MEAD JOHNSON NUTRITION COMPANY (NYSE:MJN) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.Entry into a Material Definitive Agreement.
On February10, 2017, Mead Johnson Nutrition Company, a Delaware
corporation (“Mead Johnson” or the “Company”), Reckitt
Benckiser Groupplc, a company incorporated in England and Wales
(“Reckitt Benckiser” or “Parent”), and Marigold Merger
Sub,Inc., a Delaware corporation and a wholly owned indirect
subsidiary of Parent (“Merger Sub”), entered into an Agreement
and Plan of Merger (the “Merger Agreement”), to which Parent
will indirectly acquire the Company by means of a merger of
Merger Sub with and into the Company on the terms and subject to
the conditions set forth in the Merger Agreement (the
“Merger”).
At the effective time of the Merger (the “Effective Time”), on
the terms and subject to the conditions set forth in the Merger
Agreement, each share of common stock, par value $0.01 per share,
of the Company (the “Common Stock”) outstanding immediately
prior to the Effective Time (other than (i)each share of Common
Stock held by the Company as treasury stock (other than shares
held for the account of clients, customers or other persons),
(ii)each share of Common Stock held by Parent or by any
subsidiary of either the Company or Parent and (iii)each share of
Common Stock held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded
appraisal for such shares in accordance with Delaware law) will
be converted into the right to receive $90.00 in cash, without
interest (the “Merger Consideration”).
Outstanding Company equity awards immediately prior to the
consummation of the Merger will generally be subject to the
following treatment:
Each stock option that is outstanding immediately prior to
the Effective Time will accelerate, vest and be cancelled as
of the Effective Time in exchange for a lump-sum cash payment
equal to the product of (A)the number of shares of Common
Stock subject to the stock option and (B)the excess, if any,
of the Merger Consideration over the exercise price per share
of such stock option. Each stock option with an exercise
price equal to or greater than the Merger Consideration will
be cancelled immediately prior to the Effective Time for no
consideration;
Each RSU that is outstanding immediately prior to the
Effective Time, other than RSUs granted after the date of the
Merger Agreement, will vest and be cancelled as of the
Effective Time in exchange for a lump-sum cash payment equal
to the product of (A)the number of shares of Common Stock
subject to such RSU immediately prior to the Effective Time
and (B)the Merger Consideration; and
Each PSU that is outstanding immediately prior to the
Effective Time and for which the performance period is
complete will vest and be cancelled as of the Effective Time
in exchange for a lump-sum cash payment equal to the product
of (A)the number of shares of Company Common Stock subject to
such PSU based on actual performance for the completed
performance period and (B)the Merger Consideration. Each PSU,
other than PSUs granted after the date of the Merger
Agreement, that is outstanding immediately prior to the
Effective Time and for which the performance period is
incomplete, will vest and be cancelled as of the Effective
Time, with the holder entitled to receive a lump-sum cash
payment equal to the product of (A)the number of shares of
Company Common Stock subject to such PSU based on target
performance for the incomplete performance period and (B)the
Merger Consideration.
The Company may grant PSUs and RSUs after the date of the
Merger Agreement but prior to the Effective Time in
connection with its annual practice of granting equity awards
and as otherwise permitted by the Merger Agreement. Each such
PSU and RSU that is outstanding immediately prior to the
Effective Time will, as of the Effective Time, convert into a
RSU award tied to shares of Parent common stock (assuming
target performance in the case of PSUs) that settles in cash
upon satisfaction of the applicable vesting conditions (such
converted awards, the “Converted Parent RSUs”). Each
Converted Parent RSU will remain subject to the same terms
and conditions as the PSU or RSU to which it relates
(including vesting) except that no Converted Parent RSUs will
be subject to performance-based vesting conditions.
The board of directors of the Company (the “Board”) unanimously
adopted and approved the Merger Agreement and the transactions
contemplated thereby, including the Merger and, subject to the
terms and conditions of the Merger Agreement, resolved to
recommend adoption of the Merger Agreement by its stockholders.
