Due to the companies' failure to notify the EC of this transaction, the closing projection must be pushed back to late-November and quite possibly into December if the notification is not filed within the next few days. There continues to be no expectation of problems with the EC with respect to this combination, so the filing delay is somewhat perplexing. Attempts are currently in progress to obtain a status report on this matter.

Philadelphia Consolidated (PHLY) - Tokio Marine Holdings

October 16, 2008 (10:05a) - Florida OIR Status

According to a Florida OIR official, the Form A application has still not been deemed complete as of this entry. Unfortunately, the OIR official is unable to offer any projections for the Form A completion at this time.

While there continues to be no indications of problems and/or potential major delays here, the failure to have the Form A deemed complete at this very late stage tends to confirm the expectation that this review will continue beyond next week's PHLY shareholder meeting. Although the recent tendency with insurance regulators has been to withhold action/decision on Form A's until shareholder approvals have been obtained, the Form A's, in general, have been deemed complete well before the shareholder votes. Thus, it will be highly unusual if the OIR deems the application complete and formally approves the Form A within the next week.

Again, the OIR has 90 days to issued a decision upon application completion. Barring contradictory information, it is currently anticipated that the OIR review will force the companies to delay the close until after the PHLY shareholder meeting and, given the current Form A status, probably into early/mid-November.

$ImClone Systems (IMCL) - Eli Lilly (LLY)

October 15, 2008 (9:20a) - Tender Offer Statement Filed

LLY filed the initial tender offer statement and offer to purchase with the SEC yesterday (10/14).

The current tender offer expiration date is Thursday, November 20, 2008.

The regulatory matters section of the document identifies three approvals, one of which may pose a minor timing issue for this transaction.

The HSR review, which is not currently considered a problem (see October 7 entry), will start "on or about" October 20, 2008, according to the document. Assuming the HSR notification is filed on that date, the waiting period expiration date will be November 3, 2008. Again, HSR clearance is expected without delay here.

GFCO approval will also be required for this deal. The tender offer statement claims the notification will be filed "no later" than October 17, 2008, which would create a review deadline of November 15, 2008. As GFCO consent is also expected without delay, this regulatory requirement is unlikely to affect the tender offer timing.

Finally, the document discloses New Jersey Industrial Site Recovery Act (ISRA) approval from the New Jersey Department of Environmental Protection. The tender offer statement notes the following regarding this review:

"On October 14, 2008, ImClone filed a general information notice with the NJDEP as required by ISRA. After filing, if the Merger does not qualify for any available exemptions, the NJDEP could require ImClone to conduct environmental testing, which could include soil, groundwater or other sampling, pursuant to ISRA. If such testing shows contamination, NJDEP could require ImClone to conduct remedial investigation and remedial action. Sites are generally investigated to unrestricted standards so that the need for remediation is assessed against the most stringent applicable environmental standards. A key determinant in completing any remedial investigation is whether all contamination has been located and treated such that the site is cleaned to the satisfaction of such standards.

"If any remediation required under ISRA is not completed before the intended closing of the Offer, ImClone may be able to enter into a “remediation agreement” with the NJDEP that would allow the Offer to close provided that there is an undertaking to complete the remediation thereafter. However, the NJDEP is not required under ISRA to enter into any such remediation agreement or to permit any transaction to close prior to completion of any required investigation or remediation. The withholding of approval by the NJDEP under ISRA could prevent or delay the consummation of the Offer or the Merger under applicable law."

The sole reference for this particular regulatory review is last year's EDO-ITT transaction, in which NJDEP consent was obtained in less than three months. The following details were obtained specific to that deal:

"The (General Information Notice) is a precursor to the owner completing a site audit to determine if any contamination exists at the site. The GIN was required to be filed 5 days after the merger was announced. There are some exemptions to the law for mergers if certain criteria are met. Usually the DEP will get an application seeking concurrence that the merger meets the exemptions although seeking the written concurrence from the DEP is not required. The cover letter with the GIN implied the exemption confirmation ie the ISRA Applicability Determination would be sought shortly after the GIN was filed at the end of September. We have no record that the Determination application was submitted. Again getting the formal determination from the DEP is a service not a requirement. If an application is submitted we usually turn the response around within 2 weeks. If the exemption does not apply to this merger we have about a 3 month backlog of work once a report on the environmental audit of the site is submitted for review."

At this time efforts are in progress to determine if the NJDEP will expedite the review for this tender offer transaction. It is apparent that the companies made it a priority to file the General Information Notice quickly in order to start this process immediately, so it must be assumed that the companies anticipated possible delays beyond the November 20 tender offer expiration. This will, of course, depend entirely on the efficiency in which the NJDEP is able to physically test the site in question and determine the necessary remedial action if necessary. It should be noted that as of last year, the NJDEP pointed out a fairly deep backlog in these cases, so there is clearly some chance that this particular case will not receive expedited status.

For the time being, the ISRA matter will be considered as a minor regulatory issue, but one which could very easily force an extension to the current tender offer expiration. Given that the current tender offer expires just before the November holidays, any extension would very likely push this deal's close into early December.

Darwin Professional Underwriters.