stockholders or if the Merger is not completed for any other reason, stockholders will not receive any payment for their shares in connection with the Merger. Instead, Shockwave will remain an independent public company, our common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and we will continue to file periodic reports with the SEC. In addition, if the Merger is not completed, we expect that 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 highly competitive industry in which Shockwave operates and risks related to adverse economic conditions.

Upon termination of the Merger Agreement under specified circumstances, Shockwave will be required to pay Parent a termination fee of $448,000,000. For more information please see the section of this proxy statement captioned “The Merger Agreement — Termination Fee.”

Furthermore, if the Merger is not completed, and depending on the circumstances that caused the Merger not to be completed, it is likely that the price of our common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of our 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 our common stock. If the Merger is not completed, the Shockwave Board will continue to evaluate and review Shockwave’s business operations, strategic direction and capitalization, among other things, and will make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the Merger Agreement is not adopted by our stockholders or if the Merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to the Shockwave Board will be offered or that Shockwave’s business, prospects or results of operation will not be adversely impacted.

 

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Merger Consideration

At the Effective Time, each outstanding share of our common stock (other than the Excluded Shares and the Dissenting Shares) will be converted into the right to receive the Merger Consideration, without interest and subject to any required tax withholding.

After the Merger is completed, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a stockholder (except that stockholders who properly demand, and do not subsequently withdraw, fail to perfect, or lose, their appraisal rights will have the right to receive a payment for the “fair value” of their shares of our common stock as determined pursuant to an appraisal proceeding as contemplated by Section 262, as described in the section of this proxy statement captioned “— Appraisal Rights”).

Background of the Merger

The following is a summary of events, meetings and discussions that are relevant to the decision of the Shockwave Board to approve the Merger Agreement and recommend that Shockwave stockholders adopt the Merger Agreement.

From time to time, Shockwave’s executives speak with executives of other medical technology companies regarding their respective businesses and industry developments. These conversations included a discussion with Parent in January 2023 regarding potential strategic relationships between Shockwave and Parent, during which discussions Parent did not make a proposal to Shockwave with respect to any transaction. In addition, in February 2023, at an industry conference, Douglas Godshall, Shockwave’s President and Chief Executive Officer, spoke with executives of a medical technology company (“Company A”) about the strategic landscape in their industry, during which discussions such Company A executives expressed views about Company A’s near-term capital deployment priorities. Mr. Godshall interpreted this discussion to mean Company A would not prioritize pursuing large-scale acquisitions in the near-term.

On March 27, 2023, the Chairman and Chief Executive Officer of another medical technology company (“Company B”) met with Mr. Godshall and stated Company B’s interest in acquiring Shockwave, proposed an acquisition price of $260 per share to be paid in a mix of cash and Company B stock, and stated that a written indication of interest would be forthcoming.

Later on March 27, 2023, Company B delivered a written non-binding indication of interest proposing an acquisition of Shockwave at a value of $260 per share, to be paid half in cash and half in Company B common stock based on a fixed exchange ratio over a specified measurement period. The letter stated that Company B’s proposal would not be subject to any financing contingency.

Over the next few days, Mr. Godshall informed each member of the Shockwave Board of Company B’s proposal and scheduled a Shockwave Board meeting to be held on April 1, 2023.

On April 1, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of Perella Weinberg Partners LP (“PWP”), Shockwave’s financial advisor, and Fenwick & West LLP (“Fenwick”), Shockwave’s outside counsel, in attendance. Mr. Godshall reviewed with the Shockwave Board his discussions with representatives of Company B, as well as the prior conversations he had had with representatives of Parent and Company A. A representative of Fenwick reviewed with the Shockwave Board their fiduciary duties in considering a strategic business combination transaction. At the request of the Shockwave Board, representatives of PWP provided a preliminary financial analysis of Company B’s proposal. Following discussion, the Shockwave Board determined and directed Mr. Godshall to inform Company B that its $260 per share proposal was not sufficient for the Shockwave Board to transact but that Shockwave would be willing to provide a management presentation to Company B to provide additional information to inform whether Company B would be willing to increase its proposal. The Shockwave Board also directed Fenwick to speak with Company B’s regulatory counsel regarding

 

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the potential issues that could arise in the regulatory review of a business combination of Shockwave and Company B.

On April 2, 2023, Mr. Godshall spoke with Company B’s Chairman and Chief Executive Officer, and informed him the Shockwave Board had determined that its $260 per share proposal was not sufficient for the Shockwave Board to transact but that Shockwave would be willing to provide a management presentation to Company B to provide additional information to inform whether Company B would be willing to increase its proposal as well as to request that the companies’ respective regulatory counsel meet to discuss the potential issues that could arise in the regulatory review of a business combination of Shockwave and Company B.

On April 3, 2023, Shockwave and Company B executed a mutual non-disclosure agreement that included a customary standstill provision applicable to Company B, which standstill would not prevent Company B from making a private communication to the Shockwave Board and would terminate upon Shockwave’s entry into a definitive acquisition agreement and certain other events.

On April 4, 2023, Mr. Godshall, Isaac Zacharias, Shockwave’s President and Chief Commercial Officer, and Dan Puckett, Shockwave’s former Chief Financial Officer, provided a management presentation to executives of Company B.

Also on April 4, 2023, Hajime Tada, Shockwave’s General Counsel, and regulatory counsel from Fenwick met with a Senior Corporate Counsel of Company B and its outside regulatory counsel to discuss potential issues that could arise in the regulatory review of a business combination of Shockwave and Company B.

On April 5, 2023, Company B delivered a written non-binding indication of interest proposing an acquisition of Shockwave at a value of $270 per share, to be paid half in cash and half in Company B common stock based on a fixed exchange ratio over a specified measurement period. The letter stated that Company B’s proposal would not be subject to any financing contingency.

On April 6, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick in attendance. At the request of the Shockwave Board, representatives of PWP provided a preliminary financial analysis of Company B’s $270 per share proposal. A representative of Fenwick discussed the potential regulatory review of a potential transaction with Company B. Following discussion, the Shockwave Board determined and directed Mr. Godshall to inform Company B that its $270 per share proposal was not sufficient for the Shockwave Board to transact, and that Company B would need to clarify the contractual commitments it would be willing to make regarding achieving regulatory clearance of the transaction as well as provide a significant reverse termination fee to be paid to Shockwave in the event the transaction was not consummated due to the failure to achieve required regulatory clearances. The Shockwave Board also determined that, if Company B’s response was favorable, Shockwave should contact Parent to inform it that Shockwave had received an acquisition proposal that it was seriously considering. The Shockwave Board also discussed with Shockwave management and representatives of PWP whether to similarly inform Company A, taking into account Company A’s need to obtain new outside financing in order to make a proposal competitive with Company B’s proposal and the resulting increased risk of a leak regarding a potential acquisition involving Shockwave which could disrupt a transaction with Company B. The Shockwave Board also discussed with Shockwave management and representatives of PWP the comments made by Company A executives to Mr. Godshall regarding Company A’s near-term capital deployment priorities, based on which the Shockwave Board determined that it would be unlikely that Company A would make an actionable acquisition proposal. Based on these considerations, the Shockwave Board determined not to contact Company A regarding its potential interest in an acquisition of Shockwave. Also on April 6, 2023, PWP provided to Shockwave PWP’s relationship disclosure letter, which was subsequently shared with the Shockwave Board.

Following the Shockwave Board meeting on April 6, 2023, Mr. Godshall called Company B’s Chairman and Chief Executive Officer and relayed the Shockwave Board’s direction that Company B’s $270 per share

 

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proposal was not sufficient for the Shockwave Board to transact and that Company B would need to clarify the commitments it was willing to make regarding achieving regulatory clearance of the transaction as well as provide a significant reverse termination fee in the event the transaction were not consummated due to the failure to achieve required regulatory clearances. Company B’s Chairman and Chief Executive Officer responded to Mr. Godshall that Company B would be willing to increase its proposal to $275 per share but would require that Shockwave agree to a period of exclusivity. Mr. Godshall stated that Shockwave would not enter into exclusivity on that basis.

On April 7, 2023, a senior business development executive of Company B spoke with Mr. Godshall and proposed an acquisition of Shockwave at a value of $275 per share, to be paid half in cash and half in Company B common stock based on a fixed exchange ratio over a specified measurement period. They also discussed the timeline and issues related to achieving required regulatory clearances for the transaction.

Later on April 7, 2023, a representative of Company B’s financial advisor called a representative of PWP to propose what it identified as Company B’s “best and final” proposal, providing for $275 per share, to be paid half in cash and half in Company B common stock, a $500 million reverse termination fee (representing approximately 4.7% of transaction equity value) to be paid to Shockwave in the event the transaction was not consummated due to the failure to achieve required regulatory clearances, and a $350 million termination fee (representing approximately 3.3% of transaction equity value) payable to Company B in the event the transaction was terminated by Shockwave in order to accept an unsolicited superior proposal and upon certain other customary triggering events.

Later on April 7, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick in attendance. At the Shockwave Board’s request, a representative of PWP provided a preliminary financial analysis of Company B’s $275 per share proposal. A representative of Fenwick discussed the potential regulatory timeline and risks presented by a potential transaction with Company B. Following discussion, the Shockwave Board determined Company B was not likely to further increase its total price proposal but that, because Company B common stock was an attractive form of consideration, Shockwave should request that the price be paid half in cash and half in Company B common stock. The Shockwave Board further determined that, in light of the regulatory risk associated with a transaction with Company B, Shockwave’s response should be focused on increasing the reverse termination fee over the period of the transaction’s pendency in order to motivate Company B to agree to take actions requested by regulatory authorities earlier in the review process. The Shockwave Board also determined that a $350 million termination fee (representing approximately 3.3% of transaction equity value) would not be preclusive of receiving a topping bid following announcement of a transaction and to accept such amount in order to focus the negotiation on the size of the reverse termination fee. The Shockwave Board directed Mr. Godshall to communicate the Shockwave Board’s positions to Company B. The Shockwave Board also determined that PWP, on behalf of Shockwave, should contact Parent to inform it that Shockwave had received an acquisition proposal that it was seriously considering. Also at this meeting, the Shockwave Board formally approved engaging PWP as Shockwave’s financial advisor with respect to a potential change in control transaction and the terms of its engagement. The Shockwave Board selected PWP due to its reputation and experience in the medical technology sector, its expertise and qualifications in transactions of this nature, and its deep familiarity with Shockwave.

Following the Shockwave Board meeting on April 7, 2023, Mr. Godshall had a series of discussions with executives of Company B, in which the parties ultimately aligned on a transaction providing for $275 per share, one half of which would be payable in cash and the remainder to be paid in shares of Company B’s common stock, with the exchange ratio for such Company B common stock to be fixed based on its trading price preceding the announcement of Company B’s first quarter financial results, a $350 million termination fee (approximately 3.3% of transaction equity value) and a reverse termination fee at an initial value of $500 million (approximately 4.7% of transaction equity value), that would increase to $700 million (approximately 6.0% of transaction equity value) if Company B extended the termination date of the merger agreement beyond 13 months.

 

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Also on April 7, 2023, at the direction of the Shockwave Board, a representative of PWP contacted Ashley McEvoy, the former Executive Vice President, Worldwide Chairman, MedTech, of Parent, to inform Parent that Shockwave had received an acquisition proposal that it was seriously considering, and Ms. McEvoy stated that Parent would consider whether it would be interested in exploring a transaction with Shockwave.

