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Securities Exchange Act of 1934
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For the Commission, by the For the Commission, by the |
Mauri L. Osheroff James A. Brigagliano |
Attachment
June 3, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: |
Brian V. Breheny, Esq. Mauri L. Osheroff, Esq. James A. Brigagliano, Esq. |
Dear Messrs. Breheny and Brigagliano and Ms. Osheroff:
I am writing on behalf of my client Sanofi-Synthélabo S.A., a société anonyme organized under the laws of the Republic of France ("Sanofi-Synthélabo"), in connection with its offer to acquire all of the outstanding ordinary shares, nominal value €3.82, of Aventis, a société anonyme organized under the laws of France ("Aventis"), first announced by Sanofi-Synthélabo on January 26, 2004. In this connection, on January 29, 2004, Sanofi-Synthélabo filed a registration statement on Form F-4 (as subsequently amended, the "Registration Statement") (File no: 333-112314) with the Securities and Exchange Commission (the "Commission"). In response to comments from the staff of the Commission (the "Staff"), the Registration Statement was amended on March 12, 2004, March 29, 2004, and April 7, 2004 and the Commission declared the Registration Statement effective on April 9, 2004. On April 12, 2004, Sanofi-Synthélabo filed a tender offer statement on Schedule TO and commenced the U.S. Offer (as defined below). On April 12, 2004, Sanofi-Synthélabo also filed with the Commission under Rule 424(b) a definitive prospectus, dated April 9, 2004 (the "U.S. Prospectus"), which was first mailed to holders of Aventis securities eligible to participate in the U.S. Offer on that date. On April 16, 2004, Aventis filed its Schedule 14D-9, in which Aventis continued to recommend that holders of Aventis securities reject Sanofi-Synthélabo's offer and not tender their Aventis securities in the offer.
On April 25, 2004, Aventis and Sanofi-Synthélabo entered into an agreement (the "Agreement"), pursuant to which, among other things, Sanofi-Synthélabo agreed to increase the cash component of its offer and the Aventis Supervisory Board agreed to recommend that holders of Aventis securities tender their Aventis securities in the offer. Pursuant to the Agreement, Sanofi-Synthélabo also agreed to revise the terms and conditions of its offer to remove the antitrust condition. On April 26, 2004, Sanofi-Synthélabo filed with the Commission an amendment to its Schedule TO, setting forth a summary of the Agreement and the revised terms of its offer. On that same date, Aventis filed an amendment to its Schedule 14D-9, indicating that the Aventis Supervisory Board had agreed to recommend that holders of Aventis securities tender their Aventis securities in the offer. On May 5, 2004, Sanofi-Synthélabo filed a post-effective amendment to the Registration Statement (the "Post-Effective Amendment"), which included a preliminary prospectus supplement/revised U.S. offer to exchange, setting forth the revised terms and conditions of the U.S. Offer. This preliminary prospectus supplement was incorporated by reference into an amendment to Sanofi-Synthélabo's Schedule TO, filed with the Commission on May 5, 2004. On May 13, 2004, the Commission declared the Post-Effective Amendment effective. On May 28, 2004, Sanofi-Synthélabo filed with the Commission under Rule 424(b) a definitive form of the prospectus supplement/revised U.S. offer to exchange, dated May 27, 2004 (the "Prospectus Supplement"), which was first mailed to holders of Aventis securities eligible to participate in the U.S. Offer on or about June 1, 2004. The Prospectus Supplement was incorporated by reference into an amendment to Sanofi-Synthélabo's Schedule TO, filed with the Commission on May 28, 2004.
Pursuant to the revised terms of its offer, in connection with its efforts to acquire all of the outstanding ordinary shares of Aventis, Sanofi-Synthélabo is offering to exchange:
The Aventis ordinary shares and the Aventis ADS are referred to collectively in this letter as the "Aventis securities." The Sanofi-Synthélabo ordinary shares and the Sanofi-Synthélabo ADSs are referred to collectively in this letter as the "Sanofi-Synthélabo securities."
Sanofi-Synthélabo's offer to acquire all of the outstanding Aventis securities is being made through three separate offers, which will close simultaneously:
Together, the Offers are being made for all issued and outstanding Aventis ordinary shares, including Aventis ordinary shares represented by Aventis ADSs, and all Aventis ordinary shares that are or may become issuable prior to the expiration of the Offers due to the exercise of outstanding Aventis stock options or the exercise of outstanding Aventis warrants (Bons de souscription d'actions, or BSAs).1 All offers to exchange or purchase and all exchanges and purchases made pursuant to the French Offer and the German Offer will be made outside of the United States. The Offers are being made on substantially similar terms, and completion of each of the Offers is subject to the same conditions. The terms and conditions of the Offers are described in greater detail below.
The Registration Statement relates to the registration under the United States Securities Act of 1933, as amended (the "Securities Act"), of up to 158,333,333 Sanofi-Synthélabo ordinary shares, including Sanofi-Synthélabo ordinary shares to be represented by Sanofi-Synthélabo ADSs, to be issued in connection with the U.S. Offer.
We hereby respectfully request that, with respect to the Offers, the Staff grant exemptive relief from the provisions of the following Rules under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"):
We further request that the Staff confirm that, based on the facts and circumstances described in this Letter (which are also fully disclosed in the U.S. Prospectus and/or the Prospectus Supplement), it will not recommend that the Commission take any enforcement action against Sanofi-Synthélabo under Rule 14d-10(a)(2) (with respect to whether the mix and match election feature respects the equal treatment of security holders), provided that the Offers are conducted as described in this Letter and in the Registration Statement.
Sanofi-Synthélabo has not had access to non-public information concerning Aventis and the execution of the Agreement did not provide Sanofi-Synthélabo with any rights of access or otherwise to obtain from Aventis any non-public information concerning Aventis. The information provided in this Letter with respect to Aventis and Aventis securities has been obtained from Aventis's Annual Report on Form 20-F for the year ended December 31, 2003, from its current reports on Form 6-K and from its pre-commencement and post-commencement filings on Schedule 14D-9, as well as from Aventis's public filings with the Autorité des marchés financiers (the "AMF") and other information publicly disclosed by Aventis. Information relating to Aventis has not been independently verified by Sanofi-Synthélabo or its counsel.
Sanofi-Synthélabo is a société anonyme organized under the laws of France. Sanofi-Synthélabo is an international pharmaceutical group engaged in the research, development, manufacture and marketing of pharmaceutical products for sale principally in the prescription market. Sanofi-Synthélabo's prescription pharmaceuticals business specializes in four therapeutic areas: cardiovascular/thrombosis; central nervous system; internal medicine and oncology. In 2003, Sanofi-Synthélabo's consolidated net sales were €8,048 million ($10,138 million), its net income was €2,076 million, it invested €1,316 million in research and development and employed over 33,000 people worldwide. On the basis of sales for the last twelve months ended September 30, 2003, Sanofi-Synthélabo is the second largest pharmaceutical group in France, the eighth largest pharmaceutical group in Western Europe and among the twenty largest pharmaceutical groups in the world (based on data from IMS Health Incorporated).
Sanofi-Synthélabo is a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act and files annual reports on Form 20-F and furnishes current reports on Form 6-K and other information with the Commission. Sanofi-Synthélabo ordinary shares are listed on the Premier Marché of Euronext Paris and trade under the symbol "SAN." Sanofi-Synthélabo ordinary shares are listed on the New York Stock Exchange ("NYSE") for listing purposes only, and Sanofi-Synthélabo ADSs are listed on the NYSE and trade under the symbol "SNY." Sanofi-Synthélabo will apply for supplemental listings of the Sanofi-Synthélabo ordinary shares and the Sanofi-Synthélabo ADSs to be issued pursuant to the Offers on Euronext Paris and on the NYSE, as applicable, and will comply with all the usual requirements of such exchanges within the time periods specified by such exchanges.
Aventis is a global pharmaceutical company that discovers, develops, manufactures and markets branded prescription drugs and human vaccines to protect and improve the health of patients around the world. Aventis claims that its therapeutic innovations rank among the leading treatments for lung and breast cancer, thrombosis, seasonal allergies, diabetes and hypertension. Aventis defines its core business as prescription drugs, human vaccines, its 50% interest in the Merial animal health joint venture, and its corporate activities. In 2003, according to Aventis's published reports, in its core business, Aventis generated sales of €16,791 million, net income of €2,444 million, invested €2,863 million in research and development and employed approximately 69,000 people worldwide. On the basis of sales for the last twelve months ended September 30, 2003, we believe that Aventis is the largest pharmaceutical group in France, the third largest pharmaceutical group in Western Europe and among the ten largest pharmaceutical groups in the world (based on data from IMS Health).
