DEFM14A 1 d390656ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box: ☐

 

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

Nexvet Biopharma

public limited company

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

  (2)  

Aggregate number of securities to which transaction applies:

 

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  (4)  

Proposed maximum aggregate value of transaction:

 

  (5)  

Total fee paid:

 

 

  Fee paid previously with preliminary materials:
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount previously paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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LOGO

NEXVET BIOPHARMA PLC

PROPOSED ACQUISITION – YOUR VOTE IS VERY IMPORTANT

 

 

Recommended Acquisition for Cash by

ZOETIS BELGIUM S.A.

A WHOLLY-OWNED INDIRECT SUBSIDIARY OF

ZOETIS INC.

of

NEXVET BIOPHARMA PLC

to be implemented by means of a Scheme of Arrangement

under Chapter 1 of Part 9 of the Companies Act 2014

 

 

On April 13, 2017, Nexvet and Zoetis entered into the Transaction Agreement for the recommended Acquisition of Nexvet by Zoetis through Bidco, whereby Bidco will acquire all of the issued and to be issued ordinary share capital of Nexvet for cash by means of a “scheme of arrangement” under Irish Law. Under the terms of the Acquisition, Nexvet Shareholders will be entitled to receive $6.72 in cash per Nexvet Share.

In connection with the Acquisition, Nexvet is calling two meetings to seek approvals from Nexvet Shareholders. The action to be taken by Nexvet Shareholders in respect of the Meetings is set out at pages 19-23.

Accompanying this document are proxy cards for the two meetings, the Scheme Meeting and the EGM, as further described herein. Nexvet Shareholders who hold in street name may, for administrative reasons, receive a second envelope containing the proxy card for the EGM. Instructions for returning proxy cards are set out at pages 10-11. Please complete and return your proxy cards even if you plan to attend and vote in person at the Scheme Meeting and/or the EGM.

Nexvet Shareholders who hold Nexvet Shares in street name should follow the voting instructions received from their brokerage firm, bank, dealer or other similar organization.

Voting Record Time: 5.00 p.m. (ET/New York time) on May 30, 2017.

 

 

This document should be read as a whole. The Nexvet Board has unanimously recommended that you vote in favor of the Resolutions. Information required under Section 452 of the Act is contained in Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document.

Capitalized words in this document are, unless otherwise noted, defined in Part 9 (Definitions).

Notices convening the Scheme Meeting and the EGM, both of which will be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, are set out in parts 10 and 11, respectively. The Scheme Meeting will start at 10:00 a.m. (Irish time). The EGM will start at 10:30 a.m. (Irish time) or, if later, as soon thereafter as the Scheme Meeting, convened for the same date and place, has concluded or been adjourned.

This document is dated June 2, 2017 and is first being mailed to Nexvet Shareholders on or about June 6, 2017.


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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

The release, publication or distribution of this document in or into certain jurisdictions may be restricted by the Laws of those jurisdictions. Accordingly, copies of this document and all other documents relating to the Acquisition are not being, and must not be, released, published, mailed or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction. Persons receiving such documents (including, without limitation, nominees, trustees and custodians) should observe these restrictions. Failure to do so may constitute a violation of the securities Laws of any such jurisdiction. To the fullest extent permitted by applicable Law, the companies involved in the Acquisition disclaim any responsibility or liability for the violations of any such restrictions by any person.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about this offer, you should consult an independent financial adviser who, if you are taking advice in Ireland, is authorized or exempted under the European Communities (Markets in Financial Instruments) Regulations 2007 (S.I. No. 60 of 2007) (as amended) or the Investment Intermediaries Act 1995 (as amended) or, if you are taking advice elsewhere, is an appropriately authorized independent financial adviser.

This document relates to a transaction which, if implemented, will result in the cancellation of the listing of Nexvet Shares on the NASDAQ Stock Market upon completion of the Acquisition.

Statements Required by the Takeover Rules

The Nexvet Directors accept responsibility for the information contained in this document other than information relating to Zoetis, Bidco, the Zoetis Group, the Zoetis Directors, the Bidco Directors and members of their immediate families, related trusts and persons connected with them for which the Zoetis Directors and the Bidco Directors accept responsibility. To the best of the knowledge and belief of the Nexvet Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Zoetis Directors and the Bidco Directors accept responsibility for the information contained in this document relating to Zoetis, Bidco, the Zoetis Group, the Zoetis Directors, the Bidco Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the Zoetis Directors and the Bidco Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Evercore Partners International LLP, which is authorized and regulated in the United Kingdom by the Financial Conduct Authority, and Evercore Group L.L.C., which is a securities broker-dealer registered with the SEC and subject to regulation by the SEC and FINRA, are acting as financial adviser for Nexvet, including for the purposes of Rule 3 of the Takeover Rules, and no one else in connection with the Acquisition and the other matters referred to in this document, and will not regard any other person as its client in relation to the Acquisition and the other matters referred to in this document and will not be responsible to anyone other than Nexvet for providing the protections afforded to clients of Evercore, nor for providing advice in relation to the Acquisition or the other matters referred to in this document. Neither Evercore nor any of its Subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with this document, any statement contained therein or otherwise.


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Cowen, which is a securities broker-dealer registered with the SEC and subject to regulation by the SEC and FINRA, is acting as financial adviser for Nexvet and for no one else in connection with the Acquisition and the other matters referred to in this document, and will not be responsible to anyone other than Nexvet for providing the protections afforded to clients of Cowen or for providing advice in relation to the Acquisition and the other matters referred to in this document.

Nexvet’s financial advisers are Evercore and Cowen. DLA Piper, Seattle and Matheson, Dublin are providing legal advice to Nexvet as to U.S. Law and Irish Law, respectively.

Goldman Sachs, which is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser exclusively for Zoetis and Bidco and no one else in connection with the Acquisition and the other matters referred to in this document, and will not regard any other person as its client in relation to the Acquisition and the other matters referred to in this document and will not be responsible to anyone other than Zoetis and Bidco for providing the protections afforded to clients of Goldman Sachs, nor for providing advice in relation to the Acquisition for the other matters referred to in this document.

Zoetis’ and Bidco’s financial adviser is Goldman Sachs. Morgan, Lewis & Bockius LLP, New York and Arthur Cox, Dublin are providing legal advice to Zoetis and Bidco as to U.S. Law and Irish Law, respectively.

This document is not intended to, and does not, constitute or form any part of any offer or invitation, or the solicitation of an offer, to purchase or otherwise acquire or subscribe for any securities pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities, in any jurisdiction in contravention of applicable Law.

This document does not constitute a prospectus or a prospectus equivalent document.

General

This document and any other information concerning the Acquisition will not be made available, directly or indirectly, in a jurisdiction where local Laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Acquisition is sent or made available in that jurisdiction, and the Acquisition will not be capable of acceptance from within a Restricted Jurisdiction.

To the fullest extent permitted by applicable Law, Nexvet, Zoetis, and Bidco disclaim any responsibility or liability for the violations of any such restrictions by any Person.

The attention of Nexvet Shareholders, who are resident in, or citizens of, or who have a contractual or legal obligation to forward this document to Persons in Restricted Jurisdictions, is drawn to paragraph 10 in Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document.

This document has been prepared for the purposes of complying with Irish Law and the Takeover Rules and U.S. proxy rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the Laws and regulations of any jurisdiction outside of Ireland or the United States.

Any response in relation to the Acquisition should be made only on the basis of the information contained in this document or any other document by which the Acquisition is made. Nexvet Shareholders are encouraged to read carefully the formal documentation in relation to the proposed Acquisition.

Zoetis reserves the right, subject to the consent of the Panel, to elect to implement the Acquisition by way of a Takeover Offer as described in Clause 3.7 of the Transaction Agreement. Without limiting Clause 3.7 of the Transaction Agreement, in such event, such offer will be implemented on terms and conditions that are as least as


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favorable to Nexvet Shareholders (except for an acceptance condition set at 80 per cent of the shares to which such offer relates or such lesser percentage being more than 50 per cent, as Bidco may, with the consent of the Panel (if required), decide) as those which would apply in relation to the Scheme

Pursuant to Rule 30.2(b) of the Takeover Rules, this document will be available to Nexvet Employees on Nexvet’s website, www.nexvet.com, and to Zoetis’ employees on Zoetis’ website www.zoetis.com/news-and-media.

Nexvet will also make a copy of this document and the documents required to be published pursuant to the Takeover Rules by Nexvet available on its website free of charge, subject to certain restrictions relating to Persons in Restricted Jurisdictions by no later than midday (ET/New York time) on June 7, 2017. A copy of this document and the documents required to be published pursuant to the Takeover Rules by Bidco will be made available by Bidco on Zoetis’ website free of charge, subject to certain restrictions relating to persons in Restricted Jurisdictions, by no later than midday (ET/New York time) on June 7, 2017.

Unless expressly provided otherwise, information contained on, or accessible through, any website referred to in this document is not a part of, and is not incorporated into, this document, and any reference to a website in this document is an inactive textual reference only.

No Profit Forecast / Asset Valuation

No statement in this document is intended to constitute a profit forecast for any period, nor should any statements be interpreted to mean that earnings or earnings per share will necessarily be greater or lesser than those for the relevant preceding financial periods for Nexvet, Zoetis or Bidco as appropriate. No statement in this document constitutes an asset valuation.

Rule 8 Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Takeover Rules, if any person is, or becomes, “interested” (directly or indirectly) in, 1% or more of any class of “relevant securities” of Nexvet, all “dealings” in any “relevant securities” of Nexvet (including by means of an option in respect of, or a derivative referenced to, any such “relevant securities”) must be publicly disclosed by not later than 3.30 p.m. (Eastern Time) on the “business day” following the date of the relevant transaction. This requirement will continue until the Offer Period ends. If two or more persons co-operate on the basis of any agreement, either express or tacit, either oral or written, to acquire an “interest” in “relevant securities” of Nexvet, they will be deemed to be a single person for the purpose of Rule 8.3 of the Takeover Rules.

Under the provisions of Rule 8.1 of the Takeover Rules, all “dealings” in “relevant securities” of Nexvet by Zoetis or Bidco, or by any party acting in concert with any of them, must also be disclosed by no later than 12 p.m. (Eastern Time) on the “business day” following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose “relevant securities” “dealings” should be disclosed, can be found on the Irish Takeover Panel’s website at www.irishtakeoverpanel.ie.

“Interests in securities” arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an “interest” by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks above are defined in the Takeover Rules, which can also be found on the Irish Takeover Panel’s website www.irishtakeoverpanel.ie.

If you are in any doubt as to whether or not you are required to disclose a “dealing” under Rule 8, please consult the Irish Takeover Panel’s website at www.irishtakeoverpanel.ie or contact the Irish Takeover Panel on telephone number +353 1 678 9020 or fax number +353 1 678 9289.


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Cautionary Statement Regarding Forward-Looking Statements

This document contains forward-looking statements. All statements other than historical facts are forward-looking statements, including statements regarding anticipated future results, or other non-historical facts. They may be identified by the words “will,” “may,” “could,” “would,” “to be,” “might,” “believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “future,” “positioned,” “potential,” “intend,” “continue,” “remain,” “scheduled,” “outlook,” “set to,” “subject to,” “upcoming,” “target” or similar expressions. These statements are based on current views, expectations, estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. If one or more of these risks or uncertainties materialize, or if underlying views, expectations, estimates or assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement.

Factors that could cause or contribute to such differences include, but are not limited to: uncertainties as to the timing of the Acquisition; uncertainties as to whether Zoetis or Bidco will be able to consummate the Acquisition; uncertainties as to whether Nexvet Shareholders will provide the requisite approvals for the Acquisition on a timely basis, or at all; the possibility that competing offers will be made; the possibility that certain conditions to the consummation of the Acquisition will not be satisfied, including obtaining the requisite approvals of the Scheme; the possibility that Nexvet Shareholders will file lawsuits challenging the Acquisition, including actions seeking to rescind the Scheme or enjoin the consummation of the Acquisition; the ability to meet expectations regarding the accounting and tax treatments of the Acquisition; changes in relevant tax and other Laws or regulations; the integration of Nexvet being more difficult, time-consuming or costly than expected; the diversion of Nexvet, Zoetis or Bidco management time and attention to issues relating to the Acquisition and integration; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the Acquisition; the difficulty retaining certain key employees of Nexvet, Zoetis or Bidco following the Acquisition; the scope, timing and outcome of any ongoing legal proceedings involving Nexvet, Zoetis or Bidco and the impact of any such proceedings on its financial condition, results of operations or cash flows; the possibility that costs, fees, expenses or charges Nexvet, Zoetis or Bidco incur in connection with the Acquisition are greater than expected; the possibility that the Scheme may be terminated in circumstances that require Nexvet to reimburse certain expenses of Zoetis or Bidco; the ability of Nexvet, Zoetis or Bidco to protect intellectual property and preserve intellectual property rights; and changes in the economic and financial conditions of the businesses of Zoetis or Nexvet.

In addition, actual future results and other future circumstances of Nexvet are subject to other risks and uncertainties that relate more broadly to Nexvet’s business, including its future results of operations and financial position; ability to continue as a going concern; its ability to execute its business strategy, including obtaining successful pivotal study results, developing its pipeline of product candidates, completing facilities upgrades, manufacturing its own product candidates, meeting conditions for the receipt of government grants, making timely regulatory submissions, and qualifying for conditional licensure or obtaining product approvals; and those risks and uncertainties discussed in Nexvet’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents on file with the SEC.

Furthermore, actual future results and other future circumstances of Zoetis or Zoetis Bidco are subject to other risks and uncertainties that relate more broadly to Zoetis’ business. A further list and description of risks, uncertainties and other matters can be found in Zoetis’ Annual Report on Form 10-K for the fiscal year ended December 31, 2016, including in the sections thereof captioned “Forward-Looking Statements and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” in Zoetis’ Quarterly Reports on Form 10-Q and in Zoetis’ Current Reports on Form 8-K.

There may be additional risks that Nexvet, Zoetis and Bidco do not presently know or currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements.

Forward-looking statements speak only as of the date on which they are made. Nexvet, Zoetis and Bidco expressly disclaim any obligation to update or revise any forward-looking statement, except as required by Law.


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Rounding

Certain figures included in this document have been subjected to rounding adjustments. Any figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.


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TABLE OF CONTENTS

 

SUMMARY TERM SHEET    1

QUESTIONS AND ANSWERS ABOUT THE ACQUISITION, THE SCHEME OF ARRANGEMENT, THE SCHEME MEETING, THE EGM AND THE COURT HEARING

   8
ADVISERS TO NEXVET, ZOETIS AND BIDCO    17
ACTION TO BE TAKEN/GENERAL INFORMATION    19
PART 1 LETTER OF RECOMMENDATION FROM THE NEXVET BOARD    24
1.    Introduction    24
2.    Summary of the Terms of the Acquisition    24
3.    Structure of the Acquisition    25
4.    Background to and Reasons for Recommending the Acquisition    26
5.    Effects of the Acquisition    31
6.    Expenses Reimbursement Agreement    32
7.    Transaction Agreement    34
8.    Nexvet Plans and Nexvet Convertible Securities    43
9.    Irrevocable Undertakings    43
10.    Delisting and Cancellation of Trading    44
11.    Financial Analysis    44
12.    Further Information    45
13.    Action to be Taken    45
14.    Overseas Shareholders    45
15.    Additional Information on Nexvet    45
16.    Recommendation    45
PART 2 LETTER FROM BIDCO    47
1.    Background to and Reasons for the Acquisition    47
2.    Information on Zoetis and Bidco    47
3.    The Consideration    47
4.    Financing the Acquisition    48
5.    Directors, Management, Employees and Nexvet’s Business    48
6.    Payment of Scheme Consideration    49

PART 3 INFORMATION REQUIRED UNDER SECTION 452 OF THE ACT—RECOMMENDED ACQUISITION FOR CASH OF NEXVET

   50
1    Introduction    50
2    The Acquisition    50
3    The Conditions    51
4    Consents and Meetings    51

 

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5    Structure of the Scheme    54
6    Nexvet Convertible Securities    54
7    The Nexvet Directors and Executive Officers and the Effect of the Scheme on their Interests    55
8    Taxation    59
9    Settlement, Listing and Dealings    59
10    Overseas Shareholders    60
11    Opinion of Nexvet’s Financial Adviser    60
12    Certain Financial Projections    67
13    Action to be Taken    69
14    Further Information    69
PART 4 THE SCHEME OF ARRANGEMENT    70
PART 5 CONDITIONS AND FURTHER TERMS OF THE ACQUISITION AND THE SCHEME    79
Part A    79
Part B    81
PART 6 INFORMATION ON ZOETIS AND BIDCO    86
PART 7 FINANCIAL INFORMATION RELATING TO NEXVET    88
PART 8 ADDITIONAL INFORMATION    89
1.    Responsibility    89
2.    Directors and Registered Office    89
3.    Market Quotations    89
4.    Security Ownership of Certain Beneficial Owners and Management    90
5.    Shareholdings, Dealings and Arrangements    93
6.    Material Contracts    104
7.    Directors and Service Contracts    104
8.    Irish Taxation    105
9.    U.S. Federal Income Tax Consequences    106
10.    Material Changes    110
11.    Consents    110
12.    Appraisal Rights    110
13.    Sources and Bases of Information    110
14.    Other Information    111
15.    Documents Available for Inspection    112
16.    Other Statements    114
PART 9 DEFINITIONS    115
PART 10 NOTICE OF NEXVET SCHEME MEETING    125
PART 11 NOTICE OF EXTRAORDINARY GENERAL MEETING OF NEXVET BIOPHARMA PLC    128

 

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SUMMARY TERM SHEET

The following summary highlights information in this document related to the Acquisition and may not contain all the information that is important to Nexvet Shareholders. Accordingly, you should read carefully this entire document, its annexes and the documents referred to in this document. Each item in this summary includes a page reference directing you to a more complete description of the item in this document.

The Companies (Pages 45, 47 and 86)

Nexvet Biopharma

Nexvet (NASDAQ: NVET) is a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals, such as dogs and cats, by developing and commercializing novel, species-specific biologics. Nexvet’s platform technology, which it refers to as “PETization,” is an algorithmic approach that enables Nexvet to rapidly create monoclonal antibodies (mAbs), a type of biologic that is designed to be recognized as “self” or “native” by an animal’s immune system, a property it refers to as “100% species-specificity.” PETization is designed to build upon the safety and efficacy data from clinically tested human therapies to create new therapies for companion animals, which is intended to reduce clinical risk and development cost.

Nexvet is leveraging diverse global expertise and incentives to build a vertically integrated biopharmaceutical company, which conducts drug discovery in Australia, conducts clinical development in the United States and Europe and conducts manufacturing in Ireland.

Nexvet’s principal executive offices are located at Unit 5, Sragh Technology Park, Rahan Road, Tullamore, Co. Offaly, Ireland.

Zoetis Inc.

Zoetis (NYSE: ZTS) is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 60 years of experience in animal health, Zoetis discovers, develops, manufactures and markets veterinary vaccines and medicines, complemented by diagnostic products, genetic tests, biodevices and a range of services. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2016, Zoetis generated annual revenue of $4.9 billion with approximately 9,000 employees.

Zoetis’ principal executive offices are located at 10 Sylvan Way, Parsippany, New Jersey 07054.

Bidco

Bidco is a limited liability company (société anonyme) incorporated under the Laws of Belgium. A wholly-owned indirect Subsidiary of Zoetis, Bidco is an operating subsidiary of Zoetis and is serving as the acquisition vehicle for the Acquisition.

The Acquisition (Page 24 and 50)

On April 13, 2017, Nexvet and Zoetis announced that they had reached agreement on the terms of a recommended acquisition of Nexvet by Zoetis through Bidco, whereby Bidco will acquire all of the issued and to be issued share capital of Nexvet for cash by means of a “scheme of arrangement” under Irish Law. Upon consummation of the Acquisition, Nexvet would become a wholly-owned Subsidiary of Bidco.

Under the terms of the Acquisition, Nexvet Shareholders will be entitled to receive $6.72 in cash per Nexvet Share, including any Nexvet Shares issued upon exercise of outstanding exercisable or convertible securities, in

 



 

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return for the cancellation of those shares, on the date the Scheme becomes effective. This consideration values the entire issued and to be issued share capital of Nexvet at approximately $85 million and represents:

 

    a 66% premium over the closing sale price of $4.05 per Nexvet Share on April 12, 2017 (being the latest date prior to announcement of the Acquisition);

 

    a 71% premium over Nexvet’s volume weighted average price per share for the one-month period ended on April 12, 2017; and

 

    an 87% premium over Nexvet’s volume weighted average price per share for the three-month period ended on April 12, 2017.

The closing sale price of a Nexvet Share on NASDAQ on June 1, 2017 was $6.65. You are encouraged to obtain current market quotations for Nexvet Shares in connection with voting your Nexvet Shares.

Upon completion of the Acquisition, trading of Nexvet Shares on NASDAQ will be cancelled. As a result of such cancellation, the Nexvet Shares will not be publicly-traded or listed on a securities exchange in the United States or elsewhere and will be deregistered under the Exchange Act.

The Scheme Meeting (Pages 8 and 19-21)

Date, Time and Place. The Scheme Meeting will be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, commencing at 10:00 a.m. (Irish time).

Purpose. The purpose of the Scheme Meeting is to allow the High Court to ascertain whether Nexvet Shareholders are in favor of the Scheme. At the Scheme Meeting, you will be asked to consider and vote upon a resolution to approve the Scheme, with or without modification. Nexvet is currently not aware of any other business to come before the Scheme Meeting.

Quorum. Nexvet Shareholders may not take action at the Scheme Meeting unless there is a quorum present. The quorum for the Scheme Meeting shall be one Nexvet Shareholder of record present in person or by proxy at the commencement of the Scheme Meeting.

Vote Required. For the Scheme to be approved at the Scheme Meeting, the Scheme must be approved by a majority in number of Nexvet Shareholders voting at the Scheme Meeting, either in person or by proxy, representing at least 75% in value of Nexvet Shares voted.

In considering its approval of the Scheme, the High Court will consider whether there has been a sufficiently large (in the High Court’s judgment) number of Nexvet Shares included in the vote in favor of the Scheme to fairly represent the opinion of Nexvet Shareholders. As a result, it is important that as many votes as possible are cast at the Scheme Meeting. If you abstain from voting, fail to cast your vote, in person or by proxy, or fail to give voting instructions to your brokerage firm, bank, dealer or other similar organization, it will have no effect on the approval of the Resolutions to be proposed at the Scheme Meeting. The failure to vote will however increase the likelihood of the Scheme being defeated at the Scheme Meeting or rejection by the High Court for lack of a fair representation of Nexvet Shareholder opinion, resulting in the Acquisition not proceeding.

The EGM (Pages 8 and 21)

Date, Time and Place. The EGM will be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, commencing at 10:30 a.m. (Irish time) or, if later, immediately after the conclusion or adjournment of the Scheme Meeting.

Purpose. At the EGM, you will be asked to consider and vote upon resolutions (1) to amend the Nexvet Constitution to broaden the objects of Nexvet in order to enable it to implement the Scheme, (2) to approve the

 



 

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Scheme and to authorize the Nexvet Directors to take such action as they consider necessary or appropriate to carry the Scheme into effect, (3) to approve the cancellation of the Cancellation Shares pursuant to Section 84 of the Act, (4) to authorize the directors of Nexvet to effect the allotment of the New Nexvet Shares and to apply the reserve in the books of Nexvet arising upon the cancellation of the Cancellation Shares in paying up in full at par the New Nexvet Shares, (5) to amend the Nexvet Constitution so that any Nexvet Shares allotted and issued following the EGM will either be subject to the terms of the Scheme or will be immediately acquired by Bidco for the same consideration per Nexvet Share as shall be payable to Nexvet Shareholders by Bidco under the Scheme, (6) to approve the cancellation of the Euro Deferred Shares pursuant to Section 84 of the Act, and (7) to approve a proposal to adjourn the EGM, if necessary, to solicit additional proxies in favor of approval of the EGM Resolutions. Nexvet is currently not aware of any other business to come before the EGM.

Quorum. Nexvet Shareholders may not take action at the EGM unless there is a quorum present. A quorum is present if one or more Nexvet Shareholders is present in person or by proxy holding not less than a majority of the issued and outstanding Nexvet Shares entitled to vote at the EGM.

Vote Required. Resolutions 2, 4, and 7 are being proposed as ordinary resolutions and, to pass, must be approved by a majority of the votes cast on the resolution. Resolutions 1, 3, 5 and 6 are being proposed as special resolutions and, to pass, must be approved by at least 75% of the votes cast on the resolution. If you abstain from voting, fail to cast your vote, in person or by proxy, or fail to give voting instructions to your brokerage firm, bank, dealer or other similar organization, it will have no effect on the approval of the EGM Resolutions.

Voting Record Time (Pages 9 and 19)

Only holders of Nexvet Shares as of 5:00 p.m. (ET/New York time) on May 30, 2017, the Voting Record Time for the Meetings, will be entitled to notice of, and to vote at, the Meetings or any adjournments thereof. At the Voting Record Time, there were 11,916,712 Nexvet Shares outstanding, held by 62 holders of record. Each issued and outstanding Nexvet Share is entitled to one vote on each proposal on which the holder of such Nexvet Share is eligible to vote and any other matter properly coming before the Meetings.

Voting and Proxies (Pages 10-12)

Any Nexvet Shareholder of record entitled to vote at the Meetings may submit a proxy via the Internet, by returning the accompanying proxy cards by mail, or by voting in person at the Meetings. If you intend to submit your proxy via the Internet, you must do so no later than the date and time indicated on the applicable proxy card(s). Even if you plan to attend the Meetings, if you hold Nexvet Shares in your own name as the Nexvet Shareholder of record, please vote your shares by completing, signing, dating and returning the accompanying proxy cards or by using the Internet voting instructions printed on your proxy cards.

If your Nexvet Shares are held in street name, you should instruct your brokerage firm, bank, dealer or other similar organization on how to vote such Nexvet Shares using the instructions provided by your brokerage firm, bank, dealer or other similar organization. If your Nexvet Shares are held in street name, you must obtain a legal proxy from such brokerage firm, bank, dealer or other similar organization in order to vote in person at the Meetings. If you fail to provide your brokerage firm, bank, dealer or other similar organization with instructions on how to vote your Nexvet Shares, your brokerage firm, bank, dealer or other similar organization will not be able to vote such shares at the Meetings.

Revocability of Proxy (Page 13)

For Nexvet Shareholders who hold in street name:

If your shares are held by your brokerage firm, bank, dealer, or other similar organization, you should follow the instructions provided by them.

 



 

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For Nexvet Shareholders of Record:

If you are the Nexvet Shareholder of record, you may revoke your proxy in any one of three ways:

 

    you may submit, in accordance with the instructions set out above, another properly completed proxy card bearing a later date to be received by post or, during normal business hours, by hand, by the Proxy Return Time;

 

    you may send a written notice to Nexvet Biopharma plc, Unit 5, Sragh Technology Park, Rahan Road, Tullamore, Co. Offaly, Ireland, Attn: Company Secretary, bearing a date later than that indicated on the proxy card or the date you voted by Internet but prior to the date of the Meetings, stating that the proxy is revoked; or by signing and delivering a subsequently dated proxy card prior to the Proxy Return Time in accordance with the instructions on the proxy card. Your notice must be received by Nexvet no later than one hour before the relevant Meeting(s) on July 10, 2017 (or any adjourned Meeting(s)) where served by hand or post or 48 hours before the relevant Meeting(s) on July 10, 2017 (or any adjourned Meeting(s)) where sent electronically; or

 

    you may attend the Meetings and vote in person.

Your last vote, prior to or at the Meetings, is the vote that will be counted.

The Court Hearing (Page 9)

In addition to the approval of the Scheme by Nexvet Shareholders at the Scheme Meeting, in order for the Scheme to become effective, the sanction of the Scheme by the High Court at a hearing is required. This hearing is referred to as the Court Hearing. Subject to the approval of the Resolutions (with the exception of Resolution 6 at the EGM) proposed at the Meetings and the prior satisfaction of the Conditions, the Court Hearing is expected to be held during the second half of 2017.

Recommendation from the Nexvet Board of and Reasons for the Scheme (Pages 24-30)

The Nexvet Board unanimously recommends that all Nexvet Shareholders vote in favor of the Acquisition, the Scheme and all the Resolutions to be proposed at both the Scheme Meeting and the EGM. The Nexvet Directors who are Nexvet Shareholders intend to so vote their own beneficial holdings of Nexvet Shares, which represented approximately 4.6% of Nexvet Shares as of the Voting Record Time.

For the factors considered by the Nexvet Board in reaching its recommendation, see “Background to and Reasons for Recommending the Acquisition” in Part 1 (Letter of Recommendation from the Nexvet Board) beginning on page 24 of this document.

Irrevocable Undertakings from Members of the Nexvet Board and Certain Shareholders (Page 43)

Zoetis and Bidco have received irrevocable undertakings from all members of the Nexvet Board that they will vote in favor of the Proposals and Resolutions at the Meetings in their capacity as shareholders in respect of their entire beneficial holdings of Nexvet Shares. In the aggregate, this amounts to 543,813 Nexvet Shares, representing approximately 4.6% of the issued and outstanding ordinary share capital of Nexvet on May 30, 2017.

In addition, Zoetis and Bidco have received irrevocable undertakings from Farallon Capital Management, L.L.C. (acting through related companies), Adage Capital Partners GP, L.L.C. and Broadfin Capital, LLC that they will vote in favor of the Proposals and Resolutions at the Meetings in respect of their entire beneficial holdings of Nexvet Shares. In the aggregate, this amounts to 4,570,896 Nexvet Shares, representing approximately 38.4% of the issued and outstanding ordinary share capital of Nexvet on May 30, 2017.

 



 

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Opinion of Nexvet’s Financial Adviser (Pages 60-67)

On April 12, 2017, Evercore made a presentation of its advice to the Nexvet Board regarding the financial terms of the Acquisition, including a confirmation that it considered such financial terms to be fair and reasonable, having taken into account the commercial assessments of the Nexvet Directors. Later that day, Evercore issued a written opinion to the Nexvet Board stating that, as of April 12, 2017, and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth therein, the $6.72 in cash per Nexvet Share to be received by Nexvet Shareholders pursuant to the Scheme was fair, from a financial point of view, to such Nexvet Shareholders.

The full text of Evercore’s written opinion to the Nexvet Board, dated April 12, 2017, is attached as Annex C to this document and is incorporated by reference in this document in its entirety. Nexvet Shareholders should read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore in rendering its opinion. Evercore’s opinion was addressed to, and was provided for the information of, the Nexvet Board, in its capacity as such, and addressed only the fairness, from a financial point of view, of the Consideration to be received by Nexvet Shareholders pursuant to the Scheme as of the date of the opinion, and did not address any other aspects or implications of the Acquisition.

Appraisal Rights (Page 110)

If Nexvet Shareholders approve the Scheme at the Scheme Meeting and the High Court sanctions the Scheme, then, subject to the Scheme becoming effective in accordance with its terms, the Scheme will be binding on all Nexvet Shareholders, including those Nexvet Shareholders who did not vote or who voted against it at the Scheme Meeting. If Nexvet Shareholders approve the Scheme and the High Court sanctions the Scheme, no Nexvet Shareholder will have “dissenters” or “appraisal” rights under Irish Law or otherwise have any right to seek a court appraisal of the value of Nexvet Shares. If the Scheme becomes effective, all Nexvet Shareholders will receive the Consideration per Nexvet Share.

Exchange of Share Certificates (Page 44)

If the Acquisition proceeds, any share certificates in respect of the Nexvet Shares will cease to be of value and should (at the request of Nexvet) be delivered to Nexvet, or any person appointed by Nexvet, for cancellation or destruction following the Effective Date. It is intended that Nexvet will be re-registered as a private limited company in due course following the Effective Date.

Conditions to the Scheme and the Acquisition (Pages 51 and 79-85)

The implementation of the Scheme and the Acquisition is conditional, among other things, upon:

 

    the Scheme becoming effective and unconditional by not later than (i) October 13, 2017, or by January 13, 2018 if a date has not been set for the High Court hearing to approve the Scheme by July 30, 2017, (ii) such earlier date as may be specified by the Panel, or (iii) such later date as Zoetis and Nexvet may agree (with the consent of the Panel, if required), and as the High Court may allow;

 

    the approval of the Scheme by a majority in number of Nexvet Shareholders present and voting (either in person or by proxy) at the Scheme Meeting, representing at least 75% in value of the Nexvet Shares held by such holders (as of the Voting Record Time) at the Scheme Meeting on or before the End Date;

 

    the requisite majority of Nexvet Shareholders approving the EGM Resolutions (with the exception of Resolution 6);

 

   

the sanction by the High Court of the Scheme (the “Court Order”) and the confirmation by the High Court of the reduction of capital necessary to implement the Scheme on or before the End Date, and the

 



 

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registration of the Court Order and the minute related to the reduction of capital with the Registrar of Companies in Dublin, Ireland, on or before the End Date; and

 

    the other conditions set forth in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document being satisfied or (where permissible) waived on or before the sanction of the Scheme by the High Court.

Non-Solicitation (Page 40-41)

Except in limited circumstances, the Nexvet Directors have agreed not to withdraw or adversely modify their recommendation to Nexvet Shareholders regarding the Scheme.

In addition, the Transaction Agreement provides that Nexvet will not, among other things, directly or indirectly:

 

    solicit, initiate, facilitate or encourage any inquiry with respect to, or the making or submission of, any Nexvet Alternative Proposal or any proposal which would reasonably be expected to lead to a Nexvet Alternative Proposal;

 

    participate in any discussions or negotiations regarding a Nexvet Alternative Proposal with, or furnish any non-public information regarding Nexvet to, any person that has made or known to be considering making a Nexvet Alternative Proposal; or

 

    expressly waive, terminate, amend or modify any provision of any “standstill” or similar obligation of any person with respect to Nexvet or its Subsidiaries subject to certain exceptions.

Termination of the Transaction Agreement (Page 39)

The Transaction Agreement contains certain termination rights for the parties, including, among other things, (1) if the requisite Nexvet Shareholder approvals are not obtained, (2) if the Acquisition is not consummated by the End Date, (3) if the High Court declines to sanction the Scheme (unless Zoetis requests that Nexvet appeal the decision), (4) if any injunction is entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Acquisition and such injunction shall have become final and non-appealable, (5) if the other party breached or failed to perform in any material respect any of its covenants or other agreements contained in the Transaction Agreement or any of its warranties set out in the Transaction Agreement having been inaccurate in certain circumstances, (6) by Zoetis if a Nexvet Change of Recommendation occurs or the Nexvet Board or any committee thereof withdraws (or modifies in any manner adverse to Zoetis) or proposes publicly to withdraw (or modify in any manner adverse to Zoetis) the Scheme Recommendation, (7) by Nexvet upon written notice at any time following delivery of a Final Recommendation Change Notice, or (8) by mutual written consent of Zoetis and Nexvet.

Expenses Reimbursement Agreement (Pages 32-34)

Under the Expenses Reimbursement Agreement, Nexvet has agreed to pay to Zoetis in certain circumstances an amount equal to all documented, specific quantifiable third party costs and expenses incurred by Zoetis and/or Bidco, or on its behalf, for the purposes of, in preparation for, or in connection with the Acquisition, including exploratory work carried out in contemplation of and in connection with the Acquisition, legal, financial, accounting and commercial due diligence, arranging finance and engaging advisers to assist in the process. The gross amount payable to Zoetis pursuant to the Expenses Reimbursement Agreement may not, in any event, exceed 1% of the total value of the issued and to be issued share capital of Nexvet that is the subject of the Acquisition.

The Nexvet Directors and Executive Officers and the Effect of the Scheme on their Interests (Page 55-58)

Nexvet’s Directors and executive officers have economic interests in the Acquisition that are different from, or in addition to, those of Nexvet Shareholders generally. These interests may create potential conflicts of interest. The

 



 

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Nexvet Board was aware of these interests, which include those summarized below, and considered them, among other matters, in approving the Acquisition and the Scheme.

 

    Severance arrangements covering Nexvet executive officers;

 

    Acceleration of all unvested Nexvet RSUs held by Nexvet Directors and executive officers; and

 

    Indemnification of Nexvet Directors and executive officers by Zoetis following the Acquisition.

Nexvet Convertible Securities (Page 43)

Each Nexvet Option and Nexvet RSU whether vested or unvested, that is outstanding and unexercised as of immediately prior to the Effective Time will, at the Effective Time, automatically (and without any action on the part of any holder thereof) be cancelled and terminated. At the Effective Time, Nexvet Options and Nexvet RSUs will no longer be exercisable or convertible into Nexvet Shares. If the exercise or conversion price per Nexvet Share of any Nexvet Option or Nexvet RSU is less than $6.72, it shall be converted into the right of the holder to receive the difference between $6.72 and such exercise or conversion price. If the exercise or conversion price per Nexvet Share of any Nexvet Option or Nexvet RSU equals or exceeds $6.72, it shall be cancelled as of the Effective Time without the payment of any amount or other consideration. The Nexvet Warrants will remain in existence (subject to their terms) following the Effective Time, but the proposed new Article 193 of Nexvet’s articles of association will result in any share in the capital of Nexvet issued upon exercise of Nexvet Warrants following the Scheme Record Time being immediately acquired by Bidco from the holder of the Nexvet Warrant for the Consideration.

Effective Time of the Scheme (Page 50)

Assuming the necessary approvals from Nexvet Shareholders have been obtained and all Conditions have been satisfied or (where applicable) waived, the Scheme will become effective upon the registration of the Court Order and the minute related to the reduction of capital with the Registrar of Companies in Dublin, Ireland, which is expected to occur in the second half of this calendar year.

Irish Taxation (Pages 105-106)

Nexvet Shareholders that are not resident or ordinarily resident in Ireland for Irish tax purposes and do not hold their shares in connection with a trade or business carried on by such shareholders through an Irish branch or agency will not be within the charge to Irish CGT on the disposal of their Nexvet Shares pursuant to the Scheme.

Irish Holders that realize a loss on the disposition of Nexvet Shares will generally be entitled to offset such capital losses against chargeable gains realized from other sources in determining their liability to Irish CGT. Capital losses which remain unrelieved in a year may generally be carried forward and applied against any chargeable gains realized in future years.

No Irish stamp duty will be payable by a holder of Nexvet Shares in relation to the cancellation of Nexvet Shares for cash.

Nexvet Shareholders are advised to consult their own tax advisers with respect to the application of Irish taxation Laws to their particular circumstances in relation to the Scheme.

U.S. Federal Income Tax Consequences (Pages 106-110)

The Scheme will be a taxable event for U.S. federal income tax purposes, and in general each U.S. Shareholder will recognize gain or loss with respect to its Nexvet Shares, measured by the difference between the amount of Consideration paid to such U.S. Shareholder and such U.S. Shareholder’s adjusted tax basis in its Nexvet Shares. Nexvet Shareholders are advised to consult their own tax advisers with respect to the application of U.S. federal, state, local and other Laws to their particular circumstances in relation to the Scheme.

 



 

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QUESTIONS AND ANSWERS ABOUT THE ACQUISITION, THE SCHEME OF

ARRANGEMENT, THE SCHEME MEETING, THE EGM AND THE COURT HEARING

The following questions and answers are provided for your convenience, and briefly address some commonly asked questions about the Acquisition, the Scheme of Arrangement, the Scheme Meeting, the EGM, and the Court Hearing. These questions and answers may not address all questions that may be important to you as a Nexvet Shareholder. Accordingly, you should still read carefully this entire document, its annexes and the documents referred to in this document.

 

Q1: What is the proposed transaction?

 

A: Bidco, a wholly-owned indirect Subsidiary of Zoetis, proposes to acquire Nexvet for $6.72 in cash per Nexvet Share. As further described below, the transaction is proposed to be structured as a scheme of arrangement under Irish Law, under which Bidco will acquire all of the issued and to be issued Scheme Shares. The Nexvet Board unanimously recommends that Nexvet Shareholders vote in favor of the Acquisition, the Resolutions and the Scheme, as the members of the Nexvet Board who hold Nexvet Shares intend to do in respect of their own beneficial holdings of Nexvet Shares.

 

Q2: What is a “scheme of arrangement”?

