424B3
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-262434

 

LOGO    LOGO

BUSINESS COMBINATIONS PROPOSED—YOUR VOTE IS VERY IMPORTANT

April 11, 2022

On December 22, 2021, Quidel Corporation (“Quidel”) and Ortho Clinical Diagnostics Holdings plc (“Ortho”) entered into a Business Combination Agreement (the “BCA”) by and among Quidel, Ortho, Coronado Topco, Inc. (“Topco”), Orca Holdco, Inc. (“U.S. Holdco Sub”) and Laguna Merger Sub, Inc. (“U.S. Merger Sub”), each wholly owned subsidiaries of Topco, and Orca Holdco 2, Inc., a wholly owned subsidiary of U.S. Holdco Sub (“U.S. Holdco Sub 2”), which provides for the acquisition of Ortho and Quidel by Topco. The combined company will unite world-class technologies and platforms to benefit customers with expanded access to clinical chemistry, immunoassay, molecular diagnostics, immunohematology, donor screening and point-of-care diagnostics offerings. We are extremely pleased about this transaction and look forward to the opportunities it presents. We are sending you this joint proxy statement/prospectus to ask you to vote in favor of these transactions and other related matters.

Pursuant to the BCA, the “Combinations” are expected to be implemented by means of (i) a scheme of arrangement to be undertaken by Ortho under Part 26 of the UK Companies Act (the “Ortho Scheme”), pursuant to which the Scheme Shares (as defined in the Scheme of Arrangement (hereinafter mentioned)) will be acquired by a nominee of Topco (or, if such nominee holds the Ortho Shares today, transferred within the nominee), such that Ortho will become a wholly owned subsidiary of Topco and (ii) a merger (the “Quidel Merger”) of U.S. Merger Sub with and into Quidel immediately following consummation of the Ortho Scheme, with Quidel surviving the merger as a wholly owned subsidiary of Topco. At the effective time of the Ortho Scheme, each Ortho Share, other than Ortho Shares held by Ortho in treasury, will be acquired by a nominee (or, if such nominee holds the Ortho Shares today, transferred within the nominee) on behalf and for the benefit of Topco in exchange for 0.1055 shares of common stock of Topco (the “Topco Shares”) and $7.14 in cash. At the effective time of the Quidel Merger, each share of common stock of Quidel (each, a “Quidel Share”), other than Quidel Shares held by Quidel, Ortho or U.S. Merger Sub, will be converted into the right to receive one Topco Share. The number of Topco Shares that Quidel stockholders will receive in the Quidel Merger and that Ortho shareholders will receive in the Ortho Scheme is based on a fixed exchange ratio that will not be adjusted to reflect changes in the market value of Quidel Shares or Ortho Shares. The parties intend to list the Topco Shares to be issued in the Combinations on the Nasdaq Global Select Market (“Nasdaq”).

Under the terms of the BCA, which was unanimously approved by the board of directors of each of Quidel and Ortho, Quidel and Ortho are entering into a business combination under Topco, a new holding company, in which Ortho will be acquired for the per-share consideration described above, including $1.75 billion of cash in the aggregate, funded through cash on the Quidel balance sheet and expected incremental borrowings. Following the closing of the Combinations, Ortho’s current net debt of $2.0 billion is expected to continue to be outstanding. If the Combinations are completed, Ortho shareholders are expected to own approximately 38% of Topco and Quidel stockholders are expected to own approximately 62% of Topco on a fully diluted basis, based on the respective capitalizations of Ortho and Quidel as of the date the parties entered into the BCA.

This document, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Topco, is a joint proxy statement/prospectus for Quidel and Ortho to solicit proxies for (i) the Quidel stockholders’ meeting to approve and adopt the BCA and the Quidel Merger and (ii) the Ortho shareholder meetings to approve the Ortho Scheme, amend the articles of association of Ortho and authorize the directors of Ortho to take all such action as they may consider necessary or appropriate for carrying the Ortho Scheme into effect. The registration statement includes the scheme circular with respect to the Ortho Scheme (as required by the UK Companies Act) and registers the Topco Shares to be issued in the Combinations.


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Your vote is very important. We cannot complete these transactions unless the Quidel stockholders vote to approve the BCA, the Quidel Merger and certain matters related thereto, and the Ortho shareholders vote to approve the Ortho Scheme and certain matters related thereto. The Ortho Scheme also requires the sanction of the High Court of Justice of England and Wales (the “Court”). IT IS IMPORTANT THAT AS MANY ORTHO SHAREHOLDERS AS POSSIBLE VOTE AND/OR PROVIDE VOTING INSTRUCTIONS ON THE ORTHO SCHEME SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR AND REASONABLE REPRESENTATION OF THE OPINION OF HOLDERS OF INTERESTS IN ORTHO SHARES.

Please carefully read this entire document, including the section entitled “Risk Factors” for a discussion of the risks relating to the Combinations and Topco following the Combinations. None of the SEC, any state securities regulatory authority or the UK Financial Conduct Authority (the “FCA”) has approved or disapproved of the Combinations or the securities to be issued in the Combinations or has passed upon the adequacy or accuracy of the disclosure in this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

For the avoidance of doubt, this joint proxy statement/prospectus is not intended to be, and is not, a prospectus for the purposes of the Prospectus Rules made under Part 6 of the UK Financial Services and Markets Act 2000 (as set out in the FCA’s Handbook).

The accompanying joint proxy statement/prospectus is dated April 11, 2022, and is first being mailed to Quidel stockholders and Ortho shareholders on or about April 11, 2022.


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LOGO

Ortho Clinical Diagnostics Holdings plc

(Incorporated and registered in England and

Wales with registered number 13084624)

NOTICE OF COURT MEETING

TO BE HELD ON MAY 16, 2022

 

IN THE HIGH COURT OF JUSTICE    

CR-2022-00034

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMPANIES COURT (ChD)

IN THE MATTER OF ORTHO CLINICAL DIAGNOSTICS HOLDINGS PLC

– and –

IN THE MATTER OF THE UK COMPANIES ACT

NOTICE IS HEREBY GIVEN that, by an order dated February 16, 2022, made in the above matters, the High Court of Justice of England and Wales (the “Court”) has given permission for a meeting (the “Ortho Court Meeting”) to be convened of the holders of Scheme Shares (as defined in the Scheme of Arrangement hereinafter mentioned) as at the Voting Record Time (each such term having the meaning given to it in the Scheme, as defined below) for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement proposed to be made pursuant to Part 26 of the Companies Act 2006 (the “UK Companies Act”) between Ortho Clinical Diagnostics Holdings plc (“Ortho”) and the holders of the Scheme Shares (the “Scheme” or the “Scheme of Arrangement”) and that the Ortho Court Meeting will be held at Latham & Watkins LLP, 1271 Avenue of the Americas, New York, NY 10020, United States on May 16, 2022, at 11:30 a.m. (Eastern Standard Time) and 4:30 p.m. (London time) at which place and time all Scheme Shareholders (as defined in the Scheme of Arrangement) are requested to attend by following the step by step procedures (see the below section entitled “Instructions for Accessing the Virtual Meeting Platform”).

A copy of the Scheme and a copy of the explanatory statement required to be published pursuant to Section 897 of the UK Companies Act are incorporated in the accompanying joint proxy statement/prospectus of which this notice forms part.

Unless the context requires otherwise, any capitalized term used but not defined in this notice shall have the meaning given to such term in the accompanying joint proxy statement/prospectus.

Voting on the resolution to approve the Scheme will be by poll, which shall be conducted as the Chair of the Ortho Court Meeting may determine. The poll shall remain open for a period of thirty minutes following the discussion of the matters to be determined at the Ortho Court Meeting to enable Scheme Shareholders to amend their vote, if they so wish.

Right to Appoint a Proxy; Procedure for Appointment

Scheme Shareholders are strongly encouraged to submit proxy appointments and instructions for the Ortho Court Meeting as soon as possible, using any of the methods (by post, online or telephone) set out in the below Notes to this notice. Scheme Shareholders are also strongly encouraged to appoint the Chair of the Ortho Court Meeting as their proxy. If any other person is appointed as proxy, he or she will not be permitted to attend the Ortho Court Meeting in person, but will be able to attend, submit written questions and vote at the Ortho Court Meeting remotely via the Virtual Meeting Platform (as defined below). Instructions for accessing the Virtual Meeting Platform and information on how to appoint a proxy are set out in the below Notes to this notice.


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Voting Record Time

Entitlement to attend (remotely, via the Virtual Meeting Platform) and vote (remotely, via the Virtual Meeting Platform, or by proxy) at the Ortho Court Meeting or any adjournment thereof and the number of votes which may be cast at the Ortho Court Meeting will be determined by reference to the register of members of Ortho at the “Voting Record Time,” which is 1:00 p.m. (Eastern Standard Time) and 6:00 p.m. (London time) on May 12, 2022 the date that is two Business Days (as defined herein) prior to the Ortho Court Meeting, or, if the Ortho Court Meeting is adjourned, 1:00 p.m. (Eastern Standard Time) and 6:00 p.m. (London time) on the date which is two Business Days before the date fixed for the adjourned meeting. Changes to the register of members of Ortho after the relevant time shall be disregarded in determining the rights of any person to attend (remotely, via the Virtual Meeting Platform) and vote (remotely, via the Virtual Meeting Platform, or by proxy) at the Ortho Court Meeting.

Joint Holders

In the case of joint holders of Scheme Shares, the vote or appointment by (as applicable) the most senior who tenders a vote, whether remotely, via the Virtual Meeting Platform, or by proxy, will be accepted to the exclusion of the vote(s) or purported appointment(s) (as applicable) of the other joint holder(s). For this purpose, seniority will be determined by the order in which the names stand in the register of members of Ortho in respect of the joint holding.

Corporate Representatives

As an alternative to appointing a proxy, any holder of Scheme Shares which is a corporation may appoint one or more corporate representatives who may exercise on its behalf all its powers as a member, provided that if two or more corporate representatives purport to vote in respect of the same shares, if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way, and in other cases the power is treated as not exercised.

By the said order, the Court has appointed Christopher Smith, or failing him, any other Ortho director to act as Chair of the Ortho Court Meeting and has directed the Chair to report the result thereof to the Court. The Scheme of Arrangement will be subject to the subsequent sanction of the Court.

YOUR VOTE IS IMPORTANT

Your vote at the Ortho Court Meeting is very important. You are strongly encouraged to submit proxy appointments and instructions for the Ortho Court Meeting as soon as possible.

Dated April 11, 2022

Latham & Watkins (London) LLP

99 Bishopsgate

London EC2M 3XF

Solicitors for the Company


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Notes:

The following notes explain your general rights as a Scheme Shareholder and your right to remotely attend and vote at the Ortho Court Meeting or to appoint a proxy to vote on your behalf.

 

1.

COVID-19 RESTRICTIONS

At the time of publication of this Notice, the UK Government has removed restrictions on large public gatherings. However, in light of the ongoing restrictions in the United States and the uncertainty surrounding COVID-19 and the possible reintroduction by the UK Government of measures restricting large public gatherings, and in order to protect the health and safety of the Ortho shareholders and Ortho directors, officers and employees, Ortho shareholders will not be permitted to attend the Ortho Court Meeting in person, except for the Chair of the Ortho Court Meeting and anyone else nominated by the Chair of the Ortho Court Meeting.

The COVID-19 situation is constantly evolving, and the UK and U.S. Governments may change current restrictions or implement further measures relating to the holding of shareholder meetings during the affected period. Any changes to the arrangements for the Ortho Court Meeting will be publicly communicated to Scheme Shareholders before the Ortho Court Meeting, including through Ortho’s investor relations website https://ir.orthoclinicaldiagnostics.com. The information contained on Ortho’s website is not incorporated into, and does not form a part of, the accompanying joint proxy statement/prospectus or any other report or document on file with or furnished to the U.S. Securities and Exchange Commission (the “SEC”).

 

2.

INSTRUCTIONS FOR ACCESSING THE VIRTUAL MEETING PLATFORM

Scheme Shareholders will be given the opportunity to remotely attend, speak, submit written questions and vote at the Ortho Court Meeting via a virtual meeting platform provided by Lumi AGM UK Limited (the “Virtual Meeting Platform”). Holders of the beneficial interests in Ortho ordinary shares will be able to submit written questions by email to IR@orthoclinicaldiagnostics.com (emails must be received no less than 48 hours before the start of the Ortho Court Meeting) and via the Virtual Meeting Platform from 7 days prior to the start of, and during, the Ortho Court Meeting and observe the Ortho Court Meeting remotely via the Virtual Meeting Platform. Access to the Virtual Meeting Platform will be in line with the steps set out below for Scheme Shareholders, provided such beneficiaries shall not be entitled to vote through such Virtual Meeting Platform. Please see the section entitled “Scheme Proposal and the Ortho Shareholder Meetings—Explanatory Statement—Beneficial Holders” of this joint proxy statement/prospectus for further information in respect of such holdings and interests.

Scheme Shareholders can access the Virtual Meeting Platform using a web browser, on a PC or smartphone device. The web browser must be compatible with the latest browser versions of Chrome, Firefox, Edge and Safari. To remotely attend, speak, submit written questions and/or vote using this method, please go to https://web.lumiagm.com.

 

(a)

How to access and vote at the Ortho Court Meeting remotely if you are a Scheme Shareholder

 

   

Log in at https://web.lumiagm.com/ at least 15 minutes before the Ortho Court Meeting starts.

 

   

Enter the meeting ID: 122-284-228.

 

   

Click on “I have a login.”

 

   

Enter your control number (which can be found on the blue form of proxy).

 

   

Enter the password: orthodiag2022 (case sensitive).

If you are unable to access your control number, please contact the following persons to access your control number. If the shareholder of record in respect of your Ortho Shares is Cede & Co., you should contact your broker, bank, trust company or other nominee to access your control number. If the shareholder of record in respect of your Ortho Shares is GTU Ops Inc., please call Computershare between 8:00 a.m. and 5:00 p.m. (Eastern Standard Time) Monday to Friday (except U.S. public holidays) at +1 (866) 644-4127 (toll-free in the U.S. and Canada) and +1 (781) 575-2906 (International). Calls from outside the U.S. will be charged at the applicable international rate. Calls are charged at standard geographic rate and will vary by provider. Different charges may apply to calls from mobile telephones. Please note that calls may be monitored or recorded and Computershare cannot provide advice on the merits of the Combinations or the Ortho Scheme or give any financial, legal or tax advice.

Access to the Ortho Court Meeting will be available from 11:00 a.m. (Eastern Standard Time) and 4:00 p.m. (London time) on May 16, 2022, although the voting functionality will not be enabled until the Chair of the Ortho Court Meeting declares the poll open. Scheme Shareholders will be permitted to speak and submit written questions (via the Virtual Meeting Platform) to the Ortho directors during the course of the Ortho Court Meeting. Scheme Shareholders may also submit written


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questions in advance of the Ortho Court Meeting by email to IR@orthoclinicaldiagnostics.com and via the Virtual Meeting Platform from 7 days prior to the start of the Ortho Court Meeting. Emails must be received no less than 48 hours before the start of the Ortho Court Meeting. The Chair of the Ortho Court Meeting will ensure that relevant matters relating to the formal business of the Ortho Court Meeting are addressed in the Ortho Court Meeting.

During the Ortho Court Meeting, you must ensure you are connected to the Internet at all times in order to submit written questions and vote when the Chair commences polling. Therefore, it is your responsibility to ensure connectivity for the duration of the Ortho Court Meeting via your wireless or other Internet connection. The Virtual Meeting Guide, which is available on Ortho’s investor relations website at https://ir.orthoclinicaldiagnostics.com, contains further information on accessing and participating in the Ortho Court Meeting remotely via the Virtual Meeting Platform. The information contained on Ortho’s website is not incorporated into, and does not form a part of, the accompanying joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC.

If you wish to appoint a proxy and for them to attend the Ortho Court Meeting on the Virtual Meeting Platform on your behalf, please complete the form of proxy provided to you in accordance with the instructions therein.

If your ordinary shares are held through a broker, bank, trust company or other nominee, you must rely on the procedures of such intermediary through which you hold your shares. As a beneficial owner, you have the right to direct your broker, bank, trust company or other nominee on how to vote the shares in your account. You should contact such intermediary for further instructions on how you can instruct that intermediary to vote on your behalf at the Ortho Court Meeting and the date by which you must provide such instructions to the intermediary. Please follow the instructions in the form of proxy provided to you if you wish to access the Virtual Meeting Platform. If you are in any doubt about your shareholding please contact Computershare, Ortho’s registrar, at +1 (866) 644-4127 (toll-free in USA and Canada) and +1 (781) 575-2906 (International). Computershare lines are open between 8:00 a.m. and 5:00 p.m. (Eastern Standard Time) Monday to Friday (except U.S. public holidays) at +1 (866) 644-4127 (toll-free in the U.S. and Canada) and +1 (781) 575-2906 (International). Calls from outside the U.S. will be charged at the applicable international rate. Calls are charged at standard geographic rate and will vary by provider. Different charges may apply to calls from mobile telephones.

 

3.

RIGHT TO APPOINT A PROXY; PROCEDURE FOR APPOINTMENT

Scheme Shareholders are strongly encouraged to submit proxy appointments and instructions for the Ortho Court Meeting as soon as possible, using any of the methods (by post, online or telephone) set out below. Scheme Shareholders are also strongly encouraged to appoint the Chair of the Ortho Court Meeting as their proxy. If any other person is appointed as proxy, he or she will not be permitted to attend the Ortho Court Meeting in person, but will be able to attend, submit written questions and vote at the Ortho Court Meeting remotely via the Virtual Meeting Platform as described above.

The completion and return of the blue form of proxy by post (or appointment of a proxy online or by telephone) will not prevent you from remotely attending, submitting questions and voting at the Ortho Court Meeting, in each case via the Virtual Meeting Platform, if you are entitled to and wish to do so.

Scheme Shareholders are entitled to attend and vote at the Ortho Court Meeting and may appoint one or more proxies to exercise all or any of such Scheme Shareholder’s rights to attend, submit written questions and, on a poll, to vote (in each case, remotely, via the Virtual Meeting Platform), on their behalf. A proxy need not be a Scheme Shareholder but must attend the meeting for the Scheme Shareholder’s vote to be counted. If a Scheme Shareholder appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by the Scheme Shareholder. If a Scheme Shareholder wishes to appoint more than one proxy, they should follow the instructions contained therein or photocopy the blue form of proxy, as required.

Scheme Shareholders who do not appoint a proxy will still be entitled to remotely attend, submit written questions and vote at the Ortho Court Meeting via the Virtual Meeting Platform.

The Chair has received the consent of the Court to be at liberty to accept forms of proxy (and to accept as having voted the number of Scheme Shares in respect of which the relevant Scheme Shareholder seeks to vote) notwithstanding that the form of proxy has not been completed in accordance with the instructions contained in the forms of proxy, provided the Chair considers that the information contained in the forms of proxy is sufficient to establish the entitlement of the Scheme Shareholder to vote and provided further that the Chair is satisfied as to the authority of the persons signing it to do so. In addition, the Chair has received the consent of the Court to be at liberty to accept any other forms of proxy or form of voting instructions that are customarily provided in relation to companies that are listed on Nasdaq.


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(a)

Sending blue form of proxy by post

A blue form of proxy, for use at the Ortho Court Meeting, has been provided with this notice. Instructions for its use are set out on the form. It is requested that the blue form of proxy (together with any power of attorney or other authority, if any, under which it is signed, or a duly certified copy thereof) be returned by post to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, USA, so as to be received as soon as possible and in any event not later than 11:30 a.m. (Eastern Standard Time) and 4:30 p.m. (London time) on May 12, 2022 (or, in the case of an adjournment of the Ortho Court Meeting, 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time appointed for the adjourned meeting). If the blue form of proxy for the Ortho Court Meeting is not received by the relevant time, it may be emailed to info@americanelectionservices.com or handed to the Chair at any time prior to the commencement of the Ortho Court Meeting otherwise it will be invalid.

 

(b)

Online appointment of proxies

As an alternative to completing and returning the printed blue form of proxy, proxies may be appointed electronically by logging on to the following website: www.proxyvote.com and following the instructions therein. Full details of the procedure to be followed to appoint a proxy electronically are given on the website. For an electronic proxy appointment to be valid, the appointment must be received not later than 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time fixed for the Ortho Court Meeting or any adjournment thereof. If the electronic proxy appointment is not received by the relevant time, the blue form of proxy may be emailed to info@americanelectionservices.com or handed to the Chair any time prior to the commencement of the Ortho Court Meeting or any adjournment thereof. Full details of the procedure to be followed to appoint a proxy electronically are given on the website referred to above.

 

(c)

Proxy appointment by telephone

A proxy, or proxies, may also be appointed via the telephone. To do so, you will need to call +1 800-690-6903 using any touch-tone telephone. Instructions of how to vote by telephone through your broker, bank, trust company or other nominee will be included on your voting instruction card.

 

4.

VOTES TO BE TAKEN BY A POLL AND RESULTS

At the Ortho Court Meeting, voting will be by poll rather than a show of hands. This is a more transparent method of voting as member votes are to be counted according to the number of ordinary shares held. The poll shall remain open for a period of thirty minutes following the discussion of the matters to be determined at the Ortho Court Meeting to enable Scheme Shareholders to amend their vote, if they so wish. The results of the poll will be announced by the filing of a Current Report on Form 8-K with the SEC and published on Ortho’s Internet website as soon as reasonably practicable following the conclusion of the Ortho Court Meeting.

Scheme Shareholders can either vote “FOR” or “AGAINST” the resolution approving the Scheme.

 

5.

WEBSITE PROVIDING INFORMATION REGARDING THE ORTHO COURT MEETING

Information regarding the Ortho Court Meeting and a copy of this Notice may be found on Ortho’s investor relations website at https://ir.orthoclinicaldiagnostics.com. The information contained on Ortho’s website is not incorporated into, and does not form a part of, this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC.

 

6.

ISSUED SHARE CAPITAL AND TOTAL VOTING RIGHTS

As at April 1, 2022 (being the latest practicable date prior to the publication of this Notice), Ortho’s issued share capital consisted of 237,620,819 ordinary shares carrying one vote each. Therefore, the total voting rights in Ortho as at April 1, 2022 were 237,620,819 votes.


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LOGO

Ortho Clinical Diagnostics Holdings plc

(Incorporated and registered in England and

Wales with registered number 13084624)

NOTICE OF GENERAL MEETING OF

ORTHO CLINICAL DIAGNOSTICS HOLDINGS PLC

TO BE HELD ON MAY 16, 2022

NOTICE is hereby given that a General Meeting (the “Ortho General Meeting” and, together with the “Ortho Court Meeting,” the “Ortho Shareholder Meetings”) of Ortho Clinical Diagnostics Holdings plc, a public limited company incorporated under the laws of England and Wales (“Ortho”), will be held on May 16, 2022, at 11:45 a.m. (Eastern Standard Time) and 4:45 p.m. (London time) (or as soon thereafter as the meeting permitted by the High Court of Justice of England and Wales (the “Court”) (the “Ortho Court Meeting”) is concluded or adjourned), at Latham & Watkins LLP, 1271 Avenue of the Americas, New York, NY 10020, United States for the purpose of considering and, if thought fit, passing the following resolutions, one of which is a special resolution and one of which is an ordinary resolution.

Unless the context requires otherwise, any capitalized term used but not defined in this notice shall have the meaning given to such term in the accompanying joint proxy statement/prospectus.

Special resolution

General Authorization to Carry Scheme into Effect and Amendment of the Articles of Association

 

1.

THAT, for the purpose of giving effect to the scheme of arrangement dated April 11, 2022 between Ortho and the holders of Scheme Shares (as defined in such scheme of arrangement), a print of which has been produced to this meeting and, for the purposes of identification, signed by the Chair of this meeting, in its original form or with or subject to any modification, addition, or condition as may be agreed from time to time (including, for the avoidance of doubt, after the date of this resolution) between Ortho, Quidel Corporation, a Delaware corporation (“Quidel”), Coronado Topco, Inc. a Delaware corporation and wholly owned subsidiary of Ortho (“Topco”), Laguna Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Topco (“U.S. Merger Sub”), Orca Holdco, Inc., a Delaware corporation and a wholly owned subsidiary of Topco (“U.S. Holdco Sub”), Orca Holdco 2, Inc., a Delaware corporation and wholly owned subsidiary of U.S. Holdco Sub (“U.S. Holdco Sub 2”) and which (if required) is approved by the High Court of Justice of England and Wales (the “Court”), or which is otherwise imposed by the Court and is mutually acceptable to Ortho, Quidel and Topco, each acting reasonably and in good faith (the “Scheme”):

 

  (A)

the directors of Ortho (or a duly authorized committee of the directors) be and are hereby authorized to take all such action as they may consider necessary or appropriate for carrying the Scheme into effect; and

 

  (B)

with effect from the passing of this special resolution, the draft articles of association of Ortho attached to this joint proxy statement/prospectus as Annex F and incorporated herein by reference be adopted as the articles of association of Ortho in substitution for, and to the exclusion of, Ortho’s existing articles of association.

Ordinary resolution

Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements

 

2.

THAT, the compensation that may be paid or become payable to Ortho’s named executive officers in connection with the Combinations, as disclosed in the table entitled “Interests of Certain Persons in the Combinations (Ortho)—Golden Parachute Compensation” of the accompanying joint proxy statement/prospectus, including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become payable, are hereby approved.


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YOUR VOTE IS IMPORTANT

Your vote at the Ortho General Meeting is very important. You are strongly encouraged to submit proxy appointments and instructions for the Ortho General Meeting as soon as possible.

 

By Order of the Board

/s/ Michael A. Schlesinger

Michael A. Schlesinger
Company Secretary

Registered Office:

Felindre Meadows, Pencoed, Bridgend Mid Glamorgan, Wales, CF35 5PZ

Ortho Clinical Diagnostics Holdings plc

Registered in England and Wales No. 13084624


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Notes:

The following notes explain your general rights as an Ortho shareholder and your right to remotely attend and vote at the Ortho General Meeting or to appoint someone else to vote on your behalf.

 

1.

COVID-19 RESTRICTIONS

At the time of publication of this Notice, the UK Government has removed restrictions on large public gatherings. However, in light of the ongoing restrictions in the United States and the uncertainty surrounding COVID-19 and the possible reintroduction by the UK Government of measures restricting large public gatherings, and in order to protect the health and safety of the Ortho shareholders and Ortho directors, officers and employees, Ortho shareholders will not be permitted to attend the Ortho General Meeting in person, except for the Chair of the Ortho Court Meeting and anyone else nominated by the Chair of the Ortho General Meeting.

The COVID-19 situation is constantly evolving, and the UK and U.S. Governments may change current restrictions or implement further measures relating to the holding of shareholder meetings during the affected period. Any changes to the arrangements for the Ortho General Meeting will be publicly communicated to Ortho’s shareholders before the Ortho General Meeting, including through Ortho’s investor relations website https://ir.orthoclinicaldiagnostics.com. The information contained on Ortho’s website is not incorporated into, and does not form a part of, the accompanying joint proxy statement/prospectus or any other report or document on file with or furnished to the U.S. Securities and Exchange Commission (the “SEC”).

 

2.

INSTRUCTIONS FOR ACCESSING THE VIRTUAL MEETING PLATFORM

Ortho shareholders will be given the opportunity to remotely attend, speak, submit written questions and vote at the Ortho General Meeting via a virtual meeting platform provided by Lumi AGM UK Limited (the “Virtual Meeting Platform”). Holders of the beneficial interests in Ortho ordinary shares will be able to submit written questions by email to IR@orthoclinicaldiagnostics.com (emails must be received no less than 48 hours before the start of the Ortho General Meeting) and via the Virtual Meeting Platform from 7 days prior to the start of, and during, the Ortho General Meeting and observe the Ortho General Meeting remotely via the Virtual Meeting Platform. Access to the Virtual Meeting Platform will be in line with the steps set out below for Ortho shareholders, provided such beneficiaries shall not be entitled to vote through such Virtual Meeting Platform. Please see the section entitled “Scheme Proposal and the Ortho Shareholder Meetings—Explanatory Statement—Beneficial Holders” of this joint proxy statement/prospectus for further information in respect of such holdings and interests.

Ortho shareholders can access the Virtual Meeting Platform using a web browser on a PC or smartphone device. The web browser must be compatible with the latest browser versions of Chrome, Firefox, Edge and Safari. To remotely attend, submit written questions and/or vote using this method, please go to https://web.lumiagm.com.

 

(a)

How to access and vote at the Ortho General Meeting remotely if you are an Ortho shareholder

 

   

Log in at https://web.lumiagm.com/ at least 15 minutes before the Ortho General Meeting starts.

 

   

Enter the meeting ID: 122-284-228.

 

   

Click on “I have a login.”

 

   

Enter your control number (which can be found on the white form of proxy).

 

   

Enter the password: orthodiag2022 (case sensitive).

If you are unable to access your control number, please contact the following persons to access your control number. If the shareholder of record in respect of your Ortho Shares is Cede & Co., you should contact your broker, bank, trust company or other nominee to access your control number. If the shareholder of record in respect of your Ortho Shares is GTU Ops Inc., please call Computershare between 8:00 a.m. and 5:00 p.m. (Eastern Standard Time) Monday to Friday (except U.S. public holidays) at +1 (866) 644-4127 (toll-free in the U.S. and Canada) and +1 (781) 575-2906 (International). Calls from outside the U.S. will be charged at the applicable international rate. Calls are charged at standard geographic rate and will vary by provider. Different charges may apply to calls from mobile telephones. Please note that calls may be monitored or recorded and Computershare cannot provide advice on the merits of the Combinations or the Ortho Scheme or give any financial, legal or tax advice.

Access to the Ortho General Meeting will be available from 11:00 a.m. (Eastern Standard Time) and 4:00 p.m. (London time) on May 16, 2022, although the voting functionality will not be enabled until the Chair of the Ortho General Meeting declares the poll open. Ortho shareholders will be permitted to speak and submit written questions (via the Virtual Meeting Platform) to the Ortho directors during the course of the Ortho General Meeting. Ortho shareholders may also submit written questions in advance of the Ortho General Meeting by email to IR@orthoclinicaldiagnostics.com and via the Virtual Meeting


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Platform from 7 days prior to the start of the Ortho General Meeting. Emails must be received no less than 48 hours before the start of the Ortho General Meeting. The Chair of the Ortho General Meeting will ensure that relevant matters relating to the formal business of the Ortho General Meeting are addressed in the Ortho General Meeting.

During the Ortho General Meeting, you must ensure you are connected to the Internet at all times in order to submit written questions and vote when the Chair of the Ortho General Meeting commences polling. Therefore, it is your responsibility to ensure connectivity for the duration of the Ortho General Meeting via your wireless or other Internet connection. The Virtual Meeting Guide, which is available on Ortho’s investor relations website at https://ir.orthoclinicaldiagnostics.com, contains further information on accessing and participating in the Ortho General Meeting remotely via the Virtual Meeting Platform. The information contained on Ortho’s website is not incorporated into, and does not form a part of, the accompanying joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC.

If you wish to appoint a proxy and for them to attend the Ortho General Meeting on the Virtual Meeting Platform on your behalf, please complete the form of proxy provided to you in accordance with the instructions therein.

If your ordinary shares are held through a broker, bank, trust company or other nominee, you must rely on the procedures of such intermediary through which you hold your shares. As a beneficial owner, you have the right to direct your broker, bank, trust company or other nominee on how to vote the shares in your account. You should contact such intermediary for further instructions on how you can instruct that intermediary to vote on your behalf at the Ortho General Meeting and the date by which you must provide such instructions to the intermediary. Please follow the instructions in the form of proxy provided to you if you wish to access the Virtual Meeting Platform. If you are in any doubt about your shareholding, please contact Computershare, Ortho’s registrar, at +1 (866) 644-4127 (toll-free in U.S. and Canada) and +1 (781) 575-2906 (International). Computershare lines are open between 8:00 a.m. and 5:00 p.m. (Eastern Standard Time) Monday to Friday (except U.S. public holidays) at +1 (866) 644-4127 (toll-free in the U.S. and Canada) and +1 (781) 575-2906 (International). Calls from outside the U.S. will be charged at the applicable international rate. Calls are charged at standard geographic rate and will vary by provider. Different charges may apply to calls from mobile telephones.

 

3.

ENTITLEMENT TO ATTEND AND VOTE

Ortho has specified that only those shareholders registered on the register of members of Ortho at 1:00 p.m. (Eastern Standard Time) and 6:00 p.m. (London time) on May 12, 2022 (or, if the meeting is adjourned to a time more than 48 hours (excluding any part of a day that is a working day) after such time, at 1:00 p.m. (Eastern Standard Time) and 6:00 p.m. (London time) on the day which is two days prior to the date of the adjourned meeting) (the “Voting Record Time”) shall be entitled to attend (remotely, via the Virtual Meeting Platform) and vote (remotely, via the Virtual Meeting Platform, or by proxy) at the Ortho General Meeting in respect of the number of ordinary shares registered in their name at that time. If the meeting is adjourned to a time not more than 48 hours after the Voting Record Time, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purposes of determining the number of votes they may cast) at the adjourned meeting. Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.

 

4.

RIGHT TO APPOINT A PROXY; PROCEDURE FOR APPOINTMENT

Ortho shareholders are strongly encouraged to submit proxy appointments and instructions for the Ortho General Meeting as soon as possible, using any of the methods (by post, online or telephone) set out below. Ortho shareholders are also strongly encouraged to appoint the Chair of the Ortho General Meeting as their proxy. An Ortho shareholder entitled to attend and vote at the Ortho General Meeting may appoint one or more proxies to exercise all or any of such Ortho shareholder’s rights to attend, submit written questions and, on a poll, to vote (in each case, remotely, via the Virtual Meeting Platform), on their behalf. If any other person is appointed as proxy, he or she will not be permitted to attend the Ortho General Meeting in person, but will be able to attend, submit written questions and vote at the Ortho General Meeting remotely via the Virtual Meeting Platform as described above.

The completion and return of the white form of proxy by post (or appointment of a proxy online or by telephone) will not prevent you from remotely attending, submitting questions and voting at the Ortho General Meeting, in each case via the Virtual Meeting Platform, if you are entitled to and wish to do so.

An Ortho shareholder entitled to attend and vote at the Ortho General Meeting may appoint one or more proxies to exercise all or any of such Ortho shareholder’s rights to attend, submit written questions and, on a poll, to vote (in each case, remotely, via the Virtual Meeting Platform), on their behalf. A proxy need not be an Ortho shareholder but must remotely attend the Ortho General Meeting for the Ortho shareholder’s vote to be counted. If an Ortho shareholder appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares


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held by the Ortho shareholder. If an Ortho shareholder wishes to appoint more than one proxy, they should follow the instructions contained therein or photocopy the white form of proxy, as required.

Ortho shareholders who do not appoint a proxy will still be entitled to remotely attend, submit written questions and vote at the Ortho General Meeting via the Virtual Meeting Platform.

 

(a)

Sending white form of proxy by post

A white form of proxy, for use at the Ortho General Meeting, has been provided with this notice. Instructions for its use are set out on the form. It is requested that the white form of proxy (together with any power of attorney or other authority, if any, under which it is signed, or a duly certified copy thereof) be returned by post to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, USA, to be received as soon as possible and in any event not later than 11:45 a.m. (Eastern Standard Time) and 4:45 p.m. (London time) on May 12, 2022 (or, in the case of an adjournment of the Ortho General Meeting, 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time appointed for the adjourned meeting). If the white form of proxy for the Ortho General Meeting is not received by the relevant time, it may be emailed to info@americanelectionservices.com or handed to the Chair at any time prior to the commencement of the Ortho General Meeting otherwise it will be invalid.

 

(b)

Online appointment of proxies

As an alternative to completing and returning the printed white form of proxy, proxies may be appointed electronically by logging on to the following website: www.proxyvote.com and following the instructions therein. Full details of the procedure to be followed to appoint a proxy electronically are given on the website referred to above. For an electronic proxy appointment to be valid, the appointment must be received not later than 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time fixed for the Ortho General Meeting or any adjournment thereof. If the electronic proxy appointment is not received by the relevant time, the white form of proxy may be emailed to info@americanelectionservices.com or handed to the Chair any time prior to the commencement of the Ortho General Meeting or any adjournment thereof. Full details of the procedure to be followed to appoint a proxy electronically are given on the website referred to above.

 

(c)

Proxy appointment by telephone

A proxy, or proxies, may also be appointed via the telephone. To do so, you will need to call +1 800-690-6903 using any touch-tone telephone. Instructions of how to vote by telephone through your broker, bank, trust company or other nominee will be included on your voting instruction card.

 

5.

APPOINTMENT OF A PROXY BY JOINT HOLDERS

In the case of joint holders, where more than one of the joint holders purports to appoint one or more proxies, only the purported appointment submitted by the most senior holder will be accepted. For this purpose, seniority shall be determined by the order in which the names of the joint holders stand in the register of members of Ortho in respect of the joint holding.

 

6.

CORPORATE REPRESENTATIVES

As an alternative to appointing a proxy, any Ortho shareholder which is a corporation may appoint one or more corporate representatives who may exercise on its behalf all of its powers, provided that if two or more representatives purport to vote in respect of the same shares: if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; and in other cases, the power is treated as not exercised.

 

7.

VOTES TO BE TAKEN BY A POLL AND RESULTS

At the Ortho General Meeting, voting on the resolutions will be by poll rather than a show of hands. This is a more transparent method of voting as member votes are to be counted according to the number of ordinary shares held. The poll shall remain open for a period of thirty minutes following the discussion of the matters to be determined at the Ortho General Meeting to enable Ortho shareholders to amend their vote, if they so wish. The results of the poll will be announced by the filing of a Current Report on Form 8-K with the SEC and published on Ortho’s Internet website as soon as reasonably practicable following the conclusion of the Ortho General Meeting.


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The “WITHHELD” option on the form of proxy is provided to enable Ortho shareholders to abstain from voting on the resolutions. However, a vote withheld is not a vote in law and will not be counted in the calculation of proportion of votes “FOR” and “AGAINST” the resolutions.

 

8.

WEBSITE PROVIDING INFORMATION REGARDING THE ORTHO GENERAL MEETING

Information regarding the Ortho General Meeting and a copy of this Notice may be found on Ortho’s investor relations website at https://ir.orthoclinicaldiagnostics.com. The information contained on Ortho’s website is not incorporated into, and does not form a part of, this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC.

 

9.

ISSUED SHARE CAPITAL AND TOTAL VOTING RIGHTS

As at April 1, 2022 (being the latest practicable date prior to the publication of this Notice), Ortho’s issued share capital consisted of 237,620,819 ordinary shares carrying one vote each. Therefore, the total voting rights in Ortho as at April 1, 2022 were 237,620,819 votes.

 

10.

FURTHER QUESTIONS AND COMMUNICATION

As set out in paragraph 1 above, Ortho shareholders will be permitted to submit written questions (via the Virtual Meeting Platform) to the Ortho directors during the course of the Ortho General Meeting. The Chair of the Ortho General Meeting will ensure that relevant matters relating to the formal business of the Ortho General Meeting are addressed in the Ortho General Meeting.

Ortho shareholders who have any queries about the Ortho General Meeting should contact the following persons. If the shareholder of record in respect of your Ortho Shares is Cede & Co., you should contact your broker, bank, trust company or other nominee. If the shareholder of record in respect of your Ortho Shares is GTU Ops Inc., please call Computershare between 8:00 a.m. and 5:00 p.m. (Eastern Standard Time) Monday to Friday (except U.S. public holidays) at +1 (866) 644-4127 (toll-free in U.S. and Canada) or +1 (781) 575-2906 (International). Calls from outside the U.S. will be charged at the applicable international rate. Calls are charged at standard geographic rate and will vary by provider. Different charges may apply to calls from mobile telephones. Please note that calls may be monitored or recorded and Computershare cannot provide advice on the merits of the Combinations or the Ortho Scheme or give any financial, legal or tax advice.

Ortho shareholders may not use any electronic address or fax number provided in this Notice or in any related documents to communicate with Ortho for any purpose other than those expressly stated. Any electronic communications, including the lodgment of any electronic proxy appointment, received by Ortho or its agents that is found to contain any virus will not be accepted.


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LOGO

QUIDEL CORPORATION

9975 Summers Ridge Road

San Diego, California 92121

(858) 552-1100

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On May 16, 2022

To the Stockholders of Quidel Corporation (“Quidel”):

The special meeting of stockholders of Quidel (together with any adjournments or postponements thereof, the “Quidel Stockholders’ Meeting”) will be held on May 16, 2022, at 8:30 a.m., Pacific Time.

 

PLACE    The Quidel Stockholders’ Meeting will be held virtually and can be accessed online at www.virtualshareholdermeeting.com/QDEL2022SM.
ITEMS OF BUSINESS   

1.  Proposal to approve and adopt the Business Combination Agreement (the “BCA”), dated December 22, 2021, by and among Quidel, Ortho Clinical Diagnostics Holdings plc (“Ortho”), Coronado Topco, Inc. (“Topco”), Orca Holdco, Inc. (“U.S. Holdco Sub”) and Laguna Merger Sub, Inc. (“U.S. Merger Sub”), each wholly owned subsidiaries of Topco, and Orca Holdco 2, Inc., a wholly owned subsidiary of U.S. Holdco Sub, including the Quidel Merger (as defined in this joint proxy statement/prospectus) and the transactions contemplated thereby (the “Merger Proposal”)

 

2.  Proposal to approve, on a non-binding, advisory basis, certain compensation arrangements for Quidel’s named executive officers in connection with the BCA (the “Advisory Merger Compensation Proposal”)

 

3.  Proposal to approve any motion to adjourn the Quidel Stockholders’ Meeting to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Quidel Stockholders’ Meeting to approve the Merger Proposal (the “Adjournment Proposal”)

 

4.  Proposal to elect the eight directors designated herein to serve on the Quidel board of directors to hold office until the 2023 annual meeting of stockholders and until their successors are elected and qualified (the “Election of Directors Proposal”)

 

5.  Proposal to approve, on an advisory basis, the compensation of Quidel’s named executive officers (the “Advisory Executive Compensation Proposal”)

 

6.  Proposal to ratify the selection of Ernst & Young LLP as Quidel’s independent registered public accounting firm for the fiscal year ending December 31, 2022 (the “Independent Registered Public Accounting Firm Proposal”)

 

7.  Proposal to approve an amendment and restatement of Quidel’s 2018 Equity Incentive Plan (the “2018 Plan”) to increase the number of Quidel Shares available under the 2018 Plan from 3,205,635 shares to 4,705,635 shares (the “Equity Incentive Plan Proposal”)


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8.  Proposal to approve an amendment and restatement of Quidel’s 1983 Employee Stock Purchase Plan (the “1983 ESPP”) to increase the number of Quidel Shares available under the 1983 ESPP from 30,197 shares to 780,197 shares (the “ESPP Proposal”)

 

RECORD DATE    March 31, 2022
PROXY VOTING    It is important that your shares be represented and voted at the Quidel Stockholders’ Meeting. You can submit a proxy to vote your shares electronically via the Internet, by telephone or by completing and returning the proxy card or voting instruction card. Voting instructions are printed on your proxy card and are included in this joint proxy statement/prospectus. If your shares are held in the name of a bank, broker or other nominee, follow the instructions you receive from your nominee on how to vote your shares. You can revoke a proxy at any time prior to its exercise at the Quidel Stockholders’ Meeting by following the instructions in the joint proxy statement/prospectus or by voting your shares virtually at the Quidel Stockholders’ Meeting. Virtual attendance by stockholders of record at the Quidel Stockholders’ Meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the Quidel Stockholders’ Meeting.

