Bayer Schering GmbH
Exhibit (a)(1)(I)
Bayer Schering GmbH
Leverkusen
Cash Compensation Offer
to the outside shareholders of
Schering Aktiengesellschaft
Berlin
– ISIN DE0007172009/ WKN 717 200 –
A Domination and Profit and Loss Transfer Agreement
(hereinafter, the “DPLTA”) pursuant to
§ 291 para. 1 German Stock Corporations Act
[Aktiengesetz, “AktG”] was entered into on
31 July 2006 between Bayer Schering GmbH (previously Dritte
BV GmbH), Leverkusen, a wholly owned subsidiary of Xxxxx XX,
Leverkusen (hereinafter, “Bayer Schering”) as
the dominating company and Schering Aktiengesellschaft, Berlin,
(hereinafter, “Schering”) as the controlled
company. The shareholders meeting of Bayer Schering approved the
DPLTA on 22 August 2006. The extraordinary general meeting
of Schering approved the DPLTA on 13 September 2006. The
DPLTA took effect upon registration in the commercial register
at the Local Court [Amtsgericht] Charlottenburg, Berlin
on 27 October 2006. The announcement of the registration
pursuant to § 10 German Commercial Code
[Handelsgesetzbuch, “HGB”] was made on
9 November 2006 in the Federal Gazette
[Bundesanzeiger] and on 24 November 2006 in
‘Der Tagesspiegel’ newspaper. The announcement is
deemed to have been made after expiration of the date on which
the last of the publications containing the announcement
appeared, thus, at the end of 24 November 2006.
According to the provisions of the DPLTA, Bayer Schering is
required upon request of each outside shareholder to acquire
that shareholder’s bearer no-par shares having a
proportionate amount in the share capital of
EUR 1.00 per share (hereinafter, the “No-Par
Share”) for a cash compensation in an amount of
EUR 89,00 per No-Par Share.
Bayer Schering declared in the general meeting of Schering on
13 September 2006 that it would increase the amount of the
cash compensation of EUR 89.00 to the weighted average
domestic stock exchange price per No-Par Share in the last three
months to be determined by the Federal Financial Supervisory
Authority [Bundesanstalt für
Finanzdiensleistungsaufsicht, “BaFin”] pursuant to
the German Takeover Act Regulation [Wertpapier Erwerbs- und
Übernahmegesetz Angebotsverordnung,
“WpÜG-AngebotsVO”]. The BaFin determined
EUR 89.36 per No-Par Share as the weighted average domestic
stock exchange price per No-Par Share for the preceding three
months as of 13 September 2006 in accordance with the
WpÜG-AngebotsVO (so-called minimum price).
Accordingly, Bayer Schering now offers to pay to all outside
shareholders of Schering an amount of EUR 0.36 per No-Par
Share (hereinafter, the “Additional Payment”)
in addition to the contractually agreed cash compensation of
EUR 89.00 for each No-Par Share transferred to it under the
provisions of the DPLTA upon request of an outside shareholder.
The Additional Payment is payable together with the
contractually agreed cash compensation under the same conditions.
Bayer Schering will acquire, therefore, the No-Par Shares of
each outside shareholder of Schering upon the request of the
outside shareholder in exchange for cash compensation in the
total amount of
EUR 89.36 per No-Par Share
(hereinafter, the “Cash Compensation Offer”).
Pursuant to § 305 para. 3 sentence 3 AktG,
the cash compensation of EUR 89.36 bears interest after
expiration of the date on which the DPLTA takes effect,
i.e. as of 28 October 2006, at an annual interest
rate of 2% above the respective base interest rate under
§ 247 German Civil Code [Bürgerliches
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Gesetzbuch, “BGB”]; any payments of guaranteed
dividends which are received are credited against the interest
payments. This applies accordingly for a dividend distributed
for the fiscal year 2006.
Those outside shareholders who do not accept the Cash
Compensation Offer remain shareholders in Schering. Bayer
Schering guarantees the outside shareholders of Schering a
payment for the period of the DPLTA in a gross annual amount of
EUR 4.60 per No-Par Share for each complete fiscal year
minus the corporate income tax together with the solidarity
surcharge which Schering must pay on this amount pursuant to the
respective tax rate applicable for these taxes for the relevant
fiscal year. The deduction is only calculated on the gross
amount contained in the guaranteed dividend of EUR 3.70 per
No-Par Share which is subject to German corporate income tax.
According to the situation at the time the DPLTA was entered
into, the proportionate compensation of EUR 3.70 per
No-Par Share burdened
by German corporate income tax is subject to 25% corporate
income tax plus 5.5% solidarity surcharge, which is a total
deduction of EUR 0.98 per
No-Par Share. Together
with the other proportionate compensation of EUR 0.90 per
No-Par Share resulting from profits which are not subject to
German corporate income tax, this results in a guaranteed
dividend in the net amount totaling EUR 3.62 per
No-Par Share for each
complete fiscal year, according to the circumstances prevailing
at the time the DPLTA was entered into. The guaranteed dividend
will be paid for the first time for the fiscal year of Schering
beginning on 1 January 2006. The guaranteed dividend to be
paid for the year 2006 is reduced for this fiscal year by the
amount which Schering may distribute as a dividend for each
No-Par Share for the
fiscal year 2006.
