UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 8 -- Restated)
Genetics Institute, Inc.
(Name of Issuer)
Depositary Shares
(Title of Class of Securities)
371855 10 7
(CUSIP Number)
LOUIS L. HOYNES, JR., ESQ.
Senior Vice President and General Counsel
American Home Products Corporation
5 Giralda Farms, Madison, N.J. 07940
(201) 660-5000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 17, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
CUSIP No. 371855 10 7
1. NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AHP Biotech Holdings, Inc.
Tax I.D. 13-3641807
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
12,835,315.80
8. SHARED VOTING POWER
12,835,315.80
9. SOLE DISPOSITIVE POWER
12,835,315.80
10. SHARED DISPOSITIVE POWER
12,835,315.80
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,835,315.80
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
The statement on Schedule 13D dated April 16, 1992, for the event which
occurred on April 8, 1992, which was amended by Amendment No. 1, dated April
20, 1992, Amendment No. 2, dated May 5, 1992, Amendment No. 3, dated May 11,
1992, Amendment No. 4, dated May 26, 1992, Amendment No. 5, dated June 2,
1992, Amendment No. 6, dated June 8, 1993, and Amendment No. 7, dated February
14, 1994, is hereby further amended (as amended and restated, the "Schedule
13D") in connection with the purchase by the Reporting Person (as defined
herein), in accordance with the provisions of the Depositary Agreement (as
defined herein), of Depositary Shares (as defined herein) pursuant to the Call
Option (as defined herein). Pursuant to Rule 101(a)(2)(ii) of Regulation S-T,
this statement, as amended, is restated in its entirety.
Item 1. Security and Issuer.
This statement relates to the Depositary Shares (the "Depositary
Shares") of Genetics Institute, Inc., a Delaware corporation (the "Company"),
which has its principal executive offices located at 87 CambridgePark Drive,
Cambridge, Massachusetts 02140.
Item 2. Identity and Background.
This statement is filed on behalf of AHP Biotech Holdings, Inc., a
Delaware corporation (the "Reporting Person"). The Reporting Person is an
indirect wholly-owned subsidiary of American Home Products Corporation, a
Delaware corporation ("AHP"), through AHP Subsidiary (11) Corporation, a
Delaware corporation ("Sub 11"), which is wholly-owned by Boca Investerings
Partnership, a New York general partnership ("Boca"), the partners of which
are AHP and AHP Subsidiary (10) Corporation, a Delaware corporation which is
wholly-owned by AHP ("Sub 10" and, collectively with AHP, Sub 11 and Boca, the
"Control Persons").
The address of the principal offices and principal business of the
Reporting Person and the Control Persons is 5 Giralda Farms, Madison, New
Jersey 07940. Set forth on Schedule A attached hereto and incorporated herein
by reference are the names, business addresses, citizenship and present
principal occupations or employment of executive officers and directors of the
Reporting Person and AHP, and the names and addresses of the employers of such
persons.
AHP is one of the world's largest research based pharmaceutical and
health care product companies and is a leading developer, manufacturer and
marketer of prescription drugs and over-the-counter medications. AHP is also
a leader in vaccines, generic pharmaceuticals, biotechnology, agricultural
products, animal health care and medical devices.
The Reporting Person, Boca, Sub 10 and Sub 11 are investment entities
whose principal business is the making and holding of investments.
Neither the Reporting Person nor, to its best knowledge, the Control
Persons, or any of the persons named on Schedule A attached hereto, has during
the last five years: (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors); or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The Reporting Person has exercised the Call Option (as defined below) to
acquire all of the Depositary Shares not owned by the Reporting Person. The
Reporting Person anticipates that the consideration for the acquisition of
such Depositary Shares will be approximately $1.3 billion, which will be
financed through the sale of short-term privately placed notes to
institutional investors.
Prior to the exercise of the Call Option, the Reporting Person had
purchased Depositary Shares on the open market from time to time between
February 13, 1992 and February 26, 1993 inclusive. Such purchases amounted to
an aggregate of 947,000 Depositary Shares. As consideration for the
acquisition of such Depositary Shares, the Reporting Person paid
$26,552,687.50.
Item 4. Purpose of Transaction.
EXERCISE OF THE CALL OPTION
The Reporting Person has exercised the Call Option to acquire all of the
Depositary Shares not owned by the Reporting Person. By notice, dated
December 17, 1996, the Reporting Person advised The First National Bank of
Boston, as Depositary (the "Depositary"), under the Depositary Agreement,
dated as of January 16, 1992 (the "Depositary Agreement") among AHP, the
Reporting Person, the Company and Depositary, that (i) the Reporting Person
would purchase all of the Depositary Shares not owned by the Reporting Person;
and (ii) the closing for the purchase of such Depositary Shares would be held
on December 31, 1996 at the Reporting Person's offices in Madison, New Jersey.
The Reporting Person has exercised the Call Option in order to acquire
the entire equity interest in the Company. Following the exercise of the Call
Option, the Company will be a wholly-owned subsidiary of the Reporting Person,
which intends to make changes in the Board of Directors of the Company.
Upon consummation of the purchase of the Depositary Shares not owned by
the Reporting Person pursuant to the exercise of the Call Option, (i) the
Governance Agreement, dated as of January 16, 1992, among AHP, the Reporting
Person and the Company (the "Governance Agreement"), a description of the
material terms of which are set forth below, will terminate; and (ii) the
Depositary Shares will cease to be listed on the National Market System of
NASDAQ, public trading of the Depositary Shares will cease and the
registration of the Depositary Shares under the Act will be terminated.
Except as set forth above and as otherwise described in this Schedule
13D, including the exhibits hereto, AHP, the Reporting Person and the Company
do not have any present plans or proposals that would relate to or result in
an extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries or a sale or
other transfer of a material amount of assets of the Company or any other
material change in the Company's corporate structure or business or the
composition of its Board of Directors or management.
BACKGROUND OF THE MERGER
(The following description contained in the Reporting Person's
previously filed Schedule 13D is included in light of the requirements of Rule
101(a)(2)(ii) of Regulation S-T to restate the Schedule 13D in its entirety
and is included to provide the historical context of the exercise of the Call
Option).