On April 8, 2023, at the direction of the Shockwave Board, the representative of PWP spoke with Ms. McEvoy regarding Parent’s review process regarding a potential transaction and sent her a draft mutual non-disclosure agreement containing a customary standstill provision applicable to Parent, which standstill would terminate upon Shockwave’s entry into a definitive acquisition agreement and certain other events.

On April 9, 2023, Fenwick sent to Company B’s outside legal counsel a proposed “clean team” confidentiality agreement to govern the treatment of competitively-sensitive due diligence information. The parties negotiated the terms of this agreement and executed it on April 10, 2024.

On April 10, 2023, Shockwave provided access to Company B and its advisors to an electronic data room containing Shockwave due diligence information. From April 12, 2023 through April 14, 2023, each of Company B and Shockwave and their respective advisors engaged in a series of due diligence and “reverse” due diligence discussions regarding aspects of each other’s businesses.

On April 11, 2023, the Centers for Medicare & Medicaid Services, referred to as CMS, issued a proposed rule to update Medicare fee-for-service payment rates and policies for inpatient hospitals and long-term care hospitals for fiscal year 2024 that provided new coverage codes specifically for Shockwave’s IVL products and payment levels that would be meaningfully higher than the pre-existing codes. These changes were not expected by Shockwave and were understood to likely provide a positive driver for sales of Shockwave’s products. Following the release of this news, the price of Shockwave’s common stock increased approximately 10%.

On April 12, 2023, Company B’s outside legal counsel sent Fenwick a draft merger agreement.

Also on April 12, 2023, Mr. Godshall spoke with the Chairman and Chief Executive Officer of Company B and informed him that due to the recent increase in the price of Shockwave’s common stock due to the favorable CMS reimbursement rule, he expected that the Shockwave Board would require a higher acquisition price than $275 per share.

On April 13, 2023, at the direction of the Shockwave Board, a representative of PWP spoke with Ms. McEvoy, who said Parent was continuing to evaluate Shockwave. The representative of PWP noted that the Shockwave Board had an upcoming meeting and that it would be helpful for the Shockwave Board to know if Parent intended to make an acquisition proposal to Shockwave.

On April 15, 2023, at the direction of the Shockwave Board, a representative of PWP followed up with Ms. McEvoy, who noted that Parent was still in the process of evaluating Shockwave.

On April 15, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick in attendance, at which the Shockwave Board discussed the status of due diligence and reverse due diligence activities with respect to Company B, the regulatory risk analysis of a transaction with Company B, and its view that the acquisition value in any acquisition transaction should reflect the higher intrinsic value of Shockwave resulting from the favorable reimbursement decision and its impact on the price of Shockwave’s common stock (the closing trading price of which was $259.84 per share as of April 14, 2023). The Shockwave Board also discussed the status of discussions with Parent. Following discussion, the Shockwave Board determined to have PWP request from Parent a specific acquisition proposal and directed Mr. Godshall to inform Company B that it would need to increase its proposed acquisition price above $275 per share and provide additional information to help inform the Shockwave Board’s assessment of the regulatory risk in the potential transaction.

 

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Following the Shockwave Board meeting on April 15, 2023, Mr. Godshall spoke with the Chairman and Chief Executive Officer of Company B and informed him that Company B would need to increase its proposed acquisition price above $275 per share and provide additional information to help inform the Shockwave Board’s assessment of the regulatory risk in the potential transaction.

On April 16, 2023, Fenwick sent to Company’s B’s outside legal counsel a revised merger agreement, which among other things, included enhanced commitments by Company B with respect to obtaining regulatory clearance of the potential transaction.

Also on April 16, 2023, at the direction of the Shockwave Board, a representative of PWP spoke with Ms. McEvoy and communicated the Shockwave Board’s request that, as Shockwave was nearing a decision of whether to proceed with a transaction with another party, if Parent wished to make an acquisition proposal, it was requested do so by April 19, 2023, and also offered to provide Parent with a confidential management presentation (subject to Parent signing the non-disclosure agreement that had been previously provided by Shockwave) in order to help inform Parent’s view of the value of Shockwave.

On April 17, 2023, the Chairman and Chief Executive Officer of Company B called Mr. Godshall to state that Company B would not increase its proposed acquisition price above $275 per share. On the same a day, a representative of Company B’s financial advisor contacted PWP to provide the same message.

On April 18, 2023, at the direction of the Shockwave Board, a representative of PWP spoke with Ms. McEvoy, who conveyed to him that Parent was continuing to evaluate a potential transaction with Shockwave and that she would update him once a decision was made.

On April 18, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick in attendance, at which Mr. Godshall updated the Shockwave Board on his discussion with the Chairman and Chief Executive Officer of Company B and the representative of PWP updated the Shockwave Board on his discussion with Ms. McEvoy. A representative of Fenwick reviewed with the Shockwave Board an updated regulatory risk analysis of a transaction with Company B as well as the currently open issues in the draft merger agreement. The Shockwave Board further discussed the relative merits and risks of an acquisition by Company B, a potential acquisition by Parent, and remaining independent as a standalone public company.

Later on April 18, 2023, Company B’s outside legal counsel sent to Fenwick a revised merger agreement.

On April 20, 2023, Parent informed Shockwave that due to other strategic priorities at Parent, Parent would not make an acquisition proposal to Shockwave in the current timeframe.

Also on April 20, 2023, representatives of Fenwick and Company B’s outside legal counsel negotiated unresolved points in the draft merger agreement. Later on April 20, 2023, Fenwick sent Company B’s outside legal counsel a revised merger agreement.

On April 21, 2023, a media report stated that Shockwave was in acquisition discussions. That day, the price of Shockwave’s common stock closed at $286.46 per share. Later that day, Mr. Godshall and the Chairman and Chief Executive Officer of Company B spoke, and he informed Mr. Godshall that notwithstanding the then-current price of Shockwave’s common stock, Company B would increase its offer to, but would not pay more than, $278 per share in combined cash and stock consideration.

Also on April 21, 2023, a senior business development executive of Company A contacted Mr. Godshall and a representative of PWP to state that Company A would be interested in pursuing a potential acquisition of Shockwave, that it would pay all-cash consideration, and that it was prepared to move forward quickly.

 

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Also on April 21, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick in attendance, at which the Shockwave Board discussed that Parent would not be making an acquisition proposal, the April 21, 2023 media report and its effect on the price of Shockwave’s common stock, the statement by the Company B Chairman and Chief Executive Officer that Company B would not transact at a price above $278, and the expressed interest of Company A in a potential acquisition of Shockwave. The Shockwave Board received a presentation from PWP including an updated preliminary financial analysis utilizing Shockwave’s financial projections that were updated by Shockwave management to reflect the increased reimbursement coverage as a result of the CMS rule, which the Shockwave Board approved for use by PWP in its financial analysis. Representatives of Fenwick reviewed with the Shockwave Board further analysis of the regulatory risk presented by a transaction with Company B as well as a preliminary assessment of the regulatory risk presented by a transaction with Company A. Following discussion, the Shockwave Board directed Mr. Godshall to respond to Company B that Shockwave’s valuation in a transaction needed to reflect the increased intrinsic value of Shockwave’s business (without regard to the separate effect of the media report) and that Shockwave would not transact at $278 per share if that was the highest price Company B was willing to pay. The Shockwave Board also instructed Shockwave’s management and PWP to engage with Company A, provide it with a confidential business update and access to diligence materials, and request from it a specific acquisition proposal.

Also on April 21, 2023, Shockwave and Company A executed a mutual non-disclosure agreement that included a customary standstill provision applicable to Company A, which standstill would not prevent Company A from making a private communication to the Shockwave Board and would terminate upon Shockwave’s entry into a definitive acquisition agreement and certain other events. Also on April 21, 2023, Shockwave management provided Company A personnel with a confidential business update, and Company A and its advisors were granted access to an electronic data room containing due diligence information on Shockwave.

On April 22, 2023, at the direction of the Shockwave Board, Mr. Godshall and a representative of PWP spoke with a senior business development executive of Company A, who expressed Company A’s strong interest in acquiring Shockwave and that it was conducting its due diligence to support making a proposal in the near term. The Company A executive requested that Mr. Godshall meet with Company A’s Chairman and Chief Executive Officer.

Also on April 22, 2023, Fenwick sent Company A’s outside legal counsel a draft “clean team” confidentiality agreement to govern the treatment of competitively-sensitive due diligence information.

On April 23, 2023, at the direction of the Shockwave Board, Mr. Godshall and a representative of PWP met with Company A’s Chairman and Chief Executive Officer and a Company A senior corporate development executive and discussed Shockwave’s business. During this meeting, the Company A executives stated Company A’s strong interest in pursuing an acquisition of Shockwave.

Later on April 23, 2023, Mr. Godshall and the Chairman and Chief Executive Officer of Company B spoke and agreed that Shockwave and Company B would suspend discussions regarding a potential acquisition.

On April 24, 2023, Shockwave and Company A finalized and executed the clean team confidentiality agreement.

From April 23, 2023 through April 25, 2023, personnel from Shockwave and Company A held a series of due diligence sessions regarding various aspects of Shockwave’s business.

On April 26, 2023, Ms. McEvoy called Mr. Godshall to express that Parent could have interest in a potential transaction with Shockwave in the future, but reiterated that, due to other strategic priorities at Parent, it would not make an acquisition proposal at such time.

 

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On April 26, 2023, the senior corporate development executive of Company A spoke with both Mr. Godshall and the representative of PWP to update them on Company A’s internal transaction review process and that Company A expected to be in a position to potentially provide a firm proposal by April 29, 2023.

On April 29, 2023, the Shockwave Board held a meeting, with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick in attendance, at which Mr. Godshall updated the Shockwave Board that discussions with Company B had been discontinued as there appeared to be no means to bridge the parties’ respective positions on acquisition value and that Parent would not be in position to transact in the near term. The Shockwave Board then reviewed with Shockwave management and PWP the status of the extensive due diligence completed by Company A and that an acquisition proposal was expected to be made by Company A in the near term. Representatives of Fenwick reviewed with the Shockwave Board a regulatory risk analysis and timeline of a potential transaction with Company A. The Shockwave Board then discussed the tactics of negotiating an acquisition proposal from Company A should one be made.

On April 30, 2023, the senior corporate development executive of Company A informed Mr. Godshall that Company A had determined not to make an acquisition proposal at such time.

On May 2, 2023, Mr. Godshall and the Chairman and Chief Executive Officer of Company B spoke and confirmed with each other that the gap regarding the price at which the companies would transact would not be resolved and the parties should discontinue discussions regarding an acquisition.

On May 3, 2023, Shockwave terminated data room access for each of Company A and Company B.

The following year, on March 5, 2024, Jennifer Kozak, Parent’s Vice President, New Business Development, MedTech, contacted Mr. Godshall to schedule a meeting between him and Joaquin Duato, the Chairman and Chief Executive Officer of Parent.

Later on March 5, 2024, Mr. Godshall informed Ray Larkin, the Chair of the Shockwave Board, of Parent’s outreach and his planned meeting with Mr. Duato.

On March 6, 2024, Ms. Kozak and Mr. Godshall spoke regarding the planned meeting between Mr. Godshall and Mr. Duato.

On March 8, 2024, Mr. Duato and Mr. Godshall met in New Brunswick, New Jersey. During their meeting, Mr. Duato expressed Parent’s interest in an acquisition of Shockwave and that Parent would be providing a specific proposal in the coming days.

Following his meeting with Mr. Duato on March 8, 2024, Mr. Godshall called Mr. Larkin to inform him of Parent’s interest in an acquisition of Shockwave.

