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EXHIBIT 2.7
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UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of )
)
) File No. 951-0090
HOECHST AG,, )
a corporation. )
AGREEMENT TO HOLD SEPARATE
This Agreement to Hold Separate ("Hold Separate") is by and among
Hoechst AG ("Hoechst"), The Dow Chemical Company ("Dow"), Marion Merrell
Dow Inc., ("MMD"), and the Federal Trade Commission ("Commission").
WHEREAS, Hoechst, through its U.S. subsidiary, Dow and MMD have
entered into a Stock Purchase Agreement and an Agreement and Plan of
Merger, both dated May 3, 1995 (collectively "Agreements"), pursuant to
which Hoechst will acquire all of the voting securities of and merge with
MMD ("Merger"); and
WHEREAS, Hoechst, a corporation organized, existing, and doing
business under and by virtue of the laws of Germany, with its office and
principal place of business located at D-65926, Frankfurt am Main, Germany,
is engaged in, among other things, the research, development, manufacture
and sale of pharmaceutical products; and
WHEREAS, MMD, a corporation organized, existing, and doing
business under and by virtue of the laws of Delaware, with its office and
principal place of business at 9300 Ward Parkway, Kansas City, Missouri
64114, is engaged in the research, development, manufacture and sale of
pharmaceutical products; and
WHEREAS, Dow is a corporation organized, existing and doing
business under and by virtue of the laws of Delaware, with its office and
principal place of business at 2030 Dow Center, Midland, Michigan 48674;
and
WHEREAS, the Commission, an independent agency of the United
States Government, established under the Federal Trade Commission Act, 15
U.S.C. Sec. 41, et seq., is investigating the Merger to determine whether it
would violate any of the statutes enforced by the Commission; and
WHEREAS, Hoechst, Dow and MMD have submitted information to the
Commission and intend to cooperate fully with the Commission in its
investigation; and
WHEREAS, Hoechst, Dow and MMD desire to consummate the Merger as
contemplated by the Agreements; and
WHEREAS, the Commission has indicated that it requires time
beyond June 27, 1995, within which to complete its investigation regarding
the competitive effects of the Merger;
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NOW, THEREFORE, Hoechst, Dow and MMD and the Commission agree as
follows:
1. The Commission will cause the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 to be terminated no later
a.m. EST on June 27, 1995, and will take no action to inter
re with consummation of the Merger as contemplated by the Agreements (it
being understood that Hoechst may acquire Dow's shares in MMD as soon as
June 28, 1995).
2. Hoechst and MMD agree to cooperate with the Commission in
the completion of its investigation by responding promptly to the requests
for documents and information contained in the "Request for Additional
Information and Documentary Material" that the Commission issued to Dow
(then including MMD) and Hoechst on June 9, 1995 and by making their
employees available for investigational hearings before the Commission upon
reasonable notice. Dow agrees to cooperation with the Commission in the
completion of its investigation by responding promptly to specific requests
for documents and information and by making its employees available for
investigational hearings before the Commission upon reasonable notice.
3. If, within 30 days after Hoechst, Dow and MMD have
substantially complied with all Commission requests as provided for in
Paragraph 2, the Commission concludes that a merger of Hoechst and MMD will
tend substantially to lessen competition with respect to the research,
development, manufacture or sale of certain pharmaceutical products subject
to the Agreement Containing Consent Order, Hoechst agrees not to contest
that determination, PROVIDED THAT Hoechst and MMD shall have been afforded
an opportunity to meet with officials within the Commission, including the
Directors of the Bureau of Competition and the Bureau of Economics, and the
Chairman and Commissioners of the Commission.
4. In the event of such determination by the Commission,
Hoechst hereby consents and agrees to be bound by the terms of an Agreement
Containing Consent Order, in the form attached hereto as Exhibit 1, and not
to challenge the jurisdiction of the Commission to issue such Order.
5. During the time contemplated by Paragraph 3 of this
Agreement to Hold Separate, in order to preserve the divestability of the
MMD voting securities, Hoechst agrees that it will not sell, transfer,
encumber, or (to the extent within Hoechst's control) limit or otherwise
impair the marketability or viability of the MMD voting securities or sell,
transfer, encumber, or (to the extent within Hoechst's control) limit or
otherwise impair the marketability or viability of the underlying MMD
assets, other than in the ordinary course of business. For the purposes of
this Agreement to Hold Separate, "MMD voting securities" means all shares
of MMD common stock, whether purchased from Dow or otherwise acquired.
