PANDION THERAPEUTICS, INC. Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On
Pursuant to the Merger Agreement, upon the terms and subject to the conditions
thereof, Merger Sub will commence a tender offer (the "Offer") to acquire all of
the outstanding shares of Pandion common stock (the "Shares") at an offer price
of
The obligation of Merger Sub to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in Annex I to the Merger Agreement, including (i) that there shall have been validly tendered and not validly withdrawn that number of Shares that, when added to any Shares then owned by Merck and its controlled affiliates, represent at least one Share more than half of the sum of (A) all Shares then outstanding as of the expiration of the Offer, and (B) all Shares that Pandion may be required to issue upon the vesting (including vesting solely as a result of the consummation of the Offer), conversion, settlement or exercise of all then outstanding warrants, options, benefit plans, obligations or securities convertible or exchangeable into Shares, or other rights to acquire or be issued Shares, regardless of the conversion or exercise price or other terms and conditions thereof (the "Minimum Condition"); (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and receipt of clearance, approval or consent under any other applicable antitrust law; and (iii) those other conditions set forth in Annex I to the Merger Agreement.
Following the consummation of the Offer and upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Pandion, with Pandion surviving as a wholly owned subsidiary of Merck (the "Merger"). In the Merger, each Share issued and outstanding immediately prior to the effective time (the "Effective Time") of the Merger (other than certain excluded Shares as described in the Merger Agreement) will automatically be converted into the right to receive the Offer Price.
In addition, immediately prior to the Effective Time, each unexpired and unexercised option to purchase Shares under any Pandion stock plan (each, a "Company Stock Option"), shall, to the extent unvested, become fully vested and exercisable immediately prior to, and contingent upon, the Effective Time. At the Effective Time, each Company Stock Option shall be cancelled and converted into the right to receive, a payment in cash equal to the product of (i) the total number of Shares subject to such Company Stock Option immediately prior to such cancellation and (ii) the excess, if any, of the Offer Price over the exercise price per Share subject to such Company Stock Option immediately prior to such cancellation. No holder of a Company Stock Option that, as of immediately prior to such cancellation, has an exercise price per Share that is equal to or greater than the Offer Price shall be entitled to any payment with respect to such cancelled Company Stock Option.
The Merger Agreement includes representations, warranties and covenants of the parties customary for a transaction of this nature. Among other things, until the earlier of the termination of the Merger Agreement or the Effective Time, Pandion has agreed to operate its business in the ordinary and usual course consistent with past practice and has agreed to certain other operating covenants, as set forth fully in the Merger Agreement. The Merger Agreement also prohibits Pandion's solicitation of proposals relating to alternative transactions and restricts Pandion's ability to furnish information to, or participate in any discussions or negotiations with, any third party with respect to any such transaction, subject to certain limited exceptions.
Either Pandion or Merck may terminate the Merger Agreement in certain
circumstances, including if (i) the Offer is not completed by
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consummation of the Offer or the Merger illegal, (iii) the Offer has expired without the acceptance of the Shares for payment, in a circumstance in which all of the conditions to the Offer have been satisfied or waived (other than the Minimum Condition), following extension of the Offer pursuant to the Merger Agreement or (iv) the other party breaches its representations, warranties or covenants in the Merger Agreement in a way that would cause any condition of the Offer not to be satisfied, subject to the right of the breaching party to cure the breach. In addition, Pandion may terminate the Merger Agreement, subject to compliance with specified process and notice requirements, in order to enter into an agreement with a third party who has made a "Superior Proposal" (as defined in the Merger Agreement), and Merck may terminate the Merger Agreement if Pandion's board of directors has changed its recommendation in favor of the Offer and the Merger, failed to include its recommendation in the Schedule 14D-9, failed to reaffirm its recommendation when requested by Merck or has taken certain other actions described in the Merger Agreement (each a "Company Adverse Recommendation Change"); or if Pandion has violated or breached in any material respect the non-solicitation provision of the Merger Agreement.
In the event of a termination of the Merger Agreement under certain specified
circumstances, including (i) termination by Pandion to enter into an agreement
providing for a Superior Proposal, (ii) termination by Merck following a Company
Adverse Recommendation Change, (iii) termination by Merck because Pandion has
violated or breached in any material respect the non-solicitation provision, or
(iv) termination because (A) after the date of the Merger Agreement an
"Acquisition Proposal" (as defined in the Merger Agreement) has either been made
to Pandion or been publicly made directly to Pandion's stockholders; (B)(1) the
Outside Date has occurred, (2) the Offer has expired without the acceptance of
the Shares for payment, or (3) Pandion has breached and not cured any
representation, warranty or covenant such that a condition to the Offer is not
capable of being satisfied; and (C) within twelve months following (B)(1), (2)
or (3), Pandion or any of its subsidiaries signs a definitive agreement for an
Acquisition Proposal or consummates an Acquisition Proposal, Pandion may be
required to pay Merck a termination fee equal to
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Concurrent with the entry into the Merger Agreement,
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Item 8.01 Other Events.
On
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit Number Description 2.1 Agreement and Plan of Merger, datedFebruary 24, 2021 , amongPandion Therapeutics, Inc. ,Merck Sharp & Dohme Corp. andPanama Merger Sub, Inc. * 99.1 Form of Tender and Support Agreement, amongMerck Sharp & Dohme Corp. ,Panama Merger Sub, Inc. and certain stockholders ofPandion Therapeutics, Inc. 99.2 Joint Press Release, datedFebruary 25, 2021 .
* Schedules to the Agreement and Plan of Merger have been omitted pursuant to
Item 601(b)(2) of Regulation S-K. The registrant will furnish copies of any
such schedules to the
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