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Filed by Watson Pharmaceuticals, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
Deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: Watson Pharmaceuticals, Inc. Commission File No: 0-20045
SOURCE: WATSON PHARMACEUTICALS, INC.
Friday, June 30, 2000
Employee Newsletter
GETTING TOGETHER
A TRANSITION NEWSLETTER FOR THE EMPLOYEES OF SCHEIN & WATSON
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June 30, 2000
WELCOME TO WATSON PHARMACEUTICALS, INC.
We know that many of you have questions regarding the recent announcement of
the pending change in ownership. During this time of change and transition,
many of the obvious questions that you might ask do not have answers at this
time. Although this lack of information is frustrating, we hope you see it is
understandable since the focus thus far has been to reach a definitive agreement
and then close the initial phase of our companies coming together. It is now the
intent for both Watson and Schein management teams to begin to move quickly into
the process of determining the organization and operations plans for our newly
combined company.
It is management's goal to provide key information to you as soon as possible.
To do so, among many forms of communication that will be used, we'll be issuing
periodic communications through the GETTING TOGETHER Newsletter - like this
first issue. It is our hope to be able to provide you with answers, activity
timeframes, and useful information about our newly combined company.
Your understanding is appreciated as we work through the many issues involved
with a transaction such as this. We're committed to doing our best in as timely
a manner as possible.
--Watson's Management Team
A CLOSER LOOK AT OUR BUSINESSES
WATSON PHARMACEUTICALS, INC., headquartered in Corona, CA, is engaged in the
development, manufacture and sale of brand and generic pharmaceutical products.
Watson's brand business currently enjoys a top-tier position in the fields of
dermatology and women's healthcare, with a supporting business in the general
products segment. Currently, it has 12 brand products in various developmental
stages.
Its generic portfolio consists of more than 90 products, three tentative product
approvals, 16 products pending approval and another 20 generic products in
development. Watson capitalizes on its proven ability to support the development
and commercialization of a broad range of brand and generic pharmaceutical
products.
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Watson has facilities in Corona, CA; Salt Lake City, UT; Miami, FL; Copiague,
NY; Glenview, IL; Cincinnati, OH and Livingston, NJ.
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SCHEIN PHARMACEUTICAL, INC., headquartered in Florham Park, NJ, has a
diversified portfolio of both brand and generic products. Schein integrates its
product development expertise, its diverse, high-volume production capacity and
direct sales and marketing force to capitalize on the commercialization of
products.
Schein's brand products group has developed an expertise in the management of
anemia in nephrology and seeks to expand that expertise to other therapeutic
areas, including iron management. Currently, it has two brand products in
development.
Schein also develops, manufactures and markets a broad generic line. It
manufactures 100 products, has five tentative product approvals, 11 products
pending approval and another 30 generic products in development.
Schein has sought to enhance its internal product development, manufacturing and
marketing efforts through various strategic collaborations.
Schein has facilities in Phoenix, AZ; Brewster, NY; Carmel, NY; Danbury, CT;
Florham Park, NJ; Cherry Hill, NJ; and Humacao, Puerto Rico.
TRANSITION PROCESS ALREADY UNDERWAY
The integration -- or merging -- of Schein with Watson is a challenging and
demanding task. The goal of successfully integrating our two companies together
is to establish a joint, specialty pharmaceutical business that takes a uniform,
strategic approach to capitalize on marketplace opportunities. Key to this
approach is preserving the historic strengths of both companies.
This integration will be accomplished through a series of transition teams, with
representation from both Watson and Schein company members.
Once formalized, teams' activities will be reported and communicated throughout
both organizations on a regular basis through periodic editions of the GETTING
TOGETHER newletter.
One team already in place is the Transition Communications Team. Led by Watson's
Director of Employee Relations, Pam Furlong, the team is comprised of the
following individuals: Lorraine Ericson, Schein's Human Resources
Manager/Phoenix; William Hnat-Blain, Schein's Human Resources Manager/Northeast
locations; Melody Carey, Schein's Director of Investor Relations and Corporate
Communications, and Sara Swee, Watson's Director of Corporate Communications.
This team will be responsible for communicating to employees regarding
transitional progress and developments. They will also be responsible for
gathering your questions and reporting back to all employees via the GETTING
TOGETHER newsletter.
TWO HOTLINES ESTABLISHED TO ANSWER EMPLOYEE QUESTIONS ABOUT THE NEWLY COMBINED
COMPANY
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Beginning July 5th, two voicemail hotlines will have been established to help
direct and respond to questions generated by Schein and Watson employees.
These voicemails will be downloaded throughout each business day, with questions
being answered (when possible) and communicated to all via the GETTING TOGETHER
newsletter.
FOR SCHEIN EMPLOYEES -
Please dial (602) 447-3127, or if you are calling internally, use extension
3127.
FOR WATSON EMPLOYEES -
Please dial (800) 249-5499, extension 1500.
