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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 16, 2009
WATSON PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Nevada
(State or Other Jurisdiction
of Incorporation)
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001-03305
(Commission File Number)
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95-3872914
(IRS Employer
Identification No.) |
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311 Bonnie Circle
Corona, California
(Address of Principal Executive Offices)
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92880
(Zip Code) |
Registrants telephone number, including area code: (951) 493-5300
(Former name or former address, if changed since last report): Not applicable.
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
Watson Pharmaceuticals, Inc., a Nevada corporation (Watson), Robin Hood Holdings
Limited, a Malta limited liability company (Robin Hood), certain shareholders of Robin
Hood (together, the Sellers) and Anthony Selwyn Tabatznik, solely in his capacity as the
Shareholders Representative therein (the Shareholders Representative), have entered
into a definitive Share Purchase Agreement, dated as of June 16, 2009 (the Share Purchase
Agreement). Pursuant to the Share Purchase Agreement, a wholly-owned subsidiary of Watson
will acquire all of the outstanding equity of Robin Hood (the Share Purchase) from the
Sellers and acquire the privately held Arrow Group, a group of global pharmaceutical companies, in
exchange for the following consideration:
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A cash payment of U.S. $1.05 billion at closing of the Share Purchase (the
Closing); |
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16,943,409 restricted shares of Common Stock of Watson (Restricted Common
Stock) issued at the Closing; |
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$200 million face amount of newly-designated non-voting Series A Preferred Stock of
Watson (Preferred Stock) issued at the Closing; and |
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Certain payments made after the Closing based on the after-tax gross profits on sales
of Atorvastatin in the United States as described in the Share Purchase Agreement. |
Representations, warranties and indemnities. Each of the parties have made customary
representations and warranties in the Share Purchase Agreement. The representations made by Robin
Hood and the Sellers generally survive for 18 months after the Closing. The Sellers have agreed to
indemnify Watson against losses relating to breaches of Robin Hoods or the Sellers
representations and warranties, subject to certain limitations. Claims for indemnification by
Watson will generally be limited to recovery of the Preferred Stock, which will be held in an
escrow account for three years after the Closing.
Covenants. Watson and Robin Hood have each agreed to conduct their respective businesses in
the ordinary course consistent with past practice in all material respects until the Closing.
Watson, Robin Hood and the Sellers have each agreed to use their reasonable best efforts to
complete the Share Purchase. Watson has also agreed to appoint Mr. Tabatznik to Watsons board of
directors (Watsons Board) to serve as a Class I director until Watsons annual meeting
in 2011. Watson, Robin Hood and the Sellers have also made other customary covenants in the Share
Purchase Agreement.
Non-Compete and Non-Solicit.
One of the conditions to the Closing is that Mr. Tabatznik
and four other key employees of Robin Hood enter into a Non-Compete and
Non-Solicitation Agreement with Watson whereby they will agree for a period of either two or three
years after the Closing not to (1) engage in certain businesses that develop, market, distribute or
manufacture certain generic pharmaceutical products in the in the United States, France, Canada,
the United Kingdom, Malta, Germany, New Zealand, Australia, or Brazil, and (2) solicit certain
employees, customers or suppliers of Robin Hood.
Closing Conditions. Each partys obligation to complete the Share Purchase is subject to
several customary conditions, including (i) clearance under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the HSR Act); (ii) the accuracy of the other
partys representations and warranties made in the Share Purchase Agreement; (iii) the compliance
of the other party with its covenants made in the Share Purchase Agreement; and (iv) no material
adverse effect on the business of Watson or Robin Hood, subject in each of cases (ii) through (iv)
to a contractually agreed upon standard of materiality.
Termination Rights and Fees. The Share Purchase Agreement can be terminated by Watson or the
Shareholders Representative under customary circumstances. If the Share Purchase Agreement is
terminated in certain circumstances relating to failure to obtain clearance under the HSR Act,
Watson must reimburse Robin Hood, the Sellers and the Shareholders Representative for up to $7
million of their transaction expenses.
Transfer Restrictions and Voting Agreement. The Restricted Common Stock may not be sold or
transferred by the Sellers for 6 months (or, for certain specified Sellers, 12 months) after the
Closing, subject to limited exceptions. In addition, certain specified Sellers have agreed to
enter into a stockholders rights agreement that will provide such Sellers or their controlling
affiliates with certain registration rights for their Restricted Common Stock and will requiring
them to vote the Restricted Common Stock in certain circumstances in accordance with the
recommendation of Watsons Board or in proportion to the votes cast by other shareholders. These
voting arrangements will remain in place until the subject shareholders collectively own less than
4% (or less than 5% for certain transferees of the subject shareholders) of Watsons outstanding
common stock.