This joint proxy statement/prospectus describes the proposals listed above in more detail. Please refer to the attached document, including the BCA and all other annexes and any documents incorporated by reference herein, for further information with respect to the business to be transacted at the Quidel Stockholders’ Meeting.

Your proxy is being solicited by the Quidel board of directors. The Quidel board of directors has determined that the transactions to be implemented pursuant to the BCA (the “Combinations”), including the Quidel Merger and the other transactions contemplated by the BCA, are consistent with and will further the business strategies and goals of Quidel, and are in the best interests of Quidel and its stockholders, and (a) has unanimously approved and declared advisable the BCA and Combinations, including the Quidel Merger and the transactions contemplated by the BCA, and (b) has determined, subject to its duties under applicable law, to recommend that the Quidel stockholders adopt the BCA and the transactions contemplated by the BCA.

Accordingly, the Quidel board of directors recommends that Quidel stockholders vote:

 

  1.

“FOR” the Merger Proposal;

 

  2.

“FOR” the Advisory Merger Compensation Proposal;

 

  3.

“FOR” the Adjournment Proposal;

 

  4.

“FOR” the Election of Directors Proposal;

 

  5.

“FOR” the Advisory Executive Compensation Proposal;

 

  6.

“FOR” the Independent Registered Public Accounting Firm Proposal;

 

  7.

“FOR” the Equity Incentive Plan Proposal; and

 

  8.

“FOR” the ESPP Proposal.

The Quidel board of directors has fixed the close of business on March 31, 2022, as the record date for determining the Quidel stockholders entitled to receive notice of, and to vote at, the Quidel Stockholders’ Meeting. Only holders of record of shares of common stock of Quidel (each, a “Quidel Share”) at the close of business on the record date are entitled to receive notice of, and to vote at, the Quidel Stockholders’ Meeting.

Your vote is very important. Whether or not you plan to attend the Quidel Stockholders’ Meeting, we urge you to submit a proxy to vote by Internet or telephone to ensure that your shares are represented at the Quidel Stockholders’ Meeting. We cannot complete the Combinations unless you approve and adopt the BCA, the Quidel Merger and the Combinations.


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A failure to submit a proxy or attend the Quidel Stockholders’ Meeting, a broker non-vote (if any) or an abstention will have the same effect as a vote “AGAINST” the Merger Proposal. A failure to submit a proxy or attend the Quidel Stockholders’ Meeting or a broker non-vote (if any) as to the Advisory Merger Compensation Proposal, the Adjournment Proposal, the Election of Directors Proposal, the Advisory Executive Compensation Proposal, the Independent Registered Public Accounting Firm Proposal, the Equity Incentive Plan Proposal or the ESPP Proposal will have no effect on these proposals. An abstention will have the same effect as a vote “AGAINST” the Advisory Merger Compensation Proposal, the Adjournment Proposal, the Election of Directors Proposal, the Advisory Executive Compensation Proposal, the Independent Registered Public Accounting Firm Proposal, the Equity Incentive Plan Proposal and the ESPP Proposal.

 

   By order of the Board of Directors,
  

/s/ Douglas C. Bryant

   Douglas C. Bryant
   President and Chief Executive Officer
   QUIDEL CORPORATION


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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Quidel and Ortho from other documents that each company has filed with the SEC. For a listing of documents incorporated by reference into this joint proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

You can obtain the documents incorporated by reference into this joint proxy statement/prospectus free of charge by visiting the SEC’s website at http://www.sec.gov, from Quidel by visiting www.quidel.com, from Ortho by visiting www.orthoclinicaldiagnostics.com or by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers. The information contained on Quidel’s and Ortho’s websites is not incorporated into, and does not form a part of, the accompanying joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC.

 

Quidel Corporation   Ortho Clinical Diagnostics Holdings plc
9975 Summers Ridge Road   1001 Route 202
San Diego, California 92121   Raritan, New Jersey 08869
Attention: Phillip S. Askim,
VP, Associate General Counsel & Secretary
  Attention: Michael A. Schlesinger,
Executive Vice President, General Counsel and Secretary
(858) 552-1100   (908) 218-8000

If you are a Quidel stockholder, you may also request copies of this joint proxy statement/prospectus and any of the documents incorporated by reference into this joint proxy statement/prospectus or other information concerning Quidel, without charge, by written or telephonic request directed to Innisfree M&A Incorporated, Quidel’s proxy solicitor, by calling (877) 750-0537. If you would like to request any documents, please do so by May 9, 2022 in order to receive them before the Quidel Stockholders’ Meeting.

If you are an Ortho shareholder, you may also request copies of this joint proxy statement/prospectus and any of the documents incorporated by reference into this joint proxy statement/prospectus or other information concerning Ortho, without charge, by written or telephonic request directed to MacKenzie Partners, Inc., Ortho’s proxy solicitor, by calling toll-free at 1-800-322-2885. If you would like to request any documents, please do so by May 9, 2022 in order to receive them before the Ortho Shareholder Meetings.


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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Topco (File No. 333-262434), constitutes a prospectus of Topco under the U.S. Securities Act of 1933, as amended (the “Securities Act”), with respect to the Topco Shares to be issued pursuant to the BCA.

This document also constitutes a proxy statement of each of Quidel and Ortho under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the Quidel Stockholders’ Meeting and the Ortho Shareholder Meetings, respectively. It also constitutes a notice of meeting with respect to the Ortho Court Meeting and the Ortho General Meeting and contains an explanatory statement in respect of the Ortho Scheme as required by Section 897 of the UK Companies Act.

You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. No person has been authorized to provide you with information that is different from what is contained in, or incorporated by reference into, this joint proxy statement/prospectus, and, if given or made by any person, such information must not be relied upon as having been authorized. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than its date as specified on the cover unless otherwise specifically provided herein. Further, you should not assume that the information contained in or incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this joint proxy statement/prospectus to Quidel stockholders and Ortho shareholders nor the issuance by Topco of Topco Shares pursuant to the BCA will create any implication to the contrary.

None of the SEC, the FCA, nor any securities commission of any jurisdiction has approved or disapproved any of the transactions described in this joint proxy statement/prospectus or the securities to be issued under this joint proxy statement/prospectus or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense. This joint proxy statement/prospectus does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities, or a solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. The distribution or possession of this joint proxy statement/prospectus in or from certain jurisdictions may be restricted by law. For the avoidance of doubt, this joint proxy statement/prospectus does not constitute an offer to buy or sell securities or a solicitation of an offer to buy or sell any securities in the United Kingdom or any state in the European Economic Area or a solicitation of a proxy under the laws of England and Wales, and it is not intended to be, and is not, a prospectus or an offer document for the purposes of the FCA’s Prospectus Rules. You should inform yourself about and observe any such restrictions, and none of Quidel, Ortho or Topco accepts any liability in relation to any such restrictions.

The information concerning Quidel contained or incorporated by reference in this joint proxy statement/prospectus has been provided by Quidel, and the information concerning Ortho, Topco, U.S. Holdco Sub, U.S. Merger Sub and U.S. Holdco Sub 2 contained or incorporated by reference in this joint proxy statement/prospectus has been provided by Ortho. As used in this joint proxy statement/prospectus, except where otherwise stated or indicated by the context, all references to Quidel are to Quidel Corporation and its consolidated subsidiaries, and all references to Ortho are to Ortho Clinical Diagnostics Holdings plc and its consolidated subsidiaries.

 

i


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EXPECTED TIMETABLE OF PRINCIPAL EVENTS

All dates and times relating to the Ortho Scheme are based on Ortho’s and Quidel’s current expectations and are subject to change. If any of the dates or times in this expected timetable change materially, the revised dates and/or times will be published by public announcement in the United States and by making such announcement available on Ortho’s website at https://ir.orthoclinicaldiagnostics.com.

 

Event

  

Expected Time and/or Datei

Directions hearing    February 15, 2022
Non-registered shareholder record time    April 4, 2022
Publication of the Ortho Scheme as contained in this joint proxy statement/prospectus    April 11, 2022
Latest time for receipt by Broadridge on behalf of Ortho of forms of proxy for the Ortho Court Meeting (blue form)    4:30 p.m. (London time) on May 12, 2022ii
Latest time for receipt by Broadridge on behalf of Ortho of forms of proxy for the Ortho General Meeting (white form)    4:45 p.m. (London time) on May 12, 2022iii
Voting Record Time    6:00 p.m. (London time) on May 12, 2022iv
Ortho Court Meeting    4:30 p.m. (London time) on May 16, 2022
Ortho General Meeting    4:45 p.m. (London time) on May 16, 2022v
The following dates and times associated with the Ortho Scheme are presented for illustrative purposes only, are subject to change and will depend on, among other things, the date on which the conditions to the Ortho Scheme are satisfied or, if capable of waiver, waived, the date on which the Court sanctions the Ortho Scheme and the date on which the Court Order is delivered to the Registrar of Companies in England and Wales (the “Registrar”). Ortho will give adequate notice of all of these dates and times, when known, by public announcement in the United States and by making the announcement available of Ortho’s website at https://ir.orthoclinicaldiagnostics.com. Further updates and changes to these times will be notified in the same way.
Court Sanction Hearing (as defined herein)    May 26, 2022
Last day of dealings in, and for registration of transfers of, Ortho Shares    D - 2
Scheme Record Time    6:00 p.m. (London time) on D-1

Effective Date

   D (“D”)vi
Date for dispatch of cheques/settlement for cash consideration (including any cash entitlement in respect of fractional shares) due under the Ortho Scheme    Dvii
Cancellation of listing of Ortho Shares on Nasdaq   

D

New Topco Shares credited by the Exchange Agent (as defined herein) to Cede & Co., as nominee for DTC (in respect of Ortho Shares held in book-entry form through DTC)    Dviii
New Topco Shares credited by the Exchange Agent in book-entry form on its books (in respect of Ortho Shares held in certificated or book-entry form on books of the Exchange Agent)    Dviii

 

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i 

The dates and times given are indicative only and are based on current expectations and are subject to change.

ii

It is requested that the blue form of proxy for the Ortho Court Meeting be received by 4:30 p.m. (London time) on May 12, 2022, or, if the Ortho Court Meeting is adjourned, 48 hours prior to the time fixed for the adjourned Ortho Court Meeting (excluding any part of such 48-hour period falling on a non-working day). If the blue form of proxy is not lodged by this time, it may be emailed to info@americanelectionservices.com or handed to the Chair at any time prior to the commencement of the Ortho Court Meeting.

iii 

It is requested that the white form of proxy for the Ortho General Meeting be received by 4:45 p.m. (London time) on May 12, 2022, or, if the Ortho General Meeting is adjourned, 48 hours prior to the time fixed for the adjourned Ortho General Meeting (excluding any part of such 48-hour period falling on a non-working day). If the white form of proxy is not lodged by this time, it may be emailed to info@americanelectionservices.com or handed to the Chair at any time prior to the commencement of the Ortho General Meeting.

iv

If either the Ortho Court Meeting or the Ortho General Meeting is adjourned, the Voting Record Time for the relevant adjourned meeting will be 6:00 p.m. (London time) on the day which is two Business Days prior to the date of the adjourned meeting.

v 

To commence at 4:45 p.m. (London time) on May 16, 2022 or as soon thereafter as the Ortho Court Meeting concludes or is adjourned.

vi

The Ortho Scheme will become effective pursuant to its terms upon the Court Order being delivered to the Registrar.

vii

The Cash Consideration under the Ortho Scheme shall be settled in accordance with the terms of the Ortho Scheme on or as soon as reasonably practicable following the Effective Date (and in any event no later than 2 Business Days following the Effective Date, or with respect to Ortho Shareholders who hold depositary receipt certificates, upon the Exchange Agent’s receipt of such certificates and completed letter of transmittal.).

viii

The Share Consideration under the Ortho Scheme shall be settled in accordance with the terms of the Ortho Scheme as soon as reasonably practicable following the Effective Date, or with respect to Ortho Shareholders who hold depositary receipt certificates and if not completed by the Effective Date, upon the Exchange Agent’s receipt of such certificates and completed letter of transmittal.

 

iii


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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

     i  

QUESTIONS AND ANSWERS ABOUT THE COMBINATIONS, THE QUIDEL STOCKHOLDERS’ MEETING AND THE ORTHO SHAREHOLDER MEETINGS

     1  

NOTE ON PRESENTATION

     12  

Ortho Financial Information

     12  

Quidel Financial Information

     12  

SUMMARY

     13  

Information about the Parties to the Combinations

     13  

The Combinations and the Business Combination Agreement

     15  

Structure and Effective Times

     15  

Merger Consideration

     15  

Treatment of Ortho Equity Awards

     15  

Treatment of Quidel Equity Awards

     16  

Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors

     17  

Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors

     17  

Opinion of J.P. Morgan Securities LLC as Financial Advisor to Ortho

     17  

Opinion of Perella Weinberg Partners LP as Financial Advisor to Quidel

     18  

Material U.S. Federal Income Tax Considerations

     18  

Material UK Tax Considerations

     19  

Delisting and Deregistration of Ortho Shares and Quidel Shares

     20  

Litigation Relating to the Combinations

     20  

Interests of Quidel Officers and Directors in the Combinations

     20  

Interests of Ortho Officers and Directors in the Combinations

     21  

Indemnification and Insurance

     21  

Board of Directors and Management of Topco Following Completion of the Combinations

     21  

Acquisition Proposals

     22  

Conditions to the Combinations

     23  

Termination

     24  

Expenses and Termination Fees

     25  

Regulatory Matters

     27  

Security Ownership of Quidel Directors and Executive Officers

     27  

Security Ownership of Ortho Directors and Executive Officers

     28  

No Appraisal Rights for Quidel Stockholders

     28  

No Delaware Appraisal Rights for Ortho Shareholders

     28  

Listing of Topco Shares on Stock Exchanges

     28  

Accounting Treatment

     28  

Comparison of Rights of Stockholders of Quidel, Ortho and Topco

     28  

Please Read the Risk Factors

     28  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     29  

RISK FACTORS

     31  

Risks Relating to the Combinations

     31  

Risks Relating to Topco Following Completion of the Combinations

     37  

Risks Relating to Quidel’s Business

     44  

Risks Relating to Ortho’s Business

     44  

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

     76  

SCHEME PROPOSAL AND THE ORTHO SHAREHOLDER MEETINGS—EXPLANATORY STATEMENT

     94  

Introduction

     94  

The Ortho Combination

     94  

Conditions to Complete the Combinations

     95  

Shareholder Meetings

     96  

The Ortho Directors and the Effect of the Ortho Scheme on their Interests

     99  

Sanction of the Ortho Scheme by the Court

     100  

Solicitation of Proxies

     100  

Listings, Dealings, Delisting and Settlement

     100  

 

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Overseas Ortho Shareholders

     103  

Action to be Taken

     103  

Forms of Proxy

     103  

Further information

     104  

THE ORTHO GENERAL MEETING

     105  

Ortho Proposal No. 1—Scheme Implementation Proposal

     105  

Ortho Proposal No. 2—Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements

     105  

THE ORTHO SCHEME

     110  

The Scheme

     113  

Transfer of the Scheme Shares

     113  

Consideration for the Transfer of the Scheme Shares—Transaction Deliverables

     114  

Share Certificates and Register of Members

     114  

Appointment of Exchange Agent

     115  

Settlement of Transaction Deliverables

     115  

Cessation of Rights

     116  

Mandates and Dividends

     116  

Effective Time

     116  

Modification

     116  

Governing Law

     116  

THE QUIDEL STOCKHOLDERS’ MEETING

     117  

General

     117  

Recommendation of the Quidel Board of Directors

     117  

Record Date; Stockholders Entitled to Vote

     118  

Voting by Quidel’s Directors and Executive Officers

     118  

Quorum

     118  

Required Vote

     118  

Failure to Either Submit a Proxy or Attend the Quidel Stockholders’ Meeting, Broker Non-Votes and Abstentions

     118  

How to Vote Your Shares

     119  

Voting in Person

     119  

Voting of Proxies

     119  

Revocation of Proxies

     120  

Solicitation of Proxies

     120  

Quidel Proposal No. 1—The Merger Proposal

     120  

Quidel Proposal No. 2—The Advisory Merger Compensation Proposal

     121  

Quidel Proposal No. 3—The Adjournment Proposal

     121  

Quidel Proposal No. 4—The Election of Directors Proposal

     122  

Quidel Proposal No. 5—The Advisory Executive Compensation Proposal

     125  

Quidel Proposal No. 6—The Independent Registered Public Accounting Firm Proposal

     126  

Quidel Proposal No. 7—The Equity Incentive Plan Proposal

     127  

Quidel Proposal No. 8—The ESPP Proposal

     134  

OTHER MATTERS RELATING TO THE QUIDEL STOCKHOLDERS’ MEETING

     138  

Committees and Meetings of the Quidel Board of Directors and Related Matters

     138  

Director Compensation

     144  

Executive Compensation

     146  

INFORMATION ABOUT THE PARTIES TO THE COMBINATIONS

     168  

Quidel Corporation

     168  

Ortho Clinical Diagnostics Holdings plc

     168  

Coronado Topco, Inc.

     168  

Laguna Merger Sub, Inc.

     168  

Orca Holdco, Inc

     168  

Orca Holdco 2, Inc

     169  

BUSINESS OF QUIDEL AND CERTAIN INFORMATION ABOUT QUIDEL

     170  

Products

     170  

Digital and Telehealth Solutions

     171  

Connectivity and Data Management

     172  

 

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Marketing and Distribution

     172  

Manufacturing

     172  

BUSINESS OF ORTHO

     174  

Business of Ortho

     174  

Overview of Business

     174  

Ortho’s Competitive Strengths

     175  

Ortho’s Growth Strategy

     178  

Ortho’s Industry

     180  

Ortho’s Products, Pipeline and Services

     181  

Key Products—Clinical Laboratories

     183  

Key Products—Transfusion Medicine

     185  

Sales, Marketing and Distribution

     186  

Research and Development

     187  

Suppliers and Raw Materials

     187  

Manufacturing

     187  

Competition

     188  

Intellectual Property

     188  

Collaboration Arrangements

     188  

Human Capital Resources

     189  

Health, Safety and Environmental

     190  

Government Regulation

     190  

Available Information

     196  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF QUIDEL

     197  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ORTHO

     198  

Overview

     198  

Key Components of Results of Operations

     198  

Impact of the Initial Public Offering

     200  

Underwritten Secondary Offering

     200  

Impact of the COVID-19 Pandemic

     200  

Results of Operations

     201  

Use of Non-GAAP Financial Measures

     207  

Segment Results

     209  

Liquidity and Capital Resources

     210  

Critical Accounting Estimates and Summary of Significant Accounting Policies

     218  

THE COMBINATIONS

     222  

The Combinations

     222  

Background of the Combinations

     222  

Ortho Scheme Consideration to Ortho Shareholders

     237  

Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors

     238  

Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors

     242  

Opinion of Perella Weinberg Partners LP as Financial Advisor to Quidel

     246  

Opinion of J.P. Morgan Securities LLC as Financial Advisor to Ortho

     255  

Unaudited Forward-Looking Financial Information

     261  

Closing Date and Effective Times

     270  

Board of Directors and Management of Topco Following Completion of the Combinations

     270  

Accounting Treatment

     272  

Regulatory Matters

     272  

The Parties’ Intentions Regarding Ortho and Quidel

     273  

U.S. Federal Securities Law Consequences

     273  

Listing of Topco Shares on Stock Exchange

     273  

Delisting and Deregistration of Ortho Shares and Quidel Shares

     273  

Litigation Relating to the Combinations

     273  

DESCRIPTION OF TOPCO CAPITAL STOCK

     275  

 

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THE BUSINESS COMBINATION AGREEMENT

     277  

Explanatory Note Regarding the Business Combination Agreement

     277  

Execution of the Business Combination Agreement

     277  

Structure and Effective Times

     277  

Merger Consideration

     278  

Adjustments to Prevent Dilution

     278  

Exchange of Shares

     278  

Lost, Stolen or Destroyed Certificates

     279  

No Transfers Following the Quidel Effective Time

     279  

Termination of Exchange Fund

     279  

Withholding Taxes

     279  

Treatment of Ortho Equity Awards

     280  

Treatment of Quidel Equity Awards

     280  

Representations and Warranties

     281  

Conduct of Business Prior to the Effective Times

     283  

Certain Permitted Disclosure

     288  

Stockholder Meetings

     288  

Efforts to Complete the Combinations

     289  

Indemnification and Insurance

     289  

Employee Matters

     289  

Corporate Governance Matters

     290  

Other Covenants and Agreements

     290  

Conditions to the Combinations

     291  

Termination

     292  

Expenses and Termination Fees

     294  

Specific Performance

     295  

STOCKHOLDERS AGREEMENT / DEED OF IRREVOCABLE UNDERTAKING

     296  

Stockholders Agreement

     296  

Current Ortho Stockholders Agreement

     296  

Irrevocable Undertaking

     296  

INTERESTS OF CERTAIN PERSONS IN THE COMBINATIONS (QUIDEL)

     297  

Treatment of Quidel Equity Awards

     297  

Post-Combinations Compensation and Benefit Arrangements

     299  

Executive Severance Arrangements

     299  

Golden Parachute Compensation

     300  

Topco Positions

     301  

Insurance and Indemnification of Directors and Executive Officers

     301  

INTERESTS OF CERTAIN PERSONS IN THE COMBINATIONS (ORTHO)

     302  

Compensation Actions in Connection with the Combinations

     303  

Treatment of Ortho Equity Awards

     303  

Executive Severance Agreements

     305  

Continuing Employees

     306  

Retention Bonuses

     306  

Transaction Bonuses

     307  

Golden Parachute Compensation

     307  

Topco Positions

     308  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     309  

MATERIAL UK TAX CONSIDERATIONS

     315  

COMPARISON OF RIGHTS OF STOCKHOLDERS OF QUIDEL, ORTHO AND TOPCO

     316  

SECURITY OWNERSHIP OF CERTAIN QUIDEL BENEFICIAL OWNERS AND MANAGEMENT

     331  

SECURITY OWNERSHIP OF CERTAIN ORTHO BENEFICIAL OWNERS AND MANAGEMENT

     334  

HOUSEHOLDING OF PROXY MATERIALS

     336  

FUTURE STOCKHOLDER PROPOSALS

     337  

Topco

     337  

Quidel

     337  

Ortho

     337  

 

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NO APPRAISAL RIGHTS FOR QUIDEL STOCKHOLDERS

     337  

LEGAL MATTERS

     337  

EXPERTS

     338  

WHERE YOU CAN FIND MORE INFORMATION

     339  

ANNEX A—BUSINESS COMBINATION AGREEMENT

     A-1  

ANNEX B—PRINCIPAL STOCKHOLDERS AGREEMENT

     B-1  

ANNEX C—FORM OF IRREVOCABLE UNDERTAKING

     C-1  

ANNEX D—OPINION OF PERELLA WEINBERG PARTNERS LP

     D-1  

ANNEX E—OPINION OF J.P. MORGAN SECURITIES LLC

     E-1  

ANNEX F—ARTICLES OF ASSOCIATION OF ORTHO

     F-1  

ANNEX G—2018 PLAN

     G-1  

ANNEX H—1983 ESPP

     H-1  

 

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QUESTIONS AND ANSWERS ABOUT THE COMBINATIONS, THE QUIDEL STOCKHOLDERS’ MEETING AND THE ORTHO SHAREHOLDER MEETINGS

 

Q:

What is this document?

 

A:

This document, which we refer to as the “joint proxy statement/prospectus,” (i) serves as the proxy statement through which Quidel and Ortho will solicit proxies to seek to obtain the necessary Quidel stockholder and Ortho shareholder approvals for the Combinations, (ii) informs holders of Quidel Shares of the upcoming Quidel Stockholders’ Meeting at which Quidel stockholders will vote on the adoption of the BCA and the Quidel Merger and provides details of the BCA and the consideration Quidel stockholders will receive upon completion of the Combinations, (iii) informs holders of Ortho Shares of the upcoming Ortho Shareholder Meetings at which Ortho shareholders will vote on the Ortho Scheme, authorize the directors of Ortho (or a duly authorized committee of the directors) to take all such action as they may consider necessary or appropriate for carrying the Ortho Scheme into effect, amend the articles of association of Ortho and approve (on a non-binding, advisory basis) certain compensation that may be paid or become payable to Ortho’s named executive officers in connection with the Combinations, as disclosed in the table entitled “Interests of Certain Persons in the Combinations (Ortho)—Golden Parachute Compensation,” (iv) provides details of the BCA and the consideration Ortho shareholders will receive upon completion of the Combinations, (v) serves as the prospectus by which Topco will issue Topco Shares to Quidel stockholders and Ortho shareholders in connection with the Combinations and (vi) provides Quidel stockholders and Ortho shareholders with important details about Topco and their rights as potential holders of Topco Shares.

 

Q:

What is the proposed transaction I am being asked to vote on, and how will it be implemented?

 

A:

On December 22, 2021, Quidel entered into the BCA with Ortho, Topco, U.S. Holdco Sub, U.S. Merger Sub and U.S. Holdco Sub 2, which provides for the acquisition of Ortho and Quidel by Topco. Pursuant to the BCA, the Combinations are expected to be implemented by way of:

(i) a scheme of arrangement to be undertaken by Ortho under Part 26 of the UK Companies Act (the “Ortho Scheme”), pursuant to which the Scheme Shares will be acquired by a nominee of Topco (or, if such nominee holds the Ortho Shares today, transferred within the nominee), such that Ortho will become a wholly owned subsidiary of Topco; and

(ii) a merger (the “Quidel Merger”) of U.S. Merger Sub with and into Quidel immediately following consummation of the Ortho Scheme, with Quidel surviving the merger as a wholly owned subsidiary of Topco (the transactions in (i) and (ii) together, the “Combinations”).

For more information about the Ortho Scheme, see the sections entitled “Scheme Proposal and the Ortho Shareholder Meetings—Explanatory Statement” and “The Ortho Scheme” of this joint proxy statement/prospectus. For more information about the Quidel Merger, see the section entitled “The Quidel Stockholders’ Meeting—Proposal No. 1—The Merger” of this joint proxy statement/prospectus.

 

Q:

Why are Quidel and Ortho proposing this transaction?

 

A:

The board of directors of each of Quidel and Ortho believes that the transaction will benefit Quidel stockholders and Ortho shareholders by creating a combined company that will bring together innovative and highly complementary diagnostic portfolios with world-class technologies and platforms that enhance the health and well-being of patients across the globe.

For more details on the reasons for the transaction, see the sections entitled “The Combinations—Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors” and “The Combinations—Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors” of this joint proxy statement/prospectus.

 

Q:

Why did I receive this joint proxy statement/prospectus and proxy card?

 

A:

You are receiving this joint proxy statement/prospectus because you were a stockholder of record of Quidel on the record date for the Quidel Stockholders’ Meeting and/or a shareholder of record of Ortho on the record date for the Ortho Court Meeting and Ortho General Meeting, and are accordingly entitled to vote at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable). This document serves (i) as a proxy

 

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Table of Contents
  statement of Quidel used to solicit proxies to obtain the necessary stockholder approval for the Merger Proposal, the Adjournment Proposal, the Election of Directors Proposal, the Independent Registered Public Accounting Firm Proposal, the Equity Incentive Plan Proposal and the ESPP Proposal and the approval (on a non-binding, advisory basis) for the Advisory Merger Compensation Proposal and the Advisory Executive Compensation Proposal at the Quidel Stockholders’ Meeting, (ii) as a proxy statement of Ortho used to solicit proxies to obtain the necessary shareholder approval for the Ortho Scheme at the Ortho Court Meeting and for the general authorization of the directors of Ortho (or a duly authorized committee of the directors) to take all such action as they may consider necessary or appropriate for carrying the Ortho Scheme into effect, the adoption of new Ortho articles of association and the approval (on a non-binding, advisory basis) of certain compensation arrangements at the Ortho Shareholder Meetings, and (iii) as a prospectus of Topco used to offer Topco Shares in exchange for Quidel Shares and Ortho Shares pursuant to the terms of the BCA. The enclosed voting materials allow both Quidel stockholders and Ortho shareholders to vote their shares by proxy without attending their respective meeting virtually.

 

Q:

What will Quidel stockholders and Ortho shareholders receive in the Combinations?

 

A:

If the Combinations are approved, at the effective time of the Ortho Scheme (the “Ortho Effective Time”), each Ortho Share, other than Ortho Shares held by Ortho in treasury, if any, will be acquired by a nominee (or, if such nominee holds the Ortho Shares today, transferred within the nominee) on behalf and for the benefit of Topco in exchange for 0.1055 Topco Shares and $7.14 in cash. At the effective time of the Quidel Merger (the “Quidel Effective Time” and together with the Ortho Effective Time, the “Effective Times”), each share of common stock of Quidel (each, a “Quidel Share”), other than Quidel Shares held by Quidel, Ortho or U.S. Merger Sub, will be converted into the right to receive one Topco Share. The parties intend to list the Topco Shares to be issued in the Combinations on the Nasdaq Global Select Market (“Nasdaq”).

 

Q:

What percentage will former Quidel stockholders and Ortho shareholders hold in Topco following completion of the Combinations?

 

A:

It is anticipated that, immediately following completion of the Combinations, former Quidel stockholders will own approximately 62% of Topco on a fully diluted basis and former Ortho shareholders will own approximately 38% of Topco on a fully diluted basis, based on the respective capitalizations of Quidel and Ortho as of the date the parties entered into the BCA. The exact equity stakes that former Quidel stockholders and former Ortho shareholders will hold in Topco immediately following the Combinations will depend on the number of Quidel Shares and Ortho Shares issued and outstanding immediately prior to the Effective Times.

 

Q:

If the Combinations are completed, will Topco Shares be listed for trading?

 

A:

Yes. The Topco Shares you will receive in the Combinations are expected to be listed on Nasdaq as of the completion of the Combinations, which will occur on the date of the Effective Times. Completion of the Combinations is subject to the Topco Shares being approved for listing on Nasdaq, subject to official notice of issuance. Topco Shares received in the Combinations are expected to be freely transferable under applicable securities laws (subject to any applicable minimum holding period in respect of Topco Shares received in exchange for Quidel Shares or Ortho Shares delivered upon vesting of certain equity awards), except for any Topco Shares held by Topco’s affiliates.

 

Q:

How will fractional entitlements to Topco Shares be dealt with?

 

A:

Fractions of Topco Shares that Scheme Shareholders would otherwise be entitled to will not be allotted to Scheme Shareholders. Instead, Scheme Shareholders will receive, in lieu of such fractional entitlements, cash in an amount in U.S. dollars (rounded down to the nearest cent) equal to such fractional amount multiplied by the aggregate net proceeds from the sale of all such fractional entitlements. The Exchange Agent will orchestrate the sale of the fractional entitlements on Nasdaq in the ten Business Days following the Scheme Effective Date (as defined herein).

 

Q:

When do you expect the Combinations to be completed?

 

A:

The Combinations are expected to close before the end of the first half of 2022, subject to the approvals of Quidel stockholders and Ortho shareholders, receipt of regulatory approvals and consents and satisfaction of other closing conditions.

 

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Q:

What happens if the Combinations are not completed?

 

A:

If Quidel stockholders do not approve the Merger Proposal, if the Ortho shareholders do not approve the Ortho Scheme or if the Combinations are not completed for any other reason, Quidel and Ortho will remain independent companies. In the event of a termination, Quidel Shares and Ortho Shares will continue to be listed and traded individually on Nasdaq and both Quidel and Ortho will continue to be registered under the Exchange Act and file periodic reports with the SEC.

Quidel or Ortho may each terminate the BCA under certain circumstances, including, among others, where the other party breaches its representations, warranties or covenants contained in the BCA (subject to customary materiality thresholds and cure periods). In connection with the termination of the BCA under specified circumstances, Quidel or Ortho may be required to pay the other party a termination fee of approximately $207.8 million, in the case of payment by Quidel, or approximately $46.9 million, in the case of payment by Ortho, or may be required to reimburse the other party for its out-of-pocket expenses incurred in connection with the BCA.

 

Q:

What regulatory approvals are needed to complete the Combinations?

 

A:

Quidel and Ortho have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the BCA. These approvals include clearance under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and other merger control and foreign investment laws and regulations. Quidel and Ortho have completed, or will complete, the filing of applications and notifications to obtain the required regulatory approvals.

For further details on regulatory approvals, see the section entitled “The Combinations—Antitrust and Merger Control” of this joint proxy statement/prospectus.

 

Q:

What other conditions must be satisfied to complete the Combinations?

 

A:

In addition to Quidel stockholder and Ortho shareholder approvals and clearance from antitrust, competition and foreign investment authorities in certain areas where Quidel and Ortho operate, closing of the Combinations is subject to certain additional conditions, including (i) the absence of any law or order prohibiting the Combinations, (ii) effectiveness of a registration statement for the Topco Shares to be issued in the Combinations, (iii) Nasdaq listing approval for Topco Shares and (iv) sanction of the Ortho Scheme by the High Court of Justice of England and Wales (the “Court”) and the delivery of the order of the Court sanctioning the Ortho Scheme to the Registrar.

 

Q:

What are the U.S. federal income tax considerations to Quidel stockholders and Ortho shareholders of the Combinations?

 

A:

The exchange of Quidel Shares for Topco Shares pursuant to the Quidel Merger, taken together with the Ortho Scheme, will qualify as a transaction described in Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus no gain or loss is expected to be recognized by the U.S. Holders of Quidel Shares as a result of the Quidel Merger.

The exchange of Ortho Shares for Topco Shares and cash pursuant to the Ortho Scheme, taken together with the Quidel Merger, will qualify as a transaction described in Section 351 of the Code. As a result, subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus, gain (but not loss) is expected to be recognized on the exchange of Ortho Shares for a combination of cash and Topco Shares pursuant to the Ortho Scheme in an amount equal to the lesser of: (a) the excess of (i) the sum of the fair market value of the Topco Shares and the amount of cash received by such U.S. Holder over (ii) such U.S. Holder’s tax basis in its Ortho Shares, and (b) the amount of cash received by such U.S. Holder pursuant to the Ortho Scheme. The treatment of the cash received in lieu of fractional Topco Shares is discussed separately in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus.

Please carefully review the information set forth in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus for a general discussion of material U.S. federal income tax considerations relating to the Quidel Merger and the Ortho Scheme. You are strongly urged to consult your tax advisors as to the specific tax consequences to you.

 

 

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Q:

What are the UK tax considerations to shareholders of the Combinations?

 

A:

See the section entitled “Material UK Tax Considerations” of this joint proxy statement/prospectus.

 

Q:

As Ortho is a UK public limited company, do the UK rules on takeovers apply to the proposed Combinations?

 

A:

The UK Panel on Takeovers and Mergers has confirmed that the City Code on Takeovers and Mergers (the “City Code”) will not apply to any transaction involving Ortho (including the Combinations) because the place of central management and control of Ortho for purposes of the City Code is outside of the UK, the Isle of Man and the Channel Islands.

 

Q:

Are either Quidel stockholders or Ortho shareholders entitled to exercise dissenters’, appraisal, cash exit, or similar rights?

 

A:

No. Neither Quidel stockholders nor Ortho shareholders are entitled to appraisal or dissenters’ rights in connection with the transaction.

 

Q:

What impact will the Ortho Scheme have on Ortho mandates relating to the payment of dividends?

 

A:

Any mandates relating to the payment of dividends on any Scheme Shares and other instructions (including communications preferences) given to Ortho by Scheme Shareholders in force at the Scheme Record Time relating to Scheme Shares will, as from the Scheme Effective Date, cease to be valid.

 

Q:

As an Ortho shareholder, why did I receive two forms of proxy?

 

A:

Ortho shareholders are entitled to vote at two meetings, the Ortho Court Meeting and the Ortho General Meeting. Each Ortho shareholder received a blue form of proxy for use in respect of the Ortho Court Meeting and a white form of proxy for use in respect of the Ortho General Meeting.

 

Q:

Whose proxies are being solicited and who is entitled to vote at the Quidel Stockholders’ Meeting and the Ortho Shareholder Meetings?

 

A:

Only Quidel stockholders are entitled to vote at the Quidel Stockholders’ Meeting and only Ortho shareholders are entitled to vote at the Ortho Court Meeting and Ortho General Meeting. The record date for the Quidel Stockholders’ Meeting is March 31, 2022. Only holders of record of Quidel Shares as of the close of business on the record date are entitled to notice of, and to vote at, the Quidel Stockholders’ Meeting. Each holder of Quidel Shares is entitled to cast one vote on each matter properly brought before the Quidel Stockholders’ Meeting for each Quidel Share that such holder owned of record as of the close of business on the record date.

The Voting Record Time for the Ortho Shareholder Meetings is 1:00 p.m. (Eastern Standard Time) and 6:00 p.m. (London time) on May 12, 2022. Only those shareholders registered on the register of members of Ortho as of such time are entitled to vote at the Ortho Shareholder Meetings. Each holder of Ortho Shares is entitled to cast one vote on each matter properly brought before the Ortho Court Meeting and one vote on each matter properly brought before the Ortho General Meeting for each Ortho Share that such holder owned of record as of the Voting Record Time.

 

Q:

What do I need to do now?

 

A:

Carefully read through this joint proxy statement/prospectus. Consider all the consequences that would occur should you vote “FOR” or “AGAINST” or “ABSTAIN” / WITHHELD on the proposals at the Quidel Stockholders’ Meeting if you are a Quidel stockholder, or at the Ortho Court Meeting or the Ortho General Meeting (as applicable) if you are an Ortho shareholder, and the consequences that would occur if you fail to submit a proxy. Confer with any advisors you think necessary to make the best decision. Fill out your proxy card(s) and send it back to Quidel or Ortho, as applicable, as soon as possible in accordance with the instructions contained herein and therein.

Even if you plan to attend the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable), after carefully reading and considering the information contained in this joint proxy statement/prospectus, please submit your proxy promptly to ensure that your shares are represented at the respective meeting(s). If you decide to attend the meeting(s) and vote virtually, your vote by ballot will revoke any proxy previously submitted. Your attendance at a meeting will not automatically revoke your proxy. Both the Quidel Stockholders’ Meeting and the Ortho Shareholder Meetings will be entirely virtual.

 

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If you are a beneficial owner (i.e., hold Quidel Shares or Ortho Shares in “street name”), please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote virtually at your respective meeting(s), you must obtain a legal proxy from your bank, brokerage firm or other nominee.

 

Q:

Do I need to do anything with my Quidel Shares or my Ortho Shares other than voting for the proposals at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting?

 

A:

No. You do not need to take any action at this time with respect to your shares. Please do not send your stock certificates, if any, with your proxy card.

 

Q:

What happens if I sell my Quidel Shares before the Quidel Stockholders’ Meeting, or sell my Ortho Shares before the Ortho Court Meeting and Ortho General Meeting?

 

A:

The record date for the Quidel Stockholders’ Meeting and the Voting Record Time for the Ortho Shareholder Meetings is earlier than the date of each such meeting and the date that the Combinations are expected to be completed. If you transfer your shares after the record date or Voting Record Time, as applicable, but before the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting, as applicable, you will, unless the transferee receives a proxy from you, retain your right to vote at the respective meeting(s), but you will have transferred the right to receive the consideration in connection with the Combinations. In order to receive the consideration, you must hold your Quidel Shares or Ortho Shares through the Quidel Effective Time or the Ortho Effective Time, as applicable.

 

Q:

What is the recommendation of the board of directors of Quidel as to each proposal that may be voted on at the Quidel Stockholders’ Meeting?

 

A:

The Quidel board of directors has determined that the Combinations, including the Quidel Merger and the other transactions contemplated by the BCA, are consistent with and will further the business strategies and goals of Quidel, and are in the best interests of Quidel and its stockholders, and (a) has unanimously approved and declared advisable the BCA and Combinations, including the Quidel Merger and the transactions contemplated by the BCA, and (b) has determined, subject to its duties under applicable law, to recommend that the Quidel stockholders adopt the BCA and the transactions contemplated by the BCA.

Accordingly, the Quidel board of directors recommends that Quidel stockholders vote:

 

  1.

“FOR” the Merger Proposal;

 

  2.

“FOR” the Advisory Merger Compensation Proposal;

 

  3.

“FOR” the Adjournment Proposal;

 

  4.

“FOR” the Election of Directors Proposal;

 

  5.

“FOR” the Advisory Executive Compensation Proposal;

 

  6.

“FOR” the Independent Registered Public Accounting Firm Proposal;

 

  7.

“FOR” the Equity Incentive Plan Proposal; and

 

  8.

“FOR” the ESPP Proposal.

See the sections entitled “Other Matters Relating to the Quidel Stockholders’ Meeting” and “The Combinations—Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors” of this joint proxy statement/prospectus.

 

Q:

What is the recommendation of the board of directors of Ortho as to each proposal that may be voted on at the Ortho Court Meeting and Ortho General Meeting?

 

A:

The Ortho board of directors considers the terms of the Ortho Scheme to be in the best interests of Ortho and its shareholders taken as a whole.

 

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Accordingly, the Ortho board of directors recommends that Ortho shareholders vote:

 

  1.

“FOR” the approval of the Scheme of Arrangement at the Ortho Court Meeting; and

 

  2.

“FOR” the approval of each of the resolutions at the Ortho General Meeting.

See the section entitled “The Combinations—Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors” of this joint proxy statement/prospectus.

 

Q:

What votes of the Quidel stockholders and the Ortho shareholders are required to approve the proposals presented at the Quidel Stockholders’ Meeting, the Ortho Court Meeting and the Ortho General Meeting?

 

A:

At the Quidel Stockholders’ Meeting, approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding Quidel Shares entitled to vote on such matter in person (virtual attendance by stockholders of record at the Quidel Stockholders’ Meeting will constitute presence in person for the purpose of determining the number of votes cast) or represented by proxy at the Quidel Stockholders’ Meeting, voting as a single class.

At the Ortho Court Meeting, approval of the Ortho Scheme requires the affirmative vote by a majority in number representing 75% in value of the holders of Ortho Shares who vote in person (virtual attendance by shareholders of record at the Ortho Court Meeting will constitute presence in person for the purpose of determining the number of votes cast) or by proxy at the Ortho Court Meeting. At the Ortho General Meeting, approval of each proposal to be considered at the Ortho General Meeting and passed as an ordinary resolution requires the affirmative vote of a majority of the voting rights represented at the Ortho General Meeting in person or by proxy and entitled to vote on such proposal, and approval of each proposal to be considered at the Ortho General Meeting and passed as a special resolution requires the affirmative vote of not less than 75% of the votes cast by Ortho shareholders present (in person or by proxy) at the meeting and entitled to vote on such proposal.

 

Q:

Will the Scheme Shareholders vote as one class at the Ortho Court Meeting?

 

A:

At a directions hearing on February 15, 2022 the Court confirmed that the Scheme Shareholders (as defined in the Scheme of Arrangement) should be treated by Ortho as a single class of shareholders for the purpose of voting at the Ortho Court Meeting to approve the Ortho Scheme. In accordance with section 899 of the Companies Act 2006 (the “Act”) the Ortho Scheme must be approved by a majority of shareholders in number (the “majority in number test”) representing three-quarters or more in value of the shareholders who vote in person or by proxy (the “value test”).