According to Aventis's most recent public filings, as of April 15, 2004, there were 802,558,637 Aventis ordinary shares outstanding (of which 23,942,226 were held by Aventis and its subsidiaries), 54,637,284 Aventis ordinary shares subject to stock subscription options and 261,971 Aventis ordinary shares subject to BSAs.
We understand that Aventis is a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act and files annual reports on Form 20-F with, and furnishes current reports on Form 6-K and other information to, the Commission.2 Aventis ordinary shares are listed on the Premier Marché of Euronext Paris and trade under the symbol "AVE" and are also listed to trade on the Frankfurt Stock Exchange and are traded under the Xetra computerized trading system in Germany. Aventis ordinary shares are listed on the NYSE for listing purposes only, and Aventis ADSs are listed on the NYSE and trade under the symbol "AVE."
In separating the Offers into the U.S. Offer, the French Offer and the German Offer and in conducting the U.S. Offer on the terms described in this Letter and in the U.S. Prospectus and the Prospectus Supplement, Sanofi-Synthélabo is relying on Rule 14d-1(d) under the Exchange Act, which provides exemptive relief from otherwise applicable rules to persons conducting a tender offer under certain conditions. In order for Sanofi-Synthélabo to qualify for exemptive relief under Rule 14d-1(d) ("Tier II Relief"), among other conditions, holders who are resident in the United States ("U.S. holders") must not hold more than 40% of the outstanding Aventis ordinary shares, including Aventis ordinary shares represented by Aventis ADSs. Because at the time Sanofi-Synthélabo commenced the U.S. Offer on April 12, 2004, Sanofi-Synthélabo was not making the U.S. Offer pursuant to any agreement with Aventis, in determining that the U.S. Offer qualified for Tier II Relief, Sanofi-Synthélabo presumed, as permitted by Instruction 3 to Rule 14d-1(d), that less than 40% of the Aventis ordinary shares were held by U.S. holders because:
The number of Sanofi-Synthélabo ordinary shares (including Sanofi-Synthélabo ordinary shares represented by Sanofi-Synthélabo ADSs) being registered with the Commission pursuant to the Registration Statement is based on the estimate that there are up to approximately 190,000,000 Aventis ordinary shares in aggregate held by U.S. holders or represented by Aventis ADSs. This estimate was based upon the best available public information regarding the percentage of Aventis ordinary shares (including Aventis ordinary shares represented by Aventis ADSs) that were held by holders located in the United States and Canada, at the time that the Registration Statement was originally filed. At that time, on its website, Aventis disclosed that approximately 21.5% of its ordinary shares were held by persons located in the United States and Canada.5 As discussed with the Staff prior to the filing of the Registration Statement, in determining the number of Sanofi-Synthélabo ordinary shares to be registered, Sanofi-Synthélabo took this Aventis estimate of 21.5%, rounded it up to 22%, and applied the percentage to the 857,978,068 Aventis ordinary shares estimated to be outstanding on a fully diluted basis (including all treasury shares and all shares subject to subscription stock options, whether or not exercisable). The number of Aventis ordinary shares (188,755,174) thus estimated to be held by holders located in the United States of America or represented by Aventis ADSs was rounded upwards to 190,000,000. The number of Sanofi-Synthélabo ordinary shares registered pursuant to the Registration Statement (158,333,333) was accordingly derived by applying the exchange ratio of 0.8333 for the Offers.
Subsequent to the filing of the Registration Statement, and after filing with the Commission its Annual Report on Form 20-F for the year ended December 31, 2004, Aventis disclosed on its website that, based on the 802,292,807 shares outstanding as of December 31, 2003, approximately 24.7% of Aventis ordinary shares were held by holders located in the United States and Canada. Based on the assumption that at least two percent of Aventis ordinary shares are held by holders located in Canada, Sanofi-Synthélabo continues to believe that no more than 190,000,000 Aventis ordinary shares (including Aventis ordinary shares represented by Aventis ADSs) are eligible to be tendered in the U.S. Offer.6
As described above, Sanofi-Synthélabo has structured its proposed acquisition of Aventis as three separate tender offers - the U.S. Offer, the French Offer and the German Offer. The offers and sales by Sanofi-Synthélabo of Sanofi-Synthélabo ordinary shares (including Sanofi-Synthélabo ordinary shares represented by Sanofi-Synthélabo ADSs) issued in the U.S. Offer will be made by means of the U.S. Prospectus, as supplemented by the Prospectus Supplement, which taken together constitute Sanofi-Synthélabo's prospectus under Section 5 of the Securities Act, as well as Sanofi-Synthélabo's offer to purchase/exchange under the Exchange Act. Sanofi-Synthélabo will apply for the supplemental listing of the Sanofi-Synthélabo ordinary shares to be issued in the Offers on the Premier Marché of Euronext Paris, as well as the supplemental listing of the Sanofi-Synthélabo ordinary shares (including Sanofi-Synthélabo ordinary shares to be represented by Sanofi-Synthélabo ADSs) and the Sanofi-Synthélabo ADSs to be issued in the U.S. Offer on the NYSE. Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp. will act as joint dealer-managers in the United States with respect to the U.S. Offer. The U.S. Offer is structured to be conducted in accordance with the U.S. federal securities laws, including Regulations 14D and 14E under the Exchange Act (including Rule 14d-1(d)), except to the extent of any exemptive relief granted pursuant to this letter, as well as in accordance with applicable French law and regulations.
The French Offer is subject to the rules and regulations of the AMF, which provide a comprehensive scheme for the regulation of French tender and exchange offers and trading in French markets, including the rules and regulations of the former Conseil des marchés financiers, the self-regulatory organization that formerly had general supervisory authority over the French stock exchanges (the "CMF") and the rules and regulations of the former Commission des opérations de bourse, the French administrative agency that was formerly responsible for overseeing the French securities markets (the "COB"). The CMF and the COB were merged to form the AMF, effective as of November 24, 2003. In particular, the French Offer is subject to the Règlement Général (the "General Regulation") of the CMF. Pursuant to French law, the French Offer on both its original and its revised terms was presented to the public on behalf of Sanofi-Synthélabo by its presenting investment banks, BNP Paribas and Merrill Lynch Capital Markets (France) S.A.S., with BNP Paribas serving as the sole guaranteeing bank of the French Offer.
In France and in jurisdictions other than Germany and the United States (provided that the French Offer is permitted in these jurisdictions), the French Offer on its original terms was communicated by means of a note d'information, or prospectus (the French Prospectus), which was published on February 16, 2004 in Les Echos and on February 17, 2004 in La Tribune, each an authorized French financial newspaper of general circulation. The revised French Offer (Surenchère) is being communicated by means of a note d'information complémentaire, or prospectus supplement (the "French Supplement"), that incorporates the French Prospectus by reference, and which was published on May 11, 2004 in La Tribune. For the Offers to proceed, the French Offer must be declared "receivable" by the AMF, indicating that the terms of the French Offer comply with applicable regulations, and the note d'information must subsequently receive the visa of the AMF, indicating that the note d'information complies with applicable regulations. The French Offer on its original terms was declared receivable on February 3, 2004, when the AMF issued its avis de recevabilité (Décision et Information No. 204C0182), and the French Prospectus was granted visa No. 04-0090 by the AMF on February 12, 2004.7 The French Offer was opened on its original terms on February 17, 2004. The revised French Offer (Surenchère) was declared recevable on May 4, 2004, when the AMF issued its avis de recevabilité (Décision et Information No. 204C0579), and the French Prospectus was granted visa No. 04-0384 by the AMF on May 7, 2004. The revised French Offer opened on May 12, 2004. Following the publication of Aventis recommendation statement (note d'information en réponse), which was granted visa No. 04-0510 by the AMF on May 28, 2004, on June 1, 2004, the AMF announced that it had set June 30, 2004 as the expiration date of the revised French OfferThe German Offer is subject to applicable laws and regulations of Germany, including the German Securities Sales Prospectus Act (WertpapierVerkaufsprospektgesetz) and is being made pursuant to a German offer document/prospectus (Angebotsunterlage und Verkaufsprospekt), which has been reviewed and approved for publication by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungaufsicht or "BaFin"). The German offer document/prospectus, which is substantially a translation into German of the Prospectus, as amended by the Prospectus Supplement, was first filed with the BaFin on January 30, 2004, and was approved for publication in Germany on March 10, 2004. The German Offer opened on March 15, 2004. The German offer document/ prospectus was subsequently amended to include the terms of the revised Offers, including the expiration date of June 30, 2004.
As described above, under the revised terms of the Offers, Sanofi-Synthélabo is offering (i) 0.8333 of a newly issued Sanofi-Synthélabo ordinary share and €20.00 in cash, without interest, in exchange for each Aventis ordinary share and (ii) 1.6667 newly issued Sanofi-Synthélabo ADSs and an amount in U.S. dollars equal to €20.00, in cash, without interest, in exchange for each Aventis ADS. The cash consideration paid to tendering holders of Aventis ordinary shares pursuant to the Offers will be paid in euros. The cash consideration paid to tendering holders of Aventis ADSs pursuant to the U.S. Offer will be converted in U.S. dollars on the day that it is received by the U.S. ADS exchange agent at the then-prevailing spot market rate and distributed, net of any expenses incurred, to the tendering holders of Aventis ADSs.