Under the Merger Agreement, consummation of the Merger is subject
to the satisfaction or waiver of certain customary closing
conditions, including, among others: (i)the affirmative vote (the
“Company Stockholder Approval”) of the holders of a majority of
the Company’s outstanding shares of Common Stock; (ii)the
affirmative vote (the “Parent Shareholder Approval”) of a
simple majority of Parent’s shareholders at the Parent
Shareholder Meeting (as defined in the Merger Agreement);
(iii)the expiration or termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (“HSR”) and the receipt of certain other non-United
States regulatory approvals required to consummate the Merger;
(iv)no provision of any applicable law restraining, enjoining,
prohibiting or otherwise making consummation of the Merger
illegal; and (v)in the case of Parent’s obligations to
consummate the Merger, the absence of a Company Material Adverse
Effect (as defined in the Merger Agreement). Moreover, each
party’s obligation to consummate the Merger is subject to
certain other conditions, including without limitation: (x)the
accuracy of the other party’s representations and warranties
contained in the Merger Agreement (subject to materiality
qualifiers) and (y)the other party’s compliance with its
covenants and agreements contained in the Merger Agreement in all
material respects. Parent and Merger Sub’s respective
obligations to consummate the Merger are not subject to any
financing condition or other contingency.
The Company has made customary representations and warranties and
covenants in the Merger Agreement, including covenants regarding
the conduct of the business of the Company prior to the
consummation of the Merger. Under the terms of the Merger
Agreement, the Company is permitted to continue paying its
regular quarterly dividend of up to $0.4125 per share of Company
Common Stock per quarter with record and payment dates consistent
with the quarterly record and payment dates in 2016.
The Merger Agreement contains a “No-Shop” provision, to which
the Company is required to, must cause its affiliates, investment
bankers, attorneys, accountants and other advisors and
representatives engaged in connection with the Merger and the
other transactions contemplated by the Merger Agreement, and must
use its reasonable best efforts to cause certain other
representatives to (i)immediately cease all existing discussions
or negotiations, if any, with any third party with respect to any
acquisition proposal and (ii)not, among other customary
restrictions, solicit alternative acquisition proposals, engage
in discussions with any third party related thereto, provide
access to the Company’s books and records or fail to recommend
the Merger to its stockholders. Notwithstanding the foregoing, if
prior to receipt of the Company Stockholder Approval, the Company
receives a written acquisition proposal that did not result from
a breach of the Merger Agreement, under certain circumstances,
the Company and its representatives may engage in negotiations
and discussions with the third party making such acquisition
proposal and may provide such third party (after execution of a
confidentiality agreement meeting certain requirements) with
non-public information relating to the Company. The Company is
permitted to terminate the Agreement to accept a Superior
Proposal if the Board determines, after considering advice from
its financial advisor and outside legal counsel, that a failure
to take such action would reasonably be expected to be
inconsistent with the Board’s fiduciary duties under Delaware
law; provided, however, that the Company is not permitted to take
any such action without first giving Parent certain customary
rights to match such alternative proposal. “Superior Proposal”
is generally defined as an unsolicited acquisition proposal for a
change of control transaction that did not result from a breach
of the “No-Shop” restrictions, and that the Board determines,
after considering advice from its financial advisor and outside
legal counsel, taking into account all
circumstances deemed reasonably relevant by the Board, is more
favorable to the Company’s stockholders from a financial point
of view than the Merger.
The Merger Agreement contains provisions giving each of Parent or
the Company the right to terminate the Merger Agreement under
certain circumstances including, among others, if the
transactions contemplated by the Merger Agreement are not
consummated on or before September10, 2017 (as may be extended to
December10, 2017 in the event the only conditions not to have
been satisfied or capable of being satisfied as of September10,
2017 relate to competition laws) (the “End Date”), the Parent
Shareholder Approval has not been obtained or the Company
Stockholder Approval has not been obtained. In addition, the
Company can terminate the Merger Agreement if, among other
things, the board of directors of Parent changes its
recommendation that the Merger be approved by the shareholders of
Parent (the “Parent Board Recommendation”) or, subject to
Parent’s rights to match such Superior Proposal, in order for
the Company to accept a Superior Proposal. Parent also has the
right to terminate the Merger Agreement if, among other things,
the Board changes its recommendation that the Merger Agreement be
adopted by the stockholders of the Company (the “Company Board
Recommendation”), if the Board fails to publicly affirm the
Company Board Recommendation in certain circumstances or if
certain named persons have willfully and materially breached the
“No-Shop” restrictions or caused the Company, its subsidiaries
or their respective representatives to materially breach the
“No-Shop” restrictions, subject to a cure right for the
Company.