On March 14, 2024, Mr. Duato called Mr. Godshall to propose an acquisition of Shockwave for $320 per share in cash. Following this call, Parent delivered a written non-binding indication of interest for an all-cash acquisition at $320 per share. The proposal indicated that the transaction would be financed with Parent’s cash on hand and from readily accessible funding sources and that closing would not be subject to any financing contingency. The proposal also stated that it was Parent’s expectation that the process of completing its due diligence review and negotiating a definitive agreement could be completed within four weeks and should be conducted on a “bi-lateral basis.”

On March 16, 2024, the Shockwave Board met, with members of Shockwave’s senior management present, as well as, at the invitation of the Shockwave Board, representatives of PWP and Fenwick. A representative of Fenwick reviewed the Shockwave Board’s fiduciary duties in the context of considering a potential strategic

 

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acquisition transaction. Members of Shockwave management reviewed with the Shockwave Board an updated long-range financial plan, which following discussion, the Shockwave Board approved for use in the strategic process and by PWP for purposes of its preliminary financial analysis of Shockwave, as more fully described in the section entitled “— Certain Financial Projections.” At the request of the Shockwave Board, representatives of PWP reviewed with the Shockwave Board a preliminary financial analysis of Shockwave and Parent’s proposal, Parent’s bidding tactics in its prior acquisitions, and other companies (including Company A and Company B) that could have the strategic interest to make an acquisition proposal to Shockwave and their financial ability to provide offers competitive with Parent’s proposal. A representative of Fenwick provided the Shockwave Board with a preliminary analysis of the regulatory landscape presented by an acquisition of Shockwave by Parent. The Shockwave Board discussed Parent’s proposal, and determined that Shockwave’s value was more likely to be optimized by seeking to improve Parent’s offer and using the promise of engaging exclusively with Parent to do so rather than soliciting bids from other companies in light of Shockwave’s experience during the 2023 stage of the strategic process with Company A and Company B, that process having become public, PWP’s financial “ability to pay” analysis regarding such other potential parties, including Company A and Company B, and that a definitive acquisition agreement with Parent would include a “fiduciary out” termination right for Shockwave to be able to negotiate and enter into an unsolicited superior acquisition transaction should one be proposed following execution of a definitive agreement upon payment of a reasonable termination fee to Parent. The Shockwave Board authorized Shockwave management to make a counterproposal to Parent at either $345 or $350 per share in cash in management’s discretion, and if the price finally agreed with Parent was at least $330 per share in cash, the Shockwave Board would be willing to move forward with such transaction, and that at a price of $330 per share or higher, management was authorized to grant Parent up to 30 days of exclusivity.

On March 18, 2024, Mr. Godshall and Mr. Duato spoke by telephone. Mr. Godshall proposed an acquisition price of $350 per share in cash. Mr. Duato said Parent would consider this counterproposal and asked whether Shockwave’s transaction process would be “bi-lateral” with Parent, to which Mr. Godshall replied that at an acquisition value of $320 per share Shockwave’s process would not be “bi-lateral.”

On March 19, 2024, Mr. Godshall and Mr. Duato spoke by telephone. Mr. Duato proposed $335 per share in cash as Parent’s “final” acquisition offer and stated it was predicated on Shockwave granting Parent 30 days of exclusivity. Following the call, Parent sent a written non-binding indication of interest proposing an all-cash acquisition of all of the outstanding equity interests of Shockwave at a price of $335 per share. The letter indicated that the transaction would be financed with Parent’s cash on hand and from readily accessible funding sources and that closing would not be subject to any financing contingency. The proposal also stated that it was predicated on Shockwave granting Parent a period of 30 days of exclusivity. The letter was accompanied by a draft exclusivity agreement and a draft non-disclosure agreement, which included a customary standstill provision applicable to Parent, which standstill would terminate upon Shockwave’s entry into a definitive acquisition agreement and certain other events.

Later on March 19, 2024, following receipt of Parent’s increased proposal, Mr. Godshall spoke with Mr. Larkin and a representative of Fenwick and confirmed with each of them that the Shockwave Board’s March 16, 2024 authorization was sufficient to permit Shockwave to enter into a period of exclusivity, and each of them agreed.

Following such discussions, on March 19, 2024, Mr. Godshall called Mr. Duato, and confirmed that the Shockwave Board had authorized moving forward with a transaction at $335 per share, and granting Parent a period of exclusivity, which he proposed would expire on April 15, 2024, a period shorter than the 30 days initially requested by Parent.

Later on March 19, 2024, Fenwick sent revised versions of the exclusivity agreement and non-disclosure agreement to Parent. Among other things, the revised exclusivity agreement provided for expiration on April 15, 2024 and immediate termination of exclusivity in the event that Parent proposed to reduce the acquisition price below $335 per share.

 

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On March 20, 2024, Parent agreed to Fenwick’s changes to the exclusivity agreement, and Fenwick and Freshfields Bruckhaus Deringer LLP (“Freshfields”), Parent’s outside counsel, negotiated and finalized the terms of the non-disclosure agreement. Both agreements were then executed by the parties on March 20, 2024.

On March 22, 2024, the Shockwave Board held a meeting with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick present, at which the Shockwave Board reviewed with Mr. Godshall the course of the price negotiations with Parent, reviewed a preliminary financial analysis by PWP of Shockwave and Parent’s proposal of $335 price per share, and discussed the planned workstreams on the transaction. Following discussion, consistent with its authorization on March 16, 2024, the Shockwave Board confirmed its satisfaction with an acquisition price of $335 per share and directed Shockwave management to continue working to provide due diligence to Parent and negotiate a definitive acquisition agreement for the Shockwave Board’s review and consideration.

Later on March 22, 2024, Shockwave provided Parent and its advisors with access to an electronic data room containing due diligence information regarding Shockwave.

On March 24, 2024, Mr. Godshall, Mr. Zacharias, Renee Gaeta, Shockwave’s Chief Financial Officer, and Trinh Phung, Shockwave’s Senior Vice President, Finance, had a meeting with Mr. Duato, Joseph Wolk, Parent’s Executive Vice President and Chief Financial Officer, Tim Schmid, Parent’s Executive Vice President and Worldwide Chairman, MedTech, Michael Bodner, Parent’s Global Head of Heart Recovery, and Ms. Kozak, at Fenwick’s offices in Mountain View, California at which the Shockwave executives provided a management presentation on Shockwave’s business.

On March 25, 2024, Freshfields sent to Fenwick a draft merger agreement, which, among other things, contained customary provisions regarding non-solicitation of alternative transactions and providing for Shockwave’s ability to provide diligence to, and negotiate the terms of an agreement with, a party making an unsolicited proposal for a superior transaction, which draft did not specify a proposed amount for the termination fee to be paid by Shockwave to Parent in the event Shockwave terminated the merger agreement to accept a superior proposal and certain other customary events.

On March 26, 2024, a media report stated that Shockwave and Parent were in acquisition discussions (the “Media Report”). That day, the closing price for shares of Shockwave’s common stock was $316.07 per share, an increase of approximately 10% over the closing price for Shockwave’s common stock on March 25, 2024 (the “Unaffected Share Price Date”).

Following the media report on March 26, 2024, Mr. Godshall and Mr. Duato spoke, and reiterated their respective companies’ continued commitment to the transaction.

Also on March 26, 2024, Fenwick sent to Freshfields proposed revisions to the draft merger agreement, which draft also did not specify a proposed amount for the termination fee.

From March 28 through April 3, 2024, representatives of Shockwave and Parent engaged in a series of due diligence meetings covering various aspects of Shockwave’s business and operations.

On March 28, 2024, Freshfields sent to Fenwick a revised draft of the merger agreement which, among other terms, proposed a termination fee equal to 3.25% of transaction equity value.

On March 29, 2024, the Shockwave Board held a meeting with members of senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick present, at which the Shockwave Board reviewed with Shockwave management the status of due diligence activities and reviewed with Fenwick the transaction terms reflected in the merger agreement and the current status of the negotiations on open points in the draft merger agreement.

 

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On March 30, 2024, representatives of Fenwick and Freshfields discussed open issues in the draft merger agreement. Following such discussion, Fenwick sent to Freshfields a revised draft of the merger agreement which, among other terms, proposed a termination fee equal to 2.75% of transaction equity value, as a well as a draft of the Shockwave disclosure letter to the merger agreement.

On each of March 31 and April 1, 2024, Mr. Godshall spoke with executives of Parent regarding the transaction and integration planning.

On April 1, 2024, Freshfields sent to Fenwick a revised draft of the merger agreement which, among other terms, proposed a termination fee equal to 3.15% of transaction equity value.

On April 2, 2024, Freshfields sent to Fenwick proposed revisions to the Shockwave disclosure letter. Also on April 2, 2024, representatives of Fenwick and Freshfields discussed open issues in the merger agreement. Following such discussion, Fenwick sent to Freshfields a revised draft of the merger agreement which, among other terms, accepted a termination fee equal to 3.15% of transaction equity value.

Also on April 2, 2024, Parent sent to Mr. Zacharias and Patrick Stephens, Shockwave’s Senior Vice President, Research & Development, proposed retention agreements for each of them to become effective upon the closing of the merger as more fully described in the section entitled “—Interests of Shockwave’s Directors and Executive Officers in the Merger.” No discussions or commitments for post-closing employment or compensation with respect to Mr. Zacharias, Mr. Stephens or any other members of Shockwave’s management were held or made by Parent prior to such time. No Shockwave executives other than Mr. Zacharias and Mr. Stephens were presented with proposed terms regarding their post-closing employment with Parent or Shockwave.

On April 3, 2024, Fenwick sent to Freshfields a revised draft of the Shockwave disclosure letter. Also on April 3, Parent and Messrs. Zacharias and Stephens finalized the terms of their retention agreements.

On April 4, 2024, Fenwick and Freshfields finalized the merger agreement and the disclosure letter delivered by each of Shockwave and Parent.

On April 4, 2024, the Shockwave Board held a meeting with members of Shockwave’s senior management and, at the invitation of the Shockwave Board, representatives of PWP and Fenwick present. Representatives of Fenwick reviewed with the Shockwave Board the terms of the draft merger agreement, the final execution version of which had been previously distributed to the members of the Shockwave Board, along with the certificate of incorporation for the surviving company in the Merger and a substantially final version of the disclosure letter to be delivered by Shockwave. A representative of Fenwick noted that PWP had provided Shockwave with an updated relationship disclosure letter, dated April 1, 2024, which was shared with the Shockwave Board prior to the meeting. At the request of the Shockwave Board, representatives of PWP reviewed with the Shockwave Board PWP’s financial analysis of the transaction, and rendered to the Shockwave Board its oral opinion, subsequently confirmed by delivery of a written opinion dated April 4, 2024, that, as of such date and based upon and subject to, among other things, the various assumptions and limitations set forth in its opinion, the Merger Consideration of $335 per share to be paid to the holders of shares of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described in the section entitled “— Opinion of Shockwave’s Financial Advisor — Perella Weinberg Partners LP.” The written opinion rendered by PWP to the Shockwave Board is attached to this proxy statement as Annex B. Following additional discussion and consideration of the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement, the Shockwave Board determined that it is in the best interests of Shockwave and its stockholders, and declared it advisable, for Shockwave to enter into the Merger Agreement and consummate the transactions contemplated by the Merger Agreement, approved the execution and delivery by Shockwave of the Merger Agreement, the performance by Shockwave of its covenants and agreements

 

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contained in the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions contained in the Merger Agreement and subject to the other terms and conditions of the Merger Agreement, resolved to recommend that Shockwave’s stockholders adopt the Merger Agreement.