In addition, the Offers each include a mix and match election feature, whereby tendering holders of Aventis securities may elect to receive, in lieu of the standard entitlement set forth above, either:
Tendering holders of Aventis securities are not required to make any election or to make the same election for all of the Aventis ordinary shares or Aventis ADSs that they tender. Tendering holders of Aventis securities that make no election will receive the standard entitlement. However, the mix and match elections described above will be satisfied in full only to the extent that off-setting elections have been made by other tendering holders of Aventis securities in the Offers. To the extent that elections cannot be satisfied in full as a result of a lack of such off-setting elections, the elections will be subject to proration and allocation adjustments that will ensure that, in the aggregate (and subject to adjustment if Aventis approves any dividend or interim dividend that has a payment or ex-dividend date before the settlement of the Offers), 71.0% of the Aventis ordinary shares (including Aventis ordinary shares represented by Aventis ADSs) tendered in the Offers will be exchanged for Sanofi-Synthélabo ordinary shares (including Sanofi-Synthélabo ordinary shares represented by Sanofi-Synthélabo ADSs), and 29.0% will be exchanged for cash. Any Aventis ordinary shares (including Aventis ordinary shares represented by Aventis ADSs) not exchanged pursuant to an All Cash Election or an All Stock Election, as the case may be, because of the application of the proration and allocation adjustments will be exchanged for the standard entitlement. The proration and allocation procedures are fully described in the Prospectus Supplement under "The Revised U.S. Offer - Mix and Match Election."
If Aventis approves any dividend or any interim dividend in respect of the Aventis ordinary shares, including Aventis ordinary shares represented by Aventis ADSs, that has a payment or ex-dividend date before the settlement of the Offers, the consideration offered in exchange for each Aventis ordinary share and each Aventis ADS tendered will be reduced by an amount equal to the net value of the dividend paid per Aventis ordinary share. The manner in which this reduction will be applied in the case of the standard entitlement and the consideration to be received pursuant to an All Stock Election and All Cash Election is described in the Prospectus Supplement under "The Revised U.S. Offer - Consideration Offered after Approval of Aventis Dividends." On April 2, 2004, Aventis announced that its Supervisory Board had proposed a resolution authorizing a dividend of €0.82 per share in respect of Aventis's 2003 results to be presented to Aventis shareholders at the annual general meeting of shareholders originally scheduled for May 19, 2004. Pursuant to the Agreement, Aventis agreed to postpone this annual general meeting and on May 12, 2004, Aventis announced that it had rescheduled the annual general meeting of shareholders for June 11, 2004. If approved by shareholders at that meeting, the dividend of €0.82 per Aventis ordinary share will have an ex-dividend date of June 15, 2004 and a payment date of July 15, 2004 (and, with respect to the Aventis ADSs, an ex-dividend date of June 14, 2004 and a payment date of July 22, 2004).
In respect of any Sanofi-Synthélabo ordinary share, including any Sanofi-Synthélabo ordinary shares represented by Sanofi-Synthélabo ADSs, that a holder receives in exchange for the Aventis ordinary shares or the Aventis ADSs tendered into the Offers, the tendering holder will be entitled to receive any annual dividend with respect to Sanofi-Synthélabo's 2003 results that is declared on the Sanofi-Synthélabo ordinary shares and any other dividend that is paid after the settlement of the Offers. On February 16, 2004, Sanofi-Synthélabo announced that its Board of Directors had proposed a resolution approving a dividend of €1.02 per share in respect of Sanofi-Synthélabo's 2003 results to be presented to Sanofi-Synthélabo shareholders at the annual general meeting of shareholders originally scheduled for May 24, 2004. On May 14, 2004, Sanofi-Synthélabo announced that it had rescheduled the annual general meeting of shareholders for June 23, 2004. On May 5, 2004, Sanofi-Synthélabo paid an interim dividend of €0.97 per Sanofi-Synthélabo ordinary share. The payment of this interim dividend does not affect the rights of tendering holders of Aventis securities to receive the full €1.02 dividend per Sanofi-Synthélabo ordinary share in respect of the Sanofi-Synthélabo securities they may receive in exchange for their Aventis securities pursuant to the Offers.
Under the General Regulation, a tender or exchange offer, once launched, may not be revoked by the offeror, except that an offeror may withdraw an offer:
Under the terms of the Offers, Sanofi-Synthélabo reserves the right to withdraw the Offers under either of these circumstances.
In the case of the French Offer, in the context of the first withdrawal condition referred to above, the AMF will, after the competing offer or improved offer by a competing bidder has been filed, announce that the previously announced expiration date for the French Offer will no longer apply and that a new expiration date will be announced upon publication of the timetable for the competing offer. Under no circumstances would Sanofi-Synthélabo's withdrawal right triggered by the filing of the competing offer or the improved offer by a competing bidder extend beyond the new expiration date.
In the context of the second withdrawal condition referred to above, the AMF retains the authority not to approve Sanofi-Synthélabo's request to withdraw the French Offer if it does not believe that Aventis's actions meet the stated criteria.8
Under applicable French law and regulations, if, during the period of the Offers, a competing offer for Aventis is approved by the AMF, any tenders of Aventis securities into the Offers will be declared null and void by the AMF.9 In addition, if an improved offer (surenchère) by Sanofi-Synthélabo or a competing bidder is approved by the AMF, tenders of Aventis securities into the Offers may also be declared null and void by the AMF. In each of these events, if the Offers remain outstanding, holders of Aventis securities who wish to tender those securities into the Offers will be required to re-tender their Aventis securities.
Under applicable French law and regulation, an offeror is permitted to make an offer conditional on (i) the tender of a specified number of shares, (ii) receipt of certain antitrust and competition law approvals, and (iii) receipt of certain required French regulatory approvals, but is otherwise severely limited in its ability to condition its offer.
Sanofi-Synthélabo will not be obligated to purchase any tendered Aventis securities pursuant to the U.S. Offer unless Aventis ordinary shares (including Aventis ordinary shares represented by Aventis ADSs) representing at least 50% of the total share capital and voting rights in Aventis, calculated on a fully diluted basis, plus one Aventis ordinary share, are validly tendered and not withdrawn in the Offers, on a combined basis (the "Minimum Tender Condition").
For purposes of determining whether the Minimum Tender Condition has been satisfied, (i) the numerator will include all Aventis ordinary shares, including all Aventis ordinary shares represented by Aventis ADSs, validly tendered and not withdrawn, in the Offers, on a combined basis at the expiration time of the Offers, and (ii) the denominator will be Aventis's fully diluted share capital, including all:
Sanofi-Synthélabo may waive the Minimum Tender Condition at any time on or prior to the date that is five French Trading Days prior to the expiration date of the Offers. Under applicable French law and regulations, a waiver of the Minimum Tender Condition is deemed to be an improved offer and may cause the AMF to extend the offer period. In this case, tenders of Aventis securities into the Offers may also be declared null and void by the AMF, in which case holders of Aventis securities who wish to tender those securities into the Offers will be required to re-tender their Aventis securities. Unless Sanofi-Synthélabo has waived the Minimum Tender Condition, if the Minimum Tender Condition is not satisfied, the Offers will not be completed. Neither Sanofi-Synthélabo nor holders of Aventis securities will know whether the Minimum Tender Condition has been satisfied until the results of the Offers are published by the AMF following the expiration date of the Offers.
Sanofi-Synthélabo's obligation to complete the Offers is also subject to the condition that the issuance of additional Sanofi-Synthélabo ordinary shares to be issued on completion of the Offers has been duly approved by the shareholders of Sanofi-Synthélabo at an extraordinary meeting of shareholders to be held for this purpose (the "Share Issuance Condition").10 See "The Revised U.S. Offer - Conditions to the Revised U.S. Offer" in the Prospectus Supplement. Pursuant to the Agreement, under their revised terms, the Offers are no longer subject to the condition that the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), has expired or been terminated and no order has been entered prohibiting the transaction (the "Antitrust Condition"). See "The Revised U.S. Offer - Conditions to the Revised U.S. Offer" in the Prospectus Supplement.; for the terms and certain consequences of the Antitrust Condition as included in the original Offers, see "The U.S. Offer - Conditions to the U.S. Offer" in the U.S. Prospectus.
