8-K
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): July 23, 2009
SCHERING–PLOUGH CORPORATION
(Exact Name of Registrant as Specified in its Charter)
| |
|
|
|
|
| New Jersey
|
|
1-6571
|
|
22-1918501 |
| (State or Other Jurisdiction of
|
|
(Commission File Number)
|
|
(IRS Employer |
| Incorporation)
|
|
|
|
Identification Number) |
2000 Galloping Hill Road
Kenilworth, NJ 07033
(Address of Principal Executive Office)
Registrant’s telephone number, including area code: (908) 298-4000
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:
| þ |
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
| o |
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
| o |
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
| o |
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
| |
|
|
|
3 |
|
|
6 |
|
|
7 |
|
EX-99.1: Consolidated Amended Complaint |
|
|
| EX-99.1 |
ITEM 8.01 OTHER EVENTS
As disclosed in Schering-Plough Corporation’s (“Schering-Plough”) and Merck & Co., Inc’s (“Merck”)
definitive joint proxy statement/prospectus, dated June 25, 2009, included in Schering-Plough’s
Registration Statement on Form S-4 (File No. 333-159371), as amended, four putative class action
lawsuits relating to the proposed merger between the two companies were filed on behalf of
Schering-Plough shareholders in the United States District Court for the District of New Jersey
(the “Court”). On April 30, 2009, the federal actions were consolidated under the caption In re
Schering-Plough/Merck Merger Litig., Civ No. 09-1099 (the “Federal Action”). On June 3, 2009,
plaintiffs filed a consolidated class action complaint in the Federal Action seeking to enjoin the
proposed merger, among other things. On July 23, 2009,
Schering-Plough entered into a memorandum of understanding regarding a settlement of the litigation. In connection with the settlement,
Schering-Plough agreed, among other things, to make the following disclosures related to the
proposed merger:
1. Additional information concerning the fees to be paid to Schering-Plough’s and Merck’s
financial advisors in connection with the transaction has been disclosed at pages 70, 80 and
89 of the definitive joint proxy statement/prospectus of Schering-Plough and Merck, dated
June 25, 2009.
2. Additional information concerning arbitration regarding Remicade and golimumab has been
disclosed at pages 94 and 95 of the definitive joint proxy statement/prospectus of
Schering-Plough and Merck, dated June 25, 2009.
3. As previously disclosed in the definitive joint proxy statement/prospectus of
Schering-Plough and Merck, dated June 25, 2009, Schering-Plough, its directors, and in
certain cases, Merck and Schering-Plough subsidiaries, SP Merger Subsidiary One, Inc. and SP
Merger Subsidiary Two, Inc., have been named as defendants in certain actions filed on behalf
of Schering-Plough shareholders challenging the proposed merger of Schering-Plough and Merck.
Plaintiffs in the consolidated federal action allege, among other things, that
Schering-Plough’s board of directors breached their fiduciary duties in connection with the
proposed transaction with Merck, and in particular, with respect to the timing of the March
9, 2009 announcement of the proposed transaction in relation to the March 12, 2009
announcement of the publication in the Lancet of the Phase II TRA-PCI trial results for
Schering-Plough’s pipeline thrombin receptor antagonist drug, SCH 530348, known as TRA.
Plaintiffs note that Merck’s share price rose approximately 12.6% between closing on March
12, 2009 and closing on March 13, 2009. A copy of the Consolidated Amended Complaint in the
Federal Action detailing plaintiffs’ allegations is furnished as an exhibit hereto.
Defendants vigorously deny the allegations in the Consolidated Amended Complaint.