The Company must pay a termination fee equal to $480,000,000 if
(i)Parent terminates the Merger Agreement because (A)the Board
changes the Company Board Recommendation or fails to affirm the
Company Board Recommendation in certain circumstances or
(B)certain of the Company’s representatives have willfully and
materially breached the “No-Shop” restrictions or caused the
Company, its subsidiaries or their respective other
representatives to materially breach the “No-Shop”
restrictions, (ii)the Company terminates the Merger Agreement to
enter into a Superior Proposal or (iii)the Company or Parent
terminates the Merger Agreement because (x)the Company
Stockholder Approval is not obtained or (y)the Merger is not
consummated on or prior to the End Date other than as a result of
a failure to obtain required regulatory approvals by such date
and (A)prior to such termination, a bona fide acquisition
proposal has been publicly disclosed and not withdrawn and
(B)within 12months of such termination, the Company closes a
change of control transaction or enters into a definitive
agreement with respect to a change of control transaction. If the
Merger Agreement is terminated by the Company or Parent because
the Company Stockholder Approval was not obtained, the Company
must pay an amount equal to all out-of-pocket costs, fees and
expenses (including legal fees and expenses) incurred by Parent
or any of its affiliates in connection with the Merger Agreement
and the transactions contemplated thereby subject to a cap of
$20,000,000 (which reimbursement will reduce on a dollar for
dollar basis any termination fee subsequently payable by the
Company). Parent must pay a termination fee equal to $480,000,000
if (i)the Company terminates the Merger Agreement because the
board of directors of Parent changes the Parent Board
Recommendation or (ii)the Company or Parent terminates the Merger
Agreement because the Parent Shareholder Approval is not
obtained.
The foregoing description of the Merger Agreement and the
transactions and agreements contemplated thereby does not purport
to be complete and is subject to, and qualified in its entirety
by, reference to the Merger Agreement, a copy of which is
attached hereto as Exhibit2.1, and the terms of which are
incorporated herein by reference.
The Merger Agreement has been included to provide investors with
information regarding its terms. It is not intended to provide
any other factual information about the Company, Merger Sub,
Parent or any of their respective subsidiaries or affiliates. The
representations, warranties and covenants contained in the Merger
Agreement were made by the parties thereto only for purposes of
that agreement and as of specific dates; were made solely for the
benefit of the parties to the Merger
Agreement; may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential
disclosures exchanged between the parties in connection with the
execution of the Merger Agreement (such disclosures include
information that has been included in the Company’s public
disclosures, as well as additional non-public information); may
have been made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of
establishing these matters as facts; and may be subject to
standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Investors are not
third-party beneficiaries under the Merger Agreement and should
not rely on the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of
facts or condition of the parties thereto or any of their
respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of representations and warranties
may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in the
Company’s public disclosures.
Item5.03.Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year.
On February9, 2017, the Board amended the Company’s Amended and
Restated Bylaws (the “Bylaws”) by adding a new Section10 to
ArticleVII therein (the “Amendment”), which provides that to
the fullest extent permitted by law, unless the Company consents
in writing to the selection of an alternative forum, the Court of
Chancery of the State of Delaware (or, if the Court of Chancery
does not have jurisdiction, another state or federal court
located in the State of Delaware) will be the sole and exclusive
forum for (i)any derivative action or proceeding brought in the
name or right of the Company or on its behalf, (ii)any action
asserting a claim for breach of a fiduciary duty owed by any
director, officer, employee, stockholder or other agent of the
Company to the Company or the Company’s stakeholders, (iii)any
action arising or asserting a claim arising to any provision of
the Delaware General Corporation Law (the “DGCL”) or any
provision of the certificate of incorporation of the Company or
the Bylaws or as to which the DGCL confers jurisdiction on the
Court of Chancery of the State of Delaware or (iv)any action
asserting a claim governed by the internal affairs doctrine,
including, without limitation, any action to interpret, apply,
enforce or determine the validity of the certificate of
incorporation of the Company or the Bylaws. The new provision
further provides that if any action the subject matter of which
is within the scope of the Bylaws is filed in a court other than
as specified above in the name of a stockholder, such stockholder
shall have been deemed to have consented to (a)the personal
jurisdiction of the Court of Chancery of the State of Delaware,
another court in the State of Delaware or the federal district
court in the District of Delaware, as appropriate, in connection
with any action brought in any such court to enforce the Bylaws
and (b)having service of process made upon such stockholder in
any such action by service upon such stockholder’s counsel in
the action as agent for such stockholder.
The Bylaws, as amended, are filed as Exhibit3.1 to this report
and are incorporated by reference herein. The foregoing summary
of the Amendment is qualified in its entirety by reference to the
full text of the Bylaws, as amended.