If either the Minimum Tender Condition (unless Sanofi-Synthélabo has waived the Minimum Tender Condition) or the Share Issuance Condition is not satisfied, the Offers will not be completed successfully. In such event, Sanofi-Synthélabo reserves the right to commence a new offer or not, in its sole discretion, and to make that offer available in the United States or not, in its sole discretion. If the Offers are not completed successfully, the Aventis securities that have been tendered in the Offers will be returned to the tendering holders without interest or any other payment being due. This should occur within one or two French Trading Days following the announcement of the failure of the Offers.
In general, the timetable and expiration date for the French Offer will be set by the AMF and Sanofi-Synthélabo may not extend the offer period of the French Offer.
Article 5-2-2 of the General Regulation provides that a tender offer opens following the publication of the offeror's note d'information duly approved with the grant of the visa by the AMF. The AMF publishes the opening date of the offer. The French Offer on its revised terms opened on May 12, 2004.11
Article 5-2-2 of the General Regulation also provides that, in general, the timetable for the offer is determined based on the date of publication of the target's note d'information en réponse (recommendation statement). In general, the expiration date for the offer will be the date that is 25 French Trading Days after the publication of the target's note d'information en réponse and no later than 35 French Trading Days after the opening date of the offer. The target must file its note d'information en réponse with the AMF within five French Trading Days after the target has received the offeror's note d'information duly approved with the grant of the visa by the AMF. The AMF then has three French Trading Days to grant its visa on the note d'information en réponse, and the target has two French Trading Days to publish the note d'information en réponse in a French financial newspaper. The expiration date of an offer may also be suspended by the Premier President of the Paris Court of Appeals pending resolution of any ongoing litigation regarding the AMF's decisions concerning an offer and is generally voluntarily suspended by the AMF while the court is reviewing the matter.12
On May 26, 2004, Sanofi-Synthélabo issued a press release announcing that pending the final decision of the AMF with respect to the expiration date of the French Offer, it had extended the U.S. Offer until 5:00 p.m. on June 30, 2004. The U.S. Offer had previously been scheduled to expire at 5:00 p.m. on May 28, 2004.
On June 1, 2004, the AMF set June 30, 2004 as the expiration date of the revised French Offer, pursuant to Article 5-2-2 of the General Regulation, following publication of Aventis's note d'information en réponse with respect to the French Supplement. On that date, Sanofi-Synthélabo issued a press release confirming that the French Offer, the German Offer and the U.S. Offer would all expire at 5:00 p.m. (New York time) on June 30, 2004.
In its avis de recevabilité, issued on May 4, 2004, the AMF indicated that, pursuant to Article 5-1-13 of the General Regulation, the AMF has agreed that the expiration date of the French Offer will be determined such that it occurs simultaneously with the expiration date of the U.S. Offer and with the expiration date of the German Offer.
Article 5-2-6 of the General Regulation governs the amendment of existing offers. To be declared "receivable" (i.e., to be allowed to proceed) by the AMF, the AMF must determine that a revised or amended exchange offer significantly improves upon the terms of the prior exchange offer.13 In accordance with Article 5-2-6 and Article 5-2-8 of the General Regulation, in the event that Sanofi-Synthélabo materially amends the terms of the Offers, the AMF may decide to, but is not obligated to, extend the offer period. The AMF has the sole authority over whether to extend the offer period. Sanofi-Synthélabo may not itself unilaterally extend the offer period.
In general, holders of Aventis ordinary shares (other than Aventis ordinary shares represented by Aventis ADSs) will accept the Offers by notifying the appropriate authorized bank, financial institution, custodian, brokerage or other intermediary at which such holders maintain accounts for Aventis ordinary shares (collectively, the "Intermediaries"), at any time prior to the expiration time of the Offers, of the holder's desire to tender. Holders of Aventis ADSs will accept the U.S. Offer by delivering to the exchange agent in the United States (the "U.S. ADS Exchange Agent") their ADSs, together with an executed Letter of Transmittal and other documents required by such letter or by notifying the Intermediary through which they hold Aventis ADSs. The procedures for tendering Aventis securities into the Offers are described in the U.S. Prospectus and the Prospectus Supplement.
Within five French Trading Days after the expiration of the Offers, the orders of holders of Aventis securities will be "centralized" at Euronext Paris S.A. ("Euronext Paris"). This centralization process consists of the Intermediaries forwarding to Euronext Paris a list of holders of Aventis ordinary shares (other than Aventis ordinary shares represented by Aventis ADSs) who have elected to tender, along with the Aventis ordinary shares held by such persons. U.S. ADS Exchange Agent will instruct the Aventis ADS depositary to deliver to the U.S. ADS Exchange Agent all Aventis ordinary shares represented by Aventis ADSs that have been tendered in the U.S. Offer, so that the U.S. ADS Exchange Agent can forward such Aventis ordinary shares to Euronext Paris. Aventis securities will thus not be transferred to Euronext Paris or to Sanofi-Synthélabo until after the expiration of the Offers. As a result, a determination of whether the Minimum Tender Condition is satisfied will not be possible until after the expiration of the Offers. Article 5-2-1 of the General Regulation specifies that sale or exchange orders transmitted to Intermediaries can be cancelled at any time prior to, or on the date of, the expiration of the Offers and the terms of the U.S. Offer therefore permit a holder of Aventis securities to withdraw any Aventis securities tendered into the U.S. Offer at any time prior to the expiration of the U.S. Offer.
Sanofi-Synthélabo expects the AMF to publish the definitive results (avis de résultat definitive) of the Offers not later than nine French Trading Days following the expiration date of the Offers. However, upon determination that the Minimum Tender Condition has been met, the AMF will publish provisional results (avis de résultat proviso ire) prior to its publication of the definitive results. The AMF's publication of the definitive results of the Offers will disclose the total number of Aventis ordinary shares, including Aventis ordinary shares represented by Aventis ADSs, and the corresponding percentage of total share capital and voting rights of Aventis that have been validly tendered.
Following publication of the final offer results, Euronext Paris will, in accordance with the General Regulation and customary French tender offer practice, contact brokers retained by Intermediaries and the ADS depositary to execute the settlement for the Offers.14 After registering the securities to be tendered in their records, such brokers and the U.S. ADS Exchange Agent will "deliver" tendered securities to Euronext Paris for the account of the investment banks presenting the Offers on Sanofi-Synthélabo's behalf and will receive in exchange the offer consideration for such delivered securities. In turn, the brokers or the U.S. ADS Exchange Agent, as applicable, will deliver the offer consideration to tendering holders of the Aventis securities, generally four French Trading Days after receiving the consideration from Euronext Paris.
In total and in accordance with the General Regulation and customary French practice, Sanofi-Synthélabo currently expects this settlement process to be completed within approximately 12 to 18 French Trading Days following the expiration date of the Offers. Accordingly, under French law and practice, a period of approximately two to three weeks is expected to elapse from the expiration of the Offers to completion of the exchange or payment of the offer consideration. During the period from the expiration of the Offers to this final settlement date, tendering holders of Aventis securities will not be able to withdraw their Aventis securities.15
As set forth above, if the Offers are not consummated (because any of the conditions is not satisfied or the Offers are withdrawn), tendered Aventis securities will be returned to Aventis security holders (and the U.S. ADS Exchange Agent will redeposit any Aventis ordinary shares represented by Aventis ADSs with the Aventis's ADS depositary) within one or two French Trading Days following the announcement of the withdrawal or lapse.
If, as a result of the Offers, Sanofi-Synthélabo acquires in aggregate between two-thirds and 95% of Aventis's total share capital and voting rights (or more than 50% if there has been a concurrent competing offer for Aventis securities), Sanofi-Synthélabo intends to provide a subsequent offering period of at least 10 French Trading Days in the French Offer, as permitted under applicable French law and regulation. If the conditions for a subsequent offering period have been met, Sanofi-Synthélabo will announce the intention to provide a subsequent offering period at the same time that Sanofi-Synthélabo announces the results of the Offers, which Sanofi-Synthélabo will do by issuing a press release as soon as practicable (but in no event later than 10 French Trading Days) after the AMF publishes the definitive results of the Offers. The AMF will then establish and publish the timetable for the subsequent offering period, which would ordinarily begin within a few days following the AMF's publication of the timetable. In the event of a subsequent offering period, Sanofi-Synthélabo will offer the same consideration that was offered during the initial offering period. The mix and match election feature will also be offered in the subsequent offering period.
If Sanofi-Synthélabo provides a subsequent offering period in the French Offer, Sanofi-Synthélabo intends to provide a subsequent offering period in the U.S. Offer and the German Offer. Sanofi-Synthélabo will issue a press release announcing the AMF's decision to permit a subsequent offering period, announcing the effects of such AMF decision on the U.S. Offer and advising the then-remaining holders of Aventis securities eligible to participate in the U.S. Offer that they may tender their Aventis securities at any time until the expiration of the subsequent offering period. Sanofi-Synthélabo will also announce and provide that any Aventis securities tendered during the subsequent offering period may be withdrawn at any time until the expiration of the subsequent offering period. The subsequent offering period for the Offers, if any, will each expire concurrently.