 

A: A “scheme of arrangement” is an Irish transaction structure that is similar in effect to a “merger” in the United States. If the Scheme of Arrangement becomes effective, then:

 

    Bidco will pay $6.72 in cash per Nexvet Share to each Scheme Shareholder;

 

    all outstanding Scheme Shares will either be cancelled or transferred to Bidco;

 

    Nexvet will issue New Nexvet Shares to Bidco in place of the Cancellation Shares, so that Nexvet becomes a wholly-owned Subsidiary of Bidco and an indirect Subsidiary of Zoetis; and

 

    the Scheme will be binding on all Nexvet Shareholders, whether or not they voted in support of the Scheme.

 

Q3: What is the Scheme Meeting?

 

A: In order for the Scheme to become effective, the Scheme must be approved by Nexvet Shareholders. This approval is obtained at a shareholder meeting referred to as the “Scheme Meeting.” The purpose of the Scheme Meeting is to allow the High Court to ascertain whether Nexvet Shareholders are in favor of the Scheme.

For information on how to vote at the Scheme Meeting please refer to Question 10.

 

Q4: When and where is the Scheme Meeting?

 

A: The Scheme Meeting will be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, commencing at 10:00 a.m. (Irish time). The Notice of the Scheme Meeting is set out in Part 10 (Notice of Nexvet Scheme Meeting) of this document.

 

Q5: What is the EGM?

 

A:

In addition to the approval of the Scheme at the Scheme Meeting, the Scheme cannot become effective unless a number of additional resolutions are approved at an extraordinary general meeting of Nexvet

 

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  Shareholders, which is referred to as the “EGM.” These resolutions are described in paragraph 4.2 of Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document, and all serve to facilitate the implementation of the Scheme and the Acquisition.

For information on how to vote at the EGM please refer to Question 11 below.

 

Q6: When and where is the EGM?

 

A: The EGM will be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, commencing at 10:30 a.m. (Irish time) or, if later, immediately after the conclusion or adjournment of the Scheme Meeting. The Notice of the EGM is set out in Part 11 (Notice of Extraordinary General Meeting of Nexvet Biopharma plc) of this document.

 

Q7: What is the Court Hearing?

 

A: In addition to the approval of the Scheme by Nexvet Shareholders at the Scheme Meeting, in order for the Scheme to become effective, the sanction of the Scheme by the High Court at a hearing is required. This hearing is referred to as the “Court Hearing.”

 

Q8: When and where is the Court Hearing?

 

A: Subject to the approval of the Resolutions (with the exception of Resolution 6 at the EGM) and the prior satisfaction of the Conditions, the Court Hearing is expected to be held at The Four Courts, Dublin 7, Ireland during the second half of 2017.

 

Q9: Who is eligible to vote at the Meetings?

 

A: For Nexvet Shareholders who hold through a brokerage firm, bank, dealer or other similar organization (such holding referred to in this document as held in street name):

For those Nexvet Shareholders whose Nexvet Shares are not registered in their own name, and are held in an account at a brokerage firm, bank, dealer or other similar organization, such shares are referred to throughout this document as shares in street name. All shares held in street name are Nexvet Shares and accordingly all references in this document to shares held in street name refer to Nexvet Shares.

Nexvet Shareholders who hold shares in street name at the Voting Record Time will, subject to compliance with the procedures described at Questions 10 and 11 below, be entitled to have their vote recorded by proxy at the Meetings. Changes in Nexvet Shareholders after the Voting Record Time will be disregarded for voting purposes.

For Nexvet Shareholders of Record:

If your Nexvet Shares are registered in Nexvet’s Register of Members in your name, you are a Nexvet Shareholder of record. References made throughout this document to “Nexvet Shareholders of record” relate to Nexvet Shareholders whose names are entered in Nexvet’s Register of Members as the holders of Nexvet Shares.

Nexvet Shareholders of record who were entered in Nexvet’s Register of Members at the Voting Record Time will be entitled to attend, speak and vote at the Meetings. Changes in Nexvet’s Register of Members after the Voting Record Time will be disregarded for these purposes.

 

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Q10: How do I vote at the Scheme Meeting?

 

A: For Nexvet Shareholders who hold in street name:

If your Nexvet Shares are held in an account held at a brokerage firm, bank, dealer or other similar organization, then the brokerage firm, bank, dealer or other similar organization is considered to be the Nexvet Shareholder of record with respect to those Nexvet Shares. Street name holders generally cannot vote their shares directly and must instead instruct their brokerage firm, bank, dealer or other similar organization how to vote their shares. If you obtain a legal proxy from your brokerage firm, bank, dealer or other similar organization, however, you may vote in person at the Scheme Meeting. Your brokerage firm, bank, dealer or other similar organization will only be permitted to vote your Nexvet Shares on your behalf at the Scheme Meeting if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your brokerage firm, bank, dealer or other similar organization, and instruct it how to vote your Nexvet Shares with the voting instruction form (“VIF”) that you will receive from your brokerage firm, bank, dealer or other similar organization. Please follow the instructions on the VIF to cast your vote and contact your brokerage firm, bank, dealer or other similar organization if you have any queries.

Your brokerage firm, bank, dealer, or other similar organization may have requirements in addition to the VIF and may have an earlier deadline than the Proxy Return Time by which you must submit your vote, so you should read carefully all materials and instructions provided to you.

Proxy Return Time: 5:00 p.m. (ET/New York time) on July 7, 2017 or, if the Scheme Meeting is adjourned, at 5:00 p.m. (ET/New York time) on the day one Business Day immediately before the date appointed for the adjourned Scheme Meeting. If a proxy card for the Scheme Meeting is not lodged by the Proxy Return Time, it may also be handed to the Chairman of the Scheme Meeting before the start of the Scheme Meeting.

For Nexvet Shareholders of Record:

As a Nexvet Shareholder of record at the Voting Record Time, you may vote in person at the Scheme Meeting or vote by proxy. The appointment of a proxy will not preclude you from attending, speaking and voting at the Scheme Meeting if you subsequently wish to attend the Scheme Meeting. In the case of joint holders, the vote of the senior member who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other shareholder of record and, for this purpose, seniority shall be determined by the order in which the names appear in Nexvet’s Register of Members in respect of the joint holding.

Nexvet Shareholders of record at the Voting Record Time have been sent a proxy card marked “Meeting 1—Scheme Meeting” in respect of the Scheme Meeting.

In order to cast a vote by proxy, please complete and sign the proxy card marked “Meeting 1—Scheme Meeting” accompanying this document in accordance with the instructions printed thereon and return it to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219, United States, as soon as possible but, in any event, so as to be received by post or, during normal business hours, by hand, by the Proxy Return Time. Your proxy card can also be submitted via the Internet at www.astproxyportal.com/ast/nvet by the Proxy Return Time. If you vote by Internet, please do not post your proxy card.

Proxy Return Time: 5:00 p.m. (ET/New York time) on July 7, 2017 or, if the Scheme Meeting is adjourned, at 5:00 p.m. (ET/New York time) on the day one Business Day immediately before the date appointed for the adjourned Scheme Meeting. If a proxy card for the Scheme Meeting is not lodged by the Proxy Return Time, it may also be handed to the Chairman of the Scheme Meeting before the start of the Scheme Meeting.

 

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American Stock Transfer & Trust Company has been appointed as an agent of Nexvet to receive proxy cards from Nexvet Shareholders on behalf of Nexvet.

For Corporate Nexvet Shareholders of Record:

In addition to the foregoing, a corporate Nexvet Shareholder of record which is entitled to attend, speak and vote at the Scheme Meeting is entitled to appoint a representative to attend, speak and vote at the Scheme Meeting on its behalf.

A form of appointment of representative by a corporate Nexvet Shareholder is available at www.nexvet.com. Corporate Nexvet Shareholders that wish to appoint a representative to attend the Scheme Meeting should complete the form of appointment of representative and then deposit it (together with any power of attorney or other authority under which it is signed or a notarized copy of that power or authority) at Nexvet Biopharma plc, Unit 5, Sragh Business Park, Rahan Road, Tullamore, Co. Offaly, Ireland, Attn: Company Secretary at any time prior to the commencement of the Scheme Meeting. Representatives of corporate shareholders will not be entitled to attend, speak and/or vote at the Scheme Meeting on behalf of such corporate Nexvet Shareholders unless these procedures are followed.

 

Q11: How do I vote at the EGM?

 

A: For Nexvet Shareholders who hold in street name:

If your Nexvet Shares are held in an account held at a brokerage firm, bank, dealer or other similar organization, then the brokerage firm, bank, dealer or other similar organization is considered to be the Nexvet Shareholder of record with respect to those Nexvet Shares. Street name holders generally cannot vote their shares directly and must instead instruct their brokerage firm, bank, dealer or other similar organization how to vote their shares. If you obtain a legal proxy from your brokerage firm, bank, dealer or other similar organization, however, you may vote in person at the EGM. Your brokerage firm, bank, dealer or other similar organization will only be permitted to vote your Nexvet Shares on your behalf at the EGM if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your brokerage firm, bank, dealer or other similar organization, and instruct it how to vote your Nexvet Shares with the VIF that you will receive from your brokerage firm, bank, dealer or other similar organization. Please follow the instructions on the VIF to cast your vote and contact your brokerage firm, bank, dealer or other similar organization if you have any queries. Please note that you may, for administrative reasons, receive a second envelope containing the proxy card for the EGM.

Your brokerage firm, bank, dealer, or other similar organization may have requirements in addition to the VIF and may have an earlier deadline than the Proxy Return Time by which you must submit your vote, so you should read carefully all materials and instructions provided to you.

Proxy Return Time: 5:00 p.m. (ET/New York time) on July 7, 2017 or, if the EGM is adjourned, at 5:00 p.m. (ET/New York time) on the day one Business Day immediately before the date appointed for the adjourned EGM.

For Nexvet Shareholders of Record:

Nexvet Shareholders of record at the Voting Record Time may vote in person at the EGM or vote by proxy. The appointment of a proxy will not preclude a Nexvet Shareholder of record from attending, speaking and/or voting at the EGM if the Nexvet Shareholder subsequently wishes to attend the EGM. In the case of joint holders, the vote of the senior member who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other shareholder of record and, for this purpose, seniority shall be determined by the order in which the names appear in Nexvet’s Register of Members in respect of the joint holding.

 

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Nexvet Shareholders of record, each at the Voting Record Time, have been sent a proxy card marked “Meeting 2—Extraordinary General Meeting” in respect of the EGM.

In order to cast a vote by proxy, please complete and sign the proxy card marked “Meeting 2—Extraordinary General Meeting” accompanying this document in accordance with the instructions printed thereon and return it to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219, United States, as soon as possible but, in any event, so as to be received by post or, during normal business hours, by hand, by the Proxy Return Time. Your proxy card can also be submitted via the Internet at www.astproxyportal.com/ast/nvet by the Proxy Return Time. If you vote by Internet, please do not post your proxy card.

Proxy Return Time: 5:00 p.m. (ET/New York time) on July 7, 2017 or, if the EGM is adjourned, at 5:00 p.m. (ET/New York time) on the day one Business Day immediately before the date appointed for the adjourned EGM.

For Corporate Nexvet Shareholders of Record:

In addition to the foregoing, a corporate Nexvet Shareholder of record which is entitled to attend, speak and vote at the EGM is entitled to appoint a representative to attend, speak and vote at the EGM on its behalf.

A form of appointment of representative by a corporate Nexvet Shareholder is available at www.nexvet.com. Corporate Nexvet Shareholders that wish to appoint a representative to attend the EGM should complete the form of appointment of representative and then deposit it (together with any power of attorney or other authority under which it is signed or a notarized copy of that power or authority) at Nexvet Biopharma plc, Unit 5, Sragh Business Park, Rahan Road, Tullamore, Co. Offaly, Ireland, Attn: Company Secretary at any time prior to the commencement of the EGM. Representatives of corporate Nexvet Shareholders will not be entitled to attend and/or vote at the EGM on behalf of such corporate Nexvet Shareholders unless these procedures are followed.

 

Q12: What vote is required at the Scheme Meeting to approve the Scheme?

 

A: Vote Required. At the Scheme Meeting, the Scheme will be approved by Nexvet Shareholders if both (1) a majority in number of Nexvet Shareholders of record who vote (in person or by proxy) at the Scheme Meeting vote in favor of the Scheme and (2) Nexvet Shares representing at least 75% in value of the total number of Scheme Shares voted at the Scheme Meeting are voted in favor of the Scheme.

High Court Determination. In addition to approval by Nexvet Shareholders at the Scheme Meeting, approval of the Scheme will also require approval by the High Court. In considering its approval of the Scheme, the High Court will consider whether there has been a sufficiently large (in the High Court’s judgment) number of Nexvet Shares included in the vote in favor of the Scheme to fairly represent the opinion of Nexvet Shareholders, in addition to whether the required majority (as described above) is obtained. As a result, it is important that as many votes as possible are cast at the Scheme Meeting.

The Nexvet Board strongly urges Nexvet Shareholders who hold shares in street name and Nexvet Shareholders of record as of the Voting Record Time to follow the relevant voting procedures outlined in Question 10 to ensure the representation and voting of their Nexvet Shares at the Scheme Meeting.

The failure to vote will increase the likelihood of the Scheme being defeated at the Scheme Meeting or rejection of the Scheme by the High Court for lack of a fair representation of Nexvet Shareholder opinion, resulting in the Acquisition not proceeding.

 

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Q13: What vote is required at the EGM?

 

A: At the EGM, the ordinary resolutions must be approved by a majority of the votes cast on the resolution. Special resolutions are required to be passed by at least 75% of the votes cast on the resolution.

The Nexvet Board strongly urges Nexvet Shareholders who hold in street name and Nexvet Shareholders of record as of the Voting Record Time to follow the relevant voting procedures outlined in Question 11 to ensure the representation and voting of their Nexvet Shares at the EGM.

 

Q14: If my Nexvet Shares are held in street name by a brokerage firm, bank, dealer or other similar organization, will it vote my Nexvet Shares for me?

 

A: Your brokerage firm, bank, dealer or other similar organization will be able to vote your Nexvet Shares held in street name only if you instruct it how to vote. You should follow the voting instructions provided by your brokerage firm, bank, dealer or other similar organization regarding the voting of your Nexvet Shares as outlined in Questions 10 and 11. If you do not follow these instructions, your Nexvet Shares will not be voted, which will increase the likelihood of the Scheme being defeated and the Acquisition not proceeding.

 

Q15: May I vote in person at the Meetings?

 

A: For Nexvet Shareholders who hold in street name:

Nexvet Shareholders who hold in street name at the Voting Record Time are invited to attend the Meetings. In order to be entitled to be admitted to the Meetings, a Nexvet Shareholder who holds in street name will need to present a form of photo identification (such as a driver’s license or passport) and valid proof of ownership of their Nexvet Shares (such as a statement reflecting their ownership as of the Voting Record Time or a letter from the organization which holds their shares in street name). However, since Nexvet Shareholders who hold in street name are not Nexvet Shareholders of record, they may not vote their shares in person at the Meetings, unless they obtain a legal proxy from the brokerage firm, bank, dealer or other similar organization holding their Nexvet Shares. Such Nexvet Shareholders may vote by proxy by following the voting instructions in Questions 10 and 11.

For Nexvet Shareholders of Record:

Nexvet Shareholders of record at the Voting Record Time are invited to attend the Meetings and may vote their Nexvet Shares in person at the Meetings. They will be admitted to the Meetings only if their shareholder status can be verified by checking their name against Nexvet’s Register of Members at the Voting Record Time. The appointment of a proxy will not preclude a Nexvet Shareholder of record from attending, speaking and voting at the Meetings if the Nexvet Shareholder subsequently wishes to attend such Meetings, and any such Nexvet Shareholder may vote by following the voting instructions in Questions 10 and 11.

 

Q16: What if I do not vote?

 

A: Only those votes cast “FOR” or “AGAINST” are counted for the purposes of determining the number of votes cast in connection with the relevant proposal. If the Scheme is defeated and the Acquisition does not proceed, you will not receive the Consideration of $6.72 in cash per Nexvet Share that is payable pursuant to the terms of the Acquisition.

Your vote is important regardless of the number of Nexvet Shares that you own. As such, Nexvet strongly encourages you to exercise your right as a shareholder to vote on the Resolutions.

 

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Q17: May I change my vote after I have already submitted my vote?

 

A: For Nexvet Shareholders who hold in street name:

If your Nexvet Shares are held by your brokerage firm, bank, dealer or other similar organization, you should follow the instructions provided by them.

For Nexvet Shareholders of Record:

If you are the Nexvet Shareholder of record, you may revoke your proxy in any one of three ways:

 

    you may submit, in accordance with the instructions set out above, another properly completed proxy card bearing a later date, to be received by post or, during normal business hours, by hand, by the Proxy Return Time;

 

    you may send a written notice to Nexvet at Nexvet Biopharma plc, Unit 5, Sragh Business Park, Rahan Road, Tullamore, Co. Offaly, Ireland, Attn: Company Secretary, bearing a date later than that indicated on the proxy card or the date you voted by Internet but prior to the date of the Meetings, stating that the proxy is revoked; or by signing and delivering a subsequently dated proxy card prior to the Proxy Return Time in accordance with the instructions on the proxy card. Your notice must be received by Nexvet no later than one hour before the relevant Meeting(s) on July 10, 2017 (or any adjourned Meeting(s)) where served by hand or post or 48 hours before the relevant Meeting(s) on July 10, 2017 (or any adjourned Meeting(s)) where sent electronically; or

 

    you may attend the Meetings and vote in person.

Your last vote, prior to or at the Meetings, is the vote that will be counted.

 

Q18: May Nexvet Shareholders who hold in street name or Nexvet Shareholders of record be represented at the Court Hearing?

 

A: Each Nexvet Shareholder is entitled to be represented by counsel or a solicitor (at its own expense) to support or oppose the sanctioning of the Scheme at the Court Hearing.

 

Q19: What rights do I have if I oppose the Acquisition and the Scheme?

 

A: For Nexvet Shareholders who hold in street name:

You can vote against approval of the Scheme at the Scheme Meeting and/or the EGM by following the voting instructions in Questions 10 and 11.

For Nexvet Shareholders of Record:

You can vote against approval of the Scheme at the Scheme Meeting and/or the EGM by following the voting instructions in Questions 10 and 11.

For all Nexvet Shareholders:

Each Nexvet Shareholder is entitled to be represented by counsel or a solicitor (at its own expense) at the Court Hearing to support or oppose the sanctioning of the Scheme.

 

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Q20: Am I entitled to “dissenters” or “appraisal” rights in connection with the Scheme?

 

A: If Nexvet Shareholders approve the Scheme in the manner outlined in Question 12, and the High Court sanctions the Scheme, then, subject to the Scheme becoming effective in accordance with its terms, the Scheme will be binding on all Nexvet Shareholders, including those Nexvet Shareholders who did not vote or who voted against it at the Scheme Meeting. If Nexvet Shareholders approve the Scheme and the High Court sanctions the Scheme, no Nexvet Shareholder will have “dissenters” or “appraisal” rights under Irish Law, or otherwise have any right to seek a court appraisal of the value of Nexvet Shares.

 

Q21: Why is the Nexvet Board recommending the Acquisition?

 

A: The Nexvet Board, which has been so advised by Evercore as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole. In providing its advice to the Nexvet Board, Evercore has taken into account the commercial assessments of the Nexvet Directors. The Nexvet Board unanimously recommends that all Nexvet Shareholders vote in favor of the Acquisition, the Resolutions and the Scheme at both the Scheme Meeting and the EGM, as the Nexvet Directors who are Nexvet Shareholders intend to do in respect of their own beneficial holdings of Nexvet Shares, which represent approximately 4.6% of Nexvet Shares as of the Voting Record Time. To review the Nexvet Board’s reasons for recommending the Acquisition, see paragraph 4 of Part 1 (Letter of Recommendation from the Nexvet Board) of this document entitled “Background to and Reasons for Recommending the Acquisition.”

 

Q22: When does Nexvet expect the Acquisition to be completed?

 

A: Nexvet currently expects the Acquisition and the Scheme to become effective during the second half of 2017. Nexvet cannot, however, require Zoetis and Bidco to proceed with the Scheme until all of the Conditions described in Part 1 (Letter of Recommendation from the Nexvet Board) of this document and set out in full in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document are waived or satisfied at or prior to the End Date in accordance with their respective terms, including the approval of the Scheme at the Scheme Meeting and the EGM. The Scheme also requires approval by the High Court. Nexvet cannot assure you as to when or if all of the Conditions of the Acquisition will be met, and it is possible the Acquisition may not be completed.

 

Q23: What happens if I sell my Nexvet Shares after the Voting Record Time and before the Effective Time?

 

A: The Voting Record Time is earlier than the expected Effective Time of the Acquisition. If you held your Nexvet Shares in street name or Nexvet Shares of record at the Voting Record Time but transfer those Nexvet Shares after the Voting Record Time and before the Effective Time, you retain your right to vote at the Scheme Meeting and the EGM but not the right to receive the Consideration. This right to receive the Consideration will pass to the person who owns the Nexvet Shares as of the Scheme Record Time.

 

Q24: Who is soliciting my proxy?

 

A: Proxies are being solicited by the Nexvet Board. The Nexvet Board considers the terms of the Acquisition to be fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole. The Nexvet Board unanimously recommends that Nexvet Shareholders vote in favor of the Acquisition and Scheme. Further information about persons who may be deemed to be soliciting proxies can be found on page 23.

 

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Q25: What will I receive in the Acquisition if it is completed?

 

A: If the Scheme becomes Effective, Nexvet Shareholders at the Scheme Record Time will receive $6.72 in cash (without interest and less any applicable withholding taxes) for each Nexvet Share that they own.

 

Q26: If the Acquisition is completed, when can I expect to receive the Consideration for my Nexvet Shares?

 

A: After the Scheme becomes effective, the Consideration payable under the terms of the Scheme will be mailed to Nexvet Shareholders of record within 14 days of the Effective Time. For Nexvet Shareholders who hold in street name, the Consideration will be transmitted to their brokerage firm, bank, dealer or other similar organization who will arrange for the allocation of funds to those Nexvet Shareholders who hold through such brokerage firm, bank, dealer or other similar organization. For more information on the details related to the payment of the Consideration, please see paragraph 9.1 of Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document.

 

Q27: What are the tax consequences of the Acquisition to me?

 

A: Your tax consequences will depend on your personal circumstances. Your receipt of the Consideration may be a taxable transaction for Irish CGT and U.S. federal income tax purposes. For a more detailed explanation of the Irish and U.S. tax consequences, see paragraphs 8 and 9 of Part 8 (Additional Information) of this document entitled “Irish Taxation” and “U.S. Federal Income Tax Consequences,” respectively. In any case and for details of the tax consequences of the Acquisition for Nexvet Shareholders in tax jurisdictions outside Ireland and the United States, you should consult your personal tax advisers for a full explanation of the tax consequences of the Scheme to you.

 

Q28: What does it mean if I receive more than one set of materials?

 

A: If you receive more than one set of materials, your Nexvet Shares may be registered in more than one name or may be registered in different accounts. In order to vote all of the Nexvet Shares that you own, you must sign and return all of the proxy cards or voting instruction forms (as applicable) that you receive or follow the instructions for any alternative voting procedure on each of the meeting materials that you receive.

 

Q29: What should I do if I have questions?

 

A: If you are a Nexvet Shareholder and have any questions relating to the Acquisition or to this document, you may contact D.F. King & Co. Inc. (“D.F. King”), our proxy solicitor, toll free within the United States and Canada at 1-866-796-1285, or call collect outside the United States and Canada at 1-212-269-5550. If you have any questions about whether voting for the Acquisition and the Scheme are appropriate for you in your circumstances, you should contact your legal, tax, financial or other advisers.

 

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ADVISERS TO NEXVET, ZOETIS AND BIDCO

 

Nexvet   

Financial Advisers to Nexvet

  

Evercore Group L.L.C.

55 East 52nd Street

New York, NY 10055

United States

 

Evercore Partners International LLP

15 Stanhope Gate

London, W1K 1LN

United Kingdom

 

Cowen and Company, LLC

One Maritime Plaza, 9th Floor

San Francisco, CA 94111

United States

U.S. Legal Advisers to Nexvet

  

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, California, 94303-2214

United States

Irish Legal Advisers to Nexvet

  

Matheson

70 Sir John Rogerson’s Quay

Dublin 2

D02 R296

Ireland

Auditors to Nexvet

  

PricewaterhouseCoopers

Spencer Dock, N Wall Quay, North Wall,

Dublin 1

Ireland

 

PricewaterhouseCoopers

2 Riverside Quay

Southbank VIC 3006

Melbourne

Australia

Registrar and Transfer Agent

  

American Stock Transfer & Trust Company, LLC

6201 15th Avenue,

Brooklyn, New York 11219

United States

Proxy Solicitor

  

D.F. King & Co., Inc.

48 Wall Street

New York, NY 10005

United States

 

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Zoetis and Bidco   

Financial Advisers to Zoetis and Bidco

  

Goldman Sachs & Co. LLC

200 West Street, 29th Floor

New York, NY 10282

United States

 

Goldman Sachs International

Peterborough Court

133 Fleet Street

London EC4A 2BB

United Kingdom

U.S. Legal Advisers to Zoetis and Bidco

  

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, NY 10178-0060

United States

Irish Legal Advisers to Zoetis and Bidco

  

Arthur Cox

Ten Earlsfort Terrace

Dublin, DO2 T380

Ireland

 

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ACTION TO BE TAKEN/GENERAL INFORMATION

INFORMATION REGARDING THE MEETINGS IS AVAILABLE ON NEXVET’S WEBSITE AT WWW.NEXVET.COM AND ALSO AT WWW.ASTPROXYPORTAL.COM/AST/NVET.

The Scheme requires approval by Nexvet Shareholders at the Scheme Meeting to be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, commencing at 10:00 a.m. (Irish time). In addition to approval at the Scheme Meeting, implementation of the Scheme requires various approvals by Nexvet Shareholders at an EGM to be held at the same location commencing at 10:30 a.m. (Irish time) on July 10, 2017 or, if later, immediately after the conclusion or adjournment of the Scheme Meeting.

Who is Eligible to Vote at the Meetings?

For Nexvet Shareholders who hold in street name:

For those Nexvet Shareholders whose Nexvet Shares are not registered in their own name, and are held in an account at a brokerage firm, bank, dealer or other similar organization, such shares are referred to throughout this document as shares in street name. All shares held in street name are Nexvet Shares and accordingly all references in this document to shares held in street name are in relation to Nexvet Shares.

Nexvet Shareholders who held shares in street name at the Voting Record Time will, subject to following the instructions from that Nexvet Shareholder’s brokerage firm, bank, dealer or other similar organization, be entitled to vote at the Meetings. Changes in Nexvet Shareholders who held Nexvet Shares in street name after the Voting Record Time will be disregarded for voting purposes.

For Nexvet Shareholders of Record:

If your Nexvet Shares are registered in Nexvet’s Register of Members in your name, you are a Nexvet Shareholder of record. References made throughout this document to “Nexvet Shareholders of record” relate to Nexvet Shares registered in Nexvet’s Register of Members.

Nexvet Shareholders of record who were entered in Nexvet’s Register of Members as of the Voting Record Time will be entitled to attend, speak, and vote at the Meetings. Changes in Nexvet’s Register of Members after the Voting Record Time will be disregarded for these purposes.

How do I Vote at the Meetings?

Voting by Proxy at the Meetings

For Nexvet Shareholders who hold in street name:

If your Nexvet Shares are held in an account at a brokerage firm, bank, dealer or other similar organization, then such brokerage firm, bank, dealer or other similar organization is considered to be the shareholder of record with respect to those Nexvet Shares. Street name holders generally cannot vote their shares directly and must instead instruct their brokerage firm, bank, dealer or other similar organization how to vote their shares. Your brokerage firm, bank, dealer or other similar organization will only be permitted to vote your Nexvet Shares on your behalf at the Meetings if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your brokerage firm, bank, dealer or other similar organization, and instruct it how to vote your Nexvet Shares with the VIF that you will receive from your brokerage firm, bank, dealer or other similar organization. Please follow the instructions on the VIF to cast your vote and contact your brokerage firm, bank, dealer or other similar organization if you have any queries. If you obtain a legal proxy from your brokerage firm, bank, dealer or other similar organization, you may instead vote in person at the Meetings.

 

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Your brokerage firm, bank, dealer, or other similar organization may have requirements in addition to the VIF and may have an earlier deadline than the Proxy Return Time by which you must submit your vote, so you should read carefully all materials and instructions provided to you.

For Nexvet Shareholders of Record:

Nexvet Shareholders of record at the Voting Record Time may vote in person at the Meetings or vote by proxy. The appointment of a proxy will not preclude Nexvet Shareholders from attending, speaking and/or voting at the Meetings if they subsequently wish to attend the Meetings. In the case of joint holders, the vote of the senior member who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other shareholder of record and, for this purpose, seniority shall be determined by the order in which the names appear in Nexvet’s Register of Members in respect of the joint holding.

Nexvet Shareholders of record at the Voting Record Time have been sent relevant proxy cards for the Meetings. In respect of the Scheme Meeting the proxy card is marked “Meeting 1—Scheme Meeting.” In respect of the EGM the proxy card is marked “Meeting 2—Extraordinary General Meeting.”

In order to cast a vote by proxy, Nexvet Shareholders of record must complete and sign the relevant marked proxy cards accompanying this document in accordance with the instructions printed thereon and return it to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219, United States, as soon as possible but, in any event, so as to be received by post or, during normal business hours, by hand, by the Proxy Return Time. Your proxy card can also be submitted via the Internet at www.astproxyportal.com/ast/nvet by the Proxy Return Time. If a proxy card for the Scheme Meeting is not lodged by the Proxy Return Time, it may also be handed to the Chairman of the Scheme Meeting before the start of the Scheme Meeting. If you vote by Internet, please do not post your proxy card.

American Stock Transfer & Trust Company, LLC has been appointed as an agent of Nexvet to receive proxy cards from Nexvet Shareholders on behalf of Nexvet.

For Corporate Nexvet Shareholders of Record:

In addition to the foregoing, a corporate Nexvet Shareholder of record which is entitled to attend, speak and vote at the Meetings is entitled to appoint a representative to attend, speak and vote at the Meetings on its behalf. A form of appointment of representative by a corporate Nexvet Shareholder is available via Nexvet’s website, www.nexvet.com. Corporate Nexvet Shareholders that wish to appoint a representative to attend the Meetings should complete the form of appointment of representative and then send or deposit it (together with any power of attorney or other authority under which it is signed or a notarized copy of that power or authority) at Nexvet’s registered office at Unit 5, Sragh Technology Park, Tullamore, Co. Offaly, Ireland, Attn: Company Secretary at any time prior to the commencement of the Meetings. Representatives of corporate Nexvet Shareholders will not be entitled to attend, speak and/or vote at the Scheme Meeting on behalf of such corporate Nexvet Shareholders unless these procedures are followed.

Attendance or Voting in Person at the Meetings

For Nexvet Shareholders who hold in street name:

Nexvet Shareholders who hold in street name at the Voting Record Time are invited to attend the Meetings. In order to be entitled to be admitted to the Meetings, a Nexvet Shareholder who holds in street name will need to present a form of photo identification (such as a driver’s license or passport) and valid proof of ownership of their Nexvet Shares (such as a statement reflecting their ownership as of the Voting Record Time or a letter from the organization which holds their shares in street name). However, since Nexvet Shareholders who hold in street name are not shareholders of record, they may not vote their shares in person at the Meetings unless they obtain a legal proxy from their brokerage firm, bank, dealer or other similar organization holding their Nexvet Shares. Such Nexvet Shareholders may vote by proxy by following the voting instructions provided by their brokerage firm, bank, dealer or other similar organization.

 

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For Nexvet Shareholders of Record:

Nexvet Shareholders of record at the Voting Record Time are invited to attend the Meetings and may vote their Nexvet Shares in person at the Meetings. They will be admitted to the Meetings only if their shareholder status can be verified by checking their name against Nexvet’s Register of Members at the Voting Record Time. The appointment of a proxy will not preclude a Nexvet Shareholder of record from attending, speaking and voting at the Meetings if the Nexvet Shareholder subsequently wishes to attend such Meetings.

What Votes are Required at the Meetings?

The total number of issued and outstanding Nexvet Shares at the Voting Record Time was 11,916,712. Each of the Resolutions shall be decided on a poll at the Meetings. A poll means every Nexvet Shareholder present in person and every proxy shall have one vote for every Nexvet Share carrying a right to vote at the Meetings of which he/she/it is the holder or proxy.

Votes Required at the Scheme Meeting

For the Scheme to be approved at the Scheme Meeting the relevant Nexvet Shareholders voting in favor of the Scheme must represent both (1) a majority in number of all Nexvet Shareholders present and voting (in person or by proxy) and (2) 75% or more in value of the Scheme Shares held by those Nexvet Shareholders present and voting (in person or by proxy) at the Scheme Meeting.

In considering its approval of the Scheme, the High Court will consider whether there has been a sufficiently large (in the High Court’s judgment) number of Nexvet Shares included in the vote in favor of the Scheme to fairly represent the opinion of Nexvet Shareholders. As a result, it is important that as many votes as possible are cast at the Scheme Meeting.

The Nexvet Board strongly urges Nexvet Shareholders who hold shares in street name to follow the instructions received from their brokerage firm, bank, dealer, or other similar organization, to ensure the representation and voting of their Nexvet Shares at the Scheme Meeting. The Nexvet Board strongly urges Nexvet Shareholders of record to complete, sign, date, and return the relevant proxy card or to vote via the Internet at www.astproxyportal.com/ast/nvet by the Proxy Return Time to ensure the representation and voting of their Nexvet Shares at the Scheme Meeting.

Votes Required at the EGM

Resolutions 2, 4 and 7 are being proposed as ordinary resolutions and are required to be approved by a majority of the votes cast on the resolution.

Resolutions 1, 3, 5 and 6 are being proposed as special resolutions and are required to be approved by at least 75% of the votes cast on the resolution.

What Quorum is Required for the Meetings?

Nexvet Shareholders may not take action at the Scheme Meeting or the EGM unless there is a quorum present. The quorum for the Scheme Meeting shall be one Nexvet Shareholder of record present in person or by proxy at the commencement of the Scheme Meeting. A quorum for the EGM shall be one or more Nexvet Shareholders present in person or by proxy holding not less than a majority of the issued and outstanding Nexvet Shares entitled to vote at the EGM.

For Nexvet Shares held in street name—What is the Impact of Broker Non-Votes and Abstentions?

With respect to each of the Scheme Meeting and the EGM, if Nexvet Shareholders who hold in street name or brokers holding their clients’ shares of record cause abstentions to be recorded, these Nexvet Shares will be

 

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considered present for purposes of determining whether or not a quorum is present at such meetings. However, abstentions will have no effect on the approval of any of the Resolutions.

A member of the NYSE (such as a brokerage firm, bank, dealer or other similar organization) who has received no instructions from its client is permitted to vote its client’s proxies at its discretion, if the vote relates to certain “routine” proposals. When a member of the NYSE indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, the missing votes are referred to as “broker non-votes.” The Resolutions to be proposed at the Scheme Meeting and the EGM are not “routine,” so a member of the NYSE who has received no instructions from its clients may not vote for or against the Resolutions. Those shares would be considered present for purposes of determining whether or not a quorum is present at the Meetings, but they are not entitled to vote and will have no effect on the approval of the Resolutions.

Only those votes cast “FOR” or “AGAINST” are counted for the purposes of determining the number of votes cast in connection with those proposals. As such, Nexvet strongly encourages you to provide instructions to your brokerage firm, bank, dealer or other similar organization to vote your Nexvet Shares and exercise your rights as a shareholder.

Can I Change my Vote After Submitting my Vote?

For Nexvet Shareholders who hold in street name:

If your shares are held by your brokerage firm, bank, dealer or other similar organization, you should follow the instructions provided by them.

For Nexvet Shareholders of Record:

If you are the Nexvet Shareholder of record, you may revoke your proxy in any one of three ways:

 

    you may submit, in accordance with the instructions set out above, another properly completed proxy card bearing a later date to be received by post or, during normal business hours, by hand, by the Proxy Return Time;

 

    you may send a written notice to Nexvet Biopharma plc, Unit 5, Sragh Business Park, Rahan Road, Tullamore, Co. Offaly, Ireland, Attn: Company Secretary, bearing a date later than that indicated on the proxy card or the date you voted by Internet but prior to the date of the Meetings, stating that the proxy is revoked; or by signing and delivering a subsequently dated proxy card prior to the Proxy Return Time in accordance with the instructions on the proxy card. Your notice must be received by Nexvet no later than one hour before the relevant Meeting(s) on July 10, 2017 (or any adjourned Meeting(s)) where served by hand or post or 48 hours before the relevant Meeting(s) on July 10, 2017 (or any adjourned Meeting(s)) where sent electronically; or

 

    you may attend the Meetings and vote in person.

Your last vote, prior to or at the Meetings, is the vote that will be counted.

What Does it Mean if I Receive More Than One Set of Materials?

If you receive more than one set of materials, your Nexvet Shares may be registered in more than one name or may be registered in different accounts. In order to vote all the Nexvet Shares you own, you must sign and return all of the proxy cards or voting instruction forms (as applicable) you receive or follow the instructions for any alternative voting procedure on each of the meeting materials you receive.

What Does it Mean if I Share the Same Address with One or More Nexvet Shareholders?

The SEC has adopted rules that permit companies and intermediaries (e.g., brokerage firm, bank, dealer or other similar organization) to satisfy the delivery requirements for proxy materials with respect to two or more

 

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shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost savings for companies.

Accordingly, a single proxy statement will be delivered to multiple Nexvet shareholders sharing an address unless contrary instructions have been received from the affected Nexvet shareholders. Once you have received notice from your brokerage firm, bank, dealer or other similar organization that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive separate proxy materials, please notify your brokerage firm, bank, dealer or other similar organization. Nexvet shareholders who currently receive multiple copies of the proxy materials at their addresses and would like to request “householding” of their communications should contact their brokerage firm, bank, dealer or other similar organization.

Who is Soliciting my Proxy?

Nexvet will pay the cost of soliciting proxies for the Meetings. Subject to complying with the Takeover Rules, Nexvet may solicit proxies by mail, telephone, facsimile, personal contact and email and arrangements are made with brokerage houses and other custodians, nominees and fiduciaries to send the notices, and if requested, other proxy materials, to beneficial owners. Upon request, Nexvet will reimburse them for their reasonable expenses. In addition and subject to complying with the Takeover Rules, Nexvet Directors, officers and employees may solicit proxies, either in-person or by telephone, facsimile or mail or email (without additional compensation). Nexvet Shareholders are encouraged to return their proxies promptly.

Nexvet has retained D.F. King to assist in the solicitation of proxies from Nexvet Shareholders by mail, telephone or other electronic means, or in person, for a fee of approximately $15,000 plus telephone charges and reasonable out-of-pocket expenses relating to the solicitation. No additional compensation will be paid for such services.

How can Nexvet Shareholders Communicate with the Nexvet Board?

Nexvet Shareholders and interested parties may contact any of the Nexvet Directors, including the Chairman of the Nexvet Board, the chair of any committee of the Nexvet Board, or any committee of the Nexvet Board by writing to them at Nexvet Biopharma plc, Unit 5, Sragh Technology Park, Tullamore, Co. Offaly, Ireland. Please direct your correspondence to the attention of the individual director or directors you would like to contact.

Are there any Shareholder Proposals at the EGM?

Under Irish Law, except as provided below, there is no general right for a shareholder of a NASDAQ-listed company to put items on the agenda of a general meeting that has been convened. Irish Law provides that one or more shareholders holding not less than one tenth of Nexvet’s paid up share capital carrying voting rights may requisition the Nexvet Board to convene extraordinary general meetings and may nominate persons to be elected as directors at such extraordinary general meetings.

Will Directors Attend the Meetings?

Each member of the Nexvet Board has been invited to attend the Meetings but such attendance is not required.

Who do I Contact with Questions or for Further Information?

If you are a Nexvet Shareholder and have any questions relating to the Acquisition or to this document, you may contact D.F. King toll free within the United States and Canada at 1-866-796-1285, or call collect outside the United States and Canada at 1-212-269-5550. If you have any questions about whether voting for the Acquisition and the Scheme are appropriate for you in your circumstances, you should contact your legal, tax, financial or other advisers.