Later on April 4, 2024, Shockwave, Parent and Merger Sub executed the Merger Agreement, and Messrs. Zacharias and Stephens executed their retention agreements.

On April 5, 2024, prior to the opening of the financial markets, Shockwave and Parent issued a joint press release announcing the execution of the Merger Agreement.

Recommendation of the Shockwave Board and Reasons for the Merger

Recommendation of the Shockwave Board

The Shockwave Board has (1) determined that it is in the best interests of Shockwave and its stockholders, and declared it advisable, for Shockwave to enter into the Merger Agreement and consummate the Transactions, (2) approved the execution and delivery by Shockwave of the Merger Agreement, the performance by Shockwave of its covenants and agreements contained therein and the consummation of the Transactions upon the terms and subject to the conditions set forth in the Merger Agreement, (3) resolved, subject to the terms and conditions of the Merger Agreement, to recommend that all of the Shockwave stockholders adopt the Merger Agreement and (4) directed that the Merger Agreement and the Transactions be submitted to the Shockwave stockholders for approval and adoption thereby.

The Shockwave Board recommends that you vote (1) “FOR” the Merger Proposal, (2) “FOR” the Compensation Proposal and (3) “FOR” the Adjournment Proposal.

Reasons for the Merger

In evaluating the Merger Agreement and the Transactions, including the Merger, the Shockwave Board consulted with our senior management, representatives of Fenwick, its outside legal counsel, and PWP, its financial advisor. In reaching their decision to approve the Merger Agreement, and in recommending that Shockwave’s stockholders vote in favor of the adoption of the Merger Agreement, the Shockwave Board considered numerous positive factors relating to the Merger Agreement, the Merger and the other Transactions, including the following material factors (which factors are not necessarily presented in order of relative importance):

 

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Certainty of Value; Immediate Liquidity. The fact that the all-cash Merger Consideration will provide Shockwave stockholders with certainty of value and immediate liquidity for their shares of our common stock at the completion of the Merger, while avoiding the long-term business and execution risks of retaining their shares of our common stock.

 

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Attractive Value. The fact that the Merger Consideration of $335 per share of our common stock:

 

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represents premia of approximately 23%, 39% and 59%, respectively, over the volume weighted average closing price per share for our common stock for the 30-day, 90-day and 180-day periods ended on the Unaffected Share Price Date; and

 

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implies an enterprise valuation of Shockwave representing multiples of approximately 18 times Shockwave’s revenue in fiscal 2023 and approximately 78 times Shockwave’s Adjusted EBITDA in fiscal 2023.

 

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Fairness Opinion of PWP. The oral opinion of PWP rendered to the Shockwave Board on April 4, 2024, which was subsequently confirmed in writing, that as of such date and based upon and subject to, among other things, the various assumptions and limitations set forth therein, the Merger Consideration

 

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of $335 per share to be paid to the holders of our common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described in the section entitled “— Opinion of Shockwave’s Financial Advisor — Perella Weinberg Partners LP.”

 

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Interactions with Potentially Interested Counterparties. The Shockwave Board also considered the fact that the Shockwave Board had engaged with other potential counterparties in 2023 regarding a potential transaction and that no alternative counterparty had expressed unsolicited interest in an acquisition of Shockwave during 2023 and 2024, despite Shockwave being a well-known publicly traded corporation in the medical device industry, the leak of transaction discussions in 2023 and the publication of the Media Report in 2024, and its belief, after consultation with its senior management and outside financial and legal advisors, that:

 

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it was not likely that an alternative counterparty to Parent with both the intent and financing capability to complete a transaction would be able to provide superior value to Shockwave stockholders;

 

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it was not likely that an alternative counterparty to Parent could move as quickly as Parent to complete a potential transaction, particularly given the fact that there were not expected to be significant antitrust or other regulatory impediments to the consummation of the Transactions other than review pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and in certain foreign jurisdictions, as further described in “The Merger — Regulatory Approvals Required for the Merger”;

 

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it was not likely that an alternative counterparty to Parent would be willing and able to acquire Shockwave at a price in excess of the Merger Consideration even if Shockwave were to conduct additional outreach; and

 

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it was not likely that an alternative counterparty to Parent would be willing and able to consummate a transaction with Shockwave that the Shockwave Board would view as more value-maximizing for holders of our common stock than the Transactions.

 

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Negotiation Process. The Shockwave Board also considered fact that the terms of the Merger were the result of arm’s length negotiations conducted by Shockwave at the direction of the Shockwave Board and with the assistance of an independent financial advisor and outside legal counsel, including the fact that Parent increased the proposed acquisition price from its March 14, 2024 proposal for $320 per share of our common stock in cash to the Merger Consideration of $335 per share and its belief that, as a result of such negotiations, the Merger Consideration was the maximum price at which Parent would conduct the acquisition of Shockwave and that further negotiations would have created a risk of causing Parent to abandon the Transactions altogether or materially delaying the entry into a definitive transaction agreements with respect to the Transactions.

 

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Strategic Alternatives. The Shockwave Board also considered the risks and potential benefits associated with other strategic alternatives and the potential for stockholder value creation associated with those alternatives. As part of these evaluations, the Shockwave Board considered continuing to execute Shockwave’s strategy on a stand-alone basis, as well as pursuing a different transaction, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to the holders of our common stock of those alternatives and the timing and likelihood of effecting such alternatives. After a thorough review of strategic alternatives and discussions with management and Shockwave’s financial and legal advisors, the Shockwave Board determined that the Merger Consideration is more favorable to the holders of our common stock than the potential value that might result from other available strategic options, including remaining independent on a stand-alone basis, taking into account execution risks as well as business, financial, industry, stock market, competitive and regulatory risks.

 

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Speed and Likelihood of Consummation. The Shockwave Board also considered the likelihood that the Merger would be consummated in a timely manner as a result of a number of factors, including:

 

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the business reputation and significant financial resources of Parent and the track record of Parent in completing acquisition transactions;

 

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the fact that the Merger is not subject to any financing condition;

 

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the fact that there are not expected to be significant antitrust or other regulatory impediments to the consummation of the Transactions, other than review pursuant to the HSR Act and in certain foreign jurisdictions, as further described in “The Merger — Regulatory Approvals Required for the Merger”;

 

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the nature of the conditions to the Merger, including the definition of “Company Material Adverse Effect” in the Merger Agreement; and

 

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Shockwave’s ability to specifically enforce the obligations of Parent under the Merger Agreement, including its obligations to consummate the Merger, and Shockwave’s ability to seek damages upon any willful and material breach by Parent or Merger Sub of the Merger Agreement.

Other Terms of the Merger Agreement. The Shockwave Board considered other terms of the Merger Agreement, as more fully described in the section entitled “The Merger Agreement,” including:

 

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Ability to Respond to Unsolicited Acquisition Proposals. Shockwave’s ability, in certain circumstances specified in the Merger Agreement, to furnish information to and conduct negotiations with a third party regarding an unsolicited alternative Acquisition Proposal that the Shockwave Board determines in good faith, after consulting with its financial advisors and outside legal counsel, constitutes or is reasonably likely to lead to a Superior Proposal and that the failure to take such action would be inconsistent with its fiduciary duties under applicable law.

 

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Ability to Accept a Superior Proposal. The ability of the Shockwave Board, in certain circumstances specified in the Merger Agreement, to terminate the Merger Agreement in order to enter into a definitive agreement with respect to a Superior Proposal (provided that Shockwave pay Parent the $448 million termination fee, equal to approximately 3.15% of the transaction equity value), subject to Parent’s ability to negotiate revised terms and conditions of the Merger Agreement with Shockwave that would obviate the basis for acceptance of such Superior Proposal.

 

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Company Adverse Recommendation Change in Response to a Superior Proposal or Intervening Event. The ability of the Shockwave Board, in certain circumstances specified in the Merger Agreement, to change its recommendation in favor of the Merger in response to an Acquisition Proposal (if the Shockwave Board determines in good faith, after consultation with Shockwave’s financial advisor and outside legal counsel, that such Acquisition Proposal constitutes a Superior Proposal) or an Intervening Event not related to an Acquisition Proposal (in each case, as defined and further discussed in the section entitled “The Merger Agreement — The Shockwave Board’s Recommendation; Shockwave Board Recommendation Change”), subject to Parent’s ability to negotiate revised terms and conditions of the Merger Agreement with Shockwave that would obviate the basis for such change in recommendation, and subject to Parent’s right to terminate the Merger Agreement following such change in recommendation and to collect a termination fee of $448 million from Shockwave (equal to approximately 3.15% of the transaction equity value).

 

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Conditions to Closing; Interim Operations. The fact that the terms and conditions of the Merger Agreement minimize, to the extent reasonably practical, the risk that a condition to consummate the Merger would not be satisfied and provide reasonable flexibility to operate Shockwave’s business during the pendency of the Merger.

 

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End Date. The fact that we anticipate the initial outside date of January 4, 2025, which may be extended until July 7, 2025, if, at the end of each prior period, the only outstanding conditions to

 

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closing the Merger are approval of the transaction pursuant to the HSR Act and/or other applicable antitrust laws, the absence of certain legal restraints preventing or otherwise making illegal the consummation of the Merger or the absence of legal proceedings brought under antitrust laws in certain applicable jurisdictions, will allow for sufficient time to consummate the Merger.

 

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Termination Fee. The belief of the Shockwave Board that the amount of the $448 million termination fee payable by Shockwave, equal to approximately 3.15% of the transaction equity value, was reasonable in light of, among other matters, the benefits of the Merger to Shockwave’s stockholders, the typical size of such termination fees in similar transactions and the likelihood that a fee of such size would not be a meaningful deterrent to alternative Acquisition Proposals.

 

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Representations, Warranties and Covenants. The fact that the scope of the representations, warranties and covenants made by Shockwave and Parent in the Merger Agreement are reasonable and customary.

 

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Appraisal Rights. The fact that statutory appraisal rights under Delaware law in connection with the Merger will be available to stockholders who do not vote in favor of the adoption of the Merger Agreement, properly demand appraisal of their shares of our common stock and otherwise fully comply with all required procedures under Section 262 of the DGCL. For more information on appraisal rights, please see the section entitled “— Appraisal Rights.”

 

•

Opportunity of Shockwave Stockholders to Vote; Rights to Adjourn or Postpone to Solicit Additional Proxies. The fact that the Merger would be subject to the approval of Shockwave stockholders, and that Shockwave stockholders would be free to evaluate the Merger and vote for or against the approval of the Merger Proposal at the Special Meeting. In addition, the Shockwave Board considered the fact that Shockwave could require the adjournment or postponement of the Special Meeting, upon the terms and subject to the conditions specified in the Merger Agreement, for the absence of a quorum at the Special Meeting or to allow additional solicitation of votes in order to obtain the adoption of the Merger Agreement by holders representing at least a majority of all outstanding shares of our common stock entitled to vote thereon.

In the course of reaching the determinations and decisions and making the recommendation described above, the Shockwave Board, in consultation with Shockwave’s senior management, outside legal counsel and financial advisors, also considered the risks and potentially negative factors relating to the Merger Agreement, the Merger and the other Transactions, including the following material factors (which factors are not necessarily presented in order of relative importance):

 

•

No Ongoing Equity Interest in Shockwave. The Shockwave Board considered the fact that Shockwave’s public stockholders will have no ongoing equity interest in the surviving corporation following the Merger, meaning that Shockwave stockholders will cease to participate in Shockwave’s potential future earnings or growth and will not benefit from any future increase in the value of Shockwave following completion of the Merger.

