-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LwWnTExFt2u2nBtcT/A5HtfmKNPoxqS+26xrj3P8QuVFSomWf1tCzKQFNyP6x+mi No4JzCax+nuH5l/JJNdqRg== 0000940180-97-000781.txt : 19970912 0000940180-97-000781.hdr.sgml : 19970912 ACCESSION NUMBER: 0000940180-97-000781 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970909 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RHONE POULENC RORER INC CENTRAL INDEX KEY: 0000217028 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 231699163 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: SEC FILE NUMBER: 005-11847 FILM NUMBER: 97677107 BUSINESS ADDRESS: STREET 1: 500 ARCOLA RD STREET 2: P O BOX 1200 M/S 5B14 CITY: COLLEGEVILLE STATE: PA ZIP: 19426-0107 BUSINESS PHONE: 6104548000 FORMER COMPANY: FORMER CONFORMED NAME: RORER GROUP INC DATE OF NAME CHANGE: 19900731 FORMER COMPANY: FORMER CONFORMED NAME: RORER AMCHEM INC DATE OF NAME CHANGE: 19770604 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RHONE POULENC RORER INC CENTRAL INDEX KEY: 0000217028 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 231699163 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 500 ARCOLA RD STREET 2: P O BOX 1200 M/S 5B14 CITY: COLLEGEVILLE STATE: PA ZIP: 19426-0107 BUSINESS PHONE: 6104548000 FORMER COMPANY: FORMER CONFORMED NAME: RORER GROUP INC DATE OF NAME CHANGE: 19900731 FORMER COMPANY: FORMER CONFORMED NAME: RORER AMCHEM INC DATE OF NAME CHANGE: 19770604 SC 14D9/A 1 SCHEDULE 14D9/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 14D-9/A SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D) (4) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1) ---------------- RHONE-POULENC RORER INC. (NAME OF SUBJECT COMPANY) RHONE-POULENC RORER INC. (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, WITHOUT PAR VALUE (TITLE OF CLASS OF SECURITIES) ---------------- 76242T 10 4 (CUSIP NUMBER OF CLASS OF SECURITIES) ---------------- RICHARD T. COLLIER, ESQ. SENIOR VICE PRESIDENT AND GENERAL COUNSEL RHONE-POULENC RORER INC. 500 ARCOLA ROAD COLLEGEVILLE, PENNSYLVANIA 19426 (610) 454-8000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATION ON BEHALF OF THE PERSON(S) FILING STATEMENT) COPY TO: MARGARET L. WOLFF, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 THIRD AVENUE NEW YORK, NEW YORK 10022 (212) 735-3000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Amendment No. 1 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9, dated August 22, 1997 (the "Schedule 14D-9"), of Rhone-Poulenc Rorer Inc., a Pennsylvania corporation (the "Company" or "RPR"), filed in connection with the Offer to Purchase as set forth in the Schedule 14D-9. Capitalized terms used herein shall have the definitions set forth in the Schedule 14D-9 unless otherwise provided herein. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED The response to Item 8 is hereby amended and supplemented by adding the following: The complaint in Steiner v. Rhone-Poulenc S.A. has been amended to include the Company and its directors as defendants (the "First Amended Complaint"). In the First Amended Complaint, plaintiffs now also allege, among other things, that the directors of the Company acted wrongfully in preventing them from realizing the full value of their investment in the Company. A copy of the First Amended Complaint is attached hereto as Exhibit (c)(16) and is incorporated by reference herein in its entirety. On August 25, 1997, an additional putative class action was filed by a shareholder of the Company. In Columbo v. Rhone-Poulenc Rorer Inc. et al. (Pennsylvania Court of Common Pleas, Trial Division, Montgomery County, filed August 25, 1997) (the "Columbo Complaint"), plaintiff alleges that the defendants--Purchaser and several individuals who are officers and/or directors of the Company and/or Purchaser--have breached their fiduciary duties by using positions of power and control to impose an allegedly inadequate price per share on the minority shareholders. The relief sought includes a declaration that defendants have breached their fiduciary duties, an injunction against the Offer or, in the alternative, rescission of the contemplated transaction and damages. A copy of the Columbo Complaint is attached hereto as Exhibit (c)(17) and is incorporated by reference herein in its entirety. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS The response to Item 9 is hereby amended and supplemented by adding the following: EXHIBIT NO. (a)(13) Communications Package to Holders of Company Stock Options (incorporated by reference to Exhibit (a)(11) to Amendment No. 1 to Purchaser's Tender Offer Statement on Schedule 14D-1, dated September 9, 1997). (c)(16) First Amended Complaint filed in Steiner v. Rhone-Poulenc Rorer Inc. et al. (United States District Court for the Eastern District of Pennsylvania, filed August 20, 1997).+ (c)(17) Complaint in Columbo v. Rhone-Poulenc Rorer Inc. et al. (Pennsylvania Court of Common Pleas, Trial Division, Montgomery County, filed August 25, 1997).+ - -------- + Filed herewith. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Rhone-Poulenc Rorer Inc. By: /s/ Michel de Rosen -------------------- Name: Michel de Rosen Title:Chairman and Chief Executive Officer Dated: September 9, 1997 2 EXHIBIT INDEX EXHIBIT NO. (a)(13) Communications Package to Holders of Company Stock Options (incorporated by reference to Exhibit (a)(11) to Amendment No. 1 to Purchaser's Tender Offer Statement on Schedule 14D-1, dated September 9, 1997). (c)(16) First Amended Complaint filed in Steiner v. Rhone-Poulenc Rorer Inc. et al. (United States District Court for the Eastern District of Pennsylvania, filed August 20, 1997).+ (c)(17) Complaint in Columbo v. Rhone-Poulenc Rorer Inc. et al. (Pennsylvania Court of Common Pleas, Trial Division, Montgomery County, filed August 25, 1997).+ - -------- + Filed herewith. EX-99.(C)16 2 FIRST AMENDED COMPLAINT - STEINER V. RHONE-POULENC RORER INC. Exhibit (c)(16) IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA - --------------------------------------- KENNETH STEINER, CIVIL ACTION NO. Plaintiff, 97-4605 (WHY) - against - PLAINTIFF'S FIRST AMENDED COMPLAINT FOR EQUITABLE RHONE-POULENC RORER INC., MICHEL AND DECLARATORY RELIEF DEROSEN, TIMOTHY G. ROTHWELL, ------------------------- MANFRED E. KAROBATH, JEAN-MARC BRUEL, CHARLES HENRI FILIPPI, JAMES S. RIEPE, ERIC J. TOPOL, ROBERT E. CAWTHORN, CLAUDE HELENE, JEAN JACQUES BERTRAND, DALE F. FREY, IGOR LANDAU, JEAN PIERRE TIROUFLET, and RHONE-POULENC S.A., Defendants. - ---------------------------------------
Plaintiff, by his attorneys, alleges upon personal knowledge as to himself and his own acts, and upon information and belief as to all other matters based upon the investigation conducted by and through his attorneys which included, among other things, a review of the filings by Rhone-Poulenc Rorer Inc. ("Rorer" or the "Company") and Rhone-Poulenc S.A. ("Rhone-Poulenc") with the Securities and Exchange Commission, news wire services, news releases, and other publicly disseminated filings and materials, as follows: JURISDICTION AND VENUE ---------------------- 1. This action is brought to remedy violations of Sections 14(d) and 14(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 15 U.S.C. (S)(S) 78n(d) and 78n(e). 2. The subject matter jurisdiction of this Court is based upon, Section 27 of the Exchange Act, 15 U.S.C. (S)78aa. 3. Venue is properly laid in the Eastern District of Pennsylvania, because many of the acts, transactions, and conduct constituting violations of law complained of herein, including, inter alia, communications to Rorer, the target ----- ---- of an improper tender offer by Rhone-Poulenc, have occurred in this District. 4. In connection with the acts, conduct, and other wrongs complained of herein, defendants, directly and indirectly, used the means and instrumentalities of interstate commerce, including the mails and the facilities of national securities markets, i.e., the facilities of the New York Stock ---- Exchange ("NYSE"). THE PARTIES ----------- 5. Plaintiff Kenneth Steiner, at all relevant times, has been the owner of common stock of Rorer. 6. Rorer is a corporation duly organized and existing under the laws of the State of pennsylvania and which maintains its principal executive offices at 500 Arcola Road, Collegeville, Pennsylvania 19242. Rorer is primarily engaged in the development, manufacturer, and marketing of a line of pharmaceutical products, including prescription drugs, over-the-counter medicines and plasma-derived products. Rorer is a majority-owned subsidiary of Rhone-Poulenc. Rorer has approximately 136.8 million shares of common stock outstanding, of which approximately 68.3% are owned by Rhone-Poulenc. The remaining approximately 43 million shares are 2 held by at least several hundred public shareholders of record other than defendants. Rorer's stock is publicly traded on the NYSE. 7. Michel DeRosen, at all times material hereto, has been Chairman of the Board and Chief Executive Officer of Rorer. 8. Timothy G. Rothwell, at all times material hereto, has been President and a Director of Rorer. 9. Manfred E. Karobath, at all times material hereto, has been Executive Vice President and a Director of Rorer. 10. Jean-Marc Bruel, at all times material hereto, has been Vice-Chairman of the Rorer's Board of Directors. 11. Charles Henri Filippi, James S. Riepe, Eric J. Topol, Robert E. Cawthorn, Claude Helene, Jean Jacques Bertrand, Dale F. Frey, Igor Landau, and Jean Pierre Tirouflet, at all times material hereto, were directors of Rorer. 12. The defendants named in paragraphs 7 through 11 are hereinafter referred to as the "Individual Defendants." 13. The Individual Defendants hold their positions at Rorer soley at the pleasure of defendant Rhone-Poulenc. 14. Defendant Rhone-Poulenc is a corporation duly organized and existing under the laws of France and maintains its principal place of business at 25 Quai Paul Doumer, 92408 Courbevois Cedex, France. Rhone-Poulenc's American depository receipts ("ADR's") trade on the NYSE. Rhone-Poulenc researches, develops, produces, markets, and sells human and animal pharmaceuticals and is engaged in the chemical, fiber, and polymer 3 business. Rhone-Poulenc presently owns or controls approximately 68.3% of the outstanding stock of Rorer. FACTS ----- 15. On June 26, 1997, Rhone-Poulenc announced it was considering an offer (the "Original Offer") to acquire all of the shares of Rorer it does not already own in a cash transaction whereby Rhone-Poulenc would pay $92.00 cash for each publicly-held share of Rorer. 