 

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PART 1

LETTER OF RECOMMENDATION FROM THE NEXVET BOARD

Nexvet Biopharma plc

(Incorporated and registered in Ireland under the Act with registered number 547923)

 

Board:

Christopher Brown

George Gunn

Ashraf Hanna

Mark Heffernan

Cormac Kilty

Joseph McCracken

Rajiv Patel

John Payne

  

Registered Office

Unit 5, Sragh Technology Park

Tullamore, Co. Offaly

Ireland

June 2, 2017

To Nexvet Shareholders, and, for information only, to holders of Nexvet Convertible Securities

RECOMMENDED ACQUISITION OF NEXVET BIOPHARMA PLC

Dear Nexvet Shareholder,

 

1. Introduction

On April 13, 2017, Nexvet and Zoetis announced that they had reached agreement on the terms of a recommended acquisition of Nexvet by Zoetis through Bidco, a wholly-owned indirect Subsidiary of Zoetis.

The Acquisition will be effected by way of a scheme of arrangement between Nexvet and the Scheme Shareholders under Chapter 1 of Part 9 of the Act, and in accordance with the Takeover Rules, the terms of which are set out in Part 4 (The Scheme of Arrangement) of this document and an explanation of which is given in Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document. The Acquisition and the Scheme are subject to the Conditions and further terms set out in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document. It is anticipated that, subject to the satisfaction or waiver of the Conditions, the Acquisition will become effective during the second half of 2017.

I am writing to you to set out the background to the Acquisition and the reasons why the Nexvet Board considers the terms of the Acquisition to be fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole, and is unanimously recommending that Nexvet Shareholders vote in favor of the Acquisition and the Scheme.

 

2. Summary of the Terms of the Acquisition

Subject to the conditions and further terms set out in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document, under the terms of the Acquisition, Scheme Shareholders will receive $6.72 in cash for each Nexvet Share. This Consideration values the entire issued and to be issued share capital of Nexvet at approximately $85 million and represents a premium of approximately:

 

    66% premium over the closing sale price of $4.05 per Nexvet Share on April 12, 2017 (being the latest date prior to announcement of the Acquisition);

 

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    71% over Nexvet’s volume weighted average price per share for the one-month period ended on April 12, 2017; and

 

    87% over Nexvet’s volume weighted average price per share for the three-month period ended on April 12, 2017.

If you wish to receive the Consideration in respect of your Nexvet Shares, you are urged to sign, vote in favor and return the accompanying proxy cards as soon as possible. You should note that if there is insufficient Scheme Shareholder support for the Scheme at the Scheme Meeting, the Scheme will not become effective, the Acquisition will not proceed and the cash Consideration of $6.72 per Nexvet Share in cash will not become payable.

 

3. Structure of the Acquisition

The Acquisition is expected to be effected by means of a scheme of arrangement between Nexvet and the Scheme Shareholders. The Scheme will involve an application by Nexvet to the High Court to sanction the Scheme. Under the Scheme, which is subject to the Conditions set out in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document, Scheme Shareholders will receive the Consideration (without interest and less any applicable withholding taxes) in return for the cancellation or (if applicable) transfer of their Nexvet Shares.

The Scheme of Arrangement is an arrangement made between Nexvet and the Scheme Shareholders under Chapter 1 of Part 9 of the Act and is subject to the approval of the High Court. If the Scheme becomes effective, all Scheme Shares will be cancelled pursuant to Sections 84 to 86 of the Act or transferred to Bidco pursuant to the Scheme (if applicable). Nexvet will then issue New Nexvet Shares to Bidco in place of the Nexvet Shares cancelled pursuant to the Scheme and Bidco will pay the Consideration in respect of the cancellation or (if applicable) transfer of Nexvet Shares to Nexvet Shareholders. As a result of these arrangements, Nexvet will become a direct wholly-owned Subsidiary of Bidco and a wholly-owned indirect Subsidiary of Zoetis.

For the Acquisition to proceed, the Scheme must become effective and unconditional by not later than: (i) October 13, 2017, or by January 13, 2018 if a date has not been set for the High Court hearing to approve the Scheme by July 30, 2017, (ii) such earlier date as may be specified by the Panel, or (iii) such later date as Zoetis and Nexvet may agree (with the consent of the Panel, if required), and as the High Court may allow. The Conditions to the Acquisition and the Scheme are set out in full in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document. The implementation of the Scheme and the Acquisition is conditional upon, among other things:

 

    the Scheme becoming effective and unconditional by not later than (i) October 13, 2017, or by January 13, 2018 if a date has not been set for the High Court hearing to approve the Scheme by July 30, 2017, (ii) such earlier date as may be specified by the Panel, or (iii) such later date as Zoetis and Nexvet may agree (with the consent of the Panel, if required), and as the High Court may allow;

 

    the approval of the Scheme by a majority in number of Nexvet Shareholders present and voting (either in person or by proxy) at the Scheme Meeting, representing at least 75% in value of the Nexvet Shares held by such holders (as at the Voting Record Time), at the Scheme Meeting on or before the End Date;

 

    the requisite majority of Nexvet’s Shareholders approving the EGM Resolutions (with the exception of Resolution 6) on or before the End Date;

 

    the Court Order and the confirmation by the High Court of the reduction of capital necessary to implement the Scheme on or before the End Date, and the registration of the Court Order and the minute related to the reduction of capital with the Registrar of Companies in Dublin, Ireland, on or before the End Date; and

 

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    the other conditions set forth in Part 5 (Conditions to and Further Terms of the Acquisition and the Scheme) of this document being satisfied or (where permissible) waived on or before the sanction of the Scheme by the High Court.

It is also proposed that the Euro Deferred Shares shall be cancelled subject to the approval by the Nexvet Shareholders of Resolution 6 at the EGM and the confirmation of the High Court. However, the implementation of the Scheme and the Acquisition shall not be conditional upon the approval of this resolution. The holder of the Euro Deferred Shares has consented to any variation, modification or abrogation of the rights attaching to the Euro Deferred Shares by virtue of the passing of any resolution at a general meeting of Nexvet to reduce its issued capital by the amount of the nominal value of the Euro Deferred Shares by cancelling and extinguishing all of the Euro Deferred Shares but without reducing the authorized share capital of Nexvet.

 

4. Background to and Reasons for Recommending the Acquisition

Background to the Acquisition

The Nexvet Board has periodically considered various strategic opportunities and commercial arrangements to enhance shareholder value, including capital raising, licensing opportunities and the possible sale of Nexvet. The Nexvet Board also regularly assesses market trends in the animal health industry and the challenges confronting Nexvet in attaining its strategic objectives. Throughout these processes, the Nexvet Board has discussed its fiduciary duties with Nexvet’s outside U.S. legal counsel, DLA Piper, and its outside Irish legal counsel, Matheson.

Discussions regarding a potential transaction began on March 21, 2016, when representatives from Cowen, one of Nexvet’s financial advisers, provided a general market update, including capital raising options, to the Nexvet Board.

During the period between March 21, 2016 and May 17, 2016, the Nexvet Board, Nexvet’s management, DLA Piper and Cowen from time to time discussed the market opportunities for Nexvet to raise capital, the existing challenges facing the animal health industry and the possibility of engaging with parties concerning a possible strategic license or sale transaction.

On May 17, 2016, Dr. Mark Heffernan, Chief Executive Officer of Nexvet, met with a senior executive of Zoetis, a competitor of Nexvet, to discuss the animal health industry generally.

On May 31, 2016, Party A delivered an indication of interest to Nexvet regarding a proposed licensing of Nexvet intellectual property and strategic collaboration.

On May 31, 2016, Zoetis delivered a preliminary non-binding indication of interest to Nexvet proposing the acquisition of all of the share capital of Nexvet, subject to a period of exclusivity to perform due diligence and enter into definitive agreements.

On June 1, 2016, the Nexvet Board held a regular meeting, which was attended by representatives of Nexvet’s management and Cowen. The Nexvet Board considered Nexvet’s strategic alternatives, the business of Party A, the strategic rationale for Zoetis’ proposed acquisition of Nexvet, the valuation of Nexvet, and certain legal issues. The Nexvet Board also considered the key provisions of Zoetis’ non-binding indication of interest, along with Party A’s licensing and strategic collaboration proposal. The Nexvet Board considered both proposals in detail and determined that a transaction with Zoetis would likely result in a superior return to Nexvet shareholders and instructed Nexvet’s management to further explore a possible transaction with Zoetis.

On June 6, 2016, Zoetis submitted a revised, non-binding proposal based on an enterprise value of $103 million, net of an assumed cash on hand of at least $37 million.

 

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On June 16, 2016, Dr. Heffernan and Mr. Damian Lismore, Chief Financial Officer of Nexvet, met with the Zoetis leadership team to profile the Nexvet business.

During June and July 2016, representatives of Nexvet, Zoetis, and their respective legal and financial advisers continued their discussions regarding the structure of a potential transaction, the valuation of Nexvet, the takeover process in Ireland, and other material terms relating to a proposed transaction.

During this period, Nexvet’s management and the Nexvet Board also reviewed the status of discussions with Party A. However, following the perceived increase in transaction value offered by Zoetis, the Nexvet Board determined to enter into a limited exclusivity agreement in furtherance of a potential transaction with Zoetis. On June 13, 2016, Nexvet and Zoetis entered into the exclusivity agreement and a confidentiality agreement, after which Zoetis commenced its due diligence investigation of Nexvet. The exclusivity period started on June 13, 2016 and ended on July 22, 2016.

In late June 2016, Nexvet’s management and the Nexvet Board met and discussed the scope of due diligence information to be shared with Zoetis and the retention of a financial and Rule 3 adviser. On June 30, 2016, the Nexvet Board selected Evercore to act alongside Cowen as Nexvet’s financial adviser in connection with the evaluation of strategic alternatives. Nexvet subsequently entered into a letter agreement with Evercore on July 1, 2016, pursuant to which Evercore was formally engaged to act in such capacity.

On July 14, 2016, Nexvet’s management updated the Nexvet Board on Zoetis’ due diligence process. At this meeting, Evercore presented a summary of Nexvet’s standalone projections, an estimate of the synergies that a potential acquiror might be able to achieve, and a preliminary valuation analysis of Nexvet’s standalone projections and of the potential synergies. Ms. Geraldine Farrell, General Counsel and Vice President of Operations at Nexvet, outlined key legal issues that would relate to a potential sale of Nexvet.

On July 15, 2016, Goldman Sachs, financial adviser to Zoetis, provided feedback to Evercore that, based on Zoetis’ due diligence investigation, Zoetis was considering a revised offer. Evercore indicated to Goldman Sachs that the aggregate consideration would need to be increased above the amount Zoetis had initially offered in its initial indication of interest in order to be acceptable to Nexvet.

On July 19, 2016, Zoetis communicated to Nexvet’s management that it was discontinuing further discussions on the acquisition of Nexvet and withdrawing its offer because certain due diligence findings caused them to reduce their estimate of the value of Nexvet.

On July 21, 2016, Nexvet’s management and Evercore outlined to the Nexvet Board the events leading to Zoetis’ withdrawal of its offer and Zoetis’ reasoning for doing so. Following discussion, including a discussion of the short-term implications of the transaction not proceeding, the Nexvet Board authorized Nexvet’s management to re-engage in discussions with Party A with respect to a license or strategic collaboration and explore available fundraising options, pending termination of exclusivity with Zoetis.

From August 2016 to January 2017, the Nexvet Board, Nexvet’s management, DLA Piper, Cowen and Evercore continued their discussions from time to time regarding a license or strategic collaboration with Party A, available fundraising options and the merits of a sale of the business. During this period, Nexvet considered entering the equity capital markets, and conducted certain confidential marketing activities with Cowen, but determined not to do so given market conditions. Nexvet’s management, at the direction of the Nexvet Board, also engaged with executives from various companies in the industry to explore interest in possible licensing or acquisition transactions.

On October 4, 2016, Dr. Heffernan and Mr. Lismore met with the leadership team of Party A to profile the Nexvet business and discuss a potential licensing transaction.

 

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On October 5, 2016, Dr. Heffernan and Mr. Lismore met with the leadership team of Party B to profile the Nexvet business and discuss a potential licensing transaction.

On December 21, 2016, Nexvet’s management received a non-binding licensing proposal from Party B.

On January 3, 2017, Nexvet’s management received a preliminary, informal acquisition proposal from Party C. Nexvet’s management requested Party C to formalize its proposal, which Party C subsequently declined to do.

On January 20, 2017, Nexvet’s management received a non-binding licensing proposal from Party D.

On January 21, 2017, Nexvet’s management received a revised licensing proposal from Party B.

On January 26, 2017, Nexvet’s management held a presentation for Party E at Evercore’s offices in New York.

On February 4, 2017, Nexvet’s management presented an update to the Nexvet Board regarding a potential license or strategic collaboration with Party E and certain other parties interested in a license of Nexvet’s lead product candidates (ranevetmab and frunevetmab).

On February 10, 2017, Nexvet’s management received two non-binding licensing proposals from Party E for each of Nexvet’s lead product candidates, and Party E commenced its due diligence investigation. On the same day, Party D submitted a revised non-binding licensing proposal to Nexvet. Evercore engaged with Party D to clarify its proposal and inquired as to Party D’s interest in exploring a potential acquisition.

On February 16, 2017, the Nexvet Board authorized Nexvet’s management to re-engage Zoetis to ascertain Zoetis’ interest and progress the discussions with respect to a potential acquisition of Nexvet. The Nexvet Board also noted Nexvet’s cash position and encouraged Nexvet’s management to prioritize the lead product candidates in the allocation of available cash resources. The same day, Dr. George Gunn, Chairman of the Nexvet Board, contacted Mr. Juan Ramón Alaix, Chief Executive Officer of Zoetis, to invite a new offer to acquire Nexvet.

Following this meeting and until the signing of the Transaction Agreement, representatives of Zoetis, with the assistance of their financial and legal advisers, conducted extensive due diligence on Nexvet covering a broad range of topics, including corporate, commercial, intellectual property, regulatory, financial, accounting, legal and business matters.

On February 24, 2017, Nexvet’s management received a non-binding licensing proposal from Party F.

On February 27, 2017, Nexvet’s management provided a detailed updated business overview to the Zoetis leadership team, highlighting program developments and accomplishments since the prior communications between the parties in 2016.

During February 2017, Party E conducted extensive due diligence on Nexvet, including a site visit to its Irish manufacturing facility.

On March 3, 2017, Nexvet’s management received a non-binding indication of interest from Zoetis to acquire the outstanding share capital of Nexvet for an aggregate value in the range of $70 million to $80 million in cash, plus expected cash on hand at closing (amount to be confirmed in diligence).

On March 10, 2017, Morgan Lewis, outside U.S. legal counsel to Zoetis, and Arthur Cox, Irish legal counsel to Zoetis, provided preliminary drafts of the Transaction Agreement and the Expenses Reimbursement Agreement. From March 10, 2017 until the execution of the Transaction Agreement and Expenses Reimbursement

 

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Agreement, Nexvet, Zoetis, and their respective legal and financial advisers exchanged drafts of the Transaction Agreement and Expenses Reimbursement Agreement and held extensive negotiations relating to their terms and conditions.

On March 17, 2017, Nexvet’s management received a non-binding indication of interest from Party D to acquire the outstanding share capital of Nexvet for $48 million in cash plus $30 million of additional consideration contingent on the performance of Nexvet’s lead product candidates representing an aggregate transaction value of up to $78 million, or $6.17 per share.

On March 22, 2017, following its due diligence review, Party E provided to Evercore a revised non-binding licensing proposal with lower terms than its prior proposal.

On March 22, 2017, the Nexvet Board held a special meeting to review and discuss potential strategic alternatives. Nexvet’s management reviewed and discussed Party E’s reduced non-binding licensing proposal and Party D’s acquisition proposal and potential responses. The Nexvet Board instructed Evercore to reach out to Party E and see if there was any interest in exploring a possible acquisition of Nexvet. Evercore followed up with Party E, and Party E indicated that they were unlikely to pursue an acquisition of Nexvet.

On March 28, 2017, Nexvet received a non-binding letter of interest from Zoetis expressing an interest to acquire the outstanding share capital of Nexvet for $70 million in cash, or $5.54 per share.

On March 31, 2017, Dr. Gunn held a meeting in New Jersey with Mr. Alaix to discuss Zoetis’ non-binding letter of interest and the potential acquisition of Nexvet. During that meeting, Mr. Alaix agreed in principle to increase Zoetis’ offer to $85 million in cash, or $6.72 per share.

On April 3, 2017, the Nexvet Board met and discussed the revised terms proposed by Zoetis as well as the terms then being proposed by Party E and Party D and the status of negotiations with Zoetis and its counsel. Representatives from Evercore also attended the meeting. At this meeting, Evercore presented a summary of Nexvet’s standalone projections and a preliminary valuation analysis of Nexvet. The Nexvet Board instructed Evercore to ask Party D whether it would consider improving the terms of its offer, which Evercore did.

On April 5, 2017, Nexvet received a revised non-binding letter of interest from Zoetis confirming the increased offer amount of $85 million in cash, or $6.72 per share.

On April 10, 2017, the Nexvet Board called a special meeting to consider all potential offers and discuss the terms of Zoetis’ revised offer. Nexvet’s management and representatives of Evercore, DLA Piper and Matheson attended the meeting. Evercore presented a summary of the Zoetis proposal, an overview of the interaction with various parties throughout the process, and Evercore’s valuation analysis of Nexvet. The Nexvet Board also reviewed and discussed at length various scenarios for Nexvet continuing on a standalone basis, the business and financial prospects of Nexvet and the perceived risks associated with continuing its operations on a standalone basis. The Nexvet Board also discussed, among other things, the level of financing required to compete and accomplish Nexvet’s strategic objectives, the current financing environment for clinical-stage companies in Nexvet’s industry, the anticipated terms of an equity financing for Nexvet in fiscal 2017, the anticipated timing and requirements for equity financings in future periods and the dilutive impact of Nexvet’s current and future capital needs on existing shareholders. During the meeting, DLA Piper and Matheson reviewed the Nexvet Board’s fiduciary duties in the context of evaluating Zoetis’ revised proposal and considering strategic alternatives. The Nexvet Board also considered that the typical transaction protection provisions in an Irish public company sale transaction are significantly less burdensome than in a similar U.S. transaction and, accordingly present a relatively low entry barrier to a third party that may be interested in acquiring Nexvet.

On April 11, 2017, Party D contacted Evercore to confirm that it was unwilling to improve the terms of its acquisition proposal at that time.

 

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On April 12, 2017, the Nexvet Board held a special meeting to consider approving the proposed transaction with Zoetis as well as the related transaction documents. Nexvet’s management and representatives of Evercore, Cowen, DLA Piper and Matheson attended the meeting. At the meeting, Nexvet’s management, together with Evercore, DLA and Matheson, updated the Nexvet Board on all of the material terms of the transaction, the transaction documents and the resolution of all significant issues. At the request of the Nexvet Board, Evercore reviewed its financial analyses with respect to the financial terms of the Acquisition, including a confirmation that it considered such financial terms to be fair and reasonable, having taken into account the commercial assessments of the Nexvet Directors. Later that day, Evercore issued a written opinion to the Nexvet Board stating that, as of April 12, 2017, and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth therein, the $6.72 per share Consideration to be received by Nexvet Shareholders pursuant to the Acquisition was fair, from a financial point of view, to such Nexvet Shareholders. After deliberations and consideration, the members of the Nexvet Board unanimously determined that the Acquisition was fair and reasonable and in the best interests of Nexvet and Nexvet Shareholders, taken as a whole, and approved the Transaction Agreement and the other transactions contemplated by the Transaction Agreement. The Nexvet Board also recommended that Nexvet Shareholders vote in favor of the Acquisition pursuant to the Scheme and instructed Nexvet’s management and counsel to finalize all documentation related to the Zoetis transaction as promptly as practicable, including the Transaction Agreement, the Expenses Reimbursement Agreement and the Rule 2.5 Announcement.

Reasons for the Acquisition

In reaching its determination, the Nexvet Board consulted with Nexvet’s management, Evercore, Cowen and its outside legal advisers, drew on its knowledge of the business, operations, properties, assets, financial condition, operating results, historical market prices and prospects of Nexvet and considered the following factors in favor of the Acquisition:

 

    the significant premium the $6.72 per share offer price represented to the prevailing trading prices in Nexvet Shares prior to the announcement of the Acquisition. The offer price offered represents a 66% premium over Nexvet’s Closing Price on April 12, 2017, a 71% premium over the volume weighted average price per share for the one-month period ended on April 12, 2017, and an 87% premium over the volume weighted average price per share for the three-month period ended on April 12, 2017;

 

    the elimination of the need for current Nexvet Shareholders to invest additional capital into Nexvet, and avoidance of potential dilution that would likely occur from raising capital from third parties;

 

    the inherent risks relating to the clinical development of Nexvet’s lead product candidates (ranevetmab and frunevetmab), and the risks relating to the regulatory, manufacturing and commercialization steps, which would require investment in a large commercial infrastructure with significant associated upfront costs and risks;

 

    the significant costs and risks related to achieving the successful commercialization of Nexvet’s broader pipeline, including successful completion of clinical studies, obtaining regulatory approvals, and manufacturing and commercialization steps;

 

    Nexvet has investigated other strategic options involving third parties, including the receipt of proposals from third parties relating to both licensing and acquisition transactions, and the Nexvet Board has concluded that the terms of these proposals were not as attractive as the terms of the Acquisition;

 

    the presentation by Evercore of its advice to the Nexvet Board regarding the financial terms of the Acquisition, including a confirmation that it considered such financial terms to be fair and reasonable, having taken into account the commercial assessments of the Nexvet Directors, followed by the written opinion of Evercore to the Nexvet Board dated April 12, 2017, that, as of such date and based on and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth therein, the Consideration to be received by Nexvet Shareholders pursuant to the Scheme was fair, from a financial point of view, to such Nexvet Shareholders;

 

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    Zoetis’ financial capability to consummate the Acquisition; and

 

    the perceived risks associated with continuing its operations on a standalone basis including regulatory approval, manufacturing and commercialization, the level of financing required to compete and accomplish Nexvet’s strategic objectives, the current financing environment for clinical-stage companies in Nexvet’s industry, the anticipated terms of an equity financing for Nexvet in fiscal 2017, the anticipated timing and requirements for equity financings in future periods and the dilutive impact of Nexvet’s current and future capital needs on existing shareholders.

In the course of its deliberations, the Nexvet Board also considered a variety of risks and other countervailing factors, including:

 

    the risks and costs to Nexvet if the Acquisition did not close, including:

 

    the diversion of Nexvet’s management and employee attention, potential employee attrition and the effect on customers and business relationships; and

 

    the market price of Nexvet Shares, as the market price could be affected by many factors, including: (1) the reason or reasons for which the Acquisition was terminated and whether such termination resulted from factors adversely affecting Nexvet; (2) Nexvet’s then current operating and financial results; (3) the possibility that, as a result of the termination of the Acquisition, the marketplace would consider Nexvet to be an unattractive acquisition candidate; and (4) the possible sale of Nexvet Shares by short-term investors (such as arbitrageurs) following an announcement of termination of the Acquisition;

 

    the fact that if the Acquisition does close, Nexvet will cease to be a publicly-owned company and current Nexvet Shareholders will no longer participate in any of its potential future growth;

 

    the fact that the Consideration would potentially be taxable to Nexvet Shareholders; and

 

    the customary restrictions on the conduct of Nexvet’s business prior to the consummation of the Acquisition.

The foregoing summary of the factors considered by the Nexvet Board is not intended to be exhaustive, but does set forth the principal factors considered by the Nexvet Board. The Nexvet Board collectively reached the unanimous conclusion to recommend the Acquisition in light of the various factors described above and other factors that each member of the Nexvet Board felt was appropriate. In view of the wide variety of factors considered by the Nexvet Board in connection with its evaluation of the Acquisition and the complexity of these matters, the Nexvet Board did not consider it practical and did not attempt to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. Rather, the Nexvet Board makes its recommendation based on the totality of information presented to and the investigation conducted by it, with the assistance of its advisers. In considering the factors discussed above, individual Nexvet Directors may have given different weights to different factors.

As a result, the Nexvet Board considers the terms of the Acquisition to be fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole and unanimously recommends that Nexvet Shareholders vote in favor of the Acquisition and the Scheme.

 

5. Effects of the Acquisition

Upon the Scheme becoming effective, each Nexvet Director will resign from the Nexvet Board. We expect one or more persons affiliated with Zoetis will be appointed to the Nexvet Board.

The Nexvet Group is party to indemnification agreements with each of the Nexvet Directors that require Nexvet to, among other things, indemnify the Nexvet Directors against certain liabilities that may arise by reason of their

 

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status of service as Nexvet Directors. In addition, pursuant to the terms of the Transaction Agreement, the Nexvet Directors will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies from Nexvet.

Further information explaining the effect of the Acquisition on the interests of the Nexvet Directors and executive officers is set out in paragraph 7 of Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document.

For a period of one year following the Effective Date, Zoetis has agreed to provide, or cause to be provided, to each Nexvet Employee, following any consultation processes which are required by Law or pursuant to existing contractual obligations:

 

    base salary or wage rate that is no less favorable than the base salary or wage rate, as applicable, provided to such Nexvet Employee immediately prior to the Effective Time;

 

    for Australian and Irish employees, superannuation or pension payments (as applicable), that are no less favorable in the aggregate to the payments included in any total fixed remuneration provided to such Nexvet Employee immediately prior to the Effective Time;

 

    cash bonus opportunities no less favorable in the aggregate than those provided to such Nexvet Employee immediately prior to the Effective Time;

 

    equity compensation opportunities under the equity compensation plans of Zoetis or its affiliates as may be determined by Zoetis, in a manner that is consistent with Zoetis’ determination with respect to its similarly situated employees;

 

    other employee benefits that, in the aggregate and when taken as a whole, are substantially comparable to those provided to Nexvet Employees immediately prior to the Effective Time; and

 

    severance benefits that are no less favorable than the severance benefits that would have been applicable immediately prior to the Effective Time to each Nexvet Employee.

The Nexvet Board understands that, at this point in time, Zoetis has not yet developed its plans regarding the potential impact of the Acquisition on Nexvet’s operations, including its employees, locations of business or redeployment of fixed assets and integration planning is an ongoing process that will continue after closing of the Acquisition. The Nexvet Board understands that any such strategic plans will be finalized once the Acquisition has been completed and Zoetis has obtained a greater insight into the day-to-day operations of the Nexvet Group. The Nexvet Board notes that Zoetis’ finalization of its strategic plans following the Acquisition, as described in paragraph 5 of Part 2 (Letter from Bidco) of this document, may lead to a reduction in headcount and elimination of duplicative functions, but welcomes the commitments given by Zoetis in the Transaction Agreement and as set out above. Further details of Zoetis’ intentions for the management, employees and locations of Nexvet are set out in paragraph 5 of Part 2 (Letter from Bidco) of this document and the effects of the Acquisition on Nexvet Convertible Securities are set out in paragraph 8 of Part 1 (Nexvet Plans and Nexvet Convertible Securities).

 

6. Expenses Reimbursement Agreement

The following summary of the Expenses Reimbursement Agreement is qualified by reference to the complete text of the Expenses Reimbursement Agreement, which is attached to this document as Annex B.

In connection with the Acquisition, Nexvet and Zoetis entered into an Expenses Reimbursement Agreement dated April 13, 2017, the terms of which have been consented to by the Panel. Under the Expenses Reimbursement Agreement, Nexvet has agreed to pay to Zoetis in certain circumstances an amount equal to all documented, specific quantifiable third party costs and expenses incurred by Zoetis and/or Bidco, or on its behalf, for the purposes of, in preparation for, or in connection with the Acquisition, exploratory work carried out in contemplation of and in connection with the Acquisition, legal, financial, accounting and commercial due diligence, arranging finance and engaging advisers to assist in the process. The gross amount payable to Zoetis pursuant to the Expenses Reimbursement Agreement may not, in any event, exceed 1% of the total value of the

 

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issued and to be issued share capital of Nexvet that is the subject of the Acquisition. The circumstances in which such payment will be made are:

 

    the Transaction Agreement is terminated:

 

    by Zoetis for the reason that the Nexvet Board or any committee thereof:

 

    withdraws (or modifies in any manner adverse to Zoetis), or fails to make when required pursuant to the Transaction Agreement, or proposes publicly to withdraw (or modify in any manner adverse to Zoetis), the Scheme Recommendation or, if applicable, the recommendation to the holders of Nexvet Shares from the Nexvet Board to accept the Takeover Offer;

 

    approves, recommends or declares advisable, or proposes publicly to approve, recommend or declare advisable, any Nexvet Alternative Proposal (it being understood, for the avoidance of doubt, that the provision by Nexvet to Zoetis of notice or information in connection with a Nexvet Alternative Proposal or Nexvet Superior Proposal as required or expressly permitted by the Transaction Agreement shall not, in and of itself, satisfy this requirement); or

 

    discloses a position that is deemed to be a Nexvet Change of Recommendation under Clause 5.2(f) of the Transaction Agreement; or

 

    by Nexvet, at any time prior to obtaining Nexvet Shareholder approval, in order to enter into any agreement, understanding or arrangement providing for a Nexvet Superior Proposal; or

 

    all of the following occur:

 

    prior to the Scheme Meeting, a Nexvet Alternative Proposal is publicly disclosed or any person shall have publicly announced an intention (whether or not conditional) to make a Nexvet Alternative Proposal and, in each case, such disclosure or announcement is not publicly and irrevocably withdrawn without qualification at least three Business Days before the date of the Scheme Meeting, (it being understood that for this purpose references to “20%” in the definition of Nexvet Alternative Proposal shall be deemed to refer to “50%”);

 

    the Transaction Agreement is terminated by Zoetis for the reason that Nexvet shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Transaction Agreement, which material breach or failure to perform:

 

    would result in a failure of any of the Conditions; and

 

    if curable, is not cured within 30 days following Zoetis’ delivery of written notice to Nexvet of such breach or failure to perform (which notice shall state Zoetis’ intention to terminate the Transaction Agreement pursuant to Clause 9.1(a)(vi) of the Transaction Agreement and the basis for such termination); and

 

    a Nexvet Alternative Proposal is consummated, or a definitive agreement providing for a Nexvet Alternative Proposal is entered into within twelve months after such termination and such Nexvet Alternative Proposal is consummated (whether or not it is the same Nexvet Alternative Proposal referred to above); or

 

    all of the following occur:

 

    prior to the Scheme Meeting, a Nexvet Alternative Proposal is publicly disclosed or any person shall have publicly announced an intention (whether or not conditional) to make a Nexvet Alternative Proposal and, in each case, such disclosure or announcement is not publicly and irrevocably withdrawn without qualification at least three Business Days before the date of the Scheme Meeting, (it being understood that for this purpose references to “20%” in the definition of Nexvet Alternative Proposal shall be deemed to refer to “50%”);

 

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    the Transaction Agreement is terminated by either Nexvet or Zoetis for the reason that the Scheme Meeting or the EGM shall have been completed and the Scheme Meeting Resolution or the EGM Resolutions, as applicable, shall not have been approved by the requisite majority of votes; and

 

    a Nexvet Alternative Proposal is consummated, or a definitive agreement providing for a Nexvet Alternative Proposal is entered into within twelve months after such termination and such Nexvet Alternative Proposal is consummated (whether or not it is the same Nexvet Alternative Proposal referred to above).

If and to the extent that any relevant Tax Authority correctly determines that the Zoetis Reimbursement Payment is consideration for a Taxable supply and that Nexvet is liable to account to a Tax Authority for VAT in respect of such supply and that all or any part of such VAT is Irrecoverable VAT, then (a) the amount payable by Nexvet by way of the Zoetis Reimbursement Payment, together with any Irrecoverable VAT arising in respect of the supply for which the payment is consideration, shall not exceed the Cap; and (b) to the extent that Nexvet has already paid an amount in respect of the Zoetis Reimbursement Payment which exceeds the amount of the Cap, Zoetis shall repay to Nexvet the portion of the Irrecoverable VAT in excess of the Cap. If Zoetis makes any such repayments to Nexvet, and after making such a repayment, Nexvet becomes entitled to recover all, or any part, of the related VAT from the relevant Tax Authority, Nexvet shall notify Zoetis without delay and, as soon as practicable, repay to Zoetis the lesser of: (a) the amount recoverable from the Tax Authority; and (b) the sum paid by Zoetis to Nexvet.

Evercore Partners International LLP and the Nexvet Board have each confirmed in writing to the Panel that, in the opinion of Evercore and the Nexvet Board (respectively), in the context of the Note to Rule 21.2 of the Takeover Rules and the Acquisition, the Expenses Reimbursement Agreement is in the best interests of Nexvet Shareholders.

 

7. Transaction Agreement

The following summary of the Transaction Agreement is qualified by reference to the complete text of the Transaction Agreement, which is attached to this document as Annex A.

 

  7.1 General

In connection with the Scheme, Nexvet, Bidco and Zoetis entered into a Transaction Agreement on April 13, 2017, which governs their relationship during the period until the Scheme becomes effective, lapses or is withdrawn and which contains certain assurances in relation to the implementation of the Scheme and the conduct of Nexvet’s business up to the Effective Date.

Under the terms of the Transaction Agreement, the parties agree:

 

  (a) to take such steps as are necessary or required and within their respective powers, and provide each other with such other assistance as may reasonably be required, to implement the Acquisition and the Scheme;

 

  (b) to assist each other as required for the purposes of preparing documents for the Acquisition and the Scheme; and

 

  (c) to use all reasonable endeavors to achieve satisfaction of the Conditions as promptly as reasonably practicable following the publication of this document.

 

  7.2 Conduct of Business

Under the Transaction Agreement, Nexvet has agreed that, from the date of the Transaction Agreement through the Effective Time or the date, if any, on which the Transaction Agreement is terminated, as discussed in

 

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paragraph 7.4 of this Part 1 (Termination of the Transaction Agreement) of this document, except as may be required by law, or as required or expressly permitted by the Transaction Agreement, Nexvet and its Subsidiaries will conduct their business in the ordinary course consistent with past practice in all material respects. Furthermore, Nexvet has agreed not to take, and cause its Subsidiaries not to take, any of the following actions (except as may be required by Law, or as expressly contemplated or permitted by the Transaction Agreement, or to the extent Zoetis consents in writing):

 

  (a) authorize or pay any dividends on or make any distribution with respect to the outstanding shares in its capital (whether in cash, assets, shares or other securities of Nexvet or its Subsidiaries);

 

  (b) split, combine or reclassify any of its shares of capital in issue, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares in its capital;

 

  (c) (i) except pursuant to any pre-existing contractual obligations owed to any Nexvet Employee, contractor, consultant or director (each a “Nexvet Associate” and collectively, the “Nexvet Associates”), increase the compensation (including bonus and equity opportunities), severance or termination pay, modify the benefits payable or provided to any Nexvet Associate or former employee, independent contractor or director of or to Nexvet or any of its Subsidiaries, other than to the extent required by the terms of any Nexvet Benefit Plan to which Nexvet or its Subsidiaries is a party or applicable Law; (ii) hire any individual or terminate the employment or service of any individual (whether as an executive officer, employee, independent contractor or consultant), in each case, other than in the ordinary course of business consistent with past practice; (iii) enter into any employment, consulting, change of control, severance or retention agreement or arrangement with any Nexvet Associate or former employee, independent contractor, consultant or director of Nexvet or any of its Subsidiaries, other than amounts required to be paid under applicable Law or an existing Nexvet Benefit Plan; (iv) establish, adopt, enter into, amend or terminate any Nexvet Benefit Plan or any other plan, trust, fund, policy or arrangement for the benefit of any Nexvet Associate or former employee, independent contractor, consultant or director of Nexvet or any of its Subsidiaries or any of their beneficiaries, except as required to comply with applicable Law; (v) fund any rabbi trust or similar arrangement or otherwise take any action to fund or in any other way secure the payment of compensation or benefits under any Nexvet Benefit Plan or other plan, policy, agreement or arrangement, except as required by applicable Law or an existing Nexvet Benefit Plan; (vi) exercise any discretion to pay or accelerate the vesting or payment of, or otherwise increase or accelerate other rights or benefits with respect to, any compensation or benefit under any Nexvet Benefit Plan or other plan, policy, agreement or arrangement, except as required by applicable Law or an existing Nexvet Benefit Plan; or (vii) change any actuarial assumptions used to calculate the funding obligations with respect to any Nexvet Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by U.S. GAAP or applicable Law or any Nexvet Benefit Plan in effect as of the date hereof);

 

  (d) make any change in financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by U.S. GAAP, applicable Law or SEC policy;

 

  (e) authorize or announce an intention to authorize, or enter into agreements with respect to, any acquisitions of an equity interest in or a substantial portion of the assets of any person or any business or division thereof, or any mergers, consolidations or business combinations, other than as expressly permitted in the Transaction Agreement;

 

  (f) amend Nexvet’s Articles of Association or any other Organizational Documents, or permit any of its Subsidiaries to adopt any material amendments to its Organizational Documents;

 

  (g) enter into any contract (other than (i) amendments to contracts in the ordinary course of business, (ii) any standard terms and conditions or amendments thereto, or (iii) contracts in connection with Nexvet’s planned clinical studies for ranevetmab or frunevetmab) that would, if entered into prior to the date of the Transaction Agreement, be a material contract;

 

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  (h) issue, deliver, grant, sell, pledge, dispose of or encumber, or authorize the issuance, delivery, grant, sale, pledge, disposition or encumbrance of, any shares in its capital, voting securities or other equity interest in Nexvet or any Subsidiaries or any securities convertible into or exchangeable for any such shares, voting securities or equity interest, or any rights, warrants or options to acquire any such shares in its capital, voting securities or equity interest or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units or take any action to cause to be exercisable any otherwise unexercisable Nexvet Convertible Security (except as otherwise required by the express terms of any Nexvet convertible securities outstanding on the date of the Transaction Agreement);

 

  (i) directly or indirectly, purchase, redeem or otherwise acquire any shares in its capital or any rights, warrants or options to acquire any such shares in its capital, other than in relation to the valid exercise of any Nexvet Convertible Security or as otherwise may be agreed with Zoetis;

 

  (j) redeem, repurchase, prepay (other than prepayments of revolving loans), defease, incur, assume, endorse, guarantee or otherwise become liable for or modify in any material respects the terms of any indebtedness for borrowed money or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), provided that nothing contained herein will prohibit Nexvet and its Subsidiaries from making guarantees or obtaining letters of credit or surety bonds for the benefit of commercial counterparties in the ordinary course of business consistent with past practice;

 

  (k) acquire, lease, license or otherwise obtain any of its material properties or assets, or to sell, lease, exclusively license, transfer, exchange, swap or otherwise dispose of, or subject to any encumbrance (other than permitted encumbrances), any of its material properties or assets, other than: (i) dispositions of inventory or equipment in the ordinary course of business; (ii) non-exclusive intellectual property licenses in connection with product development, publishing or brand licensing for the benefit of Nexvet, or exclusive intellectual property licenses in connection with brand licenses, in each case in the ordinary course of business consistent with past practices; (iii) for transactions among Nexvet and its wholly-owned Subsidiaries or among its wholly-owned Subsidiaries in the ordinary course of business consistent with past practices; or (iv) for transactions (excluding transactions for the purchase or sale of intellectual property) in the ordinary course of business consistent with past practice involving less than $250,000 individually or in the aggregate;

 

  (l) enter into a new line of business that is material to Nexvet and its Subsidiaries;

 

  (m) (i) other than in the ordinary course of business consistent with past practice, enter into any contract pursuant to which Nexvet or any Nexvet Subsidiary grants to any other person any non-competition, “most-favored nation”, exclusive marketing or other exclusive rights (other than exclusive brand licenses, and non-solicitation agreements with respect to employees) of any type or scope, or that otherwise restricts or purports on its face to restrict in a material respect Nexvet or its Subsidiaries from engaging or competing in any material line of business in any location; or (ii) enter into any contract that, upon completion of the Acquisition, would restrict or purport on its face to restrict Zoetis or any of its Subsidiaries (including Nexvet or its Subsidiaries) from engaging or competing in any line of business in any location;

 

  (n) adopt, approve or implement any “poison pill” or similar rights plan or related agreement;

 

  (o) announce, implement or effect any reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of Nexvet Associates, other than routine employee terminations in the ordinary course of business consistent with past practices;

 

  (p) engage in any merger;

 

  (q)

compromise or settle any material claim, litigation, investigation or proceeding, in each case made or pending by or against the Nexvet Group or any of their officers and directors in their capacities as such,

 

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  other than the compromise or settlement of claims, litigation, investigations or proceedings that: (i) are for an amount not to exceed, for any such compromise or settlement individually or in the aggregate, $150,000, (ii) does not impose any injunctive relief or otherwise limit any action or inaction other than the payment of monetary relief by Nexvet or any of its Subsidiaries;

 

  (r) (i) make, change or revoke any material tax election, change any annual tax accounting period or method of tax accounting unless in each case required by applicable Law, (ii) settle or compromise any corporate income tax audit or proceeding relating to a material amount of taxes, or material claim for refund, or enter into any closing or similar agreement with any tax authority other than entering into the process for claiming tax credits in the ordinary course consistent with past practice, or (iii) make, change or revoke any tax election which results in any modification of the pass through or transparency status, or lack thereof, of any entity in any jurisdiction;

 

  (s) make any new capital expenditure, or commit to do so, except as permitted, in excess of $250,000 in aggregate;

 

  (t) alter any intercompany arrangements or agreements or the ownership structure among Nexvet and its wholly-owned Subsidiaries or among Nexvet’s wholly-owned Subsidiaries; and

 

  (u) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Nexvet or its Subsidiaries.

