Form 4: Surmodics CEO Sells All Shares Post-Merger

Surmodics Inc. CEO Gary R. Maharaj reports the disposition of all common stock and derivative securities following the company's merger into a wholly-owned subsidiary of BCE Parent, LLC.

Summary

• Gary R. Maharaj, President & CEO and Director of Surmodics Inc. (SRDX), reported changes in beneficial ownership due to a merger.
• The changes resulted from a Merger Agreement dated May 28, 2024, where Surmodics Inc. merged with BCE Merger Sub, Inc., becoming a wholly-owned subsidiary of BCE Parent, LLC.
• At the effective time of the merger, each outstanding share of Surmodics common stock was automatically cancelled and converted into the right to receive $43.00 per share in cash.
• Mr. Maharaj disposed of 192,056 shares of common stock, resulting in zero direct beneficial ownership post-merger.
• All outstanding restricted stock units (RSUs) held by Mr. Maharaj vested immediately prior to the merger and were converted into the $43.00 per share cash consideration.
• All unexercised employee stock options were cancelled and converted into a cash payment for in-the-money options, calculated as (Merger Consideration Exercise Price) multiplied by the number of shares.
• Options with exercise prices of $56.63 and $43.93 per share were out-of-the-money relative to the $43.00 merger consideration and did not result in a cash payment.
• Options with exercise prices of $42.00, $37.44, $36.13, and $33.64 per share were in-the-money and resulted in cash payments.
• Following these transactions, Mr. Maharaj no longer beneficially owns any common stock or derivative securities of Surmodics Inc.

Sentiment

Score: 7

Explanation: The sentiment is positive as the merger successfully completed, providing a cash payout to shareholders and the reporting person for their equity holdings. While the company is no longer public, the transaction itself was executed as planned, delivering value to equity holders.

Positives

• The merger transaction successfully completed, providing liquidity to shareholders of Surmodics Inc.
• Shareholders received a cash consideration of $43.00 per share for their common stock.
• In-the-money employee stock options and vested restricted stock units held by the reporting person were converted into cash payments.

Negatives

• Surmodics Inc. is no longer an independent publicly traded company.
• The reporting person, Gary R. Maharaj, no longer holds any beneficial ownership in the company's common stock or derivative securities.
• Out-of-the-money stock options (with exercise prices of $56.63 and $43.93) did not yield any cash payment for the reporting person.

Risks

• The filing does not detail future risks for the now-private entity. The primary risk for public shareholders, the potential non-completion of the merger, has been resolved.

Future Outlook

The filing does not provide a future outlook for Surmodics Inc. as it reports a past transaction related to the company's acquisition and subsequent privatization. The company is now a wholly-owned subsidiary of BCE Parent, LLC.

Management Comments

• "Each share of the Issuer's common stock... was automatically cancelled and converted into the right to receive $43.00 per share in cash."
• "All outstanding restricted stock units... vested immediately prior to the Effective Time and the reporting person is entitled to receive the Merger Consideration for such vested RSUs."
• "This unexercised stock option... was cancelled and automatically converted into the right to receive an amount in cash... equal to the product of (a) the aggregate number of shares... multiplied by (b) the excess, if any, of the Merger Consideration over such Option's applicable per share exercise price."

Industry Context

This transaction reflects a broader trend of public companies being acquired and taken private, often by private equity firms (BCE Parent, LLC in this case). Such mergers typically offer a premium to public shareholders, providing immediate liquidity and removing the company from the scrutiny and costs associated with public market reporting. For the acquiring entity, it allows for strategic restructuring and long-term investment without quarterly market pressures.

Comparison to Industry Standards

• Not directly applicable as this is a Form 4 reporting an insider's transaction post-merger, rather than operational results. The $43.00 per share merger consideration would have been evaluated against industry benchmarks and comparable transactions at the time the merger agreement was announced (May 28, 2024) to determine its fairness and attractiveness to shareholders. Without the original merger announcement details, specific comparable companies or projects cannot be listed here.

Corporate Governance

Stakeholder Impact

• Shareholders: Received $43.00 per share in cash, providing liquidity and a return on investment.
• Employees (including reporting person): Equity holdings (RSUs, stock options) were converted to cash, providing a payout based on the merger consideration.
• The company: Now operates as a private entity, potentially leading to different strategic priorities and operational structures under BCE Parent, LLC.

Next Steps

• Surmodics Inc. will operate as a wholly-owned subsidiary of BCE Parent, LLC.
• Public shareholders have received their cash consideration and no longer hold shares in Surmodics Inc.

Key Dates

Keywords

Surmodics, SRDX, Merger, Acquisition, Form 4, Insider Transaction, Beneficial Ownership, Stock Options, Restricted Stock Units, Gary R. Maharaj, Private Equity, Delisting