16. Rhone-Poulenc announced the Original Offer during the period when a so-called "standstill agreement" precluded it from acquiring all of the publicly traded shares of Rorer. The restriction under the "standstill agreement," dating from a 1990 merger with Rorer Inc. that created the current structure of Rorer, was set to expire on July 31, 1997. 17. Because of its position of dominance and control of Rorer, Rhone-Poulenc announced the Offer on June 26, 1997 to manipulate the price of Rorer shares so that they do not trade at a price materially higher than the Original Offer, thereby limiting the price it will have to pay for the balance of Rorer's stock. 18. By announcing the Original Offer on June 26, 1997, Rhone-Poulenc began the tender offer process without complying with the requirements of the Exchange Act and the rules promulgated thereunder, attempted to limit the Original Offer price, and avoided having to make a materially higher offer were Rorer's stock, unaffected by the Original Offer, to rise materially between now and July 31, 1997. 4 19. On July 8, 1997, when the price of Rorer shares rose to $93.625, $1.625 above the Original Offer price, Jean-Rene Fourtou, Chairman and Chief Executive Officer of Rhone-Poulenc, stated in an interview with Bloomberg Information Television: "The share price of [Rorer] is slightly above our offer price, which --------------- clearly poses a problem . . . . "We are going to move as quickly as possible . . . . Fast, if we reach a rapid accord with the minority shareholders and their representatives on the board -- which I hope will happen -- a little more slowly otherwise. As of August 1 we'll be ready to move quickly." [Emphasis added]. 20. On August 20, 1997, Rorer reported that it had agreed to accept a revised offer from Rhone-Poulenc to acquire the outstanding minority interest in Rorer for $97.00 per share in cash (the "Revised Offer"). It was widely reported in the financial press that Rhone-Poulenc was forced to raise its initial bid for Rorer after complaints from Rorer shareholders that the Original Offer undervalued Rorer's earnings potential. 21. Rhone-Poulenc's Revised Offer was conditional upon it acquiring at least 90% of Rorer's stock -- of which Rhone-Poulenc already holds 68% percent. 22. Rhone-Poulenc announced that in order to implement the Revised Offer, it would commence a tender offer at $97.00 per share within the next five days and would thereafter make a second offer at $97.00 per share for those shares it does not acquire in the tender offer. 5 23. Despite the increase over its initial bid, Rorer and the Individual Defendants have wrongfully agreed to the terms of the Revised Offer which are grossly unfair, inadequate, and provides value to Rorer's stockholders substantially below the fair or inherent value of the Company. The intrinsic value of the equity of Rorer is materially greater than the consideration contemplated by Rhone-Poulenc's proposed offer price, taking into account Rorer's earnings potential, asset value, liquidation value, expected growth, revenues, and cash flow. The Revised Offer remains below the expectations of market analysts who expected an offer price of $105.00 or more per share. 24. The Revised Offer and offered premium is wrong, unfair, harmful to Rorer's public stockholders and wholly inadequate in light of the fact that public shareholders will no longer share proportionately in the true value of Rorer's valuable assets, profitable business, and that the same value will be usurped for the benefit of Rhone-Poulenc -- the majority owner of the Company's stock. 25. Rhone-Poulenc is presently the largest shareholder of Rorer, and now seeks to take advantage of its majority stock ownership position in Rorer by imposing the inadequate Revised Offer on Rorer's public stockholders. The Revised Offer is part of a sweeping corporate overhaul of Rhone-Poulenc, meant to benefit only Rhone-Poulenc. Pursuant to the planned overhaul, Rhone-Poulenc intends to spin off its chemical, fibers, and polymer operations, in order to become one of the world's biggest 6 pharmaceutical companies, by combining Rorer's business with Rhone-Poulenc's vaccine and animal health businesses. According to The Wall Street Journal of ----------------------- June 27, 1997, the chemical business has been less profitable than the pharmaceutical business and has weighed down Rhone-Poulenc's profits and price share. Thus, Rhone-Poulenc's plan is to divest itself of its less profitable businesses and, taking advantage of its dominant position over Rorer, acquire from the public shareholders of Rorer, without complying with the requirements of the Exchange Act, Rorer's more profitable pharmaceutical business. 