6. During the time contemplated by Paragraph 3 of this
Agreement to Hold Separate, in order to ensure the complete independence
and viability of MMD and to assure that no competitive information is
exchanged between MMD and Hoechst, Hoechst will hold MMD separate and apart
on the following terms and conditions:
a. MMD, as it is presently constituted (including
subsidiaries, divisions, groups and affiliates controlled by MMD),
shall be held separate and apart and shall be operated independently
of Hoechst (meaning here and hereinafter, Hoechst excluding MMD);
PROVIDED HOWEVER that Hoechst may exercise only such direction and
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control over MMD as is necessary to assure compliance with this
Agreement to Hold Separate, the Agreement Containing Consent Order,
and the Order; and FURTHER PROVIDED, HOWEVER, that nothing in this
subparagraph (a) shall be construed to preclude Hoechst from providing
cash management services to MMD on a contract basis.
b. Hoechst shall not exercise direction or control over,
or influence, directly or indirectly, MMD or any of its operations or
businesses; PROVIDED HOWEVER, that Hoechst may exercise only such
direction and control over MMD as is necessary to assure compliance
with this Agreement to Hold Separate, the Agreement Containing Consent
Order, and the Order; and FURTHER PROVIDED, HOWEVER, that nothing in
this subparagraph (b) shall be construed to preclude Hoechst and MMD
from performing any obligations under the Settlement and Release
Agreement executed between Hoechst and Biovail Corporation
International on April 8, 1995.
c. Hoechst shall maintain the viability and marketability
of the MMD voting securities and the underlying MMD assets and, other
than in the ordinary course of business, shall not sell, transfer,
encumber, or (to the extent within Hoechst's control) limit, or
otherwise impair the marketability or viability of the underlying MMD
assets, and shall not sell, transfer, encumber, or (to the extent
within Hoechst's control) limit, or otherwise impair the marketability
or viability of the MMD voting securities.
d. The MMD Board of Directors shall have exclusive
authority for managing MMD, and shall consist exclusively of
individuals who are not officers, directors or employees of Hoechst.
e. The individuals on the MMD Board of Directors shall not
be involved in any way in the research, development, manufacturing,
marketing or selling of pharmaceuticals (other than through MMD's
operations as presently constituted). Each of these individuals, the
management of MMD and Hoechst, and the directors, officers, or
employees responsible for the operation of MMD will receive the
notification appended as Attachment A hereto.
f. If necessary to assure compliance with the terms of
this Agreement to Hold Separate, the Agreement Containing Consent
Order, and the Order, Hoechst may, but is not required to, assign an
individual to MMD for the purpose of overseeing such compliance ("on-
site person"). The on-site person shall have access to all officers
and employees of MMD and such records of MMD as he deems necessary and
reasonable to assure compliance. Such individual shall enter into a
confidentiality agreement with Hoechst agreeing to be bound by the
terms and conditions of Attachment A, appended hereto.
g. Except as required by law, and except to the extent
that necessary information is exchanged in the course of evaluating
the merger, defending investigations or litigation, or negotiating
agreements to divest assets, Hoechst shall not receive or have access
to, or the use of, any material confidential information about MMD or
the activities of the MMD Board of Directors in managing the business
that is not in the public domain. Nor shall the MMD Board of
Directors, any individual member of the MMD Board of Directors, or the
on-site person receive or have access to, or the use of, any material
confidential information about Hoechst's pharmaceutical businesses or
activities not in the public domain. Hoechst may receive on a regular
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basis from MMD aggregate financial information necessary and essential
to allow Hoechst to prepare consolidated financial reports, tax
returns, and personnel reports. "Material confidential information,"
as used herein, means competitively sensitive information, not
independently known to Hoechst from sources other than the MMD Board
of Directors and includes, but is not limited to, customer lists,
price lists, bidding lists, marketing methods, marketing plans, sales
plans, long range planning documents, patents, technologies,
processes, or other trade secrets.
h. Hoechst shall not remove or replace any member of the
MMD Board of Directors, or the on-site person except as provided
below:
(1) Hoechst may remove and replace anyone for cause, death,
disability, or resignation from service with MMD;
(2) Hoechst may remove any member of the MMD Board of
Directors if a conflict of interest develops in that member's
role as a potential purchaser of the MMD voting securities or any
MMD assets and that member's role as a Director of MMD;
(3) Hoechst may replace any member of the MMD Board of
Directors or officer of MMD after providing the Commission with
sixty (60) days advance written notice; and
(4) Hoechst may replace any individual who interferes in
any way with Hoechst's ability to comply with the terms of this
Agreement to Hold Separate, the Agreement Containing Consent
Order, and the Order.