Item8.01.Other Events.
On February10, 2017, the Company issued a letter to its employees
announcing that it has entered into the Merger Agreement and
providing certain information regarding the Merger and a
factsheet providing certain information about the Company. A copy
of the letter and a copy of the factsheet are included as
Exhibit99.1 and Exhibit99.4 to this report, respectively, and are
incorporated herein by reference.
Also, on February10, 2017, the Company distributed a letter to
its employees from the CEO of Reckitt Benckiser and an
infographic, a factsheet and an employee FAQ from Reckitt
Benckiser, regarding the Merger and operations of Reckitt
Benckiser and the Company. Copies of these communications are
attached hereto as Exhibits99.2, 99.3, 99.5 and 99.6 to this
report and are incorporated herein by reference.
Item9.01.Financial Statements and Exhibits.
(d)
Exhibits
Exhibit No.
Description
2.1
Agreement and Plan of Merger, dated as of February10,
2017, among Mead Johnson Nutrition Company, Reckitt
Benckiser Groupplc and Marigold Merger Sub,Inc.
3.1
Amendment No.1 to the Amended and Restated Bylaws of the
Company, adopted on February9, 2017
99.1
Letter to Employees issued February10, 2017
99.2
Letter from Reckitt Benckiser CEO issued February10, 2017
99.3
Infographic Release from Reckitt Benckiser issued
February10, 2017
99.4
Company Factsheet issued February10, 2017
99.5
Reckitt Benckiser Factsheet issued February10, 2017
99.6
Employee FAQ from Reckitt Benckiser issued February10,
2017
Cautionary Statement Regarding Forward-Looking
Statements
This report contains certain statements with respect to a
transaction involving Mead Johnson and Reckitt Benckiser Groupplc
that are forward-looking as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
may be identified by the fact they use words such as “should,”
“expect,” “anticipate,” “estimate,” “target,” “may,”
“project,” “guidance,” “intend,” “plan,” “believe” and
other words and terms of similar meaning and expression.
Forward-looking statements can also be identified by the fact
that they do not relate strictly to historical or current facts.
Such forward-looking statements are based on current expectations
that involve inherent risks, uncertainties and assumptions that
may cause actual results to differ materially from expectations
as of the date of this report. These risks include, but are not
limited to: (1)the possibility that a transaction will not be
consummated or delays in consummating the transaction; (2)adverse
effects on the market price of Mead Johnson’s common stock and
on Mead Johnson’s operating results because of a failure to
complete the transaction; (3)negative effects relating to the
announcement of the transaction or any further announcements
relating to the transaction or the entrance into or consummation
of the transaction on the market price of Mead Johnson’s stock;
(4)unanticipated difficulties or expenditures relating to the
transaction; (5)legal proceedings instituted against Mead Johnson
and others in connection with the transaction; (6)disruptions of
current plans and operations caused by the announcement and
pendency of the transaction; (7)potential difficulties in
employee retention as a result of the announcement and pendency
of the transaction; (8)the response of customers, distributors,
suppliers and competitors to the announcement of the transaction;
(9)the ability to sustain brand strength, particularly the Enfa
family of brands; (10)the effect on the company’s reputation of
real or perceived quality issues; (11)the effect of regulatory
restrictions related to the company’s products; (12)the adverse
effect of commodity costs; (13)increased competition from
branded, private label, store and economy-branded products;
(14)the effect of an economic downturn on consumers’ purchasing
behavior and customers’ ability to pay for product;
(15)inventory reductions by customers; (16)the adverse effect of
changes in foreign currency exchange rates; (17)the effect of
changes in economic, political and social conditions in the
markets where we operate; (18)changing consumer preferences;
(19)the possibility of changes in the Women, Infants and Children
(WIC) program, or participation in WIC; (20)legislative,
regulatory or judicial action that may adversely affect the
company’s ability to advertise its products, maintain product
margins, or negatively impact the
company’s reputation or result in fines or penalties that
decrease earnings; and (21)the ability to develop and market new,
innovative products.
Where, in any forward-looking statement, we or our management
expresses an expectation or belief as to future results or
actions, there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished.