QUESTIONS & ANSWERS
Immediately following the acquisition announcement, members of Watson's
management team and Corporate Human Resources Department visited each of the
Schein sites. During those visits, information about Watson and the strategic
rationale for the acquisition were communicated. Employees were also encouraged
to ask questions.
We will provide those questions most often asked by your colleagues in each
issue of GETTING TOGETHER. Where we can, we will give you answers; where we
don't have an answer yet, we'll tell you that too.
Thank you for your continued patience and understanding as we proceed on this
transition journey together. We look forward to working together as a team.
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WILL WE HAVE JOBS? AND WHEN WILL WE KNOW?
We're sensitive to this key issue and we know that it's on the minds of everyone
- at both companies. Management is reviewing organizational operations and areas
for efficiency improvements. While both the Schein and Watson organizations are
strong, we believe we can do better. When key decisions are made, we will
communicate with those affected as soon as possible.
WHAT WILL HAPPEN TO SCHEIN CORPORATE? WHAT IS "COMMERCIAL" HEADQUARTERS?
Schein's Florham Park, NJ operations will remain at that location and will be
considered the combined company's Commercial Headquarters, with Sales and
Marketing as well as other departments (yet to be determined) located there.
Corporate Headquarters will remain located in Corona, CA.
WILL WE HAVE A CHANCE TO MEET WATSON'S CEO, DR. CHAO, HERE IN PUERTO RICO?
Dr. Chao is coordinating his schedule to visit all Schein sites in the near
future. Site management will be notified when Dr. Chao will be visiting, so
everyone can meet him and ask questions.
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WILL MARSAM OR STERIS BE CLOSED?
As you know, Marsam is not currently operational and Steris is producing several
products, including the important INFeD(R) product. We are evaluating strategic
opportunities for both sites and have not yet made a decision on either.
WILL SCHEIN MANAGEMENT BE ABLE TO PARTICIPATE IN THESE INTEGRATION MEETINGS?
This merger is seen as a unique opportunity to look at various factors; taking
away the `best practice' available. For this to occur, input from both Schein
and Watson management is needed. Utilizing that input, decisions will be made by
senior management at Watson.
WHAT ARE THE KEY TOPICS MANAGEMENT IS FOCUSING ON RIGHT NOW?
Management teams are coordinating the review of many key areas. Naturally, these
areas will be addressed in order of operational importance. Currently, the teams
are reviewing strategic directives, organizational efficiencies, manufacturing
systems, quality assurance programs, information systems, HR programs, employee
communication issues and customer and marketing issues, to name a few.
WHAT ABOUT BENEFIT PROGRAMS?
We are reviewing both companies' programs to ascertain the most appropriate
programs for the newly combined company. Both companies will, however, continue
with their respective health plans through the end of the year.
While other benefit decisions have not yet been made, Watson will certainly
honor Schein's severance and retention packages currently in place.
WHEN WILL THE OPEN ENROLLMENT PERIOD FOR BENEFITS BE HELD?
The combined company's enrollment period will be held in the Fall.
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ADDITIONAL INFORMATION AND WHERE TO FIND IT
Watson filed a Schedule TO on June 6, 2000, in connection with the tender offer,
and plans to file a registration statement on SEC Form S-4 in connection with
the merger. Watson and Schein have mailed tender offer documentation and expect
to mail a proxy statement/prospectus to stockholders of Schein containing
information about the tender offer and the merger. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE TENDER OFFER DOCUMENTATION, THE REGISTRATION
STATEMENT AND THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE.
THE TENDER OFFER DOCUMENTATION, THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT SCHEIN, WATSON,
THE TENDER OFFER, THE MERGER AND RELATED MATTERS. INVESTORS AND SECURITY HOLDERS
WILL BE ABLE TO OBTAIN FREE COPIES OF THESE DOCUMENTS THROUGH THE WEB SITE
MAINTAINED BY THE SECURITIES AND EXCHANGE COMMISSION AT HTTP://WWW.SEC.GOV. FREE
COPIES OF THE TENDER OFFER DOCUMENTATION, THE PROXY STATEMENT/PROSPECTUS AND
THESE OTHER DOCUMENTS MAY ALSO BE OBTAINED FROM WATSON BY DIRECTING A REQUEST
THROUGH THE INVESTOR RELATIONS PHONE LINE AT 909-270-1400, EXTENSION 4153; BY
MAIL TO WATSON PHARMACEUTICALS, INC., ATTENTION: INVESTOR RELATIONS DEPARTMENT,
311 BONNIE CIRCLE, CORONA, CALIFORNIA 92880, FROM SCHEIN
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THROUGH THE INVESTOR RELATIONS PHONE LINE AT 973-593-5535 OR BY MAIL TO SCHEIN
PHARMACEUTICAL, INC., ATTENTION: INVESTOR RELATIONS, 100 CAMPUS DRIVE, FLORHAM
PARK, NEW JERSEY, 07932.