Majority in Number Test

At a directions hearing on February 15, 2022 the Court confirmed that for the purpose of the majority in number test, Ortho shall treat a holder of Scheme Shares that casts votes both ‘for’ and ‘against’ the Ortho Scheme as voting in favour of the Ortho Scheme if such holder casts more votes ‘for’ the Ortho Scheme than ‘against’ the Ortho Scheme and otherwise, against.

If Ortho’s register of members remains unchanged, it is anticipated that at the Ortho Court Meeting Ortho shall have two registered shareholders, and the holders of the Scheme Shares shall be Cede & Co., as depositary nominee of The Depositary Trust Company (“DTC”) and GTU Ops Inc., as nominee of Computershare Trust Company, N.A. (“Computershare”). Accordingly, provided that a majority of the votes cast in respect of the Scheme Shares held by Computershare are voted ‘for’ the Ortho Scheme, Computershare shall be considered to have voted in favour of the Ortho Scheme. Similarly, if a majority of the votes cast in respect of the Scheme Shares held by DTC are voted ‘for’ the Ortho Scheme, DTC shall be considered to have voted in favour of the Ortho Scheme.

As at March 4, 2022 Carlyle Partners VI Cayman Holdings, L.P. (“Carlyle”) held 118,106,000 ordinary shares in the share capital of Ortho via Computershare and Computershare held a total of 120,252,074 ordinary shares in the share capital of Ortho. Therefore, if Carlyle votes in favour of the Ortho Scheme 98.2% of the ordinary shares held by Computershare will be voted in favour of the Scheme and, as this constitutes a majority, Computershare will be deemed to have voted ‘for’ the Ortho Scheme. As at March 4, 2022 DTC held 117,297,848 ordinary shares in the share capital of Ortho. Assuming that each ordinary share held by DTC is voted at the Ortho Court Meeting, 58,648,925 of such ordinary shares in the share capital of Ortho would need to vote in favour of the Ortho Scheme in order for DTC to be considered to have voted in favour of the Ortho Scheme. It is possible that not all of the shares held via DTC will be voted at the Ortho Court Meeting; however, provided a majority of the shares that actually vote are voted in favour of the Ortho Scheme DTC shall be considered to have voted in favour of the Ortho Scheme.

 

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It is only possible for existing beneficial holders of Ortho Shares to attend and vote directly (i.e., in their own name) at the Ortho Court Meeting (or Ortho General Meeting) in respect of all or part of their holding, if they become a registered holder of Ortho Shares. In the event that Ortho has additional registered shareholders on its register of members as at the Voting Record Time, then it is expected that the Court will continue to require that a majority in number of all such voting holders (irrespective of the size of their shareholding) vote ‘for’ the Ortho Scheme than ‘against’ the Ortho Scheme. Beneficial holders of shares of Ortho Shares may arrange to become a registered holder of Ortho Shares upon completion of a stock transfer form by the applicable registered holder nominee (DTC or Computershare) in respect of the Ortho Shares that they wish to be transferred into their name (and pay any related UK stamp duty, if applicable) and send the completed stock transfer form and related documentation (as applicable) to Ortho’s transfer agent, Computershare Investor Services at Investor Services at 462 South 4th Street, Suite 1600, Louisville, KY, 40202, United States, to permit processing to be completed by Computershare prior to the Voting Record Time.

Value Test

As at March 4, 2022 Ortho had 237,549,922 ordinary shares in issue. Assuming that each of such ordinary shares is voted at the Ortho Court Meeting, and if Carlyle votes in favour of the Ortho Scheme in respect of the 118,106,000 ordinary shares it holds via Computershare, Carlyle will account for 49.7% for the purpose of the value test. Assuming that each of the remaining 119,443,922 ordinary shares vote at the Ortho Court Meeting, at least 60,056,442 of such ordinary shares (representing 50.3% of the ordinary shares not held by Carlyle and 25.3% of the total ordinary shares) would need to vote in favour of the Ortho Scheme in order for the value test to be passed. As stated above, it is possible that not all of the ordinary shares held by shareholders other than Carlyle will vote at the Ortho Court Meeting and, as a result, Carlyle’s vote would represent a larger proportion of the three-quarters in value required to pass the value test. As a result, until the number of votes cast at the Ortho Court Meeting are known it is not possible to state how many ordinary shares held other than by Carlyle would need to vote in favour of the Ortho Scheme in order to pass the value test (unless every ordinary share not held by Carlyle votes at the Ortho Court Meeting—as described in the calculation above).

 

Q:

What are the effects of abstentions and broker non-votes at the Quidel Stockholders’ Meeting, the Ortho Court Meeting and the Ortho General Meeting?

 

A:

In connection with the Quidel Stockholders’ Meeting, abstentions and broker non-votes (if any) will be considered in determining the presence of a quorum. An abstention occurs when a stockholder abstains from voting (either in person or by proxy) on one or more of the proposals. Broker non-votes occur when a broker, bank, trust or other nominee returns a proxy but does not have authority to vote on a particular proposal. You should therefore provide your broker, bank, trust or other nominee with instructions as to how to vote your Quidel Shares or Ortho Shares (as applicable).

A failure to submit a proxy or attend the Quidel Stockholders’ Meeting, a broker non-vote (if any) or an abstention will have the same effect as a vote “AGAINST” the Merger Proposal. A failure to submit a proxy or attend the Quidel Stockholders’ Meeting or a broker non-vote (if any) as to the Advisory Merger Compensation Proposal, the Adjournment Proposal, the Election of Directors Proposal, the Advisory Executive Compensation Proposal, the Independent Registered Public Accounting Firm Proposal, the Equity Incentive Plan Proposal or the ESPP Proposal will have no effect on these proposals. An abstention will have the same effect as a vote “AGAINST” the Advisory Merger Compensation Proposal, the Adjournment Proposal, the Election of Directors Proposal, the Advisory Executive Compensation Proposal, the Independent Registered Public Accounting Firm Proposal, the Equity Incentive Plan Proposal and the ESPP Proposal.

In connection with the Ortho Shareholder Meetings, abstentions and broker non-votes will be considered in determining the presence of a quorum. However, abstentions and broker non-votes are not considered votes cast under the UK Companies Act. An abstention occurs when an Ortho shareholder abstains from voting (either in person or by proxy) on one or more of the proposals. Broker non-votes occur when a broker, bank, trust or other nominee returns a proxy but does not have authority to vote on a particular proposal. As a result, for purposes of determining whether each of the resolutions set out in the Notice of Ortho Court Meeting and Notice of Ortho General Meeting has been approved in accordance with the UK Companies Act, abstentions and broker non-votes will not have any effect on the outcome of the vote.

 

Q:

If I am a stockholder of record for either Quidel Shares or Ortho Shares, how do I vote?

 

A:

If you are the stockholder of record with respect to your Quidel Shares or Ortho Shares, you may vote virtually at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable) or by proxy. Virtual

 

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  attendance by stockholders of record at the Quidel Stockholders’ Meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the Quidel Stockholders’ Meeting.

If you do not wish to vote virtually or if you will not be attending your respective meeting(s), you may submit a proxy. You can vote by proxy over the Internet by going to www.proxyvote.com, by mail by returning the proxy card or by telephone by calling the number listed on your proxy card for your respective meeting(s) and, in each case, following the instructions provided. Even if you plan to attend the Quidel Stockholders’ Meeting, the Ortho Court Meeting and/or the Ortho General Meeting and vote virtually (as applicable), we recommend you submit a proxy so your vote will be counted even if your plans change.

Both Quidel and Ortho provide Internet proxy voting to allow you to submit a proxy to vote your Quidel Shares or Ortho Shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions.

 

Q:

If I am a beneficial owner of either Quidel Shares or Ortho Shares held in street name, how do I vote?

 

A:

If, on the Quidel record date, your shares were held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in “street name,” and the organization holding your account is considered the stockholder of record for purposes of voting at the Quidel Stockholders’ Meeting.

If you are a beneficial owner of Quidel Shares registered in the name of your broker, bank, dealer or other similar organization and you wish to vote in person at the Quidel Stockholders’ Meeting, you must obtain a valid proxy from the organization that holds your Quidel Shares. If you do not wish to vote in person or you will not be attending the Quidel Stockholders’ Meeting, you should have received a proxy card and voting instructions with this joint proxy statement/prospectus from that organization. Please follow the voting instructions provided by your broker, bank, dealer or other similar organization to ensure that your vote is counted. Virtual attendance by stockholders of record at the Quidel Stockholders’ Meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the Quidel Stockholders’ Meeting.

If you are a beneficial owner of Ortho Shares registered in the name of your broker, bank, dealer or other similar organization and you wish to vote in person at the Ortho Shareholder Meetings, you must obtain a valid proxy from the organization that holds your Ortho Shares. If you do not wish to vote in person or you will not be attending the Ortho Shareholder Meetings, you should have received proxy cards and voting instructions with this joint proxy statement/prospectus from that organization. Please follow the voting instructions provided by your broker, bank, dealer or other similar organization to ensure that your vote is counted.

If your Ortho Shares are held through a broker, bank, trust company or other nominee and you wish to access the Virtual Meeting Platform, you will need to access the Virtual Meeting Platform provided by Lumi AGM UK Limited as set out in the notices set out in this joint proxy statement/prospectus and enter the control number included in with the forms of proxy. Holders of the beneficial interests in Ortho Shares will be able to submit written questions by email to IR@orthoclinicaldiagnostics.com (emails must be received no less than 48 hours before the start via the virtual meeting platform in the seven days prior to, and during, the Ortho Shareholder Meetings) and observe the Ortho Shareholder Meetings remotely via the Virtual Meeting Platform. Please see the section entitled “Scheme Proposal and the Ortho Shareholder Meetings—Explanatory Statement—Beneficial Holders” of this joint proxy statement/prospectus for further information in respect of such holdings and interests. If you are in any doubt about your shareholding, please contact Computershare, Ortho’s registrar, at +1 (866) 644-4127 (toll-free in U.S. and Canada) and +1 (781) 575-2906 (International).

 

Q:

What happens if I am an Ortho shareholder located outside of the United States?

 

A:

The availability of the Ortho Scheme and the transaction deliverables to overseas Ortho shareholders (i.e., those outside the United States) may be affected by the laws of the relevant jurisdictions. Overseas Ortho shareholders should inform themselves about, and should observe, any applicable legal requirements. It is the responsibility of all overseas Ortho shareholders to satisfy themselves as to their full compliance with the laws of the relevant jurisdiction, including obtaining any governmental, exchange control or other consents which may be required and their compliance with any other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction. If you are in any doubt regarding such matters, you should consult an independent professional adviser in the relevant jurisdiction without delay. Overseas Ortho shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Combinations in their particular circumstances.

 

Q:

What happens if I hold both Quidel Shares and Ortho Shares?

 

A:

You will receive separate proxy or voting instruction cards for each of the Quidel Stockholders’ Meeting, the Ortho Court Meeting and the Ortho General Meeting (as applicable), and are advised to complete, sign and date each proxy or voting instruction card and return each proxy or voting instruction card in the appropriate postage-paid envelope or, if available, submit a proxy or voting instruction by telephone or through the Internet for each company.

 

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Q:

How do I appoint a proxyholder?

 

A:

Your proxyholder is the person you appoint to cast your votes on your behalf at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable), if you do not attend and vote virtually. You can choose anyone you want to be your proxyholder; it does not have to be the persons Quidel or Ortho has designated. To designate a different person to be your proxyholder, if you are a holder of Quidel Shares, write in the name of the person you would like to appoint in the blank space provided in the proxy card and, if you are a holder of Ortho Shares, follow the instructions included in the form of proxy. An Ortho shareholder entitled to attend and vote at the Ortho Court Meeting and Ortho General Meeting may appoint one or more proxies to exercise all or any of such Ortho shareholder’s rights to attend, submit written questions and, on a poll, to vote (in each case, remotely, via the Virtual Meeting Platform), on their behalf. Please ensure that the person you have appointed will be attending the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable) and is aware that he or she will be voting your shares.

If you sign the proxy card without naming your own proxyholder and you are a holder of Quidel Shares, you thereby appoint Douglas C. Bryant, Randall J. Steward and Phillip S. Askim as your proxyholders, who will be authorized to vote and otherwise act for you at the Quidel Stockholders’ Meeting in accordance with the instructions on the proxy card. If you sign the proxy card without naming your own proxyholder and you are a holder of Ortho Shares, you thereby appoint the Chair of Ortho as your proxyholder, who will be authorized to vote and otherwise act for you at the Ortho General Meeting, but not the Ortho Court Meeting, in accordance with the instructions on the proxy card.

 

Q:

How many proxies can I appoint?

 

A:

An Ortho shareholder of record may appoint one or more proxies to exercise all or any of such Ortho shareholder’s rights to attend, submit written questions and, on a poll, to vote (in each case, remotely, via the Virtual Meeting Platform), on their behalf. If an Ortho shareholder of record appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by such shareholder. If an Ortho shareholder of record wishes to appoint more than one proxy, they should follow the instructions contained therein or photocopy the blue/white form of proxy, as required.

 

Q:

How will my shares be voted at the Ortho Court Meeting and the Ortho General Meeting if I submit my proxy?

 

A:

On the proxy card, you can indicate how you want your proxyholder to vote your shares. If you have specified on the proxy card how you want to vote on a particular proposal (by marking as applicable “FOR” or “AGAINST”), then your proxyholder must vote your shares accordingly. With respect to the Ortho General Meeting, but not the Ortho Court Meeting, you can let your proxyholder decide for you by signing and returning the proxy card without indicating a voting preference for one or all proposals. With respect to the Ortho Court Meeting, if you sign your proxy card without giving instructions, you will have granted authority to your proxy to vote “FOR” each of the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements but not the Scheme Proposal.

 

Q:

When should I submit my proxy?

 

A:

You should submit your proxy as soon as possible so that your shares will be voted at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable). If you are either a Quidel stockholder of record or an Ortho shareholder of record, your proxy must be received by Internet or telephone (in the case of Quidel only) before the Quidel Stockholders’ Meeting, or Internet, post, telephone, email or hand (in the case of Ortho only) before the Ortho Court Meeting or the Ortho General Meeting (as applicable) in order for your shares to be voted at the applicable meeting(s). If you are either a Quidel stockholder of record or an Ortho shareholder of record and you received a printed set of proxy materials, you also have the option of completing and returning the proxy card enclosed with the proxy materials so that it is received by Quidel or Ortho, respectively, before the respective meeting(s) in order for your shares to be voted at the meeting. If you hold your shares in street name through a broker, bank or other nominee, please comply with the deadlines included in the voting instructions provided by the broker, bank or other nominee that holds your shares. For a proxy appointment to be valid in respect of the Ortho Court Meeting and the Ortho General Meeting, the appointment must be received by Broadridge not later than 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time fixed for the Ortho Court Meeting and the Ortho General Meeting or any adjournment thereof. If the appointment is not received by Broadridge by the relevant time, it may be emailed to info@americanelectionservices.com or handed to the Chair at any time prior to the commencement of the Ortho Court Meeting and Ortho General Meeting, as applicable, otherwise it will be invalid.

 

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Q:

Can I change my vote or revoke my proxy after I have returned a proxy or voting instruction card?

 

A:

Yes. You may revoke your proxy and change your vote at any time before the final vote at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable). The most recent proxy card or telephone or Internet proxy received by the inspector of elections (for Quidel) or scrutineer (for Ortho) for each meeting is the one that is counted.

Quidel Stockholder of Record: If you are a Quidel stockholder of record, you may revoke your proxy or change your vote in any one of the following ways:

 

   

you may send a written notice that you are revoking your proxy to Quidel’s Secretary at Quidel Corporation, Attention: Phillip S. Askim, 9975 Summers Ridge Road, San Diego, California 92121, United States of America;

 

   

you may send a subsequent properly completed proxy card in accordance with the instructions in this joint proxy statement/prospectus;

 

   

you may grant a subsequent proxy by telephone or through the Internet in accordance with the instructions in this joint proxy statement/prospectus; or

 

   

you may attend the Quidel Stockholders’ Meeting and either vote or revoke your proxy in writing. Your attendance at the Quidel Stockholders’ Meeting will not automatically revoke your proxy unless you vote again at the Quidel Stockholders’ Meeting or specifically request in writing that your prior proxy be revoked. Virtual attendance by stockholders of record at the Quidel Stockholders’ Meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the Quidel Stockholders’ Meeting.

Ortho Shareholder of Record: If you are an Ortho shareholder of record, you may revoke your proxy or change your vote for either meeting in any one of the following ways:

 

   

you may send a subsequent properly completed proxy card in accordance with the instructions in this joint proxy statement/prospectus;

 

   

you may grant a subsequent proxy through the Internet in accordance with the instructions in this joint proxy statement/prospectus;

 

   

you may send a written notice that you are revoking your proxy to Ortho Clinical Diagnostics Proxy, Attention: Michael A. Schlesinger, Executive Vice President, General Counsel and Secretary at Ortho Clinical Diagnostics Holdings plc, 1001 Route 202, Raritan, New Jersey 08869; or

 

   

you may attend the Ortho Court Meeting and/or the Ortho General Meeting and vote via the Virtual Meeting Platform. Your attendance at either meeting will not automatically revoke your proxy.

 

Q:

What should I do if I receive more than one set of voting materials for a particular meeting?

 

A:

You may receive more than one set of voting materials for the same meeting, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, a holder of Quidel Shares or Ortho Shares who holds shares in more than one brokerage account would receive a separate voting instruction card for each brokerage account in which such holder holds shares. Additionally, a holder of record of shares whose shares are registered in more than one name would receive more than one proxy card.

In order to ensure that all of your shares are voted at the Quidel Stockholders’ Meeting, the Ortho Court Meeting or the Ortho General Meeting (as applicable), please complete, sign, date and return each proxy card and voting instruction card that you receive.

 

Q:

Are there risks associated with the Combinations that I should consider in deciding how to vote?

 

A:

Yes. You should carefully read the detailed description of the risks associated with the Combinations and Topco’s operations following the Combinations described in the section entitled “Risk Factors” of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors associated with the businesses of both Quidel and Ortho that are included in, or contained in the documents that are incorporated by reference into, this joint proxy statement/prospectus because these risks will relate to the business of Topco following the completion of the Combinations.

 

Q:

Who will count the votes at each meeting?

 

A:

At the Quidel Stockholders’ Meeting, American Election Services LLC will serve as inspector of elections and will count the votes. At the Ortho Shareholder Meetings, American Election Services LLC will serve as scrutineer and will count the votes and also act as the independent inspector of elections.

 

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Q:

Where can I find the voting results of the Quidel Stockholders’ Meeting, the Ortho Court Meeting and the Ortho General Meeting?

 

A:

Regarding the Quidel Stockholders’ Meeting and the Ortho Shareholder Meetings, the preliminary voting results will be announced at each meeting. In addition, within four Business Days following certification of the final voting results, each of Quidel and Ortho intends to file the final voting results with the SEC on a Current Report on Form 8-K.

 

Q:

What is “householding”?

 

A:

The SEC has adopted rules that permit companies and intermediaries (such as brokers or banks) to satisfy the delivery requirements for proxy statements with respect to two or more security holders sharing the same address by delivering a single notice or proxy statement addressed to those security holders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for security holders and cost savings for companies.

Several brokers and banks with accountholders who are Quidel stockholders or Ortho shareholders will be “householding” Quidel’s or Ortho’s proxy materials. As indicated in the notices provided by these brokers to Quidel stockholders and Ortho shareholders, a single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from an affected stockholder. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If at any time you no longer wish to participate in “householding” and you prefer to receive a separate proxy statement, if you are a Quidel stockholder, please notify your broker or contact Quidel’s proxy solicitor, Innisfree M&A Incorporated, at (877) 750-0537, or if you are an Ortho shareholder, please notify your broker or Ortho’s proxy solicitor, MacKenzie Partners, Inc., toll-free at 1-800-322-2885. Quidel stockholders or Ortho shareholders who currently receive multiple copies of this joint proxy statement/prospectus at their address and would like to request “householding” of their communications should contact their broker or nominee.

See the section entitled “Householding of Proxy Materials” of this joint proxy statement/prospectus for additional information.

 

Q:

Who can answer my questions?

 

A:

The information provided above in the question-and-answer format is for your convenience only and is merely a summary of some of the information contained in this joint proxy statement/prospectus. You should read carefully the entire joint proxy statement/prospectus, including the information in the annexes. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus. If you would like additional copies of this joint proxy statement/prospectus or the enclosed proxy card, without charge, or if you have questions about the Combinations, including the procedures for voting your shares, you should contact:

 

If you are a Quidel stockholder:

Quidel Corporation

9975 Summers Ridge Road

San Diego, California 92121

Attention: Phillip S. Askim, Vice President,

Associate General Counsel & Secretary

(858) 552-1100

and

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders may call toll free: (877) 750-0537

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

If you are an Ortho shareholder:

Ortho Clinical Diagnostics Holdings plc

1001 Route 202

Raritan, New Jersey 08869

Attention: Michael A. Schlesinger, Executive Vice President, General Counsel and Secretary

(908) 218-8000

and

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

Attn: Bob Marese, President

(800) 322-2885

 

 

No other methods of communication from stockholders will be accepted. You may not use any electronic address provided in this joint proxy statement/prospectus or any related documents to communicate with Quidel or Ortho for any purposes other than those expressly stated.

 

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NOTE ON PRESENTATION

Ortho Financial Information

Historical financial information of Ortho included in this joint proxy statement/prospectus has been derived from (i) the audited consolidated financial statements of Ortho as of January 2, 2022 and January 3, 2021 and for each of the fiscal years ended January 2, 2022, January 3, 2021 and December 29, 2019 included in “Item 8. Financial Statements and Supplementary Data” of Ortho’s Annual Report on Form 10-K for the year ended January 2, 2022 filed with the SEC on March 8, 2022, and incorporated by reference into this joint proxy statement/prospectus.

The consolidated financial statements of Ortho are reported pursuant to U.S. generally accepted accounting principles (“U.S. GAAP”) and are presented in U.S. dollars.

Quidel Financial Information

Financial information of Quidel included in this joint proxy statement/prospectus has been derived from (i) the audited consolidated financial statements of Quidel as of December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021 included in “Item 8. Financial Statements and Supplementary Data” of Quidel’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 18, 2022, and incorporated by reference into this joint proxy statement/prospectus. Each of Quidel’s fiscal quarters ends on the Sunday closest to the end of the calendar quarter. For ease of reference, the calendar quarter end dates are used herein.

The consolidated financial statements of Quidel are reported pursuant to U.S. GAAP and are presented in U.S. dollars.

Certain totals in the tables included in this joint proxy statement/prospectus may not add up due to rounding.

 

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SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus and might not contain all of the information that is important to you. You should read carefully this entire joint proxy statement/prospectus, including the annexes, for a more complete understanding of the Combinations. In addition, Quidel and Ortho incorporate by reference into this joint proxy statement/prospectus important business and financial information about Quidel and Ortho, as applicable. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus for more information.

Information about the Parties to the Combinations

Quidel Corporation

Quidel commenced operations in 1979 and was originally incorporated as Monoclonal Antibodies, Inc. in California. In 1987, Quidel re-incorporated as Quidel Corporation in the State of Delaware. Quidel has a leadership position in the development, manufacturing and marketing of rapid diagnostic testing solutions. These diagnostic testing solutions are separated into four product categories: rapid immunoassay, cardiometabolic immunoassay, molecular diagnostic solutions and specialized diagnostic solutions. Quidel sells products directly to end users and distributors, in each case, for professional use in physician offices, hospitals, clinical laboratories, reference laboratories, urgent care clinics, leading universities, retail clinics, pharmacies and wellness screening centers, as well as for individual, non-professional, over-the-counter (“OTC”) use. Quidel markets its products through a network of distributors and a direct sales force. Quidel operates in one business segment that develops, manufactures and markets its products globally.

Quidel Shares are listed on Nasdaq under the symbol “QDEL.”

The principal executive offices of Quidel are located at 9975 Summers Ridge Road, San Diego, California 92121, United States of America, and its telephone number is (858) 552-1100.

Ortho Clinical Diagnostics Holdings plc

Ortho is a leading global provider of in-vitro diagnostics (“IVD”) solutions to the clinical laboratory and transfusion medicine communities. Ortho maintains a direct or indirect commercial presence in more than 130 countries and territories, with a direct presence in 36 countries. Ortho’s instruments, assays, reagents and other consumables are used in hospitals, laboratories, clinics, blood banks and donor centers worldwide. Ortho is globally operated with manufacturing facilities in the United States and the United Kingdom and with sales centers, administrative offices and warehouses located throughout the world.

Ortho is a public limited company organized under the laws of England and Wales. On February 1, 2021, Ortho closed the initial public offering of its ordinary shares, and Ortho Shares began trading on Nasdaq under the symbol “OCDX” on January 28, 2021. Prior to September 2021, Ortho was a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, Ortho was not subject to a number of corporate governance rules relating to the composition of its board of directors and certain committees. Following the sale of Ortho Shares by the Carlyle Stockholder in September 2021, Ortho no longer qualifies as a “controlled company.” As of March 4, 2022, the Carlyle Stockholder beneficially owned approximately 49.7% of the outstanding Ortho Shares and had the ability to nominate up to eight directors to the Ortho Board pursuant to the terms of Ortho’s articles of association. Following the closing of the Combinations, we expect that the Carlyle Stockholder will beneficially own approximately 18.7% of the outstanding Topco Shares. Pursuant to the Principal Stockholders Agreement, the Carlyle Stockholder will have the right to appoint two directors to the Topco Board while it holds at least 12% of the outstanding Topco Shares, one director while it holds at least 5% but less than 12% of the outstanding Topco shares and no directors once it holds less than 5% of the outstanding Topco Shares.

Concurrently with execution of the BCA, the Carlyle Stockholder delivered to Ortho and Quidel a deed of irrevocable undertaking to vote or procure votes in favor of the Ortho Scheme at the Ortho Court Meeting and the resolutions to be

 

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proposed at the Ortho General Meeting in respect of the 118,106,000 Ortho Shares beneficially owned by the Carlyle Stockholder, which represents approximately 49.79% of the Ortho Shares. Approval of the Ortho Scheme requires, assuming all of the Ortho Shares continue to be held directly by Cede & Co., as depositary nominee of The Depositary Trust Company, and GTU Ops, Inc., as nominee of Computershare Trust Company, N.A., a vote in favor of the Ortho Scheme by the majority of votes cast through each of these nominees. For more information, see “Stockholders Agreement / Deed of Irrevocable Undertaking.”

The principal executive offices of Ortho are located at 1001 Route 202, Raritan, New Jersey 08869, United States of America, and its telephone number at that address is (908) 218-8000.

As of January 2, 2022, Ortho had total indebtedness of approximately $2.0 billion, which is expected to remain outstanding following the closing of the Combinations. For more information, see “Risk Factors—Risks Relating to Ortho’s Business—Risks Relating to Ortho’s Indebtedness.” In addition, Ortho has assumed certain underfunded and unfunded net pension liabilities of approximately $40.0 million in relation to defined benefit pension plans, which will need to be satisfied as they mature. Ortho also has a history of net losses and for the fiscal years ended January 2, 2022, January 3, 2021 and December 29, 2019, Ortho recorded net losses of approximately $54.3 million, $211.9 million and $156.9 million, respectively. For more information, see “Risk Factors—Risks Relating to Ortho’s Business—General Risks Relating to Ortho.”

Coronado Topco, Inc.

Coronado Topco, Inc., a Delaware corporation (“Topco”), is a wholly owned subsidiary of Ortho. Ortho formed Topco on December 17, 2021, for the purpose of entering into the BCA. Pursuant to the BCA, after the Quidel Effective Time on the date on which the Ortho Scheme Order is duly filed with the Registrar (the “Scheme Effective Date”), Topco will become the parent company for the combined businesses of Quidel and Ortho.

The principal executive offices of Topco are located at c/o Ortho Clinical Diagnostics Holdings plc, 1001 Route 202, Raritan, New Jersey 08869, United States of America, and its telephone number at that address is (908) 218-8000.

Laguna Merger Sub, Inc.

Laguna Merger Sub, Inc., a Delaware corporation (“U.S. Merger Sub”), is a wholly owned subsidiary of Topco formed solely for the purpose of effecting the Combinations. U.S. Merger Sub will not conduct any business operations other than those incidental to its formation and in connection with the transactions contemplated by the BCA.

The principal executive offices of U.S. Merger Sub are located at c/o Ortho Clinical Diagnostics Holdings plc, 1001 Route 202, Raritan, New Jersey 08869, United States of America, and its telephone number at that address is (908) 218-8000.

Orca Holdco, Inc.

Orca Holdco, Inc., a Delaware corporation (“U.S. Holdco Sub”), is a wholly owned subsidiary of Topco formed solely for the purpose of effecting the Combinations. U.S. Holdco Sub will not conduct any business operations prior to closing of the Combinations other than those incidental to its formation and in connection with the transactions contemplated by the BCA.

The principal executive offices of U.S. Holdco Sub are located at c/o Ortho Clinical Diagnostics Holdings plc, 1001 Route 202, Raritan, New Jersey 08869, United States of America, and its telephone number at that address is (908) 218-8000.

Orca Holdco 2, Inc.

Orca Holdco 2, Inc., a Delaware corporation (“U.S. Holdco Sub 2”), is a wholly owned subsidiary of U.S. Holdco Sub. U.S. Holdco Sub 2 will not conduct any business operations prior to closing of the Combinations other than those incidental to its formation and in connection with the transactions contemplated by the BCA.

 

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The principal executive offices of U.S. Holdco Sub 2 are located at c/o Ortho Clinical Diagnostics Holdings plc, 1001 Route 202, Raritan, New Jersey, 08869, United States of America, and its telephone number at that address is +1 908 218-8000.

The Combinations and the Business Combination Agreement

The terms and conditions of the Combinations are contained in the BCA, a copy of which is attached as Annex A to this joint proxy statement/prospectus. Quidel and Ortho encourage you to read the entire BCA carefully because it is the principal document governing the Combinations. For more information on the Combinations, see the section entitled “The Combinations” of this joint proxy statement/prospectus.

Structure and Effective Times

The Combinations will be implemented in two main steps. First, pursuant to the Ortho Scheme, each Ortho Share will be acquired by a nominee of Topco (or, if such nominee holds the Ortho Shares today, transferred within the nominee), such that Ortho will become a wholly owned subsidiary of Topco. Second, immediately following the consummation of the Ortho Scheme, U.S. Merger Sub will merge with and into Quidel with Quidel surviving the merger as a wholly owned subsidiary of Topco. The Combinations will become effective sequentially (i) with the Ortho Scheme Order becoming effective on the Scheme Effective Date and at the time the Ortho Scheme Order is duly delivered to the Registrar, such time being the “Ortho Effective Time,” and (ii) with the certificate of merger relating to the Quidel Merger (the “Quidel Certificate of Merger”) becoming effective on the Scheme Effective Date immediately following the Ortho Effective Time (or such subsequent time as Ortho and Quidel shall agree and as shall be specified in the Quidel Certificate of Merger, and in no event prior to the Ortho Effective Time), such time being the “Quidel Effective Time.”

As a result of the Combinations, Ortho and Quidel will each become wholly owned subsidiaries of Topco, and Ortho shareholders and Quidel stockholders will become Topco stockholders. If the Combinations are completed, Ortho shareholders are expected to own approximately 38% of Topco and Quidel stockholders are expected to own approximately 62% of Topco, on a fully diluted basis, based on the respective capitalizations of Ortho and Quidel as of the date the parties entered into the BCA.

The closing of the Combinations will take place on the Scheme Effective Date (the “Closing Date”). Subject to the terms and conditions set forth in the BCA, on the Closing Date, and as soon as practicable after the Ortho Scheme Order is duly filed with the Registrar, Quidel will file the Quidel Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the Delaware General Corporation Law (the “DGCL”) and shall make all other filings or recordings required under the DGCL.

Merger Consideration

Ortho Shares Consideration

The BCA provides that, at the Ortho Effective Time, each Ortho Share, other than Ortho Shares held by Ortho in treasury, will be acquired by a nominee (or, if such nominee holds the Ortho Shares today, transferred within the nominee) on behalf and for the benefit of Topco in exchange for 0.1055 Topco Shares and $7.14 in cash.    

Quidel Shares Consideration

The BCA provides that, at the Quidel Effective Time, each Quidel Share, other than Quidel Shares held by Quidel, Ortho or U.S. Merger Sub, will be converted into the right to receive one Topco Share.

Treatment of Ortho Equity Awards

Stock Options

At the Ortho Effective Time, each Ortho Stock Option, whether vested or unvested, that is outstanding immediately prior to the Ortho Effective Time will cease to represent an option to acquire Ortho Shares and will be converted into

 

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(a) an option to purchase Topco Shares (each, a “Topco Stock Option”) on the same terms and conditions as were applicable to such Ortho Stock Option immediately prior to the Ortho Effective Time, except as adjusted by the BCA, (b) with respect to the portion of such Ortho Stock Option that is vested as of the Ortho Effective Time, the right to receive payment, in cash, equal to the cash consideration payable in respect of the Ortho Shares subject to the vested portion of such Ortho Stock Option and (c) with respect to the portion of such Ortho Stock Option that is not vested as of the Ortho Effective Time, the right to receive payment, in cash, equal to the cash consideration payable in respect of the Ortho Shares subject to the unvested portion of such Ortho Stock Option when it vests in accordance with its terms. See the section of this joint proxy statement/prospectus entitled “The Business Combination Agreement—Treatment of Ortho Equity Awards” for further details on the treatment of Ortho Stock Options.

Restricted Stock Units

At the Ortho Effective Time, each Ortho Equity Right that is outstanding immediately prior to the Ortho Effective Time will cease to relate to or represent a right to receive Ortho Shares and will be converted into a Topco Equity Right of the same type and on the same terms and conditions as were applicable to the corresponding Ortho Equity Right immediately prior to the Ortho Effective Time. Upon the subsequent vesting of any portion of such Ortho Equity Right, such portion of the Ortho Equity Right shall also be entitled to a right to receive payment, in cash, equal to the cash consideration in respect of the Ortho Shares subject to the unvested portion of the Ortho Equity Right when it vests in accordance with its terms. See the section of this joint proxy statement/prospectus entitled “The Business Combination Agreement—Treatment of Ortho Equity Awards” for further details on the treatment of Ortho Equity Rights.

Treatment of Quidel Equity Awards

Stock Options

At the Quidel Effective Time, each outstanding option to purchase Quidel Shares (a “Quidel Stock Option”) granted under the Quidel employee and director stock plans (each, a “Quidel Stock Plan” and together, the “Quidel Stock Plans”), whether vested or unvested, will cease to represent an option to acquire Quidel Shares and will automatically, without any action on the part of the holder thereof, be converted into a Topco Stock Option on the same terms and conditions (including applicable vesting conditions) applicable to such Quidel Stock Option under the applicable Quidel Stock Plan and award agreement in effect immediately prior to the Quidel Effective Time, except as adjusted by the BCA. See the section of this joint proxy statement/prospectus entitled “The Business Combination Agreement—Treatment of Quidel Equity Awards” for further details on the treatment of Quidel Stock Options.

Restricted Stock Units

At the Quidel Effective Time, each outstanding Quidel restricted stock unit (a “Quidel RSU”) granted under the Quidel Stock Plans will automatically, without any action on the part of the holder thereof, be converted into a restricted stock unit of Topco (a “Topco RSU”) on the same terms and conditions (including applicable vesting conditions) applicable to such Quidel RSU under the applicable Quidel Stock Plan and award agreement in effect immediately prior to the Quidel Effective Time. See the section of this joint proxy statement/prospectus entitled “The Business Combination Agreement—Treatment of Quidel Equity Awards” for further details on the treatment of Quidel RSUs.

Performance Restricted Stock Units

At the Quidel Effective Time, each outstanding Quidel performance restricted stock unit (a “Quidel PSU”) granted under a Quidel Stock Plan will automatically, without any action on the part of the holder thereof, be converted into a performance restricted stock unit of Topco (a “Topco PSU”) on the same terms and conditions (including applicable vesting conditions) applicable to such Quidel PSU under the applicable Quidel Stock Plan and award agreement in effect immediately prior to the Quidel Effective Time. See the section of this joint proxy statement/prospectus entitled “The Business Combination Agreement—Treatment of Quidel Equity Awards” for further details on the treatment of Quidel PSUs.

 

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Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors

The Ortho board of directors has determined, having been so advised by J.P. Morgan Securities LLC (“J.P. Morgan”), financial advisor to Ortho in connection with the financial terms of the Combinations, that the transactions contemplated by the BCA, including the Ortho Scheme, are fair to, and in the best interests of Ortho and its shareholders. At its meeting on December 22, 2021, the Ortho board of directors, among other things, (a) determined that the Ortho Scheme and the transactions contemplated by the BCA as a whole are in the best interests of Ortho, would further the business goals and strategies of Ortho and would promote the success of Ortho for the benefit of its shareholders as a whole, (b) approved the terms of the BCA, including but not limited to the Ortho Scheme, (c) directed that the Ortho Scheme be recommended to Ortho’s shareholders and, subject to receiving the vote of Ortho’s shareholders, approved and (d) approved the execution and delivery of the BCA by any director of Ortho.

In arriving at its conclusion, the Ortho board of directors consulted with Ortho’s management, legal, financial and other advisors, reviewed a significant amount of information and considered a number of factors in its deliberations. For a more detailed discussion of these factors, see the section entitled “The Combinations—Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors” of this joint proxy statement/prospectus.

Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors

The Quidel board of directors has determined that the Combinations, including the Quidel Merger and the other transactions contemplated by the BCA, are consistent with and will further the business strategies and goals of Quidel, and are in the best interests of Quidel and its stockholders. At its meeting on December 22, 2021, the Quidel board of directors (a) unanimously approved and declared advisable the BCA and the Combinations, including the Quidel Merger and the transactions contemplated by the BCA, and (b) determined, subject to its duties under applicable law, to recommend that the Quidel stockholders adopt the BCA and the transactions contemplated by the BCA, including the Quidel Merger.

In arriving at its conclusion, the Quidel board of directors consulted with Quidel’s management and its legal, financial and other advisors, reviewed a significant amount of information and considered a number of factors in its deliberations. For a more detailed discussion of these factors, see the section entitled “The Combinations—Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors” of this joint proxy statement/prospectus.

Opinion of J.P. Morgan Securities LLC as Financial Advisor to Ortho

Pursuant to an engagement letter, Ortho retained J.P. Morgan as its financial advisor in connection with the Combinations. At the meeting of the Ortho board of directors on December 22, 2021, J.P. Morgan rendered its oral opinion to the Ortho board of directors that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, the Ortho Scheme Consideration to be paid to the holders of Ortho Shares was fair, from a financial point of view, to such holders. J.P. Morgan confirmed its December 22, 2021 oral opinion by delivering its written opinion, dated as of December 23, 2021, to the Ortho board of directors that, as of such date, the Ortho Scheme Consideration was fair, from a financial point of view, to the holders of Ortho Shares.

The full text of the written opinion of J.P. Morgan, dated December 23, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, is attached as Annex E to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Holders of Ortho Shares are urged to read the opinion in its entirety. J.P. Morgan’s opinion was addressed to the Ortho board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the Combinations, was directed only to the Ortho Scheme Consideration to be paid in the Combinations and did not address any other aspect of the Combinations. J.P. Morgan expressed no opinion as to the fairness of the Ortho Scheme Consideration to the holders of any other class of securities, creditors or other constituencies of Ortho

 

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or as to the underlying decision by Ortho to engage in the Combinations. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any shareholder of Ortho as to how such shareholder should vote with respect to the Combinations or any other matter. For a description of the opinion that the Ortho board of directors received from J.P.  Morgan, see the section entitled “The Combinations—Opinion of J.P. Morgan Securities LLC as Financial Advisor to Ortho.”

Opinion of Perella Weinberg Partners LP as Financial Advisor to Quidel

Quidel retained Perella Weinberg Partners LP (“Perella Weinberg”) to act as its financial advisor in connection with the Combinations. Quidel selected Perella Weinberg based on its qualifications, expertise and reputation and its knowledge of the business and affairs of Quidel and the industry in which Quidel conducts its businesses. On December 22, 2021, Perella Weinberg rendered its oral opinion, subsequently confirmed in writing, to the Quidel board of directors that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth therein, the consideration of 0.1055 Topco Shares and $7.14 in cash per Ortho Share (collectively, the “Consideration”) to be paid by Quidel pursuant to the BCA was fair, from a financial point of view, to Quidel, taking into account the one Topco Share per Quidel Share to be received by the Quidel stockholders in the Combinations (the “Quidel Exchange Ratio”).

The full text of Perella Weinberg’s written opinion, dated December 22, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by Perella Weinberg in preparing its opinion, is attached hereto as Annex D and is incorporated herein by reference. Holders of Quidel Shares should read the opinion carefully and in its entirety. Perella Weinberg’s opinion does not address Quidel’s underlying business decision to enter into the BCA or the relative merits of the Combinations as compared with any other strategic alternative that may be available to Quidel. Perella Weinberg was not authorized to solicit, and did not solicit, indications of interest in a transaction with Quidel from any party. Perella Weinberg’s opinion was not intended to be and does not constitute a recommendation to any holder of Quidel Shares or Ortho Shares, or any other person, as to how such person should vote or otherwise act with respect to the Combinations or any other matter. Perella Weinberg’s opinion does not in any manner address the prices at which the Quidel Shares, the Ortho Shares or the Topco Shares will trade at any time. In addition, Perella Weinberg expressed no opinion as to the fairness of the Combinations to, or any consideration received in connection with the Combinations by, the holders of any other class of securities, creditors or other constituencies of Quidel. Perella Weinberg provided its opinion for the information and assistance of the Quidel board of directors in connection with, and for the purposes of its evaluation of, the Combinations. The summary of the written opinion of Perella Weinberg is qualified in its entirety by reference to the full text of the written opinion attached as Annex D to this joint proxy statement/prospectus. For a description of the opinion that the Quidel board of directors received from Perella Weinberg, see the section entitled “The Combinations—Opinion of Perella Weinberg Partners LP as Financial Advisor to Quidel.”

Material U.S. Tax Considerations

Material U.S. Federal Income Tax Considerations to U.S. Holders of Ortho Shares of the Ortho Scheme

The exchange of Ortho Shares for Topco Shares and cash pursuant to the Ortho Scheme, taken together with the Quidel Merger, will qualify as a transaction described in Section 351 of the Code. As a result, subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus, gain (but not loss) will be recognized on the exchange of Ortho Shares for a combination of cash and Topco Shares pursuant to the Ortho Scheme in an amount equal to the lesser of: (a) the excess of (i) the sum of the fair market value of the Topco Shares and the amount of cash received by such U.S. Holder over (ii) such U.S. Holder’s tax basis in its Ortho Shares, and (b) the amount of cash received by such U.S. Holder pursuant to the Ortho Scheme. The treatment of the cash received in lieu of fractional Topco Shares is discussed separately in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus.

