From LGND's SEC filing, here's the history of the merger:
THE MERGER
BACKGROUND OF THE MERGER
Seragen is a biotechnology company engaged in the discovery, research and
development of fusion protein products for human therapeutic applications. Since
1985, Seragen has focused its efforts and resources on research and development
of its fusion protein technology. Seragen's Fusion Proteins were developed using
proprietary technology and have potential applications in a wide range of human
diseases.
To date, Seragen has not generated any revenues from the sale of fusion
protein products, and Seragen does not expect to receive any such revenues in
1998. In order to finance its development efforts, Seragen completed an initial
public offering of Seragen Common Stock in April 1992, a second public offering
of Seragen Common Stock in March 1993, and thereafter a series of private
placement financings.
Seragen's current cash position may not be sufficient to meet its
financial obligations and allow it to continue its operations except by virtue
of the forbearance on the part of BU and Marathon with respect to the collection
of amounts due to them from Seragen under the Service Agreement. In addition,
Seragen's ability to commercialize DAB(389)IL-2 on an economically viable basis
is unlikely as a result of Seragen's obligations to third parties. In light of
these business considerations, the Seragen Board has been for some time seeking
ways to improve stockholder value, to sustain Seragen's ongoing business
operations, and to preserve its intellectual property assets.
In November 1996, the Seragen Board hired Mr. Prior, Mr. Crane and Ms.
Chen, a team which specializes in the management of financially-troubled
biotechnology companies, to explore alternatives for maximizing value for
Seragen's stockholders. At the time Mr. Prior, Mr. Crane and Ms. Chen were
hired, Seragen had approximately $3.5 million in cash on hand, with a payable
due to Ajinomoto on March 31, 1997, in the amount of $4.3 million. In addition,
Seragen's operations at November 1996 were proceeding at a level that the New
Management Team calculated would result in a net cash burn rate for the twelve
months beginning November 1996 of approximately $20.0 million not including
amounts owed by Seragen under its license agreement with Ajinimoto. The Seragen
Board directed the New Management Team to explore all alternatives for
maximizing shareholder value, including a restructuring of the company and its
financial obligations or a possible sale or merger of the company.
Upon the recommendation of the New Management Team, in February 1997, the
Seragen Board authorized the sale of Seragen's operating division to BU pursuant
to the Service Agreement and an Asset Purchase Agreement dated as of February
14, 1997 by and between Seragen and BU, as a means to reduce Seragen's cash
requirements with minimal disruption to Seragen's ongoing operations. The sale
of Seragen's operating division was completed on December 31, 1997. See
"Seragen--Seragen's Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Seragen--Certain Transactions."
Beginning in early 1997, the New Management Team pursued strategic
alternatives for Seragen, and members of the New Management Team held meetings,
both in the United States and abroad, with various investment banks and
biotechnology and pharmaceutical companies to consider the feasibility of such
alternatives. In April 1997, Seragen retained Lehman Brothers as its financial
adviser for the purpose of providing additional assistance in the
identification, analysis, structuring, negotiation and effectuation of strategic
alternatives that might be available to Seragen.
The Seragen Board and the New Management Team undertook efforts to
identify new sources of financing for Seragen. On the recommendation of Lehman
Brothers, Seragen in July 1997 engaged Shoreline Pacific Institutional Finance
("Shoreline Pacific") to assist it in securing additional equity or debt
financing and identifying other strategic alternatives for Seragen. Ultimately,
the New Management Team and the Seragen Board concluded that the availability of
additional financing to Seragen was doubtful, and in any event not possible
without unacceptable dilution to Seragen's existing stockholders.
The Seragen Board and the New Management Team explored opportunities for
additional strategic partnerships that would support the development and
commercialization of Seragen's proprietary technology. As
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part of these efforts, on July 31, 1997, Seragen entered into a licensing
arrangement with USSC with respect to development and testing of Seragen's
DAB(389)EGF molecule for restenosis in connection with angioplasty procedures
the ("USSC License Agreement"). See "--Effects of the Merger on the Interests of
Certain Persons--Interests of United States Surgical Corporation,"
"Seragen--Seragen's Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Seragen--Certain Transactions." The New
Management Team also had discussions with a number of other companies regarding
corporate collaboration opportunities. None of these discussions, however,
proved productive.
