Merck gets no tenders in offer for three series of Cubist convertibles

By Jennifer Chiou

New York, Feb. 23 – Cubist Pharmaceuticals, Inc. announced that tenders were received for none of its 2.5% convertible senior notes due 2017, 1.125% convertible senior notes due 2018 and 1.875% convertible senior notes due 2020 in the offer that was conducted in connection to the acquisition of Cubist by Merck & Co., Inc.

According to a past filing with the Securities and Exchange Commission, Merck completed in January the tender offer for all Cubist common shares at $102.00 per share, consummated the merger of Cubist into Mavec Corp., Inc., a wholly owned subsidiary of Merck, and terminated trading of Cubist’s common stock (Nasdaq: CBST), each of which constituted a fundamental change, triggering Cubist’s obligation to begin the tender offer.

The tender offer expired at 11:59 p.m. ET on Feb. 19. It began on Jan. 22.

As reported, holders of the company’s convertible notes had the right to require Cubist to repurchase their notes for cash, or any portion of the principal amount equal to $1,000 or an integral multiple of $1,000, at par plus accrued interest to the Feb. 23 fundamental change repurchase date.

Holders could instead convert their notes at any time until Feb. 23 into the merger consideration that a holder would have been entitled to receive upon the consummation of the merger had each $1,000 principal amount of notes been converted into shares.

Had any holders elected to convert their securities, the company’s conversion obligation would have been fixed at an amount in cash equal to the applicable conversion rates of 34.66199631 for the 2.5% notes, 13.17448859 for the 1.125% notes and 13.51652926 for the 1.875% notes, multiplied by the merger consideration of $102.00. Per $1,000 principal amount of notes, holders would have received in cash $3,535.52 for the 2.5% notes, $1,343.80 for the 1.125% notes and $1,378.69 for the 1.875% notes.

The paying agent and conversion agent was Bank of New York Mellon Trust Co., NA (315 414-3362 or ct_reorg_unit_inquiries@bnymellon.com). MacKenzie Partners, Inc. (212 929-5500 or 800 322-2885 or tenderoffer@mackenziepartners.com) was the information agent.

Merck is a Kenilworth, N.J.-based health care company. Cubist is its wholly owned subsidiary.

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