 

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Material U.S. Federal Income Tax Considerations to U.S. Holders of Quidel Shares of the Quidel Merger

The exchange of Quidel Shares for Topco Shares pursuant to the Quidel Merger, taken together with the Ortho Scheme, will qualify as a transaction described in Section 351 of the Code. As a result, subject to the limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus, no gain or loss is expected to be recognized by the U.S. Holders of Quidel Shares as a result of the Quidel Merger.

Material U.S. Federal Income Tax Considerations to Non-U.S. Holders of Owning and Disposing of Topco Shares Received in the Combinations

Distributions to Non-U.S. Holders with respect to Topco Shares will generally be subject to U.S. federal withholding tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) to the extent such distributions are dividends for U.S. federal income tax purposes and are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States. Dividends that are effectively with the Non-U.S. Holder’s conduct of a trade or business within the United States will generally be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates and, for Non-U.S. Holders that are corporations, may be subject to an additional branch profits tax at a rate of 30% (or a lower rate specified by an applicable income tax treaty).

Subject to the exceptions and qualifications described in “Material U.S. Federal Income Tax Considerations,” a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of Topco Shares.

Please carefully review the information set forth in the section entitled “Material U.S. Federal Income Tax Considerations” of this joint proxy statement/prospectus for a discussion of certain U.S. federal income tax considerations relating to the Combinations. Please consult your tax advisors as to the specific tax consequences to you of the Combinations.

Material UK Tax Considerations

Subject to the comments below in relation to Section 137 of the UK Taxation of Chargeable Gains Act 1992 (the “TCGA”), the receipt of Topco Shares by an Ortho shareholder in respect of, and in proportion to, such shareholder’s Ortho Shares pursuant to the Combinations may potentially be treated as a scheme of reconstruction for the purposes of UK capital gains tax or corporation tax on chargeable gain (collectively, “CGT”). On that basis, an Ortho shareholder would not be treated as making a disposal of their Ortho Shares and, therefore, no liability to CGT would arise in respect of the receipt of Topco Shares by an Ortho shareholder pursuant to the Combinations. For the purposes of CGT, the Topco Shares received by an Ortho shareholder would be treated as the same asset, acquired at the same time and for the same amount, as the Ortho Shares in respect of which they are issued.

If the “rollover” treatment described above is not available (and no assurance is or can be given that such treatment will be available), an Ortho shareholder would be treated as having made a full disposal of their Ortho Shares and may, depending on such shareholder’s personal circumstances, be liable to pay CGT.

Under Section 137 of the TCGA, any Ortho shareholder who holds (when his, her or its relevant holding is aggregated with that of persons connected with him, her or it) more than 5% of, or of any class of, shares in or debentures of Ortho will not in any event receive the possible “rollover” treatment described above if the relevant transaction has not been effected for bona fide commercial reasons or if it forms part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the avoidance of liability to CGT or UK corporation tax. It is possible to apply for statutory clearance from HM Revenue & Customs (“HMRC”) under Section 138 of the TCGA confirming that this anti-avoidance provision does not apply. No application for clearance has been made to HMRC under Section 138 of the TCGA in respect of the receipt of Topco Shares pursuant to the Combinations. For the avoidance of doubt, please note that any Ortho shareholder who holds (when their relevant holding is aggregated with that of persons connected with them) 5% or less of, or of any class of, shares in or debentures of Ortho would not have to satisfy this anti-avoidance provision.

 

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For a further discussion of the material UK tax considerations relating to the Combinations, see the section entitled “Material UK Tax Considerations” of this joint proxy statement/prospectus. Please consult your tax advisors as to the specific tax consequences to you of the Combinations.

Delisting and Deregistration of Ortho Shares and Quidel Shares

Promptly after the Ortho Effective Time, the Ortho Shares will be delisted from Nasdaq and deregistered under the Exchange Act, and promptly after the Quidel Effective Time, the Quidel Shares will be delisted from Nasdaq and deregistered under the Exchange Act. Topco will be the successor to Quidel for purposes of Topco’s Nasdaq listing.

Litigation Relating to the Combinations

Since the announcement of the Combinations, three putative complaints have been filed. Two complaints have been filed by and purportedly on behalf of alleged Ortho shareholders: Rydberg v. Ortho Clinical Diagnostics Holdings plc, et al., No. 1:22-cv-01334 filed March 10, 2022 in the United States District Court for the Eastern District of New York (the “Rydberg Action”), and Bushansky v. Ortho Clinical Diagnostics Holdings plc, et al., No. 2:22-cv-01593 filed March 21, 2022 in the United States District Court for the District of New Jersey (the “Bushansky Action”). The third complaint has been filed by and purportedly on behalf of an alleged Quidel stockholder: Lahey v. Quidel Corporation, et al., No. 1:22-cv-02071 filed March 14, 2022 in the United States District Court for the Southern District of New York (the “Lahey Action”).

The Rydberg and Bushansky Actions name as defendants Ortho and the members of the Ortho board of directors. The Rydberg and Bushansky Actions generally allege, among other things, that the joint proxy statement/prospectus omits certain information regarding projections of Ortho, Quidel and Topco, the analysis performed by the financial advisor of Ortho, and potential conflicts of interest involving a financial advisor and Ortho’s officers and directors. The Rydberg and Bushanksy Actions seek, among other things, injunctive relief to prevent the Combinations from closing, damages if the Combinations close, and attorneys’ fees. Ortho believes these claims are entirely without merit and that the joint proxy statement/prospectus does not omit any material information about the Combinations.

The Lahey Action names as defendants Quidel and the members of the Quidel board of directors. The Lahey Action alleges, among other things, that the joint proxy statement/prospectus omits certain information regarding projections of Ortho, Quidel and Topco, the analyses performed by the financial advisors of Quidel and Ortho, and potential conflicts of interest involving a financial advisor and Quidel’s officers and directors. The Lahey Action seeks, among other things, injunctive relief to prevent the Combinations from closing, damages if the Combinations close, declaratory relief in the form of an updated joint proxy statement/prospectus, and attorneys’ fees. Quidel believes these claims are entirely without merit and that the joint proxy statement/prospectus does not omit any material information about the Combinations.

Interests of Quidel Officers and Directors in the Combinations

Quidel’s executive officers and directors have interests in the Combinations that are different from, or in addition to, the interests of Quidel stockholders generally. These interests may include, but are not limited to:

 

   

the treatment in the Combinations of equity awards held by Quidel directors and executive officers;

 

   

the continued engagement and/or employment, as applicable, of certain executive officers of Quidel;

 

   

the continued positions of certain directors of Quidel as directors on the board of directors of Topco; and

 

   

severance payments payable under existing employment and severance arrangements or arrangements that may be entered into in connection with the Combinations.

The Quidel board of directors was aware of these potentially differing interests and considered them, among other matters, in reaching its decision to adopt the BCA, approve the Combinations and to recommend that you vote in favor of the Merger Proposal, the Adjournment Proposal, the Election of Directors Proposal, the Independent Registered Public Accounting Firm Proposal, the Equity Incentive Plan Proposal and the ESPP Proposal and the approval (on a non-binding, advisory basis) for the Advisory Merger Compensation Proposal and the Advisory Executive Compensation Proposal.

 

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For further information with respect to arrangements between Quidel and its executive officers and directors, as well as arrangements for Topco director nominees, see the section entitled “Interests of Certain Persons in the Combinations (Quidel)” of this joint proxy statement/prospectus.

See the sections entitled “The Combinations—Background of the Combinations” and “The Combinations—Quidel Reasons for the Combinations and Recommendation of the Quidel Board of Directors” of this joint proxy statement/prospectus. Quidel stockholders should take these interests into account in deciding whether to vote “FOR” the Merger Proposal.

Interests of Ortho Officers and Directors in the Combinations

Ortho’s executive officers and directors have interests in the Ortho Scheme that are different from, or in addition to, the interests of Ortho shareholders generally. These interests may include, but are not limited to:

 

   

the continued engagement and/or employment, as applicable, of certain board members and executive officers of Ortho;

 

   

the continued positions of certain directors of Ortho as directors on the board of directors of Topco;

 

   

the treatment in the Combinations of equity awards and stock options held by Ortho directors and executive officers;

 

   

retention bonus awards, 40% of which will be payable at the closing of the Combinations and the remaining 60% of which will be payable on the first anniversary of the closing of the Combinations;

 

   

transaction bonuses payable upon the closing of the Combinations; and

 

   

severance payments payable under existing employment and severance arrangements or arrangements that may be entered into in connection with the Combinations.

The Ortho board of directors was aware of these potentially differing interests and considered them, among other matters, in reaching its decision to adopt the BCA, approve the Combinations and to recommend that you vote in favor of all proposals to be approved at the Ortho Shareholder Meetings.

For further information with respect to arrangements between Ortho and its executive officers and directors, as well as arrangements for Topco director nominees, see the section entitled “Interests of Certain Persons in the Combinations (Ortho)” of this joint proxy statement/prospectus.

See the sections entitled “The Combinations—Background of the Combinations” and “The Combinations—Ortho Reasons for the Combinations and Recommendation of the Ortho Board of Directors” of this joint proxy statement/prospectus. Ortho shareholders should take these interests into account in deciding whether to vote “FOR” the proposals to be approved at the Ortho Shareholder Meetings.

Indemnification and Insurance

Pursuant to the terms of the BCA, Ortho’s, Quidel’s and any of their subsidiaries’ directors, officers and employees will be entitled to certain ongoing indemnification and insurance coverage from Topco. For additional information, see the section entitled “The Business Combination Agreement—Indemnification and Insurance” of this joint proxy statement/prospectus.

Board of Directors and Management of Topco Following Completion of the Combinations

Effective as of the Ortho Effective Time, the Topco board of directors will consist of 12 members, comprised of: (i) eight directors designated by Quidel prior to closing, one of whom will be the Chief Executive Officer of Quidel immediately prior to the Quidel Effective Time, and at least four of whom will qualify as an “independent director” under applicable rules of Nasdaq, and (ii) four directors designated by Ortho prior to closing, at least two of whom will qualify as an “independent director” under the applicable rules of Nasdaq. Each of the members of the Topco board of directors designated by Ortho shall be reasonably acceptable to the nominating and corporate governance committee of the current Quidel board of directors.

 

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As of the Ortho Effective Time, the Topco board of directors will form the following board committees: the audit committee (the “Audit Committee”), the compensation committee (the “Compensation Committee”) and the nominating and corporate governance committee (the “Nominating and Governance Committee”). The Audit Committee, the Compensation Committee and the Nominating and Governance Committee will each be chaired by a member of the Topco board of directors designated by Quidel. The Audit Committee, the Compensation Committee and the Nominating and Governance Committee will each consist of one member of the Topco board of directors designated by Ortho and not less than two additional members of the Topco board of directors designated by Quidel, in each case, subject to applicable legal and regulatory requirements, and, in the case of the Ortho designees, such designees must be reasonably acceptable to the Topco board of directors. The charters for the Audit Committee, the Compensation Committee and the Nominating and Governance Committee will each be substantially similar to the charters for the respective committees of the Quidel board of directors that were in effect as of the date of the BCA.

Pursuant to the terms of the BCA, at the Ortho Effective Time, Douglas Bryant, current President and Chief Executive Officer of Quidel, will serve as Chair and Chief Executive Officer of Topco. Joseph M. Busky, current Chief Financial Officer of Ortho, will serve as Chief Financial Officer of Topco. Robert J. Bujarski, current Chief Operating Officer of Quidel, will serve as President and Chief Operating Officer of Topco. Michael S. Iskra, current Executive Vice President of Commercial Excellence & Strategy at Ortho, will serve as Chief Commercial Officer of Topco.

Acquisition Proposals

Pursuant to the terms of the BCA, each of Quidel and Ortho agrees that it will not, and agrees to cause its subsidiaries and its and their respective officers, directors and employees not to (and use reasonable best efforts to cause its and its subsidiaries’ other representatives not to), directly or indirectly:

 

   

initiate, solicit or knowingly facilitate or encourage (including by way of furnishing information) any inquiries, discussions or the making, submission or announcement of any proposal, request or offer that constitutes, or could reasonably be expected to lead to or result in, an Acquisition Proposal (as defined in the section entitled “The Business Combination Agreement—Acquisition Proposals” of this joint proxy statement/prospectus);

 

   

have any discussion with any person relating to an Acquisition Proposal (other than, solely with respect to an Acquisition Proposal that does not result from a material breach of this provision, to clarify the terms of an Acquisition Proposal submitted to such party after the date of the BCA for the sole purpose of enabling the Quidel board of directors or Ortho board of directors, as applicable, to evaluate such Acquisition Proposal for the purposes of this provision), engage in, continue or otherwise participate in any negotiations concerning an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal;

 

   

provide any non-public or confidential information or data or afford access to its books or records or directors, officers, employees or advisors, to any person in relation to an Acquisition Proposal;

 

   

terminate, amend, release, modify or fail to enforce any provision of, or grant any permission, waiver or request under, any standstill, confidentiality or similar agreement entered into by it or any of its subsidiaries (other than to the extent the Quidel board of directors or Ortho board of directors, as applicable, determines in good faith, after consultation with its financial and outside legal advisors, that failure to take any such actions under this provision would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law);

 

   

approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal;

 

   

approve or recommend, propose publicly to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, business combination agreement, option agreement or other similar agreement relating to any Acquisition Proposal;

 

   

take any action to make the provisions of any takeover law inapplicable to any transactions contemplated by any Acquisition Proposal; or

 

   

propose publicly or agree to do any of the foregoing related to any Acquisition Proposal.

 

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For more information, see the section entitled “The Business Combination Agreement—Acquisition Proposals” of this joint proxy statement/prospectus.

Conditions to the Combinations

The obligations of the parties to consummate the Combinations are subject to the satisfaction or waiver by the parties of the following conditions:

 

   

the Quidel Requisite Vote (as defined in the section entitled “The Business Combination Agreement—Acquisition Proposals” of this joint proxy statement/prospectus) shall have been obtained at the Quidel Stockholders’ Meeting and the Ortho Requisite Vote (as defined in the section entitled “The Business Combination Agreement—Acquisition Proposals” of this joint proxy statement/prospectus) shall have been obtained at the Ortho Shareholder Meetings;

 

   

the Topco Shares issuable in the Combinations shall have been authorized for listing on Nasdaq, subject to official notice of issuance;

 

   

no governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any order or law which is in effect and prohibits, restrains, prevents or makes illegal consummation of the transactions contemplated by the BCA;

 

   

the Registration Statement shall have been declared effective by the SEC under the Securities Act, and shall not be the subject of any stop order which is in effect suspending the effectiveness of the Registration Statement or any proceedings for that purpose;

 

   

certain antitrust, competition and foreign investment approvals designated by the parties shall have been obtained or any waiting periods thereunder shall have expired or been terminated; and

 

   

the Ortho Scheme Order shall have been sanctioned by the Court and the Ortho Scheme Order shall have been delivered to the Registrar with due confirmatory receipt thereof.

The obligations of Ortho and Topco to consummate the Combinations are subject to the satisfaction or waiver by Ortho of each of the following additional conditions:

 

   

certain representations and warranties of Quidel set forth in the BCA relating to the authorized capital stock of Quidel are true and correct (except for de minimis inaccuracies) as of the Closing Date as though made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date);

 

   

certain representations and warranties of Quidel set forth in the BCA regarding the authorization of and other matters relating to the capitalization of Quidel and the corporate authority of Quidel are true and correct in all material respects as of the Closing Date as though made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date);

 

   

each of the other representations and warranties of Quidel set forth in the BCA are true and correct (disregarding all qualifications or limitations as to “material,” “Material Adverse Effect” and words of similar import set forth therein) as of the date of the BCA and as of the Closing Date as though made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Quidel;

 

   

Quidel shall, in all material respects, have performed and complied with all obligations required to be performed or complied with by it under the BCA;

 

   

at any time after the date of the BCA there shall not have occurred and be continuing any effect that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Quidel; and

 

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Ortho shall have received a certificate dated as of the Closing Date executed by a duly authorized officer of Quidel as to the satisfaction of the conditions set forth above.

The obligations of Quidel to consummate the Combinations are subject to the satisfaction or waiver by Quidel of the following additional conditions:

 

   

certain representations and warranties of Ortho set forth in the BCA relating to the authorized capital stock of Ortho and Topco are true and correct (except for de minimis inaccuracies) as of the Closing Date as though made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date);

 

   

certain representations and warranties of Ortho set forth in the BCA regarding the authorization of and other matters relating to the capitalization of Ortho and the corporate authority of Ortho are true and correct in all material respects as of the Closing Date as though made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date);

 

   

each of the other representations and warranties of Ortho (and, as applicable, Topco, U.S. Merger Sub, U.S. Holdco Sub and U.S. Holdco Sub 2) set forth in the BCA are true and correct (disregarding all qualifications or limitations as to “material,” “Material Adverse Effect” and words of similar import set forth therein) as of the date of the BCA and as of the Closing Date as though made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Ortho;

 

   

Ortho shall, in all material respects, have performed and complied with all obligations required to be performed or complied with by it under the BCA;

 

   

at any time after the date of the BCA, there shall not have occurred and be continuing any effect that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Ortho; and

 

   

Quidel shall have received a certificate dated as of the Closing Date executed by a duly authorized officer of Ortho as to the satisfaction of the conditions set forth above.

Termination

The BCA may be terminated at any time prior to the Ortho Effective Time, whether before or after receipt of the Quidel Requisite Vote or Ortho Requisite Vote, as follows:

 

   

by the mutual written consent of Quidel and Ortho;

 

   

by either Quidel or Ortho, if the Ortho Effective Time has not occurred by September 22, 2022 (the “Termination Date”); provided, however, that such date shall automatically be extended to January 22, 2023, if the only conditions that have not been satisfied (other than those conditions that Quidel and Ortho have mutually agreed to waive, if and to the extent that such waiver is permitted by applicable law, and other than those conditions that by their nature can only be satisfied at or immediately prior to the Scheme Effective Date) are one or more of the conditions set forth in (a) clause (iii) under “Conditions to the Combinations” above to the extent relating to an approval required by clause (v) under “Conditions to the Combinations” above or (b) clause (v) under “Conditions to the Combinations” above; provided, further, that the right to terminate the BCA pursuant to this provision may not be exercised by any party whose failure to perform any material covenant or obligation under the BCA has been the primary cause of, or primarily resulted in, the failure of any such closing condition to be satisfied on or before the Termination Date;

 

   

by either Quidel or Ortho, if (a) the Quidel Requisite Vote has not been obtained at the Quidel Stockholders’ Meeting (or at any adjournment or postponement thereof) or (b) the Ortho Requisite Vote has not been obtained at the Ortho Shareholder Meetings (or at any adjournment or postponement thereof) or the Ortho Scheme is not sanctioned and the Ortho Scheme Order is not issued by the Court;

 

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by either Quidel or Ortho, if any governmental entity that must grant a required regulatory approval has denied such grant in writing and such denial has become final, binding and non-appealable, or any order permanently restraining, enjoining or otherwise prohibiting consummation of the Combinations has become final and non-appealable;

 

   

by Quidel, at any time prior to the receipt of the Ortho Requisite Vote, if the Ortho board of directors has effected an Ortho Change in Recommendation (whether or not in compliance with the applicable provisions of the BCA);

 

   

by Quidel, at any time prior to the Ortho Effective Time, if Ortho breaches or fails to perform any of its covenants or agreements contained in the BCA, or if any of the representations or warranties of Ortho contained therein fails to be true and correct, which breach or failure (a) would give rise to the failure of the conditions to Quidel’s obligation to close and (b) is not reasonably capable of being cured by Ortho by the Termination Date or is not cured by Ortho within 45 days after receiving written notice from Quidel, unless Quidel’s failure to perform any material covenant or obligation under the BCA has been the primary cause of, or primarily resulted in, the failure of any such closing condition to be satisfied on or before the Termination Date;

 

   

by Quidel, at any time prior to the receipt of the Quidel Requisite Vote, if the Quidel board of directors has effected a Quidel Change in Recommendation in compliance with the BCA in response to a Quidel All Cash Superior Proposal and in order for Quidel to enter into a merger agreement, acquisition agreement or other similar agreement that the Quidel board of directors has authorized and directed Quidel to execute with respect to such Quidel All Cash Superior Proposal; provided, however, that the BCA may not be so terminated unless (a) prior to or simultaneously with such termination the Quidel Termination Payment (as defined below) has been made in full to Ortho, and (b) simultaneously or promptly following such termination Quidel enters into such agreement;

 

   

by Ortho, at any time prior to the receipt of the Quidel Requisite Vote, if the Quidel board of directors has effected a Quidel Change in Recommendation (whether or not in compliance with the applicable provisions of the BCA);

 

   

by Ortho, at any time prior to the Ortho Effective Time, if Quidel breaches or fails to perform any of its covenants or agreements contained in the BCA, or if any of the representations or warranties of Quidel contained therein fails to be true and correct, which breach or failure (a) would give rise to the failure of the conditions to Ortho’s obligation to close and (b) is not reasonably capable of being cured by Quidel by the Termination Date or is not cured by Quidel within 45 days after receiving written notice from Ortho, unless Ortho’s failure to perform any material covenant or obligation under the BCA has been the primary cause of, or primarily resulted in, the failure of any such closing condition to be satisfied on or before the Termination Date; or

 

   

by Ortho, at any time prior to the receipt of the Ortho Requisite Vote, if the Ortho board of directors has effected an Ortho Change in Recommendation in compliance with the BCA in response to an Ortho All Cash Superior Proposal and in order for Ortho to enter into a merger agreement, acquisition agreement or other similar agreement that the Ortho board of directors has authorized and directed Ortho to execute with respect to such Ortho All Cash Superior Proposal; provided, however, that the BCA may not be so terminated unless (a) prior to or simultaneously with such termination, the Ortho Termination Payment (as defined below) has been made in full to Quidel, and (b) simultaneously or promptly following such termination, Ortho enters into such agreement.

For more information, see the section entitled “The Business Combination Agreement—Termination” of this joint proxy statement/prospectus.

Expenses and Termination Fees

All costs and expenses incurred in connection with the BCA and the Combinations and the other transactions contemplated by the BCA generally are to be paid by the party incurring such costs and expenses, but Quidel and Ortho will share equally all expenses associated with antitrust filings, the Nasdaq listing application and the filing, printing and mailing of this joint proxy statement/prospectus, the Registration Statement and other disclosure documents required in connection with the Combinations.

 

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Quidel must pay Ortho a termination fee of approximately $207.8 million (the “Quidel Termination Payment”) if:

 

   

the BCA is terminated by Ortho, as a result of a Quidel Change in Recommendation;

 

   

the BCA is terminated by either Quidel or Ortho if (i) the Combinations are not consummated by the Termination Date or (ii) the Quidel Requisite Vote has not been obtained at the Quidel Stockholders’ Meeting and, at the time of such termination, Ortho had a right to terminate as a result of a Quidel Change in Recommendation;

 

   

(a) an Acquisition Proposal for Quidel shall have been publicly announced or made publicly known or otherwise communicated or made known to Quidel management or the Quidel board of directors (or any third party shall have publicly announced, communicated or made known a bona fide intention, whether or not conditional, to make a proposal with respect to an Acquisition Proposal) and not withdrawn prior to termination or such vote to adopt the BCA, as applicable, at any time after the date of the BCA and (b) the BCA is subsequently terminated by Ortho as a result of Quidel’s breach of the BCA or is terminated by either Quidel or Ortho because (i) the Combinations are not consummated by the Termination Date or (ii) the Quidel Requisite Vote has not been obtained at the Quidel Stockholders’ Meeting and, at the time of such termination, Ortho had a right to terminate the BCA as a result of a failure by Quidel to perform any of its covenants or agreements contained in the BCA;

 

   

the BCA is terminated by Quidel in connection with a Quidel All Cash Superior Proposal, subject to certain additional conditions; or

 

   

(a) an Acquisition Proposal for Quidel has been publicly announced or made publicly known or otherwise communicated or made known to Quidel management or the Quidel board of directors (or any third party shall have publicly announced, communicated or made known a bona fide intention, whether or not conditional, to make a proposal with respect to an Acquisition Proposal) and not withdrawn prior to termination or such vote to adopt the BCA, as applicable, at any time after the date of the BCA, (b) the BCA is subsequently terminated by Quidel or Ortho because (i) the Combinations are not consummated by the Termination Date or (ii) the Quidel Requisite Vote has not been obtained at the Quidel Stockholders’ Meeting, and (c) within nine months of such termination, Quidel or any of its subsidiaries executes an acquisition agreement with respect to, or consummates, or approves or recommends to the Quidel stockholders to accept, any Acquisition Proposal (provided that, for purposes of this clause (c), the term “Acquisition Proposal” is defined as in the section entitled “The Business Combination Agreement—Acquisition Proposals” of this joint proxy statement/prospectus, except that each reference to “15% or more” in the definition of “Acquisition Proposal” and “Major Subsidiary” shall be deemed to be a reference to “50% or more”).

In the event that the BCA is terminated because the Quidel Requisite Vote has not been obtained at the Quidel Stockholders’ Meeting, and the Quidel Termination Payment is not otherwise payable, then Quidel shall pay, or cause to be paid, to Ortho by way of reimbursement its reasonable documented out-of-pocket costs, fees and expenses incurred in connection with its investigation, consideration, documentation, diligence and negotiations of the BCA and the transactions contemplated thereby, including all reasonable fees and expenses of Ortho’s and its subsidiaries’ respective representatives and financing sources.

In the event the Quidel Termination Payment is payable by Quidel to Ortho after the time Quidel pays any expense reimbursement to Ortho in accordance with the terms of the BCA, the amount of the Quidel Termination Payment payable by Quidel to Ortho will be reduced by the amount of such expense reimbursement actually paid to Ortho.

Ortho must pay Quidel a termination fee of approximately $46.9 million (the “Ortho Termination Payment”) if:

 

   

the BCA is terminated by Quidel, as a result of an Ortho Change in Recommendation;

 

   

the BCA is terminated by either Quidel or Ortho if (i) the Combinations are not consummated by the Termination Date or (ii) the Ortho Requisite Vote has not been obtained at the Ortho Shareholder Meetings or the Ortho Scheme is not sanctioned and the Ortho Scheme Order is not issued by the English Court and, at the time of such termination, Quidel had a right to terminate as a result of an Ortho Change in Recommendation;

 

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(a) an Acquisition Proposal for Ortho shall have been publicly announced or made publicly known or otherwise communicated or made known to Ortho management or the Ortho board of directors (or any third party shall have publicly announced, communicated or made known a bona fide intention, whether or not conditional, to make a proposal with respect to an Acquisition Proposal) and not withdrawn prior to termination or such vote to adopt the BCA, as applicable, at any time after the date of the BCA and (b) the BCA is subsequently terminated by Quidel as a result of Ortho’s breach of the BCA or is terminated by either Quidel or Ortho because (i) the Combinations are not consummated by the Termination Date or (ii) the Ortho Requisite Vote has not been obtained at the Ortho Shareholder Meetings or the Ortho Scheme is not sanctioned and the Ortho Scheme Order is not issued by the English Court and, at the time of such termination, Quidel had a right to terminate the BCA as a result of a failure by Ortho to perform any of its covenants or agreements contained in the BCA;

 

   

the BCA is terminated by Ortho in connection with an Ortho All Cash Superior Proposal, subject to certain additional conditions; or

 

   

(a) an Acquisition Proposal for Ortho has been publicly announced or made publicly known or otherwise communicated or made known to Ortho management or the Ortho board of directors (or any third party shall have publicly announced, communicated or made known a bona fide intention, whether or not conditional, to make a proposal with respect to an Acquisition Proposal) and not withdrawn prior to termination or such vote to adopt the BCA, as applicable, at any time after the date of the BCA, (b) the BCA is subsequently terminated by Quidel or Ortho because (i) the Combinations are not consummated by the Termination Date or (ii) the Ortho Requisite Vote has not been obtained at the Ortho Shareholder Meetings or the Ortho Scheme is not sanctioned and the Ortho Scheme Order is not issued by the English Court, and (c) within nine months of such termination, Ortho or any of its subsidiaries executes an acquisition agreement with respect to, or consummates, or approves or recommends to the Ortho shareholders to accept, any Acquisition Proposal (provided that, for purposes of this clause (c), the term “Acquisition Proposal” is defined as in the section entitled “The Business Combination Agreement—Acquisition Proposals” of this joint proxy statement/prospectus, except that each reference to “15% or more” in the definition of “Acquisition Proposal” and “Major Subsidiary” shall be deemed to be a reference to “50% or more”).

In the event that the BCA is terminated because the Ortho Requisite Vote has not been obtained at the Ortho Shareholder Meetings or the Ortho Scheme is not sanctioned and the Ortho Scheme Order is not issued by the English Court, and the Ortho Termination Payment is not otherwise payable, then Ortho shall pay, or cause to be paid, to Quidel by way of reimbursement its reasonable documented out-of-pocket costs, fees and expenses incurred in connection with its investigation, consideration, documentation, diligence and negotiations of the BCA and the transactions contemplated thereby, including all reasonable fees and expenses of Quidel’s and its subsidiaries’ respective representatives and financing sources.

In the event the Ortho Termination Payment is payable by Ortho to Quidel after the time Ortho pays any expense reimbursement to Quidel in accordance with the terms of the BCA, the amount of the Ortho Termination Payment payable by Ortho to Quidel will be reduced by the amount of such expense reimbursement actually paid to Quidel.

Regulatory Matters

Ortho and Quidel have agreed to use their reasonable best efforts to obtain all regulatory approvals required to complete the transactions contemplated by the BCA. These approvals include clearance under the HSR Act, and other merger control and foreign investment laws and regulations. Ortho and Quidel have completed, or will complete, the filing of applications and notifications to obtain the required regulatory approvals.

For more information, see the section entitled “The Combinations—Regulatory Matters” of this joint proxy statement/prospectus.

Security Ownership of Quidel Directors and Executive Officers

As of close of business on March 4, 2022, directors and executive officers of Quidel and their affiliates were entitled to vote 1,154,623 Quidel Shares, or approximately 2.7% of the Quidel Shares outstanding and entitled to vote on that date.

 

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For more information, see the section entitled “Security Ownership of Certain Quidel Beneficial Owners and Management” of this joint proxy statement/prospectus.

Security Ownership of Ortho Directors and Executive Officers

As of close of business on March 4, 2022, directors and executive officers of Ortho and their affiliates were entitled to vote 3,187,125 Ortho Shares, or approximately 1.3% of the Ortho Shares outstanding and entitled to vote on that date.

For more information, see the section entitled “Security Ownership of Certain Ortho Beneficial Owners and Management” of this joint proxy statement/prospectus.

No Appraisal Rights for Quidel Stockholders

Appraisal rights are statutory rights under the DGCL that enable stockholders who object to certain extraordinary transactions to demand that the corporation pay such stockholders the fair value of their shares instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. However, appraisal rights are not available in all circumstances. Appraisal rights are not available to Quidel stockholders in connection with the Combinations.

No Delaware Appraisal Rights for Ortho Shareholders

As shareholders in a UK public limited company, Ortho shareholders do not have appraisal rights similar to the statutory rights under the DGCL that enable shareholders who object to certain extraordinary transactions to demand that the corporation pay such shareholders the fair value of their shares instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction.

Listing of Topco Shares on Stock Exchanges

Topco Shares currently are not traded or quoted on a stock exchange or quotation system. The parties expect that, following completion of the Combinations, Topco Shares will be listed for trading on Nasdaq, and it is a condition to the parties’ obligations to effect the Combinations that the Topco Shares be authorized for listing on Nasdaq, subject to official notice of issuance.

Accounting Treatment

Topco will account for the Combinations using the acquisition method of accounting in accordance with ASC Topic 805. For further information, see the section entitled “Unaudited Pro Forma Combined Financial Information” of this joint proxy statement/prospectus.

Comparison of Rights of Stockholders of Quidel, Ortho and Topco

Quidel and Topco are organized under the laws of the State of Delaware. Ortho is organized under the laws of England and Wales. If the Combinations are consummated, the Quidel stockholders and Ortho shareholders will become stockholders of Topco. After giving effect to the Combinations, the rights of stockholders of Topco and the relative powers of the Topco board of directors will be governed by Delaware law and by the Topco Charter and Topco Bylaws. Each Topco Share will be issued pursuant to, and will carry with it the rights and obligations set forth in, the Topco Charter. As a result of differences between the respective organizational documents of Quidel, Ortho and Topco, and applicable governing law, there will be material differences between the rights of Quidel stockholders and Ortho shareholders before consummation of the Combinations and the rights of Topco stockholders after consummation of the Combinations.

For a full description of these differences, see the section entitled “Comparison of Rights of Stockholders of Quidel, Ortho and Topco” of this joint proxy statement/prospectus.

Please Read the Risk Factors

You should carefully read the detailed description of the risks associated with the Combinations and Topco’s operations following the Combinations described in the section entitled “Risk Factors” of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors associated with the businesses of both Quidel and Ortho that are included in, or contained in the documents that are incorporated by reference into, this joint proxy statement/prospectus, because these risks will relate to the business of Topco following the completion of the Combinations.

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains forward-looking statements within the meaning of federal securities laws concerning Quidel, Ortho, Topco, the Combinations and other matters that involve material risks, assumptions and uncertainties. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or other matters, based on the current beliefs of the management of Quidel and Ortho as well as assumptions made by, and information currently available to, the management of both companies. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or similar words, phrases or expressions, although some forward-looking statements are expressed differently. These statements are subject to various risks and uncertainties, many of which are outside the parties’ control. Factors that could cause actual results to differ materially from those discussed in these forward-looking statements include, but are not limited to, risks and uncertainties detailed in the section entitled “Risk Factors” of this joint proxy statement/prospectus, in Quidel’s periodic public filings with the SEC, including those discussed in the section entitled “Risk Factors” of Quidel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 18, 2022, and in Ortho’s periodic public filings with the SEC, including those discussed in the section entitled “Risk Factors” of Ortho’s Annual Report on Form 10-K for the fiscal year ended January 2, 2022 filed with the SEC on March 8, 2022, factors contained or incorporated by reference into such documents and in subsequent filings by Quidel and Ortho with the SEC, and the following factors:

 

   

global economic conditions;

 

   

the occurrence of any change, effect, event, occurrence, development, matter, state of facts, series of events or circumstances that could give rise to the termination of the BCA, including a termination of the BCA under circumstances that could require Quidel to pay a termination fee or expense reimbursement to Ortho or require Ortho to pay a termination fee or expense reimbursement to Quidel;

 

   

failure to obtain applicable regulatory or stockholder and shareholder approvals in a timely manner or otherwise, or being required to accept conditions that could reduce the anticipated benefits of the Combinations as a condition to obtaining regulatory approvals;

 

   

failure to satisfy other closing conditions to the Combinations;

 

   

risks associated with tax liabilities, or changes in U.S., UK or other tax laws or interpretations to which the companies are subject;

 

   

risks that the newly combined businesses will not be integrated successfully or that the cost, time and effort required to integrate the newly combined businesses may be greater than anticipated;

 

   

failure to effectively manage the newly combined businesses, or that Topco will not realize any or all of the estimated cost savings, value of certain tax assets, synergies and growth or that such benefits may take longer to realize than expected;

 

   

the inability to close the proposed transaction, the inability to achieve any or all of the anticipated benefits and synergies of Topco’s operations following the Combinations or the effects of the Combinations on Topco’s financial condition or operating results;

 

   

the inability of Quidel and Ortho to meet expectations regarding the timing, completion, accounting and tax treatments with respect to the Combinations;

 

   

reductions in customer or government spending, a slowdown in payments and changes in customer or government demand for products and services;

 

   

unanticipated changes relating to competitive factors in the industries in which the companies operate;

 

   

the ability to hire and retain personnel;

 

   

diversion of the attention of Quidel’s and Ortho’s management from ongoing business concerns;

 

   

limitations placed on the ability of Quidel and Ortho to operate their respective businesses by the BCA pending consummation of the Combinations;

 

   

operating costs, customer loss or business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, distributors or suppliers) being greater than expected in anticipation of, or, if consummated, following, the Combinations;

 

 

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the outcome of any legal proceedings that may be instituted against Quidel, Ortho and/or others relating to the Combinations;

 

   

the potential impact of the announcement or consummation of the Combinations on relationships with third parties, including customers, employees and competitors;

 

   

the ability to attract new customers and retain existing customers in the manner anticipated;

 

   

the impact of acquisitions that the companies have made or may make;

 

   

reliance on and integration of information technology (“IT”) systems;

 

   

changes in legislation or governmental regulations affecting the companies;

 

   

international, national or local economic, social or political conditions that could adversely affect Ortho, Quidel or their respective customers;

 

   

the market price for Topco Shares potentially being affected following the Combinations by factors that historically have not affected the market price for Quidel Shares or Ortho Shares when Quidel and Ortho were standalone companies;

 

   

conditions in the capital and credit markets;

 

   

risks associated with assumptions the parties make in connection with critical accounting estimates and legal proceedings;

 

   

the parties’ international operations, which are subject, among other factors, to the risks of currency fluctuations and foreign exchange controls;

 

   

the possibility that Topco could fail to realize the anticipated benefits and synergies expected from the Combinations, which could adversely affect its business, financial condition and operating results; and

 

   

the unaudited prospective financial information for Quidel and Ortho included in this joint proxy statement/prospectus reflects management estimates and may not prove to be reflective of actual future financial results.

The foregoing list of factors is not exhaustive and speaks only as of the date hereof. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the parties’ businesses, including those described in this joint proxy statement/prospectus, and information contained in or incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus for more information.

Nothing in this joint proxy statement/prospectus is intended, or is to be construed, as a profit projection or to be interpreted to mean that earnings per Ortho Share or Quidel Share for the current or any future financial years or those of Topco will necessarily match or exceed the historical published earnings per Ortho Share or Quidel Share, as applicable.

Except as otherwise required by applicable securities laws, Quidel, Ortho and Topco are under no obligation, and each expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.

 

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RISK FACTORS

Investing in Topco Shares involves risks, some of which are related to the Combinations. You should carefully consider the risks described below, as well as the other information included in or incorporated by reference into this joint proxy statement/prospectus, including the risk factors described in Quidel’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 18, 2022, and the risk factors described in Ortho’s Annual Report on Form 10-K for the year ended January 2, 2022, filed with the SEC on March 8, 2022. In particular, you should carefully consider the risks associated with each of the businesses of Ortho and Quidel because these risks will relate to the business of Topco following the completion of the Combinations. The business of Topco, as well as the respective businesses of Ortho and Quidel, as well as their respective financial condition or results of operations, could be materially adversely affected by any of these risks.

For information on where you can find the documents Quidel and Ortho have filed with the SEC and which are incorporated into this joint proxy statement/prospectus by reference, please see the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

Risks Relating to the Combinations

Completion of the Combinations is subject to certain conditions, some of which are outside of the parties’ control, and if these conditions are not satisfied or waived, the Combinations will not be completed.

The closing of the Combinations is subject to certain conditions, including (i) Quidel stockholder approval of the Merger Proposal and related matters, (ii) Ortho shareholder approval of the Ortho Scheme, amendments to the articles of association of Ortho and certain related matters, (iii) receipt of clearance from competition and foreign investment authorities in certain areas where the companies operate, including the expiration or termination of the waiting period under the HSR Act, (iv) the absence of any law, injunction, order or other judgment prohibiting the Combinations, (v) the effectiveness of the registration statement on Form S-4 for the Topco Shares, (vi) receipt of Nasdaq listing approval for the Topco Shares, (vii) subject to certain materiality exceptions, the accuracy of each of Ortho’s and Quidel’s representations and warranties in the BCA and performance by each of Ortho and Quidel of its obligations under the BCA and (viii) the sanctioning of the Ortho Scheme by the Court and the delivery of the order of the Court of sanctioning the Ortho Scheme to the Registrar.

The requirement to satisfy each of the foregoing conditions could delay completion of the Combinations for a significant period of time or prevent them from occurring at all. Any delay in completing the Combinations could cause Topco not to realize some or all of the benefits that the parties expect Topco to achieve if the Combinations are successfully completed within the expected timeframe. Further, as a condition to approving the Combinations, governmental authorities may impose conditions, terms, obligations or restrictions on the conduct of the parties’ business after the completion of the Combinations. Under the terms of the BCA, the parties are not required to proffer or negotiate, or agree or consent to, any action (including any contractual, behavioral or conduct restriction, agreement, commitment or remedy) that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect (as defined in the section entitled “The Business Combination Agreement—Representations and Warranties” of this joint proxy statement/prospectus) on Topco. Notwithstanding the provisions of the BCA, if the parties were to become subject to any conditions, terms, obligations or restrictions (whether because such conditions, terms, obligations and restrictions do not rise to the specified level of materiality or because the parties consent to their imposition), it is possible that such conditions, terms, obligations or restrictions will delay completion of the Combinations or otherwise adversely affect the parties’ business, financial condition, or operations. Furthermore, governmental authorities may require that the parties divest assets or businesses as a condition to the closing of the Combinations. If the parties are required to divest assets or businesses, there can be no assurance that Quidel and Ortho will be able to negotiate such divestitures expeditiously or on favorable terms or that the governmental authorities will approve the terms of such divestitures. There can be no assurance that the conditions to the closing of the Combinations will be satisfied or, where applicable, waived or that the Combinations will be completed.

In addition, if the Ortho Effective Time shall not have occurred by September 22, 2022 (subject to certain extension rights), either Ortho or Quidel may choose not to proceed with the Combinations. Quidel and Ortho may also terminate the BCA under certain specified circumstances, including, among others, in order to enter into an agreement with respect to an all-cash proposal (A) that is determined by the Quidel board of directors, in the case of a proposal to Quidel, or (B) that is determined by the Ortho board of directors, in the case of a proposal to Ortho, to be superior to the BCA, subject to the terms and conditions of the BCA (including a requirement that the terminating party pay a termination fee to the other party in accordance with the BCA).

 

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Some of the conditions to the Combinations and termination rights may be waived by Ortho or Quidel without resoliciting Ortho shareholder or Quidel stockholder approval.

Some of the conditions and termination rights set forth in the BCA may be waived by Ortho or Quidel, subject to certain limitations. If any conditions or termination rights are waived, Quidel and Ortho will evaluate whether amendment of this joint proxy statement/prospectus and resolicitation of proxies would be warranted. Subject to applicable law, if Quidel and Ortho determine that resolicitation of Quidel stockholders or Ortho shareholders is not warranted, the parties will have the discretion to complete the Combinations without seeking such additional Ortho shareholder approval or Quidel stockholder approval, as applicable. No action by the Quidel board of directors or Ortho board of directors with respect to the BCA may adversely affect the stockholders of Quidel or shareholders of Ortho, respectively, or affect the consideration to be received by the stockholders of Quidel or the shareholders of Ortho in the Combinations, unless their stockholders or shareholders, as applicable, approve such action.

Failure to complete the Combinations could negatively impact the stock price and the future business and financial results of Quidel and Ortho.

