JAZZ

Jazz Pharmaceuticals Plc - Form 8-K Summary

Business Context and Reporting Period

Date: February 3, 2021
Company: Jazz Pharmaceuticals Plc (Jazz)
Event: Entry into a Material Definitive Agreement to acquire GW Pharmaceuticals plc (GW).
Structure: The acquisition will be executed via a Scheme of Arrangement under UK law by Jazz's wholly-owned subsidiary, Jazz Pharmaceuticals UK Holdings Limited (Bidco).

Key Financial Metrics and Transaction Terms

Consideration per GW Share:

• Cash: $16.66 2/3 per GW Ordinary Share.
• Stock: Jazz Ordinary Shares determined by an "Exchange Ratio" based on the "Jupiter Share Price" (15-day VWAP of Jazz stock prior to closing).

Consideration per GW ADS (12 shares):

• Cash: $200.
• Stock: $20 worth of Jazz Ordinary Shares.

Exchange Ratio Tiers:

• If Jupiter Share Price > $139.72 and < $170.76: Ratio = $1.66 2/3 divided by Jupiter Share Price.
• If Jupiter Share Price ≤ $139.72: Fixed Ratio of 0.011929.
• If Jupiter Share Price ≥ $170.76: Fixed Ratio of 0.009760.

Financing Commitments (Item 8.01):
Jazz secured commitments from BofA Securities, Bank of America, and JPMorgan Chase for:

• Senior Secured Revolving Credit Facility: Up to $500.0 million.
• Senior Secured Term Loan B: Up to $3,150.0 million.
• Senior Secured Bridge Loan: Up to $2,200.0 million.

Termination Fee:
GW must pay Jazz $71.5 million if the agreement is terminated due to a change in GW board recommendation, failure of shareholder approval (with a superior proposal), court refusal to sanction, or GW accepting a superior proposal.

Material Changes and Conditions

Conditions to Closing:

• Approval by GW shareholders and High Court of Justice of England and Wales.
• Regulatory approvals, including expiration of the HSR Act waiting period.
• Listing approval of Jazz shares on Nasdaq.
• Accuracy of representations and warranties.

Equity Award Treatment:

• Pre-2021 GW options will vest and be canceled for an all-cash payment of the "in-the-money" value.
• 2021 GW options will convert to Jazz options, with performance-based options converting to time-vesting options.

Timeline:
The transaction must be completed by August 3, 2021, subject to up to two three-month automatic extensions.

Outlook, Risks, and Management Commentary

Strategic Rationale:
Management anticipates the acquisition will accelerate Jazz's growth, enhance its neuroscience leadership, and create long-term shareholder value.

Key Risks and Uncertainties:

• Regulatory and Approval Risk: Failure to obtain necessary shareholder, court, or regulatory approvals.
• Integration Risk: Challenges in integrating GW's business, potentially diverting management attention.
• GW Product Dependence: GW's reliance on the commercialization of Epidiolex/Epidyolex and the uncertain market potential of its pipeline (e.g., nabiximols).
• Financing Risk: Ability to obtain expected financing to consummate the deal.
• Market Volatility: Impact of the transaction announcement and broader market conditions on share prices.
• COVID-19 Impact: Adverse effects on operations, sales, and clinical development.

Forward-Looking Statements:
The filing contains forward-looking statements regarding the anticipated benefits and timing of the transaction, which are subject to significant risks and uncertainties.

Investor Verification Checklist

• Proxy Statement: Review the definitive proxy statement (Schedule 14A) to be filed by GW for detailed terms and risk factors.
• Transaction Agreement: Examine Exhibit 2.1 for full legal terms, covenants, and representations.
• Financing Conditions: Monitor the status of the credit facility commitments and their closing conditions.
• Regulatory Status: Track the progress of HSR Act waiting periods and other required regulatory approvals.
• Shareholder Approval: Await the results of the GW shareholder special meetings required to approve the Scheme of Arrangement.
• GW Financials: Review GW's recent 10-K and 10-Q filings to assess the financial health of the target company.