ICOS - Eli Lilly (M&A)

ICOS Corporation (ICOS)
Eli Lilly and Company (LLY)
$2.1B Cash Merger

Summary

Lilly to buy its Cialis joint venture partner for $2.1B

$32 per ICOS share

LLYstock chart

Announced 10.17.06

Closed 12.18.06

Developments

5% holder objects to financial terms

See Hedge Fund Opposition below

Hedge Fund Opposition

HealthCor Management opposes deal's financial terms

Letter to Board 11.02.06
Schedule 13D 11.02.06

Advisors

Financial

ICOS : Merrill Lynch

Legal

ICOS : Latham Watkins
LLY : Dewey Ballantine

Merger Agreement Hyperlinked

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article I Definitions

Definitions

Article II The Merger

2.1 The Merger
2.2 Closing
2.3 Effective Time
2.4 Articles of Incorporation and Bylaws
2.5 Directors and Officers

Article III Merger Consideration

3.1 Effect on Capital Stock
3.2 Paying Agent; Exchange of Company Certificates
3.3 Equity Awards

Article IV Company Reps

4.1 Organization
4.2 Capitalization
4.3 Subsidiaries
4.4 Authority
4.5 Consents and Approvals; No Violations
4.6 Sec Reports and Financial Statements
4.7 Absence of Certain Changes or Events
4.8 No Undisclosed Liabilities
4.9 Benefit Plans; Employees and Employment Practices
4.10 Material Contracts
4.11 Insurance
4.12 Litigation
4.13 Compliance with Applicable Law
4.14 Taxes and Tax Returns
4.15 Hazardous Substances
4.16 State Takeover Statutes
4.17 Rights Agreement
4.18 Intellectual Property
4.19 Information Technology
4.20 Regulatory Compliance
4.21 Properties
4.22 Absence of Indemnifiable Claims, Etc
4.23 Opinion of Financial Advisor
4.24 Board Approval
4.25 Voting Requirements
4.26 Brokers and Finders
4.27 Information Supplied

Article V Buyer Reps

5.1 Organization
5.2 Authority
5.3 Consents and Approvals; No Violations
5.4 Information Supplied
5.5 Financing

Article VI Covenants

6.1 Covenants of the Company
6.2 Covenants of Parent and Merger Sub
6.3 No Solicitation
6.4 Company Shareholder Meeting; Preparation of the
Proxy Statement
6.5 Access to Information
6.6 Reasonable Best Efforts
6.7 State Anti-takeover Statutes
6.8 Indemnification; Insurance
6.9 Certain Litigation
6.10 Notification of Certain Matters
6.11 Tax Covenants
6.12 Benefits and other Employee Matters

Article VII Conditions

7.1 Each Party
7.2 Parent and Merger Sub
7.3 Company
7.4 Frustration of Closing Conditions

Article VIII Termination and Amendment

8.1 Termination
8.2 Effect of Termination
8.3 Fees and Expenses
8.4 Termination Fee
8.5 Extension; Waiver

Article IX Miscellaneous

9.1 Nonsurvival of Representations and Warranties
9.2 Notices
9.3 Interpretation
9.4 Counterparts
9.5 Entire Agreement; No Third Party Beneficiaries
9.6 Governing Law
9.7 Publicity
9.8 Assignment
9.9 Enforcement
9.10 Severability
9.11 Modification

Other Agreements

Rights agreement amendment

Proxy Solicitation

Definitive proxy statement 11.14.06

Table of contents

Preliminary proxy statement 11.01.06

Table of contents

Deal Protection

No shop covenant

Merger agreement 6.3
Proxy statement disclosure

Break-up fee

$55 million
Merger Agreement 8.4
Proxy statement disclosure

Regulatory Approvals

HSR Act

Merger agreement §6.6
Proxy statement disclosure

Fairness Opinion

Merrill Lynch fairness opinion

Proxy statement disclosure

Tax Matters

Disclosure

Proxy statement disclosure

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