If the Combinations are not completed for any reason, including as a result of Quidel stockholders failing to adopt the BCA or Ortho shareholders failing to approve the Ortho Scheme, the ongoing businesses of Quidel and Ortho may be adversely affected and, without realizing any of the benefits of having completed the Combinations, Quidel and Ortho would be subject to a number of risks, including the following:

 

   

Quidel may be required, under certain circumstances, to pay Ortho a termination fee of approximately $208 million or reimburse Ortho for certain fees and expenses;

 

   

Ortho may be required, under certain circumstances, to pay Quidel a termination fee of approximately $47 million or reimburse Quidel for certain fees and expenses;

 

   

Quidel and Ortho are subject to certain restrictions on the conduct of their businesses prior to completing the Combinations, which may adversely affect their respective abilities to execute certain of their respective business strategies going forward if the Combinations are not completed;

 

   

Ortho and Quidel have incurred and will continue to incur significant costs and fees associated with the proposed Combinations, such as legal, accounting, financial advisor and printing fees, regardless of whether the Combinations are completed;

 

   

Ortho and Quidel may experience negative reactions from the financial markets, including negative impacts on their stock prices;

 

   

Ortho and Quidel may experience negative reactions from their customers, regulators and employees; and

 

   

matters relating to the Combinations (including integration planning) will require substantial commitments of time and resources by Ortho’s and Quidel’s management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Ortho and Quidel as independent companies.

In addition, Ortho and Quidel could be subject to litigation related to any failure to complete the Combinations or related to any enforcement proceeding commenced against Ortho, Quidel or Topco to perform its obligations under the BCA. If the Combinations are not completed, these risks may materialize and may adversely affect Ortho’s or Quidel’s respective businesses, financial conditions, financial results and stock price.

The number of Topco Shares that Quidel stockholders will receive in the Quidel Merger and that Ortho shareholders will receive in the Ortho Scheme is based on a fixed exchange ratio that will not be adjusted to reflect changes in the market value of Quidel Shares or Ortho Shares. Further, when Ortho shareholders and Quidel stockholders vote on the transactions contemplated in the BCA, they will not know the exact value of the Topco Shares that will be issued in connection with the Combinations. The value of the Topco Shares that Quidel stockholders and Ortho shareholders receive upon completion of the Combinations could vary based on changes in the market value of Quidel Shares and Ortho Shares from the time that the Quidel stockholders and Ortho shareholders vote to adopt the BCA or approve the Ortho Scheme, as applicable.

Upon completion of the Combinations, Quidel stockholders will be entitled to receive 1.00 Topco Share for each Quidel Share that they own and Ortho shareholders will be entitled to receive 0.1055 Topco Shares for each Ortho Share that they own. Immediately following consummation of the Combinations, it is expected that former Ortho shareholders will own

 

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approximately 38% of Topco and former Quidel stockholders will own approximately 62% of Topco, on a fully diluted basis, based on the respective capitalizations of Ortho and Quidel as of the date the parties entered into the BCA. The market value of the Topco Shares that Quidel stockholders will be entitled to receive when the Quidel Merger is completed and that Ortho shareholders will be entitled to receive when the Ortho Scheme is completed could vary significantly due to a change in the market value of Quidel Shares or Ortho Shares from the date the BCA was entered into, the date of this joint proxy statement/prospectus or the date of the Quidel Stockholders’ Meeting or the Ortho General Meeting. Because the applicable exchange ratios will not be adjusted to reflect any changes in the market value of Quidel Shares or Ortho Shares, such market price fluctuations may affect the relative value that Quidel stockholders will receive at the Quidel Effective Time and that Ortho shareholders will receive at the Ortho Effective Time. Share price changes may result from a variety of factors, including changes in the business, operations or prospects of Quidel or Ortho, market assessments of the likelihood that the Combinations will be completed, market assessments of the value of Topco, the timing of the Combinations, regulatory considerations, governmental actions, general market and economic conditions, legal proceedings and other factors, each of which may be beyond the control of Topco, Quidel or Ortho. Prior to making any investment decision, stockholders are urged to obtain updated market quotations for Quidel Shares and Ortho Shares.

The trading of Topco Shares after completion of the Combinations may cause the market price of Topco Shares to fall.

Following completion of the Combinations, Topco Shares are expected to be publicly traded on Nasdaq, enabling former Quidel stockholders and former Ortho shareholders to sell the Topco Shares that they receive in the Combinations. Such sales of Topco Shares may take place promptly following the Combinations and could have the effect of decreasing the market price for Topco Shares owned by former Quidel stockholders and Ortho shareholders below the market price of the Quidel Shares or Ortho Shares owned by such Quidel stockholders and Ortho shareholders, respectively, prior to completion of the Combinations.

The Combinations may be completed even though material adverse changes subsequent to the announcement of the Combinations, such as industry-wide changes or other events, may occur.

In general, either Quidel or Ortho can, on the terms and conditions set forth in the BCA, refuse to complete the Combinations if there is a material adverse change affecting the other party. However, some types of changes do not permit either Quidel or Ortho to refuse to complete the Combinations, even if such changes would have a material adverse effect on either of the parties. For example, a worsening of Quidel’s or Ortho’s financial condition or results of operations due to a decrease in commodity prices or general economic conditions, except to the extent affecting Quidel or Ortho, as applicable, in a disproportionate manner relative to other businesses operating in the industries in which they operate, or a drop in Quidel’s or Ortho’s stock price, would not give the other party the right to refuse to complete the Combinations. If adverse changes occur that affect either party, but the parties are still required to complete the Combinations, the share price of Topco Shares and the business and financial results of Topco may suffer.

The BCA contains provisions that restrict Ortho’s and Quidel’s ability to pursue alternatives to the Combinations and, in specified circumstances, would require Ortho or Quidel to pay the other party a termination fee.

Under the BCA, each of Ortho, Quidel and Topco is restricted, subject to certain exceptions, from soliciting, initiating, knowingly encouraging or facilitating, discussing or negotiating, or furnishing non-public information with regard to, any inquiry, proposal or offer for a competing acquisition proposal from any person or entity. If any party receives a competing acquisition proposal and such party’s board of directors determines (after consultation with such party’s financial advisors and outside legal counsel) that such proposal constitutes a Quidel All Cash Superior Proposal or an Ortho All Cash Superior Proposal, as the case may be, and the board of directors makes a change in recommendation in response to such proposal to the stockholders or shareholders of such company, Quidel, on the one hand, or Ortho, on the other hand, would be entitled, upon complying with certain requirements, to terminate the BCA, subject to the terms of the BCA. Under such circumstances, Quidel may be required to pay Ortho a termination fee of approximately $208 million, Ortho may be required to pay Quidel approximately $47 million, or either party may be required to reimburse the other party for its out-of-pocket expenses incurred in connection with the BCA. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of either company from considering or proposing such an acquisition, even if such third party was prepared to enter into a transaction that would be more favorable to one of the companies and its respective stockholders or shareholders than the Combinations. See the sections entitled “The Business Combination Agreement—Acquisition Proposals,” “The Business Combination Agreement—Termination” and “The Business Combination Agreement—Expenses and Termination Fees” of this joint proxy statement/prospectus.

 

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Quidel and Ortho will incur significant transaction and merger-related costs in connection with the Combinations.

Ortho and Quidel have incurred and expect to incur a number of non-recurring direct and indirect costs associated with the Combinations. These costs and expenses include fees paid to financial, legal and accounting advisors, severance and other potential employment-related costs, including payments that may be made to certain Ortho and Quidel executives, filing fees, printing expenses and other related charges. Some of these costs are payable by Ortho and Quidel regardless of whether the Combinations are completed. There are also processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Combinations and the integration of the two companies’ businesses. While both Ortho and Quidel have assumed that a certain level of expenses would be incurred in connection with the Combinations and the other transactions contemplated by the BCA and continue to assess the magnitude of these costs, there are many factors beyond their control that could affect the total amount or the timing of the integration and implementation expenses.

There may also be additional unanticipated significant costs in connection with the Combinations that Ortho and Quidel may not recoup. These costs and expenses could reduce the realization of efficiencies and strategic benefits Ortho and Quidel expect Topco to achieve from the Combinations. Although Ortho and Quidel expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

In connection with the Combinations, Quidel, Ortho and/or Topco may be required to take write-downs or write-offs, restructuring and impairment or other charges that could negatively affect the business, assets, liabilities, prospects, outlook, financial condition and results of operations of Quidel, Ortho and/or Topco.

Although Quidel and Ortho have conducted extensive due diligence in connection with the Combinations and related transactions, they cannot assure you that this diligence revealed all material issues that may be present, that it would be possible to uncover all material issues through a customary amount of due diligence or that factors outside of Quidel’s and Ortho’s control will not later arise. Even if Quidel’s and Ortho’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Quidel’s and Ortho’s preliminary risk analysis. Further, as a result of the Combinations, purchase accounting and the proposed operation of Topco going forward, Quidel, Ortho and/or Topco may be required to take write-offs or write-downs, restructuring and impairment or other charges. As a result, Quidel, Ortho and/or Topco may be forced to write-down or write-off assets, restructure its operations or incur impairment or other charges that could negatively affect the business, assets, liabilities, prospects, outlook, financial condition and results of operations of Quidel, Ortho and/or Topco.

After the Combinations, Quidel stockholders and Ortho shareholders will have a reduced ownership and voting interest in Topco than they currently have in Quidel and Ortho respectively, and will exercise less influence over Topco’s management.

Immediately following consummation of the Combinations, it is expected that former Ortho shareholders will own approximately 38% of Topco and former Quidel stockholders will own approximately 62% of Topco, on a fully diluted basis, based on the respective capitalizations of Ortho and Quidel as of the date the parties entered into the BCA. Consequently, former Quidel stockholders will have a reduced ownership of Topco than they currently have of Quidel and will exercise less influence over the management and policies of Topco than they currently have over the management and policies of Quidel. Former Ortho shareholders will have a reduced ownership of Topco than they currently have of Ortho and will exercise less influence over the management and policies of Topco than they currently have over the management and policies of Ortho.

In addition, pursuant to the terms of the BCA, following the closing of the Combinations, the Topco board of directors will initially be comprised of 12 directors, consisting of eight individuals designated by Quidel, expected to consist of Messrs. Bryant, Buechler, Michael, Strobeck, Widder and Wilkins and Mses. Polan and Rhoads, each of whom, other than Mr. Bryant, qualifies as an “independent director” under the applicable rules of Nasdaq, and four individuals designated by Ortho prior to closing, at least two of whom will qualify as an “independent director” under the applicable rules of Nasdaq. Following the closing of the Combinations, (i) Douglas Bryant, the current President and Chief Executive Officer of Quidel, will serve as Chair and Chief Executive Officer of Topco, (ii) Robert Bujarski will serve as President and Chief Operating Officer of Topco, (iii) Joseph Busky will serve as Chief Financial Officer of Topco, (iv) Michael Iskra will serve as Chief Commercial Officer of Topco and (v) each of the committees of the Topco board of directors will consist of one director designated by Ortho (who is reasonably acceptable to the Topco board of directors) and not less than two additional directors designated by Quidel.

 

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Ortho and Quidel may have difficulty attracting, motivating and retaining executives and other key employees due to uncertainty associated with the Combinations.

Topco’s success after completion of the Combinations will depend in part upon the ability of Topco to retain key employees of Ortho and Quidel. Competition for qualified personnel can be intense. Current and prospective employees of Ortho or Quidel may experience uncertainty about the effect of the Combinations, which may impair Ortho’s and Quidel’s ability to attract, retain and motivate key management, sales, marketing, manufacturing, technical and other personnel prior to and following the Combinations. Employee retention may be particularly challenging during the pendency of the Combinations, as employees of Ortho and Quidel may experience uncertainty about their future roles with Topco.

In addition, pursuant to change in control and/or severance provisions in Ortho’s severance schemes and executive employment agreements, as well as severance provisions in Quidel’s executive employment agreements, certain key employees of Quidel and Ortho are entitled to receive severance payments upon certain qualifying terminations of their employment. Certain key Quidel and Ortho employees potentially could terminate their employment following specified circumstances set forth in the applicable executive severance scheme or employment agreement, including certain changes in such key employees’ title, status, authority, duties, responsibilities or compensation, and be entitled to receive severance. Such circumstances could occur in connection with the Combinations as a result of changes in roles and responsibilities.

While Quidel and Ortho may employ the use of certain retention programs, there can be no guarantee that they will prove to be successful. If key employees of Ortho or Quidel depart, the integration of the companies may be more difficult and Topco’s business following the Combinations may be harmed. Furthermore, Topco may be required to incur significant costs in identifying, hiring, training and retaining replacements for departing employees and may lose significant expertise and talent relating to the businesses of Ortho or Quidel, which may adversely affect Topco’s ability to realize the anticipated benefits of the Combinations. In addition, there could be disruptions to or distractions for the workforce and management associated with activities of labor unions or works councils or integrating employees into Topco. Accordingly, no assurance can be given that Topco will be able to attract or retain key employees of Ortho and Quidel to the same extent that those companies have been able to attract or retain their own employees in the past.

Ortho’s and Quidel’s business relationships may be subject to disruption due to uncertainty associated with the Combinations.

Companies with which Ortho or Quidel do business may experience uncertainty associated with the Combinations, including with respect to current or future business relationships with Ortho, Quidel or Topco. Ortho’s and Quidel’s business relationships may be subject to disruption as customers, distributors, suppliers, vendors and others may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than Ortho, Quidel or Topco. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of Topco, including an adverse effect on Topco’s ability to realize the anticipated benefits of the Combinations. The risk and adverse effect of such disruptions could be exacerbated by a delay in completion of the Combinations.

The COVID-19 pandemic may adversely affect Quidel’s and Ortho’s ability to timely consummate the Combinations.

COVID-19 and the various precautionary measures attempting to limit its spread taken by many governmental authorities worldwide have had a severe effect on global markets and the global economy. The extent to which the COVID-19 pandemic impacts Quidel’s and Ortho’s respective business operations will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, new information that may emerge concerning the severity of COVID-19, the nature and extent of governmental actions taken to contain COVID-19 or treat its impact, the availability of effective treatments and vaccines, the ultimate duration of the pandemic and how quickly and to what extent normal economic and operating conditions can resume. COVID-19 and official actions in response to it have made it more challenging for Quidel, Ortho and relevant third parties to adequately staff their respective businesses and operations, and may cause delay in the companies’ ability to obtain the relevant approvals for the consummation of the Combinations. The spread of COVID-19 has caused Quidel and Ortho to modify their business practices (including employee travel, employee work locations and physical participation in meetings, events and conferences), and each of Quidel and Ortho may take further actions as may be required by government authorities or that Quidel or Ortho determines are in the best interests of their employees, customers, partners, and suppliers. Such measures may not mitigate fully the risks posed by the virus, impairing Quidel’s and Ortho’s ability to perform critical functions.

 

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In response to increased COVID-19 testing demand, Quidel is continuing to rapidly and significantly expand its manufacturing capacity, including expanding and scaling its infrastructure to support existing and anticipated COVID-19 testing demand and commercial activities. This rapid expansion has placed and may continue to place significant strain on Quidel’s management, personnel, operations, systems and financial resources. Failure to successfully manage this expansion, including due to inefficiencies in implementing such expansion or higher costs for materials, technology, equipment and human capital during the intensity of the COVID-19 pandemic, could negatively affect Quidel’s or Topco’s operating results.

The respective opinions of Ortho’s and Quidel’s financial advisors will not reflect changes in circumstances between the signing of the BCA and the completion of the Combinations.

The Ortho board of directors and the Quidel board of directors received opinions from their respective financial advisors in connection with their determinations to approve the BCA, the Combinations and all other transactions contemplated by the BCA. However, Ortho and Quidel do not expect to receive updated opinions from their respective financial advisors prior to completion of the Combinations, and thus, the opinions do not speak as of the time of the Ortho Shareholder Meetings, the Quidel Stockholders’ Meeting or completion of the Combinations or as of any date other than the date of such opinions. Changes in the operations and prospects of Ortho or Quidel, general market and economic conditions and other factors that may be beyond the control of Ortho or Quidel and on which the financial advisors’ opinions were based may significantly affect the relative value of Ortho and Quidel and the prices of Ortho Shares or Quidel Shares by the time the Combinations are completed. As a result, the opinions will not address the fairness, from a financial point of view, of the Ortho Scheme Consideration to be received by Ortho shareholders or to be paid by Quidel, as applicable, at the times of such meetings or the time the Combinations are completed. For a description of the opinions that Ortho and Quidel received from their respective financial advisors, see the sections entitled “The Combinations—Opinion of J.P. Morgan Securities LLC as Financial Advisor to Ortho” and “The Combinations—Opinion of Perella Weinberg Partners LP as Financial Advisor to Quidel” of this joint proxy statement/prospectus.

Quidel’s and Ortho’s executive officers and directors have interests in the Combinations that may be different from the interests of Quidel stockholders or Ortho shareholders, respectively, generally.

When considering the recommendation of the Quidel board of directors that Quidel stockholders approve the Merger Proposal, Quidel stockholders should be aware that directors and executive officers of Quidel have certain interests in the Combinations that may be different from or in addition to the interests of Quidel stockholders generally. These interests include, but are not limited to, the treatment of Quidel equity awards in the Quidel Merger, severance protection provided for in compensation arrangements of certain executives, and potential changes to their roles and responsibilities with Topco following the completion of the Combinations. The Quidel board of directors was aware of these interests and considered them, among other things, in evaluating and negotiating the BCA and the Combinations and in recommending that the Quidel stockholders approve the Merger Proposal.

When considering the recommendation of the Ortho board of directors that Ortho shareholders approve the Ortho Scheme, Ortho shareholders should be aware that directors and executive officers of Ortho have certain interests in the Combinations that may be different from or in addition to the interests of Ortho shareholders generally. These interests include, but are not limited to, the treatment of Ortho equity compensation awards in the Ortho Scheme. The Ortho board of directors was aware of these interests and considered them, among other things, in evaluating and negotiating the BCA and the Combinations and in recommending that the Ortho shareholders approve the Ortho Scheme.

See the sections entitled “The Combinations—Background of the Combinations,” “Interests of Certain Persons in the Combinations” and “The Business Combination Agreement—Indemnification and Insurance” of this joint proxy statement/prospectus.

Completion of the Combinations may trigger change-in-control or other provisions in certain agreements that Quidel or Ortho is party to.

The completion of the Combinations may trigger change-in-control or other provisions in certain agreements that Quidel or Ortho is party to. If Quidel or Ortho, as applicable, is unable to negotiate waivers of those provisions, the respective counterparties may exercise their rights and remedies under the applicable agreements, including in some instances potentially terminating the agreements or seeking monetary damages. Even if Quidel or Ortho, as applicable, is able to negotiate waivers, the respective counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to the combined business.

 

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If the Quidel Merger does not qualify as part of an exchange described under Section 351 of the Code or a “reorganization” within the meaning of Section 368(a) of the Code, U.S. stockholders of Quidel may be required to pay substantial U.S. federal income taxes. Likewise, if the Ortho Scheme does not qualify as part of an exchange described under Section 351 of the Code, U.S. shareholders of Ortho may be required to pay substantial U.S. federal income taxes.

For U.S. federal income tax purposes, the Combinations, taken together as a single integrated transaction, are intended to qualify as an exchange described under Section 351 of the Code and the payment of cash pursuant to the Combinations is intended to be treated as a payment pursuant to Section 351(b) of the Code (the “Intended Tax Treatment”). The Quidel Merger is also intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. All parties intend to report the Combinations consistent with the Intended Tax Treatment. However, neither Quidel nor Ortho intends to obtain a ruling from the IRS with respect to the tax consequences of the Combinations. If the IRS or a court determines that the Quidel Merger does not qualify as part of an exchange under Section 351 of the Code and does not qualify as a “reorganization” under Section 368(a) of the Code, a U.S. stockholder of Quidel would generally recognize taxable gain or loss upon the exchange of Quidel Shares for Topco Shares pursuant to the Combinations. If the IRS or a court determines that the Ortho Scheme does not qualify as part of an exchange under Section 351 of the Code, a U.S. shareholder of Ortho would generally recognize taxable gain or loss upon the exchange of its Ortho Shares for Topco Shares and cash pursuant to the Combinations (whereas if the Ortho Scheme qualifies as part of an exchange under Section 351 of the Code, the U.S. shareholder of Ortho would only recognize taxable gain on the exchange with respect to the cash portion of the consideration). See the section entitled “Material U.S. Federal Income Tax Considerations.”

Risks Relating to Topco Following Completion of the Combinations

In addition to the risks described below, you should carefully consider the risks discussed under “—Risks Relating to Quidel’s Business” and “—Risks Relating to Ortho’s Business,” as these risks will be applicable to the business of Topco following the completion of the Combinations.

The failure to integrate successfully the businesses of Quidel and Ortho in the expected timeframe would adversely affect Topco’s future business and financial performance following the Combinations.

The combination of two independent companies is a complex, costly and time-consuming process. As a result, the combined company will be required to devote significant management attention and resources to integrate the business practices and operations of Ortho and Quidel. The integration process may disrupt the business of either or both of the companies and, if implemented ineffectively, could preclude realization of the full benefits expected by Ortho and Quidel from the Combinations. The failure of Topco to meet the challenges involved in successfully integrating the operations of Ortho and Quidel or otherwise to realize the anticipated benefits of the Combinations could cause an interruption of the activities of Topco and could seriously harm its results of operations. In addition, the overall integration of the two companies may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships and diversion of management’s attention, and may cause Topco’s stock price to decline. The difficulties of combining the operations of Quidel and Ortho include, among others:

 

   

managing a significantly larger company;

 

   

coordinating geographically separate organizations, including extensive international operations;

 

   

the potential diversion of management’s focus and resources from other strategic opportunities and from operational matters;

 

   

performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the Combinations and integrating the companies’ operations;

 

   

aligning and executing the strategy of Topco;

 

   

retaining existing customers and attracting new customers;

 

   

maintaining employee morale and retaining key management and other employees;

 

   

the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, systems, procedures and policies;

 

   

integrating two unique business cultures, which may prove to be incompatible;

 

   

the possibility of faulty assumptions underlying expectations regarding the integration process;

 

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consolidating corporate and administrative infrastructures and eliminating duplicative operations;

 

   

coordinating distribution and marketing efforts;

 

   

integrating IT, communications and other systems;

 

   

changes in applicable laws and regulations;

 

   

managing tax costs or inefficiencies associated with integrating the operations of Quidel and Ortho;

 

   

unforeseen expenses or delays associated with the Combinations; and

 

   

taking actions that may be required in connection with obtaining regulatory approvals.

Many of these factors will be outside of Topco’s control and any one of them could result in increased costs, decreased revenues and diversion of management’s time and energy, which could materially impact the combined company’s business, financial condition and results of operations. In addition, even if the operations of Ortho and Quidel are integrated successfully, Topco may not realize the full benefits of the Combinations, including the synergies, cost savings or sales or growth opportunities that Ortho and Quidel expect. These benefits may not be achieved within the anticipated timeframe, or at all. As a result, Ortho and Quidel cannot assure their respective shareholders and stockholders that the combination of Ortho and Quidel will result in the realization of the full benefits anticipated from the Combinations.

The synergies attributable to the Combinations may vary from expectations.

Topco may fail to realize the anticipated benefits and synergies expected from the Combinations, which could adversely affect its business, financial condition and operating results. The success of the Combinations will depend, in significant part, on Topco’s ability to successfully integrate the businesses of Quidel and Ortho and realize the anticipated strategic benefits and synergies from the Combinations. Quidel and Ortho believe that the combination of the two businesses will complement each party’s strategy by providing a balanced and diversified product portfolio, operational efficiencies, supply chain optimization, complementary geographic footprints, product development synergies and cash flow and margin enhancement opportunities. However, achieving these goals requires, among other things, realization of the targeted cost synergies expected from the Combinations. The anticipated benefits of the Combinations and actual operating, technological, strategic and revenue opportunities may not be realized fully or at all, or may take longer to realize than expected. If Topco is not able to achieve these objectives and realize the anticipated benefits and synergies expected from the Combinations within the anticipated timeframe or at all, Topco’s business, financial condition and operating results may be adversely affected.

The future results of Topco will suffer if Topco does not effectively manage its expanded operations following the Combinations.

Following the Combinations, the size of the business of Topco will increase significantly beyond the current size of either Quidel’s or Ortho’s business. Topco’s future results depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurance that Topco will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the Combinations.

Business issues currently faced by Quidel or Ortho may be imputed to the operations of the other.

To the extent either Quidel or Ortho currently has, or is perceived by customers to have, operational challenges, such as service performance, safety issues or workforce issues, those challenges may raise concerns by existing customers of the other company following the Combinations, which may limit or impede Topco’s future ability to obtain additional business from those customers.

Topco will be subject to certain risks relating to Ortho’s indebtedness.

In connection with the consummation of the Combinations, Ortho’s current net debt of $2.0 billion is expected to continue to be outstanding, and as a result, Topco will be subject to certain risks related to this indebtedness. For a discussion of the risks relating to this indebtedness and the related debt instruments, including the requirement to comply with certain covenants that may restrict Topco from realizing the anticipated benefits and synergies expected from the Combinations, see “—Risks Relating to Ortho’s Business—Risks Relating to Ortho’s Indebtedness.”

 

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No trading market currently exists for Topco Shares.

Prior to the Combinations, no trading market exists for Topco Shares. Upon the closing of the Combinations, the Topco Shares are expected to be listed for trading on Nasdaq. However, there can be no assurance that an active trading market for Topco Shares will develop after the closing of the Combinations, or if it develops, that such market will be sustained. In the absence of an active trading market for the Topco Shares, investors may not be able to sell their Topco Shares at the time that they would like to sell.

The market price of Topco Shares may be volatile.

The market price of Topco Shares may be volatile. Broad general economic, political, market and industry factors may adversely affect the market price of Topco Shares, regardless of Topco’s actual operating performance and the success of the integration of Quidel and Ortho. Factors that could cause fluctuations in the price of Topco Shares include:

 

   

actual or anticipated variations in quarterly operating results and the results of competitors;

 

   

changes in financial projections by Topco, if any, or by any securities analysts that may cover Topco Shares;

 

   

conditions or trends in the industry, including regulatory changes or changes in the securities marketplace;

 

   

announcements by Topco or its competitors of significant acquisitions, strategic partnerships or divestitures;

 

   

announcements of investigations or regulatory scrutiny of Topco’s operations or lawsuits filed against it;

 

   

additions or departures of key personnel; and

 

   

issuances or sales of Topco Shares, including sales of shares by Topco’s directors and officers or its key investors.

Future sales of Topco Shares by Topco or its stockholders in the public market, or the perception that such sales may occur, could reduce the price of Topco Shares, and any additional capital raised by Topco through the sale of equity or convertible securities may dilute ownership in Topco.

The sale of Topco Shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of Topco Shares. These sales, or the possibility that these sales may occur, also might make it more difficult for Topco to sell equity securities in the future at a time and at a price that Topco deems appropriate.

After the completion of the Combinations, Topco is expected to have approximately 66.7 million outstanding Topco Shares. Following the completion of the Combinations, it is expected that former Ortho shareholders will own approximately 38% of Topco and former Quidel stockholders will own approximately 62% of Topco, on a fully diluted basis, based on the respective capitalizations of Ortho and Quidel as of the date the parties entered into the BCA.

All Topco Shares that will be issued in connection with the Combinations are expected to be freely tradable without restriction or further registration under the Securities Act, except for any Topco Shares held by Topco’s affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including certain of Topco’s directors, executive officers and other affiliates, which shares may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144. Following the completion of the Combinations, Topco Shares covered by registration rights are expected to represent approximately 19% of Topco’s outstanding Topco Shares. Registration of any of these outstanding Topco Shares would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. As restrictions on resale end or if these stockholders exercise their registration rights, the market price of Topco Shares could drop significantly if the holders of these Topco Shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for Topco to raise additional funds through future offerings of Topco Shares or other securities.

In addition, Topco intends to file a registration statement with the SEC on Form S-8 providing for the registration of approximately 6.6 million Topco Shares issued or reserved for issuance under the Quidel 2018 Equity Plan, as proposed to be amended and assumed by Topco. Subject to the satisfaction of vesting conditions, shares registered under the registration statement on Form S-8 may be made available for resale immediately in the public market without restriction.

In the future, Topco may also issue its securities in connection with investments or acquisitions, or otherwise. Topco cannot predict the size of future issuances of Topco Shares or securities convertible into Topco Shares or the effect, if any, that future issuances and sales of Topco Shares will have on the market price of Topco Shares. Sales of substantial amounts of Topco Shares (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of Topco Shares.

 

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If securities or industry analysts do not publish research or reports about Topco, the trading price of Topco Shares could decline.

The trading market for Topco Shares will be influenced by any research and reports that industry or securities analysts publish about Topco or its business. If one or more of these analysts cease coverage of Topco or fail to publish reports on Topco regularly, Topco could lose visibility in the financial markets, which in turn could cause Topco’s stock price or trading volume to decline. Moreover, if one or more of the analysts who cover Topco downgrade the Topco Shares or if Topco’s operating results do not meet their expectations, the trading price of Topco Shares could decline.

Topco Shares to be received by Ortho shareholders and Quidel stockholders as a result of the Combinations will have rights different from the Ortho Shares and Quidel Shares that they hold prior to the Effective Times of the Combinations.

Upon completion of the Combinations, the rights of former Ortho shareholders and Quidel stockholders who become stockholders of Topco will be governed by the certificate of incorporation of Topco (the “Topco Charter”) and the bylaws of Topco (the “Topco Bylaws”) and by the DGCL. The rights associated with Ortho Shares and Quidel Shares are different from the rights associated with Topco Shares. See the section entitled “Comparison of Rights of Stockholders of Quidel, Ortho and Topco” of this joint proxy statement/prospectus.

The Topco Bylaws will designate the Court of Chancery of the State of Delaware (the “Court of Chancery”) as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Topco’s stockholders, which could limit Topco’s stockholders’ ability to obtain a favorable judicial forum for disputes with Topco or its directors, officers, employees or agents.

The Topco Bylaws after the Combinations will provide that, unless Topco consents in writing to the selection of an alternative forum, (i) the Court of Chancery (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware) will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for any claims (other than any cause of action arising under the Securities Act), including claims in the right of Topco that are based upon a violation of duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery, and (ii) the federal district courts of the United States of America will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for any cause of action arising under the Securities Act but that the forum selection provision will not apply to claims brought to enforce a duty or liability created by the Exchange Act. Any person or entity purchasing or otherwise acquiring any interest in shares of Topco’s capital stock will be deemed to have notice of, and to have consented to, the provisions of the Topco Bylaws described in the preceding sentence. This forum selection provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Topco or its directors, officers, employees or agents, which may discourage such lawsuits against Topco and such persons and result in increased costs for a stockholder to bring a claim. There is uncertainty as to whether a court would enforce such provisions and stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. If a court were to find these provisions of the Topco Bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, Topco may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect Topco’s business, financial condition or results of operations.

If Topco fails to develop or maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, stockholders could lose confidence in Topco’s financial reporting, which would harm its business and the trading price of Topco Shares.

Effective internal controls are necessary for Topco to provide reliable financial reports, prevent fraud and operate successfully as a public company. If Topco cannot provide reliable financial reports or prevent fraud, its reputation and operating results would be harmed. Topco cannot be certain that its efforts to develop and maintain an effective system of internal controls will be successful, that it will be able to maintain adequate controls over its financial processes and reporting in the future, or that it will be able to comply with its obligations under Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to develop or maintain effective internal controls, or difficulties encountered in implementing or improving internal controls, could harm Topco’s operating results or cause Topco to fail to meet its reporting obligations. Ineffective internal controls could also cause investors to lose confidence in Topco’s reported financial information, which would likely have a negative effect on the trading price of the Topco Shares.

 

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Topco’s IT systems may be vulnerable to hacker intrusion, malicious viruses and other cybercrime attacks, which may harm its business and expose it to liability.

Topco’s operations will depend to a great extent on the reliability and security of its IT systems, software and network, which are subject to damage and interruption caused by human error, problems relating to telecommunications networks, software failure, natural disasters, sabotage, viruses and similar events. Any interruption in Topco’s IT systems could have a negative effect on the quality of products and services offered and, as a result, on customer demand and volume of sales.

Topco will be exposed to significant risks in relation to compliance with anti-corruption laws and regulations and economic sanctions programs.

Doing business on a worldwide basis will require the combined company to comply with the laws and regulations of various jurisdictions, and Topco’s failure to successfully comply with these rules and regulations may expose it to liabilities. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict the combined company’s operations, trade practices, investment decisions and partnering activities. In particular, Topco’s international operations are subject to anti-corruption and anti-bribery laws and regulations, such as the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), the UK Bribery Act of 2010 (the “Bribery Act”) and the Brazilian Anti-Bribery Act (also known as the Brazilian Clean Company Act), among others, and economic and trade sanctions, including those administered by the United Nations, the European Union, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) and the U.S. Department of State. The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. Topco may deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. Topco is subject to the jurisdiction of various governments and regulatory agencies outside of the United States, which may bring Topco’s personnel into contact with foreign officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations. The provisions of the Bribery Act extend beyond bribery of foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitation payments and penalties. Economic and trade sanctions restrict Topco’s transactions or dealings with certain sanctioned countries, territories and designated persons, absent authorizations or exemptions under applicable law, such as OFAC’s licenses permitting certain humanitarian trade.

As a result of doing business in foreign countries, including through partners, distributors, agents and other third parties acting on Topco’s behalf, Topco will be exposed to a risk of violating anti-corruption and anti-bribery laws and sanctions regulations. Some of the international locations in which Topco will operate have developing legal systems and may have higher levels of corruption than more developed nations. Topco’s continued expansion and worldwide operations, including in developing countries, its development of joint-venture relationships worldwide and the employment of local agents in the countries in which Topco will operate increase the risk of violations of anti-corruption and anti-bribery laws and economic and trade sanctions. Though these distributors, manufacturers and other third parties acting on Topco’s behalf are not Topco’s affiliated legal entities, such violations could expose Topco to FCPA liability or liabilities under similar laws of the various jurisdictions in which Topco operates and/or Topco’s reputation may potentially be harmed by the third parties. Violations of anti-corruption and anti-bribery laws and economic and trade sanctions are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts) and revocations or restrictions of licenses, as well as criminal fines and imprisonment. In addition, any major violations could have a significant impact on Topco’s reputation and consequently on its ability to win future business.

While Ortho and Quidel believe that Topco will have a strong culture of compliance and an adequate system of internal controls, including procedures to minimize and detect fraud in a timely manner, as well as processes for complying with OFAC authorizations or exemptions, Ortho and Quidel will seek to continuously improve Topco’s system of internal controls and to remedy any weaknesses identified. There can be no assurance, however, that Topco’s policies and procedures will be followed at all times or will effectively detect and prevent violations of the applicable laws by one or more of its employees, consultants, agents or partners and, as a result, Topco could be subject to penalties and material adverse consequences on its business, financial condition or results of operations.

Topco’s ability to utilize the U.S. net operating loss carryforwards may be limited.

The ability of Topco and its affiliates, including Quidel and Ortho, to utilize any U.S. federal net operating loss carryforwards (“NOLs”) and other tax attributes existing at the time of the Combinations to reduce future taxable income

 

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following the consummation of the Combinations is subject to limitations under U.S. federal income tax laws and depends on many factors, including its future income, which cannot be assured. In addition, Section 382 of the Code (“Section 382”) generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382), as is expected to be the case for Ortho following the Combinations. An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least 5% of such corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Section 382 may apply as a result of the Combinations and limit the use of any NOLs prior to their expiration.

Topco and its subsidiaries will be subject to U.S. and foreign tax laws, and changes to such tax laws or differing interpretation of those laws by the relevant governmental authorities could adversely affect Topco.

The U.S. Congress, the Organisation for Economic Co-operation and Development and other government agencies in jurisdictions where Topco and its affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. Additionally, changes proposed by the current U.S. administration, including significant tax reform, could significantly change the U.S. federal income tax rules and regulations applicable to Topco and its affiliates, although the prospect of tax reform, and the nature of any such reform, remains highly uncertain. Thus, the tax laws in the United States, the United Kingdom and other countries in which Topco and its affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect Topco.

In addition, the tax laws and regulations in the United States, the United Kingdom and the numerous other jurisdictions in which Topco and its subsidiaries operate are inherently complex, and Topco and its subsidiaries will be obligated to make judgments and interpretations about the application of these laws and regulations to Topco and its subsidiaries and their operations and businesses. The interpretation and application of these laws and regulations could be challenged by the relevant governmental authorities, which could result in material administrative or judicial procedures, actions or sanctions.

The unaudited prospective financial information for Quidel and Ortho included in this joint proxy statement/prospectus reflects management estimates and may not prove to be reflective of actual future financial results.

In connection with the Combinations, Quidel and Ortho prepared and considered, among other things, certain internal, unaudited prospective financial information for Quidel and Ortho. This unaudited prospective financial information included assumptions regarding future market conditions, operating cash flows, expenditures and growth of Quidel and Ortho, as applicable. This internal, unaudited prospective financial information speaks only as of the date made and, except as required by applicable securities laws, will not be updated. This unaudited prospective financial information is subject to significant economic, competitive, industry and other uncertainties, which may cause the unaudited prospective financial information or the underlying assumptions to be inaccurate. As a result of these contingencies, there can be no assurance that the unaudited prospective financial information of Quidel and Ortho will be achieved in full, at all or within projected timeframes. In light of these uncertainties, the inclusion of the unaudited prospective financial information of Quidel and Ortho in this joint proxy statement/prospectus should not be regarded as an indication that the Quidel board of directors, the Ortho board of directors, Quidel, Ortho, Perella Weinberg or J.P. Morgan or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future financial results.

The unaudited prospective financial information was prepared for internal use and to assist Quidel and Ortho with their due diligence investigations and their respective financial advisors with their respective financial analyses. The unaudited prospective financial information was not prepared with a view toward public disclosure or toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial information included in this joint proxy statement/prospectus has been prepared by, and is the responsibility of, Quidel’s and Ortho’s management. Ernst & Young LLP (Quidel’s independent registered public accounting firm) and PricewaterhouseCoopers LLP (Ortho’s independent registered public accounting firm) have not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, Ernst & Young LLP and PricewaterhouseCoopers LLP have not expressed an opinion or any other form of assurance with respect thereto. The Ernst & Young LLP report incorporated by reference into this joint proxy statement/prospectus relates to Quidel’s previously issued financial statements and the PricewaterhouseCoopers LLP report included in this joint proxy statement/prospectus

 

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relates to Ortho’s previously issued financial statements. The reports do not extend to the prospective financial information and should not be read to do so. For additional information regarding the unaudited prospective financial information, see the section entitled “The Combinations—Unaudited Forward-Looking Financial Information” of this joint proxy statement/prospectus.

Topco’s actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this joint proxy statement/prospectus.

Topco has been recently incorporated and has no operating history and no revenues. While the unaudited pro forma financial information contained in this joint proxy statement/prospectus represents the best estimates of Quidel’s and Ortho’s management, it is presented for illustrative purposes only and may not be an accurate indication of Topco’s financial position or results of operations if the Combinations and associated financing transactions are completed on the dates indicated. The unaudited pro forma financial information has been derived from the audited and unaudited historical financial statements of Ortho and Quidel and certain adjustments and assumptions have been made regarding Topco after giving effect to the Combinations. The unaudited pro forma financial information does not include any fair value adjustments associated with the assets and liabilities of Ortho with the exception of the fair value of long-term borrowings and intangible assets, as Quidel and Ortho’s management have preliminarily concluded that these historical carrying values approximate their fair values as of September 30, 2021. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates may be revised as additional information becomes available and as additional analyses are performed. Differences between preliminary estimates in the unaudited pro forma financial information and the final acquisition accounting will occur and could have a material impact on the unaudited pro forma financial information and Topco’s financial position and future results of operations.

In addition, the assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect Topco’s financial condition or results of operations following the closing of the Combinations. Any potential decline in Topco’s financial condition or results of operations may cause significant fluctuations in the price of Topco Shares. See the section entitled “Unaudited Pro Forma Combined Financial Information” of this joint proxy statement/prospectus.

Topco will be exposed to foreign currency exchange risk.

Upon completion of the Combinations, Topco will transact business in numerous countries around the world and expects that a significant portion of its business will continue to take place in international markets. Topco will conduct its business and prepare its consolidated financial statements in its functional currency, while the financial statements of each of its subsidiaries will be prepared in the functional currency of that entity and the business of that entity will be conducted in the functional currency of that entity. Accordingly, fluctuations in the exchange rate of the functional currencies of Topco’s foreign currency entities against the functional currency of Topco will impact its results of operations and financial condition. Accordingly, it is expected that Topco’s revenues and earnings will be exposed to the risks that may arise from fluctuations in foreign currency exchange rates, which could have a material adverse effect on Topco’s business, results of operations or financial condition.

A downgrade in Topco’s or its subsidiaries’ credit ratings following the Combinations could impact Topco’s access to capital and cost of doing business.

Following the Combinations, rating agencies may re-evaluate Topco’s and its subsidiaries’ credit ratings, and any additional actual or anticipated downgrades in such credit ratings could limit Topco’s ability to access credit and capital markets, or to restructure or refinance its indebtedness. As a result of any such downgrades, future financings or refinancings may result in higher borrowing costs and require more restrictive terms and covenants, including obligations to post collateral with third parties, which may further restrict operations and negatively impact liquidity.

Credit rating agencies perform independent analyses when assigning credit ratings. Each analysis includes a number of criteria, including, but not limited to, business composition, market and operational risks, and various financial tests. Credit rating agencies continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria from time to time. Credit ratings are not recommendations to buy, sell or hold investments in the rated entity. Ratings are subject to revision or withdrawal at any time by the rating agencies, which could have a material adverse effect on Topco’s business, results of operations or financial condition.

 

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Risks Relating to Quidel’s Business

In addition to the foregoing risks, Quidel is, and will continue to be, and the combined company will be, subject to the risks described in Quidel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as such risks may be updated or supplemented in Quidel’s subsequently filed Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, to the extent incorporated by reference into this joint proxy statement/prospectus, other than to the extent inconsistent with the risks described in the section entitled “—Risks Relating to Topco Following Completion of the Combinations.” See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

Risks Relating to Ortho’s Business

In addition to the foregoing risks, Ortho is, and will continue to be, and the combined company will be, subject to the risks described below, as such risks may be updated or supplemented in Ortho’s subsequently filed Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, to the extent incorporated by reference into this joint proxy statement/prospectus, other than to the extent inconsistent with the risks described in the section entitled “—Risks Relating to Topco Following Completion of the Combinations.” See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

Ortho has significant international sales and operations and faces risks related to health epidemics, including the ongoing global pandemic related to COVID-19. Ortho’s business, consolidated results of operations, financial position and cash flows have been and may continue to be negatively affected by the COVID-19 pandemic.

Any significant outbreak of contagious diseases and other adverse public health developments in countries where Ortho operates could have a material and adverse effect on Ortho’s business, financial condition and results of operations. Since the World Health Organization characterized COVID-19 as a pandemic in March 2020, COVID-19 has continued to spread throughout the United States and globally and it remains unclear when the COVID-19 pandemic will abate. Although the U.S. Food and Drug Administration (the “FDA”) has approved certain therapeutics and authorized three COVID-19 vaccines for emergency use, there has been some public resistance in the implementation of a national vaccine program, new strains of COVID-19 have been and may continue to be discovered, and the efficacy of the existing vaccines with respect to any such newly discovered strain of COVID-19 remains uncertain. The COVID-19 pandemic has resulted, and future significant outbreaks of contagious diseases in the human population could result, in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for Ortho’s products and services and, as a result, likely impact Ortho’s operating results.

