Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On July 26, 2016, Sequenom, Inc., a Delaware corporation (the
Company
), entered into an Agreement and Plan of
Merger (the
Merger Agreement
) with Laboratory Corporation of America Holdings, a Delaware corporation (
Parent
), and Savoy Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent (
Purchaser
). The board of directors of the Company has unanimously approved the Merger Agreement.
Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, Purchaser will commence a tender offer (the
Offer
) no later than August 9, 2016, to acquire all of the outstanding shares of common stock of the Company, $0.001 par value per share, including the associated preferred stock purchase rights (the
Rights
) issued under the Rights Agreement, dated March 3, 2009, as amended, between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (such Rights, together with the shares
of Company common stock, the
Shares
), at a purchase price of $2.40 per Share in cash (the
Offer Price
), without interest, subject to any required withholding of taxes.
The obligation of Purchaser to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of a number of conditions set
forth in the Merger Agreement, including that the number of Shares tendered in the Offer, considered together with all other Shares (if any) otherwise owned by Purchaser, must represent one more than 50% of the total number of Shares outstanding at
the time of the consummation of the Offer, including for the purposes of this calculation (x) Shares subject to Company Restricted Stock Awards (defined below) plus (y) the total number of shares issuable to holders of Company Options
(defined below) and warrants from which the Company has received notices of exercise prior to the expiration of the Offer plus (z) the aggregate number of Shares issuable upon the deemed or pending exercise, if any, prior to or at the
expiration of the Offer, of any warrants and Convertible Notes (defined below), but excluding any warrants included in clause (y) (the
Minimum Condition
).
Following the completion of the Offer and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement,
Purchaser will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the
Merger
). Purchaser will effect the Merger after consummation of the Offer pursuant to
Section 251(h) of the Delaware Generation Corporation Law. At the effective time of the Merger (the
Effective Time
), the Shares not purchased pursuant to the Offer (other than Shares held by the Company, Parent,
Purchaser or any of their respective wholly owned subsidiaries or by stockholders of the Company who have perfected their statutory rights of appraisal under Delaware law) will each be converted into the right to receive an amount in cash equal to
the Offer Price (the
Merger Consideration
), without interest, subject to any required withholding of taxes.
Each of the Companys stock options (the
Company Options
) that is outstanding as of immediately prior to the
Effective Time and held by an individual who, as of the Effective Time, is an active employee, director or consultant of the Company, shall accelerate and become fully vested and exercisable effective immediately prior to, and contingent upon, the
Effective Time. As of the Effective Time each Company Option that is then outstanding and unexercised shall be cancelled and converted into the right to receive cash (without interest) in an amount equal to the product of (i) the total number
of Shares subject to the vested portion of such Company Option immediately prior to the Effective Time (taking into account any acceleration of vesting), multiplied by (ii) the excess, if any, of (x) the Merger Consideration over
(y) the exercise price payable per Share under such Company Option. No holder of a Company Option that has an exercise price per Share that is equal to or greater than the Merger Consideration shall be entitled to any payment with respect to
such cancelled Company Option before or after the Effective Time.
Pursuant to the Merger Agreement, each restricted stock unit providing
for settlement in Shares (the
Company RSU
) that is outstanding as of immediately prior to the Effective Time and held by an individual who, as of the Effective Time, is an active employee, director or consultant of the
Company, shall accelerate and become fully vested effective immediately prior to, and contingent upon, the Effective Time. In lieu of any issuance of Shares in settlement of such Company RSU, as of the Effective Time, each Company RSU that is
outstanding shall be cancelled and converted into the right to receive cash (without interest) in an amount equal to the product of (i) the total number of Shares issuable in settlement of the vested portion of such Company RSU immediately
prior to the Effective Time (taking into account any acceleration of vesting) multiplied by (ii) the Merger Consideration.
Each
award of Shares that is subject to vesting or forfeiture or repurchase by the Company (the
Company Restricted Stock Award
) that is outstanding as of immediately prior to the Offer Acceptance Time (defined below) shall
accelerate and become fully vested such that the Companys right of reacquisition or repurchase, as applicable, shall lapse in full effective immediately prior to, and contingent upon, the Offer Acceptance Time. As of the Offer Acceptance Time,
each Share underlying each Company Restricted Stock Award shall be treated as an outstanding Share for purposes of the Merger Agreement, including for purposes of tendering pursuant to the Offer.
