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Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On May 3, 2020, Stemline Therapeutics, Inc., a Delaware
corporation (“Stemline”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with
Berlin-Chemie AG, a company formed under the laws of Germany (“Berlin-Chemie”), and Mercury Merger Sub, Inc., a
Delaware corporation and a wholly-owned subsidiary of Berlin-Chemie (“Purchaser”). Berlin-Chemie is a wholly-owned subsidiary of A. Menarini - Industrie Farmaceutiche Riunite S.r.l., a company formed under the laws of Italy (together,
with its subsidiaries, the “Menarini Group”).
Pursuant to the terms and subject to the conditions of the Merger
Agreement, Purchaser will commence a tender offer (the “Offer”) no later than May 15, 2020 to acquire all of the outstanding
shares of common stock of Stemline, $0.0001 par value per share (the “Shares”), at an offer price of (i) $11.50 per
Share, net to the seller in cash, without interest (the “Cash Amount”), plus (ii) one contingent value right per
Share (a “CVR”) which represents the right to receive $1.00 per CVR (the “Milestone Payment”) at the time
provided in the CVR Agreement (as defined below) (the Cash Amount plus one CVR, collectively, the “Offer Price”).
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 Annex I to the Merger Agreement,
including (i) that there have been validly tendered and not validly withdrawn Shares that, considered together with all
other Shares, if any, beneficially owned by Berlin-Chemie and its affiliated entities, represent one Share more than 50% of
the total number of Shares outstanding at the time of the expiration of the Offer (the “Minimum Condition”); (ii)
the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR Act”); and (iii) those other conditions set forth in Annex I to the Merger Agreement
(collectively, the “Offer Conditions”).
The Offer will initially expire at one minute after 11:59
p.m. Eastern Time on the date that is 20 business days following the commencement of the Offer, unless otherwise agreed
to in writing by Berlin-Chemie and Stemline. If, as of the then-scheduled expiration date, any Offer Condition is not
satisfied or waived (to the extent waivable), Purchaser may, in its discretion (and without the consent of Stemline) extend
the Offer for additional periods of up to 10 business days per extension, to permit such Offer Condition to be satisfied. If,
as of the then-scheduled expiration date, any Offer Condition is not satisfied or waived (to the extent waivable), at the
request of Stemline, Purchaser will extend the Offer for additional periods specified by Stemline of up to 10 business days
per extension to permit such Offer Condition to be satisfied, provided that Purchaser will not be required to extend the
Offer beyond the then-existing expiration date for more than three consecutive additional periods, not to exceed an aggregate
of 30 business days if all of the Offer Conditions have been satisfied or waived other than the Minimum Condition. Subject to
the foregoing and the valid termination of the Merger Agreement, Purchaser will not terminate the Offer without the prior
written consent of Stemline.
Subject only to the satisfaction or, to the extent waivable
by Purchaser or Berlin-Chemie, waiver by Purchaser or Berlin-Chemie of each of the Offer Conditions, Purchaser will (i) immediately
after the Expiration Date irrevocably accept for payment all Shares tendered (and not validly withdrawn) pursuant to the Offer
(the time of such acceptance, the “Offer Acceptance Time”) and (ii) promptly after the Offer Acceptance Time pay for
such Shares.
At or prior to the Offer Acceptance Time, Berlin-Chemie will
duly authorize, execute and deliver the Contingent Value Rights Agreement in the form attached as Annex III to the Merger Agreement
(the “CVR Agreement”).
As soon as practicable following the Offer Acceptance
Time, upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with
Section 251(h) of the Delaware General Corporation Law (the “DGCL”), Purchaser will be merged with and into
Stemline (the “Merger”), the separate existence of Purchaser will cease and Stemline will continue as a
wholly-owned subsidiary of Berlin-Chemie, without a meeting or vote of the stockholders of Stemline. At the effective time of
the Merger (the “Effective Time”), the Shares not purchased pursuant to the Offer (other than Shares held by
Stemline, Berlin-Chemie, Purchaser, any subsidiary of Berlin-Chemie, or by stockholders of Stemline who have perfected their
statutory rights of appraisal under Delaware law) will each be converted into the right to receive the Offer Price without
interest and subject to any withholding of taxes.
In addition, at the Effective Time, each In-The-Money
Company Option, Company RSU, and Restricted Share (as such terms are defined in the Merger Agreement), in each case whether
or not vested, will be canceled, and the holder thereof will be entitled to receive the Cash Amount (less any applicable
exercise price) and one CVR for each Share subject to each such security (in each case, without regard to vesting), pursuant
to the terms set forth in the Merger Agreement. Each Out-Of-The-Money Company Option (as such term is defined in the Merger
Agreement) with an exercise price below $12.50 will be canceled, and the holder thereof will receive one CVR for each Share
subject to such Out-Of-The-Money Company Option, which, solely in the case of an Out-Of-The-Money Company Option, represents the right to receive $1.00 less the amount by
which the exercise price of such Out-Of-The-Money Company Option exceeds $11.50.