4. The following table sets forth the closing stock prices of Schering-Plough and Merck
during the week following the announcement of the proposed transaction.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
03/09/09 |
|
03/10/09 |
|
03/11/09 |
|
03/12/09 |
|
03/13/09 |
Schering-Plough |
|
$ |
20.13 |
|
|
$ |
21.08 |
|
|
$ |
20.84 |
|
|
$ |
22.32 |
|
|
$ |
24.21 |
|
Merck |
|
$ |
20.99 |
|
|
$ |
22.20 |
|
|
$ |
21.94 |
|
|
$ |
24.03 |
|
|
$ |
27.07 |
|
5. Below is a timeline of the major public disclosures of results of the TRA-PCI trial:
| |
• |
|
March 2007, at a late-breaker session at the American College of Cardiology
meeting, as disclosed by Schering-Plough in a press release dated March 24, 2007. |
| |
| |
• |
|
September 2007, at the European Society of Cardiology Meeting. |
| |
| |
• |
|
November 2007, at the American Heart Association meeting, as disclosed by
Schering-Plough in a press release dated November 7, 2007. |
| |
| |
• |
|
On the evening of March 12, 2009, with the prior knowledge of Schering-Plough,
the medical journal Lancet published the previously disclosed results of the
Phase II TRA-PCI clinical trial concerning TRA, as disclosed by Schering-Plough
in a press release dated March 12, 2009. |
The board was generally aware of the status of Schering-Plough’s pipeline projects, including
TRA. The board was updated on the pipeline on a regular basis. Schering-Plough confirms
that it did not consider the Lancet article specifically, or the timing of its publication,
in connection with the board of directors’ decision to approve the transaction with Merck or
the timing of such approval or the timing of the announcement of the proposed merger with
Merck. Further, Schering-Plough did not request or instruct its financial advisors, Goldman,
Sachs & Co. and Morgan Stanley & Co., Incorporated, to consider the fact or timing of the
publication of the Lancet article in connection with completion of their work in the
rendering of their respective fairness opinions.
During the negotiations between Schering-Plough and Merck, Schering-Plough provided customary
due diligence to Merck, including information regarding both its pipeline and its marketed
drugs. The pipeline drugs on which Schering-Plough provided information included TRA, among
others. In approving the transaction, Schering-Plough’s board of directors was
3
aware of the company’s important pipeline products including TRA, TRA’s long-term potential
to generate substantial revenue for the company, and the success of TRA in Phase II trials.
6. During the course of its negotiations with Merck, Schering-Plough’s financial advisors
identified other companies in the pharmaceutical industry in order to review with
Schering-Plough’s board whether other companies might have an interest in a strategic
transaction with Schering-Plough. Schering-Plough’s board of directors was advised that as a
practical matter no company, other than Company X, had a profile such that a transaction of
similar or greater value for shareholders than the proposed transaction with Merck was
likely. Accordingly, during its negotiations with Merck, Schering-Plough did not contact any
other company, other than Company X, concerning a potential strategic transaction.
7. The initial draft of the proposed merger agreement provided by Fried, Frank, Harris,
Shriver & Jacobson LLP (“Fried Frank”) to Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”)
on February 24, 2009 contained various “deal protection” provisions related to the merger.
Schering-Plough’s counsel, financial advisors and/or Schering-Plough executives negotiating
the proposed transaction (together, “Schering-Plough Representatives”) with Merck, objected
to a number of the provisions as potentially unduly restrictive. The parties negotiated
selected changes to those provisions as follows:
| |
• |
|
Definition of Superior Proposal. The initial draft merger agreement
proposed by Merck would in certain circumstances permit Schering-Plough to engage
in discussions or negotiations with a third party that has made a superior
proposal or a proposal that the Schering-Plough board determines could lead to a
superior proposal. However, as proposed by Merck, the definition of what would
qualify as a “superior proposal” generally required that a third party make a
proposal involving 100% of the stock or assets of Schering-Plough.
Schering-Plough Representatives noted that a 100% threshold was too high, and
that the threshold should be lowered to 50%. After making an initial
counterproposal of 75%, Merck ultimately agreed to a 50% threshold. |
| |
| |
• |
|
Third Party “Standstill” Provision. The initial draft merger
agreement proposed by Merck would permit Schering-Plough to furnish nonpublic
information to potential third parties seeking a business combination only if
such third parties enter into a confidentiality agreement with Schering-Plough
containing a “standstill” or similar provision on terms no more materially
favorable to the third party than the terms of any “standstill” or similar
provision applicable to Merck with respect to Schering-Plough. Schering-Plough
Representatives objected to the requirement that third parties enter into a
“standstill” agreement that would effectively prevent the third party from making
proposals for a business combination or other transaction with Schering-Plough.