In addition, Nexvet has agreed to take, and cause its Subsidiaries to take, certain actions:

 

  (a) upon request by Zoetis reasonably in advance, provide Zoetis with reasonable access, during normal business hours and where not unduly disruptive to Nexvet’s business, to Nexvet or its Subsidiaries’ personnel, assets, properties, offices and other facilities, and books and records, and shall furnish Zoetis and Zoetis’ representatives with such financial, operating and other information as reasonably requested by Zoetis which is not subject to legal privilege, any confidentiality or non-disclosure provisions in favor of a third party or in relation to any Nexvet Alternative Proposal;

 

  (b) perform all obligations under all material contracts;

 

  (c) promptly notify Zoetis orally and in writing upon an executive officer becoming actually aware: (i) that any representation or warranty made by it in the Transaction Agreement has become untrue or inaccurate in any material respect, or of any failure by Nexvet to comply in any material respect with any material covenant or condition of the Transaction Agreement; and (ii) of any material action commenced against Nexvet or any of its Subsidiaries; and

 

  (d) provide Zoetis as soon as reasonably practicable after receipt or delivery thereof, copies of all written correspondence and any other written material exchanged between Nexvet and its Subsidiaries (or any of their respective representatives) and any Governmental Body;

 

  (e) use all reasonable endeavors to achieve specified activities set out in a Disclosure Letter provided by Nexvet to Zoetis in connection with the Transaction Agreement in the nine months following the date of the Transaction Agreement, including specified actions relating to the continued advancement of its ranevetmab and frunevetmab programs.

The agreements related to the conduct of Nexvet’s business are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Transaction Agreement, including information contained in a Disclosure Letter provided by Nexvet to Zoetis in connection with the signing of the Transaction Agreement. The Disclosure Letter contains information that modifies, qualifies and creates exceptions to the agreements relating to the conduct of Nexvet’s business set forth in the Transaction Agreement. The agreements relating to the conduct of Nexvet’s business contained in the Transaction Agreement are complicated and not easily summarized. You are urged to carefully read Schedule 1 of the Transaction Agreement, which is attached to this document as Annex A.

 

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  7.3 Representation and Warranties

The Transaction Agreement contains representations and warranties made by Nexvet to Zoetis and Bidco and representations and warranties made by Zoetis and Bidco to Nexvet. The assertions embodied in those representations and warranties are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Transaction Agreement, including (in the case of the representations and warranties made by Nexvet) information contained in a Disclosure Letter provided by Nexvet to Zoetis in connection with the signing of the Transaction Agreement. The Disclosure Letter contains information that modifies, qualifies and creates exceptions to Nexvet’s representations and warranties set forth in the Transaction Agreement. Furthermore, some of those representations and warranties may not be accurate or complete as of any particular date because they are subject to a contractual standard of materiality different from that generally applicable to public disclosures to shareholders. Moreover, certain representations and warranties in the Transaction Agreement were used for the purpose of allocating risk between Nexvet and Zoetis rather than establishing matters as facts. Accordingly, you should not rely on the representations and warranties in the Transaction Agreement as characterizations of the actual state of facts about Nexvet or Zoetis. This description of the representations and warranties is included to provide Nexvet Shareholders with additional information regarding the terms of the Transaction Agreement. It is not intended to provide any other factual information about Nexvet or Zoetis.

In the Transaction Agreement, Nexvet has made representations and warranties to Zoetis and Bidco with respect to, among other things:

 

    the due organization, valid existence, good standing and power of Nexvet;

 

    its Subsidiaries and their due incorporation or organization, valid existence, good standing, power and authority;

 

    its capitalization, including in particular the number of outstanding shares, and the number of shares issuable upon the exercise of share options and other equity awards;

 

    its corporate authority to execute and deliver, and the valid execution of, the Transaction Agreement;

 

    investment company matters;

 

    legal compliance matters;

 

    the absence of certain investigations or litigation;

 

    absence of undisclosed liabilities;

 

    the ownership and sufficiency of certain assets used in Nexvet’s business;

 

    its material contracts;

 

    its internal controls and procedures;

 

    the accuracy of the information supplied by Nexvet for inclusion in this document and any other documents furnished to the High Court or the SEC;

 

    tax matters;

 

    its intellectual property;

 

    labor and employee benefits matters;

 

    certain regulatory matters;

 

    its real property;

 

    absence of contracts related to product distribution;

 

    absence of related party transactions;

 

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    matters related to its insurance;

 

    receipt of a fairness opinion from its financial adviser;

 

    the absence of undisclosed finders’ or brokers’ fees and expenses;

 

    the absence of untrue statements of material facts or omissions; and

 

    the absence of representations or warranties other than those in Clause 6.1 of the Transaction Agreement.

The representations and warranties included in the Transaction Agreement are complicated and not easily summarized. You are urged to carefully read clause 6 of the Transaction Agreement, which is attached to this document as Annex A.

 

  7.4 Termination of the Transaction Agreement

The Transaction Agreement may be terminated at any time prior to the Effective Time by either Nexvet or Zoetis:

 

    if the Scheme Meeting or the EGM have been completed and the Scheme Meeting Resolution or the EGM Resolutions, as applicable, were not approved by the requisite majorities;

 

    if the Effective Time has not occurred by 5:00 p.m., New York City time, on the End Date, provided that the right to terminate the Transaction Agreement pursuant to this paragraph will not be available to a party whose breach of any provision of the Transaction Agreement will have been the primary cause of the failure of the Effective Time to have occurred by such time;

 

    if the High Court declines or refuses to sanction the Scheme, unless the decision of the High Court will be appealed (it being agreed that Nexvet shall make such an appeal if requested to do so by Zoetis and the counsel appointed by Zoetis advises that doing so is a reasonable course of action);

 

    if an injunction will have been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Acquisition and such injunction shall have become final and non-appealable; provided that the right to terminate the Transaction Agreement pursuant to this paragraph will not be available to a party whose breach of any provision of the Transaction Agreement will have been the primary cause of such injunction;

 

    if the other party breached or failed to perform in any material respect any of its covenants or other agreements contained in the Transaction Agreement or if any of its warranties set forth in the Transaction Agreement are inaccurate, which material breach, failure to perform or inaccuracy (i) would result in a failure of any Conditions; and (ii) is not reasonably capable of being cured within 30 days of the non-breaching party’s delivery of written notice of such breach, failure to perform or inaccuracy; or

 

    by mutual written consent of Nexvet and Zoetis.

In addition, the Transaction Agreement may be terminated at any time prior to the Effective Time by Zoetis in the event that a Nexvet Change of Recommendation will have occurred prior to the EGM or the Nexvet Board or any Committee thereof withdraws (or modifies in any manner adverse to Zoetis) or proposes publicly to withdraw (or modify in any manner adverse to Zoetis) the Scheme Recommendation.

In addition, the Transaction Agreement may be terminated at any time prior to the Effective Time by Nexvet in connection with a Nexvet Superior Proposal where a Final Recommendation Change Notice has been delivered.

 

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  7.5 Non-Solicitation

Subject to any actions which Nexvet is required to take so as to comply with the requirements of the Takeover Rules, Nexvet has agreed that neither it nor any of its Subsidiaries will, and that it will use all reasonable endeavors to cause its and their respective Representatives and any person acting in concert with Nexvet not to, directly or indirectly: (1) solicit, initiate, facilitate or encourage any enquiry with respect to, or the making or submission of, any Nexvet Alternative Proposal, (2) participate in any discussions or negotiations regarding a Nexvet Alternative Proposal with, or, except as required by Law, furnish any nonpublic information regarding Nexvet to, any person that has made or, to Nexvet’s knowledge, is considering making a Nexvet Alternative Proposal, except to notify such person as to the existence of the provisions of this paragraph, or (3) expressly waive, terminate, amend or modify any provision of any “standstill” or similar obligation of any person with respect to Nexvet or any of its Subsidiaries; provided that Nexvet shall not be (x) prohibited from permitting any person to make a Nexvet Alternative Proposal privately to the Nexvet Board or (y) required to take, or be prohibited from taking, any action otherwise prohibited or required by this paragraph if the Nexvet Board determines, in good faith (after consultation with its outside legal counsel), that failure to take such action or permit such inaction would be inconsistent with the directors’ fiduciary duties under applicable Law. Nexvet has agreed to, and to cause its Subsidiaries and its and their respective Representatives to, immediately cease and cause to be terminated all existing discussions or negotiations with any person conducted prior to the date of the Transaction Agreement with respect to any Nexvet Alternative Proposal, or any enquiry or proposal that may reasonably be expected to result in a Nexvet Alternative Proposal, request the prompt return or destruction of all confidential information previously furnished in connection therewith and immediately terminate all physical and electronic dataroom access previously granted to any such person or its Representatives.

Notwithstanding the limitations set forth above, if Nexvet receives a written Nexvet Alternative Proposal that did not result from a knowing or intentional breach of obligations described in the above paragraph, Nexvet may take any or all of the following actions: (i) contact the person who makes such Nexvet Alternative Proposal to understand the terms and conditions thereof; (ii) furnish non-public information to the third party (and any persons acting in concert with such third party and to their respective potential financing sources and representatives) making such Nexvet Alternative Proposal (provided that all such information has previously been provided to Zoetis or is provided to Zoetis concurrently with the time it is provided to such person(s)), if, and only if, prior to so furnishing such information, Nexvet receives from the third party an executed confidentiality agreement on terms no less restrictive of such person than the confidentiality agreement entered into between Zoetis and Nexvet and (iii) engage in discussions or negotiations with the third party with respect to such Nexvet Alternative Proposal; provided that Nexvet shall not be permitted to take the action set forth above unless the Nexvet Board has determined in good faith (after consultation with Nexvet’s financial advisers and outside legal counsel) that such Nexvet Alternative Proposal is, or would reasonably be expected to lead to, a Nexvet Superior Proposal.

Nexvet has agreed to promptly (and in any event within 24 hours of receipt) notify Zoetis of the receipt of any Nexvet Alternative Proposal and indicate the material terms and conditions of such Nexvet Alternative Proposal and the identity of the person making any such Nexvet Alternative Proposal, and thereafter will promptly keep Zoetis informed on a current basis of any material change to the terms and status of any such Nexvet Alternative Proposal. Nexvet will provide to Zoetis as soon as reasonably practicable after receipt or delivery thereof (and in any event within 24 hours of receipt or delivery) copies of all written correspondence and other written material exchanged between Nexvet or any of its Subsidiaries and the person making any such Nexvet Alternative Proposal (or such person’s representatives) that describes any of the material terms or conditions of such Nexvet Alternative Proposal, including draft agreements or term sheets submitted by either party in connection therewith. Nexvet will not, and will cause its Subsidiaries not to, enter into any confidentiality or other agreement with any person subsequent to the date of the Transaction Agreement that prohibits Nexvet from providing such information to Zoetis.

Except under certain circumstances, Nexvet has agreed that neither the Nexvet Board nor any committee thereof will (i) withdraw (or modify in any manner adverse to Zoetis), or propose publicly to withdraw (or modify in any

 

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manner adverse to Zoetis), the Scheme Recommendation; (ii) approve, recommend or declare advisable, or propose publicly to approve, recommend or declare advisable any Nexvet Alternative Proposal; or (iii) cause or allow Nexvet or any of its Subsidiaries to execute or enter into, any expenses reimbursement agreement or break fee payment agreement, letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, transaction agreement, implementation agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or other agreement constituting or with respect to, or that would reasonably be expected to lead to, any Nexvet Alternative Proposal, or requiring, or reasonably expected to cause, Nexvet to abandon, terminate, delay or fail to consummate the Acquisition.

Nothing in the Transaction Agreement prohibits or restricts the Nexvet Board from making a Nexvet Change of Recommendation if the Nexvet Board has given not less than 48 hours’ notice to Zoetis of the holding of a meeting of the Nexvet Board (or a committee thereof) at which a Nexvet Change of Recommendation is to be considered and has concluded, in good faith (after consultation with Nexvet’s outside legal counsel and financial advisers) that: (i) the relevant Nexvet Alternative Proposal constitutes a Nexvet Superior Proposal; and (ii) that the failure to make a Nexvet Change of Recommendation would be inconsistent with the directors’ fiduciary duties under applicable Law; provided that (x) promptly (and in any event within 48 hours) following the Nexvet Board’s determination (after consultation with Nexvet’s outside legal counsel and financial advisers) that the relevant Nexvet Alternative Proposal constitutes a Nexvet Superior Proposal, Nexvet has provided a written notice to Zoetis advising Zoetis that Nexvet has received a Nexvet Alternative Proposal and specifying the material terms of such Nexvet Alternative Proposal, the identity of the person making such Nexvet Alternative Proposal, including written notice of the determination of the Nexvet Board that such Nexvet Alternative Proposal constitutes a Nexvet Superior Proposal and (y) Nexvet has provided Zoetis with an opportunity, for a period of five Business Days following the time of delivery to Zoetis of the Superior Proposal Notice, to discuss in good faith the terms and conditions of the Transaction Agreement and the Transactions, including an increase in, or modification of, the Consideration, and such other terms and conditions such that the relevant Nexvet Alternative Proposal no longer constitutes a Nexvet Superior Proposal.

 

  7.6 Employee Matters

The Transaction Agreement provides that, for a period of one year following the Effective Date, Zoetis will provide, or will cause to be provided to each Nexvet Employee, following any consultation processes which are required by Law or pursuant to existing contractual obligations: (i) a base salary or wage rate that is no less favorable than the base salary or wage rate provided to such Nexvet Employee immediately prior to the Effective Time; (ii) for Australian and Irish Nexvet Employees, superannuation or pension payments (as applicable), that are no less favorable in the aggregate to the payments included in any total fixed remuneration provided to such Nexvet Employee immediately prior to the Effective Time; (iii) cash bonus opportunities no less favorable in the aggregate than those provided to such Nexvet Employee immediately prior to the Effective Time; (iv) equity compensation opportunities under the equity compensation plans of Zoetis or its affiliates as may be determined by Zoetis (in its sole discretion), with such determination as to which Nexvet Employees may be offered such an opportunity and the amount and terms and conditions of such opportunity to be made by Zoetis on an individual basis in a manner that is consistent with Zoetis’ determination with respect to its similarly situated employees; (v) employee benefits (excluding any cash incentive compensation, equity or equity-based compensation, defined benefit pension benefits, and post-employment health and welfare benefits) that, in the aggregate and when taken as a whole, are substantially comparable to those provided to the Nexvet Employees immediately prior to the Effective Time; and (vi) severance benefits that are no less favorable than the severance benefits that would have been applicable immediately prior to the Effective Time to each Nexvet Employee in accordance with the severance formula set out in Schedule 2 of the Transaction Agreement, which is attached to this document at Annex A.

For purposes of (i) eligibility, vesting and determining the applicable level of vacation and other paid time off benefits (but not for purposes of any other benefit accrual), under the employee benefit plans pursuant to which Zoetis provides benefits to any Nexvet Employee after the Effective Time (the “New Plans”), which exclude any benefits provided by, in whole or in part, a Governmental Body and workers’ compensation insurance, each

 

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Nexvet Employee shall be credited with his or her years of service with Nexvet, Nexvet’s Subsidiaries and its predecessors before the Effective Date, to the same extent as such Nexvet Employee was entitled, before the Effective Time, to credit for such service under any similar Nexvet Benefit Plan in which such Nexvet Employee participated; provided, however, that the foregoing shall not apply to any cash incentive, equity or equity based plans or awards or to the extent that its application would result in a duplication of benefits with respect to the same period of service.

For purposes of each New Plan providing disability, medical, dental, pharmaceutical and/or vision benefits to any Nexvet Employee, Zoetis shall use all reasonable endeavors to cause: (i) all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such employee and his or her covered dependents, unless and to the extent the individual was subject to such conditions under the comparable Nexvet Benefit Plan immediately prior to the Effective Date (an “Old Plan”); and (ii) any co-payments and deductibles paid by such employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date such employee’s participation in the corresponding New Plan begins to be taken into account under such New Plan for the purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan. Where Zoetis maintains any of the Old Plans in full force and effect, the above provisions will not apply with respect to the benefits available under such Old Plans unless and until Zoetis replaces such Old Plans with New Plans. Nothing in the Transaction Agreement will require Zoetis to replace the Old Plans with New Plans.

 

  7.7 Indemnification and Insurance

Zoetis agrees that all rights to exculpation, indemnification or advancement of expenses arising from, relating to, or otherwise in respect of acts or omissions occurring at or prior to the date of the Effective Time existing at the date of the Transaction Agreement in favor of each present and former director, officer or employee of Nexvet or any of its Subsidiaries (the “Indemnified Parties”) provided for in their respective organizational documents or any indemnification or similar agreements will survive the Acquisition and continue in full force and effect in accordance with their terms. For a period of no less than six (6) years from the Effective Time, Zoetis shall cause Nexvet to maintain in effect the exculpation, indemnification and advancement of expenses provisions of Nexvet’s and its Subsidiaries’ organizational documents or any indemnification or similar agreements, in the form that is in effect as of the date of the Transaction Agreement, and shall not, and shall cause Nexvet not to, amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any individuals who immediately before the Effective Time were current or former directors, officers or employees of Nexvet.

During the period commencing at the Effective Time and ending on the sixth (6th) anniversary of the Effective Time, Zoetis shall, and shall cause Nexvet to, indemnify and hold harmless, and advance expenses to, the Indemnified Parties against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities in connection with any actual or threatened action arising out of, relating to or in connection with (i) the fact that such Indemnified Party is or was a director or officer of Nexvet or any of its Subsidiaries, (ii) any acts or omissions occurring or alleged to occur prior to or at the Effective Time in such Indemnified Party’s capacity as a director, officer, employee or agent of Nexvet or any of its Subsidiaries, or (iii) the Acquisition, the Transaction Agreement or the transactions contemplated thereby.

Prior to the Effective Time, Nexvet shall obtain and fully pay for “tail” insurance policies with a claims period of no more than six (6) years from and after the Effective Time from an insurance carrier with the same or better credit rating as Nexvet’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance with benefits and levels of coverage not materially more favorable than Nexvet’s existing policies (the “Existing Policies”) with respect to matters existing or occurring at or prior to the Effective Time (including with respect to acts and omissions occurring in connection with the Transaction Agreement, the Acquisition or the other transactions or actions contemplated thereby) and, if such policies have been obtained,

 

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Zoetis shall, and shall cause Nexvet to, maintain such policies in full force and effect after the Effective Time; provided, however, that in no event shall Nexvet pay, or be required to pay, for such “tail” policies a one-time premium in excess of 250% of Nexvet’s current aggregate annual premium amount under its Existing Policies. If Nexvet for any reason fails to obtain such tail policy, Nexvet shall, and Zoetis shall cause Nexvet to, maintain in effect for not less than six (6) years from the Effective Time the Existing Policies for the Indemnified Parties otherwise covered by such Existing Policies; provided that (i) Nexvet may substitute therefor policies of substantially the same coverage containing terms and conditions that are no less advantageous to such Indemnified Parties and are from an insurance carrier with the same or better credit rating as Nexvet’s current insurance carrier; and (ii) Nexvet shall not be required to pay annual premiums for the Existing Policies (or for any substitute policies) in excess of 250% of the annual premiums paid for the Existing Policies prior to the date of the Transaction Agreement (the “Maximum Premium”). In the event any future annual premiums for the Existing Policies (or any substitute policies) exceed such amount, the Surviving Entity shall be entitled to reduce the amount of coverage of the Existing Policies (or any substitute policies) to the maximum amount of coverage that can be obtained for a premium equal to such amount.

 

  7.8 Other Covenants

The Transaction Agreement also contains covenants relating to the preparation and distribution of this document and all requisite regulatory filings.

 

8. Nexvet Plans and Nexvet Convertible Securities

Nexvet has agreed to do everything necessary to procure that with effect from the Effective Time, the Nexvet Plans are terminated.

Nexvet has also agreed to do everything necessary to procure that all Nexvet Options and Nexvet RSUs, whether vested or unvested, that are outstanding and unexercised as of immediately prior to the Effective Time shall, at the Effective Time, automatically (and without any action on the part of any holder thereof) be cancelled and terminated. At the Effective Time, all Nexvet Options and Nexvet RSUs shall no longer be exercisable for or convertible into Nexvet Shares except that:

 

    if the exercise or conversion price per ordinary share of any Nexvet Option or Nexvet RSU (whether or not vested) that is outstanding as of immediately prior to the Effective Time is less than the Consideration, it shall be converted into the right of the holder thereof to receive $6.72 less the exercise or conversion price payable by or on behalf of the holder for the purpose of exercising or converting such Nexvet Option or Nexvet RSU (without interest and less any applicable withholding taxes); and

 

    if the exercise or conversion price per ordinary share of any Nexvet Option or Nexvet RSU (whether or not vested) that is outstanding as of immediately prior to the Effective Time is equal to or exceeds the Consideration, such Nexvet Option or Nexvet RSU shall be cancelled as of the Effective Time without the payment of any amount or other consideration in respect thereof.

The Nexvet Warrants will remain in existence (subject to their terms) following the Effective Time, but the proposed new Article 193 of Nexvet’s articles of association will result in any share in the capital of Nexvet issued upon exercise of Nexvet Warrants following the Scheme Record Time being immediately acquired by Bidco from the holder of the Nexvet Warrant for the Consideration. The proposed new Article 193 is set out in Resolution 5 in the notice of the EGM set out in Part 11 (Notice of Extraordinary General Meeting of Nexvet Biopharma plc) of this document.

 

9. Irrevocable Undertakings

Zoetis and Bidco have received irrevocable undertakings from all members of the Nexvet Board (Christopher Brown, George Gunn, Ashraf Hanna, Mark Heffernan, Cormac Kilty, Joseph McCracken, Rajiv Patel

 

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and John Payne) that they will vote in favor of the Proposals and Resolutions at the Meetings in their capacity as shareholders in respect of their entire beneficial holdings of Nexvet Shares. In the aggregate, this amounts to 543,813 Nexvet Shares, representing approximately 4.6% of the issued and outstanding ordinary share capital of Nexvet on May 30, 2017.

In addition, Zoetis and Bidco have received irrevocable undertakings from Farallon Capital Management, L.L.C. (acting through related companies), Adage Capital Partners GP, L.L.C. and Broadfin Capital, LLC that they will vote in favor of the Proposals and Resolutions at the Meetings in respect of their entire beneficial holdings of Nexvet Shares. In the aggregate, this amounts to 4,570,896 Nexvet Shares, representing approximately 38.4% of the issued and outstanding ordinary share capital of Nexvet on May 30, 2017.

The irrevocable undertakings from members of the Nexvet Board referred to above shall lapse upon the occurrence of certain events, namely the earlier to occur of the following:

 

  (a) the Scheme becoming effective;

 

  (b) the Transaction Agreement being terminated in accordance with its terms.

The irrevocable undertaking from each of the Nexvet Shareholders referred to above shall lapse upon the occurrence of certain events, namely the earliest to occur of the following:

 

  (a) the Scheme becoming effective;

 

  (b) any third party, in accordance with the Takeover Rules, announcing a firm intention to make a general offer to acquire the entire issued and to be issued share capital of Nexvet (not already owned by such third party) with a value per Nexvet Share in cash (or equivalent to cash) of $7.06 or more; or

 

  (c) the Transaction Agreement being terminated in accordance with its terms.

 

10. Delisting and Cancellation of Trading

On completion of the Acquisition, Nexvet will become a direct wholly-owned Subsidiary of Bidco and a wholly-owned indirect Subsidiary of Zoetis, and trading of Nexvet Shares on NASDAQ will be cancelled. Following such cancellation, the Nexvet Shares will not be publicly-traded or listed on a securities exchange in the United States or elsewhere and will be deregistered under the Exchange Act.

Any share certificates in respect of the Nexvet Shares will cease to be of value and should at the request of Nexvet be delivered to Nexvet, or any person appointed by Nexvet, for cancellation or destruction following the Effective Date. It is intended that Nexvet will be re-registered as a private limited company following the Effective Date.

 

11. Financial Analysis

Your attention is drawn to the Evercore Fairness Opinion which is contained in Annex C to this document.

Evercore Partners International LLP is acting as independent financial adviser to the Nexvet Directors in relation to the Acquisition for the purposes of Rule 3 of the Takeover Rules.

As part of its engagement, the Nexvet Directors requested that Evercore render an opinion in accordance with its customary practice with respect to the fairness, from a financial point of view, to Nexvet Shareholders of the Consideration to be received by Nexvet Shareholders pursuant to the Scheme. On April 12, 2017, Evercore made a presentation of its advice to the Nexvet Board regarding the financial terms of the Acquisition, including a confirmation that it considered such financial terms to be fair and reasonable, having taken into account the commercial assessments of the Nexvet Directors. Later that day, Evercore issued a written opinion to the Nexvet Board stating that, as of April 12, 2017, and based upon and subject to the assumptions made, procedures

 

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followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth therein, the $6.72 per share Consideration to be received by Nexvet Shareholders pursuant to the Scheme was fair, from a financial point of view, to such Nexvet Shareholders.

Nexvet urges Nexvet Shareholders to read the entire Evercore Fairness Opinion carefully to learn about the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore in rendering the Evercore Fairness Opinion.

Your attention is drawn to paragraph 11 of Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document which contains a discussion of the Evercore Fairness Opinion.

 

12. Further Information

Your attention is drawn to the information set out in the rest of this document. You are advised to read this document in its entirety and not to rely solely on the information in this Part 1 (Letter of Recommendation from the Nexvet Board) of this document.

 

13. Action to be Taken

Your attention is drawn to the summary of the action to be taken at pages 19-23 of this document.

 

14. Overseas Shareholders

Persons who are resident in, or who are citizens of, jurisdictions outside of Ireland or the United States should refer to paragraph 10 of Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) of this document, which contains important information relevant to such persons.

 

15. Additional Information on Nexvet

Nexvet (NASDAQ: NVET) is a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals, such as dogs and cats, by developing and commercializing novel, species-specific biologics. Nexvet’s platform technology, which it refers to as “PETization,” is an algorithmic approach that enables Nexvet to rapidly create monoclonal antibodies (“mAbs”), a type of biologic that is designed to be recognized as “self” or “native” by an animal’s immune system, a property referred to as “100% species-specificity.” PETization is designed to build upon the safety and efficacy data from clinically tested human therapies to create new therapies for companion animals, which is intended to reduce clinical risk and development cost.

Nexvet is leveraging diverse global expertise and incentives to build a vertically integrated biopharmaceutical company, which conducts drug discovery in Australia, conducts clinical development in the United States and Europe and conducts manufacturing in Ireland. Nexvet’s registered and principal office is located at Unit 5, Sragh Technology Park, Rahan Road, Tullamore, County Offaly, Ireland.

Nexvet Shares have been traded in the United States on NASDAQ under the symbol “NVET” since Nexvet’s initial public offering in February 2015.

16. Recommendation

The Nexvet Directors, who have been so advised by Evercore as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole. In providing its opinion to the Nexvet Directors, Evercore has taken into account the commercial assessments of the Nexvet Directors. The Nexvet Directors unanimously determined that the

 

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Expenses Reimbursement Agreement, the Transaction Agreement and the transactions contemplated thereby, including the Scheme, are fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole.

Accordingly, the Nexvet Directors unanimously recommend that Nexvet Shareholders vote in favor of the Scheme Meeting Resolution and the EGM Resolutions (or in the event that the Acquisition is implemented by way of a Takeover Offer, Nexvet Shareholders accept such Takeover Offer).

Yours faithfully,

/s/ Dr. George Gunn

Dr. George Gunn

Chairman of the Board, Nexvet Biopharma plc

 

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PART 2

LETTER FROM BIDCO

ZOETIS BELGIUM S.A.

(having its official seat in Louvain-la-Neuve, Belgium, registered with the Belgium trade register under number 0401.953.350 (RLE Nivelles))

Registered Office Laid Bumiat 1, B-1348 Louvain-la-Neuve Belgium

To Nexvet Shareholders, and, for information only, to holders of Nexvet Convertible Securities

RECOMMENDED ACQUISITION OF NEXVET BIOPHARMA PLC

Dear Nexvet Shareholder,

 

1. Background to and Reasons for the Acquisition

On April 13, 2017, Nexvet and Zoetis announced that they had reached agreement on the terms of a recommended acquisition of Nexvet by Zoetis through Bidco, a wholly-owned indirect Subsidiary of Zoetis.

The acquisition of Nexvet would strengthen Zoetis’ pipeline in monoclonal antibodies (mAbs), an important area where Zoetis is looking to expand its portfolio and sustain its leadership.

Zoetis believes this acquisition strengthens its research and development pipeline in biologics, including monoclonal antibodies for pain and other therapeutic areas in companion animals.

 

2. Information on Zoetis and Bidco

Zoetis (NYSE: ZTS) is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 60 years of experience in animal health, Zoetis discovers, develops, manufactures and markets veterinary vaccines and medicines, complemented by diagnostic products, genetic tests, biodevices and a range of services. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2016, Zoetis generated annual revenue of $4.9 billion with approximately 9,000 employees. Bidco is a wholly-owned indirect Subsidiary of Zoetis.

Zoetis’ financial adviser is Goldman Sachs. Morgan, Lewis & Bockius LLP, New York and Arthur Cox, Dublin are providing legal advice to Zoetis and Bidco as to U.S. Law and Irish Law, respectively.

 

3. The Consideration

Under the terms of the Acquisition, Nexvet Shareholders will be entitled to receive $6.72 in cash per Nexvet Share, including any shares issued upon exercise of outstanding exercisable or convertible securities, in return for the cancellation of their shares, on the date the Scheme becomes effective. This consideration values the entire issued and to be issued share capital of Nexvet at approximately $85 million and represents:

 

    a 66% premium over the closing sale price of $4.05 per Nexvet Share on April 12, 2017 (being the latest date prior to announcement of the Acquisition);

 

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    a 71% premium over Nexvet’s volume weighted average price per share for the one-month period ended on April 12, 2017; and

 

    an 87% premium over Nexvet’s volume weighted average price per share for the three-month period ended on April 12, 2017.

 

4. Financing the Acquisition

The Consideration payable by Bidco under the terms of the Acquisition will be funded by cash on hand and Bidco’s own financial resources. Goldman Sachs, financial adviser to Zoetis and Bidco, is satisfied that sufficient resources are available to Bidco to satisfy in full the Consideration payable to Nexvet Shareholders under the terms of the Acquisition.

 

5. Directors, Management, Employees and Nexvet’s Business

The acquisition of Nexvet would strengthen Zoetis’ pipeline in monoclonal antibodies, an important area where Zoetis is looking to expand its portfolio and sustain its leadership.

The global market for companion animal pain therapeutics is currently estimated at approximately $400 million annually. Zoetis has been a leader in companion animal pain based on its RIMADYL pharmaceutical non-steroidal anti-inflammatory (NSAID) product, and Nexvet’s pipeline product ranevetmab (a mAb targeting nerve-growth factor (NGF)) would complement Zoetis’ offering with the introduction of the industry’s first monoclonal antibody for chronic pain (monthly injectable). Ranevetmab would be a highly differentiated alternative to Zoetis’ NSAID pain products, which are administered daily instead of monthly, have a different form of administration and work through a different mechanism of action. Feline treatments for pain are limited, and Nexvet’s feline-specific injectable mAb (frunevetmab, also a mAb targeting NGF) could also open up a new opportunity in feline pain that is underserved today.

This transaction demonstrates Zoetis’ intent to remain the leader in animal health and innovation, and its judicious capital allocation strategy consisting of a mix of internal research and development and business development activities to grow the business and create value for shareholders.

At this point in time, Zoetis has not yet developed its plans regarding the potential impact of the Acquisition on Nexvet’s operations, including its employees, locations of business or redeployment of fixed assets. Integration planning is an ongoing process that will continue after the closing of the Acquisition. Any such strategic plans will be finalized once the Acquisition has been completed and Zoetis has obtained a greater insight into the day-to-day operations of Nexvet. Until these strategic plans have been finalized, Zoetis is not in a position to comment on prospective potential impacts upon employment, specific locations or any redeployment of fixed assets. Based upon Zoetis’ considerable experience in integrating acquisitions, it is Zoetis’ expectation that there will be a reduction in headcount for the combined group stemming from the elimination of duplicative activities, functions, facilities or the redeployment of fixed assets. Zoetis has given commitments in the Transaction Agreement in relation to Nexvet Employees, as set out below.

For a period of one year following the Effective Date, Zoetis has agreed to provide, or cause to be provided, to each Nexvet Employee, following any consultation processes which are required by Law or pursuant to existing contractual obligations:

 

    base salary or wage rate that is no less favorable than the base salary or wage rate, as applicable, provided to such Nexvet Employee immediately prior to the Effective Time;

 

    for Australian and Irish employees, superannuation or pension payments (as applicable), that are no less favorable in the aggregate to the payments included in any total fixed remuneration provided to such Nexvet Employee immediately prior to the Effective Time;

 

    cash bonus opportunities no less favorable in the aggregate than those provided to such Nexvet Employee immediately prior to the Effective Time;

 

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    equity compensation opportunities under the equity compensation plans of Zoetis or its affiliates as may be determined by Zoetis, in a manner that is consistent with Zoetis’ determination with respect to its similarly situated employees;

 

    other employee benefits that, in the aggregate and when taken as a whole, are substantially comparable to those provided to Nexvet Employees immediately prior to the Effective Time; and

 

    severance benefits that are no less favorable than the severance benefits that would have been applicable immediately prior to the Effective Time to each Nexvet Employee.

Subject to the de-listing of Nexvet, Zoetis will also seek to reduce costs where appropriate, which have historically been related to Nexvet’s status as a listed company.

Upon the Scheme becoming effective, each Nexvet Director will resign from the Nexvet Board and one or more persons affiliated with Zoetis will be appointed to the Nexvet Board. Pursuant to the terms of the Transaction Agreement, for a period of six years following the Effective Date, the Nexvet Directors will be entitled to certain ongoing indemnification rights under the Nexvet Group’s organizational documents as well as coverage under directors’ and officers’ liability insurance policies from Nexvet (which Zoetis has agreed to cause Nexvet to maintain).

 

6. Payment of Scheme Consideration

Upon completion of the Scheme, settlement of the Consideration will be effected within 14 days of the Effective Date. Full details of arrangements in connection with the payment of the Consideration are set out at paragraphs 3 and 4 of Part 4 (The Scheme of Arrangement) of this document and the Transaction Agreement.

Yours faithfully,

/s/ Roman Trawicki

Roman Trawicki

Director, Zoetis Belgium S.A.

 

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PART 3

INFORMATION REQUIRED UNDER SECTION 452 OF THE ACT—RECOMMENDED ACQUISITION FOR CASH OF NEXVET

 

1 Introduction

On April 13, 2017, Nexvet and Zoetis announced that they had reached agreement on the terms of a recommended acquisition for cash of the entire issued and to be issued share capital of Nexvet by Bidco by way of a scheme of arrangement under Chapter 1 of Part 9 of the Act.

Your attention is drawn to the letter of recommendation from the Nexvet Board in Part 1 (Letter of Recommendation from the Nexvet Board) of this document, which sets out the reasons why the Nexvet Directors, who have been so advised by Evercore as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable to, and in the best interests of, Nexvet and Nexvet Shareholders taken as a whole and why the Nexvet Board unanimously recommends that all Nexvet Shareholders vote in favor of the Acquisition and the Scheme at the Scheme Meeting and at the EGM, as the Nexvet Directors intend to do in respect of their beneficial holdings of Nexvet Shares, which represented approximately 4.6% of the existing issued share capital of Nexvet at the Voting Record Time. In providing its opinion to the Nexvet Directors, Evercore has taken into account the commercial assessments of the Nexvet Directors.

 

2 The Acquisition

The Acquisition is to be effected by way of the scheme of arrangement between Nexvet and the Scheme Shareholders under Part 1 of Chapter 9 of the Act. The Scheme is set out in full in Part 4 (The Scheme of Arrangement) of this document. Under the terms of the Scheme, Bidco will pay the Consideration to Scheme Shareholders in consideration for the cancellation of their Cancellation Shares and/or the transfer to Bidco of their Transfer Shares. Immediately prior to the cancellation of the Cancellation Shares, one ordinary share in Nexvet will be issued to Zoetis or its nominee(s) at a price equal to the nominal value of such Nexvet ordinary share so as to ensure that Zoetis has 100% control of Nexvet on completion of the Acquisition.

If the Scheme is implemented, at the Effective Time, all Cancellation Shares will be cancelled pursuant to Sections 84 to 86 of the Act and all Transfer Shares will be transferred to Bidco in accordance with the Scheme. Nexvet will then issue New Nexvet Shares to Bidco in place of the Cancellation Shares and Bidco will pay the Consideration to Scheme Shareholders in consideration for the Acquisition. As a result of the Scheme, Nexvet will become a wholly-owned Subsidiary of Bidco.

The Scheme will require approval by Nexvet Shareholders at the Scheme Meeting, approval by Nexvet Shareholders at the EGM and the sanction of the High Court at the Court Hearing. The Scheme Meeting and the EGM and the nature of the approvals required to be given at the Meetings are described in more detail in paragraph 4 of this Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet). Each Nexvet Shareholder of record is entitled to be represented by counsel or a solicitor (at its own expense) at the Court Hearing to support or oppose the sanctioning of the Scheme.

The Acquisition is subject to a number of Conditions (summarized in paragraph 3 of this Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) and set out in full in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document). The Acquisition can only become effective if the Conditions to the Acquisition have been satisfied or (where permissible) waived on or before the Effective Date in accordance with their respective terms.

Assuming the necessary approvals from Nexvet Shareholders have been obtained and all other conditions have been satisfied or, where applicable, waived, the Scheme will become Effective upon delivery to the Registrar of Companies of a copy of the Court Order, together with the minute required by Section 86(1) of the Act confirming the capital reduction necessary to implement the Scheme and registration of the Court

 

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Order and minute by the Registrar of Companies. If the Scheme becomes Effective, it will be binding on all Nexvet Shareholders, irrespective of whether or not they attended or voted at the Scheme Meeting or the EGM (and, if they attended and voted, whether or not they voted in favor). The Scheme is expected to become effective in the second half of 2017.

 

3 The Conditions

The Acquisition is conditional on, among other things, the Scheme becoming effective. The Conditions to the Acquisition and the Scheme are set out in full in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document. The implementation of the Scheme and the Acquisition is conditional, among other things, upon:

 

    the Scheme becoming effective and unconditional by not later than (i) October 13, 2017, or by January 13, 2018 if a date has not been set for the High Court hearing to approve the Scheme by July 30, 2017, (ii) such earlier date as may be specified by the Panel, or (iii) such later date as Zoetis and Nexvet may agree (with the consent of the Panel, if required), and as the High Court may allow;

 

    the approval of the Scheme by a majority in number of Nexvet Shareholders present and voting (either in person or by proxy) at the Scheme Meeting, representing at least 75% in value of the Nexvet Shares held by such holders (as of the Voting Record Time), at the Scheme Meeting on or before the End Date;

 

    the requisite majority of Nexvet Shareholders approving the EGM Resolutions (with the exception of Resolution 6) on or before the End Date;

 

    the issuance of the Court Order and the confirmation by the High Court of the reduction of capital necessary to implement the Scheme on or before the End Date, and the registration of the Court Order and the minute related to the reduction of capital with the Registrar of Companies in Dublin, Ireland, on or before the End Date; and

 

    the other conditions set forth in Part 5 (Conditions and Further Terms of the Acquisition and the Scheme) of this document being satisfied or (where permissible) waived on or before the sanction of the Scheme by the High Court.