Many countries, including the United States, have and may continue to restrict travel and/or temporarily close businesses, schools and other public gathering spaces. Further, significant governmental measures, both in the United States and globally, have been and may continue to be implemented to control the spread of the virus, including restrictions on manufacturing, shipping and the movement of employees. As a result of such restrictions, Ortho has and may continue to experience some restrictions on its ability to efficiently distribute its products in the regions affected.

The COVID-19 pandemic has also resulted in global supply chain challenges and during the quarter ended October 3, 2021, Ortho began to experience some supply chain disruptions. For instance, supply chain shortages of certain key components of Ortho’s instruments and assays are affecting Ortho’s ability to fulfill customer orders on a timely basis and have had, and are expected to continue to have, a negative impact on Ortho’s business and results of operations, which could be material. Although Ortho and its contract manufacturer partners, suppliers of raw materials and other third-party vendors are pursuing additional sources for certain of these components, Ortho may be unable to identify additional suppliers and expects that these shortages and other supply chain challenges will continue to impact its business. Ortho has and may continue to encounter increases in idle facility costs and freight and distribution costs, which in some instances have affected the pricing of Ortho’s products. Any prolonged and significant supply chain disruptions or inability to provide products in countries adversely impacted by the COVID-19 pandemic would continue to impact Ortho’s revenues, increase Ortho’s costs and negatively affect Ortho’s business relationships and reputation, as well as Ortho’s operating results. It is also possible that Ortho will experience an adverse impact on collections and timing of cash receipts from its customers as a result of the impact of the COVID-19 pandemic, which could result in significant fluctuations in Ortho’s cash flows from period to period during the pandemic and in the periods that follow the end of the COVID-19 pandemic.

Ortho maintains a direct or indirect commercial presence in more than 130 countries and territories, with a direct presence in 36 countries, including in countries that have been severely impacted by the COVID-19 pandemic. Government imposed

 

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travel restrictions and local statutory quarantines, as well as the potential impact to personnel, to the extent Ortho’s employees become ill, may result in direct operational and administrative disruptions. Ortho’s business may also be impacted by the imposition of government orders relating to COVID-19 vaccination status or regular testing of Ortho’s employees, which could result in the loss of employees and may impact Ortho’s ability to manufacture or ship its products. Ortho may also face increased risks of disputes with Ortho’s business partners, litigation and governmental and regulatory scrutiny as a result of the effects of COVID-19.

Health regulatory agencies globally may also experience disruptions in their operations as a result of the COVID-19 pandemic. The FDA and comparable foreign regulatory agencies may have slower response times or be under-resourced and, as a result, review and approval of product registrations may be materially delayed. For example, as health authorities have redeployed resources to focus on the management of the pandemic, there is a reduction in available capacity for the review and approval of other less-critical product submissions. As a result, manufacturers may incur a delay in obtaining product registrations.

Ortho cannot reasonably estimate the length or severity of the COVID-19 pandemic. The extent to which the COVID-19 pandemic, in particular, impacts Ortho’s business or results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity and duration of the COVID-19 pandemic and the actions to contain it or treat its impact, among others.

To the extent the COVID-19 pandemic adversely affects Ortho’s business and financial results or those of Ortho’s customers, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section. The ultimate impact of the COVID-19 outbreak on Ortho’s business, financial condition and results of operations depends on many factors, including those discussed above, that are not within Ortho’s control.

Ortho faces significant competition, and Ortho’s failure to compete effectively could adversely affect Ortho’s sales and results of operations.

The markets in which Ortho and Ortho’s competitors operate are rapidly evolving, and developments are expected to continue at a rapid pace. Competition in these markets is intense and expected to increase as new products, services and technologies become available and as new competitors enter the market. Ortho faces competition from diagnostics divisions of large multinational healthcare companies and conglomerates. Some of Ortho’s existing or potential competitors have substantially greater research and development capabilities, clinical, manufacturing, regulatory and marketing experience and financial and managerial resources than Ortho does. Some of these competitors are divisions or subsidiaries of corporations with substantial resources. Ortho’s sales and results of operations may be adversely affected by:

 

   

customers’ perceptions of the comparative quality of Ortho’s competitors’ products or services;

 

   

Ortho’s ability to manufacture, in a cost-effective way, sufficient quantities of Ortho’s products to meet customer demand;

 

   

the ability of Ortho’s competitors to develop products, services and technologies that are more effective than Ortho’s or that render Ortho’s obsolete;

 

   

Ortho’s competitors’ ability to obtain patent protection or other intellectual property rights that would prevent Ortho from offering competing products or services;

 

   

the ability of Ortho’s competitors to obtain regulatory approval for the commercialization of products or services more rapidly or effectively than Ortho does; and

 

   

competitive pricing by Ortho’s competitors.

Ortho expects competition to intensify in the future as more companies enter Ortho’s markets. Increased competition and potential new entrants in these industries may result in lower prices and volumes, higher costs for resources and lower profitability for Ortho. Moreover, competitive and regulatory conditions in many markets in which Ortho and Ortho’s competitors operate restrict Ortho’s ability to fully recover through price increases, higher costs of acquired goods and services resulting from inflation, and other drivers of cost increases. Ortho may not be able to supply customers with products and services that they deem superior and at competitive prices, and Ortho may lose business to Ortho’s competitors. Ortho also faces risks related to customers finding alternative methods for testing, which could result in lower demand for

 

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Ortho’s products. If Ortho is unable to compete successfully in these highly competitive industries, it could have a material effect on Ortho’s business, financial condition and results of operations.

Ortho may experience difficulties that delay or prevent Ortho’s development, introduction or marketing of new or enhanced products or services.

Ortho’s success depends on Ortho’s ability to effectively introduce new and competitive products and services. The development of new or enhanced products or services is a complex, costly and uncertain process and is becoming increasingly complex and uncertain in the United States. Furthermore, developing and manufacturing new products and services requires Ortho to anticipate customers’ and patients’ needs and emerging technology trends accurately. Ortho may experience research and development, manufacturing, regulatory, marketing and other difficulties that could delay or prevent Ortho’s introduction of new or enhanced products and services, including the timelines for the introduction of new products as described in this joint proxy statement/prospectus. The research and development process in the healthcare industry generally takes a significant amount of time from design stage to product launch. This process is conducted in various stages, and each stage presents the risk that Ortho will not achieve its goals. In addition, innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursements. In the event of such failure, Ortho may have to abandon a product in which it has invested substantial resources. Ortho cannot be certain that:

 

   

any of Ortho’s products or services under development will prove to be safe and effective in clinical trials;

 

   

Ortho will be able to obtain, in a timely manner or at all, necessary regulatory approvals;

 

   

the products and services Ortho develops can be manufactured or provided at acceptable cost and with appropriate quality; or

 

   

these products and services, if and when approved, can be successfully marketed.

These factors, as well as manufacturing or distribution problems or other factors beyond Ortho’s control, could delay the launch of new products or services. Any delay in the development, approval, production, marketing or distribution of a new product or service could materially and adversely affect Ortho’s competitive position, Ortho’s branding and Ortho’s results of operations. Additionally, customers could adopt alternative technologies, instead of Ortho’s technology, which could result in lower demand for Ortho’s products.

Global market, economic and political conditions may adversely affect Ortho’s operations and performance.

The growth of Ortho’s business and demand for Ortho’s products are affected by changes in the health of the overall global economy and, in particular, of the healthcare industry. Demand for Ortho’s products and services could change more dramatically than in previous years based on activity, funding reimbursement constraints and support levels from governments, universities, hospitals and the private industry, including laboratories. Ortho’s global business is adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending, increases in unemployment rates and budgeting constraints of governmental entities. Disruptions in the United States, Europe or in other economies, or weakening of emerging markets, including China, could adversely affect Ortho’s sales, profitability and/or liquidity.

Ortho cannot assure you that there will not be a future deterioration in financial markets or confidence in major economies. These economic developments affect businesses such as Ortho’s in a number of ways. A tightening of credit in financial markets could adversely affect the ability of Ortho’s customers and suppliers to obtain financing for significant purchases and operations, could result in a decrease in or cancellation of orders for Ortho’s products and services and could impact the ability of Ortho’s customers to make payments. Similarly, a tightening of credit may adversely affect Ortho’s supplier base and increase the potential for one or more of Ortho’s suppliers to experience financial distress or bankruptcy. Ortho’s financial position, results of operations and cash flows could be materially adversely affected by difficult conditions and volatility in the capital, credit and commodities markets. Difficult conditions in these markets or in the overall economy could affect Ortho’s business in a number of ways. For example:

 

   

under such conditions, Ortho cannot assure you that borrowings under Ortho’s multicurrency senior secured revolving facility with commitments of $500.0 million (the “Revolving Credit Facility”) will be available or sufficient, and in such a case, Ortho may not be able to obtain additional financing on reasonable terms or at all; and

 

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in order to respond to market conditions, Ortho may need to seek waivers of various provisions in the credit agreement governing Ortho’s senior secured credit facilities (the “Senior Secured Credit Facilities”), which consist of (i) the senior secured term loan facility, as amended on June 8, 2018, in an original amount of $2,325.0 million (collectively, the “Dollar Term Loan Facility”), (ii) the euro-denominated senior secured term loan facility in an amount equal to €337.4 million (the “Euro Term Loan Facility” and, together with the Dollar Term Loan Facility, the “Term Loan Facilities”), and (iii) the Revolving Credit Facility (as amended, the “Credit Agreement”), and Ortho might not be able to obtain such waivers on reasonable terms, if at all.

Ortho’s ability to obtain additional capital on commercially reasonable terms may be limited or non-existent.

Although Ortho believes its cash, cash equivalents and short-term investments, as well as future cash generated from operations and availability under Ortho’s Revolving Credit Facility, provide adequate resources to fund ongoing debt service and working capital requirements, capital expenditures and transition costs for the foreseeable future, Ortho may need to seek additional financing to compete effectively.

If Ortho is unable to obtain capital on commercially reasonable terms, or at all, it could:

 

   

result in reduced funds available to Ortho for purposes such as working capital, capital expenditures, research and development, strategic acquisitions and other general corporate purposes;

 

   

restrict Ortho’s ability to introduce new services or products or exploit business opportunities;

 

   

increase Ortho’s vulnerability to economic downturns and competitive pressures in the markets in which Ortho operates; and

 

   

place Ortho at a competitive disadvantage.

Ortho may engage in acquisitions and divestitures, and may encounter difficulties integrating acquired businesses with, or disposing of divested businesses from, Ortho’s current operations; therefore, Ortho may not realize the anticipated benefits of these acquisitions and divestitures.

Ortho may seek to grow through strategic acquisitions. Ortho’s due diligence reviews of Ortho’s acquisition targets may not identify all of the material issues necessary to accurately estimate the cost or potential loss contingencies with respect to a particular transaction, including potential exposure to regulatory sanctions resulting from an acquisition target’s previous activities as well as potential vulnerability to cybersecurity risks. Ortho may incur unanticipated costs or expenses, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, litigation and other liabilities. Ortho also may encounter difficulties in integrating acquisitions with Ortho’s operations, applying Ortho’s internal controls processes to these acquisitions, retaining key technical and management personnel, complying with regulatory requirements, or in managing strategic investments. Additionally, Ortho may not achieve the benefits Ortho anticipates when Ortho first enters into a transaction in the amount or timeframe anticipated. Any of the foregoing could adversely affect Ortho’s business and results of operations. In addition, accounting requirements relating to business combinations, including the requirement to expense certain acquisition costs as incurred, may cause Ortho to experience greater earnings volatility and generally lower earnings during periods in which Ortho acquires new businesses. Furthermore, Ortho may make strategic divestitures from time to time. These divestitures may result in continued financial involvement in the divested businesses, such as through guarantees, indemnity obligations or other financial arrangements, following those transactions. Under these arrangements, nonperformance by those divested businesses could result in financial obligations imposed upon Ortho and could affect Ortho’s future financial results.

It may be difficult for Ortho to implement Ortho’s strategies for improving growth.

Ortho plans to continue expanding its commercial capabilities and the scope of its business, both domestically and internationally, while maintaining its commercial operations and administrative activities. For example, Ortho intends to pursue the following growth strategies: (i) maximize Lifetime Customer Value (“LCV”) to produce and maintain a growing and recurring, high margin, durable financial profile; (ii) provide an unparalleled customer experience to retain and attract existing and new customers; (iii) leverage Ortho’s global footprint to deliver innovative solutions to meet Ortho’s customers’ needs in both developed and emerging markets; (iv) create meaningful product innovation through menu expansion, development of novel instruments and enhancement of automation and informatics; (v) continue to identify operating efficiencies to allow for reinvestment in growth and improve margins; and (vi) pursue business development opportunities,

 

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partnerships and strategic acquisitions to enter adjacencies or expand Ortho’s current business units. However, Ortho’s ability to manage its business and conduct its global operations while also pursuing the aforementioned growth strategies requires considerable management attention and resources. Furthermore, it is subject to the challenges of supporting a growing business on a global basis.

Ortho’s failure to implement these strategies in a cost-effective and timely manner could have an adverse effect on Ortho’s business, results of operations and financial condition.

Ortho may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.

Under the acquisition method of accounting for business combinations, the net assets acquired are recorded at their fair value as of the date of the acquisition, with any excess purchase price recorded as goodwill. Ortho was created pursuant to the acquisition by Ortho-Clinical Diagnostics Bermuda Co. Ltd., a Bermuda exempted limited liability company and direct wholly-owned subsidiary of Ortho, pursuant to a stock and asset purchase agreement, dated January 16, 2014 (the “Acquisition Agreement”), of (i) certain assets and liabilities and (ii) all of the equity interests and substantially all of the assets and liabilities of certain entities which, together with their subsidiaries, comprised the Ortho Clinical Diagnostics business from Johnson & Johnson (the “Acquisition”). The Acquisition resulted in significant balances of goodwill and identified intangible assets. As of January 2, 2022, the balance of goodwill and identified intangible assets was $573.6 million and $879.2 million, respectively. Ortho is required to test goodwill and any other intangible asset with an indefinite life for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment. Ortho is also required to evaluate amortizable intangible assets and fixed assets for impairment if there are indicators of a possible impairment.

There is significant judgment required in the analysis of a potential impairment of goodwill, identified intangible assets and fixed assets. If, as a result of a general economic slowdown, deterioration in one or more of the markets in which Ortho operates or impairment in Ortho’s financial performance and/or future outlook, the estimated fair value of Ortho’s long-lived assets decreases, Ortho may determine that one or more of Ortho’s long-lived assets is impaired. An impairment charge would be determined based on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on Ortho’s results of operations and financial position.

Ortho may be unable to achieve some or all of the operational cost improvements and other benefits that Ortho expects to realize.

Ortho has previously announced several initiatives to strengthen its operational performance and has begun to execute certain of these initiatives. For example, Ortho has pursued a number of operational cost improvements associated with procurement, manufacturing, field service organization, distribution and logistics, quality and regulatory and other general and administrative functions. However, Ortho cannot be certain that it will be able to successfully realize all the expected benefits of these initiatives. A variety of risks could cause Ortho not to realize some or all of the expected benefits. These risks include, among others, higher-than-expected standalone overhead expenses, delays in the anticipated timing of activities related to such initiatives, increased difficulty and cost in establishing Ortho as a standalone business and the incurrence of other unexpected costs associated with operating the business. Moreover, Ortho’s continued implementation of these initiatives may disrupt its operations and performance and Ortho’s estimated cost savings from these initiatives are based on several assumptions that may prove to be inaccurate and, as a result, Ortho cannot assure you that it will realize these cost savings. If, for any reason, the benefits Ortho realizes are less than its estimates or if Ortho’s improvement initiatives adversely affect its operations or cost more or take longer to implement than Ortho projects, or if Ortho’s assumptions prove inaccurate, Ortho’s results of operations may be materially adversely affected.

Ortho’s collaboration arrangements may not operate according to its business strategy if its collaboration arrangement partners fail to fulfill their obligations.

As part of Ortho’s business, it has entered into collaboration arrangements with other companies, including the ongoing collaboration with Grifols Diagnostics Solutions, Inc. (the “Joint Business”), which is structured as a license, research and supply agreement, and Ortho may enter into additional collaboration arrangements in the future.

The nature of a collaboration arrangement requires Ortho to share control over significant decisions with unaffiliated third parties. Since Ortho may not exercise exclusive control over its current or future collaboration arrangements, Ortho may not

 

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be able to require its collaboration arrangement partners to take actions that Ortho believes are necessary to implement Ortho’s business strategy. Additionally, differences in views among collaboration arrangement partners may result in delayed decisions or failures to agree on major issues. Disputes between Ortho and its collaboration arrangement partners could also result in litigation, which can be expensive and time-consuming. If these differences cause Ortho’s collaboration arrangements to deviate from its business strategy, Ortho’s results of operations could be materially adversely affected.

If Ortho delivers products with defects, Ortho may be subject to product recalls or negative publicity, Ortho’s credibility may be harmed, market acceptance of Ortho’s products may decrease and Ortho may be exposed to liability.

The manufacturing and marketing of professional and consumer diagnostics involve an inherent risk of product liability claims. For example, a defect in one of Ortho’s diagnostic products could lead to a false positive or false negative result, affecting the eventual diagnosis. Ortho’s product development and production are extremely complex and could expose Ortho’s products to defects. Ortho’s Immunohematology business in particular is subject to the risk of product liability claims, as even the slightest inaccuracies in a specimen’s analysis can lead to critical outcomes in the life of a patient, thereby leaving little to no room for error in the precision and accuracy of such testing.

Manufacturing and design defects could lead to recalls (either voluntary or required by the FDA or other government authorities) and could result in the removal of a product from the market. Depending on the corrective action Ortho takes to redress a product’s deficiencies, Ortho may be required to obtain new clearances or approvals before it may market or distribute the corrected device. Defects in Ortho’s products could also harm Ortho’s reputation, lead to negative publicity and decrease sales of Ortho’s products, and Ortho could also face additional regulatory enforcement action, including FDA warning letters, untitled letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.

In addition, Ortho’s marketing of monitoring services may cause Ortho to be subjected to various product liability or other claims, including, among others, claims that inaccurate monitoring results lead to injury or death, or, in the case of Ortho’s toxicology monitoring services, the imposition of criminal sanctions. Any product liability or other claim brought against Ortho, regardless of merit, could be costly to defend and could result in an increase to Ortho’s insurance premiums. If Ortho is held liable for a claim, that claim could materially affect Ortho’s business and financial condition.

A decrease in the number of surgical procedures performed, and the resulting decrease in blood demand, could negatively impact Ortho’s financial results.

Ortho’s Immunohematology and Donor Screening products are frequently used in connection with the testing of blood prior to transfusion, which is typically associated with surgical procedures. A decrease in the number of surgeries being performed in the markets in which Ortho operates could result in decreased demand for blood for transfusions, which would in turn result in lower testing volumes and, therefore, decreased sales of Ortho’s products. For example, Ortho believes the market in developed countries has, at times, seen a decrease in the number of surgical procedures and lower demand for blood in recent years. A decrease in the number of surgical procedures performed could result from a variety of factors, such as fewer elective procedures and the improved efficacy and popularity of non-surgical treatments. In addition to lower surgical volumes, blood demand could also be negatively affected by more efficient blood utilization by hospitals. Blood is a large expense for hospital laboratories and pressure on hospital budgets due to macroeconomic factors and healthcare reform could force changes in the ways in which blood is used. Fewer surgeries and lower blood demand could negatively impact Ortho’s revenue, profitability and cash flows.

Ortho’s reagent rental model reduces Ortho’s cash flows during the initial part of the applicable contract, which causes Ortho’s cash flows to fluctuate from quarter to quarter.

Leases, rather than sales, of instruments under Ortho’s reagent rental model have the effect of reducing cash flows during the initial part of the applicable contract as Ortho supports those commercial transactions until Ortho is able to recover its investment over the life of the contract. The use of cash in connection with this model causes Ortho’s cash flows to fluctuate from quarter to quarter and may have a negative effect on Ortho’s financial condition.

Johnson & Johnson’s historical and future actions, or failure to comply with its indemnification obligations, may materially affect Ortho’s business and operating results.

Although Ortho is an independent company as a result of the Acquisition, Johnson & Johnson’s historical and future actions may still have a material impact on Ortho’s business and operating results. In connection with the Acquisition, Ortho entered

 

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into certain agreements with Johnson & Johnson, including the Acquisition Agreement and certain other transitional services agreements. In addition, Johnson & Johnson has, subject to certain exceptions and exclusions, agreed to indemnify Ortho under the Acquisition Agreement for certain liabilities relating to historical litigation matters and divestiture agreements, tax liabilities existing at the date of the Acquisition and certain employee-related liabilities. Ortho could incur material additional costs if Johnson & Johnson fails to meet its obligations or if Ortho otherwise is unable to recover costs associated with such liabilities.

Risks Relating to Ortho’s International Operations

As a global business, Ortho is subject to risks associated with Ortho’s non-U.S. operations where such risks are not present in the United States.

Ortho conducts its business on a global basis, with sales outside the United States constituting approximately 50.3% of Ortho’s total revenue for the fiscal year ended January 2, 2022, and a significant number of employees and contractors located in foreign countries. Ortho anticipates that international sales will continue to represent a substantial portion of Ortho’s revenue and that Ortho’s strategy for continued growth and profitability will entail further international expansion, particularly in emerging markets. Conducting business outside the United States subjects Ortho to numerous risks, including:

 

   

lost revenue as a result of macroeconomic developments;

 

   

decreased liquidity resulting from longer accounts receivable collection cycles typical of foreign countries;

 

   

lower productivity resulting from difficulties Ortho encounters in staffing and managing sales, support and research and development operations across many countries;

 

   

difficulties associated with enforcing agreements and collecting receivables through foreign legal systems;

 

   

disputes with third-party distributors of Ortho’s products or from third parties claiming distribution rights to Ortho’s products;

 

   

difficulties associated with navigating foreign laws and legal systems;

 

   

difficulties in identifying potential third-party distributors or distribution channels;

 

   

the imposition by foreign governments of trade barriers such as tariffs, quotas, preferential bidding and import restrictions;

 

   

import or export licensing requirements, both by the United States and foreign countries;

 

   

acts of war, terrorism, theft or other lawless conduct or other economic, social or political instability in or affecting foreign countries in which Ortho sells its products or operates;

 

   

international sanctions regimes;

 

   

adverse effects resulting from changes in foreign regulations, rules, policies or other laws affecting sales of Ortho’s products or Ortho’s foreign operations;

 

   

tax liability resulting from international tax laws;

 

   

increased financial accounting and reporting burdens and complexities;

 

   

increased costs to comply with changes in legislative or regulatory requirements;

 

   

failure of laws to protect Ortho’s intellectual property rights; and

 

   

delays in obtaining import or export licenses, transportation difficulties and delays resulting from inadequate local infrastructure.

The occurrence of any of these, or other factors over which Ortho does not have control, could lead to reduced revenue and profitability.

Currency translation risk and currency transaction risk may adversely affect Ortho’s financial condition, results of operations and cash flows.

Ortho derives a significant portion of its revenue from outside the United States (approximately 50.3% for the fiscal year ended January 2, 2022), and Ortho conducts its business and incurs costs in the local currency of most countries in which it

 

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operates. Because Ortho’s financial statements are presented in U.S. dollars, Ortho must translate earnings as well as assets and liabilities into U.S. dollars at exchange rates in effect during or at the end of each reporting period, as applicable. Therefore, increases or decreases in the value of the U.S. dollar against other currencies in countries where Ortho operates will affect Ortho’s results of operations and the value of balance sheet items denominated in foreign currencies. Furthermore, many of Ortho’s local businesses generate revenues and incur costs in a currency other than their functional currency, which can impact the operating results for these operations if Ortho is unable to mitigate the impact of foreign currency fluctuations. Additionally, in order to fund the purchase price for certain assets of Ortho and the capital stock of certain other non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries. In many instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries. Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies will affect Ortho’s results of operations. Ortho cannot accurately predict the effects of exchange rate fluctuations upon its future operating results because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates. Accordingly, Ortho’s profitability could be affected by fluctuations in foreign exchange rates. Given the volatility of exchange rates, Ortho may not be able to effectively manage its currency transaction and/or translation risks, and any volatility in currency exchange rates may have an adverse effect on Ortho’s financial condition, results of operations and cash flows. Ortho has entered into hedging agreements to address certain of its currency risks and intends to utilize local currency funding of expansions when appropriate. Ortho does not intend to hold financial instruments for trading or speculative purposes.

New tariffs and other trade measures could adversely affect Ortho’s business and financial results.

Governments sometimes impose additional duties, tariffs or taxes on certain imported products. The imposition of import tariffs or restrictions, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries. For instance, the United States and China have implemented import tariffs and retaliatory tariffs on certain categories of goods, including from time to time, some of Ortho’s reagent products sold in China. These tariffs, depending upon their ultimate scope and value and how they are implemented, could negatively impact Ortho’s business by increasing Ortho’s costs and by making Ortho’s products less cost competitive in China.

The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and Ortho’s business.

Ortho is a multinational company with worldwide operations, including significant business operations in Europe. Following a national referendum in which a majority of voters in the United Kingdom elected to withdraw from the European Union and the enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020. On December 24, 2020, the United Kingdom and the European Commission reached an agreement on the terms of its future cooperation with the European Union (the “UK-EU Trade and Cooperation Agreement”). On December 30, 2020, the UK Parliament provided its approval of the European Union (Future Relationship) Bill (now the European Union (Future Relationships) Act 2020) which implements, inter alia, the UK-EU Trade and Cooperation Agreement. However, significant political and economic uncertainty remains about whether the terms of the relationship will differ materially in practice from the terms before withdrawal and uncertainty continues to persist as there are a number of areas not covered by the UK-EU Trade and Cooperation Agreement.

These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. The medium- and long-term impact of withdrawal of the United Kingdom from the European Union on these conditions and markets are not yet known. Asset valuations, currency exchange rates and credit ratings have been and may continue to be subject to increased market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which European Union laws to replace or replicate could depress economic activity and investment into the United Kingdom and restrict Ortho’s access to capital. The full extent of the tax implications of the United Kingdom’s departure from the European Union are also not certain as of the date of this joint proxy statement/prospectus.

In addition, there is a risk of delays in the delivery of Ortho’s products from the United Kingdom to customers in the European Union and an increase in associated delivery costs. Restrictions on the free movement of goods (including as a result of customers’ duties, import tariffs or other restrictions on trade) could also have a material adverse effect on Ortho’s

 

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supply chains, production schedule and costs. In addition, Ortho may face challenges retaining or attracting EU staff in the United Kingdom, which could disrupt its business and growth in this market. The full impact of the changes to immigration laws following the United Kingdom’s departure from the European Union is not clear, but Ortho may face particular challenges attracting skilled talent (including scientists, engineers and laboratory technicians) if the conditions for EU nationals to be eligible to work in the United Kingdom are found, or are perceived, to be more onerous or expensive.

It is also possible that the resulting uncertainty and/or economic instability in the UK outlined above, could have a wider effect in other countries, for instance as a result of spreading economic market conditions or if other European Union member states are also prompted to leave.

Any of these factors could have a material adverse effect on Ortho’s business, financial condition and results of operations and prospects.

Risks Relating to Ortho’s Employees, Customers and Suppliers

Ortho must deliver products and services that meet customers’ needs and expectations or Ortho’s business and results of operations will be adversely impacted.

Ortho’s ability to retain customers, attract new customers, grow Ortho’s business and enhance its brand depends on Ortho’s success in delivering products and services that meet its customers’ needs and expectations. If Ortho is unable to deliver reliable products in a timely manner, promptly respond to and address quality issues, provide expected levels of customer service, develop and maintain cross-functional communication within Ortho’s company and comply with applicable regulations and rules, Ortho’s ability to deliver products that meet its customers’ needs and expectations, its competitive position, branding and results of operations may be adversely and materially affected. Furthermore, any improvement in the perception of the quality of Ortho’s competitors’ products or services relative to the quality of Ortho’s products and services could adversely and materially affect Ortho’s ability to retain Ortho’s customers and attract new customers. Additionally, the introduction of counterfeit products into the markets Ortho serves may have the effect of eroding confidence in Ortho’s products or in Ortho’s industry as a whole.

The success of many of Ortho’s products depends heavily on acceptance by directors of clinical laboratories, blood banks and hospitals, and Ortho’s failure to maintain a high level of confidence in its products could adversely affect its business.

Ortho maintains customer relationships with numerous directors of clinical laboratories, blood banks and hospitals. Ortho believes that sales of its products depend significantly on its customers’ confidence in, and recommendations of, its products. In addition, Ortho’s success depends on technicians’ acceptance and confidence in the effectiveness and ease-of-use of Ortho’s products, including its new products. In order to achieve acceptance by healthcare professionals, Ortho seeks to educate the healthcare community as to the distinctive characteristics, perceived benefits, clinical efficacy and cost-effectiveness of Ortho’s products compared to alternative products, including the products offered by its competitors. Acceptance of Ortho’s products also requires effective training of healthcare professionals in the proper use and application of Ortho’s products. Failure to effectively educate and train Ortho’s technician end-users and failure to continue to develop relationships with leading healthcare professionals could result in less frequent recommendations of Ortho’s products, which may adversely affect Ortho’s sales and profitability.

The healthcare industry and related industries that Ortho serves have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, which could adversely affect Ortho’s business, financial condition and results of operations.

The healthcare industry and related industries that Ortho serves have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs.

Many of Ortho’s customers, and the end-customers to whom Ortho’s customers supply products, rely on government funding of and reimbursement for healthcare products and services and research activities. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), healthcare austerity measures in Europe and other potential healthcare reform changes and government austerity measures may reduce the amount of government funding or reimbursement available to customers or end-customers of Ortho’s products and services and/or the volume of medical procedures using Ortho’s products and services. Global economic uncertainty or deterioration can also adversely impact government funding and reimbursement.

 

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Governmental and private healthcare providers and payors around the world are increasingly utilizing managed care for the delivery of healthcare services, forming group purchasing organizations to improve their purchasing leverage and using competitive bid processes to procure healthcare products and services.

Health insurance premiums, co-payments and deductibles have also generally increased in recent years. These increases may cause individuals to forgo health insurance, as well as medical attention. This behavior may reduce the number of lives managed by Ortho’s health information solutions, including Ortho’s health improvement programs.

These changes have increased tax costs and may cause participants in the healthcare industry to purchase fewer of Ortho’s products and services, reduce the prices they are willing to pay for Ortho’s products or services, reduce the amounts of reimbursement and funding available for Ortho’s products or services from governmental agencies or third-party payors, reduce the volume of medical procedures that use Ortho’s products and services and increase Ortho’s compliance and other costs. In addition, Ortho may be unable to enter into contracts with group purchasing organizations and integrated health networks on terms acceptable to Ortho, and even if Ortho does enter into such contracts, they may be on terms that negatively affect its current or future profitability.

All of the factors described above could adversely affect Ortho’s business, financial condition and results of operations.

Reductions in government funding and reimbursement to Ortho’s customers could negatively impact Ortho’s sales and results of operations.

Many of Ortho’s customers rely on government funding and on prompt and full reimbursement by Medicare and Medicaid and equivalent programs outside of the United States. Global economic uncertainty can result in lower levels of government funding or reimbursement. A reduction in the amount or types of government funding or reimbursement that affect Ortho’s customers could have a negative impact on Ortho’s sales. Additionally, the PPACA, which was enacted in 2010, substantially changed the way healthcare is financed by both governmental and private insurers in the United States and expanded Medicaid program eligibility and access to commercial health insurance coverage. Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the PPACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the PPACA brought by several states without specifically ruling on the constitutionality of the PPACA. Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health insurance coverage through the PPACA marketplace, from February 15, 2021 through August 15, 2021. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including, among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the PPACA. It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the PPACA will impact the law or our business.

In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. The Budget Control Act of 2011, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020, through March 31, 2022, unless additional Congressional action is taken. Additionally, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations. It is unclear what effect new quality and payment programs, such as MACRA, may have on our business, financial condition, results of operations or cash flows.

On January 1, 2018, CMS implemented certain provisions of the Protecting Access to Medicare Act of 2014 (“PAMA”), which made substantial changes to the way in which clinical laboratory services are paid under Medicare. Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule are required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostics laboratory tests”), private payer payment rates and volumes for their tests. Laboratories that fail to report the

 

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required payment information may be subject to substantial civil monetary penalties. CMS uses the data to calculate a weighted median payment rate for each test, which is used to establish a revised Medicare reimbursement rate. Under PAMA, the revised Medicare reimbursement rates were scheduled to apply to clinical diagnostic laboratory tests furnished on or after January 1, 2018. The revised reimbursement methodology is expected to result in relatively lower reimbursement under Medicare for clinical diagnostic lab tests than has been historically available. Any reduction to payment rates resulting from the new methodology is limited to 10% per test per year in 2018 through 2020, and to 15% per test per year in 2021 through 2023. For clinical diagnostic laboratory tests that are assigned a new or substantially revised Healthcare Common Procedure Coding System code, initial payment rates for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests will be assigned by the cross-walk or gap-fill methodology. Initial payment rates for new advanced diagnostic laboratory tests will be based on the actual list charge for the laboratory test. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, amended the timeline for reporting private payer payment rates, and delayed by one year the payment reductions scheduled for 2021. On December 10, 2021, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act (“PMAFSA”), which delays the next data-reporting period by an additional year and prevents any reduction in payment amounts from commercial payer rate implementation in 2022.

In addition to the CARES Act, Congress has enacted other laws in response to the COVID-19 pandemic to provide financial relief to healthcare providers and suppliers, including diagnostic laboratories, and to encourage implementation of diagnostic testing and treatment for COVID-19. For instance, the Families First Coronavirus Response Act (“FFCRA”), enacted on March 18, 2020, requires certain governmental and commercial insurance plans to provide coverage of COVID-19 diagnostic testing services without imposing cost-sharing (e.g., copays, deductibles or coinsurance) or other utilization management requirements. The CARES Act and the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCEA”), enacted on April 24, 2020, each appropriated approximately $100 billion to provide financial relief for certain healthcare providers and to expand treatment and diagnostic testing capacity for COVID-19. The Consolidated Appropriations Act of 2021 (“CAA”), which was enacted on December 27, 2020 and included further pandemic relief measures, temporarily increased payment rates under the Medicare Physician Fee Schedule by 3.75% beginning January 1, 2021 through December 31, 2021. The PMAFSA further established a temporary 3% payment rate increase under the Medicare Physician Fee Schedule that will remain in effect beginning January 1, 2022 through December 31, 2022. The CARES Act, as subsequently amended by the CAA and PMAFSA, also suspended, for the period from May 1, 2020 to March 31, 2022, the 2% payment reduction created under the sequestration required by the Budget Control Act of 2011 (as amended by the American Taxpayer Relief Act of 2012), and extended the sequester by one year, through 2030.

It is unclear what impact new quality and payment programs, such as MACRA, or new pricing structures, such as those adopted under PAMA, the CARES Act, or other legislative measures enacted in response to the COVID-19 pandemic, may have on Ortho’s business, financial condition, results of operations or cash flows.

Ortho relies on certain suppliers and manufacturers for raw materials and components for Ortho’s products and services, and fluctuations in the availability and price of such materials, products and services may interfere with Ortho’s ability to meet Ortho’s customers’ needs.

For certain of Ortho’s products, including finished products, Ortho is dependent on a small number of key suppliers and manufacturers. Ortho also depends on key suppliers for critical raw materials and components. As a result, Ortho’s ability to obtain, enter into and maintain contracts with these manufacturers and suppliers is important to Ortho’s business. Ortho cannot ensure that it will be able to obtain, enter into or maintain all such contracts in the future, and difficulty in obtaining such products or raw materials could affect Ortho’s ability to achieve anticipated production levels. On occasion, Ortho has been forced to revalidate the raw materials and components of products when a supplier of critical raw materials or components terminated its contract or no longer made the materials or components available to Ortho. Stringent requirements of the FDA and other regulatory authorities regarding the manufacture of Ortho’s products may prevent Ortho from quickly establishing additional or replacement sources for the raw materials, products, components or manufacturing services that Ortho uses, or from doing so without excessive cost. Further, Ortho’s suppliers may be subject to regulation by the FDA and other regulatory authorities that could hinder their ability to produce necessary raw materials, products and components. As a result, a reduction or interruption in supply or an inability to secure alternative sources of raw materials, products, components or manufacturing services could have a material adverse effect on Ortho’s business, result of operations, financial condition and cash flows. If Ortho is unable to achieve anticipated production levels and meet Ortho’s customers’ needs, Ortho’s operating results could be adversely affected. For a discussion of the impact of global supply chain challenges on Ortho, including on Ortho’s ability to obtain certain key components of its instruments and fulfill customer orders on a

 

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timely basis, see “—Ortho has significant international sales and operations and faces risks related to health epidemics, including the ongoing global pandemic related to COVID-19. Ortho’s business, consolidated results of operations, financial position and cash flows have been and may continue to be negatively affected by the COVID-19 pandemic.” In addition, Ortho’s results of operations may be significantly impacted by unanticipated increases in the cost of labor, raw materials, freight, utilities and other items needed to develop, manufacture and maintain Ortho’s products and operate Ortho’s business. For example, Ortho may be disadvantaged when negotiating contract terms with its suppliers, which could increase costs and reduce its margins. Suppliers may also deliver products, components or materials that do not meet specifications, preventing Ortho from manufacturing or supplying products that meet Ortho’s design specifications or customer needs.

Ortho may not be able to recruit and retain the experienced and skilled personnel it needs to compete.

Ortho’s future success depends on its ability to attract, retain, develop and motivate highly skilled personnel. Ortho relies on qualified managers and skilled employees, such as scientists, engineers and laboratory technicians, with technical expertise in operations, scientific knowledge, engineering and quality management experience in order to operate Ortho’s business successfully. From time to time, there may be a shortage of skilled labor, which may make it more difficult and expensive for Ortho to attract and retain qualified employees. If Ortho is unable to attract and retain sufficient numbers of qualified individuals or Ortho’s costs to do so increase significantly, Ortho’s operations could be materially adversely affected. Additionally, if Ortho were to lose a sufficient number of its research and development scientists and were unable to replace them or satisfy its needs for research and development through outsourcing, it could adversely affect Ortho’s business.

The loss of key members of management and the risks inherent in succession planning could adversely affect Ortho’s results of operations or financial condition.

Ortho must have talented personnel to succeed and competition for senior management in Ortho’s industry is intense. Ortho’s ability to meet its performance goals depends upon the personal efforts and abilities of the principal members of Ortho’s senior management who provide strategic direction, develop Ortho’s business, manage Ortho’s operations and maintain a cohesive and stable work environment and upon their ability to work effectively as a team.

As part of their ongoing effort to maximize Ortho’s performance, Ortho’s board of directors regularly evaluates Ortho’s senior management capabilities in light of, among other things, Ortho’s business strategy, changes to Ortho’s capital structure, developments in Ortho’s industry and markets and Ortho’s ongoing financial performance, and will consider, where appropriate, supplementing, changing or otherwise enhancing Ortho’s senior management team and operational and financial management capabilities in order to maximize Ortho’s performance. Accordingly, Ortho’s organizational structure and senior management team may change in the future, which could result in a material business interruption, the risk of employment-related claims or proceedings, and the incurrence of material costs, including as a result of severance or other termination payments, damages or other compensation. Further, Ortho cannot assure you that it will retain or successfully recruit senior executives, or that their services will remain available to Ortho.

Consolidation of Ortho’s customer base and the formation of group purchasing organizations could materially adversely affect Ortho’s sales and results of operations.

Consolidation among healthcare providers and the formation of buying groups and, with respect to Ortho’s international operations, government-sponsored tendering processes, have put pressure on pricing and sales of Ortho’s products, and in some instances, required payment of fees to group purchasing organizations or providing lower pricing in the tendering process. Ortho’s success in these areas depends partly on Ortho’s ability to enter into contracts with integrated health networks and group purchasing organizations. If Ortho is unable to enter into contracts with these group purchasing organizations and integrated health networks on terms acceptable to Ortho or fails to have its pricing terms accepted in the tendering process, Ortho’s sales and results of operations may be adversely affected. Even if Ortho is able to enter into these contracts or have its pricing terms accepted in the tendering process, they may be on terms that negatively affect Ortho’s current or future profitability. Furthermore, given the average industry contract length of five to seven years, if Ortho is unable to enter into a contract with a new customer or renew a given contract with an existing customer, it may be several years before Ortho has an opportunity to acquire or reacquire, as applicable, such customer’s business, which may have a material adverse effect on Ortho’s results of operations in the interim period.

 

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Ortho may experience manufacturing or warehousing problems or delays due to, among other reasons, Ortho’s volume and specialized processes, and any interruption in supply from certain of its contract manufacturers, suppliers of raw materials and other third-party vendors, which could result in decreased revenue or increased costs.

The global supply of Ortho’s products depends on the uninterrupted efficient operation of its manufacturing facilities, and the continued performance of Ortho’s contract manufacturers, suppliers of raw materials and other third-party vendors under Ortho’s contractual arrangements. Many of Ortho’s manufacturing processes are complex and involve sensitive scientific processes involving the use of unique and often proprietary antibodies and other raw materials that cannot be replicated or acquired through alternative sources without undue delay or expense. Other processes present difficult technical challenges to obtain the manufacturing yields necessary to operate profitably. In addition, Ortho’s manufacturing processes may require complex and specialized equipment, which can be expensive to repair or replace with required lead times of up to a year.

The manufacturing of certain of Ortho’s products is concentrated in one or more of Ortho’s plants, with limited alternate facilities. Any event that negatively impacts Ortho’s manufacturing facilities, Ortho’s manufacturing systems or equipment, or the facilities, systems or equipment of Ortho’s contract manufacturers or suppliers, could delay or suspend shipments of products or the release of new products or could result in the delivery of inferior products. Ortho’s revenue from the affected products would decline and Ortho could incur losses until such time as Ortho or its contract manufacturers are able to restore Ortho’s or their production processes or Ortho is able to put in place alternative contract manufacturers or suppliers. Similarly, given the specialized storage requirements for Ortho’s supplies and Ortho’s products, any disruption or other operational challenges to one of Ortho’s two primary warehouse facilities in Memphis, Tennessee and Strasbourg, France could result in decreased revenue or increased costs given the challenge in finding suitable alternative facilities. As a result of, among other factors, the impact of COVID-19 on supply chain operations as well as increased customer demand for Ortho’s products, Ortho is currently encountering, and may continue to encounter, increased customer backlogs of inventory shipments out of its warehouse facilities, particularly the Memphis, Tennessee facility. If these increased customer backlogs continue, they may adversely impact customer relationships and affect Ortho’s financial performance.

Ortho also relies on contract manufacturers to manufacture certain of its products, such as the instruments for Ortho’s Transfusion Medicine and Clinical Laboratories businesses, as well as suppliers of raw materials and other third-party vendors. Any change in Ortho’s relationship with its contract manufacturers, suppliers of raw materials and other third-party vendors or changes to contractual terms of Ortho’s agreements with any of them could adversely affect Ortho’s financial condition and results of operations. Ortho’s reliance on a small number of contract manufacturers and a large number of single and sole source suppliers makes Ortho vulnerable to possible capacity constraints, reduced control over product availability, delivery schedules and costs and reduced ability to monitor compliance with Ortho’s product manufacturing specifications.