Subsequent to the purchase of the shares of the Company's Common Stock,
par value $.01 per share (each a "Share" and collectively the "Common Stock")
on January 16, 1992 pursuant to the terms of the Agreement and Plan of Merger,
dated as of September 19, 1991 ("Merger Agreement"), as described below, among
the Company, AHP, the Reporting Person and AHP Merger Subsidiary Corporation,
a Delaware corporation and a wholly owned subsidiary of the Reporting Person
("Merger Subsidiary"), a copy of which is attached hereto as Exhibit I and is
hereby incorporated herein by reference, the Reporting Person had determined
to further expand its investment in biotechnology through its affiliation with
the Company, a leading biotechnology company. AHP's Board of Directors
considered the acquisition on January 16, 1992 of its equity interest in the
Company on the terms set forth in the Merger Agreement and its open market
purchases of the Depositary Shares, together with its right to acquire the
remaining outstanding equity interests in accordance with the terms of the
Call Option, to be an attractive, long-term investment.
The Reporting Person had purchased during the period of February 13,
1992 through February 26, 1993 inclusive 947,000 Depositary Shares.
Set forth below is a description of the material terms of the merger
(the "Merger") of Merger Subsidiary with and into the Company, which was
consummated on January 16, 1992, pursuant to the terms of the Merger
Agreement, including; (i) the grant by the Company to the Reporting Person of
the Call Option; (ii) the acquisition of Shares by the Reporting Person
pursuant to the Merger; (iii) the change in the composition of the Board of
Directors of the Company (the "Board of Directors") pursuant to the Merger;
(iv) the designation of certain committees of the Board of Directors; (v) the
grant by the Company to the Reporting Person of certain approval rights with
respect to matters of corporate governance; (vi) the grant to AHP of certain
rights with respect to material licensing and marketing arrangements with
third parties; (vii) the restrictions on certain acquisitions and dispositions
of Shares and Depositary Shares by AHP and the Reporting Person; (viii)
certain limitations upon the voting of Shares and Depositary Shares by the
Reporting Person; (ix) certain restrictions upon the transfer of Shares or
Depositary Shares by AHP and the Reporting Person; (x) the termination of
provisions regarding matters of corporate governance; and (xi) amendments to
the Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") and the Company's By-laws (the "By-laws").
THE MERGER AND THE CALL OPTION
On January 16, 1992, at a special meeting of stockholders of the
Company, the Company's stockholders voted to approve the Merger Agreement and
the transactions contemplated therein.
The Merger was consummated on January 16, 1992. As a result of the
Merger, each Share outstanding prior to the effective time of Merger (the
"Effective Time") was converted into the right to receive $20.00 in cash and
six-tenths (0.6) of a Depositary Share, each Depositary Share representing one
Share, subject to a call option held by the Reporting Person to acquire all of
the Shares not owned by the Reporting Person or its affiliates (the "Call
Option").
The Depositary Shares are evidenced by depositary receipts (the
"Depositary Receipts") issued pursuant to the Depositary Agreement (to which
holders of Depositary Shares will be deemed parties), a copy of which is
attached hereto as Exhibit II and is hereby incorporated herein by reference.
Under the terms of the Call Option, the Reporting Person has the right,
but not the obligation, to purchase the Shares held by the Depositary, in
whole but not in part, at any time on or prior to December 31, 1996, at fixed
call prices increasing by approximately $1.84 per quarter from $50.00 per
Share for the period from the consummation of the Merger through March 31,
1992 to $85.00 per share for the period from October 1, 1996 through December
31, 1996, subject to certain adjustments (each such price, a "Call Price").
Prior to the date that the Call Option expires or is exercised (the
"Option Determination Date"), each holder of a Depositary Share is entitled to
all the rights of the Share represented thereby, including dividend, voting
and liquidation rights. Prior to the expiration of the Call Option, holders
of Depositary Shares do not have the right to require the Depositary to
deliver the Shares represented thereby and, absent an exercise by the
Reporting Person of the Call Option, do not have the right to require payment
of the Call Price.
Following the Option Determination Date, (i) if the Call Option is
exercised, each holder of a Depositary Share would be entitled to receive the
applicable Call Price for the Share represented thereby, without interest, and
(ii) if the Call Option expires, each holder of a Depositary Share would be
entitled to receive the Share represented thereby, together with any declared
and unpaid dividends thereon. The Depositary is required to transfer the
Shares held in the Depositary to the Reporting Person if and when the
Reporting Person exercises the Call Option.
THE ACQUISITION OF SHARES BY THE REPORTING PERSON
Pursuant to the terms of the Merger Agreement: (i) the Reporting Person
acquired 5,867,111.2 Shares upon the conversion of the common stock of Merger
Subsidiary in the Merger (the "Merger Shares") and (ii) the Reporting Person
purchased 9,446,709 Shares directly from the Company (the "Additional
Shares").
Pursuant to the Merger (and in addition to the Call Option), the
Reporting Person was also granted the following rights (the "Subscription
Rights") to acquire additional securities of the Company: (i) the right to
purchase for cash its pro rata share of the issuance by the Company of certain
equity securities after the Effective Time; and (ii) the right and the
obligation to purchase a number of Shares equal to 40% of the number of Shares
which would otherwise be issuable by the Company (but for the Merger) upon the
exercise of warrants of the Company or the conversion of any 8% Convertible
Subordinated Debentures due 2014 (the "Debentures") issued in exchange
therefor at a purchase price of $20.00 per Share (approximately adjusted to
reflect any stock split, reverse stock split or other reclassification of the
Shares prior to such exercise or conversion).
Pursuant to the Governance Agreement, the Reporting Person may purchase
or otherwise acquire equity securities of the Company prior to January 1, 1997
so long as AHP's Voting Interest (as defined below) does not immediately after
such acquisition exceed 75%, subject to certain exceptions as more fully
described below.
Upon consummation of the Merger and the transactions contemplated
thereby (i) the Depositary Shares were authorized to be traded on the NASDAQ
National Market System under the symbol GENIZ and (ii) the Shares ceased to be
authorized to be quoted on the NASDAQ National Market System.
CHANGE IN THE COMPOSITION OF THE BOARD OF DIRECTORS
The Governance Agreement, a copy of which is attached hereto as Exhibit
III and is hereby incorporated herein by reference, provides, among other
things, for the designation by the Reporting Person of two nominees whom the
Reporting Person has designated to be Mr. Fred Hassan and Dr. Robert Levy.
Mr. Hassan has been elected to serve until the 1999 Annual Meeting, and Dr.
Levy has been elected to serve until the 1998 Annual Meeting.
