Sciele Pharma, Inc. - Current report filing (8-K)
03 Septiembre 2008 - 3:47PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported):
September 1, 2008
SCIELE PHARMA, INC.
(Exact
name of registrant as specified in its charter)
Delaware
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000-30123
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58-2004779
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(State of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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Five Concourse Parkway
Suite 1800
Atlanta, Georgia 30328
(Address of principal executive offices) (Zip Code)
(770) 442-9707
(Registrants telephone number, including area code)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425
under the Securities Act
o
Soliciting material pursuant to Rule 14a-12
under the Exchange Act
o
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act
o
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act
Item 1.01
Entry into a Material Definitive Agreement.
Merger Agreement
On September 1, 2008, Sciele
Pharma, Inc., a Delaware corporation (Sciele or the Company), entered
into an Agreement and Plan of Merger (the Merger Agreement) with Shionogi &
Co., Ltd., a company formed under the laws of Japan (Parent) and Tall Bridge, Inc.,
a Delaware corporation and an indirect wholly-owned subsidiary of Parent (Merger
Sub).
Pursuant to the Merger Agreement,
upon the terms and subject to the conditions thereof:
·
Merger
Sub will commence a tender offer (the Offer) to acquire all of the
outstanding shares of common stock of the Company (the Shares) at a purchase
price of $31.00 per share, net to the holder in cash (the Offer Price),
subject to any required withholding of taxes, and
·
as
soon as practicable after the consummation 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 (the Merger), and the Company
will become an indirect wholly-owned subsidiary of Parent. In the Merger, the
shares of the Company remaining outstanding following the consummation of the
Offer, other than shares held by Parent or its subsidiaries or by stockholders
who have validly exercised their appraisal rights under Delaware law, will be
converted into the right to receive the Offer Price.
Concurrently with the execution of
the Merger Agreement, each of the following officers and directors of the
Company entered into a
Tender
and Voting Agreement with Parent dated as of the date of the Merger Agreement pursuant to which each
such officer or director agreed to tender into the Offer all shares of Sciele
common stock beneficially owned by him and not to withdraw any such shares
previously tendered as well as to vote for the Merger should such a vote be
required: Patrick Fourteau, Edward Schutter, Darrell Borne, Leslie
Zacks, Larry Dillaha, Joseph Ciaffoni, Jerry Ellis, Jerry Griffin, Pierre
Lapalme, William Robinson, Jon Saxe, and Patrick Zenner.
The obligation of Merger Sub to
accept for payment and pay for the shares tendered in the Offer is subject to
the satisfaction or waiver of a number of conditions set forth in the Merger
Agreement, including the expiration or termination of applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act. In addition, it is a condition to Merger Subs
obligation to accept for payment and pay for the shares tendered in the Offer
that the number of the outstanding shares of the Companys common stock that
have been validly tendered (including by guaranteed delivery) and not properly
withdrawn, together with any shares of the Companys common stock owned by
Parent or its subsidiaries, equals at least a majority of the Companys
outstanding common stock on a fully-diluted basis.
The closing of the Merger is subject
to customary closing conditions. The parties have agreed that if, following
completion of the Offer, Parent, Merger Sub and any other Parent subsidiary own
at least 90% of the outstanding shares of the Companys common stock, the
Merger will be completed without a meeting of the Companys stockholders,
pursuant to Delawares short-form merger statute.
Following the completion of the
Offer, if a majority but fewer than 90% of the issued and outstanding Shares
are accepted for payment in the Offer, Merger Sub has an option to purchase
from Sciele a number of Shares that, when added to the Shares that Parent and
its affiliates own after the Offer is completed, constitutes the least amount
required for Parent and its affiliates, including Merger Sub, to own more than
90% of the outstanding Shares (such option, the Top-Up Option). The Top-Up Option can only be exercised when (i) the
Shares issued pursuant to the Top-Up Option will enable Merger Sub to obtain
more than 90% of the issued and outstanding Shares, (ii) the number of
Shares issued pursuant to the Top-Up Option would not exceed the total number
of authorized but unissued Shares, (iii) the exercise of the Top-Up
Option would not require approval of the holders of the Companys Shares
pursuant to the rules of The NASDAQ Stock Market LLC (provided that a
waiver of such rules is not obtained) and (iv) such issuance is
lawful.
The Merger Agreement includes
customary representations, warranties and covenants of the Company, Merger Sub,
and Parent. The Company has agreed to use commercially reasonable efforts to
operate its business in the ordinary course until the Offer is consummated. The
Company has agreed not to solicit or initiate discussions with third
2
parties regarding other proposals to
acquire the Company and to certain restrictions on its ability to respond to
any such proposal. 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, the
Company will be required to pay Parent a termination fee of $25 million
(approximately 2.28% of the equity value of the transaction). The representations and warranties in the
Merger Agreement of the Company, Merger Sub and Parent were made to each other
as of specific dates. The assertions embodied in those representations and
warranties were made solely for purposes of the contract among the Company,
Merger Sub and Parent and may be subject to important qualifications and
limitations agreed to by the Company, Merger Sub and Parent in connection with
the negotiated terms. Moreover, some of those representations and warranties
may not be accurate or complete as of any specified date, may be subject to a
contractual standard of materiality different from those generally applicable
to stockholders or may have been used for purposes of allocating risk among the
Company, Merger Sub and Parent rather than establishing matters as facts.
