What was the primary purpose of these transactions?

The primary purpose of these transactions was to facilitate a significant reduction in Sanofi's ownership stake in Regeneron through a secondary offering and a large stock repurchase by Regeneron, financed in part by a new bridge loan facility. These actions also redefined the ongoing investor relationship between Regeneron and Sanofi.

How was the $5 billion stock repurchase funded?

The $5 billion stock repurchase was funded by a combination of sources, including proceeds from the secondary offering and a new $1.5 billion bridge loan facility secured by Regeneron. The exact split between these and potentially other internal funds is not fully detailed in the 8-K, but the bridge loan was specifically to finance, in part, the stock repurchase.

What are the key changes in the relationship between Regeneron and Sanofi following these events?

Following these events, Sanofi's right to designate a board member for Regeneron has been terminated, along with its registration rights, information rights, and pre-emptive rights. While standstill provisions and voting commitments persist, Sanofi's direct influence on Regeneron's board and its ability to demand share registrations have been significantly reduced. Sanofi's shares are also subject to lock-up restrictions until December 20, 2020.

What is the impact on Regeneron's share count for earnings per share (EPS) calculations?

Regeneron estimates that for the second quarter of 2020, its weighted average diluted share count for GAAP EPS will be between 116-118 million shares, and for non-GAAP diluted EPS, it will be between 118-120 million shares. This increase is due to the completion of the secondary offering and the subsequent repurchase, affecting the denominator in EPS calculations.

REGN 8-K: Material Agreements & Regulation FD

Summary

Regeneron Pharmaceuticals, Inc. (REGN) filed an 8-K on May 28, 2020, detailing significant transactions that occurred around May 25-29, 2020. These include a large secondary offering of common stock by selling shareholders Sanofi and Aventisub LLC, totaling approximately 13 million shares. Concurrently, Regeneron repurchased approximately $5 billion of its common stock from Sanofi. To finance this substantial repurchase, Regeneron also entered into a $1.5 billion, 364-day senior unsecured bridge loan facility, which was fully funded. Furthermore, an amendment to the investor agreement between Regeneron and Sanofi was executed, altering certain rights and restrictions. Notably, Sanofi's right to designate a board member was terminated, and its registration rights, information rights, and pre-emptive rights were also ended. However, standstill provisions and voting commitments remain, and Sanofi's lock-up restrictions extend until December 20, 2020. These actions signify a material shift in the relationship and shareholding structure between Regeneron and Sanofi.

Key Highlights

1Regeneron completed a $5 billion stock repurchase from Sanofi on May 29, 2020.
2Sanofi and Aventisub LLC sold approximately 13 million shares of Regeneron common stock through a secondary offering that closed on May 29, 2020.
3Regeneron secured a $1.5 billion bridge loan facility to partially finance the stock repurchase.
4The bridge loan facility is a 364-day senior unsecured loan, fully funded on May 28, 2020.
5An amended investor agreement between Regeneron and Sanofi significantly alters Sanofi's rights, including the termination of its board designation right and registration rights.
6Sanofi's lock-up restrictions on its remaining shares extend until December 20, 2020, with some exceptions.
7The company estimates its weighted average share count for Q2 2020 will be between 116-120 million shares (GAAP and non-GAAP diluted).

REGENERON PHARMACEUTICALS, INC. 8-K Report, Material Agreement (May 29, 2020)

Summary

Key Highlights

Frequently Asked Questions