The Governance Agreement also limits the number of directors that can be
designated by the Reporting Person and provides that, notwithstanding any
other provision of the Governance Agreement, the Certificate of Incorporation,
By-laws or applicable law, the Reporting Person will not at any time prior to
January 1, 1997 be entitled to designate, or to cause the nomination or
election of, more than two members of the Board of Directors. Directors
nominated by the Reporting Person pursuant to the Governance Agreement are
referred to herein as "Investor Directors" and all other directors are
referred to as "Non-investor Directors."
Pursuant to the Governance Agreement, if the Call Option is not
exercised, on and after January 1, 1997 the Board of Directors will be
increased to nine directors and will include two nominees designated by the
Reporting Person and two officers of the Company nominated by the nominating
or proxy committee of the Board of Directors. The remainder of the Board of
Directors will be comprised of Independent Directors, as defined below. Upon
its request, the Reporting Person will be entitled to designate nominees for a
number of Independent Directors equal to AHP's Voting Interest (as defined
below) times the total number of such Independent Directors, rounded up to the
next whole number if AHP's Voting Interest is greater than 50% and less than
or equal to 60% and rounded down to the next whole number if AHP's Voting
Interest is less than or equal to 50% or greater than 60%.
Notwithstanding the foregoing, the Reporting Person will have no right
to designate any nominee for director pursuant to the Governance Agreement at
any time after AHP's Voting Interest has fallen below 20%. At such time as
AHP' Voting Interest falls below 20%, the Reporting Person will cause all the
Investor Directors to resign from the Board of Directors.
For purposes of the Governance Agreement, "Independent Director" means a
director of the Company who is not an officer or employee of the Company and
who is not an officer, employee, director, principal stockholder or partner of
AHP, any affiliate or associate of AHP or any entity dependent on AHP for more
than 10% of its revenues or earnings in its most recent fiscal year. "AHP's
Voting Interest" means the percentage of votes for elections of directors of
the Company generally controlled directly or indirectly by AHP, and any
affiliates or associates of AHP, assuming the conversion, exchange or exercise
into or for voting stock of equity securities other than voting stock and not
taking into account any voting agreements or arrangements granting to a third
party control over the voting of voting stock beneficially owned by AHP.
COMMITTEES OF THE BOARD OF DIRECTORS
Pursuant to the Governance Agreement, the Board of Directors has
designated a nominating or proxy committee, compensation committee,
intellectual property rights committee and scientific affairs committee. Each
committee of the Board of Directors (other than any special committee or
committee of Independent Directors constituted for the purposes of making any
determination that is to be made under the terms of the Governance Agreement
or otherwise) will at all times include at least one director designated by
the Reporting Person and no action by any such committee shall be valid unless
taken at a meeting for which adequate notice has been duly given to or waived
by the members of such committee. The director designated by the Reporting
Person to serve on any committee is entitled to designate as his alternate
another director designated by the Reporting Person.
The Governance Agreement provides that the intellectual property rights
committee and scientific affairs committee will each consist of two Investor
Directors and two Non-investor Directors. The intellectual property rights
committee is responsible for the general review of patent application strategy
and the approval of material decisions regarding patent litigation strategy,
including litigation commencement, defense, prosecution and settlement. The
scientific affairs committee is responsible for the general review of the
Company's research programs and for the approval of its research budget.
The Governance Agreement provides that the compensation committee will
consist of two Non-investor Directors (neither of whom is an officer of the
Company) and one Investor Director. The compensation committee, which only
acts upon a unanimous vote, is responsible for establishing and modifying the
compensation of all corporate officers of the Company, adoption and amendment
of all stock option and other employee benefit plans and the terms of any
employment agreements and arrangements with, and termination of, all corporate
officers of the Company.
The Governance Agreement provides that the nominating or proxy committee
include, in addition to a director designated by the Reporting Person, two
Non-investor Directors, and that it have the exclusive authority to nominate
individuals to fill all positions of the Board of Directors, except for those
designated by the Reporting Person pursuant to the relevant provisions of the
Governance Agreement in accordance with the terms thereof. With respect to
any election of directors prior to January 1, 1997 (but not any election on or
after January 1, 1997), any nomination of a person not then serving as a
director requires the unanimous approval of the nominating or proxy committee,
except that the directors designated or nominated by the Reporting Person or
the holders of Convertible Exchangeable Preferred Stock do not require such
unanimous approval. The Company has agreed to use all reasonable efforts to
solicit proxies for the nominees for directors nominated by such committee
from all holders of voting stock entitled to vote thereon.
CERTAIN APPROVAL RIGHTS OF THE REPORTING PERSON WITH RESPECT TO MATTERS OF
CORPORATE GOVERNANCE
The Governance Agreement provides that the approval of the Investor
Directors designated by the Reporting Person pursuant to the Governance
Agreement is required to approve any of the following:
(a) the entry by the Company into any merger or consolidation or the
acquisition by the Company of any business or assets that would constitute a
Substantial Part (as defined below) of the business or assets of the Company,
whether such acquisition be by merger or consolidation or the purchase of
stock or assets or otherwise;
(b) the sale, lease, pledge, grant of a security interest, transfer or
the disposal of all or a Substantial Part of the business or assets of the
Company;
(c) the issuance of any equity securities or other capital stock of
the Company, except for (i) issuances of Depositary Shares (or, after the
termination of the Call Option, Shares) or options, warrants or rights to
acquire, or securities convertible into or exchangeable for, such Depositary
Shares (or, after the termination of the Call Option, Shares) pursuant to any
employee compensation plan that was in existence at the Effective Time or that
has been approved by the compensation committee, and (ii) issuances thereof
upon the exercise, conversion or exchange of any outstanding equity securities
or other capital stock;
(d) the repurchase or redemption of any equity securities or other
capital stock of the Company, other than redemptions required by the terms
thereof and purchases made in connection with the Company's 1991 Restricted
Plan or any similar plan adopted with the approval of the compensation
committee;
(e) any action otherwise within the purview of the intellectual
property rights committee, scientific affairs committee or compensation
committee which is presented to the full Board of Directors for consideration
and action;
(f) any amendment to the Certificate of Incorporation or By-laws or
change in the size of the Board of Directors, except as contemplated by the
Governance Agreement; and
(g) any action with respect to any shareholders rights plan of the
Company or any similar contract, agreement, plan or arrangement.
The Governance Agreement provides that a "Substantial Part" means more
than 10% of the fair market value of the total assets of the Company.