Although Merck initially disagreed, Merck ultimately agreed to include a
carve-out explicitly permitting the required “standstill” provision to allow a
third party to make such proposals to Schering-Plough. |
| |
| |
• |
|
Termination Right for Superior Proposal. The initial draft merger
agreement proposed by Merck did not provide for the ability of Schering-Plough to
terminate the merger agreement to accept a superior proposal. Thus, in the event
a third party made a proposal that the Schering-Plough board determined was
superior to the business combination with Merck, it would nonetheless be unable
to terminate the merger agreement to accept such proposal. In conjunction with
the “force-the-vote” provision that Merck had proposed, Schering-Plough could
have been required to hold its shareholder meeting to vote on the proposed
business combination with Merck, even when a superior alternative proposal had
already been made. Schering-Plough Representatives noted that a termination
right in such event would be standard and appropriate, and, in the course of
negotiations, Merck ultimately agreed to include such a right. |
| |
| |
• |
|
Matching Period. The initial draft merger agreement proposed by Merck
required Schering-Plough, in the event of a superior proposal, to negotiate with
Merck for five business days prior to the Schering-Plough board changing its
recommendation or terminating the merger agreement. Schering-Plough
Representatives requested that this time period be reduced from five business
days to three business days. After making a counterproposal of four business
days, Merck ultimately agreed to reduce the period to three business days. |
| |
| |
• |
|
Termination Fee. The initial draft merger agreement proposed by Merck
included a general termination fee of $1.75 billion. Schering-Plough
Representatives noted that the proposed general termination fee was high, and
requested that the fee be lowered to an amount equal to 1.5% of the equity
transaction value. After a counterproposal by Merck to set the general
termination fee at 4% of the equity transaction value, the parties ultimately
agreed to lower the general termination fee to $1.25 billion. |
8. As previously disclosed in the preliminary joint proxy statement/prospectus, on March 3,
2009, representatives of Fried Frank and Wachtell Lipton held a conference call to discuss
key outstanding issues. The attorneys noted that the parties were not far apart on many of
the provisions in the merger agreement, but that key unresolved issues remained, most
prominent of which was the financing provision. Other key issues included the size of the
general termination fee and the actions required to be taken to obtain regulatory approvals.
* * * * * *
4
The agreement to make the additional disclosures specified herein does not constitute an
acknowledgment that these additional disclosures are required under any applicable state or federal
law, statute, rule or regulation. The settlement of the Federal Actions is subject to customary
conditions, including court approval following notice to Schering-Plough’s shareholders. A hearing
will be scheduled at which the Court will consider the fairness, reasonableness, and adequacy of
the settlement. If the settlement is finally approved by the Court, it will resolve and release all
claims in the Federal Action that were or could have been brought challenging any aspect of the
proposed merger, the merger agreement, and any disclosure made in connection therewith, pursuant to
terms that will be disclosed to Schering-Plough shareholders prior to final approval of the
settlement. In addition, in connection with the settlement, the parties contemplate that
plaintiffs’ counsel will file a petition in the Court for an award of attorneys’ fees and expenses
to be paid by Schering-Plough. Schering-Plough shall pay or cause to be paid such award(s) of attorneys’ fees and
expenses. There can be no assurance that the Court will approve the settlement. In such event, the
proposed settlement as contemplated by the memorandum of understanding may be terminated.
* * * * * *
Additional Information
In connection with the proposed transaction, Schering-Plough filed a registration statement,
including a joint proxy statement of Merck and Schering-Plough, with the SEC. Investors are urged
to read the registration statement and joint proxy statement (including all amendments and
supplements to it) because they contain important information. Investors may obtain free copies of
the registration statement and joint proxy statement, as well as other filings containing
information about Merck and Schering-Plough, without charge, at the SEC’s Internet web site
(www.sec.gov). These documents may also be obtained for free from Schering-Plough’s Investor
Relations web site
(www.schering-plough.com) or by directing a request to Schering-Plough’s
Investor Relations at (908) 298-7436. Copies of Merck’s filings may be obtained for free from
Merck’s Investor Relations Web Site (www.merck.com) or by directing a request to Merck at Merck’s
Office of the Secretary, (908) 423-1000.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
99.1 Consolidated Amended Complaint
5
SIGNATURES
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.
| |
|
|
|
|
| Schering-Plough Corporation |
|
|
|
|
|
|
|
By:
|
|
/s/ Michael Pressman
Michael Pressman
|
|
|
|
|
Deputy Secretary |
|
|
Date: July 24, 2009
6
Exhibit Index
| |
|
|
| Exhibit |
|
|
| Number |
|
Description |
99.1
|
|
Consolidated Amended Complaint |
7