If Ortho’s current contract manufacturers, suppliers of raw materials and other third-party vendors were unable or unwilling to manufacture or supply Ortho’s products or requirements for raw materials in required volumes and at required quality levels or renew existing terms under supply agreements, Ortho may be required to replace such manufacturers, suppliers and vendors and may be unable to do so in a timely or cost-effective manner, or at all. Any interruption of supply or any increase in price of the instruments or raw materials and other key products produced by such contract manufacturers or raw materials supplied by such suppliers and vendors could adversely affect Ortho’s profitability.

Risks Relating to Ortho’s Business—Government Regulation

If Ortho is unable to obtain required clearances or approvals for the commercialization of its products in the United States, Ortho would not be able to sell those products in the United States.

Ortho’s future performance depends on, among other matters, the timely receipt of necessary regulatory clearances and approvals for its products. Regulatory clearance and approval can be a lengthy, expensive and uncertain process. In addition, regulatory processes are subject to change, and new or changed regulations can result in increased costs and unanticipated delays.

In the United States, clearance or approval to commercially distribute new medical devices is received from the FDA through clearance of a Premarket Notification under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (a “510(k)”), or through approval of a Premarket Approval application (a “PMA”). Approval to commercially distribute biologics is received from the FDA through approval of a Biologics License Application (a “BLA”) and may also require state licensing for the movement of biologics products in interstate commerce. The FDA may deny 510(k) clearance because, among other reasons, it determines that Ortho’s product is not substantially equivalent to another U.S. legally marketed device. The FDA may deny

 

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approval of a PMA or BLA because, among other reasons, it determines that Ortho’s product is not sufficiently safe or effective. Failure to obtain FDA clearance or approval would preclude commercialization in the United States, which could materially and adversely affect Ortho’s future results of operations.

Modifications or enhancements to a cleared or approved product that could significantly affect safety or effectiveness, or that constitute a major change in the intended use of the product, could require new 510(k) clearances or possibly approval of a new PMA or BLA, or a supplement to those applications. The FDA requires every manufacturer to make the determination regarding the need for a new 510(k) submission in the first instance, but the FDA may review a manufacturer’s decision not to seek a new 510(k). Ortho has made modifications to some of its products since receipt of initial 510(k) clearance. With respect to several of these modifications, Ortho filed new 510(k)s or PMAs; however, Ortho determined that submission was not necessary for all of the modifications. The FDA may not agree with any of Ortho’s determinations not to submit a new 510(k), PMA or PMA supplement, or BLA or BLA supplement for any modifications made to Ortho’s products. If the FDA requires Ortho to submit a new 510(k), PMA or PMA supplement, or BLA or BLA supplement for any product modification, Ortho may be prohibited from marketing the modified products until the new submission is cleared or approved by the FDA. In that case, Ortho may be required to recall and stop marketing its products as modified, which could require Ortho to redesign its products and conduct clinical studies to support any modifications, and Ortho could be subject to enforcement action.

If the results of clinical studies required to gain regulatory approval to sell Ortho’s products are not available when expected, or do not demonstrate the safety and effectiveness of those products, Ortho may be unable to sell those products.

Before Ortho can sell certain of its products, Ortho must conduct clinical studies intended to demonstrate that those products are safe and effective and perform as expected. The results of these clinical studies (which are experiments involving human patients having the diseases or medical conditions that the product is trying to evaluate or diagnose) are used to obtain regulatory clearance or approval from government authorities, such as the FDA. Conducting clinical studies is a complex, time-consuming and expensive process. In some cases, Ortho may spend several years completing the necessary clinical studies.

If Ortho fails to adequately manage its clinical studies, those clinical studies and corresponding regulatory clearances or approvals may be delayed or Ortho may fail to gain clearance or approval for its products altogether. Even if Ortho successfully manages its clinical studies, Ortho may not obtain favorable results and may not obtain regulatory clearance or approval. If Ortho is unable to market and sell its new products or is unable to obtain clearances or approvals in the time frame needed to execute its product strategies, Ortho’s business and results of operations would be materially and adversely affected.

Ortho is subject to the regulatory approval requirements of the foreign countries in which it sells its products, and these requirements may prevent or delay Ortho from marketing its products in those countries.

Ortho is subject to the regulatory approval requirements for each foreign country in which it sells its products. The process for complying with these approval requirements can be lengthy and expensive. Any changes in foreign approval requirements and processes may cause Ortho to incur additional costs or lengthen review times of Ortho’s products. Ortho may not be able to obtain foreign regulatory approvals on a timely basis, if at all, and any failure to do so may cause Ortho to incur additional costs or prevent it from marketing its products in foreign countries, which may have a material adverse effect on Ortho’s business, financial condition and results of operations.

Ortho’s business is subject to substantial regulatory oversight, and Ortho’s failure to comply with applicable regulations may result in significant costs or, in certain circumstances, the suspension or withdrawal of previously obtained clearances or approvals.

Ortho’s businesses are extensively regulated by the FDA and other federal, state and foreign regulatory agencies. These regulations impact many aspects of Ortho’s operations, including development, manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, physician interaction and record-keeping. Any material failure by Ortho to comply with such applicable governmental regulations could result in product recalls, the imposition of fines, restrictions on Ortho’s ability to conduct or expand its operations or the cessation of all or a portion of its operations.

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restrict the commercial applications of those products. The discovery of problems with a product may result in restrictions on the product, including withdrawal of the product from the market. In addition, in some cases Ortho may sell products or provide services which are reliant on the use or commercial availability of products of third parties, including medical devices or equipment, and regulatory restrictions placed upon any such third-party products could have a material adverse impact on the sales or commercial viability of Ortho’s related products or services.

Ortho is subject to routine inspection by the FDA and other agencies for compliance with the FDA’s requirements applicable to Ortho’s products, including, without limitation, the Quality System Regulation and Medical Device Reporting requirements in the United States, and other applicable regulations worldwide. Ortho’s manufacturing facilities and those of its suppliers and distributors also are, or can be, subject to periodic regulatory inspections.

Ortho is also subject to laws relating to matters such as privacy, safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. Ortho may incur significant costs to comply with these laws and regulations. If Ortho fails to comply with applicable regulatory requirements, Ortho may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products or injunctions against Ortho’s distribution of products, termination of Ortho’s service agreements by its customers, disgorgement of money, operating restrictions and criminal prosecution.

Changes in applicable laws, changes in the interpretation or application of such laws, or any failure to comply with existing or future laws, regulations or standards could have a material adverse effect on Ortho’s results of operations, financial condition, business and prospects. Moreover, new laws may be enacted, or regulatory agencies may impose new or enhanced standards, that would increase Ortho’s costs, as well as expose Ortho to risks associated with non-compliance. Over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products. For example, in November 2018, FDA officials announced steps that the FDA intended to take to modernize the premarket notification pathway under Section 510(k) of the Federal Food, Drug, and Cosmetic Act. Among other things, the FDA announced that it planned to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals included plans to potentially sunset certain older devices that were used as predicates under the 510(k) clearance pathway, and to potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than ten years old. These proposals have not yet been finalized or adopted, although the FDA may work with Congress to implement such proposals through legislation. Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on Ortho that could delay its ability to obtain new 510(k) clearances, increase the costs of compliance, restrict Ortho’s ability to maintain its current clearances, or otherwise create competition that may negatively affect its business.

More recently, in September 2019, the FDA issued revised final guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process. The FDA maintains a list of device types appropriate for the “safety and performance based” pathway and continues to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as recommended testing methods, where feasible. The FDA may establish performance criteria for classes of devices for which Ortho or its competitors seek or currently have received clearance, and it is unclear the extent to which such performance standards, if established, could impact Ortho’s ability to obtain new 510(k) clearances or otherwise create competition that may negatively affect Ortho’s business.

Ortho is subject to extensive regulatory requirements in connection with the emergency use authorizations (“EUAs”) that Ortho has received from the FDA for its COVID-19 antibody and antigen tests. If Ortho fails to comply with these requirements, or if the FDA otherwise determines that the conditions no longer warrant such authorization, Ortho will be unable to market its products pursuant to this authorization and its business may be harmed.

Ortho has received EUAs from the FDA authorizing Ortho to market its Anti-SARS-CoV-2 IgG Antibody test, Anti-SARS-CoV-2 IgG Quantitative Antibody test, Anti-SARS-CoV-2 Total (Anti-S) Antibody test, Anti-SARS-CoV-2 Total (Anti-N) Antibody test, SARS-CoV-2 Antigen test and related calibrators and controls on Ortho’s VITROS analyzers. These EUAs allow Ortho to market and sell its antibody tests to health-care professionals for the detection of certain SARS-CoV-2

 

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antibodies to aid in identifying individuals with an adaptive immune response to SARS-CoV-2 and, for Ortho’s Antigen test, for the detection of acute infection of SARS-CoV-2, without the need to obtain premarket clearance or approval under the FDA’s standard review pathways, for the duration of the COVID-19 public health emergency. The FDA has also established certain conditions which must be met in order to maintain authorization under these EUAs. The requirements that apply to the manufacture and sale of these products may be unclear and are subject to change.

The FDA has the authority to issue an EUA during a public health emergency if it determines that, based on the totality of the scientific evidence, it is reasonable to believe that the product may be effective, that the known and potential benefits of a product outweigh the known and potential risks, that there is no adequate, approved and available alternative and if other regulatory criteria are met. These standards for marketing authorization are lower than if the FDA had reviewed Ortho’s tests under its traditional marketing authorization pathways, and Ortho cannot assure you that its tests would be cleared or approved under those more onerous clearance and approval standards. Moreover, the FDA’s policies regarding EUAs can change unexpectedly, and the FDA may revoke an EUA where it determines that the underlying health emergency no longer exists or warrants such authorization or if problems are identified with the authorized product. Ortho cannot predict how long its authorization will remain in place. FDA policies regarding diagnostic tests, therapies and other products used to diagnose, treat or mitigate COVID-19 remain in flux as the FDA responds to new and evolving public health information and clinical evidence. For example, in December 2021, the FDA issued a draft guidance describing a potential transition plan for the regulation and distribution of emergency-use-authorized medical devices in the event that the current EUA declaration is terminated. Changes to FDA regulations or requirements could require changes to Ortho’s authorized tests, necessitate additional measures or make it impractical or impossible for Ortho to market its test. The termination of an EUA for Ortho’s products could adversely impact Ortho’s business, financial condition and results of operations.

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner or at all, which could negatively impact Ortho’s business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new medical devices and biologics or modifications to approved or cleared medical devices and biologics to be reviewed and/or cleared or approved by necessary government agencies, which would adversely affect Ortho’s business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities.

Separately, in response to the COVID-19 pandemic, on March 10, 2020, the FDA announced its intention to postpone most inspections of foreign manufacturing facilities and products, and on March 18, 2020, the FDA temporarily postponed routine surveillance inspections of domestic manufacturing facilities. Subsequently, in July 2020, the FDA resumed certain on-site inspections of domestic manufacturing facilities subject to a risk-based prioritization system. The FDA utilized this risk-based assessment system to assist in determining when and where it was safest to conduct prioritized domestic inspections. In May 2021, the FDA outlined a detailed plan to move toward a more consistent state of inspectional operations, and in July 2021, the FDA resumed standard inspectional operations of domestic facilities and was continuing to maintain this level of operation as of September 2021. More recently, the FDA continues to monitor and implement changes to its inspections and related activities to ensure the safety of its employees and those of the firms it regulates as it adapts to the evolving COVID-19 pandemic. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process Ortho’s regulatory submissions, which could have a material adverse effect on Ortho’s business.

 

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Ortho may face business disruption and related risks resulting from President Biden’s invocation of the Defense Production Act, which could have a material adverse effect on Ortho’s business.

In response to the COVID-19 pandemic, President Biden invoked the Defense Production Act, codified at 50 U.S.C. § 4501 et seq. (the “Defense Production Act”). Pursuant to the Defense Production Act, the federal government may, among other things, require domestic industries to provide essential goods and services needed for the national defense. For example, in March 2021, President Biden invoked the Defense Production Act to expand production of the COVID-19 vaccine. While Ortho has not experienced any impact on its business as a result of such actions, Ortho continues to assess the potential impact that the invocation of the Defense Production Act may have on its ability to effectively conduct its business operations as planned, either as a result of becoming directly subject to the requirements of the Defense Production Act, Ortho’s suppliers becoming so subject and diverting deliveries of raw materials elsewhere, or otherwise. There can be no assurance that Ortho will not be impacted by any action taken by the federal government under the Defense Production Act, and any resulting disruption on Ortho’s ability to conduct business could have a material adverse effect on Ortho’s financial condition and results or operations.

Ortho could incur costs complying with environmental and health and safety requirements, or as a result of liability for contamination or other potential environmental harm or liability caused by Ortho’s operations.

Ortho’s operations and facilities are subject to various foreign, federal, state and local environmental, health and safety laws, rules, regulations and other requirements, including those governing the generation, use, manufacture, handling, transport, storage, treatment and disposal of, or exposure to, regulated materials, discharges and emissions to air and water, the cleanup of contamination and occupational health and safety matters. Noncompliance with these laws, rules, regulations and other requirements can result in fines or penalties or limitations on Ortho’s operations or liability for remediation costs, as well as claims alleging personal injury, property, natural resource or environmental damages. Ortho believes that its operations and facilities are operated in compliance in all material respects with existing environmental, health and safety requirements, including the operating permits required thereunder.

Ortho’s research and development and manufacturing processes involve the use of regulated materials subject to environmental, health and safety regulations. Ortho may incur liability as a result of any contamination or injury arising from a release of or exposure to such regulated materials. Under some environmental laws and regulations, Ortho could also be held responsible for costs relating to any contamination at its past or present facilities and at third-party disposal sites where Ortho has sent wastes for treatment or disposal. Liability for contamination at contaminated sites may be imposed without regard to whether Ortho knew of, or caused, the release or disposal of such regulated substances and, in some cases, liability may be joint or several. Any such future expenses or liability could have a negative impact on Ortho’s financial condition and results of operations. The enactment of stricter laws or regulations, the stricter interpretation of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at Ortho’s current or former facilities or at third-party sites where Ortho has sent waste for treatment or disposal may require Ortho to make additional expenditures or subject Ortho to additional liability or claims.

In addition, Ortho’s workers, properties and equipment may be exposed to potential operational hazards such as fires, process safety incidents, releases of regulated materials, malfunction of equipment, accidents and natural disasters, which could result in personal injury or loss of life, damage to or destruction of property and equipment or environmental damage, and could potentially result in a suspension of operations, harm to Ortho’s reputation and the imposition of civil or criminal fines or penalties, all of which could adversely affect Ortho’s business. See “Business of Ortho—Health, Safety and Environmental.”

Ortho is subject to healthcare regulations that could result in liability, require Ortho to change its business practices and restrict its operations in the future.

Ortho is subject to healthcare fraud and abuse regulation and enforcement by both the federal government and the governments of states and foreign countries in which Ortho conducts its business. In the United States, these healthcare laws and regulations include, for example:

 

   

the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. The U.S.

 

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government has interpreted this law broadly to apply to the marketing and sales activities of medical device manufacturers. In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;

 

   

the federal civil and criminal false claims laws, including the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent. Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act;

 

   

the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

 

   

the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;

 

   

the federal Physician Payments Sunshine Act which requires certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under certain federal healthcare programs, to monitor and report to the Centers for Medicare & Medicaid Services, or CMS, certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers, including physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

 

   

the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices, and regulates device marketing;

 

   

U.S. federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers; and

 

   

state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws requiring device companies to comply with specific compliance standards, restrict payments made to healthcare providers and other potential referral sources, and report information related to payments and other transfers of value to healthcare providers or marketing expenditures; and state laws related to insurance fraud in the case of claims involving private insurers.

These laws and regulations, among other things, constrain our business, marketing and other promotional and research activities by limiting the kinds of financial arrangements, including sales programs, we may have with hospitals, physicians or other potential purchasers of our products. In particular, these laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements, as well as interactions with healthcare professionals through consultant arrangements, product training, sponsorships, or other activities. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare and other laws and regulations will involve substantial costs. Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, governmental authorities may possibly conclude that our business practices may not comply with healthcare laws and regulations.

To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. We may be subject to private qui tam actions brought by individual whistleblowers on behalf of the federal or state governments, with potential liability under the federal False Claims Act including mandatory treble damages and significant per-claim penalties. Additionally, as a result of these investigations and qui tam actions, we may have to agree to additional compliance and reporting requirements as part of a

 

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consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business, financial condition and results of operations. Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to.

If our operations are found to be in violation of any of the federal and state laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil, and administrative penalties, damages, fines, exclusion from participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, oversight if we become subject to a consent decree or corporate integrity agreement, disgorgement and we could be required to curtail, restructure or cease our operations. Any of the foregoing consequences will negatively affect our business, financial condition and results of operations.

Ortho’s failure to comply with the anti-corruption laws of the United States and various international jurisdictions could negatively impact Ortho’s reputation and results of operations.

Doing business on a worldwide basis requires Ortho to comply with the laws and regulations of the U.S. government and those of various international and sub-national jurisdictions, and Ortho’s failure to successfully comply with these rules and regulations may expose Ortho to liabilities. These laws and regulations apply to companies, individual directors, officers, employees and agents, and may restrict Ortho’s operations, trade practices, investment decisions and partnering activities. In particular, Ortho’s international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the FCPA, as well as anti-corruption laws of the various jurisdictions in which Ortho operates. The FCPA and other laws prohibit Ortho, and Ortho’s officers, directors, employees and agents acting on Ortho’s behalf, from corruptly offering, promising, authorizing or providing anything of value to foreign officials or entities for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. As part of Ortho’s business, Ortho deals with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. Ortho is subject to the jurisdiction of various governments and regulatory agencies outside of the United States, which may bring Ortho’s personnel into contact with foreign officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations. In addition, some of the international locations in which Ortho operates lack a developed legal system and have elevated levels of corruption. Ortho’s global operations expose Ortho to the risk of violating, or being accused of violating, the foregoing or other anti-corruption laws, including similar anti-corruption laws, rules and regulations of the various jurisdictions in which Ortho operates. Such violations could be punishable by criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be very expensive and disruptive. Additionally, Ortho faces a risk that its distributors, manufacturers and other third parties acting on Ortho’s behalf may potentially violate the FCPA or similar laws, rules or regulations of the various jurisdictions in which Ortho operates. Though these distributors, manufacturers and other third parties acting on Ortho’s behalf are not Ortho’s affiliated legal entities, such violations could expose Ortho to FCPA liability or liabilities under similar laws of the various jurisdictions in which Ortho operates and/or Ortho’s reputation may potentially be harmed by the distributors and manufacturers’ violations and resulting sanctions and fines.

Ortho’s international operations require it to comply with anti-terrorism laws and regulations and applicable trade embargoes.

Ortho is subject to trade and economic sanctions laws and other restrictions on international trade. The United States and other governments and their agencies impose sanctions and embargoes on certain countries, their governments and designated parties. In the United States, the economic and trade sanctions programs are principally administered and enforced by OFAC. Currently, OFAC maintains comprehensive trade and economic sanctions against the following countries and territories: Cuba, Iran, Syria, North Korea and the Crimea region of Ukraine. If Ortho fails to comply with these laws, Ortho could be subject to civil or criminal penalties, other remedial measures and legal expenses, which could adversely affect Ortho’s business, financial condition and results of operations.

Ortho cannot predict the nature, scope or effect of future regulatory requirements to which Ortho’s international sales and manufacturing operations might be subject or the manner in which existing laws might be administered or interpreted. Future regulations could limit the countries in which some of Ortho’s products may be manufactured or sold, or could restrict Ortho’s access to, or increase the cost of obtaining, products from foreign sources. The occurrence of any of the foregoing could have a material adverse effect on Ortho’s business, financial condition and results of operations.

 

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Ortho’s collection, use and disclosure of personal information, including health information, is subject to federal and state privacy and security regulations, as well as data privacy and security laws outside the United States, including in the European Economic Area (the “EEA”) the United Kingdom and the People’s Republic of China, and Ortho’s failure to comply with those laws and regulations or to adequately secure the information Ortho holds could result in significant liability or reputational harm.

Ortho and its partners may be subject to federal, state, and foreign data protection laws and regulations. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues, which may affect its business and may increase its compliance costs and exposure to liability. In the United States, numerous federal and state laws and regulations, including state security breach notification laws, federal and state health information privacy laws (including HIPAA) and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of personal information, including health-related information. Each of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues. If Ortho fails to comply with applicable laws and regulations it could be subject to penalties or sanctions, including criminal penalties if Ortho knowingly obtains or discloses individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or applicable state laws.

In the United States, HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for Ortho and its future customers and strategic partners. For example, the California Consumer Privacy Act of 2018 (“CCPA”) went into effect on January 1, 2020. The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Further, the California Privacy Rights Act (“CPRA”) recently passed in California. The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required. Similar laws have passed in Virginia and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that Ortho is subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect its financial condition.

Furthermore, the Federal Trade Commission (the “FTC”) and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive. For example, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure can constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

HIPAA as well as numerous other federal and state laws and regulations, govern the collection, dissemination, use, privacy, security, confidentiality, integrity and availability of personally identifiable information (“PII”), including protected health information (“PHI”). HIPAA applies national privacy and security standards for PHI to covered entities, including certain types of healthcare entities and their service providers that access PHI, known as business associates. HIPAA requires covered entities and business associates to maintain policies and procedures governing PHI that is used or disclosed, and to implement administrative, physical and technical safeguards to protect PHI, including PHI maintained, used and disclosed in electronic form. These safeguards include employee training, identifying business associates with whom covered entities need to enter into HIPAA-compliant contractual arrangements and various other measures. While Ortho undertakes substantial efforts to secure the PHI Ortho maintains, uses and discloses in electronic form, a cyber-attack or other intrusion that bypasses Ortho’s information security systems causing an information security breach, loss of PHI, PII or other data subject to privacy laws or a material disruption of Ortho’s operational systems could result in a material adverse impact on Ortho’s business, along with potentially substantial fines and penalties. Ongoing implementation and oversight of these security measures involves significant time, effort and expense.

 

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HIPAA requires covered entities and their business associates to report breaches of unsecured PHI to affected individuals without unreasonable delay and in no case later than 60 days after the discovery of the breach by the covered entity or its agents.

Notification must also be made to the U.S. Department of Health and Human Services (“HHS”) and, in certain situations involving large breaches, to the media. HIPAA rules created a presumption that all non-permitted uses or disclosures of unsecured PHI are breaches unless the covered entity establishes that there is a low probability the information has been compromised. A data breach affecting sensitive personal information, including health information, also could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on Ortho’s business.

HIPAA also authorizes state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents. While HIPAA does not create a private right of action allowing individuals to sue Ortho in civil court for violations of HIPAA’s requirements, its standards have been used as a basis for the duty of care in state civil suits, such as those for negligence or recklessness in the handling of PHI. In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of covered entities and business associates.

In addition, many states in which Ortho operates may impose laws that are more protective of the privacy and security of PII than HIPAA. Where these state laws are more protective than HIPAA, Ortho may have to comply with their stricter provisions. Not only may some of these state laws impose fines and penalties upon violators, but some may afford private rights of action to individuals who believe their PII has been misused.

Both state and federal laws and regulations are subject to modification or enhancement of privacy and security protections at any time. Ortho’s business will continue to remain subject to any federal and state privacy-related laws and regulations that are more restrictive than the privacy regulations issued under HIPAA. Sweeping privacy measures in certain states such as the California Consumer Privacy Act impose European-like standards for the protection of personal data and allow for a private right of action. These statutes vary and could impose additional requirements on Ortho and more severe penalties for disclosures of confidential health information. New health and consumer information standards could have a significant effect on the manner in which Ortho does business, and the cost of complying with new standards could be significant. Ortho may not remain in compliance with the diverse privacy and security requirements in all of the jurisdictions in which Ortho does business. If Ortho fails to comply with such state laws, it could incur substantial civil monetary or criminal penalties.

Ortho is also subject to data privacy and security laws in jurisdictions outside of the United States. For example, in the EEA and the United Kingdom, Ortho is subject to the General Data Protection Regulation 2016/679 (the “GDPR”) and the United Kingdom data protection regime consisting primarily of the UK General Data Protection Regulation and the UK Data Protection Act 2018 (collectively, the “UK GDPR”), which could limit Ortho’s ability to collect, control, process, share, disclose and otherwise use personal data (including health and medical information which are subject to strict requirements). Maintaining compliance with the GDPR and UK GDPR could cause Ortho’s compliance costs to increase, ultimately having an adverse impact on Ortho’s business. Ortho is implementing measures to comply with these laws as part of Ortho’s comprehensive compliance program with input from external advisors to address Ortho’s compliance with these obligations under GDPR. Failure to comply with the GDPR and UK GDPR may result in fines up to the greater of €20 million / £17.5 million or 4% of total annual revenue. In addition to the foregoing, a breach of the GDPR and UK GDPR could result in regulatory investigations, reputational damage, orders to cease or change Ortho’s processing of its data, enforcement notices or assessment notices (for a compulsory audit). Ortho may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources and reputational harm. In addition, in September 2021, the UK government launched a consultation on its proposals for wide-ranging reform of UK data protection laws following Brexit. There is a risk that any material changes which are made to the UK data protection regime could result in the European Commission reviewing the UK adequacy decision (enabling data transfers from EU member states to the UK without additional safeguards) and the UK losing its adequacy decision if the European Commission deems the UK to no longer provide adequate protection for personal data. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how UK data protection laws and regulations will develop in the medium to long term, and how data transfers to and from the United Kingdom will be regulated in the long term. These changes could lead to additional costs and increase Ortho’s overall risk exposure.

Ortho is also subject to European Union and United Kingdom rules with respect to cross-border transfers of personal data out of the EEA and the United Kingdom, respectively. Recent legal developments in Europe have created complexity and

 

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uncertainty regarding transfers of personal data from the EEA to the United States. For instance, on July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-U.S. Privacy Shield Framework (the “Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme. While the CJEU did not invalidate standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. Ortho currently relies on the standard contractual clauses among other data transfer mechanisms allowed pursuant to the GDPR to transfer personal data outside the EEA or the United Kingdom, including to the United States. The European Commission has published revised standard contractual clauses for data transfers from the EEA: the revised clauses must be used for relevant new data transfers from September 27, 2021; existing standard contractual clauses arrangements must be migrated to the revised clauses by December 27, 2022. Ortho will be required to implement the revised standard contractual clauses, in relation to both relevant existing contracts and transfer arrangements and additional or new contracts and arrangements, within the relevant time frames. The revised standard contractual clauses apply only to the transfer of personal data outside of the EEA and not the United Kingdom; the UK’s Information Commissioner’s Office launched a public consultation on its draft revised data transfers mechanisms in August 2021. Ortho is monitoring the outcome of this, and we may be required to implement new or revised documentation and processes in relation to data transfers subject to the UK GDPR within the relevant time frames. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, Ortho could suffer additional costs, complaints, regulatory investigations or fines, and if Ortho is otherwise unable to transfer personal data between and among countries and regions in which Ortho operates, it could affect the manner in which Ortho provides its services and the geographical location or segregation of Ortho’s relevant systems and operations, which could adversely affect Ortho’s financial results.

Ortho depends on a number of third-parties in relation to the operation of its business, a number of which process personal data on Ortho’s behalf. With each such third party, Ortho attempts to mitigate the associated risks of using third parties by performing applicable security assessments and detailed due diligence, entering into contractual arrangements to require that providers only process personal data according to Ortho’s instructions, and that they have sufficient technical and organizational security measures in place. Where Ortho transfers personal data outside the EEA or the United Kingdom to such third parties, Ortho does so in compliance with the relevant data export requirements, as described above. There is no assurance that these contractual measures and Ortho’s own privacy and security-related safeguards will fully protect Ortho from the risks associated with the third-party processing. Any violation of data or security laws by Ortho’s third-party processors could have a material adverse effect on Ortho’s business and result in the fines and penalties outlined below.

Ortho is also subject to evolving privacy laws on cookies and e-marketing. In the European Union, regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive will be replaced by an EU regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance. While the text of the ePrivacy Regulation is still under development, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. In the United States, the Federal Trade Commission and many state laws have increasingly focused on the collection and use of behavioral data including geolocation and biometric information. As regulators start to enforce a strict approach (which has already started in Germany), this could lead to substantial costs, require significant systems changes, limit the effectiveness of Ortho’s marketing activities, divert the attention of Ortho’s technology personnel, adversely affect Ortho’s margins, increase costs and subject Ortho to additional liabilities.

Recently many countries have enacted legislation to strengthen privacy laws to protect their residents’ personal data. Some countries’ laws have been modeled on GDPR, including fines and penalties such as Brazil’s enacted data protection law and similar pending legislation in Chile. Ortho is currently monitoring the evolving data protection landscape so that Ortho can comply with the requirements in the countries in which Ortho does business.

Data compliance in other countries outside EEA, the United Kingdom and the United States may be even more complex and varied making it difficult to comply with them all. China’s legislation and regulation of the healthcare industry involves multiple pieces of legislation prescribing complex regulatory requirements governing different types of data across a continuum of care, and various supervisory authorities frequently conduct inspections and investigations. For example, under China’s Cybersecurity Law, any collection, use, transfer and storage of personal information of a Chinese citizen through a network by the network operator should be based on the three principles of legitimacy, justification and necessity and requires the consent of the data subject. The rules, purposes, methods and ranges of such collection should also be disclosed

 

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to the data subject. China’s data localization requirements are becoming increasingly common in sector-specific regulations. China’s Cybersecurity Law requires operators of critical information infrastructure (“CIIOs”) to store personal information and important data collected and generated from the critical information infrastructure within China. Failure to do so can result in fines of up to RMB 100,000 for the relevant entity as well as for the personnel directly responsible.

China’s Data Security Law (“Data Security Law”) became effective on September 1, 2021. The primary purpose of the Data Security Law is to regulate data activities, safeguard data security, promote data development and usage, protect individuals and entities’ legitimate rights and interests, and safeguard state sovereignty, state security and development interests. The Data Security Law applies extraterritorially, and to a broad range of activities that involve “data” (not only personal or sensitive data). Under the Data Security Law, entities and individuals carrying out data activities must abide by various data security obligations. For example, the Data Security Law proposes to classify and protect data based on the importance of data to the state’s economic development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. The appropriate level of protective measures is required to be taken for each respective class of data. The Data Security Law also echoes the data localization requirement in the Cybersecurity Law and requires important data to be stored locally in China. Such important data may only be transferred outside of China subject to compliance with certain data transfer restrictions, such as passing a security assessment organized by the relevant authorities.

Notably, China’s Personal Information Protection Law (“PIPL”), similar to the GDPR, applies extraterritorially. The PIPL is intended to clarify the scope of application, the definitions of personal information and sensitive personal information (which includes medical and health information), the legality of personal information processing and the basic requirements of notice and consent, among other things. The PIPL also sets out data localization requirements for CIIOs and personal information processors who process personal information above a certain threshold prescribed by the relevant authorities. The PIPL also includes a list of rules which must be complied with prior to the transfer of personal information outside of China, such as compliance with a security assessment or certification by an agency designated by the relevant authorities or entering into standard form model contracts approved by the relevant authorities with the overseas recipient. Failure to comply with PIPL can result in fines of up to RMB 50 million or 5% of the prior year’s total annual revenue for the personal information processor and/or a suspension of services or data processing activities. Other potential penalties include a fine of up to RMB 1 million on the person in charge or directly responsible personnel and, in serious cases, individuals and entities may be exposed to criminal liabilities under other local Chinese law, such as the Criminal Law of the People’s Republic of China. The PIPL also prohibits responsible personnel for violations of the PIPL from holding high-level management or data protection officer positions in relevant enterprises.

In addition to China’s Cybersecurity Law, the Data Security Law and the PIPL, the relevant government authorities of People’s Republic of China promulgated several regulations or released a number of draft regulations for public comments which are designed to provide further implemental guidance in accordance with the laws mentioned above.

Ortho cannot predict what impact the new laws and regulations, in particular the Data Security Law or PIPL, or the increased costs of compliance, if any, will have on Ortho’s operations in China due to their recent enactment and the limited guidance available, particularly on PIPL, which entities are awaiting further guidance on. It is also generally unclear how the laws will be interpreted and enforced in practice by the relevant government authorities as often the abovementioned laws are drafted broadly and leaves great discretion to the relevant government authorities to exercise.

Compliance with China’s data laws mentioned above, the GDPR and UK GDPR and the various other global data privacy laws that Ortho is subject to has required, and may continue to require, significant company resources and expenditures, and may require further changes in Ortho’s products, services or business model that increase competition or reduce revenue.

Although Ortho works to comply with applicable laws, regulations and standards, its contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which Ortho must comply. Any failure or perceived failure by Ortho or its employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to Ortho, damage its reputation, and adversely affect its business and results of operations.

 

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Risks Relating to Ortho’s Information Technology and Intellectual Property

Ortho’s data management and information technology systems are critical to maintaining and growing Ortho’s business.

Ortho’s business is dependent on the effective use of information technology and, consequently, technology failure or obsolescence may negatively impact Ortho’s business. In addition, data acquisition, data quality control, data privacy, data security and data analysis are intense and complex processes subject to error. Untimely, incomplete or inaccurate data, flawed analysis of data or Ortho’s inability to properly integrate, implement, protect and update systems could have a material adverse impact on Ortho’s business and results of operations. Ortho expects that it will need to continue to improve and further integrate its information technology systems on an ongoing basis in order to effectively run Ortho’s business. If Ortho fails to successfully manage its information technology systems, its business and operating results could be adversely affected.

Ortho’s ability to protect its information systems and electronic transmissions of personal data and sensitive data from data corruption, cyber-based attacks, security breaches or privacy violations is critical to the success of Ortho’s business.

Ortho is highly dependent on information technology networks and systems, including its office networks, operational environment, special purpose networks, systems and software used to operate Ortho’s instruments and devices and those networks and systems managed by vendors or third parties, to securely process, transmit and store electronic information (including sensitive data such as trade secrets, confidential business information and personal data relating to employees, customers and business partners). Like any large corporation, from time to time the information systems on which Ortho relies, including those controlled and managed by third-parties, may be subject to computer viruses, malicious software, attacks by hackers and other forms of cyber intrusions or unauthorized access, any of which can create system disruptions, shutdowns or unauthorized disclosure of sensitive data. In addition, a security breach that leads to disclosure of information protected by privacy laws could compel Ortho to comply with breach notification requirements under applicable laws, potentially resulting in litigation or regulatory action, or otherwise subjecting Ortho to liability under laws that protect personal data.

If Ortho experiences a significant technology incident, such as a serious product vulnerability, security breach or a failure of a system that is critical for the operations of Ortho’s business, it could impair Ortho’s ability to operate its business, including its ability to provide maintenance and support services to Ortho’s customers. If this happens, Ortho’s revenues could decline and its business could suffer, and it may need to make significant further investments to protect data and infrastructure. An actual or perceived vulnerability, failure, disruption or breach of Ortho’s network or privileged account security in Ortho’s systems also could adversely affect the market perception of Ortho’s products and services, as well as Ortho’s perception among new and existing customers. Additionally, a significant security breach could subject Ortho to potential liability, litigation and regulatory or other government action. If any of the foregoing were to occur, Ortho’s business may suffer.

Ortho attempts to mitigate the above risks by employing a number of measures, including monitoring and testing of Ortho’s security controls, employee training and maintenance of protective systems and contingency plans. Further, Ortho’s contractual arrangements with service providers aim to ensure that third-party cybersecurity risks are appropriately mitigated. Ortho also maintains insurance relating to cybersecurity incidents, which Ortho cannot guarantee will be adequate. It is impossible to eliminate all cybersecurity risk and thus Ortho’s systems, products and services, as well as those of its service providers, remain potentially vulnerable to known or unknown threats. Additionally, Ortho’s information technology systems may also be vulnerable to damage or interruption from circumstances beyond Ortho’s control, including fire, natural disasters, power outages and system failures. Any system outages or security breaches, whether caused intentionally or unintentionally, can interrupt Ortho’s operations, delay production and shipments, result in theft of trade secrets and intellectual property, damage Ortho’s reputation, result in defective products or services, give rise to legal proceedings, liabilities and penalties, and cause Ortho to incur increased costs for insurance premiums, security, remediation, and regulatory compliance.

Information security risks have generally increased in recent years because of the increased proliferation, sophistication and availability of complex malware and hacking tools to carry out cyber-attacks. As a result of the COVID-19 pandemic, Ortho may also face increased cybersecurity risks due to its reliance on internet technology and the number of its employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, Ortho may be unable to anticipate these techniques or implement adequate preventative measures. Ortho may also experience security breaches that may remain undetected for an extended period of

 

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time. As cyber threats continue to evolve, Ortho may be required to expend additional resources to mitigate new and emerging threats while continuing to enhance Ortho’s information security capabilities or to investigate and remediate security vulnerabilities.

Ortho’s inability to protect and enforce its intellectual property rights could adversely affect its financial results.

Intellectual property rights both in the United States and in foreign countries, including patents, trade secrets, proprietary information, trademarks and trade names, are important to Ortho’s business and will be critical to its ability to grow and succeed in the future. Ortho makes strategic decisions on whether to apply for intellectual property protection and what kind of protection to pursue based on a cost-benefit analysis. While Ortho endeavors to protect its intellectual property rights in certain jurisdictions in which its products are produced or used and in jurisdictions into which Ortho’s products are imported, the decision to file for intellectual property protection is made on a case-by-case basis. Because of the differences in foreign trademark, patent and other laws concerning proprietary rights, Ortho’s intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States. Additionally, certain of Ortho’s intellectual property rights are held through its license agreements and collaboration arrangements with third parties. Because of the nature of these licenses and arrangements, Ortho cannot assure you that it would be able to retain all of these intellectual property rights upon termination of such licenses and collaboration arrangements. Ortho’s failure to obtain or maintain adequate protection of its intellectual property rights for any reason could have a material adverse effect on its business, results of operations and financial condition.

Ortho has applied for patent protection relating to certain existing and proposed products, processes and services in certain jurisdictions. While Ortho generally considers applying for patents in those countries where it intends to make, has made, uses or sells patented products, Ortho may not accurately assess all of the countries where patent protection will ultimately be desirable. If Ortho fails to timely file a patent application in any such country, Ortho may be precluded from doing so at a later date. Furthermore, Ortho cannot assure you that its pending patent applications will not be challenged by third parties or that such applications will eventually be issued by the applicable patent offices as patents. Ortho also cannot assure you that the patents issued as a result of its foreign patent applications will have the same scope of coverage as its U.S. patents. It is possible that only a limited number of the pending patent applications will result in issued patents, which may have a materially adverse effect on Ortho’s business and results of operations.

The patents Ortho owns could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide Ortho with any meaningful protection or commercial advantage. Furthermore, Ortho’s existing patents are subject to challenges from third parties which may result in invalidations and will all eventually expire, after which Ortho will not be able to prevent Ortho’s competitors from using Ortho’s previously patented technologies, which could materially adversely affect Ortho’s competitive advantage stemming from those products and technologies. Ortho also cannot assure you that competitors will not infringe Ortho’s patents, or that Ortho will have adequate resources to enforce Ortho’s patents.

Ortho also licenses third parties to use Ortho’s patents and know-how. In an effort to preserve Ortho’s intellectual property rights, Ortho enters into license agreements with these third parties, which govern the use of Ortho’s patents, know-how and other confidential, proprietary information. Although Ortho makes efforts to police the use of its intellectual property by its licensees, Ortho cannot assure you that these efforts will be sufficient to ensure that Ortho’s licensees abide by the terms of their licenses. In the event that Ortho’s licensees fail to do so, Ortho’s intellectual rights could be impaired.

Ortho also relies on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to Ortho’s unpatented technology. To protect Ortho’s trade secrets and other proprietary information, Ortho requires certain employees, consultants, advisors and collaborators to enter into confidentiality agreements as Ortho deems appropriate. Ortho cannot assure you that it will be able to enter into these confidentiality agreements or that these agreements will provide meaningful protection for Ortho’s trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If Ortho is unable to maintain the proprietary nature of Ortho’s technologies, it could be materially adversely affected.

Ortho relies on its trademarks, trade names and brand names to distinguish its products from the products of its competitors, and have registered or applied to register many of these trademarks. Ortho cannot assure you that its trademark applications will be approved. Third parties may also oppose Ortho’s trademark applications, or otherwise challenge Ortho’s use of the trademarks. In the event that Ortho’s trademarks are successfully challenged, Ortho could be forced to rebrand its products,

 

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which could result in loss of brand recognition, and could require Ortho to devote resources to advertising and marketing new brands. Further, Ortho cannot assure you that competitors will not infringe Ortho’s trademarks, or that Ortho will have adequate resources to enforce Ortho’s trademarks.

Risks Relating to Ortho’s Taxation

Legislative or taxation changes or HM Revenue & Customs (“HMRC”) enforcement actions may have a material adverse impact on Ortho’s business, results of operations and financial condition.

Ortho is subject to the laws of England and Wales and the taxation rules administered by HMRC. Changes in legislation or regulations and actions by regulators, including changes in administration and enforcement policies, could from time to time require operational improvements or modifications, including in relation to the conduct of reviews and audits, that could result in higher costs or restrict Ortho’s ability to operate its business and, as a result, have a material adverse effect on its business, results of operations and financial condition. HMRC may also take enforcement actions against Ortho which may result in fines, penalties and/or interest charges being imposed on Ortho which may have a material adverse effect on its business, results of operations and financial condition.

Changes in tax laws or exposures to additional tax liabilities could negatively impact Ortho’s operating results.

Changes in tax laws or regulations around the world, including in the United States and as led by the Organization for Economic Cooperation and Development, could negatively impact Ortho’s effective tax rate and results of operations. A change in statutory tax rate or certain international tax provisions in any country would result in the revaluation of Ortho’s deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. This change would result in an expense or benefit recorded to Ortho’s consolidated statement of operations. Ortho closely monitors these proposals as they arise in the countries where Ortho operates. Changes to tax laws or regulations may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.

Ortho’s ability to use its net operating loss carry forwards to offset future taxable income are expected to be subject to certain limitations and Ortho could be subject to tax audits or examinations that could result in a loss of Ortho’s net operating losses and/or cash tax exposures.

As of January 2, 2022, Ortho had NOLs of approximately $889 million in the United States and approximately $467 million in Luxembourg due to prior period losses. In addition, Ortho had approximately $446 million of U.S. carryforward interest expense and approximately $214 million of Luxembourg carryforward interest expense as of January 2, 2022. Certain of these carryforwards, if not utilized, will begin to expire through 2037. Realization of these carryforwards depends on future income, and there is a risk that Ortho’s existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect Ortho’s cash flows.

In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its tax attributes, including its NOLs to offset future taxable income. As of January 2, 2022, the Ortho Scheme is expected to result in an ownership change under Section 382 of the Code. There is risk that subsequent changes in ownership could result in another Section 382 ownership change and further limit the use of Ortho’s tax attributes. Ortho’s NOLs may also be impaired under state laws. There is also a risk that due to regulatory changes, or other unforeseen reasons, Ortho’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Furthermore, any available NOLs would have value only to the extent there is income in the future against which such NOLs may be offset. For these reasons, Ortho may not be able to realize a tax benefit from the use of Ortho’s NOLs, whether or not Ortho attains profitability.