 

•

Inability to Solicit Takeover Proposals. The Shockwave Board considered the fact that the Merger Agreement contains covenants prohibiting Shockwave from soliciting other potential Acquisition Proposals and restricting its ability to entertain other potential Acquisition Proposals unless certain conditions are satisfied. The Shockwave Board also considered the fact that the right afforded to Parent under the Merger Agreement to negotiate revised terms and conditions of the Merger Agreement in response to an Acquisition Proposal that the Shockwave Board determines in good faith is a Superior Proposal may discourage other parties that might otherwise have an interest in a business combination with, or an acquisition of, Shockwave.

 

•

The Termination Fee. The Shockwave Board considered the fact that Shockwave may be required to pay a termination fee of $448 million (equal to approximately 3.15% of the transaction equity value) to Parent if the Merger Agreement is terminated under certain circumstances, including in connection with Shockwave accepting a Superior Proposal or due to the Shockwave Board changing or withdrawing its recommendation in favor of the Merger.

 

49

•

Effect of Announcement. The Shockwave Board considered the potential effect of the public announcement of the Transactions on Shockwave’s employees, operations and business partners and stock price, as well as its ability to attract and retain key personnel while the Merger is pending.

 

•

Litigation Risk. The Shockwave Board considered the risk of litigation in connection with the execution of the Merger Agreement and the consummation of the Merger which, even where lacking in merit, could nonetheless result in distraction and expense.

 

•

Interim Operating Covenants. The Shockwave Board considered the fact that the Merger Agreement imposes restrictions on the conduct of Shockwave’s business prior to the consummation of the Merger, requiring Shockwave to use commercially reasonable efforts to conduct its business according to its ordinary course of business consistent with past practice and refrain from taking certain specified actions without Parent’s prior written consent. The Shockwave Board considered that such restrictions may potentially delay or prevent Shockwave from pursuing business strategies or opportunities that may arise while the Merger is pending.

 

•

Risks That the Merger May Not Be Approved by Shockwave Stockholders. The Shockwave Board considered the possibility that the Merger Proposal will not be approved by Shockwave’s stockholders.

 

•

Risks That the Merger Might Be Delayed or Not Be Completed at All. The Shockwave Board considered the fact that there can be no assurance that all conditions to the parties’ obligations under the Merger Agreement will be satisfied on a timely basis or at all. Furthermore, the Shockwave Board considered the risks and costs to Shockwave if the Merger is not consummated in the anticipated timeframe or at all, including the diversion of Shockwave’s management and employees’ attention, potential employee attrition, the potential effect on customers, vendors, distributors, partners, licensors and others that do business with Shockwave; and the potential effect on the trading price of the shares of Shockwave’s common stock.

 

•

Transaction Costs. The Shockwave Board considered the fact that significant costs have been incurred in connection with negotiating and entering into the Merger Agreement and will continue to be incurred in connection with completing the Merger, and that substantial time and effort of Shockwave’s management and certain other key employees will be required, potentially resulting in disruptions to the operation of Shockwave’s business. If the Merger is not consummated, Shockwave will be required to pay its own expenses associated with the Merger Agreement, and the resulting public announcement of the termination of the Merger Agreement could affect the trading price of Shockwave’s common stock.

 

•

Interests of Directors and Executive Officers. The Shockwave Board considered that Shockwave’s executive officers and directors may have interests in the Merger that may be different from or in addition to those of other stockholders, as described in the section entitled “— Interests of Shockwave’s Directors and Executive Officers in the Merger.”

 

•

Regulatory Approval and Risks of Pending Actions. The Shockwave Board considered the fact that the completion of the Merger requires certain regulatory clearances, which could subject the Merger to unforeseen delays and risk.

 

•

Tax Treatment. The Shockwave Board considered the fact that the receipt of cash by Shockwave stockholders in exchange for our common stock as a result of the Merger generally will be taxable to Shockwave stockholders for U.S. federal income tax purposes (as further described in the section entitled “— U.S. Federal Income Tax Considerations of the Merger”).

The Shockwave Board believed that, overall, the potential benefits of the Merger to Shockwave’s stockholders substantially outweighed the risks and uncertainties of the Merger.

The foregoing discussion of factors considered by the Shockwave Board contains the material factors considered by the Shockwave Board but is not in any way intended to be exhaustive. In light of the variety of

 

50

factors considered in connection with its evaluation of the Merger, the Shockwave Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Each member of the Shockwave Board applied his or her own business judgment to the process and may have given different weight to different factors. The Shockwave Board did not undertake to make any specific determination as to whether any factor or any particular aspect of a factor supported or did not support its ultimate determination. Rather, the Shockwave Board based its recommendation on the totality of the information presented.

Opinion of Shockwave’s Financial Advisor — Perella Weinberg Partners LP

Shockwave retained PWP to act as its financial advisor in connection with the Merger. The Shockwave Board selected PWP due to its reputation and experience in the medical technology sector, its expertise and qualifications in transactions of this nature, and its deep familiarity with Shockwave. PWP, as part of its investment banking business, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions and other transactions as well as for corporate and other purposes.

On April 4, 2024, at the request of the Shockwave Board, PWP rendered its oral opinion, subsequently confirmed in writing, to the Shockwave Board, that, as of the date of such opinion, and based upon and subject to, among other things, the various assumptions and limitations set forth therein, the Merger Consideration of $335.00 per share to be paid to the holders of our common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of PWP’s written opinion, dated April 4, 2024, which sets forth, among other things, the assumptions made, procedures followed, matters considered, and limitations described in the opinion, is attached hereto as Annex B and is incorporated by reference herein.

For purposes of rendering its opinion, PWP, among other things:

 

•

reviewed certain publicly available financial statements and other publicly available business and financial information with respect to Shockwave, including equity research analyst reports;

 

•

reviewed certain internal financial statements, analyses and forecasts and other internal financial information and operating data relating to the business of Shockwave, in each case, prepared by or at the direction of the management of Shockwave and approved for PWP’s use by management of Shockwave (as set forth in the section entitled “— Certain Financial Projections”) (such forecasts, the “Company Forecasts”);

 

•

discussed the past and current business, operations, financial condition and prospects of Shockwave with senior management of Shockwave;

 

•

compared the financial terms of the Merger with the publicly available financial terms of certain transactions which PWP believed to be generally relevant;

 

•

reviewed the historical trading prices for Shockwave common stock and compared such price with that of securities of certain publicly traded companies which PWP believed to be generally relevant;

 

•

reviewed a draft of the Merger Agreement dated April 4, 2024; and

 

•

conducted such other financial studies, analyses and investigations, and considered such other factors, as PWP deemed appropriate.

For purposes of its opinion, PWP assumed and relied upon, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, accounting, legal, tax, regulatory and other

 

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information provided to, discussed with or reviewed by it (including information that was available from public sources) and further relied upon the assurances of management of Shockwave that they are not aware of any facts or circumstances that would make such information inaccurate or misleading in any material respect. With respect to the Company Forecasts, PWP was advised by management of Shockwave and assumed, with the Shockwave Board’s consent, that the Company Forecasts had been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of Shockwave as to the future financial performance of Shockwave and the other matters covered thereby, and PWP expressed no view as to the reasonableness of the Company Forecasts or the assumptions on which they were based. See the section entitled “— Certain Financial Projections” for a description of the Company Forecasts.

PWP assumed that the final Merger Agreement would not differ from the draft of the Merger Agreement that it reviewed in any respect material to its analysis or opinion. PWP also assumed that (i) the representations and warranties of all parties to the Merger Agreement and all other related documents and instruments that are referred to therein are true and correct in all respects material to its analysis and its opinion, (ii) each party to the Merger Agreement and such other related documents and instruments will fully and timely perform all of the covenants and agreements required to be performed by such party in all respects material to its analysis and its opinion, and (iii) that the Merger would be consummated in a timely manner in accordance with the terms set forth in the Merger Agreement, without any modification, amendment, waiver or delay that would be material to its analysis or its opinion. In addition, PWP assumed that in connection with the receipt of all approvals and consents required in connection with the proposed Merger, no delays, limitations, conditions or restrictions would be imposed that would be material to its analysis.

PWP’s opinion addressed only the fairness from a financial point of view, as of the date thereof, to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) of the Merger Consideration of $335.00 per share to be paid to such holders in the proposed Merger pursuant to the Merger Agreement. PWP was not asked to, and it did not, offer any opinion as to any other term of the Merger Agreement or any other document contemplated by or entered into in connection with the Merger Agreement, the form or structure of the Merger or the likely timeframe in which the Merger would be consummated. In addition, PWP expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any party to the Merger Agreement, or any class of such persons, whether relative to the Merger Consideration or otherwise. PWP did not express any opinion as to the fairness of the Merger to the holders of any other class of securities, creditors or other constituencies of Shockwave. Nor did PWP express any opinion as to any tax or other consequences that may result from the transactions contemplated by the Merger Agreement or any other related document. PWP’s opinion did not address any legal, tax, regulatory or accounting matters, as to which PWP understood Shockwave had received such advice as it deemed necessary from qualified professionals.

PWP’s opinion was for the information and assistance of the Shockwave Board in connection with, and for the purpose of its evaluation of, the Merger. PWP’s opinion is not intended to be and does not constitute a recommendation to any holder of Shockwave common stock as to how such holder should vote or otherwise act with respect to the proposed Merger or any other matter. PWP expressed no opinion as to the prices at which Shockwave common stock will trade at any time. In addition, PWP expressed no opinion as to the fairness of the Merger, or any consideration received in connection with the Merger by the holder of any other class of securities, creditors or other constituencies of Shockwave. PWP’s opinion was necessarily based on financial, economic, market, monetary and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Subsequent developments may affect PWP’s opinion and the assumptions used in preparing it, and PWP does not have any obligation to update, revise, or reaffirm its opinion.

Summary of Material Financial Analyses

The following is a summary of the material financial analyses performed by PWP and reviewed with the Shockwave Board in connection with PWP’s opinion and does not purport to be a complete description of the

 

52

financial analyses performed by PWP. The order of analyses described below does not represent the relative importance or weight given to those analyses by PWP. Some of the summaries of the financial analyses include information presented in tabular format. In order to fully understand PWP’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of PWP’s financial analyses.

For purposes of this section, “Unaffected Share Price” means the closing per share price of $287.23 of Shockwave common stock on March 25, 2024 (the last day prior to the publication of a Wall Street Journal article first reporting a potential sale of Shockwave), “Unaffected Share Price Date” means March 25, 2024 and “Last Trading Share Price” means the closing per share price of $320.72 of the Shockwave common stock on April 3, 2024 (the last closing price prior to PWP’s rendering of its opinion).

Selected Publicly Traded Company Comparison

PWP reviewed and compared certain financial information for Shockwave with corresponding financial information, ratios and public market multiples for nine publicly traded companies in the medical device industry with a market capitalization between $2.6 billion and $53.8 billion (the “Selected Publicly Traded Companies”). Although none of the Selected Publicly Traded Companies is identical to Shockwave, PWP selected these companies because they had publicly traded equity securities and were deemed to be similar to Shockwave in one or more respects, including operating in the medical device industry. PWP selected the companies used in the analysis on the basis of its experience and knowledge of companies in the industry and various factors, including the size of the company and the similarity of the business lines to Shockwave’s lines of businesses, as well as the business models, service offerings and end-market exposures of such companies.