 

4 Consents and Meetings

The Scheme is subject to approval by Nexvet Shareholders at the Scheme Meeting as more fully described in paragraph 4.1 of this Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet) and its implementation will also require various approvals of Nexvet Shareholders (where eligible) at the separate EGM, as more fully described in paragraph 4.2 of this Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet), both of which will be held on July 10, 2017. The Scheme Meeting will be held at the offices of Matheson, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland on July 10, 2017, commencing at 10:00 a.m. (Irish time). The EGM will be held at the same location and place, commencing at 10:30 a.m. (Irish time) or, if later, immediately after the conclusion or adjournment of the Scheme Meeting. The purpose of the Scheme Meeting is to allow the High Court to ascertain whether Nexvet Shareholders are in favor of the Scheme. The purpose of the EGM is to seek approvals to facilitate the implementation of the Scheme, including but not limited to, to amend the Nexvet Constitution, to authorize the Nexvet Directors to take such action as they consider necessary or appropriate to carry the Scheme into effect, and the other matters described below.

Notices of the Scheme Meeting and the EGM are set out in the following parts of this document:

 

    Part 10 (Notice of the Nexvet Scheme Meeting); and

 

    Part 11 (Notice of Extraordinary General Meeting of Nexvet Biopharma plc).

 

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The entitlement of Nexvet Shareholders to attend and vote at each Meeting (where eligible) is detailed in the section above entitled “Action to be Taken/General Information.” The number of votes which may be cast at each Meeting will be determined by reference to the Register of Members of Nexvet at the Voting Record Time.

 

4.1 Scheme Meeting

The Scheme Meeting has been convened for 10:00 a.m. (Irish time) on July 10, 2017, to enable Nexvet Shareholders at the Voting Record Time to consider and vote on a resolution proposing that the Scheme in its original form or with or subject to any modification(s), addition(s) or condition(s) approved or imposed by the High Court. At the Scheme Meeting, voting will be by poll and not a show of hands and each Nexvet Shareholder who is present in person or by proxy will be entitled to one vote for each Nexvet Share held for the purposes of sub-paragraph (b) below. The approval required at the Scheme Meeting is that those voting to approve the Scheme must:

 

  (a) represent a majority in number of those Nexvet Shareholders of record at the Voting Record Time present and voting in person or by proxy at the Scheme Meeting; and

 

  (b) also represent 75% in value of the Nexvet Shares held by those Nexvet Shareholders at the Voting Record Time present and voting in person or by proxy at the Scheme Meeting.

It is important that as many votes as possible are cast at the Scheme Meeting so that the resolution to approve the Scheme can be passed and that the High Court may be satisfied that there is a fair representation of Nexvet Shareholder opinion when it is considering whether to sanction the Scheme. Nexvet urges Nexvet Shareholders who hold shares in street name to follow the instructions received from their brokerage firm, bank, dealer or other similar organization, to ensure the representation and voting of their Nexvet Shares at the Scheme Meeting. The Nexvet Board strongly urges Nexvet Shareholders of record to complete, sign, date, and return the proxy card marked “Meeting 1—Scheme Meeting” or to vote via the Internet at www.astproxyportal.com/ast/nvet by the Proxy Return Time to ensure the representation and voting of their Nexvet Shares at the Scheme Meeting.

 

4.2 Extraordinary General Meeting

In addition, the EGM has been convened for 10:30 a.m. (Irish time) on July 10, 2017 or, if later, as soon thereafter as the Scheme Meeting is concluded or adjourned. A quorum must be present in order to conduct any business at the EGM. The Nexvet Articles provide that Nexvet Shareholders may not take action at the EGM unless there is a quorum present. A quorum is present if one or more Nexvet Shareholders is present in person or by proxy holding not less than a majority of the issued and outstanding Nexvet Shares entitled to vote at the meeting. At the EGM, Nexvet Shareholders will consider and, if thought fit, pass the following resolutions (which in the case of special resolutions require the approval of at least 75% of the votes cast, and in the case of ordinary resolutions require the approval of a majority of the votes cast):

Resolution 1—Special Resolution

To amend the memorandum of association of Nexvet to broaden the objects of Nexvet in order to enable it to implement the Scheme.

Resolution 2—Ordinary Resolution

To approve the Scheme and to authorize the Nexvet Directors to take such action as they consider necessary or appropriate to carry the Scheme into effect.

Resolution 3—Special Resolution

To approve the cancellation of the Cancellation Shares pursuant to Section 84 of the Act.

 

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Resolution 4—Ordinary Resolution

To authorize the directors of Nexvet to effect the allotment of the New Nexvet Shares and to apply the reserve in the books arising upon the cancellation described above in paying up in full at par New Nexvet Shares.

Resolution 5—Special Resolution

To amend the Nexvet Articles so that any Nexvet Shares, other than any allotted and issued to Bidco and/or its nominee(s), allotted and issued following the Voting Record Time will either be subject to the terms of the Scheme or will be immediately and automatically acquired by Bidco for the same consideration per Nexvet Share as shall be payable to Nexvet Shareholders by Bidco under the Scheme.

Resolution 6—Special Resolution

To approve the cancellation of the Euro Deferred Shares pursuant to Section 84 of the Act.

Resolution 7—Ordinary Resolution

To approve a proposal to adjourn the EGM, if necessary, to solicit additional proxies in favor of approval of the resolutions to be considered at the EGM. Nexvet is submitting a proposal for consideration at the EGM to authorize the Chairman of the EGM to approve one or more adjournments of the EGM if there are not sufficient votes to approve the resolutions to be considered at the EGM at the time of the EGM. Even though a quorum may be present at the EGM, it is possible that Nexvet may not have received sufficient votes to approve the resolutions to be considered at the EGM by the time of the EGM. In that event, Nexvet would determine to adjourn the EGM in order to solicit additional proxies. The adjournment proposal relates only to an adjournment of the EGM for purposes of soliciting additional proxies to obtain the requisite Nexvet Shareholder approval to approve the EGM Resolutions. Any other adjournment of the EGM (e.g., an adjournment required because of the absence of a quorum or the previous adjournment of the Scheme Meeting) would be voted upon pursuant to the discretionary authority granted by the proxy.

 

4.3 Court Hearing

Subject to the approval of the Resolutions (with the exception of Resolution 6 of the EGM) and the prior satisfaction (or waiver, where permissible) of the Conditions, the Court Hearing is expected to take place during the second half of 2017. Each Nexvet Shareholder is entitled to be represented by counsel or a solicitor (at its own expense) at the Court Hearing to support or oppose the sanctioning of the Scheme.

 

4.4 Proxy Cards and Voting by Nexvet Shareholders

Nexvet Shareholders of record have been sent proxy cards marked with the relevant number of the meeting for the Scheme Meeting and the EGM. Nexvet Shareholders of record are strongly urged to complete and return their relevant proxy cards (in respect of the Scheme Meeting the proxy card marked Meeting 1—Scheme Meeting and in respect of the EGM the proxy card marked Meeting 2—Extraordinary General Meeting) to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219, United States, as soon as possible and in any event, by no later than the Proxy Return Time.

Nexvet Shareholders who hold their shares in street name are strongly urged to follow the instructions received from their brokerage firm, bank, dealer or other similar organization in respect of the Scheme Meeting and the EGM.

 

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4.5 Abstentions and Broker Non-Votes

If Nexvet Shareholders who hold in street name, or brokers holding Nexvet Shares on behalf of their clients, cause abstentions to be recorded, these Nexvet Shares will be considered present for purposes of determining whether or not a quorum is present at the Meetings. However, abstentions will have no effect on the approval of any of the proposals.

A member of the NYSE (such as a brokerage firm, bank, dealer or other similar organization) who has received no instructions from its client is permitted to vote its client’s proxies at its discretion, if the vote relates to certain “routine” proposals. Where a proposal is not “routine,” such as the resolutions to be proposed at the Scheme Meeting and the EGM, a brokerage firm, bank, dealer or other similar organization who has received no instructions from its clients does not have discretion to vote its clients’ uninstructed shares on that proposal. When a member of the NYSE indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, the missing votes are referred to as “broker non-votes.” The Resolutions to be proposed at the Scheme Meeting and the EGM are not “routine,” so a member of the NYSE who has received no instructions from its clients may not vote for or against the Resolutions. Those shares would be considered present for purposes of determining whether or not a quorum is present at the Meetings, but they are not entitled to vote and will have no effect on the approval of the Resolutions.

 

5 Structure of the Scheme

It is proposed that, under the Scheme, the Cancellation Shares will be cancelled pursuant to Sections 84 to 86 of the Act and all Transfer Shares will be transferred to Bidco. New Nexvet Shares will be issued to Bidco (and/or its nominee(s)) by the capitalization of the reserve arising from the cancellation of the Cancellation Shares. As a result of these arrangements, Nexvet will become a wholly-owned Subsidiary of Bidco.

Nexvet Shareholders whose shares are subject to the Scheme will receive the Consideration (without interest and less any applicable withholding taxes). Nexvet Shares issued after the Scheme Record Time will not be subject to the Scheme. Accordingly, it is proposed that the Nexvet Articles be amended so that any Nexvet Shares issued after the Scheme Record Time (other than to Bidco) will be immediately and automatically transferred to Bidco on the same terms as under the Scheme.

It is expected that the Scheme will become effective and that the Acquisition will be completed in the second half of 2017. The Scheme can only become effective if all the Conditions to which the Scheme is subject have been satisfied or (where permissible) waived by no later than the End Date or such later date (if any) as Nexvet, Bidco and Zoetis may, with (if required) the consent of the Panel, agree and (if required) the High Court may allow. Assuming the necessary approvals from Nexvet Shareholders have been obtained and all other conditions have been satisfied or (where permissible) waived, the Scheme will become Effective upon delivery to the Registrar of Companies of a copy of the Court Order, together with the minute required by Section 86(1) of the Act confirming the capital reduction necessary to implement the Scheme and registration of the Court Order and minute by the Registrar of Companies. If the Scheme becomes Effective, it will be binding on all Nexvet Shareholders, irrespective of whether or not they attended or voted at the Scheme Meeting or the EGM (and, if they attended and voted, whether or not they voted in favor).

 

6 Nexvet Convertible Securities

This section describes the treatment of Nexvet Options, Nexvet RSUs and Nexvet Warrants. As is required under the Takeover Rules, appropriate proposals will be made to holders of Nexvet Convertible Securities in connection with the Scheme. The treatment given to all such Nexvet Convertible Securities will be as set forth below.

All Nexvet Options and Nexvet RSUs, whether vested or unvested, that are outstanding and unexercised as of immediately prior to the Effective Time shall, at the Effective Time, automatically (and without any

 

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action on the part of any holder thereof) be cancelled and terminated. At the Effective Time, all Nexvet Options and Nexvet RSUs shall no longer be exercisable for or convertible into Nexvet Shares except that:

 

    if the exercise or conversion price per ordinary share of any Nexvet Option or Nexvet RSU (whether or not vested) that is outstanding as of immediately prior to the Effective Time is less than the Consideration, it shall be converted into the right of the holder thereof to receive $6.72 less the exercise or conversion price payable by or on behalf of the holder for the purpose of exercising or converting such Nexvet Option or Nexvet RSU (without interest and less any applicable withholding taxes); and

 

    if the exercise or conversion price per ordinary share of any Nexvet Option or Nexvet RSU (whether or not vested) that is outstanding as of immediately prior to the Effective Time is equal to or exceeds the Consideration, such Nexvet Option or Nexvet RSU shall be cancelled as of the Effective Time without the payment of any amount or other consideration in respect thereof.

The Nexvet Warrants will remain in existence (subject to their terms) following the Effective Time, but the proposed new Article 193 of Nexvet’s articles of association will result in any share in the capital of Nexvet issued upon exercise of Nexvet Warrants following the Scheme Record Time being immediately acquired by Bidco from the holder of the Nexvet Warrant for the Consideration. The proposed new Article 193 is set out in Resolution 5 in the notice of the EGM set out in Part 11 (Notice of Extraordinary General Meeting of Nexvet Biopharma plc) of this document.

 

7 The Nexvet Directors and Executive Officers and the Effect of the Scheme on their Interests

 

7.1 Interests Held by Nexvet Directors and Executive Officers

The effect of the Scheme on the interests of the Nexvet Directors and executive officers does not differ from its effect on the like interests of other persons, except as disclosed in this paragraph 7.

The names of the Nexvet Directors and executive officers are listed below. The address of each person listed in the table below is c/o Nexvet Biopharma plc, Unit 5, Sragh Technology Park, Tullamore, Co. Offaly, Ireland.

 

Name

  

Position

Christopher Brown    Director
Ashraf Hanna    Director
Mark Heffernan    Director, Chief Executive Officer
George Gunn    Chairman of the Board
Cormac Kilty    Director
Joseph McCracken    Director
Rajiv Patel    Director
John Payne    Director
Jürgen Horn    Chief Product Development Officer
Damian Lismore    Chief Financial Officer
Geraldine Farrell    General Counsel and Vice President Operations

The interests of Nexvet Directors and executive officers in the share capital of Nexvet and in the Nexvet Plans, including the Nexvet Options and Nexvet RSUs, are set out in paragraphs 4 and 5 of Part 8 (Additional Information) of this document.

The executive officers of Nexvet have an interest in continued employment pursuant to Section 7.3 of the Transaction Agreement, which provides that for a period of one year following the Effective Time, Zoetis will provide, or will cause to be provided to each Nexvet Employee certain employment benefits, including base salary and cash bonus opportunities, that are no less favorable to each Nexvet Employee than those provided by Nexvet immediately prior to the Effective Time. The entitlement of Nexvet Employees,

 

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including Nexvet’s executive officers, to continued employment is detailed in the section above entitled “Employee Matters.”

 

7.2 Treatment of Ordinary Shares, Nexvet RSUs and Nexvet Options

Nexvet Directors and executive officers will receive the same Consideration per Nexvet Share on the same terms and conditions as the other holders of Nexvet Shares in connection with the Scheme. Nexvet RSUs and Nexvet Options held by the Nexvet Directors and executive officers will be treated in a similar manner to all other Nexvet RSUs and Nexvet Options, as set out in paragraph 6 of this Part 3 (Information Required under Section 452 of the Act –Recommended Acquisition for Cash of Nexvet).

 

7.3 Table of Equity Related Payments

The following table sets forth the Nexvet Shares, Nexvet Options and Nexvet RSUs held by each of the Nexvet Directors and executive officers, together with the value payable in respect of such holdings, in connection with the consummation of the Scheme. No Nexvet Director or executive officer holds any interest, directly or indirectly in any Nexvet Warrants, except in the case of Mr. Patel who holds an indirect interest in Nexvet Warrants through entities associated with Farallon Capital Management, L.L.C., Mr. Lismore and Ms. Farrell. The table below excludes Nexvet Shares issuable upon the exercise of Nexvet Warrants because the exercise price is in excess of the $6.72 per share Consideration payable in the Acquisition. The information reflects holdings of Nexvet Shares, Nexvet RSUs and Nexvet Options as of June 1, 2017, assuming solely for purposes of this table that the Scheme is completed in the second half of 2017.

 

Name

   Ordinary
Shares
Held (#)
    Value of
Ordinary
Shares
Held (1)
    Shares
Underlying
Nexvet
Options (#)
    Value of
Ordinary
Shares
Underlying
Nexvet
Options ($) (2)
     Shares
Underlying
Nexvet
RSUs (#)
     Value of
RSUs
($) (3)
     Aggregate
Value for
Equity ($)
 

Christopher Brown

     12,400     $ 83,328       10,680     $ 70,435        3,600      $ 23,742      $ 177,505  

George Gunn

     38,500       258,720       —         —          5,600        36,932        295,652  

Ashraf Hanna

     13,420       90,182         —          4,100        27,040        117,222  

Mark Heffernan

     292,754       1,967,307       66,076 (4)      111,822        217,572        1,434,887        3,514,016  

Cormac Kilty

     151,564       1,018,510       —         —          3,600        23,742        1,042,252  

Joseph McCracken

     12,300       82,656       —         —          4,100        27,040        109,696  

Rajiv Patel

     2,658,176 (5)      17,862,943 (5)      —         —          5,100        33,635        17,896,577  

John Payne

     13,395       90,014       —         —          3,600        23,742        113,756  

Geraldine Farrell

     30,760       206,707       9,060 (6)      59,751        47,018        310,084        576,542  

Jürgen Horn

     —         —         60,000       97,200        63,000        415,485        512,685  

Damian Lismore

     66,634       447,780       11,079 (4)      73,066        106,250        700,719        1,221,565  

 

(1) Reflects the number of Nexvet Shares held by the person, multiplied by $6.72.
(2) Reflects the product of the number of Nexvet Shares issuable upon exercise of Nexvet Options held by the person, multiplied by the difference between $6.72 and the Nexvet Option’s exercise price per share.
(3) Reflects the product of the number of Nexvet Shares issuable upon conversion of Nexvet RSUs held by the person, multiplied by the difference between $6.72 and the $0.125 conversion price per share.
(4) Excludes 100,000 Nexvet Shares issuable upon exercise of Nexvet Options held by the person, with an exercise price of $15.00 per share, which exceeds the $6.72 per share Consideration payable in the Acquisition.

 

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(5) Includes 2,648,696 Nexvet Shares held by entities associated with Farallon Capital Management, L.L.C.
(6) Excludes 20,000 Nexvet Shares issuable upon exercise of options with exercise price of $15.00 per share, which exceeds the $6.72 per share Consideration payable in the Acquisition.

 

7.4 Agreements or Arrangements with Nexvet Executive Officers

Nexvet has entered into employment agreements with Dr. Mark Heffernan, Damian Lismore and Dr. Jürgen Horn that provide certain severance benefits as follows:

 

    Upon a “change in control,” all his equity awards will become 100% vested and exercisable in full.

 

    Upon termination without “cause” or resignation for “good reason” immediately prior to, upon or within 12 months following a “change of control,” he will be entitled to (i) the prorated amount of his base salary and any accrued and used vacation or benefits through the termination date, and (ii) continued payment of his base salary and health insurance premiums for himself and his eligible dependents for 12 months, a cash amount approximating the value of the annual equity award he would have received in the year of his termination (prorated through his termination date), and full acceleration of the vesting of his options and any annual equity awards (which will be exercisable for the remainder of the option term as if employment had not terminated).

Dr. Heffernan’s and Mr. Lismore’s employment agreements also provide that, if amounts in the nature of compensation payable to Dr. Heffernan or Mr. Lismore would be subject to the excise tax imposed by Section 4999 of the Code, each would be entitled to receive either the full payment or such lesser amount that would result in no portion of such payments being subject to such tax, whichever results in the greatest after-tax payment to him.

For purposes of these employment agreements:

 

    A “change in control” means: (i) a merger or consolidation or the sale, or exchange by Nexvet Shareholders of all or substantially all of Nexvet’s share capital, where Nexvet Shareholders immediately before such transaction do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting equity of the surviving or acquiring entity in substantially the same proportion as before such transaction; (ii) any transaction or series of related transactions to which Nexvet is a party in which in excess of 50% of its voting power is transferred, other than a transfer in which Nexvet Shareholders immediately before such transfer obtain or retain, directly or indirectly, more than 50% of the beneficial interest in the voting equity of the entity to which the voting power of Nexvet was transferred; or (iii) the sale or exchange of all or substantially all of Nexvet’s assets, other than a sale or transfers one of its Subsidiaries in which Nexvet Shareholders immediately before such sale or exchange do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting equity of the entity acquiring Nexvet’s assets in substantially the same proportion as before such transaction.

 

    “Cause” means: (i) his gross negligence, gross misconduct or refusal to perform his duties and responsibilities to Nexvet (including any willful act or omissions that have a material adverse effect on Nexvet’s reputation or financial statements) after receiving a written description of such failure and being provided with 30 days to cure such failure, or his material breach of fiduciary duties to Nexvet; (ii) his conviction of, or plea of nolo contendere to, a felony; or (iii) his engagement in acts of embezzlement or material dishonesty; and

 

   

“Good reason” means his resignation within 90 days after one of the following conditions has come into existence without his consent: (i) the material breach by Nexvet of any of Nexvet’s obligations under the employment agreement; (ii) a material reduction of his duties, position or responsibilities or his removal from such position and responsibilities, or a reduction in the level of supervisor within the organization to whom he reports; (iii) a material reduction in his base salary, unless such reduction is made in connection with a company-wide cost reduction effort; (iv) Nexvet’s requirement that he

 

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report to a new primary work location; or (v) a material reduction in the kind or level of employee benefits to which he is entitled immediately prior to such reduction with the result that his overall benefits package is significantly reduced such that the reduction constitutes a “material negative change” to his employment relationship (within the meaning of Section 1.409A-1(n)(2) of the United States Treasury Regulations), unless such reduction is made in connection with a company-wide cost reduction effort of similar scope for all similarly situated employees.

Nexvet has also entered into an employment agreement with Geraldine Farrell that provides the following severance benefits:

 

    12 months’ written notice if her employment is terminated immediately prior to, upon or within 12 months following a “change of control.”

 

    Upon a “change in control,” all her equity awards will become 100% vested and exercisable in full.

 

    Upon a termination immediately prior to, upon or within 12 months following a “change of control,” she will be entitled to a cash amount approximating the value of the annual equity award she would have received in the year of her termination (prorated through her termination date).

 

    Notwithstanding the foregoing, Nexvet may terminate Ms. Farrell summarily without notice, acceleration of vesting or any payment in lieu of notice if she commits serious misconduct, she commits a serious or persistent breach of any material term or condition of her employment agreement, she refuses or fails to comply with a lawful and reasonable directive that is not timely rectified, she engages in any fraudulent or dishonest conduct or other specified conditions arise that impact her ability to perform her duties or may bring Nexvet into disrepute.

For purposes of Ms. Farrell’s employment agreement, “change of control” has the same meaning as set forth above for the agreements with Dr. Heffernan, Mr. Lismore, and Dr. Horn.

 

7.5 Effect of Scheme on Employee Benefits

The Transaction Agreement provides that, for a period of one year following the Effective Date, Zoetis has agreed to provide, or cause to be provided, to each Nexvet Employee, following any consultation processes which are required by Law or pursuant to existing contractual obligations:

 

    base salary or wage rate that is no less favorable than the base salary or wage rate, as applicable, provided to such Nexvet Employee immediately prior to the Effective Time;

 

    for Australian and Irish Nexvet Employees, superannuation or pension payments (as applicable), that are no less favorable in the aggregate to the payments included in any total fixed remuneration provided to such Nexvet Employee immediately prior to the Effective Time;

 

    cash bonus opportunities no less favorable in the aggregate than those provided to such Nexvet Employee immediately prior to the Effective Time;

 

    equity compensation opportunities under the equity compensation plans of Zoetis or its affiliates as may be determined by Zoetis, in a manner that is consistent with Zoetis’ determination with respect to its similarly situated employees;

 

    other employee benefits that, in the aggregate and when taken as a whole, are substantially comparable to those provided to Nexvet Employees immediately prior to the Effective Time; and

 

    severance benefits that are no less favorable than the severance benefits that would have been applicable immediately prior to the Effective Time to each Nexvet Employee.

For purposes of (i) eligibility, vesting and determining the applicable level of vacation and other paid time off benefits (but not for purposes of any other benefit accrual), under the employee benefit plans pursuant to which Zoetis provides benefits to any Nexvet Employee after the Effective Time (the “New Plans”), which

 

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exclude any benefits provided by, in whole or in part, a Governmental Body and workers’ compensation insurance, each Nexvet Employee shall be credited with his or her years of service with Nexvet, Nexvet’s Subsidiaries and its predecessors before the Effective Date, to the same extent as such Nexvet Employee was entitled, before the Effective Time, to credit for such service under any similar Nexvet Benefit Plan in which such Nexvet Employee participated; provided, however, that the foregoing shall not apply to any cash incentive, equity or equity based plans or awards or to the extent that its application would result in a duplication of benefits with respect to the same period of service.

For purposes of each New Plan providing disability, medical, dental, pharmaceutical and/or vision benefits to any Nexvet Employee, Zoetis shall use all reasonable endeavors to cause: (i) all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such employee and his or her covered dependents, unless and to the extent the individual was subject to such conditions under the comparable Old Plan; and (ii) any co-payments and deductibles paid by such employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date such employee’s participation in the corresponding New Plan begins to be taken into account under such New Plan for the purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan. Where Zoetis maintains any of the Old Plans in full force and effect, the above provisions shall not apply with respect to the benefits available under such Old Plans unless and until Zoetis replaces such Old Plans with New Plans. Nothing in the Transaction Agreement requires Zoetis to replace the Old Plans with New Plans.

Nothing in the Transaction Agreement confers upon any Nexvet Employee or any other individual any right to continue in the employment or service of any member of the Nexvet Group, Zoetis or any Affiliate of Zoetis, or shall interfere with or restrict in any way the rights of any member of the Nexvet Group, Zoetis or any Affiliate of Zoetis, which rights are hereby expressly reserved, to discharge or terminate the services of any Nexvet Employee or other individual at any time for any reason whatsoever, with or without cause.

 

7.6 Insurance and Indemnification of Nexvet’s Officers and Directors

In connection with the Acquisition, the officers, directors and employees of Nexvet will be entitled to certain indemnification rights and directors’ and officers’ liability insurance that will survive completion of the Acquisition, as described in paragraph 7.7 of Part 1 (Letter of Recommendation from the Nexvet Board) of this document.

 

8 Taxation

Your attention is drawn to paragraphs 8 and 9 of Part 8 (Additional Information) of this document, headed “Irish Taxation” and “U.S. Federal Income Tax Consequences” respectively. If you are in any doubt as to your own tax position, or if you require more detailed information or if you are subject to taxation in any jurisdiction other than Ireland or the United States, you should consult an independent financial adviser immediately.

 

9 Settlement, Listing and Dealings

If the Scheme is approved by the High Court, a request will be made to cancel the listing of Nexvet Shares on NASDAQ and to deregister the Nexvet Shares under the Exchange Act. The last day of dealings in Nexvet Shares on NASDAQ is currently expected to be on or about the Effective Date.

No transfers of Nexvet Shares (other than transfers to Bidco) will be registered after the Scheme Record Time. At the Effective Time, any share certificates in respect of Nexvet Shares will cease to be of value and should, if so requested by Nexvet or its agents, be sent to Nexvet for cancellation.

 

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9.1 Consideration

Subject to the Acquisition becoming effective, the Consideration will be mailed to Nexvet Shareholders of record within 14 days of the Effective Date by ordinary post (or by such other manner as the Panel may approve). Such cash payments will be made in U.S. dollars. For Nexvet Shareholders who hold their shares in street name, the Consideration will be transmitted to their brokerage firm, bank, dealer or other similar organization who will arrange for the allocation of funds to those Nexvet Shareholders who hold in street name.

Nexvet Shareholders will receive $6.72 in cash (without interest and less any applicable withholding taxes) for each Nexvet Share that they own.

Except with the consent of the Panel, any payment to which a Nexvet Shareholder is entitled will be implemented in full without regard to any lien, right of set-off, counter claim or other analogous right to which Bidco may be, or claim to be, entitled against such Nexvet Shareholder.

All documents and remittances sent to Nexvet Shareholders (or in accordance with their directions) will be mailed at their own risk.

 

9.2 Certain Effects of the Scheme

If the Scheme becomes effective, Nexvet will become a wholly-owned Subsidiary of Bidco and, as such, Nexvet Shareholders will not have an opportunity to continue their equity interest in Nexvet as an ongoing corporation and, therefore, will not have the opportunity to share in its future earnings, dividends or growth, if any.

 

10 Overseas Shareholders

As regards Overseas Shareholders, the Acquisition may be affected by the Laws of the relevant jurisdictions. Such Overseas Shareholders should inform themselves about and observe any applicable legal requirements. It is the responsibility of Overseas Shareholders to satisfy themselves as to the full observance of the Laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction.

This document has been prepared for the purposes of complying with the Laws of Ireland and the Takeover Rules and U.S. proxy rules, respectively (to the extent applicable), and the information disclosed may be different from that which would have been disclosed if this document had been prepared in accordance with the Laws of jurisdictions outside Ireland and the United States.

Overseas Shareholders are encouraged to consult their local tax adviser.

 

11 Opinion of Nexvet’s Financial Adviser

Nexvet engaged Evercore to act as its financial advisor in connection with a potential sale of Nexvet. On April 12, 2017, Evercore made a presentation of its advice to the Nexvet Board regarding the financial terms of the Acquisition, including a confirmation that it considered such financial terms to be fair and reasonable, having taken into account the commercial assessments of the Nexvet Directors. Later that day, Evercore issued a written opinion to the Nexvet Board stating that, as of April 12, 2017, and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of the review undertaken by Evercore as set forth therein, the $6.72 per share Consideration to be received by Nexvet Shareholders pursuant to the Scheme was fair, from a financial point of view, to such Nexvet Shareholders.

The full text of Evercore’s written opinion, dated April 12, 2017, which sets forth, among other things, assumptions made, procedures followed, matters considered and qualifications and limitations on the

 

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scope of the review undertaken in rendering its opinion, is attached as Annex C to this proxy statement and is incorporated by reference in its entirety into this proxy statement. You are urged to read Evercore’s opinion carefully and in its entirety. Evercore’s opinion was directed to the Nexvet Board and addresses only the fairness, from a financial point of view, of the Consideration to be received by Nexvet Shareholders. The opinion does not address any other aspect of the Acquisition nor does it constitute a recommendation to any Nexvet Shareholder as to how such Nexvet Shareholder should vote or act with respect to any matters relating to the Acquisition. Evercore’s opinion does not address the relative merits of the Acquisition as compared to other business or financial strategies that might be available to Nexvet, nor does it address the underlying business decision of Nexvet to engage in the Acquisition. The summary of the Evercore opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion included as Annex C.

In connection with rendering its opinion, Evercore has, among other things:

 

    reviewed certain publicly available business and financial information relating to Nexvet that Evercore deemed to be relevant, including publicly available research analysts’ estimates;

 

    reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to Nexvet prepared and furnished to us by Nexvet’s management;

 

    reviewed certain non-public projected financial data relating to Nexvet prepared and furnished to Evercore by Nexvet’s management;

 

    reviewed certain non-public historical and projected operating data relating to Nexvet prepared and furnished to Evercore by Nexvet’s management;

 

    discussed the past and current operations, financial projections and current financial condition of Nexvet with Nexvet’s management (including management’s views on the risks and uncertainties of achieving such projections);

 

    reviewed the reported prices and the historical trading activity of Nexvet Shares;

 

    compared the financial performance of Nexvet and its stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant;

 

    compared the financial performance of Nexvet and the valuation multiples relating to the transaction with those of certain other transactions that Evercore deemed relevant;

 

    evaluated other considerations related to the execution risk of Nexvet’s standalone plan, including Nexvet’s ability to raise the required additional capital;

 

    reviewed a draft of the Transaction Agreement dated April 11, 2017; and

 

    performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon, without undertaking any independent verification of, the accuracy and completeness of all of the information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, and Evercore assumed no liability therefor. With respect to the projected financial data relating to Nexvet referred to above, Evercore has assumed that the projections by Nexvet’s management have been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of Nexvet’s management as to the future financial performance of Nexvet. Evercore expressed no view as to any projected financial data relating to Nexvet or the assumptions on which they are based. Evercore has relied, at Nexvet’s direction, without independent verification, upon the assessments of Nexvet’s management as to the probabilities of success of Nexvet’s pharmaceutical products and the timing of their regulatory approval.

For purposes of rendering its opinion, Evercore assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the Transaction Agreement were true and correct,

 

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that each party would perform all of the covenants and agreements required to be performed by it under the Transaction Agreement and that all conditions to the consummation of the Acquisition would be satisfied without material waiver or modification thereof. Evercore assumed that the Transaction Agreement would conform in all material respects to the draft reviewed by Evercore. Evercore further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Acquisition would be obtained without any material delay, limitation, restriction or condition that would have an adverse effect on Nexvet or the consummation of the Acquisition or materially reduce the benefits to Nexvet Shareholders of the Acquisition.

Evercore did not make nor assume any responsibility for making any independent valuation or appraisal of the assets or liabilities of Nexvet, nor was Evercore furnished with any such appraisals, nor did Evercore evaluate the solvency or fair value of Nexvet under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion was necessarily based upon information made available to it as of the date of the opinion and financial, economic, market and other conditions as they existed and as could be evaluated on the date of the opinion. It should be understood that subsequent developments may affect Evercore’s opinion and that Evercore does not have any obligation to update, revise or reaffirm its opinion.

Evercore was not asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness, from a financial point of view, of the Consideration to be received by Nexvet Shareholders, as of the date of its opinion. Evercore did not express any view on, and its opinion did not address, the fairness of the Acquisition to, or any consideration received in connection therewith by, the holders of any other securities, creditors or other constituencies of Nexvet, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Nexvet, or any class of such persons, whether relative to the Consideration or otherwise. Evercore assumed that any modification to the structure of the Acquisition would not vary in any respect material to its analysis. Evercore’s opinion did not address the relative merits of the Acquisition as compared to other business or financial strategies that might be available to Nexvet, nor did it address the underlying business decision of Nexvet to engage in the Acquisition. Evercore’s opinion does not constitute a recommendation to the Nexvet Board or to any other persons in respect of the Acquisition, including as to how any Nexvet Shareholder should vote or act in respect of the Acquisition. Evercore expressed no opinion as to the price at which Nexvet Shares will trade at any time. Evercore’s opinion noted that it is not a legal, regulatory, accounting or tax expert and that Evercore assumed the accuracy and completeness of assessments by Nexvet and its advisors with respect to legal, regulatory, accounting and tax matters.

Except as described above, the Nexvet Board imposed no other instructions or limitations on Evercore with respect to the investigations made or the procedures followed by Evercore in rendering its opinion. Evercore’s opinion was only one of many factors considered by the Nexvet Board in its evaluation of the Acquisition and should not be viewed as determinative of the views of the Nexvet Board or Nexvet’s management with respect to the Acquisition or the Consideration payable in the Acquisition.

Set forth below is a summary of the material financial analyses reviewed by Evercore with the Nexvet Board on April 12, 2017 in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before April 11, 2017 (the last trading day prior to April 12, 2017, the date on which the Nexvet Board approved the Acquisition), and is not necessarily indicative of current market conditions.

The following summary of financial analyses includes information presented in tabular format. These tables must be read together with the text of each summary in order to understand fully the financial analyses. The tables alone do not constitute a complete description of the financial analyses. Considering the tables below without considering the full narrative description of the financial

 

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analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Evercore’s financial analyses.

In performing the financial analyses summarized below, Evercore utilized and relied upon the projected financial data relating to Nexvet prepared and furnished to Evercore by Nexvet’s management as described in additional detail below under the heading “Certain Financial Projections” in paragraph 12 of Part 3 (Information Required under Section 452 of the Act) of this document.

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis to calculate a range of implied equity value per share of Nexvet Shares as of June 30, 2017 utilizing estimates of the standalone, unlevered, after-tax free cash flows Nexvet was expected to generate for the fiscal years 2018 through 2032 based on projections from Nexvet’s management, as reflected in the line “Unlevered FCF” in the summary of the projections provided by Nexvet’s management to Evercore and the Nexvet Board set out below the heading “Certain Financial Projections” in paragraph 12 of Part 3 (Information Required under Section 452 of the Act) of this document. In evaluating other considerations related to the execution risk of Nexvet’s standalone plan, Evercore assumed that Nexvet will be a clinical-stage company over the near term. Evercore noted that the business plan assumes a cash flow breakeven in fiscal year 2021. Evercore further noted that in order to meet the projections provided by Nexvet’s management, Nexvet would need to raise a significant amount of additional capital relative to its current market capitalization, which would be challenging given the current financing environment for clinical-stage pharmaceutical and biotechnology companies. Any near term equity financing would likely only provide a portion of the financing need.

Evercore calculated a range of terminal values for Nexvet, using an assumed perpetuity growth rate range of negative 10%—negative 20%. Evercore then discounted Nexvet’s projected, unlevered free cash flows for fiscal years 2018 through 2032 and the range of terminal values for Nexvet to a present value as of June 30, 2017 using discount rates ranging from 12.0% to 16.0% to derive a range of implied equity values for Nexvet, assuming a mid-year convention. The discount rates were based on Evercore’s judgment of the estimated range of Nexvet’s weighted average cost of capital. At the direction of Nexvet’s management, Evercore assumed an effective tax rate of 16% and working capital to be 20.0% of sales. Based on these ranges of implied equity values and Nexvet’s management’s estimate of the net cash of Nexvet as of June 30, 2017, Evercore calculated a range of implied equity values per Nexvet Share. The projections were risk adjusted based on the assessment of Nexvet’s management of a possibility of success (“POS”) assumption of 80.0% for ranevetmab and a POS assumption of 55.0% for frunevetmab. This analysis resulted in a range of illustrative implied equity values per Nexvet Share of approximately $4.15 to $7.72, as compared to the consideration of $6.72 per Nexvet Share.

Trading Multiple Analysis

Evercore calculated certain financial multiples for the following selected group of publicly traded commercial-stage animal health companies:

 

    Zoetis Inc.

 

    Dechra Pharmaceuticals PLC

 

    Virbac S.A.

 

    Phibro Animal Health Corporation

 

    Vetoquinol SA

 

    ECO Animal Health Group PLC

 

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Evercore also calculated certain financial multiples for the following selected group of publicly traded clinical-stage animal health companies:

 

    Aratana Therapeutics Inc.

 

    Kindred Biosciences Inc.

Although none of these companies are directly comparable to Nexvet, Evercore selected these companies based on its professional judgment because they are animal health companies with business characteristics that for purposes of its analysis Evercore considered similar to the business characteristics of Nexvet.

For each of the selected companies identified above, Evercore calculated multiples of enterprise value (defined as equity market capitalization plus total debt, plus preferred equity and minority interest, less cash and cash equivalents) to estimated net revenue for calendar years 2017 through 2020, based on closing stock prices as of April 11, 2017 and financial data, which Evercore obtained from filings made with the SEC and consensus estimates based on publicly available equity research analysts’ projections.

The results of these calculations were as follows for commercial stage companies:

 

     Equity Value/Revenue Multiples      2017-2020E
Revenue
CAGR
 
     2017E      2018E      2019E      2020E     

Mean

     3.5x        3.2x        3.1x        3.0x        5.5

Median

     3.2x        3.0x        2.8x        2.6x        5.6

High

     5.8x        5.5x        5.2x        4.9x        8.4

Low

     1.5x        1.5x        1.7x        1.7x        2.3

The results of these calculations were as follows for all companies:

 

     Equity Value/Revenue Multiples      2017-2020E
Revenue
CAGR
 
     2017E      2018E      2019E      2020E     

Mean

     4.3x        3.6x        2.8x        2.4x        63.3

Median

     4.5x        3.8x        2.0x        1.7x        7.0

High

     9.2x        6.1x        5.2x        4.9x        258.9

Low

     1.5x        1.5x        1.7x        1.2x        2.3

Based on the multiples it derived for the selected peer group companies and based on its professional judgment and experience, Evercore applied an enterprise value/net revenue multiple reference range of 3.0x-3.5x to Nexvet’s management’s projected revenues for calendar years 2021 and 2022. The projections were risk adjusted based on the assessment of Nexvet’s management of a POS assumption of 80.0% for ranevetmab and a POS assumption of 55.0% for frunevetmab and excluded revenues associated with international profit sharing arrangements. These projected revenues were discounted to present value as of June 30, 2017 using a discount rate of 14.0% and a discount period of 3.75 years for calendar year 2021 and 4.75 years for calendar year 2022. This analysis implied an equity value range per Nexvet Share of $5.37 to $6.11 for calendar year 2021 and an equity value range per Nexvet Share of $6.57 to $7.50 for calendar year 2022, as compared to the consideration of $6.72 per Nexvet Share.

Precedent Transactions Analysis

Evercore performed an analysis of selected animal health transactions to compare multiples paid in other transactions to the multiples implied in the Acquisition. Evercore analyzed a group of 14 merger and acquisition transactions that were announced between 2012 and 2016 involving the acquisition of animal health companies. The selected transactions are set forth below:

 

Date Announced   

Acquiror

  

Target

10/5/16   

Elanco Animal Health, Inc.

  

Boehringer Ingelheim Vetmedica Inc.

9/16/16   

Dechra Pharmaceuticals PLC

  

Apex Laboratories Pty Ltd

 

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Date Announced   

Acquiror

  

Target

7/1/16   

Merck & Co., Inc.

  

Vallée S.A.

3/15/16   

Dechra Pharmaceuticals PLC

  

Putney, Inc.

12/15/15   

Boehringer Ingelheim Corporation

  

Merial Ltd

11/2/15   

Zoetis Inc.

  

PHARMAQ AS

11/17/14   

Zoetis Inc.

  

Abbott Animal Health, Inc.

