Sirtex Medical Limited, in the matter of Sirtex Medical Limited [2018] FCA 1048

Sirtex Medical Limited, in the matter of Sirtex Medical Limited [2018] FCA 1048 | Case summary | Zoe

FARRELL J 1 On 29 March 2018, Gleeson J made orders under s 411(1) of the Corporations Act 2001 (Cth) convening a meeting of the shareholders of Sirtex Medical Ltd to consider approving a scheme of arrangement to effect a takeover of Sirtex by Varian Medical Systems Inc (scheme meeting). That meeting was subsequently postponed. 2 Sirtex now seeks orders under s 1319 of the Corporations Act that the scheme meeting not be held because it lacks utility in light of the board's approval of a superior proposal and the termination of the scheme implementation deed between Sirtex and Varian dated 30 January 2018 (as amended). 3 In support of the orders, Sirtex relies on submissions and the affidavit of Owen James Anderson filed on 2 July 2018. I have marked the submissions as MFI-1. 4 I am satisfied that the scheme meeting has no utility and that it is appropriate to make the order that the meeting not be held against the background and relying on the authorities set out in the submissions which I will set out as schedule 1 to the published reasons. 5 Varian has sought an order that the proceedings be stood over until 25 July 2018 for directions. The purpose appears to be to ensure that a "reimbursement fee" demanded by Varian in an amount of $15,835,036.56 under the scheme implementation deed has been paid by that time. Sirtex consented to the order being made. 6 I decline to make that order. Section 1319 provides as follows: Where, under this Act, the Court orders a meeting to be convened, the Court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as it thinks fit. 7 In my view, enforcement of the scheme implementation deed in relation to the payment of a reimbursement fee is beyond the scope of the ancillary orders which might be made under s 1319 and beyond the scope of s 411 in these circumstances so that there would be no utility in standing the matter over to 25 July 2018. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.

[4]

The plaintiff (Sirtex) seeks orders that the scheme meeting ordered by the Court on 29 March 2018 to be held at 10.00am (AEST) on 7 May 2018 and postponed by order of the Court on 4 May 2018 (scheme meeting) not be held, as there would be no utility in the scheme meeting being held.
The purpose of the scheme meeting was for holders of ordinary shares in Sirtex to consider, and if thought fit, agree to a scheme of arrangement proposed to be entered into between Sirtex and its shareholders (Varian scheme). Pursuant to the Varian scheme, it was proposed that: (a) Sirtex shareholders would transfer their shares to Varian Medical Systems, Inc (Varian); (b) The consideration for each share transferred would be a total cash payment of $28 per Sirtex share, payment of which was secured by a deed poll executed by Varian Bidco and Varian; and (c) the proposed scheme would effect the acquisition of Sirtex by Varian Bidco and would result in Sirtex becoming a subsidiary of Varian Bidco and being delisted.
On 22 May 2018, Sirtex received a proposal for the acquisition of all of the shares in Sirtex at a price of $33.60 per Sirtex share, being a joint proposal made by CDH Investments and China Grand Pharmaceutical and Healthcare Holdings Limited (CDH- CGP Proposal): affidavit of Owen James Andersen sworn 2 July 2018 at [5].
On 14 June 2018: (a) Sirtex made an announcement to the ASX that, among other things: (i) Sirtex had entered into a binding scheme implementation deed with CDH Investments and China Grand Pharmaceutical and Healthcare Holdings Limited; (ii) the Board of Sirtex had unanimously formed a view that the CDH-CGP Proposal was superior to the proposed scheme of arrangement with Varian; and (iii) Sirtex would terminate the Varian Scheme Implementation Deed and apply to the Court for orders to cancel the scheme meeting in respect of the Varian Scheme. A copy of Sirtex's ASX announcement made on 14 June 2018 is at annexure OJA-18 to the affidavit of Owen James Andersen sworn 2 July 2018. (b) Sirtex terminated the scheme implementation deed between Sirtex and Varian dated 30 January 2018 (as varied by a Variation and Restatement Deed dated 27 March 2018) (Varian Scheme Implementation Deed), which related to the Varian Scheme. A copy of the letter from Sirtex's solicitors to Varian's solicitors dated 14 June 2018, by which the Varian Scheme Implementation Deed was terminated, is annexure OJA-19 to the affidavit of Owen James Andersen sworn 2 July 2018.
On 15 June 2018, Varian's solicitors sent a demand on behalf of Varian requiring that Sirtex pay Varian the sum of $15,835,036.56 being the reimbursement fee under the Varian Scheme Implementation Deed: annexure OJA-20 to the affidavit of Owen James Andersen sworn 2 July 2018. Varian has not sought to challenge the termination of the Varian Scheme Implementation Deed.
ASIC has indicated that it does not intend to appear at the hearing on 3 July 2018 and does not have any comments regarding Sirtex's proposal to seek orders dissolving the deferred scheme meeting together with an order that the proceedings be otherwise dismissed: email from ASIC dated 2 July 2018 at annexure OJA-23 to the affidavit of Owen James Andersen sworn 2 July 2018.
The court has power under s 1319 of the Corporations Act 2001 (Cth) to cancel a scheme meeting where there would be no utility in the scheme meeting being held: Re Cape Alumina Ltd (No 3) [2013] FCA 1338 at [8] (Farrell J); CMPS&F Pty Ltd v Crookes Mitchell Ltd (1997) 76 FCR 366 at 367 (Burchett J); Re Australian Gas Light Company [2006] FCA 346; 57 ACSR 67 (Emmett J); Re White Energy Company Limited [2009] FCA 1424 (Siopis J).
There is no utility in holding the scheme meeting to consider the Varian scheme given that the Varian Scheme Implementation Deed has been terminated, Sirtex has entered into a scheme implementation deed in relation to an alternative scheme (which, when implemented, will result in Sirtex's shareholders receiving higher scheme consideration than they would have received under the Varian scheme), and the Board of Sirtex has unanimously formed a view that the alternative proposal is superior to the Varian scheme.
In the circumstances, it is appropriate for the Court to order that the scheme meeting not be held. Malcolm Oakes Sonia Tame Tenth Floor Chambers New Chambers Tel: 9233 7215 Tel: 9151 2003 oakes@tenthfloor.org tame@newchambers.com.au Counsel for the plaintiff 2 July 2018

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