The results of certain aspects of PWP’s analysis with respect to the Selected Publicly Traded Companies are summarized in the following table:

 

Selected Publicly Traded Company		Enterprise Value/Revenue 2024E				Enterprise Value/Revenue 2025E
Vericel Corporation			10.6x				8.6x
Glaukos Corporation			14.3x				11.7x
Inspire Medical Systems, Inc.			7.6x				6.2x
Axonics, Inc.(1)			6.1x				5.0x
DexCom, Inc.			12.4x				10.4x
Insulet Corporation			6.3x				5.3x
iRhythm Technologies, Inc.(2)			6.3x				5.3x
Inari Medical, Inc.			4.2x				3.6x
Penumbra, Inc.			6.6x				5.7x
Median			6.6x				5.7x
Shockwave (Unaffected)			12.1x				9.8x

 

(1)	Represents market data as of January 5, 2024 (the unaffected share price date prior to the public announcement that Axonics, Inc. entered into a definitive agreement to be acquired by Boston Scientific Corporation).

(2)	Presented on a pro forma basis giving effect to the issuance of 2029 convertible senior notes, repayment of certain indebtedness, share repurchases and certain capped call transactions.

For Shockwave and each of the Selected Publicly Traded Companies, PWP calculated and compared financial information and various financial market multiples and ratios based on company filings for historical information, the Company Forecasts and Wall Street consensus third party research estimates from Capital IQ and FactSet.

 

53

Based on the multiples of enterprise value (“EV”) to calendar year 2024 estimated (“2024E”) revenue and calendar year estimated 2025 (“2025E”) revenue described above, PWP’s analysis of the various Selected Publicly Traded Companies and on professional judgments made by PWP with respect to, among other things, the financial performance of Shockwave and the Selected Publicly Traded Companies, PWP (i) applied a range of multiples of 6.5x-12.5x to EV/2024E Revenue of Shockwave based on Wall Street consensus third party research estimates to derive a range of implied values from $157 per share to $296 per share, compared to the Unaffected Share Price of $287.23, the Last Trading Share Price of $320.72 per share and the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement, and (ii) applied a range of multiples of 5.5x-10.5x to EV/2025E Revenue of Shockwave based on Wall Street consensus third party research estimates to derive a range of implied values from $163 per share to $306 per share, compared to the Unaffected Share Price of $287.23, the Last Trading Share Price of $320.72 per share and the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement.

Although the Selected Publicly Traded Companies were used for comparison purposes, no business of any Selected Publicly Traded Company was either identical or directly comparable to Shockwave’s business. Accordingly, PWP’s comparison of the Selected Publicly Traded Companies and its analysis of the results of such comparisons was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the relative values of the Selected Publicly Traded Companies.

Selected Precedent Transaction Analysis

Using publicly available information, PWP reviewed the financial terms of selected precedent transactions (the “Selected Transactions”) involving companies that operated in, or were exposed to, the medical device industry. PWP selected these transactions in the exercise of its professional judgment and experience because PWP deemed them to be most similar in size, scope and impact on the industry to Shockwave or otherwise relevant to the Merger.

 

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For each of the Selected Transactions, PWP calculated and compared the resulting EV in the transaction as a multiple of last twelve months (“LTM”) revenue at the announcement of the transaction and next twelve months (“NTM”) revenues based on Wall Street consensus third party research estimates. The following table lists the Selected Transactions, transaction values (inclusive where applicable of the present value of future potential earnout payments as disclosed by parties to the transaction in publicly available filings) and summarizes the observed LTM EV/Revenue multiples and NTM EV/Revenue multiples.

 

Announcement Date

Target

Acquiror

Deal Value (Upfront Value with Earnout Present Value) (in $billions)

LTM EV/Revenue Multiple

NTM EV/Revenue Multiple

January 8, 2024

Axonics, Inc.

Boston Scientific Corporation

$

3.4

9.4x

7.7x

November 1, 2022

Abiomed, Inc.

Parent

$

16.6/$17.3

(1)

15.0x/15.7x

13.2x/13.8x

January 6, 2022

Vocera Communications, Inc.

Stryker Corporation

$

3.1

13.3x

11.6x

October 6, 2021

Baylis Medical Company, Inc.

Boston Scientific Corporation

$

1.8

N/A

8.8x

August 6, 2021

Intersect ENT, Inc.

Medtronic PLC

$

1.1

10.5x

8.2x

January 21, 2021

Preventice Solutions, Inc.

Boston Scientific Corporation

$

0.9/$1.1

(2)

5.9x/7.3x

N/A/N/A

December 18, 2020

BioTelemetry, Inc.

Philips Healthcare N.V.

$

2.7

6.2x

5.3x

November 4, 2019

Wright Medical Group N.V.

Stryker Corporation

$

5.3

5.8x

5.5x

September 5, 2017

Neotract Inc.

Teleflex Incorporated

$

0.7/$1.0

(3)

7.6x/9.9x

4.8x/6.3x

June 28, 2017

The Spectranetics Corporation

Philips Healthcare N.V.

$

2.1

7.7x

6.6x

 

(1)	Based on present value calculation of potential earnout payments in the aggregate of approximately $780 million as disclosed in public filings.

(2)	Based on present value calculation of potential future earnout payments in the aggregate of approximately $300 million as disclosed in public filings.

(3)	Based on present value calculation of potential future earnout payments in the aggregate of approximately $375 million as disclosed in public filings.

PWP observed that the average and median LTM EV/Revenue multiples (based on transaction consideration payable upfront and the present value of certain earnout payments) for the Selected Transactions were 9.0x (and 9.5x inclusive of the referenced earnout payments) and 7.7x (and 9.4x inclusive of the referenced earnout payments), respectively, and that the average and median NTM EV/Revenue multiples (based on transaction consideration payable upfront and the present value of certain earnout payments) for the Selected Transactions were 8.0x (and 8.2x inclusive of the referenced earnout payments) and 7.7x (and 7.7x inclusive of the referenced earnout payments), respectively.

Based on the multiples of LTM EV/Revenue and NTM EV/Revenue described above, PWP’s analyses of the various Selected Transactions and on professional judgments made by PWP with respect to, among other things, the financial performance and competitive positioning of Shockwave and the target companies in the Selected Transactions, PWP (i) applied a range of multiples of 8.5x to 15.5x to Shockwave’s 2023 LTM EV/Revenue based on publicly filed financial statements and information provided by Shockwave management to derive a range of implied values of approximately $163 to $289 per share of Shockwave common stock and (ii) applied a range of multiples of 7.5x to 13.5x to Shockwave’s 2024 NTM EV/Revenue based on Wall Street consensus

 

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third party research estimates to derive a range of implied values of approximately $180 to $317 per share of Shockwave common stock. PWP compared these ranges to the Unaffected Share Price of $287.23 per share, the Last Trading Share Price of $320.72 per share and the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement.

Although the Selected Transactions were used for comparison purposes, none of the Selected Transactions nor the companies involved in them was either identical or directly comparable to the Merger or Shockwave.

Discounted Cash Flow Analysis

PWP conducted a discounted cash flow analysis for Shockwave based on the Company Forecasts to derive a range of implied enterprise values for Shockwave by:

 

•

calculating the present value as of April 3, 2024 of the estimated standalone unlevered free cash flows (calculated as after-tax EBITA, plus depreciation, minus capital expenditures, minus the net increase in net working capital) that Shockwave could generate for the complete calendar years 2024 through 2033, as included in the Company Forecasts, using discount rates ranging from 11.25% to 12.75%; and

 

•

adding the present value as of April 3, 2024 of the terminal value of Shockwave at the end of calendar year 2033 using perpetuity growth rates ranging from 3.0% to 5.0% and discount rates ranging from 11.25% to 12.75%. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts to a specific point in time by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, capital structure, income taxes, expected returns and other appropriate factors taken into account based on the professional judgment and experience of PWP.

PWP estimated the range of perpetuity growth rates utilizing its professional judgment and experience, taking into account market expectations regarding long-term real growth of gross domestic product and inflation.

PWP used discount rates ranging from 11.25% to 12.75%, which were derived from Shockwave’s weighted average cost of capital determined by the application of the capital asset pricing model based on PWP’s experience and professional judgment, and which took into account certain company-specific metrics, including Shockwave’s target capital structure, the cost of long-term debt, forecasted tax rate and predicted Barra beta, as well as certain financial metrics for the United States financial markets generally.

From the range of implied enterprise values, PWP derived a range of implied equity values for Shockwave. To calculate the implied equity value from the implied enterprise value, PWP added cash and cash equivalents and subtracted debt and non-operating liabilities (on a net basis), in each case as provided by Shockwave management. PWP calculated implied values per share by dividing the implied equity values by the applicable diluted shares (based upon the number of issued and outstanding shares, net in the money shares underlying the convertible facility, capped call, and other equity interests), based on information provided by Shockwave management, and using the treasury stock method for calculation of option dilution.

This analysis resulted in an implied per share equity value reference range for the Shockwave common stock of approximately $237 to $357 per share. PWP compared this range to the Unaffected Share Price of $287.23 per share, the Last Trading Share Price of $320.72 per share and the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement.

 

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Summary of Additional Reference Information

PWP observed the following additional information that was not considered part of PWP’s financial analysis with respect to its opinion, but which were noted as reference data for the Shockwave Board:

Historical Stock Trading

PWP reviewed the closing prices of the Shockwave common stock on the Nasdaq for the 52 weeks ended on the Unaffected Share Price Date. PWP observed that during such period, the intraday trading price of the Shockwave common stock ranged from $157 to $316 per share. PWP compared this range to the Unaffected Share Price of $287.23 per share, the Last Trading Share Price of $320.72 per share and the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement.

Equity Research Analysts’ Price Targets

PWP also reviewed analyst price targets per share of Shockwave common stock prepared and published by 11 equity research analysts prior to the Unaffected Share Price Date. The range of such price targets was $165 to $290 per share. Certain of these equity research analysts published updated price targets following the Unaffected Share Price Date but prior to the announcement of the transaction. The range of such price targets for those equity analysts which published updated price targets following the announcement of the transaction was from $165 to $361. In each case, PWP compared these ranges to the Unaffected Share Price of $287.23 per share, the Last Trading Share Price of $320.72 per share and the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement. The price targets published by equity research analysts do not necessarily reflect current market trading prices for shares of Shockwave common stock and these estimates are subject to uncertainties, including the future financial performance of Shockwave and future financial market conditions.

Miscellaneous

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 herein, without considering the analyses or the summary as a whole, could create an incomplete view of the processes underlying PWP’s opinion. In arriving at its fairness determination, PWP considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered. Rather, PWP 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 analyses described herein as a comparison is directly comparable to Shockwave or the Merger.

PWP prepared the analyses described herein for purposes of providing its opinion to the Shockwave Board as to the fairness, from a financial point of view, as of the date of such opinion, of the Merger Consideration of $335.00 per share to be paid to the holders of Shockwave common stock (other than holders of Excluded Shares and Dissenting Company Shares) in the Merger pursuant to the Merger Agreement. These analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. PWP’s analyses were based in part upon the Company Forecasts and other third-party research analyst estimates, which are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by PWP’s analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties to the Merger Agreement or their respective advisors, none of Shockwave, PWP or any other person assumes responsibility if future results are materially different from those forecasted by Shockwave management or third parties.

PWP has acted as financial advisor to Shockwave with respect to the Merger. Pursuant to the terms of the engagement letter between PWP and Shockwave, dated April 7, 2023, Shockwave agreed to pay PWP

 

57

$7.0 million in cash, upon delivery by PWP of its opinion or, following request by the Shockwave Board that PWP render an opinion, the determination by PWP that it would not be able to deliver an opinion containing the conclusion sought by Shockwave in the context of the Merger. Shockwave also has agreed to pay PWP an additional fee, which is contingent upon the consummation of the Merger, of approximately $92.7 million (following reduction by the opinion fee previously paid to PWP by Shockwave). PWP will also be entitled to receive a termination fee equal to a portion of any compensation Shockwave may receive as a result of the termination of the Merger Agreement. In addition to the fees for professional services of PWP, Shockwave agreed to reimburse PWP for reasonable, documented, out-of-pocket expenses incurred in connection with the undertakings described in the engagement letter that may arise, and to indemnify PWP for certain liabilities and other items that may arise, out of its engagement by Shockwave.