Copies of the Merger Agreement and
the form of the Tender and Voting Agreements are attached as Exhibits 2.1 and
99.2, respectively, to this report and are incorporated herein by reference.
The foregoing descriptions of the Merger Agreement and the Tender and Voting
Agreements do not purport to be complete and are qualified in their entirety by
reference to the Merger Agreement and the Tender and Voting Agreements.
Notice to
Investors
The Offer for the outstanding common
stock of the Company referred to in this report has not yet commenced. This report
is neither an offer to purchase nor a solicitation of an offer to sell any
securities. The solicitation and the offer to buy shares of the Companys
common stock will be made pursuant to an offer to purchase and related
materials that Merger Sub intends to file with the U.S. Securities and Exchange
Commission. At the time the Offer is commenced, Merger Sub will file a Tender
Offer Statement on Schedule TO with the U.S. Securities and Exchange
Commission, and thereafter the Company will file a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer. The Tender Offer
Statement (including an Offer to Purchase, a related Letter of Transmittal and
other offer documents) and the Solicitation/Recommendation Statement will
contain important information that should be read carefully and considered
before any decision is made with respect to the Offer. These materials will be
sent free of charge to all stockholders of the Company. In addition, all of
these materials (and all other materials filed by the Company with the U.S.
Securities and Exchange Commission) will be available at no charge from the
U.S. Securities and Exchange Commission through its website at www.sec.gov.
Investors and security holders may also obtain free copies of the documents
filed with the U.S. Securities and Exchange Commission by the Company at
www.sciele.com.
Forward-Looking
Statements
This report contains forward-looking
statements that involve significant risks and uncertainties. All statements
other than statements of historical fact are statements that could be deemed
forward-looking statements, including: statements regarding the anticipated
timing of filings and approvals relating to the transaction; statements
regarding the expected timing of the completion of the transaction; statements
regarding the ability to complete the transaction considering the various
closing conditions; any statements of expectation or belief; and any statements
of assumptions underlying any of the foregoing. Investors and security holders
are cautioned not to place undue reliance on these forward-looking statements.
Actual results could differ materially from those currently anticipated due to
a number of risks and uncertainties. Risks and uncertainties that could cause
results to differ from expectations include: uncertainties as to the timing of
the Offer and Merger; uncertainties as to how many of the Companys
stockholders will tender their stock in the Offer; the risk that competing
offers will be made; the possibility that various closing conditions for the
transaction may not be satisfied or waived, including that a governmental
entity may prohibit, delay or refuse to grant approval for the consummation of
the transaction; the effects of disruption from the transaction making it more
difficult to maintain relationships with employees, licensees, other business
partners or governmental entities; other business effects, including the
effects of industry, economic or political conditions outside of the Companys
control; transaction costs; actual or contingent liabilities; and other risks
and uncertainties discussed in documents filed with the U.S. Securities and
Exchange Commission by the Company, as well as the tender offer documents to be
filed by Merger Sub and the Solicitation/Recommendation Statement to be filed
by the Company. The Company does not
undertake any obligation to update any forward-looking statements as a result
of new information, future developments or otherwise, except as expressly
required by law.
3
Item 5.02. Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On September 1, 2008, and as a
condition to the Parents willingness to enter into the Merger Agreement, the
Company entered into agreements (the Employment Agreements) with each of Patrick
Fourteau (Chief Executive Officer), Edward Schutter (President and Chief
Operating Officer), Darrell Borne (Executive Vice President and Chief Financial
Officer), Leslie Zacks (Executive Vice President and Chief Legal and Compliance
Officer), Larry Dillaha (Executive Vice President and Chief Medical Officer) and
Joseph Ciaffoni (Executive Vice President and Chief Commercial Officer) (each
an Executive) which amend and restate their existing employment agreements
with the Company (the Existing Employment Agreements). The Employment
Agreements will become effective only upon consummation of the Merger and,
among other things, (i) include an initial term through December 31,
2012 (provided that in each case such term is automatically extended for
subsequent one-year terms unless either the Executive or the Company gives
written notice to the other of its or his intent not to extend at least 90 days
prior to the end of the then-applicable term), (ii) provide for each Executive
to receive a salary which, for the remainder of 2008, shall remain at its
current level; for 2009 and 2010 shall be as provided in each Employment Agreement
and as set forth in the table below; and thereafter shall be reviewed annually,
provided that it shall increase at least four percent per year during the
Initial Term (as defined in each Employment Agreement), (iii) provide for
each Executive to receive an annual bonus which, for 2008, shall be paid in
accordance with the terms of the bonus plan in which each Executive currently
participates; for 2009 shall be based on performance criteria to be mutually
agreed upon by the Executive and the Company and shall have a target level as
set forth in the table below; and thereafter shall be based on performance
criteria fixed by the Companys Board of Directors and shall have a target
level not less than the Executives prior years target level, (iv) provide
for each Executive to participate in a long-term incentive compensation plan
which, for 2009, shall have a target long-term incentive payment amount as
provided in each Employment Agreement and as set forth in the table below and
thereafter shall have a target level determined by the Companys Board of
Directors and shall be paid on the basis of criteria based upon earnings before
interest, taxes, depreciation and amortization, (v) provide for each
Executive to receive a retention bonus payable over four years commencing with
the six month anniversary of the effective date of the Merger, (vi) provide
for each Executive to receive severance benefits if he is terminated without
Cause or resigns for Good Reason (as those terms are defined in the Employment Agreements)
and (vii) provide for each Executive to participate in those of the
Companys programs applicable to the Companys senior executives generally. The table below sets forth certain amounts
which are due or which may potentially be received by each Executive under the
Employment Agreements.