26. Following the announcement of the Revised Offer, shareholders of Rorer who do not possess crucial material information regarding their decisions whether to hold or sell their shares of Rorer and who are, otherwise poorly informed as a result of defendants' incomplete or non-existent disclosures, are required to make their decisions without the requisite disclosures being made by Rorer and Rhone-Poulenc. IRREPARABLE INJURY ------------------ 27. Plaintiff seeks preliminary and permanent injunctive relief and declaratory relief preventing defendants from inequitably and unlawfully depriving Rorer and its shareholders of their right to realize a full and fair value for Rorer's stock and to compel defendants to maximize Company and shareholder value. 28. Only through the exercise of this Court's equitable powers can the Company and its shareholders be fully protected from the immediate and irreparable injury that defendants' actions 7 threaten to inflict. Defendants are precluding the shareholders' enjoyment of the full economic value of their investment by acquiescing the Rhone-Poulenc offer which offers an inadequate premium in light of Rorer's earnings potential and assets. 29. Unless enjoined by the Court, defendants will bend to the will of Rhone-Poulenc and sell Rorer at an insubstantial premium, all to the irreparable harm of Rorer and its public shareholders. 30. Rorer and its public shareholders have no adequate remedy at law. COUNT I ------- (Individual Claim for Injunctive Relief) 31. Plaintiff repeats and realleges all prior paragraphs, as though full set forth herein. 32. Each Individual Defendant is beholden to Rhone-Poulenc for his position with Rorer and is acting solely for the benefit of Rhone-Poulenc in agreeing to sell Rorer to Rhone-Poulenc on the terms set forth in paragraph 20 herein. 33. Defendants have wrongfully failed to take those actions necessary to maximize shareholder value in selling Rorer to Rhone-Poulenc. These wrongful actions have prevented shareholders from realizing the full value of their investment in Rorer. As a result of the foregoing, defendants have agreed to sell Rorer to Rhone-Poulenc at a price which is wholly inadequate to the public shareholders of Rorer, which benefits solely Rhone-Poulenc and 8 which puts the interests of Rhone-Poulenc at odds with and above the interests of the public shareholders of Rorer, all to the detriment of the public shareholders of Rorer. 34. Defendants' conduct was not due to an honest error or misjudgment, but rather was due to the defendants' wrongful actions in putting the interests of Rhone-Poulenc above the interests of Rorer's public shareholders. 35. Rorer's shareholders have sustained and will continue to sustain injury by reason of the defendants' wrongful conduct. 36. Unless enjoined by this Court, defendants will continue to act wrongfully, and will succeed in their plan to exclude plaintiff from the fair proportionate share of Rorer's valuable assets and businesses, all to plaintiff's irreparable harm. 37. Plaintiff has no adequate remedy of law. COUNT II -------- (Against The Individual Defendants For Declaratory Relief) 38. Plaintiff repeats and realleges all prior paragraphs, as though fully set forth herein. 39. The Individual Defendants have acted wrongfully and to the detriment and harm of plaintiff and the other public shareholders of Rorer by preventing Rorer's public shareholders from realizing the full value of their investment in Rorer, all for the benefit of Rhone-Poulenc. 9 40. Plaintiff requests a declaration that, the Individual Defendants have acted wrongfully, and are continuing to act wrongfully by failing to take those actions necessary to maximize shareholder value. COUNT III --------- (Violation of Sections 14(d) and 14(e) of the Exchange Act Against All Defendants) 41. Plaintiff repeats and realleges the preceding paragraphs of this Complaint as though fully set forth herein. 42. This claim, pursuant to Sections 14(d) and 14(e) of the Exchange Act, is being brought by plaintiff against all defendants to enjoin the Offer, which is an improper tender offer, commenced by defendants. 43. In preparing, publishing and disseminating the offers, and subsequently commenting publicly on the offers, defendants knowingly or recklessly commenced and continued an improper tender offer in violation of Sections 14(d) and 14(e) of the Exchange Act. 44. By reason of the foregoing, defendants violated Sections 14(d) and 14(e) of the Exchange Act and defendants should be preliminary and permanently enjoined from continuing the offers, together with such other and further relief as may be proper. WHEREFORE, plaintiff demands judgement as follows: a. Declaring that the Individual Defendants, and each of them, have acted wrongfully toward plaintiff and Rorer's 10 other public shareholders, and awarding compensatory damages in an amount to be proved at trial; C. Declaring that the defendants, and each of them, have acted wrongfully toward plaintiff and the other public shareholders of Rorer, and requiring defendants to take all steps necessary to maximize shareholder value. E. Declaring that the defendants and each of them have violated Sections 14(d) and 14(e) of the Exchange Act