Item 1.01
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Entry into a Material Definitive Agreement.
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On July 29, 2019, Mylan N.V., a public company with limited liability incorporated under the laws of the Netherlands (Mylan)
entered into definitive agreements with Pfizer Inc., a Delaware corporation (Pfizer), Upjohn Inc., a Delaware corporation and wholly owned subsidiary of Pfizer (Newco), Utah Acquisition Sub Inc., a Delaware corporation and a
wholly owned subsidiary of Newco (Newco Sub), Mylan I B.V., a company incorporated under the laws of the Netherlands and a wholly owned subsidiary of Mylan (Mylan Newco), and Mylan II B.V., a company incorporated under the
laws of the Netherlands and a wholly owned subsidiary of Mylan Newco (Mylan Newco Sub, and together with Mylan and Mylan Newco Sub, the Mylan Parties), for a business combination transaction pursuant to which, subject to the
terms and conditions of certain definitive agreements, (1) Pfizer will transfer its global, primarily
off-patent
branded and generic established medicines business (the Upjohn Business) to
Newco (the Contribution), (2) Pfizer will distribute to its stockholders all of the issued and outstanding shares of Newco common stock held by Pfizer by way of either (at Pfizers option) a pro rata dividend or an exchange offer
(the Distribution), and (3) immediately following the Distribution, Newco and Mylan will engage in a strategic business combination transaction (the Combination). When the Combination is completed, Newco will hold the
combined Upjohn and Mylan businesses, holders of Pfizers common stock prior to the Distribution will own approximately 57% and former Mylan shareholders will own approximately 43% of the outstanding shares of Newco Common Stock on a fully
diluted basis. The transaction has been approved by the Boards of Directors of both Mylan and Pfizer.
The definitive agreements entered
into in connection with the transaction include (1) a Business Combination Agreement (the Business Combination Agreement), dated as of July 29, 2019, by and among Mylan, Pfizer, Newco, Newco Sub, Mylan Newco and Mylan Newco Sub and
(2) a Separation and Distribution Agreement (the Separation and Distribution Agreement), dated as of July 29, 2019, by and between Pfizer and Newco. Pfizer and Newco will also enter into additional agreements, including, among
others:
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a Tax Matters Agreement, which will govern, among other things, Pfizers and Newcos respective rights,
responsibilities and obligations with respect to taxes, tax attributes, the preparation and filing of tax returns, responsibility for and preservation of the expected
tax-free
status of the transactions
contemplated by the Separation and Distribution Agreement and certain other tax matters;
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an Employee Matters Agreement, which will govern, among other things, Pfizers and Newcos obligations
with respect to current and former employees of Pfizer and of the Upjohn Business;
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an IP Matters Agreement, which will allocate rights and interests in certain intellectual property rights
relating to the Upjohn Business; and
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transition service agreements, manufacturing and supply agreements, trademark license agreements, and other
commercial agreements.
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The Separation and Distribution Agreement
The Separation and Distribution Agreement sets forth the terms and conditions regarding the separation of the Upjohn Business from Pfizer. The
Separation and Distribution Agreement identifies and provides for the transfer of certain assets by Pfizer to Newco and the assumption of certain liabilities by Newco from Pfizer.
The Separation and Distribution Agreement also governs the rights and obligations of Pfizer and Newco regarding the distribution by Pfizer of
Newco Common Stock to Pfizers stockholders. At Pfizers election (subject to certain restrictions) pursuant to the Separation and Distribution Agreement, the Distribution may be effected by means of a pro rata distribution of Newco Common
Stock to Pfizers stockholders or through an exchange offer of Pfizer Common Stock for Newco Common Stock, followed by a pro rata,
clean-up
distribution to Pfizers stockholders of the remaining
shares of Newco Common Stock held by Pfizer that were not exchanged in the exchange offer.
Prior to, and as a condition of, the
Distribution, Newco will make a cash payment to Pfizer equal to $12.0 billion (the Cash Distribution). On July 29, 2019, Newco and certain financial institutions executed a
364-day
bridge
loan facility commitment letter pursuant to which such financial institutions have committed to provide bridge financing to Newco to fund in part the amount of the Cash Distribution and to pay fees and expenses related to the transactions
contemplated by the Business Combination Agreement, on the terms and conditions set forth therein.
The Separation and Distribution
Agreement also sets forth other agreements between Pfizer and Newco related to the Distribution, including provisions concerning the termination and settlement of intercompany accounts, certain working capital adjustments and governmental approvals
and third-party consents. The Separation and Distribution Agreement governs certain aspects of the relationship between Pfizer and Newco after the Distribution, including provisions with respect to release of claims, indemnification, insurance,
access to financial and other information and access to and provision of records. The parties have mutual ongoing indemnification obligations following the Distribution with respect to certain liabilities related to the Upjohn Business and
Pfizers business, respectively.
Consummation of the Distribution is subject to various conditions, including the satisfaction or
waiver of all conditions under the Business Combination Agreement (which include the completion of the Cash Distribution and other conditions described below). The Separation and Distribution Agreement provides that Mylan is a third-party
beneficiary of certain provisions of the Separation and Distribution Agreement.