Sanofi-Synthélabo will accept any and all Aventis securities tendered during the subsequent offering period and not validly withdrawn prior to the expiration of the subsequent offering period. Delivery of the Sanofi-Synthélabo ordinary shares or Sanofi-Synthélabo ADSs, as applicable, and the cash to be paid to tendering holders of Aventis securities in exchange for the Aventis securities tendered in the subsequent offering period will occur approximately 12 to 18 French Trading Days following the expiration of the subsequent offering period and will follow the same settlement procedures set forth above. Holders of Aventis securities tendering their Aventis securities into the U.S. Offer during the subsequent offering period will be entitled to make a mix and match election as described above under "Financial Terms of the Offers" on the same basis as during the initial offering period.
As with the initial offering period, under applicable French law and regulations, the AMF will set the expiration date for the subsequent offering period. While French law provides that any subsequent offering period must remain open for a minimum of at least 10 French Trading Days, it does not establish a maximum for the subsequent offering period.
Holders of Aventis securities tendered during the initial offering period pursuant to the Offers may withdraw their Aventis securities at any time prior to the expiration of the initial offering period. If there is a subsequent offering period, holders of Aventis securities may withdraw their Aventis securities tendered during the subsequent offering period at any time prior to the expiration of such subsequent offering period. However, under the Offers, Aventis securities tendered during such periods may not be withdrawn between the applicable expiration date and the applicable settlement date.16 The settlements for Aventis securities tendered during the initial offering period and any subsequent offering period are expected to take place approximately 12 to 18 French Trading Days after the expiration of the applicable period.
Pursuant to Commission policy, the minimum time period during which the Offer must remain open following material changes in its terms, other than a change in price or a change in percentage of securities sought, will depend on all the facts and circumstances, including the materiality of the changes. See SEC Release No. 34-23421 (July 11, 1986). The Commission has advised that a tender offer should remain open for a minimum of five business days from the date a material change is first published, sent or given to shareholders. See SEC Release No. 34-24296 (Apr. 3, 1987). If material changes are made with respect to the price or the percentage of securities sought, pursuant to Rule 14e-1(b), an offer is required to remain open for a minimum of 10 business days.
As discussed above, the AMF has the sole authority to determine whether or not to extend the offer period, and Sanofi-Synthélabo may not itself extend the offer period. However, the AMF has stated in the avis de recevabilité granted with respect to the revised French Offer on May 4, 2004 that, pursuant to Article 5-1-13 of the General Regulation (which allows the AMF to extend the closing date of an offer at any time during the period the offer is open), the AMF has agreed that the closing date of the French Offer will occur on the same date as the closing date of the U.S. Offer and the German Offer.
We understand that the Staff has taken the position that, with certain exceptions relating to regulatory consents, a tender offer must become unconditional not later than its expiration date. The Staff has taken the position that all conditions to the offer must be satisfied or waived and the offer must be declared wholly unconditional before a bidder may terminate the withdrawal rights of security holders. See, e.g., Manual of Publicly Available Telephone Interpretations, Third Supplement, II. Cross-Border Release, A. Tier II, Question 1 (SEC Division of Corporation Finance, July 2001). We understand that the Staff bases this position on Rule 14d-7, which requires that "any person who has deposited securities pursuant to a tender offer has the right to withdraw those securities during the period such offer, request or invitation remains open." We understand that the Staff's position is that an offer that remains subject to a post-expiration condition might be deemed to "remain open" and therefore that security holders could be entitled to withdrawal rights.
Article 5-2-9 of the General Regulation governs the withdrawal of an offer by an offeror under French law and regulations. Article 5-2-9 of the General Regulation permits the offeror at any time until the results of an offer are known and published to request the AMF to authorize the offeror to withdraw an offer if (i) the target has adopted measures "modifying its substance" ("modifiant sa consistence") or (ii) the offer becomes "irrelevant" ("sans objet"). Without the protection afforded by this provision, the target of the offer could take measures of the type contemplated (for example, selling off all, or a significant portion of, its material assets), during the period after the expiration date of the offer and prior to the announcement of the results of the offer, and the bidder would nonetheless be obligated to pay the offered consideration. While the offeror may be able to file legal proceedings against the directors or managers of the target of the offer for a breach of their fiduciary duties under French law if such measures were taken, the remedies that a French court may permit may not fully or timely compensate the offeror or its shareholders for the damages suffered as a result of the extraordinary measures taken by the target of the offer.
In addition, while there is extensive United States case law discussing and defining the permissible scope of action that a board of directors may take while subject to a tender offer, French case law on the fiduciary duties of directors in such circumstances is extremely limited. While an offeror for a U.S. subject company may be able to sue members of a board of directors in their personal capacities if they voted to take these types of actions between the expiration date of a successful offer and the announcement of the results of that offer, as a result of the limited case law in France, no such assurance can be given with respect to members of a French board of directors taking similar action. Even after the Aventis Supervisory Board has decided to recommend the Offers, thereby reducing the risk that Aventis may take any action that modifies the substance of Aventis prior to the announcement of the results of the Offers, we do not believe that Sanofi-Synthélabo should be required to prematurely waive the protection that it is afforded under French law by Article 5-2-9 of the General Regulation, which provides for such protection because of the significant delay under French law and customary practice between the expiration of the Offers and the announcement of the results of the Offers. Any such waiver could result in severe adverse consequences to Sanofi-Synthélabo's shareholders if Aventis were to take any such extraordinary action.
Accordingly, on behalf of Sanofi-Synthélabo, we respectfully request exemptive relief from the provisions of Rule 14d-7(a)(1) to permit the Offers to be conducted subject to Sanofi-Synthélabo right to request that the AMF authorize Sanofi-Synthélabo to withdraw the Offers in the circumstances contemplated by Article 5-2-9 of the General Regulation as discussed above, notwithstanding that such withdrawal right could be exercised after the expiration date of the Offers and after the withdrawal rights of tendering security holders have terminated.
We note that the Staff recently granted such relief to allow a bidder making a dual offer subject to the General Regulation to reserve its withdrawal rights in this manner, even where the offer had received the recommendation of the target board of directors. See Offer by Alcan, Inc. for Common Shares, ADSs, Bonus Allocation Rights and OCEANES of Pechiney (Oct. 8, 2003) (hereafter, Alcan/Pechiney No-Action Letter).
As discussed above, the Offers are subject to a Minimum Tender Condition. Unless Sanofi-Synthélabo has waived the Minimum Tender Condition, if the Minimum Tender Condition is not satisfied, the Offers will not be completed successfully. It will not be possible for Sanofi-Synthélabo to determine whether the Minimum Tender Condition has been satisfied prior to the expiration of the Offers, and neither Sanofi-Synthélabo nor holders of Aventis securities will know whether the Minimum Tender Condition has been satisfied until the results of the Offers are published by the AMF following the expiration date of the Offers. As discussed above, because of the centralized counting procedures employed in France, the definitive results may not be published until nine French Trading Days following the expiration date of the Offers; although, upon determination that the Minimum Tender Condition has been met, the AMF will publish provisional results prior to its publication of the definitive results. If it is determined that that the Minimum Tender Condition was not satisfied, Sanofi-Synthélabo must assert the condition, terminate the Offers and return the tendered Aventis securities. If Sanofi-Synthélabo is not permitted to assert the Minimum Tender Condition at the time that its satisfaction may be determined (which is necessarily after the expiration of the initial offering period), it would effectively render the Minimum Tender Condition meaningless and would conflict with French law relating to the waiver of minimum tender conditions.17
We believe that permitting Sanofi-Synthélabo to assert the Minimum Tender Condition upon publication of the final results of the Offers, notwithstanding that the Offers have expired and that tendering holders of Aventis Securities will no longer have withdrawal rights, is consistent with Tier II Relief under Rule 14d-1(d)(2)(v), which expressly permits a bidder, notwithstanding Section 14(d)(5) of the Exchange Act, "not to extend withdrawal rights following the close of the offer and prior to the commencement of the subsequent offering period." We also believe that permitting Sanofi-Synthélabo to proceed in this manner is consistent with the principles of Tier II Relief, which generally defer to home jurisdiction law and practice with respect to procedure.
Accordingly, on behalf of Sanofi-Synthélabo, we respectfully request exemptive relief from the provisions of Rule 14d-7(a)(1) to permit Sanofi-Synthélabo to assert the Minimum Tender Condition in the manner set forth in this Letter and in the U.S. Prospectus and the Prospectus Supplement if it is determined after the expiration of the U.S. Offer and after the withdrawal rights of tendering security holders have terminated that the Minimum Tender Condition has not been satisfied.