and granting temporary, preliminary and permanent injunctive relief. F. Awarding plaintiff the costs of his action, including reasonable attorneys' and accountants' and other experts' fees and other disbursements; and G. Granting such other and further relief as the Court may deem just and proper. Dated: August 20, 1997 SAVETT, FRUTKIN, PODELL & RYAN, P.C. By: /s/ Robert P. Frutkin --------------------------------- Robert P. Frutkin 320 Walnut Street, Suite 508 Philadelphia, PA 19106 (215) 923-5400 WECHSLER HARWOOD HALEBIAN & FEFFER LLP 805 Third Avenue New York, New York 10022 (212) 935-7400 Attorneys for Plaintiff 11 CERTIFICATE OF SERVICE ---------------------- The undersigned hereby certifies that he has this date caused the foregoing Plaintiff's First Amended Complaint for Equitable and Declaratory Relief to be served by first class mail upon counsel for defendant, Rhone-Poulenc: Jay A. Dubow, Esquire Wolf, Block, Schorr and Solis-Cohen 12th Floor Packard Building 15th and Chestnut Streets Philadelphia, PA 19102-2678 Dated: August 20, 1997 /s/ Robert P. Frutkin -------------------------------- ROBERT P. FRUTKIN EX-99.(C)17 3 COMPLAINT-COLUMBO VS. RHONE-POULENC RORER INC. Exhibit (c)(17) [STAMP OF OFFICE OF THE PROTHONOTARY MONTGOMERY COUNTY, PA 97 AUG 25 PM 2:14 APPEARS HERE] -------------------------- By: Anthony Chu -------------------------- Attorney I.D. 79645 ----------------- -------------------------- -------------------------- Attorney for Plaintiff --------------------- IN THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY, PENNSYLVANIA CIVIL ACTION - LAW Patrick F. Columbo * - -------------------------------- * - -------------------------------- CLASS ACTION v. * No. 97 15704 -------------- Rhone-Poulenc Rorer, Inc. * - -------------------------------- et al. * - -------------------------------- NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the plaintiff. You may lose money or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Lawyer Reference Service 100 West Airy Street Norristown, Pennsylvania 19401 Telephone (610) 279-9660 [STAMP OF LEGAL DEPT. RECEIVED AUG 26, 1997 APPEARS HERE] [STAMP OF RECEIVED MONTGOMERY COUNTY SHERIFFS DEPT. 97 AUG 25 PM 2:39 APPEARS HERE] SPECTOR & ROSEMAN, P.C. BY: Robert M. Roseman I.D. No.: 37989 BY: Anthony Chu I.D. No.: 79645 2000 Market Street, 12th Floor Philadelphia, PA 19103 (215) 864-2400 IN THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY PENNSYLVANIA - --------------------------------------X PATRICK F. COLUMBO, : : Plaintiff, : : CLASS ACTION COMPLAINT v. : ---------------------- : RHONE-POULENC RORER, INC., : CIVIL ACTION - LAW RHONE-POULENC S.A., JEAN-MARC : BRUEL, CHARLES-HENRI FILIPPI, : NO. 97-15704 E. MANFRED KAROBATH, JAMES S. : RIEPE, ERIC I. TOPOL, M.D., : JURY TRIAL DEMANDED ROBERT E. CAWTHORN, CLAUDE : HELENE, JEAN-JAQUES BERTRAND, : MICHEL DE ROSEN, DALE F. FREY, : IGOR LANDAU, TIMOTHY ROTHWELL : and JEAN-PIERRE TIROUFLET : : Defendants. : - --------------------------------------X Plaintiff, by his attorneys, for his Complaint alleges, upon information and belief, except as to the allegations contained in paragraph 2, which plaintiff alleges upon knowledge, as follows: NATURE OF ACTION ---------------- 1. Plaintiff brings this class action on behalf of himself and all other shareholders of defendant Rhone-Poulenc Rorer, Inc. ("Rorer" or the "Company") similarly situated (the "Class") to enjoin defendants from effectuating an unfair cash-out acquisition be Rhone-Poulenc S.A. ("Rhone-Poulenc"), designed to force the sale of minority shareholders' equity interest in Rorer at a grossly inadequate and unfair price of $97 per share. As set forth below, pursuant to the proposed tender offer, Rhone-Poulenc, which now controls approximately 68% of the Company's total shares outstanding, will acquire the remaining 32% equity interest in the Company. Moreover, the acquisition proposal is manifestly unfair as it is below the fair market value of the Company on a private market basis and/or as a multiple of said value, according to independent valuations preformed by financial analysts familiar with the Company and the pharmaceutical industry. PARTIES ------- 2. Plaintiff Patrick F. Columbo, residing at 34 Sunset Ridge Road, Franconia, New Hampshire, 03580, at all times relevent hereto, owned Rorer common stock. 3. Defendant Rorer is a Pennsylvania corporation with its principal executive offices located at 500 Arcola Road, Collegeville, Pennsylvania 19426. Rorer is primarily engaged in the discovery, development and marketing of pharmaceutical products for human use. As of February 28, 1997, the Company had 136.82 million shares of common stock outstanding. For the fiscal year ended December 31, 1996, the Company reported net income of $473.5 million, or $3.16 per share, on revenues of $5.42 billion. 4. Defendent Rhone-Poulenc is a multinational conglomerate that manufactures chemicals, polymers, fibers, pharmaceuticals and agricultural chemicals. Rhone-Poulenc's principal place of business is 25 Quai Paul Doumer, 92408 Courbevoie Odax, France. As of February 27, 1997, Rhone-Poulenc owned approximately 86.806 million shares, or 68.3% of Rorer common stock. 