Item 1.01. Entry into a Material Definitive Agreement.
On April 6, 2018, AveXis, Inc., a Delaware corporation (the “
Company
”), entered into an Agreement and Plan of Merger (the “
Merger Agreement
”) with Novartis AG
, a company organized under the laws of Switzerland
(“
Parent
”), and Novartis AM Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”).
Pursuant to the Merger Agreement, and upon the terms and subject to the conditions described therein, Parent will cause Merger Sub to commence a cash tender offer (the “
Offer
”) within seven business days following the date of the Merger Agreement, for all of the Company’s outstanding shares of common stock, par value $0.0001 per share (the “
Shares
”), at a purchase price of $218 per Share (such price, as it may be increased as described in the following sentence, the
“
Offer Price
”
), net to the seller in cash, without interest, subject to any required withholding of taxes. In the event Parent elects to extend the Outside Date (as defined in the Merger Agreement) in accordance with the terms of the Merger Agreement, the Offer Price will be increased to $225 per Share, net to the seller in cash, without interest, subject to any required withholding of taxes. The Offer will remain open for a minimum of 20 business days from the date of commencement.
The obligation of Merger Sub to purchase Shares tendered in the Offer is subject to customary closing conditions, including (i) Shares having been validly tendered and not withdrawn that represent at least a majority of the total number of Shares then-outstanding on a fully diluted basis, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, without the imposition of a Burdensome Condition (as defined in the Merger Agreement), (iii) the absence of injunctions or other legal restraints preventing the consummation of the Offer or the Merger, as defined below, or imposing a Burdensome Condition and (iv) certain other conditions set forth in Exhibit A to the Merger Agreement. The consummation of the Offer is not subject to any financing condition.
Following the completion of the Offer, subject to the satisfaction or waiver of certain customary 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 (the “
Merger
”), pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law (the “
DGCL
”), without any stockholder approvals. The Merger will be effected as soon as practicable following the time of purchase by Merger Sub of Shares validly tendered and not withdrawn in the Offer (the “
Acceptance
Time
”).
At the effective time of the Merger (the “
Effective Time
”), each issued and outstanding Share (other than Shares owned by (i) the Company, any subsidiary of the Company, Parent, Merger Sub and any other subsidiary of Parent and (ii) stockholders of the Company who have validly exercised their statutory rights of appraisal under the DGCL) will be converted into the right to receive the Offer Price, in cash, without interest, subject to any required withholding of taxes.
Each stock option outstanding immediately prior to the Effective Time, whether or not vested, will be canceled at the Effective Time and converted into the right to receive (i) the excess, if any, of the Offer Price (or, in the case of stock options granted under the Company’s Amended and Restated 2014 Stock Plan, if greater, the volume-weighted average trading price of Shares on the date of the Acceptance Time (or if such date is not a trading day, the last trading day)) over the exercise price per Share of the stock option, multiplied by (ii) the number of Shares subject to the stock option immediately prior to the Effective Time. Each restricted stock unit and performance stock unit outstanding immediately prior to the Effective Time will be canceled at the Effective Time and converted into the right of the holder to receive (i) the Offer Price multiplied by (ii) the number of Shares subject to such restricted stock unit or performance stock unit (as applicable) immediately prior to the Effective Time (assuming in the case of performance stock units, that applicable performance conditions are achieved at maximum performance levels).
The Merger Agreement includes representations and warranties and covenants of the parties customary for a transaction of this nature. Until the earlier of the termination of the Merger Agreement and the Effective Time, the Company has agreed to operate its business in the ordinary course and has agreed to certain other operating covenants, as set forth more fully in the Merger Agreement.
The Merger Agreement also contains a “no shop” provision that, in general, restricts the Company’s ability to solicit third-party acquisition proposals or provide information to, or engage in discussions or negotiations with, third parties that have made or that could reasonably be expected to make an acquisition proposal. The no shop provision is subject to a “fiduciary out” provision that allows the Company, under certain circumstances and in compliance with certain obligations, to provide information and participate in discussions and negotiations with respect to unsolicited third-party acquisition proposals that would reasonably be expected to lead to a Superior Company Proposal (as defined in the Merger Agreement) and, subject to compliance with certain obligations, to terminate the Merger Agreement and accept a Superior Company Proposal upon payment to Parent of the Termination Fee discussed below.
The Merger Agreement 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 a Superior Company Proposal, the Company will be required to pay a fee equal to $284 million (the “
Termination Fee
”). The Merger Agreement also provides that, in connection with the termination of the Merger Agreement under specified antitrust related circumstances, Parent will be required to pay to the Company a “reverse termination fee” equal to $437 million, which fee increases in the event Parent elects to extend the Outside Date in accordance with the terms of the Merger Agreement.
The foregoing description of the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to this report and incorporated herein by reference.
The Merger Agreement and the foregoing descriptions of the Merger Agreement have been included to provide investors 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 the Merger Agreement, were solely for the benefit of the parties to the Merger Agreement and may be subject to qualifications and limitations agreed upon by the 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, and may have been qualified by confidential disclosures. 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 United States Securities and Exchange Commission (the “
SEC
”). Accordingly, investors 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.