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This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated June 6,
2000, and the related Letter of Transmittal (and any amendments or supplements
thereto), and is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities or other laws require the Offer to be made by
a licensed broker or dealer, the Offer shall be deemed to be made on behalf of
the Purchaser by Bear, Stearns & Co. Inc., the Dealer Manager for the Offer or
by one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SCHEIN PHARMACEUTICAL, INC.
AT
$19.50 NET PER SHARE
BY
WS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
WATSON PHARMACEUTICALS, INC.
WS Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of Watson Pharmaceuticals, Inc., a Nevada corporation
("Parent"), is offering to purchase all the outstanding shares of common stock,
par value $0.01 per share (the "Shares"), of Schein Pharmaceutical, Inc., a
Delaware corporation (the "Company"), at a price of $19.50 per Share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated June 6, 2000 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any supplements or amendments thereto, collectively constitute the
"Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JULY 3, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 24, 2000 (the "Merger Agreement"), among Parent, the Purchaser and the
Company, pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares owned by the Company as treasury stock or
by Parent, the Purchaser or any other subsidiary of Parent or by stockholders,
if any, who are entitled to and who properly exercise appraisal rights under
Delaware law) will be converted into the right to receive the Merger
Consideration. The "Merger Consideration" into which each issued and outstanding
Share, other than Dissenting Shares and Ineligible Shares, will be converted is
based upon the "Parent Average Stock Price," which is defined as the average of
the closing price of a share of Parent common stock on the New York Stock
Exchange for the ten consecutive trading days ending on the trading day two
trading days prior to the date of the special meeting of stockholders
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relating to the merger or, if no special meeting is required under applicable
law in order to consummate the merger, the effective time of the merger.
If the Parent Average Stock Price is EQUAL TO OR GREATER THAN $37.82, the
Merger Consideration will be that number of shares of common stock, par value
$0.0033 per share, of Parent equal to the "Exchange Ratio." "Exchange Ratio"
means the quotient (rounded to the nearest hundred thousandth) obtained by
dividing $23.00 by the Parent Average Stock Price; provided, however, that:
- if the Parent Average Stock Price is greater than or equal to $37.82 but
less than $44.61, the Exchange Ratio will be 0.51562;
- if the Parent Average Stock Price is greater than $54.52 but less than or
equal to $62.82, the Exchange Ratio will be 0.42187; and
- if the Parent Average Stock Price is greater than $62.82, the Exchange
Ratio will be the quotient (rounded to the nearest hundred thousandth)
obtained by dividing $26.50 by the Parent Average Stock Price.
If the Parent Average Stock Price is LESS THAN $37.82, the Merger
Consideration will be one of the following, as determined by Parent in its sole
discretion:
- that number of shares of Parent common stock equal to the quotient
(rounded to the nearest hundred thousandth) obtained by dividing $19.50
by the Parent Average Stock Price;
- $19.50 in cash; or
- the aggregate of (x) 0.51562 of a share of Parent common stock and (y) a
dollar amount in cash equal to $19.50 minus the product of 0.51562
multiplied by the Parent Average Stock Price.
Receipt of the Offer Price and the Merger Consideration will be taxable to
the stockholders of the Company. The Offer and the Merger will be accounted for
as a purchase. The Merger Agreement is more fully described in Section 11 of the
Offer to Purchase.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
24,500,000 SHARES (THE "MINIMUM CONDITION") AND IS ALSO SUBJECT TO OTHER
CUSTOMARY CLOSING CONDITIONS.
