Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On August 20, 2016, Medivation, Inc., a Delaware corporation (the
Company
), entered into an Agreement and Plan of
Merger (the
Merger Agreement
) with Pfizer Inc., a Delaware corporation (
Parent
), and Montreal, Inc., a Delaware corporation and a wholly owned subsidiary of Parent
(
Purchaser
). The boards of directors of both the Company and Parent have 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 30, 2016, to acquire all of the outstanding shares of common stock of the Company, $0.01 par value per share (the
Shares
), at a purchase price of $81.50 per Share (the
Offer Price
) net to the seller in cash, 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 Parent and its affiliates, must represent one more than 50% of the total number of Shares outstanding at the time of the consummation of the Offer (the
Minimum Condition
),
including for the purposes of this calculation (x) the total number of Shares outstanding at the time of the expiration of the Offer, including restricted Shares and Shares deemed issued pursuant to the Companys 2013 Employee Stock Purchase
Plan and (y) the aggregate number of Shares issuable to holders of Company stock options from which the Company has received notices of exercise prior to the expiration of the Offer (and as to which Shares have not yet been issued to such exercising
holders of the options).
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 promptly 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, which Shares will be cancelled, or by stockholders of the Company who have perfected their statutory rights of appraisal under Delaware law), together with the associated Stock
Purchase Rights, if any, issued pursuant to the Rights Plan (as defined below), will be converted into the right to receive an amount in cash equal to the Offer Price, without interest, subject to any required withholding of taxes.
At the Effective Time, each outstanding Company stock option, Company stock appreciation right, Company restricted share, Company restricted
stock unit, and Company performance stock unit (collectively, the
Company Stock Awards
) will become fully vested (in the case of performance stock units, with applicable performance conditions deemed satisfied at maximum
levels) and will be cancelled and converted into the right to receive an amount in cash equal to the Offer Price in respect of each Share underlying such Company Stock Award (net of the applicable exercise or base price, in the case of stock options
and stock appreciation rights, respectively). With respect to its Employee Stock Purchase Plan (
ESPP
), the Company will cause any outstanding offering period under such plan to terminate as of the last business day prior to
the Offer Acceptance Time (as defined below), with outstanding rights under such plan being exercised as of the Effective Time. Any Shares so purchased under the ESPP will be canceled and converted into the right to receive an amount in cash equal
to the Offer Price.
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 such number of Shares validly tendered and not validly
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. Subject to the terms and conditions of 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 $510 million (the
Termination Fee
). A superior offer is defined in the Merger Agreement as 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 outside legal counsel and financial advisors) to be more favorable to the Companys stockholders from a financial point of view than the transaction contemplated by the Merger Agreement. 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 be inconsistent with 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 August 20, 2016
(the
Rights Amendment
), amending the Rights Agreement, dated December 4, 2006, 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.
Additional Information
The foregoing
descriptions of the Merger Agreement and the Rights Amendment are not complete and are qualified in their entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to this report and incorporated herein by reference, and the
Rights Amendment, which is attached as Exhibit 4.1 to this report and incorporated herein by reference.
The Merger Agreement, and the
foregoing description of the Merger Agreement, have been included to provide investors and stockholders with information regarding the terms of the Merger Agreement. The assertions embodied in the representations and warranties contained in the
Merger Agreement are qualified by information in confidential disclosure schedules delivered by the Company to Parent in connection with the signing of the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement
were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties to the Merger
Agreement. Accordingly, the representations and warranties in the Merger Agreement should not be relied on by any persons as characterizations of the actual state of facts and circumstances of the Company at the time they were made and information
in the Merger Agreement should be considered in conjunction with the entirety of the factual disclosure about the Company in the Companys public reports filed with the U.S. Securities and Exchange Commission (the
SEC
). Information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys
public disclosures.