CERTAIN RIGHTS WITH RESPECT TO MATERIAL LICENSING AND MARKETING ARRANGEMENTS
WITH THIRD PARTIES
The Governance Agreement provides that the Company will not, and will
not permit any of its subsidiaries to, enter into any material third party
licensing or marketing agreement with respect to any products, processes,
inventions or developments made by the Company or any subsidiary of the
Company unless it shall have first offered to afford such licensing or
marketing rights to AHP as set forth in the Governance Agreement.
RESTRICTIONS ON CERTAIN ACQUISITIONS AND DISPOSITIONS OF SHARES BY AHP AND THE
REPORTING PERSON
The Governance Agreement provides for certain restrictions on
acquisitions and dispositions of Shares by AHP and its affiliates, including
restrictions providing that AHP will not (A) propose that the Company enter
into any Business Combination, as defined below, prior to January 1, 1997 with
AHP or any affiliate of AHP unless AHP in good faith determines that there
have occurred events or circumstances substantially impairing the business,
prospects or financial viability of the Company and its subsidiaries, taken as
a whole, since the Effective Time, (B) act to consummate any Business
Combination whether or not prior to January 1, 1997, between the Company and
AHP or any affiliate of AHP without an affirmative vote of a majority of the
Independent Directors of the Company and (C) purchase or otherwise acquire any
equity securities of the Company prior to January 1, 1997 such that AHP's
Voting Interest would exceed 75% except pursuant to (x) the exercise of the
Call Option, (y) a Business Combination meeting the above requirements or (z)
certain other specific exceptions.
The term "Business Combination" as used in the Governance Agreement
means any of the following transactions: (i) any merger or consolidation of
the Company or any subsidiary with (A) AHP or (B) any corporation (other than
the Company) which is, or after such merger or consolidation would be, an
affiliate or associate of AHP, or any tender or exchange offer by AHP or any
affiliate or associate of AHP for any equity securities of the Company or any
subsidiary thereof; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other dispositions by the Company (in one transaction or a series of
transactions) to or with AHP or any affiliate or associate of AHP (other than
the Company) of all or a Substantial Part of the assets of the Company or any
subsidiary thereof; (iii) the issuance, exchange or transfer by the Company or
any subsidiary (in one transaction or a series of transactions) of any
securities of the Company or any subsidiary thereof to AHP or any affiliate or
associate of AHP (other than the Company) in exchange for cash, securities or
other consideration (or a combination thereof) having an aggregate fair market
value equal to or in excess of a Substantial Part of the assets of the
Company; (iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Company proposed by or on behalf of AHP or any affiliate or
associate of AHP (other than the Company); (v) any reclassification of
securities (including any reverse stock split), recapitalization of the
Company, or any merger or consolidation of the Company with any subsidiary
thereof or any other transaction to which the Company is a party (whether or
not with or into or otherwise involving AHP or any affiliate or associate of
AHP) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Company or any subsidiary thereof which is
directly or indirectly owned by AHP or any affiliate or associate of AHP
(other than the Company); or (vi) any agreement, contract or other arrangement
with AHP or any affiliate or associate of AHP (other than the Company) in
which AHP or any affiliate or associate of AHP (other than the Company) has an
interest (other than proportionately as a stockholder) providing for any one
or more of the actions specified in subsections (i) to (v) above. However,
none of the following shall be deemed to be a Business Combination: (x) any
licensing, marketing or other agreements entered into by the Company and AHP
pursuant to the Governance Agreement; (y) any issuance, exchange, or transfer
of securities by the Company to or on behalf of AHP, the Reporting Person or
any of their affiliates or associates (A) pursuant to the provisions of the
Merger Agreement or Governance Agreement or (B) which would not result in
AHP's Voting Interest exceeding 75% immediately after the consummation
thereof; and (z) any exercise by the Reporting Person of the Call Option in
accordance with the terms of the Depositary Agreement.
LIMITATIONS UPON THE VOTING OF SHARES AND DEPOSITARY SHARES BY THE REPORTING
PERSON
The Governance Agreement limits the voting of Shares and Depositary
Shares by the Reporting Person and its affiliates in the following manner. In
any election of directors, the Reporting Person and its affiliates will vote
their Shares and any Depositary Shares which the Reporting Person and its
affiliates hold for all nominees in proportion to the votes cast by the other
holders of Depositary Shares; provided that the Reporting Person and its
affiliates may cast all of their votes (i) in favor of any nominee to the
Board of Directors designated by the Reporting Person pursuant to the
Governance Agreement and (ii) in the Reporting Person's sole discretion in
connection with any election contest to which Rule 14a-11 under the Act
applies (the "Director Vote Limitation"). In any vote to amend the term of
the Depositary Shares, the Reporting Person and its affiliates will vote their
Depositary Shares, if any, in proportion to the votes cast by the holders of
Depositary Shares (other than the Reporting Person and its affiliates) (the
"Amendment Vote Limitation") and, collectively with the Director Vote
Limitation, the "Voting Limitations").
CERTAIN RESTRICTIONS UPON THE TRANSFER OF SHARES OR DEPOSITARY SHARES BY AHP
AND THE REPORTING PERSON
The Governance Agreement provides for the following restrictions on the
transfer (the "Transfer Restrictions") of the Shares or Depositary Shares held
by the Reporting Person: (i) AHP and the Reporting Person will not, other than
to any entity that is directly or indirectly wholly owned by AHP, and will not
permit any such entity to, sell or otherwise transfer any Shares or Depositary
Shares prior to January 1, 1997, except that at any time after December 31,
1993 or such earlier time as it shall have become illegal for AHP or the
Reporting Person to continue to own the Shares or Depositary Shares directly
or indirectly or to exercise fully all rights of ownership with respect to the
Shares or Depositary Shares, AHP or the Reporting Person may sell or otherwise
transfer Shares or Depositary Shares (a) pursuant to a registered,
underwritten public offering, (b) in compliance with the volume and manner of
sale requirements of Rule 144 promulgated under the Securities Act of 1933, as
amended (whether or not such requirements are legally required) or (c)
pursuant to privately negotiated block sales in the aggregate not exceeding
15% of the Shares outstanding on a fully diluted basis; provided that in no
event shall AHP or the Reporting Person prior to January 1, 1997 knowingly
make any sale to a person who after giving effect to such sale would
beneficially own more than 5% of the outstanding Shares or equity securities
of the Company; and (ii) AHP and the Reporting Person will not, and will not
permit any of their respective wholly owned entities, to sell or otherwise
transfer any Shares or Depositary Shares (except for sales to any entity that
is directly or indirectly wholly owned by AHP) to a person who acquires Shares
or Depositary Shares from AHP or the Reporting Person representing more than
30% of the aggregate number of outstanding Shares unless such person agrees to
be bound by the provisions of the Governance Agreement relating to
restrictions on Business Combinations to the same extent that the Reporting
Person was bound thereby.
