Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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As previously disclosed in the
Current Report on Form 8-K filed by Anacor Pharmaceuticals, Inc., a Delaware corporation (
Anacor
), with the U.S. Securities and Exchange Commission (the
SEC
) on May 16, 2016, Anacor entered into an
Agreement and Plan of Merger (the
Merger Agreement
), dated as of May 14, 2016, with Pfizer Inc., a Delaware corporation (
Pfizer
), and Quattro Merger Sub Inc., a Delaware corporation and a wholly-owned
subsidiary of Pfizer (
Merger Sub
). Pursuant to the Merger Agreement, on May 26, 2016, Merger Sub commenced a tender offer to purchase any and all of the outstanding shares of common stock, par value $0.001 per share, of
Anacor (the
Shares
), at a price of $99.25 per Share (the
Offer Price
), net to the seller in cash, without interest, subject to any required withholding of taxes, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated May 26, 2016 (as amended or supplemented from time to time, the
Offer to Purchase
), and in the related Letter of Transmittal (as amended or supplemented from time to time, the
Letter of Transmittal
, and together with the Offer to Purchase and other related materials, as each may be amended or supplemented from time to time, the
Offer
), filed as Exhibit (a)(1)(A) and Exhibit (a)(1)(B),
respectively, to the Schedule TO originally filed with the SEC by Pfizer and Merger Sub on May 26, 2016.
The Offer and withdrawal
rights expired immediately after 11:59 p.m., New York City time, on June 23, 2016. Computershare Trust Company, N.A., in its capacity as depositary and paying agent for the Offer (the
Depositary
), has advised Pfizer and
Merger Sub that a total of 35,006,482 Shares were validly tendered and not validly withdrawn pursuant to the Offer as of the Expiration Date, representing approximately 76.7% of the outstanding Shares. In addition, notices of guaranteed delivery
have been delivered for 4,300,427 Shares, representing approximately 9.4% of the outstanding Shares. All conditions to the Offer having been satisfied, on June 24, 2016, Merger Sub accepted for payment all Shares validly tendered and not
validly withdrawn prior to the Expiration Date (as defined in the Offer), and payment of the Offer Price for such Shares will be made by the Depositary.
On June 24, 2016 (the
Closing Date
), pursuant to the terms of the Merger Agreement and in accordance with
Section 251(h) of the Delaware General Corporation Law (the
DGCL
), Merger Sub merged with and into Anacor, with Anacor continuing as the surviving corporation (the
Merger
). Upon completion of the Merger,
Anacor became a wholly-owned subsidiary of Pfizer.
Pursuant to the Merger Agreement, each Share outstanding immediately prior to the
Effective Time (as defined in the Offer) (other than treasury Shares held by Anacor and any Shares owned by Pfizer, Merger Sub or any person who was entitled to and has properly demanded statutory appraisal of his or her Shares under the DGCL) was
canceled and converted at the Effective Time into the right to receive an amount in cash equal to the Offer Price, without interest (the
Merger Consideration
).
Each option to purchase Shares that was outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested,
became fully vested (to the extent unvested) and was converted at the Effective Time into the right to receive an amount in cash equal to the product obtained by multiplying (a) the excess, if any, of the Offer Price over the exercise price per
Share of such stock option by (b) the total number of Shares subject to such stock option, less any required withholding taxes. Any options to purchase Shares for which the exercise price per Share equaled or exceeded the Offer Price were
canceled for no consideration at the Effective Time. Subject to certain exceptions, each restricted stock unit in respect of Shares that was outstanding immediately prior to the Effective Time, whether vested or unvested, became fully vested (to the
extent unvested) and was converted at the Effective Time into the right to receive an amount in cash equal to the product obtained by multiplying (a) the Offer Price by (b) the total number of Shares subject to such restricted stock unit,
less any required withholding taxes. Certain restricted stock units in respect of Shares held by a consultant of Anacor were converted into a fixed cash amount on the same terms as described in the preceding sentence but remain subject to the
vesting schedule and performance conditions that applied prior to the Effective Time.
The aggregate consideration for the transaction, net of Anacors cash and cash equivalents,
was approximately $5.2 billion, which assumes the conversion of Anacors outstanding convertible notes.
The foregoing summary
description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the terms of the Merger Agreement, which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by Anacor with the SEC on
May 16, 2016 and is incorporated by reference herein.
Item 2.04.
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Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
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The consummation of the Merger on June 24, 2016 constituted a Make-Whole Fundamental Change and a Fundamental
Change under (i) the Indenture, dated as of October 16, 2014 (such indenture, the
2021 Indenture
), governing Anacors 2.00% Convertible Senior Notes due 2021 (such notes, the
2021 Notes
),
and (ii) the Indenture, dated as of April 6, 2016 (such indenture, the
2023 Indenture
, and together with the 2021 Indenture, the
Indentures
), governing Anacors 2.00% Convertible Senior Notes due
2023 (such notes, the
2023 Notes
, and together with the 2021 Notes, the
Notes
). As result, holders of the Notes have the right to require Anacor to repurchase their Notes at their principal amount plus accrued
and unpaid interest on a date (the
Fundamental Change Purchase Date
) specified by Anacor in accordance with the terms of the Indentures (the
Repurchase Right
). Anacor has designated August 15, 2016 as the
Fundamental Change Purchase Date under the Indentures.
In connection with the Merger, holders of the Notes also have the right to convert
their Notes for cash at the then applicable conversion rate under the applicable Indenture (subject to any adjustments provided for therein, including any additional shares owing at conversion if such conversion is done in connection with a
Make-Whole Fundamental Change) (the
Conversion Right
). Holders of the Notes may exercise the Conversion Right in connection with the Make-Whole Fundamental Change at any time until the business day immediately preceding the
Fundamental Change Purchase Date.
Assuming that each holder of Notes exercised the Repurchase Right, Anacor would be obligated to make
aggregate payments of approximately $370 million, plus accrued and unpaid interest.
Assuming that each holder of Notes exercised the
Conversion Right in connection with a Make-Whole Fundamental Change, Anacor would be obligated to make aggregate payments of approximately $697 million.
Holders may only exercise one of either the Repurchase Right or the Conversion Right.
In connection with the Merger, Anacor executed supplemental indentures to each of the Indentures, which provide that, at and after the
Effective Time, the consideration due upon any conversion of the Notes will not be Shares and instead will be cash (with any reference to any number of Shares instead being a reference to a cash amount equal to the Offer Price multiplied by such
number of Shares). Copies of the First Supplemental Indenture to the 2021 Indenture and the First Supplemental Indenture to the 2023 Indenture are filed as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K, and are incorporated
herein by reference.
In connection with the Merger, Anacor also terminated its capped call transactions (the
Capped Call Transactions
), dated as of March 31, 2016 and April 1, 2016, with Citigroup Global Markets Inc. (
Citigroup
) and Goldman, Sachs & Co (
GS
, together with Citigroup,
the
Capped Call Counterparties
). The Capped Call Transactions were entered into to reduce the potential dilution with respect to Anacors common stock and/or offset any potential cash payments that Anacor would be required to
make in excess of the principal amount of converted Notes, as the case may be, upon any conversion of the Notes to the extent that the market price per share of Anacors common stock exceeded the applicable strike price of the Capped Call
Transactions (which initially corresponded to the applicable conversion price of the Notes). As a result of the termination of the Capped Call Transactions, the Capped Call Counterparties made aggregate payments of approximately $13 million to
Anacor.