PWP and its affiliates, as part of their investment banking business, are regularly engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes.

During the two-year period prior to the date of PWP’s opinion, PWP provided financial advisory services to a subsidiary of Parent on a matter unrelated to the Merger, for which PWP received approximately $3.4 million in compensation. PWP has provided investment banking services to Shockwave or its affiliates on matters unrelated to the Merger for which it received approximately $5.0 million in compensation during the two-year period prior to the date of PWP’s opinion, including on Shockwave’s acquisition of Neovasc Inc. in January 2023 and on its $750 million convertible note issuance in August 2023.

PWP and its affiliates in the future may provide investment banking and other financial services to Parent and/or Shockwave and their respective affiliates and in the future may receive compensation for the rendering of these services. In the ordinary course of its business activities, PWP and its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers or clients, in (i) debt, equity or other securities (or related derivative securities) or financial instruments (including bank loans or other obligations) of Shockwave, Parent or any of their respective affiliates and (ii) any currency or commodity that may be material to the parties or otherwise involved in the Merger. The issuance of PWP’s opinion was approved by a fairness opinion committee of PWP.

Certain Financial Projections

Shockwave does not as a matter of course publicly disclose long term projections as to future performance, revenues, operating income, or other financial results. However, Shockwave’s management prepared the Company Forecasts at the request of the Shockwave Board in the ordinary course of business, which were provided to and reviewed by the Shockwave Board and subsequently used in connection with the Shockwave Board’s analysis of the Transactions. The Company Forecasts are included in this proxy statement solely because (1) the Company Forecasts were made available to PWP for use in its financial analyses in connection with rendering its opinion to the Shockwave Board as described in the section entitled “— Opinion of Shockwave’s Financial Advisor — Perella Weinberg Partners LP” and (2) the Company Forecasts were made available to the Shockwave Board, including in connection with its consideration of the Merger and approved by the Shockwave Board for use by PWP in its financial analyses in connection with rendering its opinion to the Shockwave Board. The Company Forecasts are not included in this proxy statement to influence any stockholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to shares of our common stock.

The Company Forecasts were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or accounting principles generally accepted in the United States (“GAAP”).

 

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The Company Forecasts are forward-looking statements. Important factors that may affect actual results and cause the Company Forecasts not to be achieved include, but are not limited to, the risks and uncertainties described below and those described in the section entitled “Forward-Looking Statements.” Although the Company Forecasts are presented with numerical specificity, they reflect numerous estimates and assumptions made by Shockwave with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Shockwave’s business, all of which are difficult or impossible to predict accurately and many of which are beyond Shockwave’s control. The Company Forecasts reflect assumptions as to certain potential business decisions that are subject to change. Without limiting the generality of the foregoing, the Company Forecasts include assumptions relating to revenue growth, expenses and certain cash flow items. The Company Forecasts cover several years and such information by its nature becomes less reliable with each successive year. The Company Forecasts were prepared on a standalone basis without giving effect to the Merger. Furthermore, the Company Forecasts do not take into account the effect of any failure of the Merger to be completed and should not be viewed as accurate or continuing in that context.

The inclusion of the Company Forecasts should not be regarded as an indication that Shockwave, PWP, any of their respective affiliates, officers, directors, advisors or other representatives or anyone who received this information then considered, or now considers, them a reliable prediction of future events, and this information should not be relied upon as such. The inclusion of the Company Forecasts herein should not be deemed an admission or representation by Shockwave that it views such Company Forecasts as material information. The inclusion of the Company Forecasts in this proxy statement should not be regarded as an indication that the Company Forecasts will necessarily be predictive of actual future events given the inherent risks and uncertainties associated with such long-range forecasts. No representation is made by Shockwave or any other person regarding the Company Forecasts or Shockwave’s ultimate performance compared to such information. The Company Forecasts should be evaluated, if at all, in conjunction with the historical financial statements and other information about Shockwave contained in its public filings with the SEC. For additional information, see the section entitled “Where You Can Find More Information.” In light of the foregoing factors, and the uncertainties inherent in the Company Forecasts, stockholders are cautioned not to place undue reliance on the Company Forecasts.

The Company Forecasts included in this document have been prepared by, and are solely the responsibility of, Shockwave’s management. Neither our independent auditor nor any other independent accountant has compiled, examined or performed any procedures with respect to the Company Forecasts, nor have they expressed any opinion or any other form of assurance on such information or its achievability.

Some of the Company Forecasts are “non-GAAP financial measures,” which are financial performance measures that are not calculated in accordance with the published guidelines of the SEC regarding projections or GAAP. The non-GAAP financial measures used in the Company Forecasts were used by the Shockwave Board in connection with its evaluation of the Merger and, at the direction of the Shockwave Board, by PWP for purposes of its financial analyses and opinion delivered to the Shockwave Board. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures, because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.

 

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The following table presents the Company Forecasts (in millions):

 

		2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E				Terminal 2033E
Revenue		$	949			$	1,335			$	1,672			$	2,035			$	2,445			$	2,990			$	3,673			$	4,162			$	4,619			$	5,059			$	5,059
Adjusted EBITDA(1)		$	224			$	380			$	518			$	694			$	907			$	1,173			$	1,566			$	1,888			$	2,125			$	2,359			$	2,359
Adjusted EBITA(2)		$	213			$	362			$	494			$	661			$	862			$	1,112			$	1,485			$	1,789			$	2,008			$	2,222			$	2,222
Unlevered Free Cash Flows(3)		$	101			$	182			$	289			$	408			$	551			$	718			$	977			$	1,239			$	1,414			$	1,586			$	1,622

 

(1)	“Adjusted EBITDA” is a non-GAAP measure calculated as net income adjusted to exclude interest, taxes, depreciation, amortization from acquired intangibles, income / loss from our equity method investment, foreign currency losses and gains, and other certain non-recurring items.

(2)	“Adjusted EBITA” is a non-GAAP financial measure calculated as net income adjusted to exclude interest, taxes, amortization from acquired intangibles, income / loss from our equity method investment, foreign currency losses and gains, and other certain non-recurring items.

(3)	“Unlevered Free Cash Flows” is a non-GAAP financial measure calculated as Adjusted NOPAT, plus depreciation, and minus capital expenditures and net increase in working capital.

The Company Forecasts set forth above have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this proxy statement.

SHOCKWAVE DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE COMPANY FORECASTS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE COMPANY FORECASTS ARE NO LONGER APPROPRIATE.

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

When considering the recommendation of the Shockwave Board that you vote to approve the Merger Proposal, you should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of our stockholders generally, as more fully described below. The Shockwave Board was aware of and considered these interests to the extent that they existed at the time, among other matters, in evaluating, negotiating and approving the Merger Agreement and the Merger and recommending that the Merger Agreement be adopted by Shockwave’s stockholders.

Shockwave’s executive officers since January 1, 2023 (referred to in this section as “executive officers”) are as follows:

 

Name		Position
Doug Godshall		President, Chief Executive Officer and Director
Renee Gaeta		Chief Financial Officer
Isaac Zacharias		President, Chief Commercial Officer
Dan Puckett		Former Chief Financial Officer

Pursuant to SEC rules, this disclosure also covers any former directors or executive officers of Shockwave who served in such role at any time since January 1, 2023, and therefore covers Shockwave’s former Chief Financial Officer, Dan Puckett, who retired in the first quarter of 2024 but continues to provide certain advisory services to Shockwave.

 

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Consideration Payable for Outstanding Shares

Shockwave’s directors and executive officers who own shares of our common stock will receive in the transactions contemplated by the Merger Agreement the same Merger Consideration, on the same terms and conditions, as the other stockholders of Shockwave, as described in the section of this proxy statement captioned “— Merger Consideration.”

The following table sets forth the number of issued and outstanding shares of our common stock beneficially owned as of April 10, 2024 by each of Shockwave’s directors and executive officers.

For purposes of the table below, the number of shares of our common stock excludes shares of our common stock underlying Company Options, Company RSU Awards and Company PSU Awards and also excludes shares of our common stock that could be acquired under the Shockwave Medical, Inc. Employee Stock Purchase Plan (the “ESPP”) during the current offering period.

 

Name		Shares Beneficially Owned (#)				Cash Consideration for Shares Beneficially Owned ($)
Doug Godshall			94,954				31,809,590
Renee Gaeta			—				—
Isaac Zacharias			22,164				7,424,940
Dan Puckett			229				76,715
Kevin Ballinger			—				—
Laura Francis			4,048				1,356,080
C. Raymond Larkin, Jr.			4,545				1,522,575
Frederic Moll, M.D.			285,791				95,739,985
Antoine Papiernik			34,177				11,449,295
Maria Sainz			3,598				1,205,330
Sara Toyloy			1,943				650,905
F.T. “Jay” Watkins			3,796				1,271,660

Treatment of Equity-Based Awards

The Merger Agreement provides that at the Effective Time, each Company Option that is outstanding and unexercised as of immediately prior to the Effective Time (whether vested or unvested) and which has a per share exercise price that is less than the Merger Consideration will be canceled and converted into the right to receive a cash payment (without interest) equal to the product of (i) the total number of shares of our common stock subject to such Company Option, and (ii) the excess of (A) the Merger Consideration over (B) the per share exercise price of such Company Option.

At the Effective Time, any Company Option that is outstanding and unexercised as of immediately prior to the Effective Time (whether vested or unvested) and which has a per share exercise price that equals or exceeds the Merger Consideration will be canceled without consideration.

 

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The following table sets forth, for each of Shockwave’s directors and executive officers as described above, (i) the number of Company Options that were held as of April 10, 2024 (all of which are vested) and (ii) the Merger Consideration payable for each such Company Option based on the Merger Consideration of $335.00 per share. None of Shockwave’s directors or executive officers hold any unvested Company Options.

 

Name		Vested Company Options (#)				Cash Consideration for Vested Company Options ($)
Doug Godshall			376,766			$	123,816,138
Renee Gaeta			—				—
Isaac Zacharias			27,709				9,096,588
Dan Puckett			135				43,644
Kevin Ballinger			—				—
Laura Francis			13,690				4,495,960
C. Raymond Larkin, Jr.			28,688				9,421,483
Frederic Moll, M.D.			33,774				10,982,814
Antoine Papiernik			—				—
Maria Sainz			—				—
Sara Toyloy			—				—
F.T. “Jay” Watkins			101,694				33,484,000

In addition, at the Effective Time, each Company RSU Award that is outstanding as of immediately prior to the Effective Time (whether vested or unvested) will be canceled and converted into the right to receive a cash payment (without interest) equal to the product of (i) the total number of shares of our common stock underlying such Company RSU Award and (ii) the Merger Consideration.

At the Effective Time, each Company PSU Award that is outstanding as of immediately prior to the Effective Time (whether vested or unvested) will be canceled and converted into the right to receive a cash payment (without interest) equal to the product of (i) the total number of shares of our common stock underlying such Company PSU Award (assuming attainment of the actual level of performance for any performance periods that have been completed as of the Effective Time, and the maximum performance for all other performance periods) and (ii) the Merger Consideration.