4/22/14   

Elanco Animal Health, Inc.

  

Novartis Animal Health, Inc.

2/27/14   

Vetoquinol SA

  

Bioniche Animal Health

1/6/14   

Aratana Therapeutics, Inc.

  

Okapi Sciences NV

10/14/13   

Aratana Therapeutics, Inc.

  

Vet Therapeutics, Inc.

2/1/13   

Perrigo Company PLC

  

Velcera, Inc.

9/14/12   

Bayer HealthCare LLC

  

Teva Animal Health, Inc.

4/5/12   

Dechra Pharmaceuticals PLC

  

Eurovet Animal Health B.V.

Using publicly available information, Evercore reviewed implied transaction data for the 14 transactions involving target companies in the animal health industry referred to above. For each of the selected transactions, Evercore reviewed enterprise values in the selected transactions, as multiples, to the extent publicly available, of latest 12 months revenue. The results of this analysis indicated a mean value of 4.3x and a median value of 3.9x. Based on the multiples it derived for the selected transactions and based on its professional judgment and experience, Evercore applied an enterprise value/net revenue multiple reference range of 3.5x-4.5x to Nexvet’s management’s projected revenues for calendar years 2021 and 2022. The projections were risk adjusted based on the assessment of Nexvet’s management of a POS assumption of 80.0% for ranevetmab and a POS assumption of 55.0% for frunevetmab and excluded revenues associated with international profit sharing arrangements. These projected revenues were discounted to present value as of June 30, 2017 using a discount rate of 14.0% and a discount period of 4.50 years for calendar year 2021 and 5.50 years for calendar year 2022. This analysis implied an equity value range per Nexvet Share of $5.62 to $6.96 for calendar year 2021 and an equity value range per Nexvet Share of $6.89 to $8.57 for calendar year 2022, as compared to the consideration of $6.72 per Nexvet Share.

Premiums Paid Analysis

Evercore reviewed the premiums for acquisitions of a controlling equity stake of U.S. and EU target healthcare companies announced over the last five years with transaction values between $25 million and $300 million. Evercore identified 41 transactions with the foregoing criteria. Using information from Securities Data Corp., a data source that monitors and publishes information on merger and acquisition transactions, premiums paid were calculated as the percentage by which the per share consideration paid in each such transaction exceeded the closing market share prices of the target companies one day, one week and four weeks prior to transaction announcements. This analysis indicated the following implied mean, median, high, 75th percentile, 25th percentile and low premiums for the selected transactions:

 

     1 Day Prior     1 Week Prior     4 Weeks Prior  

Mean

     63.4     61.1     65.4

Median

     44.8     44.3     49.8

High

     346.4     303.2     331.0

75th Percentile

     73.5     70.5     82.4

25th Percentile

     29.0     26.3     27.7

Low

     14.4     14.2     11.4

Based on the above analysis, Evercore then applied a range of selected premiums from 30.0% to 75.0% derived from the selected transactions to the closing price of Nexvet Shares on April 11, 2017. This analysis indicated a range of implied equity values of $5.37 to $7.23 per Nexvet Share, as compared to the consideration of $6.72 per Nexvet Share.

 

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Ordinary Shares Trading Range Analysis

To provide background information and perspective, Evercore reviewed for informational purposes the intraday 52 week high and low trading prices of Nexvet Shares. This analysis resulted in a range of $2.61 to $5.70 per Nexvet Share. To provide background information and perspective, Evercore also reviewed for informational purposes the current analyst price targets, which indicated a 12-month implied per share equity value of $8.00. Evercore then calculated the present value of the current analyst price targets using a discount rate of 15.0%, based on Evercore’s analysis of the equity cost of capital for Nexvet, which indicated an implied per share equity value of $6.96.

General

In connection with the review of the transaction by the Nexvet Board, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s opinion. In arriving at its fairness determination, Evercore considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be the view of Evercore with respect to the actual value of the ordinary shares of Nexvet. No company used in the above analyses as a comparison is identical to Nexvet, and no transaction used is identical to this Acquisition. Further, Evercore’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Nexvet or its advisors.

Evercore prepared these analyses for the purpose of providing an opinion to the Nexvet Board as to the fairness, from a financial point of view, of the Consideration to be received by Nexvet Shareholders. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the business or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates. The issuance of the fairness opinion was approved by an Opinion Committee of Evercore. The Consideration to be received by Nexvet Shareholders pursuant to the Scheme was determined through arm’s length negotiations between Nexvet and Zoetis and was approved by the Nexvet Board. Evercore did not recommend any specific consideration to Nexvet or that any given consideration constituted the only appropriate consideration.

Pursuant to the terms of Evercore’s engagement letter with Nexvet, Evercore is entitled to receive a fee of $1.5 million if the Acquisition is consummated, of which $500,000 is owed in connection with rendering its opinion to the Nexvet Board and is fully creditable against any fees to be paid in connection with the consummation of the Acquisition. In addition, Nexvet agreed to reimburse Evercore’s reasonable expenses and to indemnify Evercore and related parties for certain liabilities, including liabilities under federal securities laws, arising out of its engagement. Evercore may provide financial or other services to Zoetis in the future and in connection with any such services Evercore may receive compensation.

In the ordinary course of business, Evercore or its affiliates may actively trade the securities, or related derivative securities, or financial instruments of Nexvet, Zoetis and their respective affiliates, for its own

 

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account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities or instruments.

Nexvet engaged Evercore to act as a financial adviser based on Evercore’s qualifications, experience and reputation. Evercore is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses in connection with mergers and acquisitions, leveraged buyouts, competitive biddings, private placements and valuations for corporate and other purposes.

 

12 Certain Financial Projections

Except for quarterly and annual guidance, Nexvet does not, as a matter of course, publicly disclose forecasts or projections as to future performance, earnings or other results due to the inherent unpredictability of the underlying assumptions, estimates and projections. In the course of planning for the Evercore Fairness Opinion, management of Nexvet prepared and provided to the Nexvet Board and Evercore projections and directed Evercore to use the projections in connection with the rendering of its opinion to the Nexvet Board and performing its related financial analyses, as described above under the heading “Opinion of Nexvet’s Financial Adviser” in paragraph 11 of Part 3 (Information Required under Section 452 of the Act – Recommended Acquisition for Cash of Nexvet) of this document. Nexvet did not provide the projections to Zoetis or Bidco, except as otherwise set forth below in Part 8 (Additional Information).

The projections were not prepared with a view toward public disclosure; and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or U.S. GAAP. Neither Nexvet’s independent registered public accounting firm, nor any other independent accountants, have audited, reviewed, compiled or performed any procedures with respect to the projections or expressed any opinion or any form of assurance related thereto. The financial projections are not included in this document to induce any shareholder to vote in favor of the Scheme or any of the other Resolutions to be voted on at the Scheme Meeting or EGM, but only because these financial projections were utilized by Evercore in connection with the preparation of the Evercore Fairness Opinion and used by the Nexvet Board in its consideration of a potential transaction.

While presented with numerical specificity necessarily, the projections were based on numerous variables and assumptions that are inherently uncertain and many of which are beyond the control of Nexvet’s management. Nexvet’s management believed that such assumptions were reasonable at the time the projections were prepared. Because the projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year.

Accordingly, there can be no assurance that the projections will be realized, and actual results may vary materially from those shown. The inclusion of the projections in this document should not be regarded as an indication that Nexvet or any of its affiliates, advisers or representatives considered or consider the projections to be necessarily predictive of actual future events, and the projections should not be relied upon as such. Neither Nexvet, Zoetis nor any of their respective affiliates, advisers, officers, directors or representatives can give any assurance that actual results will not differ from the projections, and none of them undertakes any obligation to update or otherwise revise or reconcile the projections to reflect circumstances existing after the date the projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error. Nexvet does not intend to make publicly available any update or other revision to the projections, except as otherwise required by Law. Neither Nexvet, Zoetis nor any of their respective affiliates, advisers, officers, directors or representatives has made or makes any representation to any Nexvet Shareholders or other person regarding the ultimate performance of Nexvet compared to the information contained in the projections or that the projections will be achieved. Nexvet has made no representation to Zoetis or Bidco, in the Transaction Agreement or otherwise, concerning the projections.

 

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Certain of the projected financial information set forth herein may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Nexvet may not be comparable to similarly titled amounts used by other companies.

In light of the foregoing factors and the uncertainties inherent in the projections, Nexvet Shareholders are cautioned not to place undue, if any, reliance on the projections.

The following is a summary of the projections provided by Nexvet’s management to Evercore and the Nexvet Board:

Projections (Non Risk-Adjusted)

 

   

($ in Millions) Fiscal Year Ending June 30,

 
    2018E     2019E     2020E     2021E     2022E     2023E     2024E     2025E     2026E     2027E     2028E     2029E     2030E     2031E     2032E  

Ranevetmab

  $ —       $ —       $ 14.3     $ 21.1     $ 32.7     $ 45.2     $ 70.2     $ 72.6     $ 75.2     $ 77.9     $ 80.6     $ 83.5     $ 86.4     $ 89.5     $ 92.6  

Frunevetmab

    —         —         17.3       25.6       39.7       54.8       85.2       88.2       91.3       94.5       97.8       101.3       104.9       108.6       112.4  

Other

    0.9       1.3       1.9       —         —         —         —         —         —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

  $ 0.9     $ 1.3     $ 33.4     $ 46.7     $ 72.5     $ 100.0     $ 155.3     $ 160.8     $ 166.5     $ 172.4     $ 178.4     $ 184.7     $ 191.3     $ 198.0     $ 205.0  

% Growth

      39.2     2476.9     39.7     55.3     38.0     55.3     3.5     3.5     3.5     3.5     3.5     3.5     3.5     3.5

Cost of Goods
Sold

  $ —       $ —       ($ 15.3   ($ 19.3   ($ 26.5   ($ 33.9   ($ 48.2   ($ 49.9   ($ 51.7   ($ 53.5   ($ 55.4   ($ 57.3   ($ 59.3   ($ 61.4   ($ 63.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

  $ 0.9     $ 1.3     $ 18.1     $ 27.4     $ 46.0     $ 66.1     $ 107.1     $ 110.9     $ 114.8     $ 118.9     $ 123.1     $ 127.4     $ 131.9     $ 136.6     $ 141.4  

% Margin

    100.0     100.0     54.2     58.7     63.4     66.1     69.0     69.0     69.0     69.0     69.0     69.0     69.0     69.0     69.0

% Growth

      39.2     1296.7     51.4     67.7     43.8     62.0     3.5     3.5     3.5     3.5     3.5     3.5     3.5     3.5

Gross Profit to Nexvet

  $ 0.9     $ 1.3     $ 12.8     $ 18.7     $ 31.7     $ 46.3     $ 75.3     $ 78.6     $ 81.4     $ 84.3     $ 87.3     $ 90.3     $ 93.5     $ 96.8     $ 100.3  

% Margin

    100.0     100.0     38.2     40.1     43.8     46.2     48.5     48.9     48.9     48.9     48.9     48.9     48.9     48.9     48.9

% Growth

      39.2     883.9     46.8     69.3     45.9     62.7     4.5     3.5     3.5     3.5     3.5     3.5     3.5     3.5

Research & Development

  ($ 11.0   ($ 6.6   ($ 0.8   $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —    

General & Administrative

    (6.5     (6.6     (7.2     (7.3     (8.4     (8.5     (8.7     (8.8     (8.9     (9.1     (9.2     (9.3     (9.5     (9.6     (9.8

Sales & Marketing

    —         (3.1     (7.8     (11.5     (10.5     (10.0     (10.2     (10.3     (10.4     (10.5     (10.7     (10.8     (10.9     (11.0     (11.2

3rd Party Payments

    —         (1.3     (1.0     (1.2     (1.8     (2.5     (4.2     (2.0     —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

  ($ 16.6   ($ 16.3   ($ 4.1   ($ 1.3   $ 10.9     $ 25.2     $ 52.3     $ 57.6     $ 62.1     $ 64.7     $ 67.4     $ 70.2     $ 73.1     $ 76.2     $ 79.3  

% Margin

    NA       NA       NA       NA       15.1     25.2     33.7     35.8     37.3     37.5     37.8     38.0     38.2     38.5     38.7

% Growth

      NA       NA       NA       NA       130.4     107.6     10.1     7.9     4.2     4.2     4.2     4.2     4.1     4.1

Memo: Unlevered Free Cash Flow Build

 

 

Net Operating Profit
after Tax

  ($ 14.0   ($ 13.7   ($ 3.5   ($ 1.1   $ 9.2     $ 21.2     $ 43.9     $ 48.3     $ 52.2     $ 54.3     $ 56.6     $ 59.0     $ 61.4     $ 64.0     $ 66.6  

Change in Net
Working Capital

  $ —       ($ 1.8   ($ 6.3   ($ 3.0   ($ 5.2   ($ 5.5   ($ 11.1   ($ 1.1   ($ 1.1   ($ 1.2   ($ 1.2   ($ 1.3   ($ 1.3   ($ 1.4   ($ 1.4

Capital Expenditure

    (2.0     (2.0     (2.0     (1.0     (1.0     (1.5     (1.5     (1.5     (1.5     (1.5     (1.5     (1.5     (1.5     (1.5     (1.5

Depreciation and Amortiazation
(Other Non-Cash)

    2.7       2.8       2.8       2.9       2.9       2.9       3.0       3.0       3.1       3.1       3.2       3.2       3.3       3.3       3.4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unlevered FCF

  ($ 13.2   ($ 14.7   ($ 9.0   ($ 2.3   $ 5.9     $ 17.1     $ 34.3     $ 48.8     $ 52.6     $ 54.8     $ 57.1     $ 59.4     $ 61.9     $ 64.4     $ 67.1  

The Panel considers the prospective financial information for the fiscal years years ending June 30, 2018 to 2032 provided by Nexvet’s management to Evercore, for use in connection with its financial analyses for the purpose of preparing the Evercore Fairness Opinion, to fall within the parameters of Rule 28 of the Takeover Rules. Rule 28 sets out those profit forecasts which are required to be examined and reported upon by the auditors to a company.

 

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However, the Panel waived the requirement under Rule 28.3 to have such prospective financial information examined and reported on by Nexvet’s reporting accountants, PricewaterhouseCoopers, noting the following exceptional circumstances:

 

(i) the prospective financial information is included in this document only because Nexvet has been advised by its U.S. legal advisers that doing so is required under United States securities Laws;

 

(ii) the prospective financial information was not prepared as part of Nexvet’s normal budgeting processes with the intent of publication and, as such, does not meet the exacting criteria of profit forecasts within the meaning of Rule 28 of the Takeover Rules; and

 

(iii) PricewaterhouseCoopers has confirmed to the Panel that they would be unable as reporting accountants to provide the profit forecast reports required under Rule 28.3 of the Takeover Rules in respect of the prospective financial information.

 

13 Action to be Taken

Your attention is drawn to the summary of the action to be taken at pages 19-23 of this document.

 

14 Further Information

The terms of the Scheme are set out in full in Part 4 (The Scheme of Arrangement) of this document. Your attention is drawn to the conditions and further terms of the Acquisition set out in the remaining parts of this document, all of which form part of this document.

 

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PART 4

THE SCHEME OF ARRANGEMENT

THE HIGH COURT

IN THE MATTER OF

NEXVET BIOPHARMA PLC

AND IN THE MATTER OF

THE COMPANIES ACT 2014

SCHEME OF ARRANGEMENT

(UNDER CHAPTER 1 OF PART 9 OF THE COMPANIES ACT 2014)

BETWEEN

NEXVET BIOPHARMA PLC

AND

THE HOLDERS OF THE SCHEME SHARES

(AS HEREINAFTER DEFINED)

PRELIMINARY

 

A. In this Scheme, unless inconsistent with the subject or context, the following expressions bear the following meanings:

 

Acquisition

   the proposed acquisition by Bidco of Nexvet by means of this Scheme (as described in the Rule 2.5 Announcement);

Act

   the Companies Act 2014, all enactments which are to be read as one with, or construed or read together as one with the Companies Act 2014 and every statutory modification and re-enactment thereof for the time being in force;

Bidco

   Zoetis Belgium S.A., a limited liability company (société anonyme) incorporated under the laws of Belgium, having its registered office at rue Laid Burniat 1, B-1348 Louvain-la-Neuve, and registered in the Crossroads Bank of Enterprises under number 0401.953.350 (RLE Nivelles);

Business Day

   any day, other than a Saturday, Sunday, public holiday or a day on which banks in Ireland or in the State of New York are authorized or required by law or executive order to be closed;

 

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Buyback Options

   options to purchase Nexvet Shares at an exercise price of $6.35 per share and an option expiry date of 5.00 p.m. Irish time on February 28, 2018, granted pursuant to Nexvet’s options terms of issue and which are exercisable in respect of 145,069 Nexvet Shares;

Cancellation Record Time

   11:59 p.m. (Irish time) on the day before the High Court hearing to sanction the Scheme;

Cancellation Shares

   any Nexvet Shares in issue before the Cancellation Record Time;
Conditions    the conditions to the Scheme and the Acquisition set forth in Schedule 1 to the Rule 2.5 Announcement, and “Condition” means any one of the Conditions;
Consideration    $6.72 per Scheme Share to be paid pursuant to the Scheme to Scheme Shareholders;
Court Hearing    the hearing by the High Court of the Petition to sanction the Scheme under Section 453 of the Act
Court Order    the order or orders of the High Court sanctioning the Scheme under Section 453 of the Act and confirming the related Reduction of Capital that forms part of it under Sections 84 and 85 of the Act;
Effective Date    the date on which this Scheme becomes effective in accordance with its terms;
Effective Time    the time on the Effective Date at which the Court Order and a copy of the minute required by Section 86 of the Act are registered by the Registrar of Companies;
EGM    the extraordinary general meeting of Nexvet Shareholders (and any adjournment thereof) to be convened in connection with the Scheme on July 10, 2017, at 10:30 a.m. (Irish time) or, if later, immediately after the conclusion or adjournment of the Scheme Meeting (it being understood that if the Scheme Meeting is adjourned, the EGM shall be correspondingly adjourned);

 

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End Date    the date that is: (i) six months after the date of the Rule 2.5 Announcement; or (ii) nine months after the date of the Rule 2.5 Announcement where the directions hearing of the High Court (following the approval of the Scheme Meeting Resolution) to set a date for the Court Hearing of the petition to sanction the Scheme and other related matters (such as advertising requirements) has not been held and concluded by Monday, July 30 2017 at the latest, or, in either case, such later date as Zoetis and Nexvet may, with (if required) the consent of the Panel, agree and (if required) the High Court may allow;
Euro Deferred Shares    the 400 deferred shares with a nominal value of €100 each in the share capital of Nexvet;
Exchange Act    the United States Securities Exchange Act of 1934, as amended;
Excluded Share    any ordinary shares with nominal value $0.125 in the capital of Nexvet which are held from time to time by Zoetis, Bidco or any other wholly-owned subsidiary of Zoetis ;
High Court    the High Court of Ireland;
Holder    in relation to any Nexvet Share, means the Member whose name is entered in the Register of Members as the holder of that share and “Joint Holders” means the Members whose names are entered in the Register of Members as the joint holders of that share, and includes any person(s) entitled by transmission;
Members    the members of Nexvet as recorded on its Register of Members at any relevant date, and “Member” will be interpreted accordingly;
New Nexvet Shares    the Nexvet Shares to be issued at par credited as fully paid up to Bidco (and/or its nominee(s)) pursuant to the Scheme;
Nexvet    Nexvet Biopharma PLC, a company incorporated in Ireland with registered number 547923;
Nexvet 2012 Plan    the Nexvet Employee Share Plan governed by the Employee Share Plan dated August 29, 2012 adopted by the board of directors of Nexvet Biopharma Pty Limited on August 29, 2012;

 

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Nexvet 2013 Australian Plan    the Nexvet Long Term Incentive Plan governed by the Long Term Incentive Rules dated November 5, 2013 and adopted by the board of directors of Nexvet Biopharma Pty Limited on October 30, 2013;
Nexvet 2013 Plan    the Nexvet Long Term Incentive Plan governed by the Long Term Incentive Plan Rules dated September 4, 2014 and adopted by the Nexvet Board on September 18, 2014;
Nexvet 2015 Plan    the Nexvet Biopharma Public Limited Company 2015 Equity Incentive Plan as adopted by the Nexvet Board on October 14, 2014 as amended by the Nexvet Board on January 16, 2015 and as further amended by the Compensation Committee (as defined therein) on September 2, 2015;
Nexvet Board    the board of directors of Nexvet from time to time and for the time being;
Nexvet Convertible Securities    all issued and outstanding securities (including, but not limited to, all options, restricted share units, and/or other convertible securities issued pursuant to the Nexvet Plans) which are convertible, exchangeable or exercisable into Nexvet Shares;
Nexvet Plans    the Nexvet 2012 Plan, the Buyback Options, the Nexvet 2013 Australian Plan, the Nexvet 2013 Plan and the Nexvet 2015 Plan;
Nexvet Share or Nexvet Shares    the existing unconditionally allotted or issued and fully paid ordinary shares with a nominal value of $0.125 each in the capital of Nexvet and any further such shares which are unconditionally allotted or issued before the date on which the Scheme is effective;
Nexvet Shareholders    holders of Nexvet Shares;
Panel    the Irish Takeover Panel;
Parties    Nexvet, Zoetis and Bidco, and “Party” shall mean either Nexvet on the one hand, or Zoetis or Bidco (whether individually or collectively), on the other hand (as the context requires);
Petition    the petition to the High Court seeking the Court Order;
Proxy Statement    the proxy statement of which this Scheme forms part;

 

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Reduction of Capital    the reduction of the share capital of Nexvet by the cancellation of the Scheme Shares as part of the Scheme as referred to in clause 1.1 of this Scheme;
Register of Members    the register of members maintained by Nexvet pursuant to the Act;
Registrar of Companies    the Registrar of Companies in Dublin, Ireland (being the “Registrar” as defined in Section 2 of the Act);
Registrar    Nexvet’s registrar, American Stock Transfer & Trust Company LLC;
Restricted Jurisdiction    any jurisdiction in relation to which Nexvet, Bidco or Zoetis (as the case may be) is advised that, into or from which the release, publishing or distribution of the Scheme Document or related proxy forms in whole or in part would or might infringe the laws of that jurisdiction or would or might require compliance with any governmental or other consent or any registration, filing or other formality with which any Party is unable to comply with or regards as unduly onerous to comply with;
Restricted Overseas Shareholder    a Nexvet Shareholder (including an individual, partnership, unincorporated syndicate, limited liability company, unincorporated organisation, trust, trustee, executor, administrator or other legal representative) in, or resident in, or any Nexvet Shareholder whom Nexvet believes to be in, or resident in, a Restricted Jurisdiction;
Rule 2.5 Announcement    the announcement made by Nexvet, Zoetis and Bidco in respect of the Acquisition, pursuant to Rule 2.5 of the Takeover Rules, on 13 April 2017, including its summary and schedules;
Scheme or Scheme of Arrangement    this proposed scheme of arrangement under Chapter 1 of Part 9 of the Act and the related capital reduction under Sections 84 and 85 of the Act to effect the Acquisition pursuant to and on the terms (including the Conditions) and for the Consideration set out in the Rule 2.5 Announcement and on such other terms and in such form not being inconsistent therewith as the Parties mutually agree in writing, including any revision thereof as may be so agreed between the Parties and, if required, by the High Court;
Scheme Document    the circular dated June 2, 2017 sent to Nexvet Shareholders (and for information only, to holders of Nexvet Convertible Securities) of which this Scheme forms part;

 

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Scheme Meeting    the meeting or meetings of Nexvet Shareholders or, if applicable, any class or classes of Nexvet Shareholders (including, but not limited to, as may be directed by the High Court pursuant to Section 450(5) of the Act) (and any adjournment of any such meeting or meetings) convened by (i) resolution of the Nexvet Board or (ii) order of the High Court, in either case pursuant to Section 450 of the Act, to consider and vote on the Scheme Meeting Resolution;
Scheme Meeting Resolution    the resolution to be considered and voted on at the Scheme Meeting proposing that the Scheme, with or without amendment (but subject to such amendment being acceptable to each of Nexvet and Zoetis, except for a technical or procedural amendment which is required for the proper implementation of the Scheme and does not have a substantive consequence on the implementation of the Scheme), be agreed to;
Scheme Record Time    11.59 pm (Irish time) on the last Business Day before the Effective Date;
Scheme Shareholder    a Holder of Scheme Shares;
Scheme Shares    the Cancellation Shares and the Transfer Shares;
Takeover Rules    the Irish Takeover Panel Act 1997 Takeover Rules, 2013;
Transaction Agreement    the Transaction Agreement entered into between Nexvet, Zoetis and Bidco dated April 13, 2017;
Transfer Shares    the Nexvet Shares issued at or after the Cancellation Record Time but before the Scheme Record Time, excluding, for the avoidance of doubt, any Excluded Share;
$    United States dollars, the lawful currency of the United States of America;
US or United States    the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia and all other areas subject to its jurisdiction; and
Zoetis    Zoetis Inc., a Delaware corporation, with a principal place of business at 10 Sylvan Way, Parsippany, NJ 07054.

 

B. The authorized share capital of Nexvet on the date hereof consists of nominal value € 40,000 divided into 400 euro deferred shares of nominal value € 100 each and $12,600,000 divided into 100,000,000 ordinary shares of nominal value $0.125 each and 10,000,000 undesignated preferred shares of $0.01 each. As of May 30, 2017, there were 11,916,712 Nexvet Shares issued and credited as fully paid and 400 Euro Deferred Shares were issued and partly paid up.

 

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C. The purpose of the Scheme is to provide for the cancellation or (where applicable) transfer of the Scheme Shares in consideration for the payment by Bidco of the Consideration (without interest and less any applicable withholding taxes) to the Scheme Shareholders.

 

D. Zoetis and Bidco have each agreed to appear by counsel on the hearing of the petition to sanction this Scheme and to submit thereto. Each of Zoetis and Bidco undertake to the High Court to be bound by and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed or done by it for the purpose of giving effect to this Scheme.

The Scheme

 

1. Cancellation of the Cancellation Shares

 

  1.1 Pursuant to Sections 84 to 86 and Chapter 1 of Part 9 of the Act and Article 67 of the Articles of Association of Nexvet, the issued share capital of Nexvet shall be reduced by cancelling and extinguishing all of the Cancellation Shares without thereby reducing the authorized share capital of Nexvet. As a result of the cancellation of the Cancellation Shares, the distributable reserves of Nexvet will be increased accordingly.

 

  1.2 Forthwith and contingently upon the Reduction of Capital taking effect:

 

  1.2.1 the ordinary issued share capital of Nexvet shall be increased to its former amount by the allotment and issue to Bidco of such number of New Nexvet Shares as shall be equal to the number of Cancellation Shares, with each such New Nexvet Share having the same rights as the Cancellation Shares so cancelled; and

 

  1.2.2 the distributable reserve arising in Nexvet’s books of account as a result of the Reduction of Capital shall be capitalized and applied in paying up in full at par the New Nexvet Shares allotted pursuant to clause 1.2.1, which shall be allotted and issued to Bidco credited as fully paid and free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature whatsoever.

 

2. Acquisition of Transfer Shares

Contingently upon and immediately following the cancellation of the Cancellation Shares becoming effective in accordance with the terms of this Scheme, the allotment of the New Nexvet Shares referred to in Clause 1.2.1 of this Scheme and the registration of such New Nexvet Shares in the name of Bidco, Bidco shall automatically, and without any further action required, with effect from the Effective Time acquire the Transfer Shares (including the legal and beneficial interest therein) fully paid, free from all liens, equities, charges, encumbrances and other interests and together with all and any rights at the date of this Scheme or thereafter attached thereto including voting rights and the right to receive and retain in full all dividends and other distributions declared, paid or made thereon on the Effective Date.

 

3. Consideration for the Cancellation Shares, the Transfer Shares and the allotment of the New Nexvet Shares

 

  3.1 In consideration for the cancellation of the Cancellation Shares pursuant to clause 1.1, the transfer of the Transfer Shares pursuant to Clause 2 and the allotment and issue of the New Nexvet Shares as provided in Clause 1.2, Bidco shall pay the Consideration (without interest and less any applicable withholding taxes) to each Holder appearing in the Register of Members at the Scheme Record Time as the Holder of Scheme Shares in accordance with the provisions of clause 4 below.

 

  3.2 Neither Zoetis, Bidco nor Nexvet shall be liable to any Scheme Shareholder for any cash payment, dividends or distributions with respect to Scheme Shares delivered to a public official in compliance with any abandoned property, escheat or law permitting attachment of money or property or similar law.

 

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4. Settlement of Consideration

 

  4.1 Not later than 14 days after the Effective Time, Bidco shall deliver or procure the delivery to the persons entitled thereto, or as they may direct, cheques for the Consideration payable to them in accordance with clause 3.1 of this Scheme or payment otherwise in accordance with any dividend mandate in place pursuant to clause 4.4 of this Scheme.

 

  4.2 All deliveries of cheques in respect of the Consideration required to be made pursuant to this Scheme shall be effected by sending the same through the post in prepaid envelopes addressed to the persons entitled thereto at their respective registered addresses as appearing in the Register of Members at the Scheme Record Time (or in the case of Joint Holders, at the registered address as appearing in the said register at such time of that one of the Joint Holders whose name then stands first in the said register in respect of such joint holding) or in accordance with any special instructions regarding communications, and neither Nexvet nor Bidco shall be responsible for any loss or delay in the transmission of any cheques sent in accordance with this clause 4, which shall be sent at the risk of the persons entitled thereto.

 

  4.3 All cheques in respect of the Consideration shall be made payable to the Holder of the Scheme Shares, or as otherwise directed by such Holder, or in the case of Joint Holders, to the first named Holder of the Scheme Shares concerned, or as otherwise directed by the first named Holder, and the encashment of any such cheque shall be a complete discharge to Nexvet, Zoetis and Bidco for the monies represented thereby.

 

  4.4 Each mandate in force on the Effective Date relating to the payment of dividends or other distributions on any Scheme Shares and other instructions given to Nexvet by Holders of Scheme Shares shall, unless notice of such revocation of such instruction is received by the Registrar prior to the Scheme Record Time, be deemed as from the Effective Date to be an effective mandate or instruction to Bidco to pay and despatch any Consideration payable under clause 4 in accordance with such mandate.

 

5. Overseas Shareholders

 

  5.1 The provisions of clauses 1, 2, 3 and 4 shall be subject to any prohibition or condition imposed by law.

 

  5.2 Notwithstanding the provisions of clause 5.1, Nexvet retains the right to permit the release, publication or distribution of the Scheme Document and/or the proxy cards to any Restricted Overseas Shareholder who satisfies Nexvet (in its sole discretion) that doing so will not infringe the laws of the relevant Restricted Jurisdiction or require compliance with any governmental or other consent or any registration, filing or other formality that Nexvet is unable to comply with or which Nexvet regards as unduly onerous to comply with.

 

6. The Effective Date

 

  6.1 This Scheme shall become effective on delivery to the Registrar of Companies of the Court Order together with the minute required by Section 86 of the Act confirming the Reduction of Capital to take place in connection with the Acquisition and the Reduction of Capital becomes effective upon the registration of the Court Order and minute by the Registrar of Companies, which delivery shall be subject to clause 6.3.

 

  6.2 Unless this Scheme shall have become effective and unconditional on or before the End Date, or such later date (if any), as Nexvet, Zoetis and Bidco may agree with the consent of the Panel and/or the High Court (if required), it shall not proceed and all undertakings given to the High Court in respect of the Scheme shall be deemed to have lapsed with immediate effect.

 

  6.3 Nexvet, Zoetis and Bidco have agreed (pursuant to the Transaction Agreement) that in certain circumstances the necessary actions to seek sanction of this Scheme may not be taken.

 

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7. Modification

The Nexvet Board (on behalf of Nexvet) and Bidco may jointly consent on behalf of all persons concerned to any modification of or addition to this Scheme or any condition that the High Court may approve or impose.

 

8. Costs

Nexvet is authorized and permitted to pay all of the costs and expenses relating to the negotiation, preparation, approval and implementation of this Scheme.

 

9. Governing Law

The Scheme shall be governed by and construed in accordance with the laws of Ireland and Nexvet, Zoetis, Bidco and the Scheme Shareholders hereby agree that the High Court shall have exclusive jurisdiction to hear and determine any suit, action or proceeding or to settle any dispute which may arise in relation thereto.

Dated: June 2, 2017

 

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PART 5

CONDITIONS AND FURTHER TERMS OF THE ACQUISITION AND THE SCHEME

Part A

The Acquisition and the Scheme will comply with the Takeover Rules and, where relevant, the respective rules and regulations of NASDAQ, the Exchange Act, and the Act, and are subject to the terms and conditions set out in the Rule 2.5 Announcement and this document. The Acquisition and the Scheme are governed by the Laws and subject to the exclusive jurisdiction of the courts of Ireland.

Conditions

The Acquisition and the Scheme will be subject to the conditions set out in Part A of this Part 5 (Conditions and Further Terms of the Acquisition and the Scheme), including the definitions set out in Part B of this Part 5 (Conditions and Further Terms of the Acquisition and the Scheme), which are incorporated into Part A by reference (the “Conditions”):

 

1. The Acquisition will be conditional upon the Scheme becoming effective and unconditional by not later than the End Date (or such earlier date as may be specified by the Panel, or such later date as Zoetis and Nexvet may, with (if required) the consent of the Panel, agree and (if required) the High Court may allow).

 

2. The Scheme will be conditional upon:

 

  (a) the approval of the Scheme by a majority in number of members of each class of Nexvet Shareholders (including, but not limited to, as may be directed by the High Court pursuant to Section 450(5) of the Act) representing at least 75% in value of the Nexvet Shares of that class, at the Voting Record Time, held by Nexvet Shareholders who are members of that class of Nexvet Shareholders that are present and voting either in person or by proxy, at the Scheme Meeting (or at any adjournment of such meeting) held no later than the End Date;

 

  (b) the EGM Resolutions (with the exception of Resolution 6) being duly passed by the requisite majority of Nexvet Shareholders at the EGM (or at any adjournment of such meeting) held no later than the End Date;

 

  (c) the sanction by the High Court (with or without modification (but subject to such modification being acceptable to each of Nexvet and Zoetis)) of the Scheme pursuant to Sections 449 to 455 of the Act and the confirmation of the related reduction of capital involved therein by the High Court on or before the End Date (the date on which the Condition in this paragraph 2(c) is satisfied, the “Sanction Date”); and

 

  (d) copies of the Court Order and the minute required by Section 86 of the Act in respect of the reduction of capital (referred to in paragraph 2(c)) being delivered for registration to the Registrar of Companies and registration of the Court Order and minute confirming the reduction of capital involved in the Scheme by the Registrar of Companies on or before the End Date.

 

3. Nexvet and Zoetis have agreed that, subject to paragraph 6 of this Part 5 (Conditions and Further Terms of the Acquisition and the Scheme), the Acquisition will also be conditional upon the following matters having been satisfied or waived on or before the Sanction Date:

 

  (a) save as provided in the Transaction Agreement and in the foregoing Conditions, there not being any other corporate proceedings, steps or actions on the part of Nexvet necessary to authorize the consummation of the Acquisition;

 

  (b) all required Clearances having been obtained and remaining in full force and effect and all applicable waiting periods having expired, lapsed or been terminated (as appropriate) in connection with any applicable foreign investment Laws;

 

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  (c) no Governmental Body having instituted or implemented any action, proceeding, investigation, enquiry or suit or having made, enforced, enacted, issued or deemed applicable to the Acquisition any statute, regulation or order or having withheld any consent which would:

 

  (i) make the Acquisition or its implementation, void, illegal or unenforceable or otherwise, directly or indirectly, materially restrain, revoke, prohibit, materially restrict or delay the same or impose materially additional or different conditions or obligations with respect thereto which would, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on Zoetis or Nexvet; or

 

  (ii) result in a Material Restraint.

 

  (d) the Transaction Agreement not having been terminated as a consequence of any of the following events having occurred (such events (including that set out in the Condition in paragraph 3(e) below) being the events set out in the Transaction Agreement following the occurrence of which the Transaction Agreement may be terminated in accordance with its terms):

 

  (i) the Scheme Meeting or the EGM having been completed and the Scheme Meeting Resolution or the EGM Resolutions, as applicable, not having been approved by the requisite majorities;

 

  (ii) the Effective Time not having occurred by 5:00 p.m. on the End Date, provided that the right to terminate the Transaction Agreement is not exercised by a party to the Transaction Agreement whose breach of any provision of the Transaction Agreement shall have been the primary cause of the failure of the Effective Time to have occurred by such time;

 

  (iii) the High Court having declined or refused to sanction the Scheme and the decision of the High Court not having been appealed;

 

  (iv) an injunction having been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Acquisition and having become final and non-appealable (provided that the right to terminate the Transaction Agreement is not exercised by a party whose breach of any provision of the Transaction Agreement shall have been the primary cause of such injunction);

 

  (v) any Zoetis Party having breached or failed to perform in any material respect any of its covenants or other agreements contained in the Transaction Agreement or any of its warranties set forth in the Transaction Agreement having been inaccurate (as of the date of the Transaction Agreement and at and as of the Sanction Date as though made at and as of the Sanction Date provided that any warranties that expressly relate to a particular period shall be true and correct only with respect to such date or period), which material breach, failure to perform or inaccuracy would result in a failure of any Conditions and is not reasonably capable of being cured by the End Date (or, if curable, is not cured within 30 days following Nexvet’s delivery of written notice to Zoetis of such breach, failure to perform or inaccuracy stating its intention to terminate the Transaction Agreement and the reasons therefor);

 

  (vi) Nexvet having breached or failed to perform in any material respect any of its covenants or other agreements contained in the Transaction Agreement or any of its warranties set forth in the Transaction Agreement having been inaccurate (as of the date of the Transaction Agreement and at and as of the Sanction Date as though made at and as of the Sanction Date provided that any warranties that expressly relate to a particular period shall be true and correct only with respect to such date or period), which material breach, failure to perform or inaccuracy would result in a failure of any Conditions and is not reasonably capable of being cured by the End Date (or, if curable, is not cured within 30 days following Zoetis’ delivery of written notice to Nexvet of such breach, failure to perform or inaccuracy stating its intention to terminate the Transaction Agreement and the reasons therefor);

 

  (vii) a Nexvet Change of Recommendation having occurred or the Nexvet Board or any committee having withdrawn (or modifying in any manner adverse to Zoetis) or proposing publicly to withdraw (or modifying in any manner adverse to Zoetis) the Scheme Recommendation; or

 

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  (viii) following Nexvet’s delivery of a Final Recommendation Change Notice, Nexvet having provided Zoetis with written notice of its termination of the Transaction Agreement;

 

  (e) the Transaction Agreement not having been terminated by the mutual written consent of Nexvet and Zoetis.

 

4. Zoetis shall have delivered to Nexvet a certificate, dated as of the Sanction Date and signed by an executive officer of Zoetis, certifying on behalf of Zoetis to the effect that the condition in paragraph 3(d)(v) has been satisfied.

 

5. Nexvet shall have delivered to Zoetis a certificate, dated as of the Sanction Date and signed by an executive officer of Nexvet, certifying on behalf of Nexvet to the effect that the condition in paragraph 3(d)(vi) has been satisfied.

 

6. Subject to the requirements of the Panel:

 

  (a) Nexvet and Zoetis reserve the right (but shall be under no obligation) to waive (to the extent permitted by applicable Law), in whole or in part, all or any of the conditions in paragraph 3 (with the exception of paragraphs 3(d)(v) and 3(d)(vi) (provided that both Parties agree to any such waiver);

 

  (b) Zoetis reserves the right (but shall be under no obligation) to waive, in whole or in part, the condition in paragraph 3(d)(vi)); and

 

  (c) Nexvet reserves the right (but shall be under no obligation) to waive, in whole or in part, the condition in paragraph 3(d)(v).

 

7. The Scheme will lapse unless it is effective and unconditional by not later than 5:00 p.m., (Eastern Time), on the End Date (or such earlier date as may be specified by the Panel, or such later date as Nexvet and Zoetis may, with (if required) the consent of the Panel, agree and (if required) the High Court may allow.

 

8. Any references in the Conditions to a Condition being “satisfied” upon receipt of any order, clearance, approval or consent from a Governmental Body shall be construed as meaning that the foregoing have been obtained, or where appropriate, made, terminated or expired in accordance with the relevant Condition.

 

9. The Scheme will lapse unless it is effective on or prior to the End Date or such later date (if any) as Zoetis and Nexvet may agree and (if required) the Panel and the High Court may allow.