TERMINATION OF PROVISIONS REGARDING MATTERS OF CORPORATE GOVERNANCE
The Governance Agreement, by its terms, will terminate at such time, if
any, as the Reporting Person and its affiliates (i) beneficially own 100% of
all outstanding classes and series of Common Stock of the Company or (ii) no
longer own any Shares thereof. In addition, the provisions relating to
Subscription Rights, the establishment and function of committees of the Board
of Directors, the approval rights of the directors designated by the Reporting
Person and the rights of AHP with respect to material third party licensing or
marketing agreements proposed to be entered into by the Company with third
parties will terminate upon any sale of Shares or Depositary Shares by the
Reporting Person and its affiliates if immediately thereafter AHP's Voting
Interest is less than 50%. The provisions of the Governance Agreement
relating to the election of directors and voting of Shares will terminate upon
such a sale if immediately thereafter AHP's Voting Interest is less than 20%.
Amendments to the Certificate of Incorporation and By-laws
Pursuant to the Merger, the Certificate of Incorporation and By-laws
were amended in order to effectuate the following changes. Article SIXTH of
the Certificate of Incorporation was amended to state that during the pendency
of the Governance Agreement: (i) the Board of Directors must establish and
empower the committees specified in the Governance Agreement; (ii) that
approval and authorization of any of the actions pursuant to which approval
rights have been granted to the Reporting Person, as described above, shall
require the approval contemplated thereby; and (iii) that any inconsistency
between the other provisions of the Certificate of Incorporation or the By-
laws and the provisions of the Governance Agreement, relating to such
committees or such approvals shall be resolved in favor of the Governance
Agreement.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person is the beneficial owner of Depositary
Shares. Based on 12,835,315.80 Depositary Shares deemed to be outstanding as
of December 13, 1996 pursuant to Rule 13d-3 of the Act, the Depositary Shares
beneficially owned by the Reporting Person constitute approximately 100% of
the outstanding Depositary Shares.
Except as set forth herein, neither the Reporting Person nor, to its
best knowledge, any Control Persons, or any of the persons named on Schedule A
attached hereto, beneficially owns any Depositary Shares.
(b) The Reporting Person has the sole power to vote, subject to the
Voting Limitations, and dispose of, subject to the Transfer Restrictions, all
the Depositary Shares beneficially owned by the Reporting Person as set forth
in Item 5(a) above.
(c) Except as set forth herein, no transactions in the Depositary
Shares have been effected during the past sixty (60) days by the Reporting
Person nor, to its best knowledge, the Control Persons, or any of the persons
named on Schedule A attached hereto.
(d) Neither the Reporting Person nor, to its best knowledge, the
Control Person, or any of the persons named on Schedule A attached hereto, has
or knows any other person who has the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, any
Depositary Shares beneficially owned by the Reporting Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
There are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 or between any of such
persons and any other person with respect to any securities of the Company
except as referred to or described herein.
On June 9, 1993, the Company called for redemption all of the
outstanding $4.00 Convertible Exchangeable Preferred Stock (the "Preferred
Stock") pursuant to the terms of the Company's Certificate of Incorporation
under which holders would be entitled to receive a redemption price of $52.40
(the "Redemption Price") for each share of Preferred Stock held as of July 15,
1993 (the "Redemption Date"). Prior to that date holders of Preferred Stock
had the option to convert their shares of Preferred Stock into a combination
of cash and Depositary Shares or sell their shares of Preferred Stock in the
open market through customary brokerage facilities or otherwise. Pursuant to
the terms of the Merger Agreement, the Reporting Person purchased 40% of all
shares surrendered for conversion, accounting for the cash portion of the
conversion consideration. Payment of the Redemption Price was made by the
Company upon receipt of the Preferred Stock.
Pursuant to a standby purchase agreement between the Reporting Person
and the Company, the Reporting Person purchased from the Company 14,863.89
shares of Common Stock at a purchase price of $29.93 per share, representing
the funds necessary to pay the aggregate Redemption Price for all shares of
Preferred Stock not duly surrendered for conversion by the close of business
on July 15, 1993. The aggregate consideration of $32,945,305 paid by the
Reporting Person to the Company pursuant to the Standby Agreement and the
foregoing provision of the Merger Agreement was financed entirely from the
working capital of the Reporting Person.
Item 7. Material to be Filed as Exhibits.
Exhibit I. Agreement and Plan of Merger, dated as of September 19,
1991, among Genetics Institute, Inc., American Home Products Corporation, AHP
Biotech Holdings, Inc. and AHP Merger Subsidiary Corporation, incorporated
herein by reference to Exhibit I of Item 7 of Schedule 13D of the Common Stock
of Genetics Institute, Inc., filed with the Securities and Exchange Commission
on January 24, 1992.
Exhibit II. Depositary Agreement, dated as of January 16, 1992, among
American Home Products Corporation, AHP Biotech Holdings, Inc. Genetics
Institute, Inc. and The First National Bank of Boston as Depositary,
incorporated herein by reference to Exhibit II of Item 7 of Schedule 13D of
the Common Stock of Genetics Institute, Inc., filed with the Securities and
Exchange Commission on January 24, 1992.
Exhibit III. Governance Agreement, dated as of January 16, 1992, among
American Home Products Corporation, AHP Biotech Holdings, Inc. and Genetics
Institute, Inc., incorporated herein by reference to Exhibit III of Item 7 of
Schedule 13D of the Common Stock of Genetics Institute, Inc., filed with the
Securities and Exchange Commission on January 24, 1992.
Exhibit IV. Standby Agreement, dated June 8, 1993, between Genetics
Institute, Inc. and AHP Biotech Holdings, Inc., incorporated by reference to
Exhibit IV of Item 7 of Amendment No. 1 of Schedule 13D of the Common Stock of
Genetics Institute, Inc., filed with the Securities and Exchange Commission on
June 8, 1993.