The amount of the contractually agreed cash compensation and the
guaranteed dividend was determined by the management of Bayer
Schering and the management board of Schering and was audited
and confirmed as adequate by the expert auditor Xxxxx &
Xxxxx GmbH Wirtschaftsprüfungsgesellschaft,
Düsseldorf, which was appointed by the court. With regard
to the declaration of Bayer Schering to increase the agreed
amount of the cash compensation from EUR 89.00 to the
minimum price determined by the BaFin under the
WpÜG-AngebotsVO, Xxxxx & Xxxxx GmbH
Wirtschaftsprüfungsgesellschaft, at the shareholders
meeting on 13 September 2006, considered the cash
compensation plus any such increase to be reasonable.
If proceedings under the Act on Special Proceedings under
Corporate Law [Gesetz über das gesellschaftsrechtliche
Spruchverfahren, “SpruchG”] are initiated and the
court in a non-appealable decision determines a higher cash
compensation than the contractually agreed cash compensation of
EUR 89.00 per No-Par Share, the Additional Payment will be
credited to this so that Bayer Schering will only have to make a
further payment to the outside shareholders who have accepted
the Cash Compensation Offer to the extent that the amount of the
increase determined by the court exceeds the Additional Payment.
In this regard, the Additional Payment constitutes an advance
payment. This also applies if Bayer Schering undertakes towards
a shareholder of Schering to pay an increase in the
contractually agreed cash compensation in a settlement concluded
in order to avert or terminate proceedings under the SpruchG.
The outside shareholders who wish to make use of this Cash
Compensation Offer are requested to submit their
No-Par Shares for the
purpose of receiving the cash compensation of EUR 89.36 per
No-Par Share commencing
immediately by way of instructing their securities account bank
to deposit the shares at
Commerzbank AG, Frankfurt am Main,
or at another credit institution for forwarding to Commerzbank
AG, Frankfurt am Main, during normal business hours.
The obligation of Bayer Schering to acquire the shares is
subject to a deadline. The deadline ends two months after the
date on which the registration of the DPLTA in the commercial
register at the Local Court Charlottenburg, Berlin, is deemed to
have been publicly announced pursuant to § 10 HGB,
thus, on 24 January 2007. If an application for a
determination by court of the cash compensation or the
guaranteed dividend in a special court proceeding
[Spruchverfahren] is filed, the deadline ends two months
after the date on which the decision on the last decided
application is publicly announced in the electronic Federal
Gazette [elektronischer Bundesanzeiger].
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In order to comply with the deadline, it is sufficient if the
declaration on accepting the Cash Compensation Offer is received
at the respective securities account bank within the deadline.
The shareholders who have accepted the Cash Compensation Offer
will be credited with the cash compensation plus interest as
soon as they have submitted their
No-Par Shares. The sale
of No-Par Shares in the
context of the Cash Compensation Offer is free of costs and fees
for the outside shareholders of Schering.
The registration of the DPLTA in the commercial register has not
yet become final. The shareholder resolution on the DPLTA passed
at the extraordinary general meeting of Schering held on
13 September 2006 is subject to legal challenges
[Anfechtungs- und Nichtigkeitsklagen]. If the legal
actions are successful and Schering is unable beforehand to
obtain a legally final judgement stating that the actions filed
do not prevent registration and that any defects of the
shareholder resolution do not affect the validity of the
registration [Freigabeverfahren], the DPLTA will be
invalid. In such a case, or if the registration in the
commercial register is removed for any other reason, it is
conceivable that the purchase agreement resulting from the
acceptance of the Cash Compensation Offer would have to be
rescinded, regardless of the legal grounds. As a result, Bayer
Schering would be obligated to return each of the
No-Par Shares
transferred to it under the DPLTA to the respective outside
shareholder, and the respective outside shareholder would be
obligated to return the received amount of the cash compensation
of EUR 89.36 per
No-Par Share
simultaneously [Zug um Zug] to Bayer Schering.
The Cash Compensation Offer requires formal implementation in
the USA in accordance with the provisions governing the US
American capital markets. Therefore, an “Offer
Document” will be submitted today to the outside
shareholders located in the USA and the holders of American
Depositary Shares of Schering in accordance with the US American
provisions on capital markets (hereinafter referred to as the
“US Offer”). This is not an independent offer,
but only a legal technical implementation of the Cash
Compensation Offer required in the USA in accordance with the
provisions governing the US American capital markets. The
outside shareholders of Schering located in the USA as well as
the holders of American Depositary Shares of Schering are urged
to read the Offer Document, the “Solicitation/
Recommendation Statement” under
Schedule 14D-9 to
be issued by Schering within ten US business days relating to
the Offer Document as well as all other documents which have
been or will be submitted to the SEC with regard to the US Offer
because they contain important information for the outside
shareholders located in the USA and the holders of American
Depositary Shares. The shareholders of Schering and the holders
of American Depositary Shares of Schering can review these
documents free of charge at the website of the SEC
(xxxx://xxx.xxx.xxx), the website
xxxx://xxx.xxxxxxxx.xx or the website
xxxx://xxx.xxxxx.xx.
| Bayer Schering GmbH | |
| The Managing Directors |
Leverkusen, in November 2006
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