8-KMaterial AgreementsShareholder MattersCorporate Changes+1

ALNYLAM PHARMACEUTICALS, INC. 8-K Report, Material Agreement (Jul 14, 2005)

Filed July 14, 2005For Securities:ALNY

Summary

Alnylam Pharmaceuticals, Inc. (ALNY) filed an 8-K on July 14, 2005, to announce the adoption of a shareholder rights plan. This plan, effective July 13, 2005, involves the declaration of a dividend of one "Right" for each outstanding share of common stock. These Rights will entitle stockholders to purchase a fraction of a share of Series A Junior Participating Preferred Stock under specific trigger events. The primary purpose of this rights plan is to protect existing shareholders from potentially coercive or inadequate takeover attempts. The plan is designed to give the Board of Directors time to evaluate unsolicited offers and to encourage any potential acquirer to negotiate with the Board. The Rights will become exercisable and will separate from the common stock if a person or group acquires 20% or more of the company's outstanding common stock, or commences a tender offer that would result in such ownership. The company has also filed a Certificate of Designations for the Series A Junior Preferred Stock, outlining its terms, preferences, and voting rights.

Key Highlights

  • 1Alnylam Pharmaceuticals adopted a shareholder rights plan, commonly known as a 'poison pill'.
  • 2A dividend of one "Right" per share of common stock was declared, with a record date of July 26, 2005.
  • 3Each Right allows the holder to purchase 1/1000th of a share of Series A Junior Participating Preferred Stock at a price of $80, subject to adjustments.
  • 4The Rights will become exercisable and separate from the common stock upon a triggering event, typically an acquisition of 20% or more of the company's stock by an "Acquiring Person".
  • 5The plan is intended to deter hostile takeovers and provide the Board with negotiating leverage.
  • 6The Series A Junior Preferred Stock has specific dividend, liquidation, and voting rights, designed to be significantly dilutive to a hostile acquirer.
  • 7The Company retains the right to redeem the Rights under certain conditions before they become exercisable.

Frequently Asked Questions

The Rights Agreement is intended to protect Alnylam's stockholders by deterring coercive or inadequate takeover bids and to provide the Board of Directors with sufficient time to evaluate any unsolicited offers and to pursue alternatives that may be in the best interests of the stockholders.

The Rights will become exercisable and will separate from the common stock on the 'Distribution Date,' which is triggered by the earlier of (i) 10 business days after an announcement that a person or group has acquired beneficial ownership of 20% or more of the Company's common stock, or (ii) 10 business days after the commencement of a tender offer that would result in such ownership. The Board can defer this date.

If a triggering event occurs (e.g., an 'Acquiring Person' acquires 20% of the stock), and the Rights are not redeemed, holders of Rights will be entitled to purchase shares of Alnylam's common stock (or in certain merger/acquisition scenarios, shares of the acquiring company) at a significant discount. This discount is calculated as the exercise price ($80) divided by 50% of the then-current market price of the common stock, effectively allowing holders to acquire shares worth double the exercise price.

Yes, the Company's Board of Directors can redeem the Rights in whole, but not in part, at any time prior to the occurrence of a triggering event for a nominal price ($0.001 per Right). This redemption terminates the Rights.