PROVIDED HOWEVER, that each individual newly appointed to the MMD Board of
Directors, pursuant to this subparagraph, must conform to all terms and
conditions of this Agreement.
i. Hoechst shall provide MMD with its share of working
capital as MMD requests from time to time.
j. Should the Commission seek in any proceeding to compel
Hoechst to divest itself of the MMD voting securities or the MMD
assets subject to the Agreement Containing Consent Order, Hoechst
shall not raise any objection based on the expiration of the
applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period
or the fact that the Commission has permitted the merger. Hoechst
also waives all rights to contest the validity of this Agreement to
Hold Separate.
7. During the time contemplated by Paragraph 3 of this
Agreement to Hold Separate, in order to preserve the divestability of the
Hoechst assets subject to the Agreement Containing Consent Order, Hoechst
agrees that it will not sell, transfer, encumber, limit or otherwise impair
the marketability or viability of the underlying Hoechst assets subject to
the Agreement Containing Consent Order, other than in the ordinary course
of business.
8. To the extent that this Agreement to Hold Separate requires
Hoechst to take, or prohibits Hoechst from taking, certain actions which
otherwise may be required or prohibited by contract, Hoechst shall abide by
the terms of the Agreement to Hold Separate, the Agreement Containing
Consent Order and the Order, and shall not assert as a defense such
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contract requirements in a civil penalty action or any other action brought
by the Commission to enforce the terms of this Agreement to Hold Separate,
the Agreement Containing Consent Order or the Order.
9. For the purpose of determining or securing compliance with
this Agreement to Hold Separate, subject to any legally recognized
privilege, and upon written request with reasonable notice to Harry R.
Benz, Hoechst Corporation, Route 202-206, P.O. Box 2500, Somerville, NJ
08876, Hoechst's United States subsidiary, Hoechst (which, for purposes of
this paragraph only includes MMD) shall permit any duly authorized
representative or representatives of the Commission:
a. Access during the office hours of Hoechst and in the
presence of counsel to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the
possession or under the control of Hoechst relating to compliance with
this Agreement to Hold Separate;
b. Upon five (5) days' notice to Hoechst, and without
restraint or interference from Hoechst, to interview officers or
employees of Hoechst, who may have counsel present, regarding any such
matters.
10. This Agreement to Hold Separate shall not be binding until
approved by the Commission.
FEDERAL TRADE COMMISSION HOECHST AG
/s/ Jay C. Shaffer /s/ Karl-Gerhard Seifert
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Jay C. Shaffer Dr. Seifert
Acting General Counsel Member of the Board
/s/ Peter Schuster
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Peter Schuster
General Counsel
/s/ William C. Pelster
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William C. Pelster
Joel M. Mitnick
Skadden, Arps, Slate, Meagher,
& Flom
Counsel for Hoechst AG
THE DOW CHEMICAL COMPANY
/s/ Jane M. Gootee
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Jane M. Gootee
Assistant General Counsel
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/s/ Robert E. Bloch
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Robert E. Bloch
Scott P. Perlman
Mayer, Brown & Platt
Counsel for The Dow Chemical
Company
MARION MERRELL DOW INC.
/s/ Edward H. Stratemeier
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Edward H. Stratameier
Vice President and Assistant
General Counsel
Dated: June 26, 1995
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ATTACHMENT A
NOTICE OF HOLD SEPARATE
AND REQUIREMENT FOR CONFIDENTIALITY
Hoechst AG ("Hoechst") has entered into a Hold Separate Agreement
with the Federal Trade Commission relating to the to be acquired interest
in Marion Merrell Dow Inc. ("MMD"). Until after the Commission completes
its investigation, MMD must be managed and maintained as a separate,
ongoing business, independent of all other competing businesses of Hoechst.
All competitive information relating to MMD must be retained and maintained
by the persons responsible for the management of MMD on a confidential
basis and such persons shall be prohibited from providing, discussing,
exchanging, circulating, or otherwise furnishing any such information to or
with any other person whose employment involves any competing Hoechst
pharmaceutical business. Similarly, all such persons responsible for the
management of Hoechst's competing pharmaceutical businesses shall be
prohibited from providing, discussing, exchanging, circulating or otherwise
furnishing competitive information about such businesses to or with any
person responsible for MMD.
Any violation of the Hold Separate Agreement may subject Hoechst
to civil penalties and other relief as provided by law.