 

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The following table sets forth, for each of Shockwave’s directors and executive officers, (i) the number of shares of our common stock underlying Company RSU Awards that were held as of April 10, 2024, (ii) the number of shares of our common stock underlying Company PSU Awards that were held as of April 10, 2024, assuming attainment of the maximum level of performance (or 200%), and (iii) the Merger Consideration payable for each such Company RSU Award and Company PSU Award based on the Merger Consideration of $335.00 per share.

 

Name		Company RSU Awards (#)				Cash Consideration for Company RSU Awards ($)				Company PSU Awards (Maximum Performance)(#)				Cash Consideration for Company PSU Awards (Maximum Performance)($)
Doug Godshall			57,819				19,369,365				100,810				33,771,350
Renee Gaeta			19,890				6,663,150				—				—
Isaac Zacharias			34,654				11,609,090				29,588				9,911,980
Dan Puckett			13,276				4,447,460				14,204				4,758,340
Kevin Ballinger			1,733				580,555				—				—
Laura Francis			736				246,560				—				—
C. Raymond Larkin, Jr.			736				246,560				—				—
Frederic Moll, M.D.			1,730				579,550				—				—
Antoine Papiernik			736				246,560				—				—
Maria Sainz			1,730				579,550				—				—
Sara Toyloy			1,730				579,550				—				—
F.T. “Jay” Watkins			736				246,560				—				—

Potential Severance Payments and Benefits

Certain of our executive officers are eligible to receive severance benefits under their separation pay agreements with Shockwave (each, a “Separation Pay Agreement”). Under each of the Separation Pay Agreements, in the event of a termination without “cause” or resignation for “good reason” (each, as defined in the applicable Separation Pay Agreement), in each case, within 3 months prior to or within 12 months following a “change in control” (as defined in the applicable Separation Pay Agreement), which the Merger will constitute, the executive will be entitled to receive:

 

•

Cash severance, payable in installments, in an aggregate amount equal to 18 months of the executive’s base salary (or, 24 months for our Chief Executive Officer) as in effect immediately prior to the executive’s termination or resignation;

 

•

A lump sum cash payment equal to a pro-rated portion of the executive’s annual bonus for the year in which such termination or resignation occurs, based on actual achievement of the applicable performance goals (other than with respect to Mr. Zacharias, who will instead be entitled to the Retention Bonus Severance amount described below in the section entitled “Retention Agreements”);

 

•

Reimbursement of a portion of the cost of COBRA continuation health coverage (so that the executive pays active employee rates) for a period of up to 18 months following the executive’s termination or resignation;

 

•

Amounts earned but unpaid during the executive’s term of service, including unpaid salary, unpaid bonus, and unused vacation, as applicable; and

 

•

Accelerated vesting of all unvested equity awards held by the executive that are then-outstanding as of the executive’s termination or resignation.

These severance benefits are subject to the executive’s execution and non-revocation of a release of claims.

 

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If any of the payments payable to an executive officer under a Separation Pay Agreement would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and would be subject to the related excise tax under Section 4999 of the Internal Revenue Code, then the executive officer would be entitled to receive either full payment of such amounts or such lesser amount that would result in no portion of the payments being subject to the excise tax, whichever results in a greater amount of after-tax benefits to the executive officer.

For purposes of the Separation Pay Agreements, “good reason” means the occurrence of any of the following without the executive’s written consent:

 

•

a material reduction in the executive’s annual rate of base salary other than a general reduction that affects all similarly situated executives in substantially the same proportions;

 

•

a material reduction in the executive’s target annual cash incentive opportunity;

 

•

a relocation of the executive’s principal place of employment by more than 30 miles;

 

•

a material breach by Shockwave of any material provision of the Separation Pay Agreement;

 

•

Shockwave’s failure to obtain an agreement from any successor to assume and agree to perform the Separation Pay Agreement in the same manner and to the same extent that Shockwave would be required to perform if no succession had taken place, except where such assumption occurs by operation of law;

 

•

a material, adverse change in the executive’s title, authority, duties or responsibilities (other than temporarily while the executive is physically or mentally incapacitated or as required by law);

 

•

a material, adverse change in the reporting structure applicable to the executive; or

 

•

in the case of Mr. Godshall, Shockwave’s failure to nominate him for election to Shockwave’s board of directors and to use its best efforts to have him elected and re-elected, as applicable.

Retention Agreement

In connection with the Merger, Shockwave has entered into an agreement with Isaac Zacharias that modifies certain provisions of Mr. Zacharias’s Separation Pay Agreement (the “Retention Agreement”). The Retention Agreement provides that Mr. Zacharias will be entitled to a retention bonus opportunity equal to $2,100,000 payable on the first anniversary of the Closing, subject to his continued employment with Shockwave, Parent or their affiliates through such date. In addition, if Mr. Zacharias’s employment is terminated prior to such date other than for “cause” (as defined in his Separation Pay Agreement), due to Mr. Zacharias’s death or disability, or if Mr. Zacharias resigns for Good Reason (as described below), then Mr. Zacharias will be entitled to receive (i) the salary continuation and COBRA continuation benefits payable under his Separation Pay Agreement and (ii) $1,251,924, which cash amount is equal to $2,100,000, subject to Mr. Zacharias’s execution and non-revocation of a release of claims.

For purposes of the Retention Agreement, “Good Reason” means the occurrence of any of the following Mr. Zacharias’s written consent, provided that the terms of Mr. Zacharias’s employment as set forth in the Retention Agreement will not in any way constitute or give rise to Good Reason:

 

•

a material reduction in Mr. Zacharias’s annual rate of base salary other than a general reduction that affects all similarly situated executives in substantially the same proportions;

 

•

a material reduction in Mr. Zacharias’s target annual cash incentive opportunity;

 

•

a relocation of Mr. Zacharias’s principal place of employment by more than 30 miles;

 

•

a material, adverse change in Mr. Zacharias’s title, authority, duties, or responsibilities relative to the Mr. Zacharias’s role as described in the Retention Agreement (other than temporarily while Mr. Zacharias is physically or mentally incapacitated or as required by applicable law); or

 

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•

a material, adverse change in the reporting structure applicable to Mr. Zacharias, relative to Mr. Zacharias’s role as described in the Retention Agreement.

Directors’ and Officers’ Indemnification and Insurance

Pursuant to the terms of the Merger Agreement, Shockwave’s directors and officers will be entitled to certain ongoing indemnification and insurance coverage. See the section entitled “The Merger Agreement — Directors’ and Officers’ Indemnification and Insurance” beginning on page 89 for a description of such ongoing indemnification and insurance coverage obligations.

Quantification of Potential Payments and Benefits to our Named Executive Officers

In accordance with Item 402(t) of Regulation S-K, the below table sets forth the amount of payments and benefits that will or may be paid or become payable to each of our named executive officers in connection with the Merger. The payments and benefits described below are calculated based on each named executive officer’s existing employment and equity arrangements with us and include certain payments or benefits that are contingent upon services to be provided by such named executive officer to Parent following the Closing, but only as set forth under the terms and conditions of our arrangements with the named executive officers (including the Retention Agreement with Mr. Zacharias).

Please note that the amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described in footnotes to the table. For example, we have assumed that:

 

(i)

the relevant price per share of our common stock is $335.00, which is equal to the Merger Consideration;

 

(ii)

the Closing occurs on April 10, 2024, the latest practicable date prior to the filing of this proxy statement;

 

(iii)

except where otherwise described below, each named executive officer experiences a “double-trigger” qualifying termination (a termination without “cause,” or resignation for “good reason”), in either case, immediately following the Effective Time;

 

(iv)

each named executive officer’s base salary and target bonus amount remain unchanged from those in effect as of April 10, 2024, and no named executive officer receives any additional equity grants, and there is no additional vesting or forfeiture of any Company RSU Awards or Company PSU Awards, on or prior to the Effective Time; and

 

(v)

no named executive officer enters into a new agreement prior to the Effective Time or otherwise becomes legally entitled to any additional compensation or benefits.

The actual amounts payable to our named executive officers will depend on whether the named executive officer experiences a qualifying termination, the date of termination (if any) and the terms of the plans or agreements in effect at such time, and accordingly may differ materially from the amounts set forth below.

The amounts shown in the table below do not include payments or benefits that would have been earned on or prior to the Effective Time or the value of payments or benefits that are not based on or otherwise relate to the Merger. For purposes of this disclosure, “single-trigger” refers to payments or benefits that are conditioned only upon the closing of the Merger, and “double-trigger” refers to payments or benefits that are conditioned on both the closing of the Merger and a qualifying termination of employment.

 

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Golden Parachute Compensation

 

Named Executive Officer		Cash($)(1)				Equity Awards($)(2)				Perquisites/ Benefits($)(3)				Total($)(4)
Doug Godshall			1,933,750				53,140,715				50,880				55,125,345
Renee Gaeta			804,167				6,663,150				50,880				7,518,197
Isaac Zacharias			2,100,000				21,521,070				50,880				23,671,950
Dan Puckett			—				9,205,800				—				9,256,680

 

(1)

The amounts shown in this column represent the aggregate cash severance that each named executive officer would receive upon a qualifying termination immediately following the Effective Time (double-trigger payments) and were determined based on the sum of (i) an amount equal to 150% of the named executive officer’s annual base salary (or, 200% in the case of Mr. Godshall), (ii) in the case of the named executive officer’s other than Mr. Zacharias, a pro-rated portion of the named executive officer’s annual bonus amount for 2024, assuming the applicable performance goals are achieved at target levels, plus (iii) in the case of Mr. Zacharias, the additional $1,251,924 that he would be entitled to receive under the Retention Agreement. The following table breaks down the amounts in this column by type of payment.

 

Named Executive Officer		Base Salary Component of Severance($)				Bonus Component of Severance($)				Additional Payment Under Retention Agreement ($)				Total($)
Doug Godshall			1,700,000				233,750				—				1,933,750
Renee Gaeta			750,000				54,167				—				804,167
Isaac Zacharias			848,076				—				1,251,924				2,100,000

 

(2)

The amounts shown in this column represent the aggregate amount of consideration that each named executive officer would receive with respect to his or her Company RSU Awards and Company PSU Awards that vest and are paid in connection with the Merger (single-trigger payments), as described in the section entitled “The Merger Agreement — Treatment of Shockwave Equity Awards.” None of the named executive officers have any unvested Company Options.

 

Named Executive Officer		Value of Unvested RSUs($)				Value of Unvested PSUs($)				Total($)
Doug Godshall			19,369,365				33,771,350				53,140,175
Renee Gaeta			6,663,150				—				6,663,150
Isaac Zacharias			11,609,090				9,911,980				21,521,070
Dan Puckett			4,447,460				4,758,340				9,205,800

 

(3)	The amounts shown in this column represent the value of 18 months’ of COBRA continuation coverage under our medical, dental and vision plans that each named executive officer would receive upon a qualifying termination immediately following the Effective Time (double-trigger payments).

 

(4)

Under the Separation Pay Agreements, amounts are subject to reduction in the event the named executive officer would receive a greater benefit on an after-tax basis by having some of his or her change in control-related payments and benefits cut back rather than paying the excise tax under Section 4999 of the Internal Revenue Code on such amounts, as described in further detail in the section of this proxy statement captioned “The Merger — Interests of Shockwave’s Directors and Executive Officers in the Merger.” This amount assumes that no such reduction is applied.

Financing of the Merger

The Merger is not conditioned on any financing arrangements or contingencies. Parent and Merger Sub have represented in the Merger Agreement that Parent, as of the date of the Merger Agreement had and at all times from the date of the Merger Agreement through the Effective Time will have (and Merger Sub will have as of the

 

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