Exhibit V. Notice of Exercise, dated December 17, 1996, from the
Reporting Person to the Depositary.
Exhibit VI. Press Release of AHP, dated December 17, 1996.
Schedule A. Executive Officers and Directors of AHP Biotech Holdings,
Inc., American Home Products Corporation, AHP Subsidiary (10) Corporation and
AHP Subsidiary (11) Corporation.
Schedule B. Transactions effected in the Depositary Shares by the
Reporting Person.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 18, 1996
AHP BIOTECH HOLDINGS, INC.
By: /s/ Thomas M. Nee
Thomas M. Nee
Vice President
SCHEDULE A
Executive Officers and Directors
of
AHP Biotech Holdings, Inc.
The names and titles of the executive officers and the names of
the directors of AHP Biotech Holdings, Inc., and their business addresses and
principal occupations are set forth below. If no address is given, the
director's or executive officer's business address is that of AHP Biotech
Holdings, Inc. Unless otherwise indicated, each occupation set forth opposite
an individual's name refers to AHP Biotech Holdings, Inc, and each individual
is a United States citizen.
Name and Business Address
EXECUTIVE OFFICERS Position; Present Principal
Occupation
John R. Stafford President; Chairman, President and
Chief Executive Officer, American
Home Products Corporation
Robert G. Blount Vice President; Senior Executive Vice
President, American Home Products
Corporation
Thomas M. Nee Vice President; Vice President - Taxes,
American Home Products Corporation
John R. Considine Treasurer; Vice President - Finance,
American Home Products Corporation
Carol G. Emerling Secretary; Secretary, American Home
Products Corporation
Jack M. O'Connor Assistant Treasurer; Treasurer, American
Home Products Corporation
Gerald A. Jibilian Assistant Secretary; Vice President and
Associate General Counsel, American Home
Products Corporation
DIRECTORS
John R. Stafford (as indicated above)
Robert G. Blount (as indicated above)
Louis L. Hoynes, Jr. Senior Vice President and General Counsel,
American Home Products Corporation
Executive Officers and Directors
of
American Home Products Corporation
The names and titles of the executive officers and the names of the
directors of American Home Products Corporation and their business addresses
and principal occupations are set forth below. If no address is given, the
director's or executive officer's business address is that of American Home
Products Corporation. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to American Home Products Corporation and
each individual is a United States citizen.
Name and Business Address
EXECUTIVE OFFICERS Position; Present Principal
Occupation
John R. Stafford Chairman, President and Chief Executive
Officer
Robert G. Blount Senior Executive Vice President
Fred Hassan Executive Vice President
Stanley F. Barshay Senior Vice President
Joseph J. Carr Senior Vice President
Louis L. Hoynes, Jr. Senior Vice President and General Counsel
William J. Murray Senior Vice President
David M. Olivier Senior Vice President
John R. Considine Vice President - Finance
Paul J. Jones Vice President and Comptroller
Rene R. Lewin Vice President - Human Resources
Thomas M. Nee Vice President - Taxes
David Lilley Vice President (British Citizen)
DIRECTORS
John R. Stafford (as indicated above)
Robert G. Blount (as indicated above)
Clifford L. Alexander President, Alexander & Associates,
Alexander & Associates (consulting firm specializing
Inc., 400 C Street, N.E. in workforce inclusiveness)
Washington,D.C.
20002
Frank A. Bennack, Jr. President and Chief Executive Officer
The Hearst The Hearst Corporation (owns and
Corporation operates communications media)
959 Eighth Avenue
NY, NY 10019
Robin Chandler Duke National Chair, Population Action
435 East 52nd Street International
NY, NY 10022
John D. Feerick Dean of Fordham University School of Law
Fordham University since 1982
School of Law
140 West 62nd Street
NY, NY 10023
Fred Hassan (as indicated above)
John P. Mascotte Retired
222 Purchase Street
Suite 345
Rye, NY 10580
Mary Lake Polan, Department Chair and Professor, Stanford
M.D., Ph.D. University School of Medicine
Stanford University
School of Medicine
100 Pasteur Drive
Stanford, CA 94305
Ivan G. Seidenberg Chairman and Chief Executive Officer
NYNEX Corporation NYNEX Corporation
1095 Avenue of the
Americas
NY, NY 10036
John R. Torell Chairman, Torell Management Inc.
Torell Management, Inc. (financial advisory company)
767 Fifth Avenue
46th Floor
NY, NY 10017
William Wrigley President, Chief Executive Officer and
Wm. Wrigley Jr. member of the Board, Wm. Wrigley Jr.
Company Company
410 North Michigan (international manufacturer of chewing
Avenue gum products)
Chicago, Illinois
60611
Executive Officers and Directors
of
AHP Subsidiary (10) Corporation
The names and titles of the executive officers and the names of the
directors of AHP Subsidiary (10) Corporation and their business addresses and
principal occupations are set forth below. If no address is given, the
director's or executive officer's business address is that of AHP Subsidiary
(10) Corporation. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to AHP Subsidiary (10) Corporation and
each individual is a United States citizen.
Name and Business Address
EXECUTIVE OFFICERS Position; Present Principal
Occupation
John R. Stafford President; Chairman, President and
Chief Executive Officer, American Home
Products Corporation
Robert G. Blount Vice President; Senior Executive Vice
President, American Home Products
Corporation
Thomas M. Nee Vice President; Vice President - Taxes,
American Home Products Corporation
John R. Considine Treasurer; Vice President - Finance,
American Home ProductsCorporation
Carol G. Emerling Secretary; Secretary, American Home
Products Corporation
Gerald A. Jibilian Assistant Secretary; Vice President and
Associate General Counsel, American Home
Products Corporation
Charles N. Ross Assistant Secretary; Assistant General
Wyeth-Ayerst Counsel and Director of Legal Division,
Laboratories Wyeth-Ayerst Laboratories Division
St. Davids Center
Radnor, Pennsylvania
DIRECTORS
John R. Stafford (as indicated above)
Robert G. Blount (as indicated above)
Louis L. Hoynes, Jr. Senior Vice President and General Counsel,
American Home Products Corporation
Executive Officers and Directors
of
AHP Subsidiary (11) Corporation
The names and titles of the executive officers and the names of the
directors of AHP Subsidiary (11) Corporation and their business addresses and
principal occupations are set forth below. If no address is given, the
director's or executive officer's business address is that of AHP Subsidiary
(11) Corporation. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to AHP Subsidiary (11) Corporation and
each individual is a United States citizen.
