Stock Spinoffs

Shutdown Schein Spinoff Boogie- Covetrus Delayed Is Not Covetrus Denied

Inelegant Investor
Just last week, Henry Schein(HSIC) announced the distribution date for its spinoff and Reverse Morris Trust transaction of Covetrus(CVET). Yesterday, the company announced a three day delay in the distribution due to the ongoing government shutdown. Whereas the company had formerly expected its registration to be effective on January 28, it now anticipates it will be effective no later February 4. This is based on guidance from the SEC that assumes a continuing government shutdown. As a result, the company now anticipates the distribution and merger will take place on February 7 rather than February 4.  All other terms remain the same; Henry Schein shareholders as of January 17 will receive .4 shares of Covetrus stock for every share of Henry Schein stock that they own.

Separately, Henry Schein and Vets First Choice announced the new Board of Directors for Covetrus.  Unsurprisingly, David E. Shaw, Co-Founder and Chairman of Vets First Choice will become Chairman of Covetrus. David Shaw is also the father of Benjamin Shaw, who is currently President, CEO and Co-Founder of Vets First Choice, and who will continue as President and CEO of Covetrus and as a Director after the transaction. Philip A. Laskawy, the Lead Independent Director on Henry Schein’s Board, will fill the same role on the Covetrus Board. The other Board members will be

  • Betsy Atkins, Chief Executive Officer of venture capital firm Baja LLC
  • Deborah G. Ellinger, Senior Advisor for The Boston Consulting Group and former CEO and/or President of four private-equity backed firms, including Ideal Image
  • Sandra L. Helton, former EVP and Chief Financial Officer of Telephone and Data Systems, Inc.
  • Mark J. Manoff, former partner and Americas Vice Chair of EY
  • Edward M. McNamara, President and co-founder of venture-building company TeamLaunch, LLC
  • Steven Paladino, EVP, Chief Financial Officer and Board Member of Henry Schein
  • Ravi Sachdev, Partner at Clayton Dubilier & Rice
  • Benjamin Wolin, former Chief Executive Officer and Co-Founder of Everyday Health and advisor for 3L Capital LLC

“Our intention has been to create a board that reflects the expansive and transformative nature of the Covetrus opportunity, and we believe that this slate of nominees achieves that in terms of caliber, diversity, independence and other qualities,” said David Shaw. “This group has a strong mix of relevant experience, global domain knowledge and extensive capabilities across key board functions that will help Covetrus scale its technology-enabled services platform across the globe and deliver upon its mission of advancing the world of veterinary medicine.”

“It is an honor to be entrusted with the role of Lead Independent Director and to join a team of such high-quality directors,” said Philip Laskawy. “At Covetrus, we will have a firm commitment to strong corporate governance as we focus on instilling a framework of accountability that drives long-term value creation.”

Last August, David Shaw’s former company, IDEXX Laboratories(IDXX), sued Vets First Choice for poaching employees and inducing them to share trade secrets. Though the suit appears to be ongoing, it does not appear in the legal proceedings disclosure of Covetrus’ registration statement. IDEXX, however, is listed as a major competitor.

Disclosure: The author holds no position in any company mentioned

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