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U.S. Securities and Exchange Commission

Securities Exchange Act of 1934
Section 14(d) and Rules 14d-4, 14d-11 and 14e-1

No Action, Interpretive and/or Exemptive Letter

Response of the Office of Mergers and Acquisitions
Division of Corporation Finance

Via Facsimile (202) 637-2201 and U.S. Mail

April 28, 2006

John J. Huber
Latham & Watkins LLP
555 Eleventh Street, NW, Suite 1000
Washington, DC 2004-1304

Re:

Offer by the Bayer Entities for all ordinary shares of Schering AG
SEC File No. 5-59757

Dear Mr. Huber:

We are responding to your letter dated April 12, 2006 addressed to Mauri L. Osheroff, Brian V. Breheny and Christina Chalk, as supplemented by telephone conversations with the staff, with regard to your request for exemptive and no-action relief. To avoid having to recite or summarize the facts set forth in your letter, our response is attached to the enclosed photocopy of your letter. Unless otherwise noted, capitalized terms in this letter have the same meaning as in your April 12, 2006 correspondence.

On the basis of your representations and the facts presented in your letter, the United States Securities and Exchange Commission ("Commission") hereby grants an exemption from the following provisions:

  • Section 14(d)(5) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 14d-7 thereunder. The exemption from Section 14(d)(5) of the Exchange Act and Rule 14d-7 permits the Bayer Entities to terminate withdrawal rights at the expiration of the Acceptance Period if all conditions to the Offer, other than the Minimum Condition, have been satisfied or waived, during a period of no more than eight German banking days to permit the determination of whether the Minimum Condition has been met and for the payment for tendered Shares in accordance with the procedural requirements of German law and practice. In addition, the exemption from Section 14(d)(5) of the Exchange Act and Rule 14d-7 permits the Bayer Entities to terminate withdrawal rights at the expiration of the Acceptance Period, if all conditions to the Offer, other than the Minimum Condition and the Regulatory Approvals, have been satisfied or waived, until the earlier of (i) the receipt or waiver of the Regulatory Approvals, the determination of whether the Minimum Condition has been met and a period of no more than eight German banking days after the receipt or waiver of the Regulatory Approvals to permit the payment for tendered Shares in accordance with the procedural requirements of German law and practice or (ii) 21 calendar days from the date of the expiration of the Acceptance Period. The exemption from Section 14(d)(5) of the Exchange Act and Rule 14d-7 thereunder also permits the Bayer Entities, once all the conditions to the offer, including the receipt or waiver of the Regulatory Approvals, have been satisfied or waived, to terminate withdrawal rights during a period of no more than eight German banking days to permit the payment for tendered Shares in accordance with the procedural requirements of German law and practice.
     
  • Rules 14d-11(c) and (e) under the Exchange Act. The exemption from Rules 14d-11(c) and (e) permits the Bayer Entities to pay for or return Shares tendered in the Acceptance Period and to commence the Additional Acceptance Period, as described in your letter, in accordance with German law and practice.
     
  • Rule 14d-11(d) under the Exchange Act. The exemption from Rule 14d-11(d) permits the Bayer Entities, in accordance with German law and practice, to commence the Additional Acceptance Period on the day after the publication of the final results of the Offer (expected to be a day no later than the fifth German banking day following the close of the Acceptance Period).
Based on the representations in your letter dated April 12, 2006, but without necessarily concurring in your analysis, the staff of the Division of Corporation Finance will not recommend enforcement action pursuant to the following rules:
  • Rule 14e-1(c) under the Exchange Act. This no-action position pursuant to Rule 14e-1(c) is taken to allow Shares tendered during the Acceptance Period or the Additional Acceptance Period to be paid no later than eight German banking days after the expiration of the Acceptance Period or Additional Acceptance Period, respectively. In addition, this no-action position pursuant to Rule 14e-1(c) allows the Bayer Entities to pay for any shares tendered in the Offer within eight German banking days after the receipt or waiver of the Regulatory Approvals if the Regulatory Approvals have not been received or waived by the expiration of the Acceptance Period. We note that the Bayer Entities would return any tendered Shares promptly if the Regulatory Approvals were not received or waived within the periods outlined in your letter.
     
  • Rule 14e-1(b) and Rule 14d-4(d)(2)(ii) under the Exchange Act. These no-action positions pursuant to Rule 14e-1(b) and Rule 14d-4(d)(2)(ii) are taken to allow the Bayer Entities to extend the Offer for a period of two weeks (as opposed to 10 business days), as required by German law, if a material change occurs in the terms of the Offer in the last two weeks of the Acceptance Period.
     
  • Rule 14e-1(d) under the Exchange Act. This no-action position pursuant to Rule 14e-1(d) is taken to allow the Bayer Entities to announce an extension of the Offer in accordance with German law and practice.

The foregoing exemptions and no-action positions are based solely on the representations and the facts presented in your letter dated April 12, 2006, as supplemented by telephone conversations with the Commission staff. The relief is strictly limited to the application of the rules listed above to this transaction. You should discontinue this transaction pending further consultations with the staff if any of the facts or representations set forth in your letter change.

We also direct your attention to the anti-fraud and anti-manipulation provisions of the federal securities laws, including Section 10(b) and 14(e) of the Exchange Act, and Rule 10b-5 thereunder. The participants in this transaction must comply with these and any other applicable provisions of the federal securities laws (subject to the relief we understand you have received from the Division of Market Regulation in connection with this transaction). The Division of Corporation Finance expresses no view on any other questions that may be raised by the proposed transaction, including but not limited to, the adequacy of disclosure concerning and the applicability of any other federal or state laws to the proposed transaction.

For the Commission,
By the Division of Corporation Finance
Pursuant to delegated authority,

Mauri L. Osheroff
Associate Director
Division of Corporation Finance


Incoming Letter:

The Incoming Letter is in Acrobat format.


http://www.sec.gov/divisions/corpfin/cf-noaction/bayerag042806.htm


Modified: 05/08/2006