We note that the Staff has recently granted similar "no-action" relief in other recent transactions that involved the centralized counting procedures employed in France. See, e.g., Serono S.A. Offer for All Outstanding Ordinary Shares, ADSs, OCEANEs and Warrants of Genset (Sept. 12, 2002) (hereafter, Serono/Genset No-Action Letter) (Staff recommendation that the Commission not take enforcement action pursuant to Regulation 14D if offeror announced after the expiration of the offers whether the minimum condition to the U.S. offer had been satisfied).
There are several potential points of conflict between the U.S. tender offer rules, French law and practice and German law and practice. Sanofi-Synthélabo believes that the best method for reconciling these potential conflicts is a triple offer structure that permits holders of Aventis ordinary shares located in the United States to participate in the transaction through the U.S. Offer on substantially the same terms as holders located in other jurisdictions may participate in the French Offer and in the German Offer, as applicable.
The U.S. Offer will be open to all holders of Aventis ADSs, wherever located, and to holders of Aventis ordinary shares who are located in the United States; the French Offer will be open to holders of Aventis ordinary shares (other than Aventis ordinary shares represented by Aventis ADSs) who are located in France or who are located outside of France, Germany and the United States if, pursuant to the local laws and regulations applicable to such holders, they are permitted to participate in the French Offer; and the German Offer will be open to holders of Aventis ordinary shares (other than Aventis ordinary shares represented by Aventis ADSs) who are located in Germany.
Rule 14d-10(a)(1) under the Exchange Act provides that no person shall make a tender offer unless the offer is open to all security holders of the class of securities subject to the tender offer. Rule 14d-1(d)(2)(ii) provides exemptive relief from this provision and allows a bidder that qualifies for Tier II Relief to separate its offer "into two offers: one offer made only to U.S. holders and another offer made only to non-U.S. holders" (emphasis added). It is a condition of this relief that the "offer to U.S. holders must be made on terms at least as favorable as those offered any other holder of the same class of securities that is the subject of the tender offers."18
Notwithstanding Sanofi-Synthélabo's eligibility for Tier II Relief, literal application of Rule 14d-1(d)(2)(ii) would not exempt the triple offer structure described in this Letter from the application of Rule 14d-10(a)(1). First, Rule 14d-1(d)(2)(ii) contemplates a U.S. offer that is made only to U.S. holders and another that is made only to non-U.S. holders. Here, the U.S. Offer is made to U.S. holders of Aventis ordinary shares (other than Aventis ordinary shares represented by Aventis ADSs) and to all holders of Aventis ADSs, wherever located. Second, Rule 14d-1(d)(2)(ii) contemplates a dual offer structure. Here, a triple offer structure is proposed.
We do not believe that these technical differences should disqualify the Offers from the exemptive relief available under Rule 14d-1(d)(2)(ii). Collectively, the French Offer and the German Offer "are made only to non-U.S. holders." Any U.S. holder of any Aventis security (as well as some non-U.S. holders of Aventis ADSs) will be tendering in an offer that is conducted in accordance with the Exchange Act. The German Offer has been bifurcated from the French Offer solely to comply with German law and regulations. No U.S. holder is eligible to tender into the German Offer, and no Aventis securities held by U.S. holders will be purchased and exchanged except pursuant to the U.S. Offer, which will be conducted in accordance with the U.S. federal securities laws, including Regulations 14D and 14E under the Exchange Act (including Rule 14d-1(d)), except to the extent of any exemptive relief granted pursuant to this Letter. We note that the Staff has recently permitted other similar dual offer structures involving U.S. offers made for both ordinary shares held by U.S. holders and for ADSs held by holders, wherever located, even where the Tier II exemption under Rule 14d-1(d) was not available due to the level of U.S. ownership. See Alcan/Pechiney No-Action Letter, supra; Serono/Genset No-Action Letter, supra; Saipem SpA Offer for Shares and ADSs of Bouygues Offshore S.A. (July 29, 2002); Proposed Exchange Offer by Technip, S.A., for all of the outstanding ordinary shares and American Depositary Shares of Coflexip, S.A. (Aug. 30, 2001) (hereafter, Technip/Coflexip No-Action Letter); In the Matter of the Exchange Offer by Banco Bilbao Vizcaya Argentaria, S.A. for ordinary shares and American Depositary Shares of BBVA Banco Frances (Apr. 19, 2001) (hereafter, Banco Bilbao Vizcaya Argentaria S.A. No-Action Letter).
Accordingly, on behalf of Sanofi-Synthélabo, we respectfully request exemptive relief from the provisions of Rule 14d-10(a)(1) to permit the Offers to be conducted according to the triple-offer structure described in this Letter and in the U.S. Prospectus and the Prospectus Supplement, notwithstanding that read literally Rule 14d-1(d)(2)(ii) contemplates Tier II exemptive relief only for a dual offer structure in which one offer is made "only" to U.S. holders and "another offer" is made only to non-U.S. holders.
Among other things, Rule 14e-5 under the Exchange Act prohibits a person making a tender or exchange offer for an equity security from, directly or indirectly, purchasing or making any arrangement to purchase such security or any security which is immediately convertible into or exchangeable for such security except pursuant to such offer. The prohibition continues from the time of the public announcement of the offer until the date that the offer expires, including any extensions thereof (the "Restricted Period"). See Rule 14e-5(a). There is an express exception for purchases or arrangements to purchase if the cross-border tender offer is excepted under Rule 14d-1(c) (often called "Tier I Relief" available in the event, among other conditions, that fewer than 10% of the subject securities are held by U.S. holders) and certain other conditions have been met. See Rule 14e-5(b)(10). There is no such exemption for cross-border tender offers that qualify for Tier II Relief under Rule 14d-1(d). However, pursuant to Rule 14e 5(d), upon written application or upon its own motion, the Commission may grant an exemption from the provisions of Rule 14e-5.
A literal application of Rule 14e-5 could be interpreted to prohibit Sanofi-Synthélabo's purchase of Aventis ordinary shares pursuant to the French Offer and/or the German Offer after the announcement of the U.S. Offer.19 Notwithstanding that a dual offer structure is expressly contemplated and permitted under the Tier II Relief provided by Rule 14d-1(d), we understand that it may be the Commission's position that an individual exemption from Rule 14e-5 may still be needed for a dual offer structure. See, e.g., Manual of Publicly Available Telephone Interpretations, Third Supplement, Regulation M-A, L. Rule 14e-5, Question 3 (SEC Division of Corporation Finance, July 2000).
On behalf of Sanofi-Synthélabo, we hereby respectfully request exemptive relief pursuant to Rule 14e-5(d) from the provisions of Rule 14e-5 with regard to purchases of Aventis securities made pursuant to the French Offer and/or the German Offer and during any subsequent offering period for the French Offer and the German Offer.
As required in order to qualify for Tier II relief, holders of Aventis ordinary shares who are located in the United States will be entitled to participate in the U.S. Offer on economic terms as favorable as those offered to holders of Aventis ordinary shares in the French Offer and in the German Offer. Sanofi-Synthélabo has taken steps to ensure (i) that the procedural terms of the Offers will be as equivalent as practicably possible, given the considerations of local law and customary local practice, and (ii) that the consideration in the Offers will be the same, except that cash consideration payable for tendered Aventis ADSs (including any cash paid in lieu of fractional shares) will be converted from euros to U.S. dollars at the then-prevailing current exchange rate.
During the Restricted Period, the only offers to purchase and the only purchases of Aventis securities by Sanofi-Synthélabo that are made outside the U.S. Offer will be made pursuant to the French Offer and the German Offer. Because the proposed triple offer structure involves purchases pursuant to a foreign tender offer, it does not present the same risks as would open market or private purchases, and we believe that the policies forming the basis for Rule 14e-5 will not be violated if the exemption requested is granted. Further, Sanofi-Synthélabo's intention to make purchases pursuant to the French Offer and the German Offer is fully disclosed in the U.S. Prospectus and the Prospectus Supplement to holders of Aventis securities, and pursuant to the U.S. Offer, holders who tender in the U.S. Offer will be entitled to receive the same consideration paid per Aventis security as will be paid pursuant to purchases under the French Offer or the German Offer. Lastly, we note that under applicable French law and regulations, Sanofi-Synthélabo is prohibited from effecting any market transactions in any equity securities of Aventis (including convertibles) until the publication of the results of the Offers. See Article 5.2.12 of the General Regulation.
We believe that the exemptive relief requested in this Letter is consistent with the dual offer structure expressly permitted by the Tier II Relief provided by Rule 14d-1(d), as well as consistent with the exemptive relief granted in connection with other tender offers similarly structured as dual offers that did not qualify for Tier II Relief. See Alcan/Pechiney No-Action Letter, supra; Serono/Genset No-Action Letter, supra; Technip/Coflexip No-Action Letter, supra; Banco Bilbao Vizcaya Argentaria S.A. No-Action Letter, supra; In the Matter of TotalFina S.A., Exchange Offer for Securities of Elf Aquitaine (July 21, 1999) (granted pursuant to former Rule 10b-13, the predecessor rule to Rule 14e-5).