The Merger Agreement includes representations, warranties, and
covenants of the parties customary for a transaction of this nature. Among other things, the Merger Agreement prohibits Stemline’s
solicitation of proposals relating to alternative transactions and restricts Stemline’s ability to furnish information to,
or participate in any discussions or negotiations with, any third party with respect to any such transaction, subject to certain
limited exceptions.
The Merger Agreement also contains termination provisions for
both Stemline and Berlin-Chemie, and further provides that, upon termination of the Merger Agreement under specified circumstances,
including termination by Stemline to accept and enter into a definitive agreement with respect to an unsolicited superior offer,
Stemline will be required to pay a termination fee of $25,400,000 (the “Termination Fee”). A superior offer includes
a bona fide written proposal from a third party to acquire 50% or more of the outstanding Shares or consolidated assets of Stemline,
not solicited in violation of the Merger Agreement, that the board of directors of Stemline determines is reasonably likely to
be consummated in accordance with its terms, and if consummated, would result in a transaction more favorable to Stemline’s
stockholders from a financial point of view than the transactions contemplated by the Merger Agreement (including after giving
effect to revised proposals, if any, made by Berlin-Chemie). Any termination of the Merger Agreement by Stemline in connection
with a superior offer is subject to certain conditions set forth in the Merger Agreement, including payment of the Termination
Fee.
Tender and Support Agreement
Concurrently with the execution and delivery of the Merger Agreement,
certain stockholders (each, a “Tendering Stockholder”) entered into a Tender and Support Agreement (each, a “Tender
Agreement”) with Berlin-Chemie and Purchaser, pursuant to which each Tendering Stockholder agreed, among other things, to
tender his, her, or its Shares pursuant to the Offer and, if necessary, vote his, her, or its Shares in certain situations as specified
in the Tender Agreements.
As of April 30, 2020, approximately 5.20 % of the outstanding
Shares are subject to the Tender Agreements. The Tender Agreements terminate in the event that the Merger Agreement is terminated.
Contingent Value Rights Agreement
At or prior to Offer Acceptance Time, Berlin-Chemie and a rights
agent mutually acceptable to Berlin-Chemie and Stemline will enter into the CVR Agreement governing the terms of the CVRs to be
received by Stemline’s stockholders. Each holder will be entitled to one CVR for each Share outstanding or underlying
each of the In-The-Money Company Options, Company RSUs, and Restricted Shares, in each case, whether or not vested. The CVRs are
not transferable except under certain limited circumstances, will not be evidenced by a certificate or other instrument, and will
not be registered or listed for trading. The CVRs will not have any voting or dividend rights and will not represent any equity
or ownership interest in Berlin-Chemie, Purchaser, Stemline or any of their respective affiliates.
Each CVR represents the right to receive the Milestone Payment
upon the first sale by or on behalf of Stemline for use or consumption by the general public of ELZONRIS for the treatment of adult
patients with blastic plasmacytoid dendritic cell neoplasm (BPDCN) in any one of the following countries: the United Kingdom, France,
Spain, Germany, or Italy after approval by the European Commission of a marketing authorization application in the European Union
through the centralized procedure (the “Milestone”). Such payment will be made on or prior to the date that is 10 business
days following delivery by Berlin-Chemie to the rights agent of a written notice indicating that the Milestone was achieved.
There can be no assurance that the Milestone will be achieved
prior to December 31, 2021, and that the resulting payment will be required of Berlin-Chemie.
Additional Information
The foregoing description of the Merger Agreement, the Tender
Agreement, and the CVR Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement and the Form
of Tender Agreement, which are attached as Exhibits 2.1 and 99.1 to this report, and the Form of CVR Agreement, which is attached
as Annex III to the Merger Agreement, all of which are incorporated herein by reference.
The Merger Agreement, the Tender Agreement, and the CVR Agreement
and the foregoing description have been included to provide investors and stockholders with information regarding the terms of
these agreements. They are not intended to provide any other factual information about Stemline. The representations, warranties,
and covenants contained in each of these documents were or will be made only as of specified dates for the purposes of such agreement,
were (except as expressly set forth therein) solely for the benefit of the parties to such agreements, 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 descriptions, 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 SEC. 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 agreements, which subsequent information may or may not be fully reflected in the parties’ public disclosures.