Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On August 19, 2020, Momenta Pharmaceuticals,
Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Johnson & Johnson, a New Jersey corporation (“Parent”), and Vigor Sub, Inc., a Delaware corporation and wholly
owned subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof,
Merger Sub will commence a tender offer (the “Offer”) as promptly thereafter as practicable, but in no event later
than September 2, 2020, to acquire all of the Company’s outstanding shares of common stock (the “Company Shares”)
at a purchase price of $52.50 per Company Share (the “Offer Price”), net to the holder thereof in cash, subject to
reduction for any applicable withholding taxes and without interest. The Merger Agreement includes a remedy of specific performance
and is not subject to a financing condition.
Merger
Sub’s obligation to purchase the Company Shares validly tendered pursuant to the Offer is subject to the satisfaction or
waiver of certain conditions set forth in the Merger Agreement, including, as of immediately prior to the Expiration Time (as defined
in the Merger Agreement) (i) that there be validly tendered and not withdrawn in accordance with the terms of the Offer,
and “received” by the “depository” for the Offer (as such terms are defined in Section 251(h) of the General
Corporation Law of the State of Delaware (the “DGCL”)), a number of Company Shares that, together with the Company
Shares then owned by Parent, Merger Sub and their affiliates, represents at least a majority of all then outstanding Company Shares
on a fully-diluted basis; (ii) the accuracy of the representations and warranties of the Company contained in the Merger Agreement,
subject to customary exceptions; (iii) the Company’s compliance in all material respects with its covenants and agreements
contained in the Merger Agreement; (iv) the expiration or termination of any waiting period (and extensions thereof) applicable
to the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
(v) the absence of a Company Material Adverse Effect (as defined in the Merger Agreement); (vi) the absence of any law, regulation,
order, injunction or ruling issued or enacted by any government authority of competent and applicable jurisdiction that would make
illegal, prohibit or otherwise prevent the consummation of the Offer, the acquisition of Company Shares by Parent or Merger Sub,
or the Merger (as defined below); (vii) the absence of any pending legal proceeding under any U.S. antitrust laws brought by any
applicable governmental authority that challenges or seeks to make illegal, prohibit or otherwise prevent the consummation of the
Offer, the acquisition of Company Shares by Parent or Merger Sub or the Merger or seeks to impose any Burdensome Condition (as
defined in the Merger Agreement) thereon; and (viii) other customary conditions.
Following the completion of the Offer and
subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will merge with and into
the Company, with the Company surviving as a wholly owned subsidiary of Parent, pursuant to Section 251(h) of the DGCL without
a vote of the Company stockholders (the “Merger”). Immediately prior to the effective time of the Merger (the “Effective
Time”), and without any action on the part of the holders of any Company Shares, each Company Share, other than any Company
Shares (i) owned at the commencement of the Offer and immediately prior to the Effective Time by Parent, Merger Sub or the Company,
(ii) irrevocably accepted for purchase pursuant to the Offer, or (iii) owned by Company stockholders who are entitled to demand
and have properly and validly demanded their appraisal rights under Delaware law, will be automatically converted into the right
to receive an amount in cash equal to the Offer Price, subject to reduction for any applicable withholding taxes and without interest.
In addition, effective as of immediately
prior to the Effective Time, (i) each outstanding Company stock option will be accelerated and vest in full and, as of the Effective
Time, will be automatically canceled and converted into the right to receive an amount in cash, without interest, equal to the
product of (A) the number of Company Shares underlying such option immediately prior to the Effective Time multiplied by (B) the
amount, if any, by which the Offer Price exceeds the exercise price per share of such option, and (ii) each outstanding Company
restricted stock unit (including any restricted stock unit that was previously subject to performance-based vesting conditions
and has become subject solely to time-based vesting conditions) (“RSU”) will be accelerated and vest in full and, as
of the Effective Time, will be automatically canceled and converted into the right to receive an amount in cash equal to the product
of (A) the number of Company Shares underlying such RSU immediately prior to the Effective Time multiplied by (B) the Offer Price,
without interest and subject to any deduction for any withholding taxes.