Among other things, Rule 14d-10 under the Exchange Act prohibits any bidder from making a tender offer unless "the consideration paid to any security holder pursuant to the tender offer is the highest consideration paid to any other security holder during such tender offer." Rule 14d-10(a)(2). Rule 14d-10(c) provides, however, that Rule 14d-10(a)(2) shall not prohibit the offer of more than one type of consideration in a tender offer, provided that:
In the Offers, pursuant to the mix and match election feature, as described above, a holder of Aventis securities will be entitled to make an All Stock Election and an All Cash Election with respect to any Aventis securities tendered in either the initial offering period or the subsequent offering period, if any. However, as described above, these elections will be satisfied in full only to the extent that off-setting elections have been made by other tendering holders of Aventis securities in the Offers on a combined basis. Because the satisfaction of any election depends on the election made by other tendering holders of Aventis securities in the Offers, there can be no assurance that tendering holders will receive all of their consideration in the form elected. Further, because the mix and match proration and allocation adjustments (including the proration factor) will be applied separately to elections made with respect to Aventis securities tendered in the initial offering period and to elections made with respect to Aventis securities tendered in the subsequent offering period, if any, there can be no assurance that an election will result in the same mix of consideration regardless whether the Aventis securities are tendered during the initial offering period or during the subsequent offering period, if any. Because the mix of consideration received by any security holder making a mix and match election will depend on the off-setting elections made by other security holders, and because the ratio of All Stock Elections to All Cash Elections made with respect to Aventis securities tendered into the initial offering period may be different from the ratio of All Stock Elections to All Cash Elections made with respect to Aventis securities tendered into the subsequent offering period, if any, it may be argued that security holders tendering in the initial offering period and security holders tendering in the subsequent offering period, if any, are not afforded equal right to elect among each of the types of consideration offered, in violation of Rule 14d-10(c)(1), or that because the mix and match proration and allocation adjustments (including the proration factor) will be applied separately in the initial offering period and the subsequent offering period, if any, the highest consideration received by a security holder making an All Cash Election or an All Stock Election, as the case may be, in the initial offering period will not necessarily be paid to each security holder making the same election in the subsequent offering period, if any, in violation of Rule 14d-10(c)(2).
We believe that security holders are afforded equal right to elect among each of the types of consideration offered. In our analysis, the mix and match election feature that will be made available in the Offers during both the initial offering period and any subsequent offering period complies with the "equal right" requirement of Rule 14d-10(c)(1), because each security holder is offered an equal right to make either an All Cash Election or an All Stock Election, and may exercise that right either during the initial offering period or any subsequent offering period. In each case the allocation and proration procedures will operate to ensure that, in the aggregate, 71.0% of the Aventis securities tendered into the Offers, during both the initial offering period and during any subsequent offering period, will be exchanged for Sanofi-Synthélabo securities and 29.0% will be purchased for cash. In both the initial offering period and any subsequent offering period, the exact mix of consideration that a tendering security holder will receive will depend on the off-setting elections made by other tendering security holders in that offering period. Rule 14d-10(c)(1) does not require an equal outcome to all elections - only an equal right to make the election. However, Rule 14d-10(c)(2) does require an equality of outcomes that will not necessarily result from the Offers because the mix and match proration and allocation adjustments (including the proration factor) will be applied separately in the initial offering period and the subsequent offering period, if any. Only if the ratio of All Cash Elections to All Cash Stock Elections made with respect to Aventis securities tendered in the initial offering period is identical to the ratio of All Cash Elections and All Stock Elections made with respect to Aventis securities tendered in the subsequent offering period, if any, such that the proration factor in the initial and the subsequent offering period is identical, will it be the case that the consideration per Aventis security tendered pursuant to an All Cash Election will be the same in both the initial and the subsequent offering periods and the consideration per Aventis security tendered pursuant to an All Stock Election will be the same in both the initial and the subsequent offering periods.20
Accordingly, on behalf of Sanofi-Synthélabo, we hereby respectfully request exemptive relief from the provisions of Rule 14d-10(c) to permit the mix and match feature of the Offers to allow holders of Aventis securities to elect among the forms of consideration in both the initial offering period and the subsequent offering period in the manner described in this Letter and in the U.S. Prospectus and the Prospectus Supplement and that the Staff confirm that it will not otherwise recommend enforcement action under Rule 14d-10(a)(2) if the mix and match feature of the Offers is conducted in the manner described in this Letter and in the U.S. Prospectus and the Prospectus Supplement.
We note that, in the past, the Staff has granted relief to allow an offer to combine a mix and match election feature with a subsequent offering period, notwithstanding that the mix and match election feature ceased to be available at all after the fifth calendar day of the subsequent offering period and, therefore, tendering holders had no right to make any mix and match election during the subsequent offering period after that time. See SERENA Software, Inc. Offer for Shares and ADSs of Merant plc (Apr. 13, 2004) (hereafter, SERENA Software No-Action Letter); Amerada Hess Corporation Offer for Shares and ADS of LASMO plc (Dec. 13, 2000) (hereafter, Amerada Hess No-Action Letter); The Royal Bank of Scotland Group plc Offer for Shares and ADSs of National Westminster Bank PLC (Dec. 30, 1999) (hereafter, The Royal Bank of Scotland No-Action Letter); Telewest Communications Plc Recommended Offer for General Cable Plc (Aug. 12, 1998) (hereafter, Telewest Communications No-Action Letter).
If, through the Offers, on a combined basis, Sanofi-Synthélabo acquires between two-thirds and 95% of Aventis's total share capital and voting rights, Sanofi-Synthélabo intends to provide a subsequent offering period of at least 10 French Trading Days in each of the French Offer, the German Offer and the U.S. Offer.
Pursuant to Rule 14d-11 under the Exchange Act, a bidder may elect to provide a subsequent offering period of between three business days and 20 business days after the expiration of the initial offering period during which additional tenders may be accepted. See Rule 14d-11. To be eligible to provide a subsequent offering period under Rule 14d-11, a bidder must, among other things:
We believe that one purpose of the subsequent offering period is to allow a bidder to achieve the ownership thresholds at which the bidder becomes entitled to make an offre publique de retrait, or minority buy-out offer under French law (which Sanofi-Synthélabo would be entitled, but not obligated, to make if it acquires at least 95% of the total voting rights of Aventis). Such offre publique de retrait may be followed by an all-cash retrait obligatoire, or compulsory acquisition (which Sanofi-Synthélabo would be entitled, but not obligated, to make if it acquires 95% of the share capital and voting rights of Aventis). The procedures governing an offre publique de retrait and the retrait obligatoire are more fully described under the heading "Plans for Aventis after the Completion of this Offer, the French Offer and the German Offer - Subsequent Transactions; Compulsory Acquisition; Delisting" in the U.S. Prospectus. Therefore, whereas in a typical tender offer for a U.S. company, 100% ownership may be achieved through a second-step merger once a majority (or sometimes a supermajority, if required pursuant to the subject company's charter or the corporations law of its state of incorporation) of the subject company's voting rights have been acquired, under French law, Sanofi-Synthélabo must first acquire at least 95% of the voting rights and share capital of Aventis before it may benefit from the compulsory acquisition procedures.
Assuming that the AMF does not extend the expiration date of June 30, 2004 for the initial offering period, pursuant to applicable French regulations and customary practice, the subsequent offering period, if any, may not be opened before the second half of July, 2004. Because late July and August are traditional vacation periods in France characterized by investor inactivity, assuming Sanofi-Synthélabo is entitled to announce a subsequent offering period, Sanofi-Synthélabo may propose that the AMF set a timetable for the subsequent offering period that exceeds 20 U.S. business days in order to increase the likelihood that Sanofi-Synthélabo may achieve the ownership thresholds discussed above. In any event, the AMF, which has sole authority to set the timetable, may require a subsequent offering period in excess of 20 U.S. business days.
In any event, because under applicable French law Sanofi-Synthélabo must pay its dividend in respect of its 2003 results on or before September 30, 2004 and because the payment date for that dividend will be the settlement date of any subsequent offering period in the Offers, the settlement of the subsequent offering period must occur on or before September 30, 2004. As described above, under "Description of the Offers - Subsequent Offering Period," because the period between the expiration date of the subsequent offering period and the settlement date may be between 12 to 18 French Trading Days, it follows that any subsequent offering period would have to close on or about mid-September, 2004.
Accordingly, on behalf of Sanofi-Synthélabo, we hereby respectfully request exemptive relief from the provisions of Rule 14d-11 to permit a subsequent offering period that exceeds 20 U.S. business days for the reasons described in this Letter.