 

10. If Bidco is required to make an offer for Nexvet Shares under the provisions of Rule 9 of the Takeover Rules, Bidco may make such alterations to any of the Conditions set out above as are necessary to comply with the provisions of that Rule.

 

11. Bidco reserves the right, subject to the consent of the Panel, to elect to implement the Acquisition by way of a Takeover Offer as described in Clause 3.7 of the Transaction Agreement. Without limiting Clause 3.7 of the Transaction Agreement, in such event, such offer will be implemented on terms and conditions that are as least as favorable to Nexvet Shareholders (except for an acceptance condition set at 80 per cent of the shares to which such offer relates or such lesser percentage being more than 50 per cent, as Bidco may, with the consent of the Panel (if required), decide) as those which would apply in relation to the Scheme.

Part B

For the purpose of Part A:

Acquisition” means the proposed acquisition by Zoetis, through Bidco, of Nexvet by means of the Scheme (as described in the Rule 2.5 Announcement) or a Takeover Offer (and any such Scheme or Takeover Offer as it may be revised, amended or extended from time to time) (including the payment by Bidco of the aggregate cash consideration pursuant to the Scheme or such Takeover Offer) pursuant to the Transaction Agreement;

 

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Act” means the Companies Act 2014, all enactments which are to be read as one with, or construed or read together as one with the Companies Act 2014 and every statutory modification and re-enactment thereof for the time being in force;

Articles of Association” means the articles of association of Nexvet as filed with the Registrar of Companies;

Bidco” means Zoetis Belgium SA, a limited liability company (société anonyme) incorporated under the Laws of Belgium, having its registered office at rue Laid Burniat 1, B-1348 Louvain-la-Neuve, and registered in the Crossroads Bank of Enterprises under number 0401.953.350 (RLE Nivelles);

Clearances” means all consents, licenses, authorizations, clearances, approvals, permissions, permits, non-actions, qualifications, orders and waivers required to be obtained from and issued by, and all registrations, applications, notices, submissions and filings required to be made with or provided to, any Person;

Court Order” means the order or orders of the High Court sanctioning the Scheme under Section 453 of the Act and confirming the related reduction of capital that forms part of it under Sections 84 and 85 of the Act;

Effective Time” means the time on the Effective Date at which the Court Order and a copy of the minute required by Section 86 of the Act are registered by the Registrar of Companies or, as the case may be, the Takeover Offer becomes (or is declared) unconditional in all respects;

EGM” means the extraordinary general meeting of Nexvet Shareholders (and any adjournment thereof) to be convened in connection with the Scheme, expected to be convened as soon as the Scheme Meeting shall have been concluded (it being understood that if the Scheme Meeting is adjourned, the EGM shall be correspondingly adjourned);

EGM Resolutions” means the resolutions to be proposed at the EGM for the purposes of approving and implementing the Scheme, the related reduction of capital of Nexvet, changes to the Articles of Association (including as contemplated by the Transaction Agreement) and such other matters as Nexvet reasonably determines to be necessary for the purposes of implementing the Acquisition or, subject to the consent of Zoetis (such consent not to be unreasonably withheld or delayed), desirable for the purposes of implementing the Scheme or the Acquisition;

EMA” means the European Medicines Agency;

“End Date” means the date that is: (i) six months after the date hereof; or (ii) nine months after the date hereof where the directions hearing of the High Court (following the approval of the Scheme Meeting Resolution) to set a date for the Court Hearing of the petition to sanction the Scheme and other related matters (such as advertising requirements) has not been held and concluded by Monday, July 30, 2017 at the latest, or, in either case, such later date as Zoetis and Nexvet may, with (if required) the consent of the Panel, agree and (if required) the High Court may allow;

Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

Final Recommendation Change Notice” has the meaning given to that term in Clause 5.2(e) of the Transaction Agreement;

FDA” means the United States Food and Drug Administration;

Governmental Body” means any Irish, United States, foreign or supranational, federal, state, local or other governmental or regulatory authority, agency in any jurisdiction, commission, board, body, bureau, arbitrator, arbitration panel, or other authority, agency, including courts and other judicial bodies, or any competition,

 

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antitrust, foreign investment review or supervisory body, central bank or other governmental, trade or regulatory agency or body, securities exchange (including NASDAQ and NYSE) or any self-regulatory body or authority, including any instrumentality or entity designed to act for or on behalf of the foregoing, in each case, in any jurisdiction (provided it has jurisdiction over the applicable Person or its activities or property), including the Panel, the High Court, the SEC, the FDA, the USDA, the EMA, the Health Products Regulatory Authority (of Ireland) and the Irish Department of Agriculture, Food and the Marine;

High Court” means the High Court of Ireland;

Ireland” means the island of Ireland, excluding Northern Ireland (the counties of Antrim, Armagh, Derry, Down, Fermanagh and Tyrone), and the word “Irish” shall be construed accordingly;

Law” means any applicable federal, state, local, municipal, foreign, supranational or other law, statute, constitution, principle of common law, resolution, ordinance, code, agency requirement, license, permit, edict, binding directive, decree, rule, regulation, judgment, order, injunction, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body;

Material Restraint” means any requirement of any entity, (including its Subsidiaries) (a) to divest, hold, separate or otherwise take any action that limits such entity’s freedom of action, ownership or control with respect to, or its ability to retain or hold, directly or indirectly, any of its businesses, assets, equity interests, product lines or properties or any equity interest in any joint venture held by such entity, (b) to license any intellectual property of either the Zoetis Group or the Nexvet Group, (c) that would reasonably be expected to impose any limitation on or result in a material delay in the ability of Zoetis to acquire, or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares (or the equivalent) in or to exercise voting or management control over, Nexvet or any member of the Nexvet Group, (d) that would impose a limitation on the ability of Zoetis or its Subsidiaries to integrate or co-ordinate its business, or any part of it, with the business of the Nexvet Group, or (e) that would result in a member of the Zoetis Group or the Nexvet Group ceasing to be able to carry on business in any jurisdiction in which it does business at the date of the Rule 2.5 Announcement, which would, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on Zoetis or Nexvet;

NASDAQ” means the NASDAQ Stock Market;

Nexvet” means Nexvet Biopharma public limited company, a public company limited by shares incorporated in Ireland under registration number 547923 having its registered office at Unit 5, Sragh Business Park, Rahan Road, Tullamore, Co. Offaly;

Nexvet Board” means the board of directors of Nexvet from time to time and for the time being;

Nexvet Change of Recommendation” has the meaning given to that term in Clause 5.2(d)(ii) of the Transaction Agreement;

Nexvet Group” means Nexvet and all of its Subsidiaries;

Nexvet Shareholders” means the holders of Nexvet Shares;

Nexvet Shares” means the existing unconditionally allotted or issued and fully paid ordinary shares with a nominal value of $0.125 each in the capital of Nexvet and any further such shares which are unconditionally allotted or issued before the date on which the Scheme is effective;

NYSE” means the New York Stock Exchange;

 

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Offer” or “Takeover Offer” means an offer in accordance with clause 3.7 of the Transaction Agreement for the entire issued and to be issued share capital of Nexvet (other than any Nexvet Share beneficially owned by any member of the Zoetis Group (if any), including any amendment or revision thereto pursuant to the Transaction Agreement, the full terms of which would be set out in the Takeover Offer Documents or (as the case may be) any revised offer documents);

Panel” means the Irish Takeover Panel;

Parties” means Nexvet, Zoetis and Bidco, and “Party” shall mean either Nexvet, Zoetis or Bidco (as the context requires);

Registrar of Companies” means the Registrar of Companies in Dublin, Ireland as defined in Section 2 of the Act;

Rule 2.5 Announcement” means the announcement dated 13 April 2017 made by the Parties pursuant to Rule 2.5 of the Takeover Rules;

Sanction Date” has the meaning given to such expression in paragraph 2(c) of this Part 5 (Conditions and Further Terms of the Acquisition and the Scheme);

Scheme” means the proposed scheme of arrangement under Chapter 1 of Part 9 of the Act and the related capital reduction under Sections 84 and 85 of the Act to effect the Acquisition pursuant to the Transaction Agreement, on the terms (including the conditions to the Scheme and the Acquisition) and for the Consideration set out in the Rule 2.5 Announcement and on such other terms and in such form not being inconsistent therewith as the Parties mutually agree in writing, including any revision thereof as may be so agreed between the Parties and, if required, by the High Court;

Scheme Document” means the scheme document set out in Part 4 (The Scheme of Arrangement) of this document;

Scheme Meeting” means the meeting or meetings of Nexvet Shareholders or, if applicable, any class or classes of Nexvet Shareholders (including, but not limited to, as may be directed by the High Court pursuant to Section 450(5) of the Act) (and any adjournment of any such meeting or meetings) convened by (i) resolution of the Nexvet Board or (ii) order of the High Court, in either case pursuant to Section 450 of the Act, to consider and vote on the Scheme Meeting Resolution;

Scheme Meeting Resolution” means the resolution to be considered and voted on at the Scheme Meeting proposing that the Scheme, with or without amendment (but subject to such amendment being acceptable to each of Nexvet and Zoetis, except for a technical or procedural amendment which is required for the proper implementation of the Scheme and does not have a substantive consequence on the implementation of the Scheme) , be agreed to;

Scheme Recommendation” means the unanimous recommendation of the Nexvet Board that Nexvet Shareholders vote in favor of the Resolutions;

SEC” means the United States Securities and Exchange Commission;

Takeover Rules” means the Irish Takeover Panel Act 1997, Takeover Rules 2013;

Transaction Agreement” means the transaction agreement entered into between Nexvet, Zoetis and Bidco dated April 13, 2017 relating to, amongst other things, the implementation of the Acquisition;

USDA” means the United States Department of Agriculture;

 

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Voting Record Time” means the time and date to be specified as the voting record time for the Scheme Meeting (or any adjournment thereof) in the Scheme Document;

Zoetis” means Zoetis Inc., a company incorporated in the United States having its registered address at 10 Sylvan Way, Parsippany, NJ 07054; and

Zoetis Group” means, collectively, Zoetis and all of its Subsidiaries, including Bidco.

 

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PART 6

INFORMATION ON ZOETIS AND BIDCO

BIDCO

 

1. Incorporation and Registered Office

Bidco, a wholly-owned indirect Subsidiary of Zoetis, was incorporated on February 15, 1950 and is a limited liability company (société anonyme) incorporated under the Laws of Belgium, having its registered office at rue Laid Bumiat 1, B-1348 Louvain-la-Neuve, and registered in the Crossroads Bank of Enterprises under number 0401.953.350 (RLE Nivelles).

 

2. Directors

The names of the directors of Bidco are Roman Trawicki, Simon Sunderland, Gabrielle Wermenbol, Johan van den Branden and Carl-Johan Ehn.

 

3. Interests in the Share Capital of Bidco and, following the Effective Date, Nexvet

Bidco is a wholly-owned indirect Subsidiary of Zoetis and immediately following the Effective Date, 100% of the relevant securities of Nexvet will be held by Bidco.

ZOETIS

 

4. Incorporation and Registered Office

Zoetis was incorporated in July 2012 and is a Delaware corporation, having its registered office at c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801. Prior to its incorporation, Zoetis operated as a business unit of Pfizer.

 

5. Directors

The names of the Zoetis Directors and their respective functions are as follows:

 

Name

 

Position

Juan Ramón Alaix   Chief Executive Officer and Director
Paul M. Bisaro   Director
Frank A. D’Amelio   Director
Sanjay Khosla   Director
Michael B. McCallister   Non-Executive Chair of the Board and Director
Gregory Norden   Director
Louise M. Parent   Director
Dr. Willie M. Reed   Director
Robert W. Scully   Director
William C. Steere, Jr.   Director

 

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6. Interests in the Share Capital of Zoetis and, following the Effective Date, Nexvet

Based on the information that is available to Zoetis as of the Latest Practicable Date with respect to interests in the share capital of Zoetis, following the Effective Date, the following persons as shareholders of Zoetis will have an indirect interest in 5% or more of the relevant securities of Nexvet:

 

Name of Beneficial Owner

   Number of
Shares Owned
     Percent of
Outstanding
Zoetis
Shares (%)

(1)
 

5% Beneficial Owners:

     

BlackRock, Inc.(2)

     33,943,989        6.90

55 East 52nd Street

     

New York, NY 10022

     

T. Rowe Price Associates, Inc.(3)

     41,237,906        8.39

100 E. Pratt Street

     

Baltimore, MD 21202

     

The Vanguard Group(4)

     32,198,134        6.55

100 Vanguard Blvd.

     

Malvern, PA 19355

     

 

(1) Percentages based on 491,691,279 shares outstanding on March 15, 2017.
(2) Based on a Schedule 13G/A that BlackRock Inc. filed with the SEC on January 27, 2017, which contained information as of December 31, 2016. Such Schedule 13G/A states that BlackRock Inc. has sole voting power with respect to 29,182,510 shares of Zoetis common stock, sole dispositive power with respect to 33,943,989 shares of Zoetis common stock and shared voting and dispositive power with respect to 0 shares of Zoetis common stock.
(3) Based on a Schedule 13G that T. Rowe Price Associates, Inc. filed with the SEC on February 7, 2017, which contained information as of December 31, 2016. Such Schedule 13G states that T. Rowe Price Associates, Inc. has sole voting power with respect to 12,052,660 shares of Zoetis common stock, sole dispositive power with respect to 41,237,906 shares of Zoetis common stock and shared voting and dispositive power with respect to 0 shares of Zoetis common stock.
(4) Based on a Schedule 13G/A that Vanguard Group Inc. filed with the SEC on February 10, 2017, which contained information as of December 31, 2016. Such Schedule 13G/A states that The Vanguard Group has sole voting power with respect to 756,266 shares of Zoetis common stock and sole dispositive power with respect to 31,358,413 shares of Zoetis common stock; and together with its wholly-owned subsidiaries Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., has shared voting power with respect to 89,670 shares of Zoetis common stock and shared dispositive power with respect to 839,721 shares of Zoetis common stock.

 

7. Financial Information related to Zoetis and Bidco

In 2015, Zoetis recorded, on a consolidated basis, income before provision for taxation of $0.5 billion for the year ended December 31, 2015. In 2015, Zoetis also generated, on a consolidated basis, revenue of $4.8 billion for the year ended December 31, 2015. In 2015, Zoetis recorded, on a consolidated basis, equity of $1.091 million for the year ended December 31, 2015.

In 2016, Zoetis recorded, on a consolidated basis, income before provision for taxation of $1.2 billion for the year ended December 31, 2016. In 2016, Zoetis also generated, on a consolidated basis, revenue of $4.9 billion for the year ended December 31, 2016. In 2016, Zoetis recorded, on a consolidated basis, equity of $1.499 million for the year ended December 31, 2016.

Bidco is a wholly-owned indirect Subsidiary of Zoetis and the financial and trading prospects of Bidco if the Scheme becomes effective will depend on the strength of the Nexvet, Zoetis and other Zoetis operating Subsidiaries held by Zoetis and Bidco and the sector in general.

Bidco is not required to publish, and does not publish, audited accounts or details of its turnover, profits or losses before taxation.

 

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PART 7

FINANCIAL INFORMATION RELATING TO NEXVET

 

1. The consolidated balance sheets of Nexvet as of June 30, 2016 and 2015 and the related consolidated statements of operations and comprehensive loss, of changes in convertible preference shares and shareholders’ equity (deficit), and of cash flows for each of the three years in the period ended June 30, 2016 (including the notes thereto) are incorporated by reference into this document from Nexvet’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016 filed with the SEC on September  2, 2016 (the “Form 10-K”), and may be accessed at www.sec.gov/Archives/edgar/data/1618561/000156459016024880/nvet-10k_20160630.htm .

 

2. The unaudited condensed consolidated balance sheet of Nexvet as of March 31, 2017 and the related unaudited condensed consolidated statements of operations and comprehensive loss, of changes in shareholders’ equity, and of cash flows for the nine months ended March 31, 2017 and 2016 (including the notes thereto) are incorporated by reference into this document from Nexvet’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 filed with the SEC on May 11, 2017 (the “Form  10-Q”), and may be accessed at
https://www.sec.gov/Archives/edgar/data/1618561/000156459017010408/nvet-10q_20170331.htm.

 

3. A Nexvet Shareholder may request a copy of the above financial information free of charge by writing to Nexvet Biopharma plc, Unit 5, Sragh Technology Park, Rahan Road, Tullamore, Co. Offaly, Ireland, or by calling Nexvet at +61 3 9610 4412. The request for a hard copy should confirm the identity of the Nexvet Shareholder and the address to which the documents should be posted. A hard copy of these documents will not be sent to any Nexvet Shareholder unless requested.

 

4. In order to ensure timely delivery of documents, Nexvet Shareholders of record must make their request no later than 5 Business Days prior to the date of the Meetings.

 

5. There are no known material changes in the financial or trading position of Nexvet subsequent to the last published audited accounts, except as set forth in the Form 10-Q.

 

6. The following table is intended to allow Nexvet Shareholders easily identify information in relation to Nexvet that is incorporated by reference:

 

Information

  

Information Source

Net income or loss before income taxes, the provision for or benefit from income taxes, and earnings per share for the last 3 financial years and in respect of the most recent interim statement made since the last published audited accounts    Form 10-K, page no. F-4 (available at
www.sec.gov/Archives/edgar/data/1618561/
000156459016024880/nvet-10k_20160630.htm
)
   Form 10-Q, page no. 3 (available at

https://www.sec.gov/Archives/edgar/data/1618561/000156459017010408/nvet-10q_20170331.htm )
A statement of assets and liabilities shown in the latest published audited accounts    Form 10-K, page no. F-3 (available at
www.sec.gov/Archives/edgar/data/1618561/
000156459016024880/nvet-10k_20160630.htm
)
A cash flow statement if provided in the last published audited accounts    Form 10-K, page no. F-6 (available at
www.sec.gov/Archives/edgar/data/1618561/
000156459016024880/nvet-10k_20160630.htm
)
Significant accounting policies together with any points from the notes to the accounts which are of major relevance to an appreciation of the figures    Form 10-K, page nos. F-7 to F-28 (available at www.sec.gov/Archives/edgar/data/1618561/
000156459016024880/nvet-10k_20160630.htm
)
   Form 10-Q, page nos. 7 to 25 (available at

https://www.sec.gov/Archives/edgar/data/1618561/000156459017010408/nvet-10q_20170331.htm ).

 

7. The information contained in this Part 7 (Financial Information relating to Nexvet) is not required to be included pursuant to the rules and regulations of the Securities and Exchange Commission but is included solely to comply with the requirements of the Act and the Takeover Rules in order to provide the information required under such Laws to Nexvet Shareholders.

 

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PART 8

ADDITIONAL INFORMATION

 

1. Responsibility

 

1.1 The Nexvet Directors (whose names are set out in paragraph 2 of this Part 8 (Additional Information) of this document) accept responsibility for the information contained in this document other than information relating to Zoetis, Bidco, the Zoetis Group, the Zoetis Directors, the Bidco Directors and members of their immediate families, related trusts and persons connected with them for which the Zoetis Directors and the Bidco Directors accept responsibility. To the best of the knowledge and belief of the Nexvet Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

1.2 The Zoetis Directors and the Bidco Directors (whose names are set out in paragraph 2 of Part 6 (Information on Zoetis and Bidco) of this document (Information on Zoetis and Bidco) of this document) accept responsibility for the information contained in this document relating to Zoetis, Bidco, the Zoetis Group, the Zoetis Directors, the Bidco Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the Zoetis Directors and the Bidco Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

2. Directors and Registered Office

The names of the Nexvet Directors and their respective functions are as follows:

 

Name

  

Position

Christopher Brown

   Director

George Gunn

   Chairman of the Board

Ashraf Hanna

   Director

Mark Heffernan

   Director, Chief Executive Officer

Cormac Kilty

   Director

Joseph McCracken

   Director

Rajiv Patel

   Director

John Payne

   Director

The registered office of Nexvet is at Unit 5, Sragh Technology Park, Tullamore, Co. Offaly, Ireland.

 

3. Market Quotations

The following table shows the Closing Price of a Nexvet Share (i) on the first Trading Day in each of the six months prior to the date of this document, (ii) on April 12, 2017 (the last day prior to the commencement of the Offer Period) and (iii) on the Latest Practicable Date.

 

Date

   Closing Price ($)  

November 1, 2016

     4.01  

December 1, 2016

     4.45  

January 3, 2017

     3.70  

February 1, 2017

     3.15  

March 1, 2017

     3.32  

April 3, 2017

     3.95  

April 12, 2017

     4.05  

June 1, 2017

     6.65  

 

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4. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information known to Nexvet regarding the beneficial ownership of Nexvet Shares as of April 30, 2017 for each of Nexvet’s named executive officers and directors, all of Nexvet’s directors and executive officers as a group and each person or group of affiliated persons who is known by Nexvet to own beneficially more than five percent of the outstanding Nexvet Shares. The table is based upon information supplied by officers, directors and principal shareholders.

Beneficial ownership has been determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose, including for purposes of Section 13(d) or 13(g) of the Exchange Act. In calculating the number of Nexvet Shares beneficially owned by a person and the percentage ownership of that person, Nexvet deemed outstanding all Nexvet Shares issuable upon exercise or conversion of Nexvet Options, Nexvet RSUs or Nexvet Warrants held by that person that are currently exercisable or exercisable within 60 days from April 30, 2017. These Nexvet Shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated and subject to community property laws where applicable, Nexvet believes the persons named in the following table have sole voting and investment power with respect to all Nexvet Shares shown as beneficially owned by them. Each shareholder’s percentage ownership is based on 11,916,712 Nexvet Shares outstanding as of April 30, 2017.

Unless otherwise indicated, the address of each beneficial owner is Unit 5, Sragh Technology Park, Rahan Road, Tullamore, Co. Offaly, Ireland.

 

Name of Beneficial Owner

   Nexvet Shares
Beneficially
Owned
     Percent of
Outstanding
Nexvet Shares
 

Named Executive Officers and Directors:

     

Mark Heffernan (1)

     418,997        3.5

Damian Lismore (2)

     138,713        1.2  

David Gearing (3)

     604,200        5.0  

Christopher Brown (4)

     23,080        *  

George Gunn

     38,500        *  

Ashraf Hanna (5)

     13,420        *  

Cormac Kilty (6)

     151,564        1.3  

Joseph McCracken

     12,300        *  

Rajiv Patel (10), (13), (17)

     3,333,176        26.5  

John Payne (7)

     13,395        *  

All directors and executive officers as a group (11 persons) (8)

     4,226,099        32.9  

5% or Greater Shareholders:

     

Adage Capital Partners, L.P. (9)

     1,020,000        8.4  

Akubra Investors, LLC (10)

     1,046,345        8.6  

AustralianSuper Pty Ltd ATF AustralianSuper (11)

     695,700        5.8  

Broadfin Capital, LLC (12)

     1,127,200        9.5  

Bushranger Funding, LLC (13)

     1,128,440        9.3  

Foresite Capital Fund II, LP (14)

     1,094,695        9.0  

Irrus Investments Nominee Limited (15)

     631,884        5.3  

One Funds Management Limited ATF Asia Pacific Healthcare Fund II (16)

     873,372        7.3  

Ute Holdings, LLC (17)

     1,148,911        9.5  

 

* Represents beneficial ownership of less than 1% of the outstanding Nexvet Shares.
(1)

Includes 49,167 Nexvet Shares held directly by Dr. Heffernan; 243,587 Nexvet Shares held by Dr. Heffernan and his spouse, Patricia Heffernan, as trustees for M&T Heffernan A/C; 74,203 Nexvet

 

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  Shares issuable upon the exercise of Nexvet Options within 60 days of April 30, 2017 held directly by Dr. Heffernan; and 52,040 Nexvet Shares issuable upon the exercise of Nexvet Options within 60 days of April 30, 2017 held by Dr. Heffernan and his spouse as trustees for M&T Heffernan A/C. Dr. and Ms. Heffernan have shared voting and dispositive power as to securities held M&T Heffernan A/C.
(2) Includes 33,750 Nexvet Shares held directly by Mr. Lismore; 18,724 Nexvet Shares and 5,147 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of April 30, 2017 held by Glenariff Superannuation Pty Ltd, as to which Mr. Lismore and his spouse, Martina Lismore, have shared voting and dispositive power; 14,160 Nexvet Shares held by Ms. Lismore; and 72,079 Nexvet Shares issuable upon the exercise of Nexvet Options within 60 days of April 30, 2017 held directly by Mr. Lismore.
(3) Dr. Gearing’s service as Nexvet’s Chief Scientific Officer terminated in March 2017. Includes 113,165 Nexvet Shares held directly by Dr. Gearing; 83,664 Nexvet Shares held by DJGearing Pty Ltd, as trustee for Gearing Family Superannuation Fund; 295,999 Nexvet Shares held by Gearing Family Pty Ltd.; 46,372 Nexvet Shares issuable upon the exercise of Nexvet Options within 60 days of April 30, 2017 held by Gearing Family Pty Ltd as trustee for Gearing Family A/C; and 65,000 Nexvet Shares issuable upon the exercise of Nexvet Options within 60 days of April 30, 2017 held directly by Dr. Gearing. Dr. Gearing and his spouse, Julie Gearing, have shared voting and dispositive power as to securities held by Gearing Family A/C and Gearing Family Superannuation Fund.
(4) Includes 3,600 Nexvet Shares held directly by Mr. Brown; 8,800 Nexvet Shares held by Elsing Pty Ltd, as to which Mr. Brown has sole voting and dispositive power; and 10,680 Nexvet Shares issuable upon the exercise of Nexvet Options within 60 days of April 30, 2017 held directly by Mr. Brown.
(5) Includes 11,920 Nexvet Shares held directly by Dr. Hanna and 1,500 Nexvet Shares held by Ashraf E. Hanna Living Family Trust U/A 8/20/15, as to which Dr. Hanna has voting and dispositive power.
(6) Includes 7,200 Nexvet Shares held directly by Dr. Kilty and 144,364 Nexvet Shares held jointly with his spouse.
(7) Includes 7,200 Nexvet Shares held directly by Mr. Payne and 6,195 Nexvet Shares held by John B. Payne Living A/C, as to which Mr. Payne has sole voting and dispositive power.
(8) Includes 261,196 and 680,147 Nexvet Shares issuable upon the exercise of Nexvet Options and Nexvet Warrants, respectively, within 60 days of April 30, 2017.
(9) Based on a Schedule 13G/A filed by Adage Capital Partners, L.P. with the SEC on February 9, 2017. Includes 225,000 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of the Latest Practicable Date. Adage Capital Partners GP, L.L.C. (“ACPGP”), serves as the general partner of Adage Capital Partners, L.P. (the “Fund”), and as such has discretion over the portfolio of securities beneficially owned by the Fund. Adage Capital Advisors, L.L.C. (“ACA”), is the managing member of ACPGP and directs ACPGP’s operations. Robert Atchinson and Phillip Gross are the managing members of ACA. Mr. Atchinson and Mr. Gross disclaim beneficial ownership of the reported securities except to the extent of their pecuniary interest therein. The address of Adage Capital Partners, L.P. is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02110.
(10)

Based on a Schedule 13D/A filed by Farallon Capital Management, L.L.C. (“Farallon”) with the SEC on April 19, 2017. Includes 212,500 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of April 30, 2017. The members of Akubra Investors, LLC (“Akubra”), are: FCIP XR 2014, L.L.C. (“FCIP XR”); and Noonday Special Situation Partners, L.P. (“NSSP,” and together with FCIP XR, the “Farallon Akubra Funds”). Farallon Capital Institutional Partners, L.P. (“FCIP”) is the sole member of FCIP XR and may be deemed to beneficially own the Nexvet Shares owned indirectly by FCIP XR. Farallon Partners, L.P. (“FP”), is the general partner of FCIP and may be deemed to beneficially own the Nexvet Shares owned indirectly by FCIP XR. NGP, L.L.C. (“NGP”) is the general partner of NSSP and may be deemed to beneficially own the Nexvet Shares owned indirectly by NSSP. Farallon is the manager of NGP and may be deemed to beneficially own the Nexvet Shares owned indirectly by NSSP. As managing members of Farallon and of FP, with the power to exercise investment discretion, each of Philip Dreyfuss, Michael Fisch, Richard Fried, Daniel Hirsch, David Kim, Monica Landry, Michael Linn, Ravi Paidipaty Rajiv Patel, Thomas Roberts, Jr., William Seybold, Andrew Spokes, John Warren and Mark Wehrly

 

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  (collectively, the “Farallon Managing Members”) may be deemed to beneficially own the Nexvet Shares indirectly owned by each of the Farallon Akubra Funds. Each of the Farallon Akubra Funds, FCIP, FP, NGP, Farallon and the Farallon Managing Members disclaims beneficial ownership of the Nexvet Shares held by Akubra. The address of Akubra is One Maritime Plaza, Suite 2100, San Francisco, California 94111.
(11) Based on a Schedule 13G filed by AustralianSuper Pty Ltd with the SEC on January 11, 2016. Dr. Chris Nave and Dr. Stephen Thompson, of BCP2 Pty Ltd, as attorney and manager of AustralianSuper Pty Ltd as trustee for AustralianSuper, have voting and dispositive power with respect to these Nexvet Shares. The address of AustralianSuper Pty Ltd is Level 33, 50 Lonsdale Street, Melbourne, Victoria, 3000, Australia.
(12) Based on a Schedule 13G/A filed by Broadfin Capital, LLC, Broadfin Healthcare Master Fund, Ltd. and Kevin Kotler on February 10, 2017. Kevin Kotler, as managing member of Broadfin Capital, LLC and director of Broadfin Healthcare Master Fund, Ltd., has voting and dispositive power with respect to these shares. The address of Broadfin Capital, LLC 300 Park Avenue, 25th Floor, New York, New York 10022, and the address of Broadfin Healthcare Master Fund, Ltd. is 20 Genesis Close, Ansbacher House, Second Floor, P.O. Box 1344, Grand Cayman KY1-1108, Cayman Islands.
(13) Based on a Schedule 13D/A filed by Farallon Capital Management, L.L.C. with the SEC on April 19, 2017. Includes 229,172 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of the Latest Practicable Date. The members of Bushranger Funding, LLC (“Bushranger”) are: FCP XR 2014, L.L.C. (“FCP XR”); Farallon Capital Institutional Partners III, L.P. (“FCIP III”); and Farallon Capital AA Investors, L.P. (“FCAAI,” together with FCP XR and FCIP III, the “Farallon Bushranger Funds”). Farallon Capital Partners, L.P. (“FCP”) is the sole member of FCP XR and may be deemed to beneficially own Nexvet Shares owned indirectly by FCP XR. FP is the general partner of FCP and of FCIP III and may be deemed to beneficially own the Nexvet Shares owned indirectly by FCP and FCIP III. Farallon AA GP, L.L.C. (“FAAGP”), is the general partner of FCAAI and may be deemed to beneficially own the Nexvet Shares owned indirectly by FCAAI. FP is the sole member of FAAGP and may be deemed to beneficially own the Nexvet Shares owned indirectly by FCAAI. As managing members of FP with the power to exercise investment discretion, each of the Farallon Managing Members may be deemed to beneficially own the Nexvet Shares indirectly owned by each of the Farallon Bushranger Funds. Each of the Farallon Bushranger Funds, FCP, FP, FAAGP and the Farallon Managing Members disclaims beneficial ownership of the Nexvet Shares held by Bushranger. The address of Bushranger is One Maritime Plaza, Suite 2100, San Francisco, California 94111.
(14) Based on a Schedule 13G/A filed by Foresite Capital Fund II, L.P. with the SEC on February 13, 2017. Includes 200,000 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of the Latest Practicable Date. As managing member of Foresite Capital Management II, LLC, James Tananbaum has voting and dispositive power with respect to these Nexvet Shares. Foresite Capital Management II, LLC, is the general partner of Foresite Capital Fund II, LP. The address of Foresite Capital Fund II, LP is c/o Foresite Capital Management, LLC, 600 Montgomery Street, Suite 4500, San Francisco, California 94111.
(15) Includes 80,250 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of the Latest Practicable Date. Aidan O’Driscoll, as the authorized director of Irrus Investments Nominee Limited, has voting and dispositive power with respect to these Nexvet Shares. The address of Irrus Investments Nominee Limited is No. 1 Grants Row, Second Floor, Mount Street Lower, Dublin 2, Ireland.
(16) Includes 90,900 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of the Latest Practicable Date. Justin Epstein, as the authorized director of One Funds Management Limited, the trustee for Asia Pacific Healthcare Fund II, has voting and dispositive power with respect to these Nexvet Shares. The address of One Funds Management Limited ATF Asia Pacific Healthcare Fund II is Level 13, 20 Hunter Street, Sydney, New South Wales, 2000, Australia.
(17)

Based on a Schedule 13D/A filed by Farallon Capital Management, L.L.C. with the SEC on April 19, 2017. Includes 233,328 Nexvet Shares issuable upon the exercise of Nexvet Warrants within 60 days of the Latest Practicable Date. The members of Ute Holdings, LLC (“Ute”) are: FCOI II Special Situation 2014, Ltd. (“FCOI II SS”); Farallon Capital Institutional Partners II, L.P. (“FCIP II”); and Farallon Special Situation Partners VI, L.P. (“FSSP VI,” together with FCOI II SS, and FCIP II, the “Farallon Ute Funds”). Farallon Capital Offshore Investors II, L.P. (“FCOI II”) is the sole owner of FCOI II SS and may be deemed to

 

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  beneficially own the Nexvet Shares owned indirectly by FCOI II SS. FP is the general partner of FCOI II SS and of FCIP II and may be deemed to beneficially own the Nexvet Shares owned indirectly by FCOI II SS and FCIP II. Farallon Partners GP VI, L.L.C. (“FPGP VI”) is the general partner of FSSP VI and may be deemed to beneficially own the Nexvet Shares owned indirectly by FSSP VI. FP is the sole member of FPGP VI and may be deemed to beneficially own the Nexvet Shares owned indirectly by FSSP VI. As managing members of FP with the power to exercise investment discretion, each of the Farallon Managing Members may be deemed to beneficially own the Nexvet Shares indirectly owned by each of the Farallon Ute Funds. Each of the Farallon Ute Funds, FCOI II, FP, FPGP VI and the Farallon Managing Members disclaims beneficial ownership of the Nexvet Shares held by Ute. The address of Ute is One Maritime Plaza, Suite 2100, San Francisco, California 94111.

 

5. Shareholdings, Dealings and Arrangements

 

5.1 Definitions

For the purposes of this paragraph 5:

 

  (a) Two or more persons are deemed to be acting in concert if they co-operate on the basis of an agreement, either express or tacit, either oral or written, aimed at:

 

  (i) either:

 

  (A) the acquisition by any one or more of them of securities in the relevant company concerned; or

 

  (B) the doing, or the procuring of the doing, of any act that will or may result in an increase in the proportion of securities in the relevant company concerned held by any one or more of them; or

 

  (ii) either:

 

  (A) acquiring control of the relevant company concerned; or

 

  (B) frustrating the successful outcome of an offer made for the purpose of the acquisition of control of the relevant company concerned;

 

     and “concert parties” shall be construed accordingly;

 

  (b) “arrangement” means any indemnity or option arrangement and any agreement or understanding, formal or informal, of whatever nature, between two or more persons relating to relevant securities which is or may be an inducement to deal or refrain from dealing in such securities;

 

  (c) “control” means the holding, whether directly or indirectly, of securities in a company that confer in aggregate not less than 30% of the voting rights in that company;

 

  (d) “derivative” includes any financial product whose value, in whole or in part, is determined directly or indirectly by reference to the price of an underlying security;

 

  (e) “disclosure date” means June 1, 2017, being the latest practicable date before the posting of this document;

 

  (f) “Disclosure Period” means the period commencing on April 13, 2016 (being the date 12 months before the commencement of the Offer Period) and ending on the disclosure date;

 

  (g) “exempt fund manager” means a discretionary fund manager which has been recognized by the Panel as an exempt fund manager for the purposes of the Takeover Rules, has been notified in writing of that fact by the Panel and has not been notified by the Panel of the withdrawal of such recognition;

 

  (h) “exempt principal trader” means a principal trader who is recognized by the Panel as an exempt principal trader for the purposes of the Takeover Rules, has been notified in writing of that fact by the Panel and has not been notified by the Panel of the withdrawal of such recognition;

 

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  (i) “interest in” or “interested in” a relevant security means:

 

  (i) for the purpose of determining whether a person has an “interest in a relevant security” or is “interested in a relevant security”:

 

  (A) that person shall be deemed to have an “interest,” or to be “interested,” in a relevant security if and only if he or she has a long position in that security; and

 

  (B) a person who has only a short position in a relevant security shall be deemed not to have an interest, nor to be interested, in that security;

 

  (ii) (A) A person shall be deemed to have a “long position” in a relevant security for the purposes of paragraph (A) if he or she directly or indirectly:

 

  I. owns that security; or

 

  II. has the right or option to acquire that security or to call for its delivery; or

 

  III. is under an obligation to take delivery of that security; or

 

  IV. has the right to exercise or control the exercise of the voting rights (if any) attaching to that security,

or to the extent that none of sub-paragraphs (I) to (IV) above applies to that person, if he or she:

 

  V. will be economically advantaged if the price of that security increases; or

 

  VI. will be economically disadvantaged if the price of that security decreases, irrespective of:

 

    how any such ownership, right, option, obligation, advantage or disadvantage arises and including, for the avoidance of doubt and without limitation, where it arises by virtue of an agreement to purchase, option or derivative; or

 

    whether any such ownership, right, option, obligation, advantage or disadvantage is absolute or conditional and,

where applicable, whether it is in the money or otherwise,

provided that a person who has received an irrevocable commitment to accept an offer (or to procure that another person accept an offer) shall not, by virtue only of sub-paragraph (II) or (III) above, be treated as having an interest in the Relevant Securities that are the subject of the irrevocable commitment;

 

  (B) A person shall be deemed to have a short position in a relevant security for the purposes of paragraph (B) if he or she directly or indirectly:

 

  I. has the right or option to dispose of that security or to put it to another person; or

 

  II. is under an obligation to deliver that security to another person; or

 

  III. is under an obligation either to permit another person to exercise the voting rights (if any) attaching to that security or to procure that such voting rights are exercised in accordance with the directions of another person,

or to the extent that none of sub-paragraphs (I) to (III) above applies to that person if he or she:

 

  IV. will be economically advantaged if the price of that security decreases; or

 

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  V. will be economically disadvantaged if the price of that security increases, irrespective of:

 

    how any such right, option, obligation, advantage or disadvantage arises and including, for the avoidance of doubt and without limitation, where it arises by virtue of an agreement to sell, option or derivative; or

 

    whether any such right, option, obligation, advantage or disadvantage is absolute or conditional and, where applicable, whether it is in the money or otherwise;

 

  (j) “relevant period” means the period commencing on April 13, 2017 and ending on the disclosure date;

 

  (k) “relevant securities” means relevant securities of Zoetis and Bidco or relevant Nexvet securities, as appropriate, and relevant security shall be construed accordingly;

 

  (l) “relevant Nexvet securities”, in relation to Nexvet, shall have the meaning assigned by Rule 2.1 of Part A of the Takeover Rules, meaning:

 

  (i) securities of Nexvet which are the subject of the Scheme or the Acquisition or which confer voting rights;

 

  (ii) equity share capital of Nexvet; and

 

  (iii) securities or any other instruments of Nexvet conferring on their holders rights to convert into or to subscribe for any new securities of the foregoing categories; and

 

  (m) “relevant securities of Zoetis and Bidco”, in relation to Zoetis, shall have the meaning assigned by Rule 2.1 of Part A of the Takeover Rules, meaning:

 

  (i) equity share capital of Zoetis and Bidco; and

 

  (ii) securities or any other instruments of Zoetis and Bidco conferring on their holders rights to convert into or to subscribe for equity share capital of Zoetis or Bidco,

and references to such “relevant securities of Zoetis and Bidco” shall include references to securities of any holding company of Zoetis and Bidco.

