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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 24, 2000
WATSON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Nevada 0-20045 95-3872914
(State of jurisdiction) (Commission File No.) (IRS Employer Identification No.)
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311 Bonnie Circle
Corona, California 92880
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (909) 270-1400
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Item 5. Other Events
THE MERGER AGREEMENT
On May 25, 2000, Registrant announced a definitive agreement with Schein
Pharmaceutical, Inc., a Delaware corporation ("Schein"), under which Registrant
will acquire all of the outstanding stock of Schein through a two-step
transaction comprised of a cash tender offer followed by a taxable stock merger.
In the tender offer, subject to the terms and conditions thereof,
Registrant will offer to purchase all outstanding shares of Schein common stock
for $19.50 per share in cash. Following the purchase of shares of Schein common
stock in the tender offer, the shares of Schein common stock not owned by
Registrant or WS Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Registrant, will be acquired, subject to certain conditions, in a
merger of WS Acquisition Corp. with and into Schein.
In the merger, each share of Schein's common stock will be converted
into the right to receive a fraction of a share of Registrant common stock
valued at $23.00, based upon the average closing price of a share of Registrant
common stock on the New York Stock Exchange for the ten day trading period
ending on the trading day two trading days prior to the date of either the
special meeting of Schein's stockholders called to approve the merger or, if no
such meeting is required under applicable law, the date of the merger.
The value of the merger consideration per share of Schein common stock
will be increased proportionately above $23.00, if the average closing price is
greater than $54.52 per share, up to maximum value of $26.50 where the average
closing price is $62.82 per share or higher. Conversely, the value of the merger
consideration will be decreased proportionately below $23.00, if the average
closing price is less than $44.61 per share down to a minimum value of $19.50,
where the average closing price is $37.82 per share or lower. At this minimum
value of $19.50, Registrant would have the option to pay the entire merger
consideration in cash, in stock, or in a mix of cash and stock.
The summary of the Merger Agreement in this 8-K is qualified in its
entirety by reference to the Agreement and Plan of Merger, dated as of May 24,
2000, by and among Registrant, WS Acquisition Corp. and Schein (the "Merger
Agreement"), attached hereto as Exhibit 99.1.
The Stockholder Agreements
In connection with the execution of the Merger Agreement, certain
significant stockholders of Schein, that own in the aggregate approximately
24,500,000 shares of Schein common stock (the "Shares"), have entered into
Stockholder Agreements with Registrant and WS Acquisition Corp. The Stockholder
Agreements are designed to encourage the significant stockholders to tender all
of their Shares in the tender offer. Specifically, pursuant to the Stockholder
Agreements, the significant stockholders have agreed (a) to tender in the tender
offer approximately 34.9% 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 tender
offer, the merger or the Merger Agreement. In addition, pursuant to the
Stockholder Agreements, the significant stockholders have granted to WS
Acquisition Corp. 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
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per share, if fewer 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
Schein.
The significant stockholders who signed such Stockholder Agreements are:
Marvin H. Schein; Bayer Corporation and Pamela Schein and related trusts. The
summary of the Stockholder Agreement in this 8-K is qualified in its entirety by
reference to the form of Stockholder Agreement, attached hereto as Exhibit 99.2.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit
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Number Description
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99.1 Agreement and Plan of Merger dated as of May 24, 2000,
among Registrant, WS Acquisition Corp., and Schein
Pharmaceutical, Inc.
99.2 Form of Stockholder Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WATSON PHARMACEUTICALS, INC.
Dated: May 30, 2000 /s/ Robert C. Funsten
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Robert C. Funsten
Senior Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
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Exhibit
Number Description
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99.1 Agreement and Plan of Merger dated as of May 24, 2000 among
Registrant, WS Acquisition Corp., and Schein Pharmaceutical,
Inc.
99.2 Form of Stockholder Agreement.
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v.