The New Management Team undertook efforts to renegotiate certain of
Seragen's key contractual arrangements. These efforts resulted in the execution
of an amendment, dated April 7, 1997 (the "April 7 Amendment"), to Seragen's
existing contractual arrangement with Lilly, an amendment, dated June 1, 1997,
to the terms of Seragen's existing license from Ajinomoto and amendments dated
August 6, 1997 and November 18, 1997 to the terms of Seragen's existing license
agreements with Harvard College and Boston Medical Center (formerly University
Hospital), respectively. See "Seragen--Seragen's Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Within a short period after the signing of the April 7 Amendment, Lilly
raised with Seragen the possibility of Lilly's assigning or subcontracting
certain of its rights and obligations under its agreements with Seragen to
Ligand as part of a larger collaborative arrangement that Lilly was negotiating
with Ligand. Seragen's management expressed misgivings regarding such an
assignment or subcontracting. Discussions between Lilly and Seragen regarding
the proposed assignment or subcontracting of Lilly's rights and obligations to
Ligand continued for some time.
In late June 1997, Lilly suggested to Seragen the possibility of a
three-party transaction, of unspecified terms, among Lilly, Ligand and Seragen.
For purposes of discussing such a transaction, Lilly invited Seragen management
to visit Lilly's offices in Indianapolis, Indiana on July 2, 1997.
Representatives of Ligand also were present at Lilly's offices. The Seragen
representatives made a presentation to the Ligand representatives regarding
Seragen's technologies, products and clinical trial status.
In August 1997, Ligand informed Seragen that it was interested in
learning more about Seragen's technology. Accordingly, on August 18, 1997,
Ligand representatives visited Seragen's facilities in Hopkinton, Massachusetts,
and conducted interviews of Seragen management, technical and clinical personnel
and reviewed clinical reports with respect to Seragen's ongoing clinical trials
of its products.
On August 30, 1997, Messrs. Prior and Crane met with Mr. Robinson and
Paul V. Maier, Senior Vice President and Chief Financial Officer of Ligand ("Mr.
Maier"), in Dallas, Texas. The meeting involved general discussions of the value
of Seragen in the context of an acquisition. The Seragen representatives
provided the Ligand representatives with information regarding Seragen's capital
and financial structure.
On October 15 and 16, 1997, the New Management Team met with Mr. Robinson
and Mr. Maier in San Diego, California. At the meeting, Seragen's
representatives provided Ligand with detailed financial information regarding
Seragen and Marathon. There were further discussions regarding the appropriate
valuation of Seragen in connection with a possible acquisition by Ligand.
On November 25, 1997, Lilly and Ligand entered into agreements providing
for a collaborative arrangement between the two companies.
In December 1997, representatives of Seragen met with representatives of
Ligand to discuss the possible acquisition of Seragen by Ligand in more detail.
In meetings held on December 4 and 19, 1997, in New York City, the parties
discussed valuation of Seragen and Marathon for purposes of an acquisition by
Ligand. The December 19 meeting was terminated without a consensus being
reached.
On December 31, 1997, Mr. Prior and Mr. Robinson met in San Diego,
California, to attempt to reach agreement as to price and terms for the
acquisition by Ligand of Seragen. After discussion, Mr. Prior and
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Mr. Robinson reached tentative agreement on certain price and terms subject to
input from their respective management teams.
On January 21, 1998, representatives of Seragen and Ligand met in San
Francisco, California. Ligand presented a proposal for its acquisition of
Seragen and Marathon in exchange for shares of Ligand stock to be valued at a
minimum price, which price was in excess of the then-current market price for
Ligand Common Stock. The Seragen representatives rejected the proposal.
From February 18 through 20, 1998, Seragen and Ligand representatives met
in San Diego, California. Tentative agreement was reached between the Seragen
and Ligand representatives for an acquisition by Ligand of Seragen and Marathon
for aggregate consideration in the amount of $75.0 million. During and following
this meeting, Messrs. Prior and Crane began, in order to permit a portion of the
merger consideration offered by Ligand to be paid to holders of Seragen Common
Stock, to seek agreements from certain of Seragen's preferred stockholders,
creditors and obligees to accept amounts in connection with a possible merger of
Seragen with Ligand that would be less than the full amounts to which such
persons would be entitled to receive from Seragen pursuant to their existing
contractual and other rights.
During the period January through March 1998, the New Management Team
continued to pursue other financing and strategic alternatives. In this regard,
members of the New Management Team held a number of meetings with various
investment banks and biotechnology and pharmaceutical companies in an effort to
develop and explore possible alternatives.