To the extent required pursuant to the indenture dated as of September 17, 2012, between the
Company and Wells Fargo Bank, National Association, as trustee, and the indenture dated as of June 9, 2015, between the Company and Wells Fargo Bank, National Association, as trustee (collectively, the
Indentures
),
pursuant to which the Company issued 5.00% Convertible Senior Notes due 2017 and 5.00% Convertible Senior Exchange Notes due 2018 (collectively, the
Convertible Notes
), respectively, the Company and Parent will take all
necessary action, effective upon the Effective Time, to execute and deliver a supplemental indenture to each Indenture to the applicable trustee to provide, among other things, that on and after the Effective Time, each holder of Convertible Notes
will have the right to convert such Convertible Notes into the conversion consideration determined by reference to the consideration receivable upon consummation of the Merger in respect of each Share in accordance with, and subject to, the
provisions of such Indenture governing the conversion of the Convertible Notes issued thereunder (including any applicable increase in the Conversion Rate as defined therein) in each case in accordance with, and subject to, such
Indenture.
Following the completion of the Offer, if Parent and Purchaser have satisfied the conditions to the consummation of the Merger
set forth in the Merger Agreement, the Merger will become effective on the first business day following the time at which the Purchaser accepts, for the first time, for payment and pays for such number of Shares validly tendered and not properly
withdrawn as satisfies the Minimum Condition (the
Offer Acceptance Time
) in accordance with and subject to the Delaware General Corporation Law.
The Merger Agreement includes representations and warranties and covenants of the parties customary for a transaction of this nature. Until
the earlier of the Offer Acceptance Time and the termination of the Merger Agreement, the Company has agreed to operate its business and the business of its subsidiaries in the ordinary course and has agreed to certain other operating covenants, as
set forth more fully in the Merger Agreement. The Company has also agreed not to solicit or initiate discussions with any third party regarding acquisition proposals.
The Merger Agreement includes a remedy of specific performance for the Company, Parent and Purchaser. The Merger Agreement also includes
customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger Agreement under specified circumstances, including termination by the Company to accept and enter into a definitive
agreement with respect to an unsolicited superior offer, the Company will be required to pay a termination fee of $10.6 million (the
Termination Fee
). A superior offer is a
bona fide
written proposal pursuant to
which a third party would acquire, among other acquisition structures set forth in the Merger Agreement, 80% or more of the voting power of the Company on terms that the board of directors of the Company determines in its good faith judgment (after
consultation with its financial advisors and outside legal counsel) to be more favorable to the Companys stockholders from a financial point of view than the terms of the Offer and the Merger. Any such termination of the Merger Agreement by
the Company is subject to certain conditions, including the Companys compliance with certain procedures set forth in the Merger Agreement and a determination by the board of directors of the Company that the failure to take such action would
reasonably constitute a breach of its fiduciary duties, payment of the Termination Fee by the Company and the execution of a definitive agreement by the Company with such third party.
Amendment to Rights Agreement
In
connection with the Companys entry into the Merger Agreement, the Company and American Stock Transfer & Trust Company, LLC (
AST
) entered into Amendment No. 1 to Rights Agreement, dated July 26, 2016
(the
Rights Amendment
), amending the Rights Agreement, dated March 3, 2009, by and between the Company and AST, as rights agent (as amended, the
Rights Agreement
). The effect of the Rights
Amendment is to permit the Offer, the Merger and the other transactions contemplated by the Merger Agreement to occur without triggering any distribution or other adverse event to Parent or its affiliates under the Rights Agreement. In particular,
(i) none of Parent, Purchaser or any of their respective stockholders, affiliates or associates shall become an Acquiring Person (as defined in the Rights Agreement), (ii) a Shares Acquisition Date (as defined in the Rights Agreement) and
a Distribution Date (as defined in the Rights Agreement) shall not occur, and (iii) the rights under the Rights Agreement will not separate from the Companys common stock, in each case, as a result of the announcement, approval,
execution, delivery, performance and/or amendment of the Merger Agreement or announcement, approval, commencement, performance, consummation and/or amendment of the Offer, the Merger and/or any of the other transactions contemplated by the Merger
Agreement or any related agreements. Additionally, the Rights Amendment provides that the Rights and the Rights Agreement will terminate and expire immediately prior to the Offer Acceptance Time.