Loan Relating to Certain License and Milestone Payments. In connection with the Share
Purchase, Robin Hood will obtain a loan from a financial institution prior to the Closing in the
amount of $151.4 million. Robin Hood will apply the proceeds of the loan to repay outstanding
indebtedness, pay dividends to, or repurchase Robin Hoods ordinary shares from, the Sellers or pay
any expenses related to the Share Purchase. This loan will be repaid by Robin Hood after the
Closing using the net proceeds received under two license and development agreements between
Sepracor Inc. and a subsidiary of Robin Hood. Pursuant to a loan guarantee arrangement, if
Sepracor fails to make a payment under these license and development agreements, one or more of the
Sellers or their affiliates will repay the corresponding amount of the loan on Robin Hoods behalf
or else reimburse the Robin Hood for the amount of such payment.
Terms of the Preferred Stock. The Preferred Stock will be non-voting and will have an
aggregate liquidation preference of $200 million and will be mandatorily redeemable three years
after issuance for the cash amount of the liquidation preference.
Board and Shareholder Approval. The Share Purchase Agreement has been approved by Watsons
Board and is not subject to approval by Watsons shareholders.
The foregoing description of the Share Purchase and Share Purchase Agreement does not purport
to be complete and is qualified in its entirety by reference to the full text of the Share Purchase
Agreement, filed as Exhibit 2.1 hereto and incorporated herein by reference. The Share Purchase
Agreement has been included to provide investors with information regarding its terms, however it
is not intended to provide any other factual information about Watson, Robin Hood, the Sellers or
Mr. Tabatznik. The Share Purchase Agreement contains representations and warranties of each of
Watson, Robin Hood, and the Sellers which are qualified by information in confidential disclosure
letters delivered in connection with signing the Share Purchase Agreement. Accordingly, investors
should not rely on the representations and warranties as characterizations of the actual state of
facts at the time they were made or otherwise.
Item 3.02 Unregistered Sales of Equity Securities.
As described in item 1.01, under the terms of the Share Purchase Agreement, Watson has agreed
to issue the Restricted Common Stock and Preferred Stock to the Sellers in a private placement of
such securities as partial consideration for the Share Purchase. The sale of the Restricted Common
Stock and Preferred Stock has not been registered under the Securities Act of 1933, as amended (the
Securities Act), or any state securities laws. Watson is relying upon the exemptions from
registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under that
section. Each of the Sellers has represented to Watson that it is an accredited investor, as such
term is defined in Regulation D under the Securities Act, and that it was acquiring the securities
for investment and not with a view to or for sale in connection with any distribution thereof, and
appropriate legends will be affixed to the securities.
Item 8.01 Other Events.
On June 17, 2009, Watson issued a press release announcing the execution of the Share Purchase
Agreement, which is filed as Exhibit 99.1 hereto and incorporated herein by reference. The
information in Item 8.01 of this report (including Exhibit 99.1) is being furnished and shall not
be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the
Exchange Act), nor shall it be deemed incorporated by reference in any filing under the
Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in
such filing.
Item 9.01. Financial Statements and Exhibits.
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Exhibit No. |
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Exhibit |
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2.1
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Share Purchase Agreement, dated as of June 16, 2009, by and among Robin Hood Holdings
Limited, Watson Pharmaceuticals, Inc., certain shareholders of Robin Hood Holdings Limited,
and Anthony Selwyn Tabatznik, solely in his capacity as the Shareholders Representative. |
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99.1
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Press Release issued by Watson Pharmaceuticals, Inc. on June 17, 2009. |
SIGNATURE
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.
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Date: June 19, 2009 |
WATSON PHARMACEUTICALS, INC.
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By: |
/s/ David A. Buchen
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Name: |
David A. Buchen |
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Title: |
Senior Vice President,
General Counsel and Secretary |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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2.1
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Share Purchase Agreement, dated as of June 16, 2009, by and among Robin Hood Holdings
Limited, Watson Pharmaceuticals, Inc., certain shareholders of Robin Hood Holdings Limited,
and Anthony Selwyn Tabatznik, solely in his capacity as the Shareholders Representative. |
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99.1
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Press Release issued by Watson Pharmaceuticals, Inc. on June 17, 2009. |