On March 26, 1998, the Seragen Board held a meeting by conference
telephone. At the meeting, Mr. Prior and Mr. Crane updated the board on the
progress of negotiations with Ligand.
Representatives of Seragen and Ligand conducted further negotiations
regarding the proposed acquisition transaction throughout March and April 1998.
On March 18, 1998, legal counsel to Ligand circulated an initial draft of a
definitive merger agreement. On April 2 and 3, 1998, Messrs. Robinson, Maier and
Respess and Ligand's outside legal counsel met with representatives of Seragen
and Seragen's legal counsel in Hopkinton, Massachusetts to review and negotiate
the draft merger agreement. Following these meetings, further due diligence
discussions and negotiations with respect to the terms of the Merger Agreement
and related documentation took place by telephone between representatives of
Ligand and Seragen. From April 18 through 23, 1998, representatives of Ligand
and Seragen and their respective legal counsel met in San Diego, California to
conduct further negotiations with respect to the terms of the Merger Agreement
and related documentation.
The Seragen Board discussed the Merger Agreement, and the transactions
contemplated thereby, at a special meeting of the Seragen Board held in Boston,
Massachusetts, on April 26, 1998. The New Management Team updated the Seragen
Board on its efforts to identify new sources of financing and strategic
alternatives for Seragen. The New Management Team gave a presentation to the
Seragen Board which reviewed materials previously provided to the Seragen Board
regarding the terms of the proposed transaction with Ligand as they existed at
the time of the meeting. Mr. Robinson and other representatives of Ligand
provided the Seragen Board with a presentation regarding Ligand's business,
financial condition and technology. Representatives of Lehman Brothers provided
information regarding the fairness, from a financial point of view, to the
holders of Seragen Common Stock of the proposed transaction with Ligand. The
Seragen Board discussed allocation of the merger consideration offered by Ligand
among Seragen's common stockholders, preferred stockholders, creditors and
obligees. The Seragen Board authorized, by a unanimous vote, the New Management
Team to proceed with the negotiation of the Merger Agreement and related
documents and with negotiations with Seragen's preferred stockholders, creditors
and obligees with a goal of obtaining the agreement of such persons to accept
payments in connection with the consummation of the proposed Merger that would
be less than the full amounts that such persons would otherwise be entitled to
receive from Seragen. See "Description of the Merger--Recommendation of the
Seragen Board; Factors Considered."
On April 29, 1998, Messrs. Robinson, Maier and Respess gave a
presentation to the Ligand Board at a regularly scheduled meeting which reviewed
materials previously delivered to the members of the Ligand Board and discussed
the proposed merger with Seragen and related transactions. Following a
discussion, the Ligand Board
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authorized, by a unanimous vote, Ligand management to proceed with the execution
and delivery of the Merger Agreement and related documents, subject to the
satisfactory resolution of outstanding issues with Seragen, Lilly and certain
stockholders of Seragen.
On May 1, 1998, the Seragen Board held a special meeting by conference
telephone to discuss the Merger Agreement and the transactions contemplated
thereby. Seragen management updated the Seragen Board on further developments in
the negotiations with Ligand, remaining issues with Ligand, and the proposed
agreement among Seragen's preferred stockholders, creditors and obligees
regarding allocation of the proceeds to be paid by Ligand in connection with the
proposed transaction. Representatives of Lehman Brothers participating in the
call provided an opinion that the consideration to be received by holders of
Seragen Common Stock in connection with the proposed Ligand transaction was
fair, from a financial point of view, to such stockholders. See "--Description
of the Merger--Opinion of Lehman Brothers Inc." Following discussion, the
Seragen Board authorized, by a unanimous vote, Seragen management to proceed
with the execution and delivery of the Merger Agreement and related documents,
subject to the resolution of outstanding issues with Ligand in a manner
satisfactory to Seragen management. See "--Description of the
Merger--Recommendation of the Seragen Board; Factors Considered."
During the 10 days following the May 1, 1998 meeting of the Seragen
Board, representatives of Ligand and Seragen continued to negotiate with respect
to issues remaining open between the parties. In addition, Lilly, Ligand and
Seragen pursued negotiations relating to the restructuring of Seragen's and
Ligand's existing arrangements with Lilly to take account of the proposed
Merger.
On May 11, 1998, upon the resolution of various open issues, Seragen and
Ligand entered into the Merger Agreement and other documents related to the
Merger Agreement were executed and delivered by the parties thereto, and Ligand
and Seragen made a public announcement with respect to the execution and
delivery of the Merger Agreement and related transactions. |