5. At all relevant times herein, defendant Michel de Rosen ("Rosen") was Chief Executive Officer of the Company and Chairman of its Board of Directors (the "Board"). Rosen is also a member of the Executive Committee of Rhone-Poulenc. 6. At all relevant times herein, defendant Timothy J. Rothwell ("Rothwell") was President of Rorer, and a member of the Board. 7. At all relevant times herein, defendant E. Manford Karobath ("Karobath") was Executive Vice President of the Company and a member of the Board. 8. At all relevant times herein, defendant Jean-Mare Bruel ("Bruel") was Vice Chairman of Rhone-Poulenc Group, a member of Rhone-Poulenc's Executive Committee, and a member of the Board. 9. At all relevant times herein, defendant Robert E. Cawthorn ("Cawthorn") was Chairman Emeritus of the Company and a member of the Board. Cawthorn was Chief Executive Officer of the Company and Chairman of the Board from 1986 to 1995. 10. At all relevant times hereto, defendant Claude Helms ("Helms") was Vice President and director of Rhone-Poulenc, and a member of the Board. 11. At all relevant times hereto, Jean-Jaques Bertrand ("Bertrand") was a member of the Board. From 1990 to 1993, Bertrand was an Executive Vice President of the Company, and from 1987 to 1990 was a President at Rhone-Poulenc Sante. -3- 12. At all relevant times hereto, defendant Igor Landau ("Landau") was a member of Rhone-Poulenc's Executive Committee and a member of the Board. 13. At all relevant times hereto, defendant Jean-Pierre Tirouflet ("Tirouflet") was Chief Financial Officer of Rhone-Poulenc, a member of its Executive Committee, and a member of the Board. 14. At all relevant times hereto, the following Individual Defendants were also members of the Board of Rorer and/or committees thereof as follows: (a) Defendant James S. Riepe ("Riepe") was a member of the Board and a member of the Boards' Audit and Compensation Committees. (b) Defendant Eric Topol ("Topol") was a member of the Board. (c) Defendant Dale F. Frey ("Frey") was a member of the Board and a member of the Boards' Audit and Nominating Committees. (d) Defendant Charles-Henri Filippi ("Filippi") was a member of the Board. 15. By virtue of their positions as directors and/or senior executive officers of Rorer and their exercise of control over its business and corporate affairs, defendants Rosen, Rothwell, Karobath, Bruel, Cawthorn, Helene, Bertrand, Landau, Tirouflet, Riepe, Topol, Frey and Filippi (collectively the "Individual Defendants") had, at all relevant times, the power to control and influence, and did control and influence, and cause Rorer to engage in the practices complained of herein. 16. Each Individual Defendant owes Rorer and its public stockholders fiduciary obligations and is required to: -4- (a) use his ability to control and manage Rorer in a fair, just and equitable manner; (b) maximize shareholder value; (c) act in furtherance of the best interests of Rorer and its public stockholders; (d) govern Rorer in such a manner as to heed the expressed views of its public shareholders; (e) refrain from abusing his position of control; (f) provide full disclosure to the public shareholders; and (g) not favor his own or any other party's interests at the expense of Rorer and its public shareholders. 17. At all relevant times hereto, defendant Rhone-Poulenc owned and controlled approximately 68 percent of the outstanding shares of Rorer common stock. 18. Rhone-Poulenc has failed to discharge its fiduciary duties to plaintiff and the other members of the Class. Rhone-Poulenc exercises domination and control over the affairs of Rorer by virtue of its representation on the Company's thirteen member Board. 19. As a result of Rhone-Poulenc's domination and control over the Board, said defendant has decided to sell to itself the remaining outstanding shares of Rorer at a grossly inadequate price to the detriment of the other public shareholders. - 5 - CLASS ACTION ALLEGATIONS ------------------------ 20. Plaintiff brings this action pursuant to Rule 1702 of the Pennsylvania Rules of Civil Procedure, for declaratory, injunctive and other relief on his own behalf and as a class action, on behalf of all public stockholders of Rorer (except defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants) and their successors in interest, who are being deprived of their equity interest in Rorer and the opportunity to maximize the value of their Rorer shares by the wrongful acts of the defendants described herein. 