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Item 1.01.
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Entry into a Material Definitive Agreement.
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As
previously announced, Portola Pharmaceuticals, Inc., a Delaware corporation (“Portola”)
entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated as of May 5, 2020,
with Alexion Pharmaceuticals, Inc., a Delaware corporation (“Alexion”), and Odyssey Merger Sub
Inc., a Delaware corporation and a direct wholly owned subsidiary of Alexion (“Purchaser”). The
Merger Agreement provides that, upon the terms and subject to the conditions thereof, as promptly as practicable (but in no
event later than 15 business days following the date of the Merger Agreement), Purchaser will commence a tender offer, which
will not expire prior to July 1, 2020 (the “Offer”), to purchase all of the issued and outstanding
shares of common stock of Portola, par value $0.001 per share (the “Shares”), other than any Shares
held immediately prior to the effective time of the Merger (the “Effective
Time”) by Portola (or held in Portola’s treasury) or by any direct or indirect wholly owned
subsidiary of Portola and any Shares held immediately prior to the Effective Time by Alexion, Purchaser or any other direct
or indirect wholly owned subsidiary of Alexion, at a price of $18.00 per Share (the “Per Share
Amount”), net to the seller thereof in cash, without interest and subject to any applicable withholding taxes.
Promptly following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement,
Purchaser will be merged with and into Portola, with Portola surviving as a wholly owned direct subsidiary of Alexion (the
“Merger”). The Merger Agreement contemplates that the Merger
will be effected pursuant to Section 251(h) of the Delaware General Corporation Law, which permits completion of the
Merger without a vote of the holders of Shares upon the acquisition by Purchaser of a majority of the aggregate voting power
of the Shares. At the Effective Time , each Share, other than Shares accepted for payment in the Offer and certain Shares
held by Portola, Alexion or their respective subsidiaries, will be canceled and converted into the right to receive the Per
Share Amount (other than dissenting Shares and Shares held by Portola and Alexion and their respective
subsidiaries).
Under
the terms of the Merger Agreement, Purchaser’s obligation to accept and pay for Shares that are tendered in the Offer
is subject to customary conditions, including: (i) the condition that, prior to the expiration of the Offer, there have been
validly tendered and not validly withdrawn a number of Shares that, together with Shares then owned by Alexion and its
affiliates, would represent at least a majority of the then-outstanding Shares; (ii) the expiration or termination of the
applicable mandatory waiting period (and any extensions thereof) applicable to the Offer under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (iii) the receipt of approvals, consents or authorizations under
certain other specified antitrust laws; (iv) the accuracy of Portola’s representations and warranties in the Merger
Agreement, subject to customary materiality qualifications; (v) compliance by Portola with its covenants in the Merger
Agreement in all material respects, subject to a specified exception; (vi) the absence of a Company Material Adverse Effect
(as defined in the Merger Agreement) of which the existence or consequences are continuing and (vii) the absence of legal
restraints or applicable law making illegal or otherwise prohibiting the consummation of the transactions.
The
Merger Agreement provides that at the Effective Time: (i) all vested, in-the-money options will be canceled for the right
to receive the Per Share Amount for each Share covered by such options, less the applicable exercise price, (ii) all unvested,
in-the-money options held by non-employee directors and certain employees of Portola who have timely delivered and not revoked
executed restrictive covenant and release agreements (collectively, “Qualified Holders”) will become
fully vested (at target for performance-based options) and will be canceled for the right to receive the Per Share Amount for
each Share covered by such options, less the applicable exercise price, (iii) all unvested, in-the-money options held by non-Qualified
Holders will be converted into options to acquire Alexion common stock (at target for performance-based options) in accordance
with the formula set forth in the Merger Agreement; (iv) all out-of-the money options, whether vested or unvested, will be canceled
without payment of consideration; (v) all restricted stock units held by non-employee directors will become fully vested and will
be canceled for the right to receive the Per Share Amount for each Share covered by such restricted stock units; (vi) all restricted
stock units held by persons who are not non-employee directors will be converted into restricted stock units relating to Alexion
common stock in accordance with the formula set forth in the Merger Agreement and (vii) all performance stock units will be converted
at target into corresponding restricted stock units relating to Alexion common stock (but excluding any performance conditions)
in accordance with the formula set forth in the Merger Agreement.
The
Merger Agreement contains representations, warranties and covenants for both Portola and Alexion that are customary for a
transaction of this nature, including among others, the covenant regarding Portola’s obligation to conduct its business
and the business of its subsidiaries in the ordinary course, consistent with past practice in all material respects during
the pendency of the transactions, and both Portola’s and Alexion’s covenants regarding public disclosures and the
use of reasonable best efforts to cause the conditions to the Offer and the Merger to be satisfied. In addition, Portola has
agreed to certain non-solicitation obligations related to alternative acquisitions proposals.
The Merger Agreement provides certain
termination rights for both Portola and Alexion and further provides that a termination fee of $51.5 million will be payable
by Portola to Alexion upon termination of the Merger Agreement under certain circumstances, including if the board of
directors of Portola (the “Board”) effects an adverse recommendation change to enter into a
transaction agreement in respect of a “superior proposal” and if Alexion terminates the Merger Agreement as a
result of an adverse recommendation change of the Board.
The foregoing description of the
Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety
by the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated by reference
herein. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended
to provide any other factual information about Alexion, Purchaser or Portola. In particular, the representations, warranties
and covenants of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are
solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosure letters made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards
of materiality applicable to the contracting parties that differ from those applicable to investors. These confidential
disclosure letters contain information that modifies, qualifies and creates exceptions to the representations and warranties
and certain covenants set forth in the Merger Agreement. Accordingly, the representations and warranties should not be relied on by any investor as characterizations of the actual
state of facts and circumstances about Portola, Alexion or Purchaser at the date they were made or at any other time, and
information in the Merger Agreement should be considered in conjunction with the entirety of the factual disclosure about
Alexion and Portola in their public reports filed with the SEC. Information concerning the subject matter of the representations
and warranties may change after the date of the Merger Agreement, which subsequent information may not be fully reflected
in Alexion’s and Portola’s public disclosures.