 

5.2 Interests and short positions in relevant Nexvet securities

 

  (a) As of the close of business on the disclosure date, the Nexvet Directors and executive officers (including persons connected with them (within the meaning of the Act)) were interested in the following relevant Nexvet securities (other than interests in Nexvet Options and Nexvet RSUs described in paragraphs 5.2(b) and (c) below):

 

Name

   Number of
Nexvet
Shares
 

Christopher Brown

     12,400  

George Gunn

     38,500  

Ashraf Hanna

     13,420  

Mark Heffernan

     292,754  

Cormac Kilty

     151,564  

Joseph McCracken

     12,300  

Raj Patel

     2,658,176  

John Payne

     13,395  

Damian Lismore

     66,634  

Geraldine Farrell

     30,760  

Jürgen Horn

     —    

 

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  (b) As of the close of business on the disclosure date, the Nexvet Directors and executive officers (including persons connected with them (within the meaning of the Act)) were interested in the following Nexvet Options which have been granted to them and remain outstanding:

 

Name

   No. of
Nexvet
Options
     Exercise
Price
($)
    

Vesting Period

   Expiry Date
Christopher Brown      3,600        0.125      Fully vested    7/1/2019
     7,080        0.125      Fully vested    11/5/2020
Mark Heffernan      52,040        6.35      Fully vested    2/28/2018
     9,203        0.125      Fully vested    11/5/2020
     4,833        0.125      Vests fully on 7/1/2017    7/1/2019
     100,000        15.00      25% vested on issuance, with 5% vesting each quarter from 6/30/2015    5/18/2020
Damian Lismore      7,079        0.125      Fully vested    11/25/2023
     4,000        0.125      Vests fully on 7/1/2017    7/1/2019
     100,000        15.00      25% vested on issuance, with 5% vesting each quarter from 6/30/2015    5/18/2020
Geraldine Farrell      6,194        0.125      Fully vested    11/5/2023
     2,866        0.125      Vests fully on 7/1/2017    7/1/2019
     20,000        15.00      25% vested on issuance, with 5% vesting each quarter from 6/30/2015    5/18/2020
Jürgen Horn      60,000        5.10      20% vested on issuance, with 5% vesting quarterly from 9/30/2015    8/26/2012

 

  (c) As of the close of business on the disclosure date, the Nexvet Directors and executive officers (including persons connected with them (within the meaning of the Act)) were interested in the Nexvet RSUs set forth below, which were granted to them and remain outstanding. Each Nexvet RSU is subject to payment of the nominal value per share to Nexvet within 30 days of vesting, pursuant an Irish Law requirement to pay to an issuer at least the nominal value per share for any issuance:

 

Name

   No. of
Nexvet
RSUs
     Conversion
Price
($)
    

Vesting Dates

Christopher Brown      3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17
Ashraf Hanna      3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17
     500        0.125      Vests as to 500 Nexvet Shares on 6/30/17
Mark Heffernan      75,000        0.125      Vests as to 25,000 Nexvet Shares on each of 7/1/17, 7/1/18 and 7/1/19
     142,572        0.125      Vests as to 35,643 Nexvet Shares on each of 7/1/17, 7/1/18, 7/1/19 and 7/1/20
George Gunn      2,000        0.125      Vests as to 500 Nexvet Shares on each of 6/30/17, 9/30/17, 12/31/17 and 3/31/18
     3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17
Cormac Kilty      3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17

 

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Name

   No. of
Nexvet
RSUs
     Conversion
Price
($)
    

Vesting Dates

Joseph McCracken      3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17
     500        0.125      Vests as to 500 Nexvet Shares on 6/30/17
John Payne      3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17
Rajiv Patel      3,600        0.125      Vests as to 3,600 Nexvet Shares on 7/1/17
     1,500        0.125      Vests as to 500 Nexvet Shares on each of 6/30/17, 9/30/17 and 12/31/17
Damian Lismore      41,250        0.125      Vests as to 13,750 Nexvet Shares on each of 7/1/17, 7/1/18 and 7/1/19
     65,000        0.125      Vests as to 16,250 Nexvet Shares on each of 7/1/17, 7/1/18, 7/1/19 and 7/1/20
Geraldine Farrell      7,018        0.125      Vests as to 2,339 Nexvet Shares on each of 7/1/17, 7/1/18 and 7/1/19
     40,000        0.125      Vests as to 10,000 Nexvet Shares on each of 7/1/17, 7/1/18, 7/1/19 and 7/1/20
Jürgen Horn      63,000        0.125      Vests as to 15,750 Nexvet Shares on each of 7/1/17, 7/1/18, 7/1/19 and 7/1/20

 

  (d) Christopher Brown, George Gunn, Ashraf Hanna, Mark Heffernan, Cormac Kilty, Joseph McCracken, Rajiv Patel and John Payne have provided irrevocable undertakings to Zoetis and Bidco to vote in favor of the Scheme in respect of (i) the entirety of their interests in Nexvet Shares (as disclosed in paragraph 5.2(a) above), (ii) the entirety of their interests in Nexvet Options (as disclosed in paragraph 5.2(b) above), to the extent such Nexvet Options are exercised for Nexvet Shares, and (iii) the entirety of their interests in Nexvet RSUs (as disclosed in paragraph 5.2(c) above), to the extent such Nexvet RSUs are converted into Nexvet Shares.

 

  (e) Except as disclosed in paragraphs 5.2(a)-(c) above, as of the close of business on the disclosure date, no Nexvet Director (including persons connected with them (within the meaning of the Act)) was interested, or held any short positions, in any relevant Nexvet securities.

 

  (f) As of the close of business on the disclosure date, no member of the Nexvet Group or any associated company of Nexvet was interested, or held any short positions, in any relevant Nexvet securities.

 

  (g) As of the close of business on the disclosure date, no trustee of any pension scheme (other than an industry-wide scheme) in which Nexvet or any Subsidiary of Nexvet participates was interested, or held any short positions, in any relevant Nexvet securities.

 

  (h) As of the close of business on the disclosure date, no fund manager (including an exempt fund manager) connected with Nexvet was interested, or held any short positions, in any relevant Nexvet securities.

 

  (i) As of the close of business on the disclosure date, neither Evercore (financial adviser to Nexvet) nor any person controlling, controlled by, or under the same control as Evercore, was interested, or held any short positions, in any relevant Nexvet securities, other than as an exempt principal trader or an exempt fund manager.

 

  (j)

As of the close of business on the disclosure date, neither Cowen (financial adviser to Nexvet) nor any person controlling, controlled by, or under the same control as Cowen, was interested, or held any short

 

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  positions, in any relevant Nexvet securities, other than as an exempt principal trader or an exempt fund manager, except that an affiliate of Cowen holds Nexvet Warrants to acquire 96,000 Nexvet Shares at an exercise price per Nexvet Share in excess of the Consideration.

 

  (k) As of the close of business on the disclosure date, no partner or member of the professional staff of DLA Piper (U.S. legal adviser to Nexvet) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Nexvet or who has been engaged in those affairs since April 13, 2015, was interested, or held any short positions, in any relevant Nexvet securities.

 

  (l) As of the close of business on the disclosure date, no partner or member of the professional staff of Matheson (Irish legal adviser to Nexvet) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Nexvet or who has been engaged in those affairs since April 13, 2015 was interested, or held any short positions, in any relevant Nexvet securities.

 

  (m) As of the close of business on the disclosure date, no partner or member of the professional staff of PricewaterhouseCoopers (Nexvet’s auditor) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Nexvet or who has been engaged in those affairs since April 13, 2015 was interested, or held any short positions, in any relevant Nexvet securities.

 

  (n) As of the close of business on the disclosure date, D.F. King (Nexvet’s proxy solicitor) was not interested, and held no short positions, in any relevant Nexvet securities.

 

  (o) Except as disclosed in this paragraph 5.2, as of the close of business on the disclosure date, no other person acting in concert (including deemed to be acting in concert) with Nexvet or any person with whom Nexvet, or any person acting in concert with Nexvet, has any arrangement was interested, or held any short positions, in any relevant Nexvet securities.

 

  (p) As of the close of business on the disclosure date, none of Zoetis, Bidco, any member of the Zoetis Group nor any associated company of Zoetis was interested, or held any short positions, in any relevant Nexvet securities.

 

  (q) As of the close of business on the disclosure date, none of Zoetis Directors or Bidco Directors (including persons connected with them (within the meaning of the Act)) was interested, or held any short positions, in any relevant Nexvet securities.

 

  (r) As of the close of business on the disclosure date, no trustee of any pension scheme (other than an industry-wide scheme) in which Zoetis or any Subsidiary of Zoetis participates was interested, or held any short positions, in any relevant Nexvet securities.

 

  (s) As of the close of business on the disclosure date, no fund manager (including an exempt fund manager) connected with Zoetis or Bidco was interested, or held any short positions, in any relevant Nexvet securities.

 

  (t) As of the close of business on the disclosure date, Goldman Sachs (financial adviser to Zoetis and Bidco) and persons controlling, controlled by, or under the same control as Goldman Sachs (other than as an exempt principal trader or an exempt fund manager), were interested in the following relevant Nexvet securities:

 

Name

  

Interest

  

No. of Relevant

Nexvet Securities

Goldman Sachs & Co. LLC

  

Long position

   858

 

       and neither Goldman Sachs nor any person controlling, controlled by, or under the same control as Goldman Sachs (other than as an exempt principal trader or an exempt fund manager) held any short positions in any relevant Nexvet Securities.

 

  (u)

As of the close of business on the disclosure date, no partner or member of the professional staff of Morgan, Lewis & Bockius LLP (U.S. legal adviser to Zoetis and Bidco) who is actively engaged in

 

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  relation to the Scheme or who is customarily engaged in the affairs of Zoetis and Bidco or who has been engaged in those affairs since April 13, 2015, was interested, or held any short positions, in any relevant Nexvet securities.

 

  (v) As of the close of business on the disclosure date, no partner or member of the professional staff of Arthur Cox (Irish legal adviser to Zoetis and Bidco) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Zoetis and Bidco or who has been engaged in those affairs since April 13, 2015 was interested, or held any short positions, in any relevant Nexvet securities.

 

  (w) As of the close of business on the disclosure date, Akubra Investors, LLC, Bushranger Funding, LLC, and Ute Holdings, LLC, being the related companies of Farallon Capital Management, L.L.C. whom have given an irrevocable undertaking to Zoetis and Bidco to vote in favor of the Scheme in respect of their entire beneficial holdings of Nexvet Shares, were interested in the following relevant Nexvet securities, all of which will be voted in accordance with this irrevocable undertaking:

 

Name

   Interest    No. of Relevant
Nexvet
Securities
 

Akubra Investors, LLC

   Nexvet Shares      833,845  

Akubra Investors, LLC

   Nexvet Warrants      212,500  

Bushranger Funding, LLC

   Nexvet Shares      899,268  

Bushranger Funding, LLC

   Nexvet Warrants      229,172  

Ute Holdings, LLC

   Nexvet Shares      915,583  

Ute Holdings, LLC

   Nexvet Warrants      233,328  

 

  (x) As of close of business on the disclosure date, Adage Capital Partners GP, L.L.C., who has given an irrevocable undertaking to Zoetis and Bidco to vote in favor of the Scheme in respect of its entire beneficial holdings of Nexvet Shares, was interested in the following relevant Nexvet securities, all of which will be voted in accordance with this irrevocable undertaking:

 

Name

   Interest    No. of Relevant
Nexvet
Securities
 

Adage Capital Partners, LP

   Nexvet Shares      795,000  

Adage Capital Partners, LP

   Nexvet Warrants      225,000  

 

  (y) As of close of business on the disclosure date, Broadfin Capital, LLC, who has given an irrevocable undertaking to Zoetis and Bidco to vote in favor of the Scheme in respect of its entire beneficial holdings of Nexvet Shares, was interested in the following relevant Nexvet securities, all of which will be voted in accordance with this irrevocable undertaking:

 

Name

   Interest      No. of Relevant
Nexvet
Securities
 

Broadfin Capital, LLC,

Broadfin Healthcare Master Fund, Ltd. and

Kevin Kotler (shared beneficial ownership)

     Nexvet Shares        1,127,200  

 

  (z) Except as disclosed in this paragraph 5.2, as of the close of business on the disclosure date, no other person acting in concert (including deemed to be acting in concert) with Zoetis or Bidco was interested, or held any short positions, in any relevant Nexvet securities.

 

  (aa) Except as disclosed in this paragraph 5.2, as of the close of business on the disclosure date, no person with whom Zoetis, or any person acting in concert with Zoetis or Bidco, has any arrangement was interested, or held any short positions, in any relevant Nexvet securities.

 

  (bb) The information in this paragraph 5.2 has been included subject to the confirmation set out in this paragraph 5.2 in respect of each member of Nexvet and all persons controlling, controlled by, or under the same control as each of them has been included subject to the Nexvet Directors’ knowledge, information and belief as of the disclosure date, having made due and careful inquiries.

 

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  (cc) The information in this paragraph 5.2 in respect of each member of the Zoetis Group and all persons controlling, controlled by, or under the same control as them has been included subject to the Zoetis Directors and Bidco Directors knowledge, information and belief as of the disclosure date, having made due and careful inquiries.

 

5.3 Dealings in relevant Nexvet securities

 

  (a) The dealings during the Disclosure Period in relevant Nexvet securities by the Nexvet Directors and executive officers or persons connected with them (within the meaning of the Act) were as follows (other than the dealings in Nexvet Options and Nexvet RSUs set out in paragraphs 5.2(b) and (c) below):

 

Name

   Number of
Nexvet
Shares
     Nature of
Transaction
     Date of
Dealing
     Price Per
Ordinary
Share
($)
 

George Gunn

     20,000        Bonus Shares        9/5/16        0.125  

 

  (b) The dealings during the Disclosure Period in Nexvet Options by the Nexvet Directors and executive officers or persons connected with them (within the meaning of the Act) were as follows:

 

Name

   Number of
Nexvet
Options
     Nature of Transaction      Date of
Dealing
     Exercise Price
Per Ordinary
Share
($)
 

Mark Heffernan

     4,833        Exercise of option        7/1/16        0.125  

Damian Lismore

     4,000        Exercise of option        7/1/16        0.125  

Geraldine Farrell

     2,867        Exercise of option        7/1/16        0.125  

 

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  (c) The dealings during the Disclosure Period in Nexvet RSUs by the Nexvet Directors or persons connected with them (within the meaning of the Act) were as follows:

 

Director

   Number of
Nexvet
RSUs
     Nature of Transaction    Date of
Dealing
     Price Per
Ordinary
Share
($)
 

Christopher Brown

     3,600      Award of RSUs      9/5/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  

Ashraf Hanna

     500      Settlement of RSUs      3/31/17        0.125  
     500      Settlement of RSUs      12/31/16        0.125  
     500      Settlement of RSUs      9/31/16        0.125  
     3,600      Award of RSUs      9/5/16        0.125  
     500      Settlement of RSUs      7/1/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  

Mark Heffernan

     142,572      Award of RSUs      9/5/16        0.125  
     4,833      Settlement of RSUs      7/1/16        0.125  
     25,000      Settlement of RSUs      7/1/16        0.125  

George Gunn

     500      Settlement of RSUs      3/31/17        0.125  
     500      Settlement of RSUs      12/31/16        0.125  
     500      Settlement of RSUs      9/31/16        0.125  
     3,600      Award of RSUs      9/5/16        0.125  
     500      Settlement of RSUs      7/1/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  

Cormac Kilty

     3,600      Award of RSUs      9/5/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  

Joseph McCracken

     500      Settlement of RSUs      3/31/17        0.125  
     500      Settlement of RSUs      12/31/16        0.125  
     500      Settlement of RSUs      9/31/16        0.125  
     3,600      Award of RSUs      9/5/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  
     500      Settlement of RSUs      6/30/16        0.125  

John Payne

     3,600      Award of RSUs      9/5/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  

Rajiv Patel

     500      Settlement of RSUs      3/31/17        0.125  
     500      Settlement of RSUs      12/31/16        0.125  
     500      Settlement of RSUs      9/31/16        0.125  
     3,600      Award of RSUs      9/5/16        0.125  
     3,600      Settlement of RSUs      7/1/16        0.125  
     500      Settlement of RSUs      6/30/16        0.125  

Damian Lismore

     65,000      Award of RSUs      9/5/16        0.125  
     13,750      Settlement of RSUs      7/1/16        0.125  

Geraldine Farrell

     40,000      Award of RSUs      9/5/16        0.125  
     2,340      Settlement of RSUs      7/1/16        0.125  

Jürgen Horn

     63,000      Award of RSUs      9/5/16        0.125  

 

  (d) During the Disclosure Period, Nexvet has not redeemed or purchased any relevant Nexvet securities.

 

  (e) During the Disclosure Period, Nexvet has not acquired any relevant Nexvet securities from employees who have left Nexvet’s employment.

 

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  (f) During the Disclosure Period, there were no dealings in relevant Nexvet securities by any member of the Nexvet Group or any associated company of Nexvet.

 

  (g) During the relevant period, there were no dealings in relevant Nexvet securities by any trustee of any pension scheme (other than an industry-wide scheme) in which Nexvet or any Subsidiary of Nexvet participates.

 

  (h) During the relevant period, there were no dealings in relevant Nexvet securities by a fund manager (including an exempt fund manager) connected with Nexvet.

 

  (i) During the relevant period, there were no dealings in relevant Nexvet securities by Evercore (financial adviser to Nexvet) or any persons (other than exempt fund managers or exempt principal traders) controlling, controlled by, or under the same control as Evercore.

 

  (j) During the relevant period, there were no dealings in relevant Nexvet securities by Cowen (financial adviser to Nexvet) or any persons (other than exempt fund managers or exempt principal traders) controlling, controlled by, or under the same control as Cowen.

 

  (k) During the relevant period, there were no dealings in relevant Nexvet securities by any partner or member of the professional staff of DLA Piper (U.S. legal adviser to Nexvet) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Nexvet or who has been engaged in those affairs since April 13, 2015.

 

  (l) During the relevant period, there were no dealings in relevant Nexvet securities by any partner or member of the professional staff of Matheson (Irish legal adviser to Nexvet) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Nexvet or who has been engaged in those affairs since April 13, 2015.

 

  (m) During the relevant period, there were no dealings in relevant Nexvet securities by any partner or member of the professional staff of PricewaterhouseCoopers (Nexvet’s auditors) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Nexvet or who has been engaged in those affairs since April 13, 2015.

 

  (n) During the relevant period, there were no dealings in relevant Nexvet’s securities by D.F. King (Nexvet’s proxy solicitor).

 

  (o) During the relevant period there were no dealings in relevant Nexvet securities by any other person acting in concert (including deemed to be acting in concert) with Nexvet.

 

  (p) Save as disclosed in paragraph 5.2 (Interests and Short Positions in Relevant Nexvet Securities) and this paragraph 5.3, during the relevant period there were no dealings in relevant Nexvet securities by any person with whom Nexvet or any person acting in concert with Nexvet has any arrangement.

 

  (q) During the Disclosure Period, there were no dealings in relevant Nexvet securities by Bidco, any member of the Zoetis Group nor any associated company of Zoetis.

 

  (r) During the Disclosure Period, there were no dealings in relevant Nexvet securities by any of the Zoetis Directors or Bidco Directors (or, where relevant, managers) (including, in each case, persons connected with them (within the meaning of the Act)).

 

  (s) During the Disclosure Period, there were no dealings in relevant Nexvet securities by any trustee of any pension scheme (other than an industry-wide scheme) in which Bidco or any Subsidiary of Zoetis participates.

 

  (t) During the Disclosure Period, there were no dealings in relevant Nexvet securities by a fund manager (including an exempt fund manager) connected with Zoetis or Bidco.

 

  (u) During the Disclosure Period, there were no dealings in relevant Nexvet securities by Akubra Investors, LLC, Bushranger Funding, LLC, or Ute Holdings, LLC, being the related companies of Farallon Capital Management, L.L.C., whom have given an irrevocable undertaking to Zoetis and Bidco to vote in favor of the Scheme.

 

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  (u) During the Disclosure Period, there were no dealings in relevant Nexvet securities by Adage Capital Partners GP, L.L.C., who has given an irrevocable undertaking to Zoetis and Bidco to vote in favor of the Scheme.

 

  (v) During the Disclosure Period, there were no dealings in relevant Nexvet securities by Broadfin Capital Partners, LLC, who has given an irrevocable undertaking to Zoetis and Bidco to vote in favor of the Scheme.

 

  (w) The dealing during the Disclosure Period in relevant Nexvet securities by Goldman Sachs (financial adviser to Zoetis and Bidco) or any persons (other than exempt fund managers or exempt principal traders) controlling, controlled by, or under the same control as Goldman Sachs were as follows:

 

Name

   Number of
Relevant
Nexvet
Securities
     Nature of
Transaction
     Date of
Dealing
     Price Per
Ordinary
Share
($)
 

Goldman Sachs & Co. LLC

     75        Sale        5/25/2016        2.96  

Goldman Sachs & Co. LLC

     60        Sale        11/1/2016        3.99  

 

  (x) During the Disclosure Period, there were no dealings in relevant Nexvet securities by any partner or member of the professional staff of Morgan, Lewis & Bockius LLP (U.S. legal adviser to Zoetis and Bidco) or Arthur Cox (Irish legal adviser to Zoetis and Bidco) who is actively engaged in relation to the Scheme or who is customarily engaged in the affairs of Zoetis and Bidco or who has been engaged in those affairs since April 13, 2015.

 

  (y) During the Disclosure Period there were no dealings in relevant Nexvet securities by any other person acting in concert (including deemed to be acting in concert) with Zoetis or Bidco.

 

  (z) During the Disclosure Period, there were no dealings in relevant Nexvet securities by any person with whom Zoetis or Bidco or any person acting in concert with Zoetis or Bidco has any arrangement.

 

  (aa) The information in this paragraph 5.3 in respect of each member of the Zoetis Group and all persons controlling, controlled by, or under the same control as them has been included subject to the Zoetis Directors and Bidco Directors knowledge, information and belief as of the disclosure date, having made due and careful inquiries.

 

5.4 Interests and short positions in relevant securities of Zoetis

 

  (a) As of the close of business on the disclosure date, Nexvet was not interested in any relevant securities of Zoetis.

 

  (b) As of the close of business on the disclosure date, Nexvet did not hold any short positions in any relevant securities of Zoetis.

 

  (c) As of the close of business on the disclosure date, no Nexvet Director (including persons connected to them (within the meaning of the Act)) was interested, or held any short positions, in any relevant securities of Zoetis, other than John Payne, who was interested in 314 shares of Zoetis common stock (which he held through a 401(k) plan).

 

5.5 Dealings in relevant securities of Zoetis or Bidco

During the Disclosure Period:

 

  (a) there were no dealings in relevant securities of Zoetis or Bidco by Nexvet; and

 

  (b) there were no dealings in relevant securities of Zoetis or Bidco by the Nexvet Directors (or persons connected with them (within the meaning of the Act)).

 

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6. Material Contracts

Except as disclosed in this paragraph 6, neither Nexvet nor any of its Subsidiaries has within the two years prior to the commencement of the Offer Period entered into any contracts (other than contracts entered into in the ordinary course of business) that are, or may be, material.

 

6.1 Expenses Reimbursement Agreement

Nexvet entered into the Expenses Reimbursement Agreement with Zoetis on April 13, 2017 as described in paragraph 6 of Part 1 (Letter of Recommendation from the Nexvet Board) of this document.

 

6.2 Transaction Agreement

Nexvet entered into the Transaction Agreement with Zoetis and Bidco on April 13, 2017 as described in paragraph 7 of Part 1 (Letter of Recommendation from the Nexvet Board) of this document.

 

6.3 Employment Agreement by and between Nexvet and Ms. Geraldine Farrell

On April 21, 2016, Nexvet Australia Pty Ltd entered into an Employment Agreement with Ms. Geraldine Farrell, the General Counsel and Vice President Operations of Nexvet, which agreement replaced the terms of her prior employment agreement. Pursuant to the Employment Agreement, Ms. Farrell’s annual base salary is A$275,000 and she is eligible for certain annual equity awards, performance-based cash bonuses, and expense reimbursements. The Employment Agreement will continue until it is terminated in accordance with its terms. Ms. Farrell is entitled to six months’ written notice of termination by Nexvet, or 12 months’ written notice if her employment is terminated immediately prior to, upon or within 12 months following a “change of control,” upon which she will be entitled to a cash amount approximating the value of the annual equity award she would have received in the year of her termination (prorated through her termination date). In addition, upon a “change in control,” all equity awards held by Ms. Farrell will become 100% vested and exercisable in full.

 

6.4 Employment Agreement by and between Nexvet and Dr. Jürgen Horn

On April 29, 2016, Nexvet US, Inc. entered into an Employment Agreement with Dr. Jürgen Horn to become Nexvet’s Chief Product Development Officer. Pursuant to the Employment Agreement, Dr. Horn’s annual base salary is $330,000 and he is eligible for certain performance-based cash bonuses, a potential relocation reimbursement and annual equity awards as determined by the Nexvet Board. Upon a “change in control,” all equity awards held by Dr. Horn will become 100% vested and exercisable in full. Dr. Horn’s employment with Nexvet is “at will” and for no specified period of time.

 

6.5 Non-Exclusive Patent License Agreement by and between Nexvet Ireland Limited and Pfizer Inc.

On February 1, 2017, Nexvet Ireland Limited entered into a non-exclusive license agreement with Pfizer Inc., pursuant to which Nexvet Ireland Limited received a non-exclusive license to certain patents in the Pfizer portfolio for anti-NGF antibodies. Pursuant to this agreement, Nexvet Ireland Limited agreed to pay Pfizer a $1.0 million upfront license fee, and may pay Pfizer (i) additional amounts based on regulatory and sales milestones and (ii) a low, single-digit royalty based on net sales of the Nexvet Group’s anti-NGF product candidates for the life of the relevant patents. The agreement remains in effect on a country-by-country basis until all claims in all licensed patents have expired or been abandoned.

 

7. Directors and Service Contracts

No Nexvet Director has a service contract with Nexvet or any of its Subsidiaries or associated companies having more than 12 months to run. No Nexvet Director’s service contract with Nexvet or any of its Subsidiaries or associated companies has been entered into or amended within six months of the date of this document.

 

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8. Irish Taxation

 

8.1 Scope of Discussion

The following is a general summary of the material Irish tax considerations applicable to certain beneficial holders of Nexvet Shares in respect of the disposition of Nexvet Shares under the Scheme based on current Irish taxation Laws and the current published practices of the Irish Revenue Commissioners and may be subject to change. Legislative, administrative or judicial changes may modify the tax consequences described below, possibly with retrospective effect. This summary is intended only as a general guide and does not constitute tax advice. The summary is not exhaustive and does not discuss all aspects of Irish taxation that may be relevant to a particular Nexvet Shareholder. This discussion does not deal with the Irish tax considerations of the release of Nexvet Options, Nexvet RSUs and Warrants. Nexvet Shareholders should consult their own tax advisers about the Irish tax consequences (and tax consequences under the Laws of other relevant jurisdictions) of the Scheme.

The summary only applies to Nexvet Shareholders who legally and beneficially hold their Nexvet Shares as capital assets and does not address special classes of Nexvet Shareholders, including, but not limited to dealers in securities, insurance companies, pension schemes, employee share ownership trusts, collective investment undertakings, charities, tax exempt organizations, financial institutions, close companies and shareholders who have or, or are deemed to have, acquired their shares by virtue of an Irish office or employment (performed or carried on in Ireland), each of which may be subject to special rules not discussed below.

 

8.2 Irish Tax on Chargeable Gains

 

  (a) Non-resident shareholders

Nexvet Shareholders that are not resident or ordinarily resident in Ireland for Irish tax purposes and do not hold their shares in connection with a trade or business carried on by such shareholders through an Irish branch or agency will not be within the charge to Irish CGT on the disposal of their Nexvet Shares pursuant to the Scheme.

Nexvet Shareholders that are not resident or ordinarily resident in Ireland for Irish tax purposes, but who hold their shares in connection with a trade carried on by such Nexvet Shareholders through an Irish branch or agency will, subject to the availability of any exemptions and reliefs, generally be within the charge to Irish CGT on the disposal of their Nexvet Shares pursuant to the Scheme. A Nexvet Shareholder who is an individual and who is temporarily non-resident in Ireland may, under Irish anti-avoidance legislation, still be liable to Irish CGT on any chargeable gain realized.

 

  (b) Irish resident shareholders

Nexvet Shareholders that are resident or ordinarily resident in Ireland for Irish tax purposes (“Irish Holder”) will, subject to the availability of any exemptions and reliefs, generally be within the charge to Irish CGT on the disposal of their Nexvet Shares pursuant to the Scheme.

For the purposes of Irish CGT an Irish Holder should be treated as having made a disposal of their holding of Nexvet Shares for consideration of an amount equal to the cash received pursuant to the Scheme. This may, subject to the Irish Holder’s individual circumstances and any available exemption or relief, give rise to a chargeable gain (or allowable loss) for the purposes of Irish CGT.

Any gain or loss will be calculated by reference to the difference between the amount of cash received and the Irish Holder’s CGT base cost in their holding of Nexvet Shares plus incidental acquisition and disposal expenses. The current rate of tax applicable to such chargeable gains is 33%.

Where proceeds are received in a currency other than the Euro, they must be translated into Euro amounts using the foreign exchange rate on the date of the disposal to calculate the amount of the chargeable gain or

 

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loss. Similarly, acquisition or disposal costs denominated in a currency other than Euro must be translated at the date of acquisition or disposal into Euro amounts.

The amount of Irish CGT, if any, payable as a consequence of the disposal of the Nexvet Shares by an Irish Holder pursuant to the Scheme will depend on his or her own personal tax position. No Irish CGT should be payable on any gain realized on the disposal of the Nexvet Shares by an individual if the amount of the net chargeable gains realized by them, when aggregated with other net chargeable gains realized by that Irish Holder in the year of assessment (and after taking account of allowable losses), does not exceed the annual exemption (EUR (€)1,270 for 2017). This annual exemption is not available to companies. Irish Holders are required, under Ireland’s self-assessment system, to make a tax return reporting any chargeable gains arising to them in a particular tax year. Indexation allowance will not be available in respect of expenditure incurred on or after January 1, 2003 or in respect of periods of ownership after December 31, 2002.

Irish Holders that realize a loss on the disposition of Nexvet Shares will generally be entitled to offset such capital losses against chargeable gains realized from other sources in determining their liability to Irish CGT. Capital losses which remain unrelieved in a year may generally be carried forward and applied against any chargeable gains realized in future years.

 

8.3 Stamp Duty

No Irish stamp duty will be payable by a holder of Nexvet Shares in relation to the cancellation of Nexvet Shares for cash.

 

9. U.S. Federal Income Tax Consequences

 

9.1 General

The following discussion summarizes certain material U.S. federal income tax considerations of the Scheme generally relevant to holders of Nexvet Shares who are U.S. Shareholders (as defined below), assuming that the Scheme is consummated. This discussion is based on the Internal Revenue Code of 1986, as amended, (“Code”), Treasury Regulations promulgated under the Code, judicial decisions, administrative rulings and other official interpretations thereof, in effect as of the date of this document and all of which are subject to change, possibly with retroactive effect. The discussion below does not address all U.S. federal income tax consequences or any state, local or non-U.S. tax consequences of the Scheme. This discussion does not apply to Nexvet Shareholders who received Nexvet Shares pursuant to the exercise of employee share options, warrants or otherwise in connection with the performance of services. The tax treatment of Nexvet Shareholders may vary depending upon each Nexvet Shareholder’s particular situation and each Nexvet Shareholder should consult a professional tax adviser with respect to the tax consequences of the Scheme to it. Also, this discussion does not apply to Nexvet Shareholders subject to special treatment, including:

 

    brokers and dealers in securities or currencies;

 

    traders in securities that elect to use the mark-to-market method of accounting;

 

    tax-exempt entities;

 

    banks and thrifts and other financial institutions;

 

    regulated investment companies;

 

    pension plans;

 

    insurance companies;

 

    persons subject to the U.S. alternative minimum tax;

 

    persons that hold their Nexvet Shares in a tax deferred account;

 

    persons that hold Nexvet Shares as part of a “straddle,” a “hedge,” a “constructive sale” transaction, a “conversion transaction,” a “synthetic security” or other integrated investment;

 

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    persons that own, actually or through certain “constructive ownership” rules, 10% or more of the outstanding Nexvet Shares;

 

    persons that have a “functional currency” other than the U.S. dollar;

 

    certain former citizens or residents of the United States;

 

    controlled foreign corporations;

 

    passive foreign investment companies; and

 

    persons that hold Nexvet Shares through pass-through entities.

This discussion also does not address the U.S. federal income tax consequences of the Scheme to holders of Nexvet Shares who do not hold such shares as a capital asset, which is generally property held for investment, and does not address tax consequences of the Scheme to Nexvet Shareholders who are not U.S. Shareholders (as defined in paragraph 9.3 of this Part 8 (Additional Information)).

For purposes of this discussion, a “U.S. Shareholder” is any beneficial owner of Nexvet Shares who, for U.S. federal income tax purposes, is:

 

  (a) a U.S. citizen or resident individual;

 

  (b) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the Laws of the United States, any state thereof or the District of Columbia;

 

  (c) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

  (d) a trust, if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all the substantial decisions of the trust, or (2) the trust has a valid election in effect under current Treasury Regulations to be treated as a U.S. person.

For investors who own Nexvet Shares through a partnership or an entity treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment will generally depend upon the status of the partner and the activities of the partnership. Such investors should consult their own tax adviser as to their particular tax consequences.

 

9.2 Income Tax Consequences to U.S. Shareholders

The Scheme will be a taxable event for U.S. federal income tax purposes and each U.S. Shareholder will recognize gain or loss with respect to its Nexvet Shares, measured by the difference between the amount of Consideration paid to such U.S. Shareholder and such U.S. Shareholder’s adjusted tax basis in its Nexvet Shares. If a U.S. Shareholder acquired Nexvet Shares by purchase, the U.S. Shareholder’s adjusted tax basis in Nexvet Shares will generally equal the amount the U.S. Shareholder paid for the relevant Nexvet Shares, less any returns of capital that the U.S. Shareholder might have received with regard to the relevant Nexvet Shares. In the case of a U.S. Shareholder who holds multiple blocks of Nexvet Shares (blocks of Nexvet Shares acquired separately at different times and/or prices), gain or loss and holding period must be calculated and accounted for separately for each block.

Subject to the discussion under “Passive Foreign Investment Company Status and Related Tax Consequences” below, the gain or loss on the sale of Nexvet Shares will constitute long-term capital gain or loss if the Nexvet Shares have been held for more than one year as of the Effective Time. If a U.S. Shareholder receiving long-term capital gain is an individual or other non-corporate shareholder, then the capital gain will generally be subject to U.S. federal income tax at a maximum rate of 20%. Short-term capital gains received by such shareholders will be subject to tax at ordinary income rates of up to 39.6%. U.S. Shareholders that are taxable as corporations for U.S. federal income tax purposes will generally be subject to 35% tax on any gain (whether long-term or short-term) from the sale or exchange of Nexvet Shares. A U.S. Shareholder’s ability to deduct capital losses is subject to several limitations. The gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes.

 

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9.3 Passive Foreign Investment Company Status and Related Tax Consequences

Nexvet believes that it was a passive foreign investment company (“PFIC”) within the meaning of Section 1297 of the Code for its fiscal years ended June 30, 2016 and June 30, 2015, that it expects to be a PFIC for its fiscal year ended June 30, 2017 and that it may be a PFIC in subsequent taxable years. The determination of whether Nexvet (or any of its Subsidiaries) was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether Nexvet (or any of its Subsidiaries) will be a PFIC for any tax year depends on the assets and income of Nexvet (and each of its Subsidiaries) over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document. Generally, if Nexvet or any of its Subsidiaries was a PFIC for any taxable year during which a U.S. Shareholder held Nexvet Shares, Nexvet will always be a PFIC with respect to such U.S. Shareholder unless the U.S. Shareholder makes a valid, timely qualified electing fund election under Section 1295 of the Code (a “QEF Election”) with respect to Nexvet and its PFIC Subsidiaries or a valid, timely mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”) with respect to such Nexvet Shares. A U.S. Shareholder that has not made a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Shareholder.” A U.S. Shareholder will be subject to different taxation rules with respect to the Scheme depending on whether such U.S. Shareholder made a QEF Election or a Mark-to-Market Election with respect to his or her Nexvet Shares. U.S. Shareholders of PFICs are required to report their shareholdings, and any dispositions of stock in a PFIC on IRS Form 8621. The PFIC rules are complex, and U.S. Shareholders should consult their own tax advisers regarding the PFIC rules and how they may affect the U.S. federal income tax consequences of the Scheme on their Nexvet Shares.

 

9.4 Income Tax Consequences to Non-Electing U.S. Shareholders

A Non-Electing U.S. Shareholder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of the Nexvet Shares and (b) any excess distribution paid on the Nexvet Shares. A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Shareholder’s holding period for the Nexvet Shares, if shorter).

Any gain recognized on the sale or other taxable disposition of Nexvet Shares, and any excess distribution paid on Nexvet Shares must be ratably allocated to each day of a Non-Electing U.S. Shareholder’s holding period for the Nexvet Shares. The amount of any such gain or excess distribution allocated to the tax year of disposition or excess distribution and to years before Nexvet became a PFIC, if any, would be taxed as ordinary income. The amounts allocated to any other tax year would be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year. A Non-Electing U.S. Shareholder that is not a corporation must treat any such interest paid as “personal interest,” which is not deductible.

 

9.5 QEF Election

A U.S. Shareholder that made a valid, timely QEF Election with respect to its Nexvet Shares generally would recognize capital gain or loss on the sale or other taxable disposition of such shares and would be taxed as described under “Income Tax Consequences to U.S. Shareholders” above. In addition, the U.S. Shareholder’s adjusted tax basis in its Nexvet Shares would have been increased to reflect any taxed but undistributed earnings and profits and decreased by any distribution of earnings and profits that previously had been taxed when received by such U.S. Shareholder.

 

9.6 Mark-to-Market Election

A U.S. Shareholder that made a valid, timely Mark-to-Market Election with respect to its Nexvet Shares generally would recognize ordinary gain or loss on the sale or other taxable disposition of such shares in

 

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connection with the making of such election. The U.S. Shareholder’s tax basis in its Nexvet Shares would have been adjusted to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. The Mark-to-Market Election may not be available with respect to Nexvet’s Subsidiaries that are PFICs. Accordingly, the deemed sale of such Subsidiaries as a result of the Scheme may be subject to the rules with respect to Non-Electing U.S. Shareholders.

 

9.7 Net Investment Income Tax

U.S. Shareholders that are individuals, estates or trusts and whose income exceeds certain thresholds will be subject to an additional 3.8% net investment income tax on any capital gains and dividend income arising from the sale of their Nexvet Shares pursuant to the Scheme. Special rules apply and certain elections are available for certain U.S. Shareholder that are subject to the 3.8% net investment income tax and hold shares in a PFIC, such as Nexvet. U.S. Shareholders are urged to consult their tax advisers regarding the application of the net investment income tax to them as a result of the Scheme.

 

9.8 Information Reporting and Backup Withholding

Information reporting generally applies to certain payments to U.S. Shareholders which are made within the U.S. (or through certain related U.S. intermediaries), unless the U.S. Shareholder is an exempt recipient (such as a corporation). Generally, backup withholding will apply to U.S. Shareholders selling their Nexvet Shares unless they provide a correct taxpayer identification number and make appropriate certifications concerning, or otherwise establish that they are exempt from, backup withholding tax requirements. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against the U.S. Shareholder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS by the U.S. Shareholder. U.S. Shareholders are urged to consult their tax advisers regarding the imposition of backup withholding and information reporting with respect to distributions on or dispositions of their Nexvet Shares.

 

9.9 Income Tax Consequences to Non-U.S. Shareholders

For purposes of this summary, the term “Non-U.S. Shareholder” means a beneficial owner of Nexvet Shares who is not a U.S. Shareholder.

Any gain realized by a Non-U.S. Shareholder pursuant to the Scheme generally will not be subject to U.S. federal income tax unless (1) the gain is effectively connected with a trade or business of such Non-U.S. Shareholder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Shareholder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. Shareholders, and, if the Non-U.S. Shareholder is a corporation (or any entity or arrangement treated as a corporation for U.S. federal income tax purposes), such gain may also be subject to the branch profits tax at a rate of 30% (or a lower rate under an applicable tax treaty); or (2) such Non-U.S. Shareholder is an individual who is present in the United States for one-hundred and eighty-three (183) days or more in the taxable year of the Scheme, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable tax treaty).

 

9.10 Information Reporting and Backup Withholding

Non-U.S. Holders are generally exempt from backup withholding, but such Non-U.S. Shareholders may have to comply with certification procedures to prove entitlement to this exemption.

The discussion above is not tax advice, and it is not a complete analysis or description of every potential U.S. federal income tax consequence or any other tax consequence of the Scheme. In addition, the summary does not address U.S.