In connection with the execution of the Merger Agreement, certain
significant stockholders of the Company, that own in the aggregate approximately
24,500,000 Shares, have entered into Stockholder Agreements with Parent and the
Purchaser. The Stockholder Agreements are designed to encourage the significant
stockholders to tender all of their Shares in the Offer. Specifically, pursuant
to the Stockholder Agreements, the significant stockholders have agreed (a) to
tender in the Offer approximately 11,508,522 Shares, which constitute
approximately 34.8% of the outstanding Shares as of May 24, 2000, and (b) to
cause such Shares to be voted in favor of the Merger and the Merger Agreement
and against any transaction or other action that might interfere with the Offer,
the Merger or the Merger Agreement. In addition, pursuant to the Stockholder
Agreements, the significant stockholders have granted to the Purchaser certain
options to purchase all of their Shares, including an option to purchase up to
an aggregate of 46.9% of the significant stockholders' Shares, at a price of
$12.00 per Share, if less than 24,500,000 Shares are validly tendered on or
before the fifth business day following the commencement of the Offer and an
option to purchase all of such significant stockholders' Shares at $19.50 per
Share under certain circumstances in the event a third party makes a proposal to
acquire the Company.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED AND FOUND ADVISABLE THE
MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND/OR VOTE TO ADOPT THE MERGER
AGREEMENT.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser
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gives oral or written notice to the Depositary (as defined in the Offer to
Purchase) of the Purchaser's acceptance for payment of such Shares. Upon the
terms and subject to the conditions of the Offer, payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from the Purchaser and transmitting payment
to tendering stockholders whose Shares have been accepted for payment. In all
cases, payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
Shares or timely confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase) and (iii) any other documents required by the Letter of
Transmittal.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Monday, July 3, 2000 unless and until the Purchaser, in its sole discretion (but
subject to the terms of the Merger Agreement), shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date on which the Offer, as so extended by the
Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole
discretion (but subject to the terms of the Merger Agreement), at any time or
from time to time, and regardless of whether or not any of the events set forth
in Section 15 of the Offer to Purchase shall have occurred, (i) to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and the payment for, any Shares, by giving oral or written notice of
such extension to the Depositary and (ii) to amend the Offer in any other
respect by giving oral or written notice of such amendment to the Depositary.
Under the Merger Agreement, the Purchaser has agreed (unless otherwise notified
by the Company), and the Purchaser shall otherwise be entitled to, extend the
expiration date of the Offer two times in increments of up to 10 business days
each (unless otherwise agreed by Parent and the Company) until the earliest to
occur of (x) the satisfaction or waiver of each condition to the Offer, (y) the
termination of the Merger Agreement in accordance with its terms and (z) either
November 13, 2000, if the condition relating to antitrust waiting periods and
approvals has not been satisfied, or October 16, 2000 if any other condition to
the Offer has not been satisfied; provided, however, that the Purchaser shall
not be required to extend the Offer as provided in this sentence unless each
such condition is reasonably capable of being satisfied. In addition, under the
Merger Agreement, the Purchaser may, without the consent of the Company, extend
the Expiration Date for up to 10 business days if, on the scheduled or any
extended Expiration Date, at least 24,500,000 Shares have been tendered and not
withdrawn but fewer than 90% of the Shares have been tendered and not withdrawn,
so long as the Purchaser waives the satisfaction of certain conditions to the
Offer not then satisfied. There can be no assurance that the Purchaser will
exercise its right to extend the Offer (other than as may be required by
applicable law). Any extension of the Offer will be followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any
extension of the Offer, all Shares previously tendered and not withdrawn will
remain subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares. The Merger Agreement does not provide for a
subsequent offering period. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE
PURCHASER ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after August
4, 2000. For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution as defined in Section 3 of the Offer to Purchase, the signature on
the notice
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<PAGE> 4
of withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with the Book-Entry
Transfer Facility's procedures. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 3 of
the Offer to Purchase at any time prior to the Expiration Date. All questions as
to the form and validity (including time of receipt) of notices of withdrawal
will be determined by the Purchaser, in its sole discretion, whose determination
will be final and binding.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 14D-6 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED IN THE OFFER TO PURCHASE AND IS
INCORPORATED HEREIN BY REFERENCE.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth below. Copies of the Offer to Purchase, the related Letter of Transmittal
and other tender offer materials may be obtained from the Dealer Manager or the
Information Agent at their addresses and telephone numbers set forth below and
will be furnished promptly, upon request, at the Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons (other than the
Dealer Manager and Information Agent, as described in the Offer to Purchase) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Bankers and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 628-8509
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Call Toll Free (Attention: Tom Monaghan): (800) 967-7915
June 6, 2000
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