The
Merger Agreement contains customary representations, warranties and covenants, including covenants obligating the Company to continue
to conduct its business in the ordinary course, to cooperate in seeking regulatory approvals and not to engage in certain specified
transactions or activities without Parent’s prior consent. In addition, subject to certain exceptions, the Company has agreed
not to solicit, initiate, knowingly encourage, or knowingly facilitate or assist, any inquiry, proposal or offer, or the making,
submission or announcement of any inquiry, proposal or offer, that constitutes or would reasonably be expected to lead to an Acquisition
Proposal (as defined in the Merger Agreement), or take certain other restricted actions in connection therewith. Notwithstanding
the foregoing, if the Company receives a bona fide Acquisition Proposal that did not result from a material breach of the non-solicitation
provisions of the Merger Agreement that the Company’s board of directors (the “Board”) determines in good
faith, after consultation with its financial advisor(s) and outside legal counsel, constitutes or is reasonably likely to lead
to a Superior Proposal (as defined in the Merger Agreement), the Company may take certain actions to participate in discussions
and negotiations and furnish information with respect to such Acquisition Proposal, after providing written notice to Parent of
such determination.
The Company shall prepare and file a Solicitation/Recommendation
Statement on Schedule 14D-9 and, subject to certain exceptions, the Board shall recommend that the stockholders accept
the Offer and tender their Company Shares to Merger Sub pursuant to the Offer (the “Company Board Recommendation”)
and not withdraw, amend, modify or qualify such Company Board Recommendation in a manner adverse to Parent or Merger Sub. However,
subject to the satisfaction of certain terms and conditions, the Company and the Board, as applicable, are permitted to take certain
actions which may, as more fully described in the Merger Agreement, include changing the Company Board Recommendation and entering
into a definitive agreement with respect to a Superior Proposal if, among other things, the Board has concluded in good faith after
consultation with its outside legal counsel that the failure to take such action would be inconsistent with the Board’s fiduciary
duties under applicable law.
The Merger Agreement also contains certain
customary termination rights in favor of each of the Company and Parent, including the Company’s right, subject to certain
limitations, to terminate the Merger Agreement in certain circumstances to accept a Superior Proposal and Parent’s right
to terminate the Merger Agreement if the Board changes its Company Board Recommendation. In addition, either Parent or the Company
may terminate the Merger Agreement if the Merger has not been successfully completed by January 19, 2021; provided that if any
of the conditions to closing related to obtaining the requisite antitrust approvals have not been made by such date, then such
date shall be automatically extended to April 19, 2021. In connection with a termination of the Merger Agreement under specified
circumstances, including due to a change in the Company Board Recommendation, the entry by the Company into a definitive agreement
with respect to a Superior Proposal, or certain other triggering events, the Company may be required to pay Parent a termination
fee of $205,000,000. The Board has unanimously (i) determined that it is in the best interests of the Company and its stockholders
to enter into, and approved and declared advisable, the Merger Agreement, (ii) approved the execution and delivery by the Company
of the Merger Agreement, the performance by the Company of its covenants and agreements contained in the Merger Agreement and the
consummation of the Offer and the Merger upon the terms and subject to the conditions contained in the Merger Agreement, and (iii)
resolved, subject to the terms and conditions set forth in the Merger Agreement, to recommend that the holders of Company Shares
accept the Offer and tender their Company Shares to Merger Sub pursuant to the Offer.
The foregoing description of the Merger
Agreement and the transactions contemplated thereunder is not complete and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is hereby filed as Exhibit 2.1 to this Current Report on Form 8-K (this “Report”) and incorporated
herein by reference. The Merger Agreement and the foregoing description thereof have been included to provide investors and stockholders
with information regarding the terms of the Merger Agreement. They are not intended to provide any other factual information about
the Company. The representations, warranties and covenants contained in the Merger Agreement were made only as of specified dates
for the purposes of such agreement, were solely for the benefit of the parties to such agreement and may be subject to qualifications
and limitations agreed upon by such parties. In particular, in reviewing the representations, warranties and covenants contained
in the Merger Agreement and discussed in the foregoing description, it is important to bear in mind that such representations,
warranties and covenants were negotiated with the principal purpose of allocating risk between the parties, rather than establishing
matters as facts. Such representations, warranties and covenants may also be subject to a contractual standard of materiality different
from those generally applicable to stockholders and reports and documents filed with the U.S. Securities and Exchange Commission
(the “SEC”), and are also qualified in important part by a confidential disclosure schedule delivered by the Company
to Parent in connection with the Merger Agreement. Investors and stockholders are not third-party beneficiaries under the Merger
Agreement. Accordingly, investors and stockholders should not rely on such representations, warranties and covenants as characterizations
of the actual state of facts or circumstances described therein. Information concerning the subject matter of such representations,
warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully
reflected in the parties’ public disclosures.