4
Executives Name
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2009 Salary
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2010 Salary
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2009 Bonus
Target as a
Percentage of
Salary
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2009 Long
Term Incentive
Target
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Retention Bonus
(1)
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Patrick Fourteau (Chief
Executive Officer)
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$
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523,750
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$
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650,000
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150
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%
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$
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1,890,625
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$
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3,200,000
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Edward Schutter
(President and Chief
Operating Officer)
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$
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437,500
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$
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550,000
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105
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%
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$
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1,603,125
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$
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2,500,000
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Darrell Borne (Executive
Vice President and Chief
Financial Officer
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$
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361,000
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$
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425,000
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90
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%
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$
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914,100
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$
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1,600,000
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Leslie Zacks (Executive
Vice President and Chief
Legal and Compliance
Officer)
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$
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342,500
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$
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425,000
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50
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%
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$
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886,250
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$
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1,400,000
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Larry Dillaha (Executive
Vice President and Chief
Medical Officer)
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$
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342,500
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$
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425,000
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50
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%
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$
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886,250
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$
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1,400,000
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Joseph Ciaffoni
(Executive Vice
President and Chief
Commercial Officer)
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$
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387,500
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$
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475,000
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60
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%
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$
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1,080,000
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$
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1,700,000
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(1) T
he Retention Bonus shall vest and be paid out in eight
equal semi-annual installments commencing with the six month anniversary of the
date the Merger becomes effective; provided that the Executive (x) is
employed with the Company on the applicable vesting date and (y) has not
given or received a notice of termination of employment without Good Reason or
for Cause on or prior to such vesting date.
The foregoing descriptions of the
Employment Agreements do not purport to be complete and are qualified in their
entirety by reference to the Employment Agreements which are attached hereto as
Exhibits 10.1 through 10.6 hereto and incorporated herein by reference.
Item 8.01 Other Events.
On September 1, 2008, the
Company issued a press release announcing the execution of the Merger
Agreement, a copy of which is filed as Exhibit 99.1 to this report and is
incorporated herein by reference.
Item 9.01 Financial Statements and
Exhibits.
(d)
Exhibits
Exhibit
No.
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Description
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2.1
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Agreement and Plan of Merger,
dated as of September 1, 2008, among Shionogi & Co., Ltd., Tall
Bridge, Inc. and Sciele Pharma, Inc. (1)
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10.1
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Patrick Fourteau.
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10.2
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Edward Schutter.
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10.3
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Darrell Borne.
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10.4
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Amended And Restated Employment Agreement
dated as of September 1, 2008, by and between Sciele Pharma, Inc.,
and Leslie Zacks.
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10.5
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Larry Dillaha.
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5
10.6
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Joseph Ciaffoni.
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99.1
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Press Release dated
September 1, 2008
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99.2
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Form of Tender and Voting
Agreement
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(1) The
schedules to the Merger Agreement have been omitted from this filing pursuant
to Item 601(b)(2) of Regulation S-K. The Company will furnish copies of
any of such schedules to the U.S. Securities and Exchange Commission upon
request.
6
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Sciele
Pharma, Inc.
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(Registrant)
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Date: September 3,
2008
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By:
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/s/ Darrell Borne
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Darrell Borne
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Executive Vice President,
Chief Financial
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Officer, Secretary and
Treasurer
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7
EXHIBIT
INDEX
Exhibit
No.
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Description
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2.1
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Agreement and Plan of Merger,
dated as of September 1, 2008, among Shionogi & Co., Ltd., Tall
Bridge, Inc. and Sciele Pharma, Inc. (1)
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10.1
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Patrick Fourteau.
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10.2
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Edward Schutter.
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10.3
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Darrell Borne.
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10.4
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Leslie Zacks.
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10.5
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Larry Dillaha.
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10.6
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Amended And Restated Employment
Agreement dated as of September 1, 2008, by and between Sciele
Pharma, Inc., and Joseph Ciaffoni.
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99.1
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Press Release dated
September 1, 2008
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99.2
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Form of Tender and Voting
Agreement
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(1)
The schedules to the Merger
Agreement have been omitted from this filing pursuant to Item 601(b)(2) of
Regulation S-K. The Company will furnish copies of any of such schedules to the
U.S. Securities and Exchange Commission upon request.
8
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