Our actual results may differ materially from our expectations,
plans or projections. Forward-looking statements are only
predictions and estimates, which are inherently subject to risks,
trends and uncertainties, many of which are beyond our ability to
control or predict with accuracy and some of which might not even
anticipate. There can be no assurance that we will achieve our
expectations and we do not assume responsibility for the accuracy
and completeness of the forward-looking statements. Future events
and actual results, financial and otherwise, may differ
materially from the results discussed in the forward-looking
statements as a result of many factors, including the risk
factors described in the risk factor section of our reports filed
with the Securities and Exchange Commission (“SEC”). Other
unknown or unpredictable factors could also have material adverse
effects on future results, performance or achievements of Mead
Johnson.
All forward-looking statements included in this report are based
upon information available to Mead Johnson as of the date of the
report, and we assume no obligation to update or revise any such
forward-looking statements except as required by law.
Additional Information and Where to Find It
This report may be deemed to be solicitation material in respect
of the transaction. In connection with the transaction, Mead
Johnson will filea proxy statement and other materials with the
SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY
STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MEAD
JOHNSON AND THE TRANSACTION.
Mead Johnson’s investors and security holders will be able to
obtain a free copy of these documents filed with the SEC at the
SEC’s website at http://www.sec.gov. In addition, investors will
be able to obtain, without charge, a copy of the proxy statement
and other relevant documents (when available) at Mead Johnson’s
Website at www.meadjohnson.com or by contacting Mead Johnson:
Investors: Kathy MacDonald, 847-832-2182
kathy.macdonald@mjn.com
or
Media: Christopher Perille, 847-832-2178
chris.perille@mjn.com
Participants in the Solicitation
Mead Johnson and its officers and directors may be deemed to be
participants in the solicitation of proxies from Mead Johnson
stockholders with respect to the transaction. Information about
Mead Johnson officers and directors and their ownership of Mead
Johnson common shares is set forth in the proxy statement for
Mead Johnson’s 2016 Annual Meeting of Stockholders, which was
filed with the SEC on April4, 2016, and in other documents filed
with the SEC by Mead Johnson and its officers and directors.
Investors and security holders may obtain more detailed
information regarding the direct and indirect interests of the
participants in the solicitation of proxies in connection with
the transaction by reading the preliminary and definitive proxy
statements regarding the transaction, which will be filed by Mead
Johnson with the SEC.
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.
MEAD JOHNSON NUTRITION COMPANY
Date: February13, 2017
By:
/s/PATRICK M. SHELLER Patrick M. Sheller Senior Vice
President, General Counsel and Secretary
EXHIBIT INDEX
Exhibit No.
Description of Exhibit
2.1
Agreement and Plan of Merger, dated as of February10,
2017, among Mead Johnson Nutrition Company, Reckitt
Benckiser Groupplc and Marigold Merger Sub,Inc.
3.1
Amendment No.1 to the Amended and Restated Bylaws of the
Company, adopted on February9, 2017
99.1
Letter to Employees issued February10, 2017
99.2
Letter from Reckitt Benckiser CEO issued February10, 2017
99.3
Infographic Release from Reckitt Benckiser issued
February10, 2017
99.4
Company Factsheet issued February10, 2017
99.5
Reckitt Benckiser Factsheet issued February10, 2017
99.6
Employee FAQ from Reckitt Benckiser issued February10,
2017
QuickLinks
Item 1.01. Entry into a Material Definitive Agreement. Item 5.03.
Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal Year. Item 8.01. Other Events. Item 9.01. Financial
Statements and Exhibits.
About MEAD JOHNSON NUTRITION COMPANY (NYSE:MJN)
Mead Johnson Nutrition Company (Mead Johnson) is a pediatric nutrition company. The Company manufactures, distributes and sells infant formulas, children’s nutrition and other nutritional products. The Company operates through three segments: Asia, North America/Europe and Latin America. Its product portfolio includes routine and specialty infant formulas, children’s milks and milk modifiers, dietary supplements for pregnant and breastfeeding mothers, pediatric vitamins, and products for pediatric metabolic disorders. The Company’s Enfa family of brands, including Enfamil infant formula, is a brand franchise in pediatric nutrition. Its product portfolio addresses a range of nutritional needs for infants, children, and expectant and nursing mothers. The Company markets its portfolio of approximately 70 products to mothers, healthcare professionals and retailers in over 50 countries in Asia, North America, Latin America and Europe. MEAD JOHNSON NUTRITION COMPANY (NYSE:MJN) Recent Trading Information
MEAD JOHNSON NUTRITION COMPANY (NYSE:MJN) closed its last trading session 00.00 at 87.72 with 50,308,024 shares trading hands.
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