In addition to the tender offer documentation, the registration statement and
the proxy statement/prospectus, Watson and Schein each file annual, quarterly
and special reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy any reports, statements or other
information filed by Watson or Schein at the SEC public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at any of the Commission's other
public reference rooms in New York, New York and Chicago, Illinois. Please call
the Commission at 800-SEC-0330 for further information on the public reference
rooms. Schein's and Watson's filings with the Commission are also available to
the public from commercial document-retrieval services and at the web site
maintained by the Commission at http://www.sec.gov.
SOLICITATION OF PROXIES; INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
WATSON, SCHEIN, THEIR RESPECTIVE DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN OTHER
MEMBERS OF MANAGEMENT AND EMPLOYEES MAY BE SOLICITING PROXIES FROM SCHEIN
STOCKHOLDERS IN FAVOR OF THE ADOPTION OF THE MERGER AGREEMENT. A DESCRIPTION OF
ANY INTERESTS THAT SCHEIN'S DIRECTORS AND EXECUTIVE OFFICERS HAVE IN THE MERGER
WILL BE AVAILABLE IN THE PROXY STATEMENT/PROSPECTUS.
FORWARD LOOKING INFORMATION
THIS DOCUMENT CONTAINS CERTAIN STATEMENTS OF A FORWARD-LOOKING NATURE RELATING
TO FUTURE EVENTS OR FUTURE BUSINESS PERFORMANCE. ANY SUCH STATEMENTS THAT REFER
TO WATSON'S OR SCHEIN'S ESTIMATED OR ANTICIPATED FUTURE RESULTS, PRODUCT
DEVELOPMENT EFFORTS OR PERFORMANCE OR OTHER NON-HISTORICAL FACTS ARE
FORWARD-LOOKING AND REFLECT EACH COMPANY'S CURRENT PERSPECTIVE OF EXISTING
TRENDS AND INFORMATION. SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS,
STATEMENTS REGARDING THE CONSUMMATION OF THE PROPOSED ACQUISITION OF SCHEIN BY
WATSON AND THE FUTURE GROWTH, IMPACT AND SUCCESS OF THE COMBINED COMPANY,
INCLUDING EXPECTATIONS REGARDING FINANCIAL PERFORMANCE, PRODUCT DEVELOPMENT
EFFORTS AND THE SUCCESSFUL INTEGRATION OF THE TWO BUSINESSES. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT CANNOT BE
PREDICTED OR QUANTIFIED AND, CONSEQUENTLY, ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. SUCH RISKS AND UNCERTAINTIES
INCLUDE, AMONG OTHERS, RISKS RELATED TO THE CONSUMMATION OF THE PROPOSED
ACQUISITION, INCLUDING THE POSSIBLE INABILITY TO OBTAIN, OR MEET THE CONDITIONS
IMPOSED FOR, GOVERNMENTAL APPROVALS FOR THE PROPOSED ACQUISITION, THE POSSIBLE
INABILITY TO OBTAIN ON COMMERCIALLY ADVANTAGEOUS TERMS ANY CONSENTS OR APPROVALS
OF THIRD PARTIES WITH RESPECT TO THE PROPOSED ACQUISITION, THE POSSIBILITY DUE
TO MARKET CONDITIONS OR OTHER FACTORS OF THE WITHDRAWAL OF THIRD PARTY FINANCING
FOR THE PROPOSED ACQUISITION, AND THE POSSIBLE FAILURE TO OBTAIN THE TENDER OF
SUFFICIENT SCHEIN SHARES PURSUANT TO WATSON'S TENDER OFFER TO MEET THE MINIMUM
CONDITION TO THE CONSUMMATION OF THE PROPOSED
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ACQUISITION, RISKS ASSOCIATED WITH THE INTEGRATION OF THE WATSON AND SCHEIN
BUSINESSES AFTER CONSUMMATION OF THE PROPOSED ACQUISITION, INCLUDING THE
POSSIBLE INABILITY TO SUCCESSFULLY INTEGRATE THESE BUSINESSES ON A COST
EFFECTIVE AND TIMELY BASIS, THE POSSIBLE INABILITY TO OBTAIN ON A TIMELY BASIS
ANY REGULATORY OR THIRD PARTY APPROVALS NECESSARY TO SUCCESSFULLY IMPLEMENT THE
COMBINED COMPANY'S INTEGRATION PLANS OR THE POSSIBLE INABILITY TO TIMELY MAKE
CHANGES ON COMMERCIALLY ADVANTAGEOUS TERMS TO SCHEIN'S BUSINESS, AND SUCH OTHER
RISKS AND UNCERTAINTIES DETAILED IN WATSON'S AND SCHEIN'S MOST RECENT FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING EACH COMPANY'S ANNUAL
REPORT AND FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND FORM 10-Q FOR THE
QUARTER ENDED MARCH 31, 2000.
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