Name and Business Address
EXECUTIVE OFFICERS Position; Present Principal
Occupation
John R. Stafford President; Chairman, President and Chief
Executive Officer, American Home Products
Corporation
Robert G. Blount Vice President; Senior Executive Vice
President, American Home Products
Corporation
Thomas M. Nee Vice President; Vice President - Taxes,
American Home Products Corporation
John R. Considine Treasurer; Vice President - Finance,
American Home Products Corporation
Carol G. Emerling Secretary; Secretary, American Home
Products Corporation
Gerald A. Jibilian Assistant Secretary; Vice President and
Associate General Counsel, American Home
Products Corporation
DIRECTORS
John R. Stafford (as indicated above)
Robert G. Blount (as indicated above)
Louis L. Hoynes, Jr. Senior Vice President and General Counsel,
American Home Products Corporation
SCHEDULE B*
TRANSACTIONS BY AHP BIOTECH HOLDINGS, INC.
IN GENETICS INSTITUTE, INC. DEPOSITARY SHARES
FOR THE PERIOD BETWEEN FEBRUARY 13, 1992 AND FEBRUARY 26, 1993 INCLUSIVE
ALL TRANSACTIONS WERE EFFECTED ON NASDAQ.
DATE OF NO. OF SHARES PRICE PER
TRANSACTION PURCHASED SHARE (1)
13-FEB-92 5,000 $27.2500
13-FEB-92 5,000 $27.1250
14-FEB-92 2,000 $27.2500
18-FEB-92 5,000 $27.0000
19-FEB-92 2,500 $26.8750
19-FEB-92 5,000 $26.5000
20-FEB-92 5,000 $26.2500
20-FEB-92 5,000 $25.5000
21-FEB-92 5,000 $25.5000
21 FEB-92 5,000 $25.8750
24 FEB-92 6,000 $26.0000
25 FEB-92 8,000 $26.0000
26-FEB-92 14,000 $26.0000
27-FEB 92 10,000 $26.0000
28-FEB 92 14,000 $26.0000
02-MAR-92 2,000 $26.0000
09-MAR-92 16,000 $26.2500
09-MAR-92 4,000 $26.7500
10-MAR-92 4,000 $26.7500
10-MAR-92 6,000 $26.7500
11-MAR-92 4,000 $26.7500
11-MAR-92 16,000 $27.0000
12-MAR-92 4,000 $27.5000
12-MAR-92 8,000 $27.2500
13-MAR-92 2,000 $27.5000
13-MAR-92 18,000 $27.7500
16-MAR-92 2,000 $27.8750
16-MAR-92 12,000 $27.7500
17-MAR-92 6,000 $27.7500
18-MAR-92 2,000 $27.7500
18-MAR-92 55,000 $27.3750
19-MAR-92 12,000 $27.7500
20-MAR-92 4,000 $28.5000
20-MAR-92 45,000 $28.2500
25-MAR-92 4,000 $28.7500
25-MAR-92 10,000 $28.6250
25-MAR-92 15,000 $28.5000
26-MAR-92 10,000 $28.8750
27-MAR-92 10,000 $28.8750
30-MAR-92 5,000 $28.8750
31-MAR-92 4,000 $29.0000
31-MAR-92 6,000 $28.7500
31-MAR-92 20,000 $28.8750
01-APR-92 20,000 $28.6875
03-APR-92 2,500 $28.5000
03-APR-92 5,000 $28.6250
08-APR-92 5,000 $26.5000
08-APR-92 5,000 $28.2500
09 APR-92 4,000 $27.7500
09 APR-92 6,000 $27.5000
09 APR-92 10,000 $27.7500
09-APR-92 10,000 $27.8750
10-APR 92 5,000 $27.8750
10-APR 92 16,000 $28.0000
14-APR-92 5,000 $28.2500
14-APR-92 5,000 $28.3750
14-APR-92 5,000 $28.5000
15-APR-92 10,000 $28.5000
15 APR-92 15,000 $28.3750
16-APR-92 2,500 $28.5000
16-APR-92 5,000 $28.0000
16-APR-92 5,000 $28.1250
16-APR-92 10,000 $28.7500
16-APR-92 7,500 $27.7500
16-APR-92 7,500 $28.6250
16-APR-92 15,000 $28.2500
20-APR-92 5,000 $27.2500
20-APR-92 7,500 $27.0000
29-APR-92 15,000 $26.3750
01-MAY-92 15,000 $28.1250
04-MAY-92 20,500 $28.1250
05-MAY-92 10,000 $28.3750
06-MAY-92 10,000 $28.5000
07-MAY-92 5,000 $28.7500
08-MAY-92 15,000 $28.7500
08-MAY-92 20,000 $29.0000
11-MAY-92 10,000 $28.7500
12-MAY-92 4,000 $28.7500
13-MAY-92 5,000 $29.0000
14-MAY-92 15,000 $29.0000
15-MAY-92 5,000 $29.2500
15-MAY-92 10,500 $29.1250
18-MAY-92 5,000 $29.2500
19-MAY-92 10,000 $29.2500
20-MAY-92 5,000 $29.5000
21-MAY-92 25,000 $29.6250
21-MAY-92 5,000 $29.7500
22-MAY-92 4,500 $29.7500
26-MAY-92 10,000 $29.8750
27-MAY-92 15,000 $29.2500
28-MAY-92 30,000 $29.2500
29-MAY-92 5,000 $29.2500
01-JUN-92 10,000 $29.7500
01-JUN-92 10,000 $29.5000
02-JUN-92 10,000 $29.8750
03-JUN-92 7,500 $28.8750
24-FEB-93 10,000 $27.0000
25-FEB-93 7,500 $26.5000
25-FEB-93 10,000 $26.5000
25-FEB-93 7,500 $26.0000
26-FEB-93 5,000 $26.2500
* EACH OF THE TRANSACTIONS SET FORTH IN THIS SCHEDULE B
WAS A REGULAR WAY PURCHASE.
(1) EXCLUDING BROKERAGE COMMISSIONS
EXHIBIT V
AHP BIOTECH HOLDINGS, INC.
