Exhibit 99.1
NEWS RELEASE
CONTACTS: Watson Pharmaceuticals, Inc.
Sara Swee
Director, Corporate Communications
(909) 270-1400
Morgen-Walke Associates, Inc.
Jim Byers, Danielle Scheg
(415) 296-7383
Schein Pharmaceutical, Inc.
Whitney K. Stearns, Jr.
Chief Financial Officer
(973) 593-5910
FOR IMMEDIATE RELEASE
WATSON TO ACQUIRE SCHEIN PHARMACEUTICAL
TRANSACTION TO EXPAND WATSON'S SPECIALTY BRAND PHARMACEUTICAL PRODUCT LINES
AND BROADEN GENERIC PRODUCT PORTFOLIO
CORONA, CA and FLORHAM PARK, NJ - May 25, 2000 - Watson
Pharmaceuticals, Inc. (NYSE: WPI) and Schein Pharmaceutical, Inc. (NYSE: SHP)
announced today that the companies have entered into a definitive agreement
under which Watson will acquire all of the outstanding stock of Schein through a
two-step transaction comprised of a cash tender followed by a taxable stock
merger. The cash tender offer will be at $19.50 per share of Schein common stock
while pursuant to the merger, each Schein share will be converted into $23.00 of
Watson common stock, subject to adjustment as described below. Both Watson and
Schein are developers, manufacturers and marketers of generic and branded
pharmaceutical products, utilizing various drug delivery technologies.
Under the terms of the definitive agreement, Watson will make a cash
tender offer for all of Schein's outstanding stock at a price of $19.50 per
share. Bayer Corporation and certain members
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of the Schein family, who collectively own approximately 74% of the outstanding
shares of common stock of Schein, have entered into stockholder agreements with
Watson and it is contemplated that these stockholders will tender all of their
shares of Schein common stock to Watson pursuant to its tender offer. Assuming
such stockholders tender all of their shares, the minimum condition of the
tender offer will be satisfied.
Following the consummation of the tender offer, and subject to the
conditions set forth in the definitive agreement (including the minimum
condition that at least 24,500,000 shares of Schein common stock be tendered
pursuant to the tender offer), Watson will acquire the remaining shares of
Schein's outstanding common stock through a merger of a wholly-owned subsidiary
of Watson into Schein. Upon the closing of the merger, each then outstanding
share of Schein's common stock will be converted into the right to receive a
fraction of a share of Watson common stock valued at $23.00, based upon the
average closing price of a share of Watson 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 (i) the special meeting of Schein's
stockholders called to approve the merger or (ii) if no such meeting is required
under applicable law, the effective date of the merger (the "Average Closing
Price").
The value of the merger consideration will be increased proportionately
above $23.00, if the Average Closing Price is greater than $54.52 per share, up
to a 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, Watson would have
the option to pay the entire merger consideration of $19.50 in cash, in stock,
or in a mix of cash and stock.
The foregoing summary is a general description of certain pricing and
related terms of the definitive agreement for the transaction, and is qualified
in its entirety by reference to the definitive agreement, a copy of which will
be filed by Watson with the Securities and Exchange Commission as an exhibit to
Watson's Form 8-K relating to the transaction.
The tender offer, which is subject to customary closing conditions, is
expected to close in late June or early July of this year. The merger is
expected to close in late August or early September of this year. Watson intends
to account for this transaction as a purchase. On a reported EPS basis,
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including the amortization of goodwill resulting from the transaction, Watson
expects the acquisition to be dilutive to earnings in the second half of 2000
and modestly accretive in 2001. On a cash EPS basis, the acquisition is expected
to be accretive to earnings in 2000 and 2001
"Our current business model pursues a strategy of generating revenue
through established proprietary and off-patent businesses. This transaction
builds upon that existing strategy to expand our brand and generic product
offerings," remarked Dr. Allen Chao, Chairman and Chief Executive Officer of
Watson. "Schein's strength in the nephrology marketplace is an excellent example
of capitalizing on a niche, specialty branded pharmaceutical program. This
specialty focus is a core element to our current brand product strategy," he
added. Remarking on Schein's generic program, Dr. Chao continued, "We believe
the addition of Schein's generic product portfolio, including its healthy
pipeline, will better enable us to further satisfy our customers by providing
them with an expanded line of generic pharmaceutical products - both now and in
the future."
Martin Sperber, Schein's Chairman and Chief Executive Officer observed,
"Schein and Watson each have successfully executed a strategy of building brand
and generics businesses. Combining our two companies makes great sense and
offers enormous opportunities. We look forward to being part of this growing
enterprise."
Watson Pharmaceuticals, Inc., headquartered in Corona, CA, is engaged
in the development, manufacture and sale of proprietary and off-patent
pharmaceutical products. Watson's proprietary business currently enjoys a
top-tier position in the fields of dermatology and women's health, with a
supporting business in the general products segment. Its generic portfolio
consists of more than 90 products, three tentative product approvals and 16
products pending approval. Watson capitalizes on its proven ability to support
the development and commercialization of a broad range of proprietary and
off-patent pharmaceutical products.
Schein Pharmaceutical, Inc., headquartered in Florham Park, NJ, has a
diverse 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. In addition, Schein develops,
manufactures, and markets a broad generic product line. Schein manufactures
approximately 100 products, five tentative
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product approvals and 11 products pending approval . Schein seeks to enhance its
internal product development, manufacturing and marketing efforts through
various strategic collaborations.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
Watson plans to file a Schedule TO and a registration statement on SEC
Form S-4 in connection with the tender offer and the merger, and Watson and
Schein expect to mail tender offer documentation and 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 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 1-800-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.
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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 press release 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 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
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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.
This release and past press releases of Watson Pharmaceuticals, Inc.
and Schein Pharmaceutical, Inc, respectively are available at Watson's web site
at http://www.watsonpharm.com and Schein's web site at http://www.schein-rx.com.
In addition, Watson's press releases are available through PR Newswire's Company
News On-Call fax service at (800) 758-5804, extension 112856, and at
http://www.prnewswire.com.
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