8-KOther EventsExhibits & Filings

ELI LILLY & Co 8-K Report, Temporary Suspension of Trading Under Employee Benefit Plans (Feb 11, 2019)

Filed February 11, 2019For Securities:LLY

Summary

Eli Lilly & Company (LLY) filed an 8-K on February 11, 2019, to report a potential trading blackout for its directors and Section 16 officers. This temporary suspension of trading is a consequence of Lilly's offer to exchange shares of its common stock for shares of Elanco Animal Health Incorporated. If 50% or more of the participants in Lilly's employee benefit plans (like the 401(k) plan) direct the trustee to exchange their Lilly shares held in the plans, a blackout period will be imposed. This blackout period, mandated by Sarbanes-Oxley Act Section 306(a) and Regulation BTR, restricts insider trading of Lilly's common stock during the Exchange Offer. The primary purpose is to prevent insider trading during a period when a significant portion of employees' stock holdings within company plans are being moved. Investors should note that while this event primarily affects insiders, it is linked to a significant corporate action – the Elanco share exchange – which could have broader implications for Lilly's future capital structure and focus.

Key Highlights

  • 1Potential trading blackout for Lilly directors and Section 16 officers due to an Elanco Animal Health share exchange offer.
  • 2The blackout is triggered if 50% or more of US-based participants in Lilly's employee benefit plans elect to exchange Lilly shares held in their accounts.
  • 3This restriction is in accordance with Sarbanes-Oxley Act Section 306(a) and SEC Regulation BTR.
  • 4The purpose is to prevent insider trading during the Exchange Offer period.
  • 5The anticipated blackout period is from March 7, 2019, to the week of March 13, 2019, subject to the Exchange Offer's duration.
  • 6During the blackout, insiders are prohibited from trading Lilly shares, with limited exceptions, but can participate in the Elanco share exchange.
  • 7Contact information for inquiries regarding the blackout and its actual dates is provided.

Frequently Asked Questions

The potential trading blackout is a result of Eli Lilly's offer to exchange its common stock for shares of Elanco Animal Health Incorporated. If a significant portion of participants in Lilly's employee stock plans choose to participate in this exchange offer, a temporary restriction on trading Lilly securities for directors and Section 16 officers will be imposed.

The trading restriction, or blackout period, directly affects Eli Lilly's directors and officers who are subject to Section 16 of the Securities Exchange Act of 1934. It does not directly impact the general investing public, although it is a consequence of a significant corporate action (the Elanco share exchange).

Eli Lilly anticipates that the blackout period, if triggered, will commence on March 7, 2019, at the close of regular trading on the NYSE and continue through the week of March 13, 2019. The exact dates may vary depending on the duration of the Exchange Offer.

During the blackout period, directors and Section 16 officers will be prohibited from directly or indirectly purchasing, selling, acquiring, or transferring any Eli Lilly shares or derivative securities related to Lilly shares, unless certain limited exemptions apply. They will, however, still have the opportunity to exchange their Lilly shares as part of the Elanco Exchange Offer.