We do not believe that the exemptive relief that we are requesting represents a material departure from the Exchange Act, and we note that unlike under the Exchange Act rules, see Rule 14d-7(a)(2), under French law, holders that tender Aventis securities during the subsequent offering period may withdraw those securities at any time prior to the expiration of such subsequent offer period. We also believe that such exemptive relief is consistent with relief previously granted. See, e.g., SERENA Software No-Action Letter, supra; Offer by Celltech Group plc for Oxford GlycoSciences plc (Mar. 3, 2003); Serano/Genset No-Action Letter, supra; Offer by RWE Aktiengesellschaft for Innogy Holdings plc (Mar. 22, 2002); Schlumberger Limited's Offer for Sema plc (July 2, 2001); Offer by Amerada Hess No Action Letter, supra; Air Products and Chemicals, Inc. and L'Air Liquide S.A. Offer for the Outstanding Capital Stock of the BOC Group plc (Mar. 10, 2000).
Tier II Relief provides under Rule 14d-1(d)(2)(v) that an offer will satisfy the announcement and prompt payment requirements of Rule 14d-11(d)21 if:
Sanofi-Synthélabo intends to announce the results of the Offers (including the approximate number of securities deposited to date) and to pay for securities tendered in the initial offer period in accordance with the law and practice of France, the home jurisdiction of Aventis. If the conditions for a subsequent offering period under French law and regulations have been met, Sanofi-Synthélabo intends to announce a subsequent offering period at the same time as it announces the results of the Offers. However, as described above under "Description of the Offers - Subsequent Offering Period," because the AMF must establish and publish the timetable for the subsequent offering period and such subsequent offering period customarily begins within a few days after the AMF's publication of that timetable, there can be no assurance that the "subsequent offering period [will] commence[ ] immediately following" Sanofi-Synthélabo's announcement of the results of the tender offer. Therefore, even if Sanofi-Synthélabo complies with the requirements of French law and practice, there can be no assurance that all of the conditions to Rule 14d-1(d)(2)(v)'s exemptive relief will be met.
Accordingly, on behalf of Sanofi-Synthélabo, we hereby respectfully request exemptive relief from the provisions of Rule 14d-11(c) and Rule 14d-11(d) to permit Sanofi-Synthélabo to provide for a subsequent offering period in accordance with French law and practice in the manner set forth in this Letter and the U.S. Prospectus and the Prospectus Supplement, notwithstanding that such compliance with French law and practice may not qualify Sanofi-Synthélabo for the exemptive relief from the "announcement and prompt payment requirements" of Rule 14d-11(d) available under Rule 14d-1(d)(2)(v).
We note that the Staff has permitted subsequent offering periods to be conducted in a similar manner in compliance with French law and practice in the context of transactions that did not qualify for Tier II Relief. See, e.g., Alcan/Pechiney No-Action Letter, supra; Serono/Genset No-Action Letter, supra.
Rule 14d-11(e) requires that shares tendered during the subsequent offering period be immediately accepted and promptly paid for. As described above under "Description of the Offers - Subsequent Offering Period," in the proposed Offers, Sanofi-Synthélabo will accept all Aventis securities tendered during the subsequent offering period and will pay for such Aventis securities in accordance with French law and practice following the expiration of the subsequent offering period, rather than on the rolling basis required by Rule 14d-11(e).
Accordingly, on behalf of Sanofi-Synthélabo, we respectfully request exemptive relief from the provisions of Rule 14d-11(e) to permit Sanofi-Synthélabo to accept and pay for Aventis securities tendered during the subsequent offering period in accordance with French law and practice in the manner described in this Letter and in the U.S. Prospectus and the Prospectus Supplement. We believe that this relief is consistent with the general exemption of Tier II Relief, which provides that "[p]ayment made in accordance with the requirements of the home jurisdiction law or practice will satisfy the requirements of Exchange Act Rule 14e-1(c)."22 Such relief is also consistent with the position taken by the Staff with respect to dual offer structures that did not qualify for Tier II Relief. See, e.g., Alcan/Pechiney No-Action Letter, supra. We also note that unlike under the Exchange Act rules, see Rule 14d-7(a)(2), under French law, holders that tender Aventis securities into the Offers during the subsequent offering period may withdraw those securities at any time prior to the expiration of such offer period. Finally, we note that payment for Aventis securities on the rolling basis required by Rule 14d 11(e) would be incompatible with the mix and election feature that is offered to tendering holders of Aventis securities in the subsequent offering period. The mix and match proration and allocation procedures cannot be applied until the total number of Aventis securities tendered in the subsequent offering period pursuant to All Cash Elections relative to the total number of Aventis securities tendered pursuant to off-setting All Stock Elections is known.
Pursuant to Rule 14d-11(b), if a bidder is offering security holders a choice of different forms of consideration, a subsequent offering period is only permissible if there is no ceiling on any form of consideration offered. Here, it may be argued that there are ceilings on the forms of consideration offered because, as described above, the mix and match elections are subject to proration and allocation adjustments that will ensure, that in the aggregate, 71.0% of the Aventis securities will be exchanged for Sanofi-Synthélabo securities and 29.0% of the Aventis securities will be purchased for cash.
Pursuant to Rule 14d-11(f), a subsequent offering period is only permissible if the bidder offers the same form and amount of consideration to security holders in both the initial and the subsequent offering period. Here, it may be argued, that the form and amount of the consideration offered under the mix and match elections differs between the initial and the subsequent offering period because, as discussed above under "Discussion and Relief Requested - Rule 14d-10: Equal Treatment of Security Holders," the application of the mix and match allocation and proration adjustments (including the proration factor) separately in the initial offering period and the subsequent offering period, if any, may result in the mix of consideration paid per Aventis security tendered pursuant to an All Cash Election differing in the initial offering period and the subsequent offering period, if any, and/or the mix of consideration paid per Aventis security tendered pursuant to an All Stock Election differing in the initial offering period from the subsequent offering period.
Accordingly, on behalf of Sanofi-Synthélabo, we hereby respectfully request exemptive relief from the provisions of Rule 14d-11(b) and Rule 14d-11(f) to permit Sanofi-Synthélabo to provide for the mix and match election feature and a subsequent offering period in the manner set forth in this Letter and the U.S. Prospectus and the Prospectus Supplement.
We believe that granting the relief requested will not compromise the principles underlying the Exchange Act. While the consideration to be received in the Offers consists of a mixture of cash and Sanofi-Synthélabo securities that may be varied by making a valid mix and match election, the form and amount of the standard entitlement to receive cash and Sanofi-Synthélabo securities is the same for each holder of Aventis securities, in the initial offering period and in the subsequent offering period. Subject to maintaining the fixed ratio of exchanging 71.0% of the Aventis securities for Sanofi-Synthélabo securities and purchasing 29.0% for cash, there is no ceiling on the amount of cash or the amount of securities that Sanofi-Synthélabo will deliver pursuant to the Offers. The purpose of the mix and match election is to facilitate exchanges between holders that tender their Aventis securities. The maximum amount of Sanofi-Synthélabo securities to be issued in the Offers, the maximum amount of cash to be paid in the Offers and the maximum number of Aventis securities (i.e., any and all) will not be varied as a result of the mix and match election feature or of any election made pursuant to that feature. The extent to which any All Stock Election or All Cash Election, as the case may be, will be satisfied in full depends on the off-setting elections made by other tendering holders of Aventis securities in the initial offering period and, separately, in any subsequent offering period. Therefore, the extent to which mix and match elections will be satisfied in full (or be subject to proration procedures) in any subsequent offering period will be determined independently of any mix and match elections made in the initial offering period. Therefore, the pattern of mix and match elections made in the initial offering period will impose no limits or "ceilings" on the forms of consideration available to holders tendering their Aventis securities into the subsequent offering period.
We note that this relief is consistent with the position taken previously by the Staff with respect to offers that provide for a mix and match feature and a subsequent offering period. See SERENA Software No-Action Letter, supra; Zimmer Holdings, Inc. Tender Offer for Shares and ADSs of Centerpulse AG and Shares of InCentive Capital AG (June 19, 2003); Smith & Nephew Group plc and Smith & Nephew plc Tender Offers for Shares and ADS of Centrepulse AG and Shares of InCentive Capital AG (Apr. 24, 2003), Amerada Hess No-Action Letter, supra; The Royal Bank of Scotland No-Action Letter, supra; Telewest Communications No-Action Letter, supra.
* * * * * *
We appreciate the Staff's prompt consideration of these matters. Please do not hesitate to contact either the undersigned at (212) 403-1309 or my colleague Ben Burman at 011-33-1-45-02-73-47 with any questions regarding this matter.
Very truly yours,
/s/ David A. Katz
David A. Katz
cc: |
Paul M. Dudek Laurent Cohen-Tanugi Olivier Diaz Thierry Vassogne Jean-Pierrre Martel Ben Burman |
http://www.sec.gov/divisions/corpfin/cf-noaction/aventis061004.htm
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