21. This action is properly maintainable as a class action for the following reasons: (a) The class of stockholders for whose benefit this action is brought is so numerous that joinder of all class members is impracticable. As of February 28, 1997 Rorer had approximately 136.8 million shares of common stock duly issued and outstanding, which trade on the New York Stock Exchange, and are owned by thousands of shareholders. Members of the Class are scattered throughout the United States. (b) There are questions of law and fact that are common to the members of the Class and that predominate over any questions affecting any individual members. The common questions include, inter alia, the following: ----- ---- (i) whether the defendants have engaged in conduct constituting unfair dealing to the detriment of the public stockholders of Rorer; -6- (ii) whether the proposed acquisition proposal by Rhone-Poulenc of $97 per share is unfair to the public stockholders of Rorer because it does not constitute a fair price for the shares of the Company; and (iii) whether the defendants have breached their fiduciary and common law duties owned by them to plaintiff and the other members of the Class. (c) The claims of plaintiff are typical of the claims of the other members of the Class, and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. (d) Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation of this nature. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (e) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, and that would establish incompatible standards of conduct for the party opposing the Class. (f) Defendants have acted, and are about to act, on grounds generally applicable to the Class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the Class as a whole. -7- (g) Plaintiff anticipates that there will be no difficulty in the management of this litigation. A class action would provide a fair and efficient method for the adjudication of this controversy. CLAIM FOR RELIEF ---------------- 22. Rorer is a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania and maintains its principal executive offices at 500 Arcola Road, Collegeville, Pennsylvania 19242. Rorer is primarily engaged in the development, manufacture, and marketing of a line of pharmaceutical products, including prescription drugs, over-the-counter medicines and plasma-derived products. Rorer is a majority-owned subsidiary of Rhone-Poulenc. 23. Rorer has approximately 136.8 million shares of common stock outstanding, of which approximately 62.3% are owned by Rhone-Poulenc. The remaining approximately 42 million shares are held by at least several hundred public shareholders of record other than defendants. 24. The Company's products are focused in the high-growth area of the respiratory, cardiovascular and oncology markets. In 1995 and 1996, the Company's common stock was the best performing stock in the S&P pharmaceutical stock universe, with a total average annual return of 35.2%. The stellar performance of the Company's common stock mirrored the strong performance of its key products, such as Lovenox, which in 1996 showed -8- revenue growth of 49%, and Nasacort, which in the same period showed revenue growth of 40%. 25. However, the Company quickly and unexpectedly found itself in a crisis when concerns were raised that two of its plasma-based products, Albuminar and Plasma Plex, may have been contaminated by bacteria. 26. In March, 1997, Rorer announced that Centeon, LLC ("Centeon"), which is a joint venture between the Company and Hoechst A.G. established to manufacture plasma products, would temporarily cease manufacturing its two products to allow for "full implementation of new production improvements." The cessation of manufacturing at Centeon followed a worldwide recall of Albuminar and Plasma Plex due to fears of bacterial contamination, which in turn spurred an investigation by the Food and Drug Administration. 27. In response to the shut-down at Centeon, the price of Rorer common stock began to lag the market significantly and, by late April 1997, Rorer's common stock was trading at a discount to its peer group and approximately 15% below its 1996 closing price. 28. Analysis, however, viewed the Company's problems at Centeon as a "one-time event" and continued to view favorably Rorer's future. Indeed, in a report dated April 16, 1997, issued by Morgan Stanley & Co., investors were informed that Rorer's stock would be "materially higher" in a year or two. The ----------------- report stated: We view this Centeon situation as a one-time event -- just painfully protracted, as was Warner-Lambert's Puerto Rican problem four years ago. Were it not for the improving core -------------- fundamentals, we would be less patient. In this case, RPR ----------- remains a peripheral name, representing good value, in our view; -9- in a year or two, the stock should be materially higher (emphasis ------------------------------------------------------- added). 29. On June 26, 1997, in order to take advantage of Rorer's temporarily depressed stock price, Rhone-Poulenc announced it was considering an offer (the "Offer") to acquire all of the shares of Rorer it does not already own in a cash transaction whereby Rhone-Poulenc would pay $92.00 cash for each of such shares. 30. Finally, on August 20, 1997, Rhone-Poulenc and the Company announced that a definitive agreement had been approved and signed by both parties whereby Rhone-Poulenc would acquire the remaining shares of the Company in a tender offer (the "Tender Offer") at $97 per share. 