Risks Relating to Ortho’s Indebtedness

Ortho’s substantial indebtedness could adversely affect Ortho’s financial condition, limit Ortho’s ability to raise additional capital to fund its operations and prevent Ortho from fulfilling its obligations under its indebtedness.

Ortho has a significant amount of indebtedness. As a result of Ortho’s substantial indebtedness, a significant amount of Ortho’s cash flows are required to pay interest and principal on Ortho’s outstanding indebtedness, and Ortho may not

 

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generate sufficient cash flows from operations, or have future borrowings available under the Revolving Credit Facility, to enable Ortho to repay its indebtedness or to fund its other liquidity needs. As of January 2, 2022, Ortho had total indebtedness of $2,276.9 and availability under its Revolving Credit Facility of $453.7 million (net of $46.3 million of outstanding letters of credit).

Subject to the limits contained in the Credit Agreement, the indenture governing the $405.0 million in aggregate principal amount of 7.250% Senior Notes due 2028 issued by Ortho-Clinical Diagnostics S.A., a société anonyme organized under the laws of the Grand Duchy of Luxembourg (the “Lux Co-Issuer”) and Ortho-Clinical Diagnostics, Inc., a New York corporation (the “U.S. Co-Issuer”) (the “2028 Notes” and such indenture, the “2028 Notes Indenture”), the indenture governing the $240.0 million in aggregate principal amount of 7.375% Senior Notes due 2025 issued by the Lux Co-Issuer and the U.S. Co-Issuer (the “2025 Notes” and such indenture, the “2025 Notes Indenture”), the three-year accounts receivable program (the “Financing Program”) and Ortho’s other debt instruments, Ortho may incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If Ortho does so, the risks related to Ortho’s high level of debt would increase. Specifically, Ortho’s high level of debt could have important consequences to you, including:

 

   

making it more difficult for Ortho to satisfy its obligations with respect to Ortho’s debt, and if Ortho fails to comply with these obligations, an event of default could result;

 

   

limiting Ortho’s ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions or other general corporate requirements;

 

   

requiring a substantial portion of Ortho’s cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes;

 

   

increasing Ortho’s vulnerability to general adverse economic and industry conditions;

 

   

exposing Ortho to the risk of increased interest rates as certain of Ortho’s borrowings, including borrowings under the Senior Secured Credit Facilities, are at variable rates of interest;

 

   

limiting Ortho’s flexibility in planning for and reacting to changes in the industry in which Ortho competes as well as changing business and economic conditions;

 

   

restricting Ortho from making strategic acquisitions or causing Ortho to make non-strategic divestitures;

 

   

impairing Ortho’s ability to obtain additional financing in the future;

 

   

preventing Ortho from raising the funds necessary to repurchase all of the 2025 Notes and the 2028 Notes (collectively, the “Senior Notes”) tendered to Ortho upon the occurrence of certain changes of control, which failure to repurchase would constitute an event of default under the 2025 Notes Indenture or the 2028 Notes Indenture;

 

   

placing Ortho at a disadvantage compared to other, less leveraged competitors and affecting Ortho’s ability to compete; and

 

   

increasing Ortho’s cost of borrowing.

The occurrence of any one of these events could have a material adverse effect on Ortho’s business, financial condition, results of operations and ability to satisfy Ortho’s obligations in respect of Ortho’s outstanding debt.

Furthermore, borrowings under Ortho’s Senior Secured Credit Facilities are at variable rates of interest and expose Ortho to interest rate risk. Recent interest rates have been at historically low levels. If interest rates increase, Ortho’s debt service obligations on the variable rate indebtedness will increase even though the amount borrowed may remain the same, and Ortho’s net income and cash flows, including cash available for servicing Ortho’s indebtedness, will correspondingly decrease. As of January 2, 2022, $1,292.8 million in aggregate principal amount of indebtedness under Ortho’s Term Loan Facilities is subject to variable interest rates subject to the London interbank offered rate (“LIBOR”). Assuming no prepayments of Ortho’s Term Loan Facilities and that Ortho’s Revolving Credit Facility is fully drawn (and to the extent that the LIBOR is in excess of the 0.00% floor rate applicable to Ortho’s Senior Secured Credit Facilities), each one-eighth percent change in interest rates, prior to the impact of derivative instruments, would result in a $2.6 million change in annual interest expense on the indebtedness under Ortho’s Senior Secured Credit Facilities. In addition, certain of Ortho’s variable

 

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rate indebtedness uses LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures will cause LIBOR to disappear entirely or be deemed unrepresentative after June 30, 2023 to perform differently than in the past. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of Ortho’s variable rate indebtedness. Ortho has entered into a series of interest rate cap and interest rate swap agreements to hedge Ortho’s interest rate exposures related to Ortho’s variable rate borrowings under the Senior Secured Credit Facilities. However, it is possible that these interest rate cap and interest rate swap agreements or any future interest rate cap agreements or swaps Ortho enters into may not fully or effectively mitigate Ortho’s interest rate risk and Ortho may decide not to maintain interest rate swaps in the future.

In addition, amounts drawn under Ortho’s Senior Secured Credit Facilities may bear interest rates in relation to LIBOR, depending on Ortho’s selection of repayment options. On March 5, 2021, the ICE Benchmark Administration, the administrator of LIBOR, and the Financial Conduct Authority, the regulatory supervisor of the ICE Benchmark Administration, announced that the final publication or representativeness date for LIBOR for: (i) Sterling and Euros will be December 31, 2021, (ii) Dollars for 1-week and 2-month tenor settings will be December 31, 2021 and (iii) Dollars for overnight, 1-month, 3-month, 6-month and 12-month tenor settings will be June 30, 2023. In the United States, the Alternative Rates Reference Committee, a group of market participants convened in 2014 to help ensure a successful transition away from USD LIBOR, has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. On December 24, 2021, Ortho entered into an amendment to the Senior Secured Credit Facilities to account for the cessation of LIBOR for Sterling, Euros and Japanese Yen and the alternative replacement rates with respect to such currencies, as applicable. As all tenor settings for LIBOR will cease to exist on June 30, 2023, Ortho will need to renegotiate certain provisions of its Senior Secured Credit Facilities and may not be able to do so with terms that are favorable to Ortho. The overall financing market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market or the inability to renegotiate Ortho’s Senior Secured Credit Facilities with favorable terms could have a material adverse effect on Ortho’s business, financial position, operating results and cash flows.

Ortho may not be able to generate sufficient cash flows from operating activities to service all of its indebtedness, and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful.

Ortho’s inability to generate sufficient cash flows to satisfy its debt obligations, or to refinance Ortho’s indebtedness on commercially reasonable terms or at all, would materially and adversely affect Ortho’s business, financial position and results of operations and Ortho’s ability to satisfy its debt obligations.

Additionally, if Ortho cannot make scheduled payments on its debt, Ortho will be in default, and holders of the Senior Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Senior Secured Credit Facilities could terminate their commitments to loan additional money to Ortho, the lenders could foreclose against the assets securing their borrowings and Ortho could be forced into bankruptcy or liquidation. All of these events could result in your losing all or a part of your investment.

Ortho’s ability to make scheduled payments on or refinance its debt obligations depends on Ortho’s financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors beyond Ortho’s control. Ortho might not be able to maintain a level of cash flows from operating activities sufficient to permit Ortho to pay the principal, premium, if any, and interest on its indebtedness.

If Ortho’s cash flows and capital resources are insufficient to fund its debt service obligations, Ortho could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance its indebtedness. In addition, Ortho’s cash flows may be negatively impacted if Ortho is required to pay back borrowing under the Financing Program sooner than anticipated if there is a reduction in the borrowing base. Ortho may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow Ortho to meet its scheduled debt service obligations. The Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture restrict Ortho’s ability to dispose of assets and use the proceeds from such dispositions and may also restrict Ortho’s ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. Because of these restrictions, Ortho may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

 

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In addition, Ortho conducts substantially all of its operations through its subsidiaries, some of which are not guarantors of Ortho’s indebtedness. Accordingly, repayment of Ortho’s indebtedness is dependent on the generation of cash flows by Ortho’s subsidiaries and their ability to make such cash available to Ortho, by dividend, debt repayment or otherwise. Unless they are guarantors of Ortho’s indebtedness, Ortho’s subsidiaries do not have any obligation to pay amounts due on Ortho’s indebtedness or to make funds available for that purpose. Ortho’s subsidiaries may not be able to, or may not be permitted to, make distributions to enable Ortho to make payments in respect of its indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit Ortho’s ability to obtain cash from its subsidiaries. While the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture limit the ability of Ortho’s subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to Ortho, these limitations are subject to qualifications and exceptions. In the event that Ortho does not receive distributions from Ortho’s subsidiaries, Ortho may be unable to make required principal and interest payments on its indebtedness.

The terms of the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture impose restrictions that may limit Ortho’s current and future operating flexibility, particularly Ortho’s ability to respond to changes in the economy or Ortho’s industry or to take certain actions, which could harm Ortho’s long-term interests and may limit Ortho’s ability to make payments on its indebtedness.

The Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture contain a number of restrictive covenants that impose significant operating and financial restrictions on Ortho and may limit Ortho’s ability to engage in acts that may be in Ortho’s long-term best interest, including restrictions on Ortho’s ability, and the ability of Ortho’s subsidiaries, to:

 

   

incur additional indebtedness and guarantee indebtedness;

 

   

pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

 

   

prepay, redeem or repurchase certain indebtedness;

 

   

make loans and investments;

 

   

sell, transfer or otherwise dispose of assets;

 

   

incur liens;

 

   

enter into transactions with affiliates;

 

   

enter into new lines of business or alter the businesses Ortho conducts;

 

   

designate any of Ortho’s subsidiaries as unrestricted subsidiaries;

 

   

enter into agreements restricting Ortho’s subsidiaries’ ability to pay dividends; and

 

   

consolidate, merge, transfer or sell all or substantially all of Ortho’s assets or the assets of Ortho’s subsidiaries.

As a result of all of these restrictions, Ortho may be:

 

   

limited in how Ortho conducts its business;

 

   

unable to raise additional debt or equity financing to operate during general economic or business downturns; or

 

   

unable to compete effectively or to take advantage of new business opportunities.

These restrictions might hinder Ortho’s ability to grow in accordance with its strategy.

While Ortho believes that they have not historically had this impact, these covenants could materially and adversely affect Ortho’s ability to finance its future operations or capital needs. Furthermore, they may restrict Ortho’s ability to expand, pursue Ortho’s business strategies and otherwise conduct Ortho’s business. Ortho’s ability to comply with these covenants may be affected by circumstances and events beyond Ortho’s control, such as prevailing economic conditions and changes in regulations, and Ortho cannot assure you that it will be able to comply with such covenants. These restrictions also limit Ortho’s ability to obtain future financings to withstand a future downturn in Ortho’s business or the economy in general. In addition, complying with these covenants may also cause Ortho to take actions that are not favorable to holders of its ordinary shares and may make it more difficult for Ortho to successfully execute its business strategy and compete against companies that are not subject to such restrictions.

 

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In addition, the financial covenant in the Credit Agreement requires the maintenance of a maximum first lien leverage ratio, which ratio will be tested when it yields more than 30% at the end of any quarter when borrowings under the Revolving Credit Facility (including swingline loans and any unreimbursed drawings under any letters of credit to the extent not cash-collateralized but excluding any guarantees and performance or similar bonds issued under Ortho’s Revolving Credit Facility) exceed $105 million at such date. As of January 2, 2022, Ortho had no borrowings outstanding under the Revolving Credit Facility and was therefore not subject to the financial covenant. Due to the current economic and business uncertainty resulting from the ongoing COVID-19 pandemic, Ortho anticipates that Ortho will maintain increased cash on hand in order to preserve financial flexibility and that, as a result, Ortho may continue to borrow from Ortho’s Revolving Credit Facility, if needed. Ortho’s ability to meet the financial covenant could be affected by events beyond Ortho’s control.

A breach of the covenants under the Credit Agreement, the 2025 Notes Indenture or the 2028 Notes Indenture could result in an event of default under the applicable indebtedness. Such a default, if not cured or waived, may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision. In addition, an event of default under the Credit Agreement would permit the lenders under Ortho’s Senior Secured Credit Facilities to terminate all commitments to extend further credit under the facilities. Furthermore, if Ortho were unable to repay the amounts due and payable under Ortho’s Senior Secured Credit Facilities, those lenders could proceed against the collateral securing such indebtedness. In the event Ortho’s lenders or holders of the Senior Notes accelerate the repayment of Ortho’s borrowings, Ortho and its subsidiaries may not have sufficient assets to repay that indebtedness.

Despite Ortho’s level of indebtedness, Ortho and its subsidiaries may still incur substantially more debt. This could further exacerbate the risks to Ortho’s financial condition described above and impair Ortho’s ability to operate its business.

Ortho and its subsidiaries may incur significant additional indebtedness in the future. Although the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes Indenture contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, including with respect to Ortho’s ability to incur additional senior secured debt. The additional indebtedness Ortho may incur in compliance with these restrictions could be substantial. These restrictions also will not prevent Ortho from incurring obligations that do not constitute indebtedness. In addition, as of January 2, 2022, our Revolving Credit Facility provides for unused commitments of $453.7 million (net of $46.3 million of outstanding letters of credit). On February 5, 2021, we entered into a Fifth Amendment of our Senior Secured Credit Facilities (the “Fifth Amendment”), which increased our Revolving Credit Facility contained in the Credit Agreement by $150.0 million to an aggregate principal amount of $500.0 million and extended the maturity date to February 5, 2026, provided that such date may be accelerated subject to certain circumstances as set forth in the Fifth Amendment. To the extent that the aggregate principal amount of the Dollar Term Loan Facility and Euro Term Loan Facility (and any Refinancing Indebtedness with respect thereto that matures on or prior to June 30, 2025) outstanding as of March 31, 2025 exceeds $500.0 million then the maturity date with respect to the Revolving Credit Facility shall be March 31, 2025. All other terms of the Senior Secured Credit Facilities will remain substantially the same except as otherwise amended by the Fifth Amendment. Ortho’s Senior Secured Credit Facilities may be increased by an amount equal to (x) a dollar amount of $375.0 million (which amount was utilized in connection with Ortho’s incurrence of the Euro Term Loan Facility), plus (y) an unlimited amount so long as on a pro forma basis Ortho’s First Lien Net Leverage Ratio (as set forth in the Credit Agreement) does not exceed 4.00 to 1.00 plus (z) an amount equal to all voluntary prepayments of term loans borrowed under the Credit Agreement and revolving loans under the Credit Agreement to the extent accompanied by a permanent reduction in the commitments therefor, subject to certain conditions. If new debt is added to Ortho’s current debt levels, the related risks that Ortho now faces would increase.

General Risks Relating to Ortho

The insurance Ortho maintains may not fully cover all potential exposures.

Ortho’s product liability, property, business interruption, cybersecurity, casualty and other insurance may not cover all risks associated with the operation of Ortho’s business and may not be sufficient to offset the costs of any losses, lost sales or increased costs experienced during business interruptions. For some risks, Ortho may not obtain insurance if Ortho believes the cost of available insurance is excessive related to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, Ortho may not be able to renew Ortho’s

 

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insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Losses and liabilities from uninsured or underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on Ortho’s financial condition and results of operations.

Terrorist acts, conflicts, wars and natural disasters may materially adversely affect Ortho’s business, financial condition and results of operations.

As a multinational company with a large international footprint, Ortho is subject to increased risk of damage or disruption to it, its employees, facilities, partners, suppliers, distributors, resellers or customers due to terrorist acts, conflicts, wars, adverse weather conditions, natural disasters, power outages, pandemics or other public health crises and environmental incidents, wherever located around the world. The potential for future terrorist attacks and natural disasters, the national and international responses to such attacks and natural disasters or perceived threats to national security and other actual or potential conflicts or wars may create economic and political uncertainties. In addition, as a multinational company with headquarters and significant operations located in the United States, actions against or by the United States could result in a decrease in demand for Ortho’s products, make it difficult or impossible to deliver products to Ortho’s customers or to receive components from Ortho’s suppliers, create delays and inefficiencies in Ortho’s supply chain and pose risks to Ortho’s employees, resulting in the need to impose travel restrictions. Any interruption in production capability could require Ortho to make substantial capital expenditures to remedy the situation, which could negatively affect Ortho’s profitability and financial condition.

Ortho is subject to work stoppages, union negotiations, labor disputes and other matters associated with its labor force, which may adversely impact Ortho’s operations and cause Ortho to incur incremental costs.

Ortho has more than 4,800 employees located around the world consisting of commercial, supply chain, quality, regulatory and compliance, research and development and general administrative personnel. Approximately 20% of Ortho’s associates globally participate in a union or works council. Historically, Ortho has not experienced work stoppages; however, in the future, Ortho may be subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes. Additionally, future negotiations with unions or works councils in connection with existing labor agreements may (i) result in significant increases in Ortho’s cost of labor, (ii) divert management’s attention away from operating Ortho’s business or (iii) break down and result in the disruption of Ortho’s operations. The occurrence of any of the preceding outcomes could impair Ortho’s ability to manufacture Ortho’s products and result in increased costs and/or decreased operating results. Further, Ortho may be subject to work stoppages at Ortho’s suppliers or customers that are beyond Ortho’s control.

If Ortho is required to make unexpected payments to any pension plans applicable to Ortho’s employees, Ortho’s financial condition may be adversely affected.

Some of Ortho’s current and former employees participate or participated in defined benefit pension plans and Ortho assumed certain underfunded and unfunded net pension liabilities of approximately $40.0 million in relation to these plans. Several of these plans are unfunded and, while Ortho does not believe the liabilities in relation to these plans are significant, they will need to be satisfied as they mature from Ortho’s cash provided by operating activities. In jurisdictions where the defined benefit pension plans are intended to be funded with assets in a trust or other funding vehicle, Ortho expects that, while not significant, the liabilities will exceed the corresponding assets in each of the plans. Various factors, such as changes in actuarial estimates and assumptions (including in relation to life expectancy, discount rates and rate of return on assets), as well as actual return on assets, can increase the expenses and liabilities of the defined benefit pension plans. The assets and liabilities of the plans must be valued from time to time under applicable funding rules and as a result Ortho may be required to increase the cash payments it makes in relation to these defined benefit pension plans.

Ortho could also be required in some jurisdictions to make accelerated payments up to the full buy-out deficit in Ortho’s defined benefit pension plans, which would likely be far higher than the normal ongoing funding cost of the plans. Ortho’s operations and financial condition may be adversely affected to the extent that Ortho is required to (i) make any additional payments to any relevant defined benefit pension plans in excess of the amounts assumed in Ortho’s current projections and assumptions or (ii) report higher pension plan expenses under relevant accounting rules.

 

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If Ortho is sued for infringing intellectual property rights of third parties, it will be costly and time-consuming, and an unfavorable outcome in any litigation would harm Ortho’s business.

Ortho cannot assure you that its activities will not, unintentionally or otherwise, infringe on the patents or other intellectual property rights owned by others. Significant litigation regarding patent rights exists in Ortho’s industry. Ortho’s competitors in both the United States and foreign countries, many of which have substantially greater resources and have made substantial investments in competing technologies, may have applied for or obtained, or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with Ortho’s ability to make and sell its products. Ortho may spend significant time and effort and incur significant litigation costs if it is required to defend itself against intellectual property rights claims brought against it, regardless of whether the claims have merit. If Ortho is found to have infringed on the patents or other intellectual property rights of others, Ortho may be subject to substantial claims for damages, which could materially impact its cash flow, business, financial condition and results of operations. Ortho may also be required to cease development, use or sale of the relevant products or processes, or Ortho may be required to obtain a license on the disputed rights, which may not be available on commercially reasonable terms, if at all, or may require Ortho to re-design Ortho’s products or processes.

Ortho will incur increased costs as a result of operating as a publicly traded company, and Ortho’s management will be required to devote substantial time to new compliance initiatives.

As a publicly traded company, Ortho incurs additional legal, accounting and other expenses that it did not previously incur, which may be material in amount. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules of the SEC, and the stock exchange on which Ortho’s ordinary shares are listed, have imposed various requirements on public companies. Ortho’s management and other personnel will need to devote a substantial amount of time to these compliance initiatives as well as investor relations. Moreover, these rules and regulations will increase Ortho’s legal and financial compliance costs and will make some activities more time-consuming and costly. For example, Ortho expects these rules and regulations to make it more difficult and more expensive for Ortho to obtain director and officer liability insurance, and Ortho may be required to incur additional costs to maintain the same or similar coverage.

 

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UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

On December 22, 2021, Quidel Corporation (“Quidel”) entered into a Business Combination Agreement (the “BCA”) by and among Quidel, Ortho Clinical Diagnostics Holdings plc (“Ortho”), Coronado Topco, Inc. (“Topco”), Orca Holdco, Inc. (“U.S. Holdco Sub”) and Laguna Merger Sub, Inc. (“U.S. Merger Sub”), each wholly owned subsidiaries of Topco, and Orca Holdco 2, Inc., a wholly owned subsidiary of U.S. Holdco Sub, which provides for the acquisition of Ortho and Quidel by Topco.

The following unaudited pro forma combined financial information, which is referred to in this joint proxy statement/prospectus as the unaudited pro forma financial information, is presented to illustrate the estimated effects of the transactions to be implemented pursuant to the BCA (the “Combinations”) based on the historical financial statements and accounting records of Quidel and Ortho after giving effect to the Combinations, and the Combinations-related pro forma adjustments as described in the accompanying notes to the unaudited pro forma financial information.

The fiscal year of each of Quidel and Ortho ends on the Sunday nearest December 31 of the specified period. For ease of reference, the calendar year end dates are used herein. The following unaudited pro forma combined balance sheet was prepared based on the following historical dates: (i) the audited historical consolidated balance sheet of Quidel as of December 31, 2021 and (ii) the audited historical consolidated balance sheet of Ortho as of December 31, 2021.

The following unaudited pro forma combined statement of income for the fiscal year ended December 31, 2021 was prepared based on the following historical periods: (i) the audited historical consolidated statement of income of Quidel for the year ended December 31, 2021 and (ii) the audited historical consolidated statement of operations of Ortho for the year ended December 31, 2021.

The following unaudited pro forma combined financial information has been prepared to reflect the Combinations and is provided for illustrative purposes only. The unaudited pro forma combined statements of income assume that the Combinations occurred on January 1, 2021, the beginning of the earliest period presented, but do not necessarily reflect what Topco’s results of operations would have been had the Combinations been completed on January 1, 2021, or for any future or historical period. The unaudited pro forma combined balance sheet assumes that the Combinations occurred on December 31, 2021, but does not necessarily reflect what Topco’s financial position would have been had the Combinations been completed on December 31, 2021, or for any future or historical period.

The unaudited pro forma financial information was prepared using the acquisition method of accounting with Quidel treated as the accounting acquirer and, therefore, the historical basis of Quidel’s assets and liabilities was not affected by the Combinations. The pro forma financial statements should be read in conjunction with the information contained in the sections entitled “The Combinations,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ortho” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Quidel” of this joint proxy statement/prospectus and the historical consolidated financial statements and related notes appearing elsewhere in, or incorporated in, this joint proxy statement/prospectus.

As of the date of this joint proxy statement/prospectus, Quidel has not completed the detailed valuation studies necessary to arrive at the final estimates of the fair market value of the Ortho assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified any adjustments necessary to conform Ortho to Quidel’s accounting policies except for the ones described in the accompanying notes. The acquisition method of accounting is dependent upon certain valuations that are provisional and subject to change. Accordingly, the pro forma adjustments in the unaudited pro forma combined financial information are preliminary based upon available information and made solely for the purpose of providing these unaudited pro forma combined financial statements.

The unaudited pro forma financial information has not been adjusted to give effect to certain expected financial benefits of the Combinations, such as revenue synergies, tax savings and cost synergies, or the anticipated costs to achieve these benefits, including the cost of integration activities. The unaudited pro forma financial information does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Topco would have been had the Combinations occurred on the dates indicated, nor is it necessarily indicative of Topco’s future consolidated results of operations or consolidated financial position. The actual financial position and results of operations will differ, potentially significantly, from the pro forma amounts reflected herein due to a variety of factors, including access to additional information, changes in value not currently identified and changes in operating results following the date of the unaudited pro forma financial information. Accordingly, actual adjustments to Topco’s financial statements following the acquisition could

 

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differ, perhaps materially, from those reflected in the unaudited pro forma condensed combined financial information because the purchase price is subject to changes in the Quidel Share price on the acquisition date, and assets and liabilities acquired and share-based compensation awards will be recorded at their respective fair values on the date the acquisition is consummated.

 

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UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2021

(in thousands)

 

    Historical
Quidel
    Historical
Ortho after
reclassification
adjustments
(Note 4)
    Transaction
accounting
adjustments
    Notes     Other
transaction
accounting
adjustments
    Notes     Pro Forma
Combined
 

ASSETS

             

Current assets:

             

Cash and cash equivalents

  $ 802,751     $ 309,700     $ (1,742,946     5a     $ 735,000       5a     $ 104,505  

Marketable securities

    25,758       —         —           —           25,758  

Accounts receivable, net

    377,969       257,200       —           —           635,169  

Inventories

    198,765       305,400       68,900       5b       —           573,065  

Prepaid expenses and other current assets

    35,067       139,400       —           —           174,467  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Total current assets

    1,440,310       1,011,700       (1,674,046       735,000         1,512,964  

Property, plant and equipment, net

    349,202       791,400       —         5c       —           1,140,602  

Marketable securities, non-current

    37,852       —         —           —           37,852  

Right-of-use assets

    127,622       30,355       —           —           157,977  

Goodwill

    337,021       573,600       1,700,438       5d       —           2,611,059  

Intangible assets, net

    98,655       879,200       2,600,800       5e       —           3,578,655  

Deferred tax asset

    20,089       9,700       25,214       5f       —           55,003  

Other non-current assets

    19,623       67,845       (2,658     5g       —           84,810  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Total assets

  $ 2,430,374     $ 3,363,800     $ 2,649,748       $ 735,000       $ 9,178,922  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

             

Accounts payable

  $ 101,492     $ 181,000     $ —         $ —         $ 282,492  

Accrued payroll and related expenses

    40,385       123,867       15,130       5h       —           179,382  

Income tax payable

    66,945       7,252       —           —           74,197  

Operating lease liabilities

    10,039       13,443       —           —           23,482  

Contingent consideration

    5,986       —         —           —           5,986  

Deferred consideration

    41,945       —         —           —           41,945  

Current portion of borrowings

    —         63,400       —           —           63,400  

Other current liabilities

    56,728       189,538       92,700       5h       —           338,966  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Total current liabilities

    323,520       578,500       107,830         —           1,009,850  

Operating lease liabilities—non-current

    128,556       17,257       —           —           145,813  

Deferred consideration—non-current

    36,491       —         —           —           36,491  

Contingent consideration—non-current

    87       —         —           —           87  

Long-term borrowings

    —         2,186,000       68,702       5i       735,000       5i       2,989,702  

Employee-related obligations

    —         37,100       —           —           37,100  

Deferred tax liability

    —         72,100       453,791       5f       —           525,891  

Other non-current liabilities

    12,358       62,343       —           —           74,701  

Commitments and contingencies

             

Stockholders’ equity:

             

Preferred stock

    —         100       (100     5j       —           —    

Common stock

    42       —         25       5j       —           67  

Additional paid-in capital

    279,768       2,425,900       111,830       5k       —           2,817,498  

Accumulated other comprehensive income (loss)

    355       (43,700     43,700       5l       —           355  

Retained earnings (accumulated deficit)

    1,649,197       (1,971,800     1,863,970       5m       —           1,541,367  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Total stockholders’ equity

    1,929,362       410,500       2,019,425         —           4,359,287  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Total liabilities and stockholders’ equity

  $ 2,430,374     $ 3,363,800     $ 2,649,748       $ 735,000       $ 9,178,922  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

See accompanying “Notes to Unaudited Pro Forma Combined Financial Information.”

 

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UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2021

(in thousands, except per share data)

 

    Historical
Quidel after
reclassification
adjustments
(Note 4)
    Historical
Ortho after
reclassification
adjustments
(Note 4)
    Transaction
accounting
adjustments
    Notes     Other
transaction
accounting
adjustments
    Notes     Pro Forma
Combined
 

Total revenue

  $ 1,698,551     $ 2,042,800     $ —         $ —         $ 3,741,351  

Cost of revenue, excluding amortization of intangible assets

    420,284       1,006,800       68,900       6a       —           1,495,984  

Research and development

    95,701       126,200       —           —           221,901  

Sales and marketing

    155,258       259,320       —           —           414,578  

General and administrative

    84,247       296,400       —           —           380,647  

Amortization of intangible assets

    27,439       133,400       62,767       6b       —           223,606  

Acquisition and integration costs

    9,557       6,978       132,641       6c       —           149,176  

Other operating expense, net

    —         39,802       —           —           39,802  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Operating income

    906,065       173,900       (264,308       —           815,657  

Other expense, net

             

Interest expense, net

    (5,808     (146,000     14,900       6d       (36,750     6d       (173,658

Tax indemnification expense

    —         (800     —           —           (800

Loss on extinguishment of debt

    —         (50,300     —           —           (50,300

Other expense, net

    102       (2,800     —           —           (2,698
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Total other expense, net

    (5,706     (199,900     14,900         (36,750       (227,456
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Income (loss) before income taxes

    900,359       (26,000     (249,408       (36,750       588,201  

Provision for income taxes

    196,133       28,300       (80,694     6e       (8,453     6e       135,286  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Net income (loss)

  $ 704,226     $ (54,300   $ (168,714     $ (28,297     $ 452,915  
 

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Basic earnings per share

    16.74                 6.75  

Diluted earnings per share

    16.43                 6.64  

Shares used in basic per share calculation

    42,078         24,984       6f           67,062  

Shares used in diluted per share calculation

    42,874         25,324       6f           68,198  

See accompanying “Notes to Unaudited Pro Forma Combined Financial Information.”

 

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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

1. Description of the proposed Combinations

On December 22, 2021, Quidel entered into the BCA by and among Quidel, Ortho, Topco, U.S. Holdco Sub and U.S. Merger Sub, each wholly owned subsidiaries of Topco, and Orca Holdco 2, Inc., a wholly owned subsidiary of U.S. Holdco Sub, which provides for the acquisition of Ortho and Quidel by Topco. The Combinations are expected to be implemented by way of (i) a scheme of arrangement to be undertaken by Ortho under Part 26 of the UK Companies Act 2006 (the “Ortho Scheme”), pursuant to which each issued and outstanding share of Ortho (the “Ortho Shares”) will be acquired by a nominee of Topco (or, if such nominee holds the Ortho Shares today, transferred within the nominee), such that Ortho will become a wholly owned subsidiary of Topco, and (ii) a merger (the “Quidel Merger”) of U.S. Merger Sub with and into Quidel immediately following consummation of the Ortho Scheme, with Quidel surviving the merger as a wholly owned subsidiary of Topco. At the effective time of the Ortho Scheme (the “Ortho Effective Time”), each Ortho Share, other than Ortho Shares held by Ortho in treasury, will be acquired by a nominee (or, if such nominee holds the Ortho Shares today, transferred within the nominee) on behalf and for the benefit of Topco in exchange for 0.1055 shares (the “Ortho Exchange Ratio”) of common stock of Topco (“Topco Shares”) and $7.14 in cash (collectively, the “Ortho Scheme Consideration”). At the effective time of the Quidel Merger (the “Quidel Effective Time” and together with the Ortho Effective Time, the “Effective Times”), each share of common stock of Quidel (each, a “Quidel Share”), other than Quidel Shares held by Quidel, Ortho or U.S. Merger Sub, will be converted into the right to receive one Topco Share (the “Quidel Exchange Ratio”) (the “Quidel Merger Consideration” and together with the Ortho Scheme Consideration, the “Combination Consideration”). Topco will apply to list the Topco Shares to be issued in the Combinations on the Nasdaq Global Select Market (“Nasdaq”).

At the Ortho Effective Time, each option to subscribe for Ortho Shares (each, an “Ortho Stock Option”), whether vested or unvested, that is outstanding immediately prior the Ortho Effective Time will cease to represent an option to acquire Ortho Shares and will be converted into (a) an option to purchase Topco Shares (each, a “Topco Stock Option”) on the same terms and conditions as were applicable to such Ortho Stock Option immediately prior to the Ortho Effective Time, except as adjusted by the BCA, (b) with respect to the portion of such Ortho Stock Option that is vested as of the Ortho Effective Time, the right to receive payment, in cash, equal to the cash consideration payable in respect of the Ortho Shares subject to the vested portion of such Ortho Stock Option and (c) with respect to the portion of such Ortho Stock Option that is not vested as of the Ortho Effective Time, the right to receive payment, in cash, equal to the cash consideration payable in respect of the Ortho Shares subject to the unvested portion of such Ortho Stock Option when it vests in accordance with its terms. The number of Topco Shares subject to each such Topco Stock Option will be equal to the product (rounded down to the nearest whole number) obtained by multiplying (i) the number of Ortho Shares subject to such Ortho Stock Option immediately prior to the Ortho Effective Time by (ii) the Ortho Exchange Ratio, and each such Topco Stock Option will have an exercise price per share (rounded up to the nearest whole cent) equal to (x) the exercise price per Ortho Share of such Ortho Stock Option immediately prior to the Ortho Effective Time divided by (y) the Ortho Exchange Ratio.

At the Ortho Effective Time, each award of restricted stock, restricted stock units or other similar rights or awards granted under an Ortho stock plan and relating to Ortho Shares (any such award, an “Ortho Equity Right” and such awards together with the Ortho Stock Options, the “Ortho Stock Awards”) that is outstanding immediately prior to the Ortho Effective Time will cease to relate to or represent a right to receive Ortho Shares and will be converted into an award of restricted stock, restricted stock units or other similar rights or awards, as applicable, relating to Topco Shares (a “Topco Equity Right”) of the same type and on the same terms and conditions as were applicable to the corresponding Ortho Equity Right immediately prior to the Ortho Effective Time. Upon the subsequent vesting of any portion of such Ortho Equity Right, such portion of the Ortho Equity Right shall also be entitled to a right to receive payment, in cash, equal to the cash consideration in respect of the Ortho Shares subject to the unvested portion of the Ortho Equity Right when it vests in accordance with its terms. The number of Topco Shares covered by each such Topco Equity Right will be equal to the product (rounded to the nearest whole number) obtained by multiplying (i) the number of Ortho Shares subject to such Ortho Equity Right immediately prior to the Ortho Effective Time by (ii) the Ortho Exchange Ratio. See estimated preliminary purchase price discussed further in Note 3.

Furthermore, all of Quidel’s outstanding share-based compensation will be replaced with similar Topco awards as described in the section entitled “The Business Combination Agreement—Treatment of Quidel Equity Awards.”

Under the terms of the BCA, which was unanimously approved by the board of directors of each of Quidel and Ortho, Quidel and Ortho are entering into a business combination under Topco, a new holding company, in which Ortho will be acquired for total consideration of approximately $4.3 billion (which is based on the March 4, 2022 closing price of $99.57 per Quidel

 

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Share, as described in further detail below), including $1.74 billion of cash, funded through cash on the balance sheet and expected incremental borrowings. Such consideration was equal to $6.0 billion based on the December 22, 2021 closing price of the Quidel Shares, and is subject to change based on the price of a Quidel Share. Topco is also expected to be subject to Ortho’s existing debt of $2.2 billion. If the Combinations are completed, Ortho shareholders are expected to own approximately 38% of Topco on a fully diluted basis and Quidel stockholders are expected to own approximately 62% of Topco on a fully diluted basis, based on the respective capitalizations of Quidel and Ortho as of the date the parties entered into the BCA.

2. Basis of pro forma presentation

The accompanying unaudited pro forma combined financial information was prepared in accordance with Article 11 of the SEC’s Regulation S-X. The historical financial statements were prepared in accordance with U.S. GAAP and presented in thousands of U.S. dollars.

The Combinations will be accounted for as a business combination using the acquisition method of accounting under the provisions of ASC Topic 805, “Business Combinations” (“ASC 805”), and using the fair value concepts defined in ASC Topic 820, “Fair Value Measurements” (“ASC 820”). ASC 820 defines the term “fair value” and sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop fair value measures. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Under ASC 805, all assets acquired and liabilities assumed are recorded at their acquisition date fair value.

Fair value estimates were determined based on preliminary discussions between Quidel’s and Ortho’s management, due diligence efforts, and information available in public filings. The allocation of the aggregate Combination Consideration used in the preliminary unaudited pro forma combined financial information is based on preliminary estimates. The estimates and assumptions are subject to change as of the Effective Times. The final determination of the allocation of the aggregate Combination Consideration will be based on the actual tangible assets, intangible assets, deferred tax assets, deferred tax liabilities and liabilities of Ortho at the Effective Times.

For pro forma purposes, the valuation of consideration transferred is based on, among other things, the closing price of Quidel Shares on March 4, 2022 of $99.57 per share. This is used for pro forma purposes only. The consideration transferred will ultimately be based on the price of Quidel Shares at the Effective Times of the Combinations and could materially change.

Significant accounting policies

The unaudited pro forma combined financial information has been compiled in a manner consistent with the accounting policies adopted by Quidel. Based on the procedures performed to date, the accounting policies of Ortho appear to be similar in all material respects to Quidel’s accounting policies. Upon completion of the Combinations, Quidel will perform a detailed review of Ortho’s accounting policies. As a result of that review, Quidel may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on the consolidated financial statements of Topco.

3. Preliminary Purchase Price

Ortho shareholders will receive 0.1055 Topco Shares and $7.14 in cash per Ortho Share as purchase consideration in connection with the Combinations as discussed above; however, because Quidel is the accounting acquirer and Ortho is the acquiree for accounting purposes, the unaudited pro forma financial information reflects the estimated fair value of the equity to be issued, as represented by the market price of Quidel Shares, to Ortho shareholders. The total purchase consideration to be received by Ortho shareholders will be based on the fair value of the equity deemed to be issued at the Effective Times of the Combinations. The preliminary purchase consideration below reflects the estimated fair value of equity issued, which is

 

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based on the March 4, 2022 closing price of Quidel Shares of $99.57 per share. The amount of total purchase consideration below is not necessarily indicative of the actual consideration that will be transferred at the Effective Times of the Combinations to Ortho shareholders as a result of potential changes to the price per Quidel Share.

The preliminary estimated purchase consideration and estimated fair value of Ortho’s net assets acquired as if the Combinations closed on December 31, 2021 is presented as follows:

 

(In thousands, except value per share data and Ortho Exchange Ratio)       

Total Ortho Shares subject to exchange

     236,815  

Ortho Exchange Ratio

     0.1055  
  

 

 

 

Topco Shares to be issued

     24,984  

Value per Quidel Share as of March 4, 2022

   $ 99.57  
  

 

 

 

Estimated value of stock consideration

   $ 2,487,657  

Fair value of replacement stock awards (1)

     50,098  

Cash consideration (2)

     1,742,946  
  

 

 

 

Estimated purchase consideration

   $ 4,280,701  
  

 

 

 

 

(1)

Represents estimated fair value of replacement stock options, restricted stock units and restricted stock outstanding as of December 31, 2021 that is attributable to pre-combination service. Management is in the process of evaluating the expected impact of replacement stock awards subsequent to the Combinations. The portion of the fair value of the replacement stock awards attributable to post-combination service will be recognized as compensation expense based on the vesting terms of the replacement stock awards.

(2)

Represents cash consideration to be paid to outstanding Ortho shareholders and to vested Ortho Stock Option holders at the Ortho Effective Time.

 

     Shares      Cash Per share      Total  

Number of Ortho Shares outstanding

     236,815      $ 7.14      $ 1,690,860  

Vested Ortho Stock Options

     7,295      $ 7.14        52,086  
        

 

 

 

Total cash consideration

         $ 1,742,946  
        

 

 

 

The estimate of consideration expected to be transferred reflected in these unaudited pro forma combined financial statements does not purport to represent what the actual consideration transferred will be when the Combinations are consummated. For purposes of these unaudited pro forma combined financial statements, the market price of Quidel Shares on March 4, 2022 and outstanding Ortho Shares as of December 31, 2021 was used to calculate the estimate of consideration expected to be transferred. However, the fair value of equity securities issued as the consideration transferred will be measured using the market price of Quidel Shares and outstanding Ortho Shares on the closing date of the Combinations. An increase/decrease of 10% in the price of Quidel Shares would increase/decrease the total consideration by $248.8 million, which would be reflected in these unaudited pro forma combined financial statements as an increase or decrease to goodwill. The estimated fair value of replacement equity awards is subject to change until the Effective Times of the Combinations due to equity awards vesting, grants or forfeitures. The estimated cash consideration was calculated using outstanding Ortho Shares and vested Ortho Stock Options as of December 31, 2021. The cash consideration at the closing of the Combinations will fluctuate due to changes in outstanding shares and vesting, grants or forfeitures of Ortho Stock Awards.

Under the acquisition method of accounting, the Ortho assets and liabilities will be recorded at fair value at the date of the completion of the Combinations and combined with the historical carrying amount of the assets and liabilities of Quidel. The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets as of December 31, 2021 and have been prepared by Quidel management and Ortho management to illustrate the estimated effect of the Combinations. The unaudited pro forma financial information does not include any fair value adjustments associated with the assets and liabilities of Ortho with the exception of the fair value of long-term borrowings, inventories, and intangible assets, as Quidel and Ortho management have based the preliminary purchase accounting on the assumption that these historical carrying values approximate their fair values as of December 31, 2021. The purchase accounting is dependent upon certain valuation and other analyses that have not yet been completed. Accordingly, the preliminary purchase accounting is subject to further adjustments as additional information becomes available and as additional analyses and final valuations are conducted at and following the completion of the Combinations. The final

 

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valuations could differ materially from the preliminary valuations presented below and, accordingly, no assurances can be provided regarding the preliminary purchase accounting.

The following table summarizes the preliminary purchase accounting consideration to the identifiable assets acquired and liabilities assumed of Ortho, with the excess of the purchase consideration issued over the fair value of Ortho’s net assets recorded as goodwill (in thousands):

 

Cash and cash equivalents

   $ 309,700  

Accounts receivable, net

     257,200  

Inventories

     374,300  

Prepaid expenses and other current assets

     139,400  

Property, plant and equipment, net

     791,400  

Right-of-use assets

     30,355  

Goodwill

     2,274,038  

Intangible assets, net

     3,480,000  

Deferred tax asset

     34,914  

Other non-current assets

     65,187  
  

 

 

 
     7,756,494  

Accounts payable

     (181,000

Accrued payroll and related expenses

     (123,867

Income tax payable

     (7,252

Operating lease liabilities

     (13,443

Current portion of borrowings

     (63,400

Other current liabilities

     (189,538

Operating lease liabilities—non-current

     (17,257

Long-term borrowings

     (2,254,702

Employee related obligations

     (37,100

Deferred tax liability

     (525,891

Other non-current liabilities

     (62,343
  

 

 

 
     (3,475,793
  

 

 

 

Estimated purchase consideration

   $ 4,280,701  
  

 

 

 

 

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4. Reclassifications

Quidel identified certain reclassification adjustments that were necessary to conform Ortho’s financial statement presentation to Quidel’s financial statement presentation. For purposes of the pro forma financial statements, Ortho’s historical balance sheet and statements of operations have been adjusted to reflect these reclassifications (in thousands):