FIVE GIRALDA FARMS, MADISON NEW JERSEY 07940
December 17, 1996
VIA FACSIMILE AND FEDERAL EXPRESS
The First National Bank of Boston
Blue Hills Office Park
150 Royall Street
Canton, Massachusetts 02021
Attention: Shareholder Services Division
Mail Stop 45-02-16
(1991 Genetics Institute, Inc. Depositary Agreement)
Dear Sirs:
Reference is made to the Depositary Agreement dated as of January 16,
1992 (the "Agreement") among American Home Products Corporation, AHP Biotech
Holdings, Inc. ("Holdings"), Genetics Institute, Inc. and The First National
Bank of Boston, as depositary (the "Depositary"). Terms not defined herein
shall have the meanings assigned to such terms in the Agreement.
Pursuant to Section 2.03(a) of the Agreement, Holdings hereby delivers
to the Depositary the Notice of Exercise notifying the Depositary that (i)
Holdings shall purchase 11,888,315.80 shares of New Common Stock (which number
is equal to the total number of Shares of New Common Stock held by the
Depositary on December 15, 1996) plus any additional shares of New Common
Stock issued after December 15, 1996 and prior to the closing date referred to
in subsection (ii) of this paragraph; and (ii) the closing for the purchase of
such Shares shall be held on December 31, 1996 at 3:30 p.m. at the offices of
Holdings at Five Giralda Farms, Madison, New Jersey 07940.
Sincerely,
AHP BIOTECH HOLDINGS, INC.
By: /s/ Robert G. Blount
Robert G. Blount
Vice President
cc: Genetics Institute, Inc.
87 CambridgePark Drive
Cambridge, Massachusetts 02140
Attention: Gabriel Schmergel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Attention: Paul Brountas, Esq.
Shipman & Goodwin
One American Row
Hartford, Connecticut 06105-2815
Attention: Daniel P. Brown, Jr., Esq.
EXHIBIT VI
FOR IMMEDIATE RELEASE
Investor Contact: Media Contact:
Thomas G. Cavanagh Lowell B. Weiner
(201) 660-5706 (201) 660-5013
AMERICAN HOME PRODUCTS CORPORATION ACQUIRES GENETICS INSTITUTE, BROADENING
RESEARCH OPPORTUNITIES IN BIOTECHNOLOGY
MADISON, N.J., December 17, 1996 -- American Home Products Corporation (NYSE:
AHP) announced that it has given notice today of the exercise of its option to
purchase the outstanding capital stock of Genetics Institute, Inc. (NASDAQ:
GENIZ) that it does not own.
Under the terms of the 1992 agreement under which AHP initially acquired a 60%
interest in Genetics Institute, AHP was granted the option to acquire the
remaining equity interest at prices which escalated to the current exercise
price of $85 per share. The amount to be paid for the approximately 40%
interest that AHP does not currently own, plus amounts to be paid in respect
of outstanding options, is approximately $1 billion net of acquired cash and
marketable securities.
Genetics Institute will become a separate subsidiary of AHP and will report to
Mr. Fred Hassan, Executive Vice President in charge of its Worldwide
Pharmaceutical and Medical Device Operations. Gabriel Schmergel, President
and CEO of Genetics Institute, will retire in January 1997 after which he will
enter into a consulting arrangement with the Company. Patrick Gage, Ph. D.,
currently Chief Operating Officer of Genetics Institute will succeed Mr.
Schmergel as President. Certain key management and scientific staff at
Genetics Institute have signed employment agreements which provide, among
other things, for continued employment for three years and non-competition
covenants for up to 18 months following termination.
According to John R. Stafford, Chairman, President and Chief Executive Officer
of AHP, "In 1992, we recognized the potential in Genetics Institute to be a
premier biotechnology company and the need to have biotechnology capabilities
in order to be a top-tier pharmaceutical company. The completion of our
acquisition recognizes the success of our strategy and the emergence of
Genetics Institute as a world class biotechnology company. This action also
will permit the coordination of our Wyeth-Ayerst Research efforts with those
of Genetics Institute. From a financial point of view, our decision is based
on our belief that the initial minimal dilution in earnings will be overcome
by the commercialization of innovative and profitable biotechnology
products, as well as the improved environment for scientific and commercial
interchange with other units of AHP that are involved with biotechnology."
Gabriel Schmergel, President and CEO of Genetics Institute, stated, "AHP's
exercise of its option is the strongest possible
endorsement of the organization and prospects of Genetics Institute. We are
extremely impressed by the way AHP has managed its majority ownership over the
past five years and are confident of our continued success within the AHP
family."
Dr. Gage stated, "Genetics Institute will submit its Biological License
Application on Neumega (IL-11), for stimulating the growth of platelets,
before the end of the year and has recently received a unanimous
recommendation for approval from a FDA medical advisory committee for BeneFix
coagulation factor IX (recombinant), a blood clotting therapy used to treat
Hemophilia B."
The effect of the acquisition will be to reduce projected 1997
earnings per share of AHP by less than 3%. Of the approximately $1.25 billion
gross purchase price, approximately $700 million
will be written-off in 1996 as purchased research and development and $300
million recorded as goodwill. This one time charge will offset the gain to be
reflected in the fourth quarter related to the sale of an 80% interest in its
food products business.
The effective date of the exercise will be December 31, 1996.
Holders of Genetics Institute Depositary Shares will receive
notification from the First National Bank of Boston, acting as Depositary,
stating where receipts for Depositary Shares should be surrendered for payment
and enclosing a form of letter of transmittal to be submitted with the shares.
Genetics Institute is a leading biopharmaceutical firm engaged in the
discovery, development and commercialization of human pharmaceuticals through
recombinant DNA and other technologies. The company has a diversified
portfolio of licensed and proprietary pharmaceutical products at various
stages of development, including treatments for anemia, hemophilia, cancer,
bone damage, infectious disease, inflammatory conditions and immune system
disorders.
American Home Products is one of the world s largest research-based
pharmaceutical and health care products companies and is a leading developer,
manufacturer and marketer of prescription
drugs and over-the-counter medications. It is also a leader in vaccines,
biotechnology, animal health care, medical devices and crop protection
products.
The statements in this press release that are not historical facts are
forward-looking statements that involve risks and uncertainties including,
without limitation, risks associated with the inherent uncertainty of
pharmaceutical research, product development and commercialization, the impact
of competitive products, patent, product liability and third party
reimbursement risks associated with the pharmaceutical industry, and the other
risks and uncertainties detailed from time to time in AHP's periodic reports,
including quarterly reports on Form 10-Q and the annual report on Form 10-K,
filed with the Securities and Exchange Commission. Actual results may differ
from the forward-looking statements.
######