31. Shareholders and analysts of Rhone-Poulenc applauded the "excellent price" that Rhone-Poulenc was able to negotiate for itself, believing that Rhone-Poulenc would need to pay $110 per share to acquire Rorer at fair market value, and in response the public shares of Rhone-Poulenc quickly rose 6.2% on heavy trading in Paris. 32. Shareholders and analysts of Rorer, however, were deeply dismayed. Many Rorer analysts had valued the Company at least $100 per share, while one prominent pharmaceutical analyst, as reported by Bloomberg News on August 13, -------------- 1997, valued the Company at $105 per share. 33. Rhone-Poulenc is taking advantage of its majority stock ownership position in Rorer by imposing the inadequate Tender Offer on Rorer's public stockholders. 34. The Tender Offer is part of a sweeping corporate overhaul of Rhone-Poulenc, meant to benefit solely Rhone-Poulenc. - 10 - 35. Pursuant to the planned overhaul, Rhone-Poulenc intends to spin off its chemical, fibers, and polymer operations, in order to become one of the world's biggest pharmaceutical companies, by combining Rorer's business with Rhone-Poulenc's vaccine and animal health businesses. 36. According to an article in The Wall Street Journal dated June 27, ----------------------- 1997, the chemical business has been less profitable than the pharmaceutical business and has weighed down Rhone-Poulenc's profits and price share. Thus, Rhone-Poulenc's plan is to divest itself of its less profitable businesses and, taking advantage of its dominant position over Rorer, as well as Rorer's temporarily depressed share price, acquire from the public shareholders of Rorer, at an inadequate consideration, Rorer's more profitable pharmaceutical business. 37. Given Rhone-Poulenc's domination and control of Rorer, the Rorer Board cannot be expected to act independently and advocate the best interests of Rorer's public shareholders. 38. By virtue of its control and domination of Rorer, Rhone-Poulenc has unique knowledge of the Company and has access to information denied or unavailable to the public. 39. Given the domination and control of Rorer, the Individual Defendants cannot be expected to negotiate for the best and highest price for Rorer's public shareholders. 40. In view of defendant Rhone-Poulenc's control of Rorer, it is unfair and in violation of defendants' fiduciary duties to consummate the transaction without first obtaining a recommendation and input by a truly independent representative of the public stockholders or obtaining the majority approval of the public stockholders. -11- 41. By virtue of the acts and conduct alleged herein, the defendants are carrying out a preconceived plan whereby Rhone-Poulenc will acquire the minority public shares of Rorer pursuant to a price that is grossly inadequate and intrinsically unfair to Rorer public shareholders, is substantially below true value, and is a product of defendants' conflicts of interest. As a result, the public common stockholders of Rorer will be wrongfully deprived of their valuable investment in the Company and all of its present and continuing profitability and growth and will receive, in return for their investment, grossly inadequate consideration. 42. The proposed Tender Offer constitutes an improper and unlawful attempt by the defendants unfairly to cash-out the minority shareholders of Rorer. 43. Unless enjoined by this Court, defendants will continue to breach fiduciary duties owed to plaintiff and the other members of the Class, and will succeed in consummating an unfair transaction by virtue of the unfair dealing complained of herein, all to the irreparable harm of the Class. 44. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgement and relief in his favor and in favor of the Class and against defendants, as follows: A. Declaring that this action be certified as a proper class actions and certifying plaintiff as a class representative; B. Declaring that the defendants and each of them have committed a gross abuse of trust and have breached their fiduciary duties to plaintiff and other members of the class; -12- C. Preliminarily and permanently enjoining defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from proceeding with, consummating or closing the proposed Tender Offer that will irreparably harm plaintiff and the Class; D. In the event the Tender Offer is consummated, rescinding it and setting it aside and/or granting rescissory damages; E. Awarding compensatory damages in excess of Fifty Thousand ($50,000.00) dollars or the mandatory compulsory arbitration limits, whichever is greater. F. Awarding the costs and disbursements of this action; G. Awarding plaintiff counsel fees; and H. Awarding such other and further relief which the Court may deem just and proper. Dated: August 25, 1997 SPECTOR & ROSEMAN /s/ Anthony Chu ----------------------- Robert M. Roseman Anthony Chu 2000 Market Street Philadelphia, PA 19103 (215) 864-2400 -13- OF COUNSEL: BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP Vincent R. Cappucci Kevin M. McGee 1285 Avenue of the Americas New York, New York 10019 (212) 554-1400 MAGER LIEBENBERG & WHITE Ann D. White Two Penn Center Plaza Philadelphia, PA 19102 (215) 569-6921 -14- -----END PRIVACY-ENHANCED MESSAGE-----