AbbVie Inc. Statement regarding a revised possible offer

By Dow Jones Business News, 
A A A


TIDMSHP

RNS Number : 7151L

AbbVie Inc.

08 July 2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE"). THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE

For immediate release July 8, 2014

Statement from AbbVie Inc. ("AbbVie") regarding a revised possible offer for Shire plc ("Shire")

AbbVie and its financial adviser have spoken to Shire's shareholders representing a majority of Shire's outstanding shares

AbbVie has increased its proposal to GBP22.44 in cash and 0.8568 ordinary shares of New AbbVie for each Shire share which represents an indicative value of GBP51.15(1)

Proposal is an approximately 11 percent increase from AbbVie's prior indicative proposal of GBP46.26(2)

AbbVie believes that the revised proposal reflects a substantial sharing of potential synergies between the shareholders of each company

Shire shareholders will also have incremental future upside from potential synergies and value creation potential through 24 percent ownership in New AbbVie(3)

Following the announcement on June 25, 2014, where AbbVie outlined its strong strategic rationale and commitment regarding a combination with Shire, AbbVie and its financial adviser have met with, or spoken to, a large number of Shire shareholders, who collectively represent a majority of Shire's outstanding shares. The majority of these shareholders are longer-term holders of Shire, including the majority of Shire's largest shareholders.

Today, AbbVie is pleased to outline its revised proposal of GBP22.44 in cash and 0.8568 ordinary shares of New AbbVie for each Shire share (the "Proposal" and the "Fourth Proposal"). The Fourth Proposal represents an indicative value of GBP51.15(1) as of July 7, 2014 (the latest practicable date before this announcement).

_____________________________

(1) Based on AbbVie's closing share price of $57.40 (and an exchange rate of $1.00:GBP0.5837) on July 7, 2014, the latest practicable date before this announcement, and assuming one New AbbVie share is issued for each existing AbbVie share in the simultaneous AbbVie holding company restructuring described in AbbVie's Rule 2.4 announcement on June 25, 2014.

(2) Based on AbbVie's closing share price of $54.03 (and an exchange rate of $1.00:GBP0.5982) on May 29, 2014, the latest practicable date before the proposal was made, and assuming one New AbbVie share is issued for each existing AbbVie share in the simultaneous AbbVie holding company restructuring described in AbbVie's Rule 2.4 announcement on June 25, 2014.

(3) As outlined in AbbVie's Rule 2.4 announcement on June 25, 2014.

The indicative value(4) of the Fourth Proposal represents:

-- An increase of approximately 11 percent and approximately a GBP3 billion increase to the indicative offer value of GBP46.26(5) per share;

   --     An increase of GBP2.00 and approximately 10 percent in cash per Shire share;

-- A premium of 75 percent to Shire's closing share price of GBP29.25 on April 17, 2014(6) and approximately GBP13 billion of incremental aggregate value for Shire's shareholders;

-- A premium of 48 percent to Shire's closing share price of GBP34.67 on May 2, 2014(7) (the last practicable date prior to AbbVie's initial proposal) and approximately GBP10 billion of incremental aggregate value for Shire's shareholders; and

-- An implied Enterprise Value(8) / Last Twelve Months' EBITDA (as reported by Shire)(9) multiple of approximately 25x.

In addition, this revised indicative proposal increases the ownership that will be held by Shire shareholders to approximately 24 percent of a new holding company of the combined group ("New AbbVie"). For reasons that AbbVie outlined in previous announcements, presentations and press releases from June 25, 2014, AbbVie continues to believe that AbbVie's attractive stock has meaningful upside potential independent of a transaction, and New AbbVie's share price would be well-positioned to appreciate and re-rate.

AbbVie Chairman and CEO Richard Gonzalez:

"This transaction is a combination of two leading companies with leadership positions in specialty pharmaceuticals that would create a global market leader with unique characteristics and a compelling investment thesis. AbbVie will bring greater financial strength and R&D experience to this combination that will enable both companies to reach their full potential for their shareholders and patients in need across the globe."

"AbbVie has made a compelling offer to Shire that creates immediate and long-term value to shareholders of both companies. We think its shareholders should strongly encourage the Shire board to engage in constructive dialogue with AbbVie."

Next steps

AbbVie strongly encourages shareholders to consider the Fourth Proposal and communicate their perspective to Shire's Board in light of the July 18, 2014 "Put Up or Shut Up" deadline. AbbVie is willing to move quickly and cooperatively to engage with Shire with a view to achieving a transaction for the benefit of all shareholders.

_____________________________

(4) Based on AbbVie's closing share price of $57.40 (and an exchange rate of $1.00:GBP0.5837) on July 7, 2014, the latest practicable date before this announcement, and assuming one New AbbVie share is issued for each existing AbbVie share in the simultaneous AbbVie holding company restructuring described in AbbVie's Rule 2.4 announcement on June 25, 2014.

(5) Based on AbbVie's closing share price of $54.03 (and an exchange rate of $1.00:GBP0.5982) on May 29, 2014, the latest practicable date before the proposal was made, and assuming one New AbbVie share is issued for each existing AbbVie share in the simultaneous AbbVie holding company restructuring described in AbbVie's Rule 2.4 announcement on June 25, 2014.

(6) The last trading day prior to the emergence of market consolidation rumors amid speculation that Pfizer had approached AstraZeneca regarding a potential transaction.

(7) On May 2, 2014, Shire's stock price closed at GBP34.67, having risen by 19 percent from GBP29.25 on April 17, 2014, the last trading day prior to the emergence of market consolidation rumors amid speculation that Pfizer had approached AstraZeneca regarding a potential transaction.

(8) Enterprise value defined as equity value on a fully diluted basis plus net debt position adjusted for Lumena and Fibrotech acquisitions (sourced from Shire press releases and Shire Q1 2014 results).

(9) Last Twelve Months' EBITDA reflects continuing EBITDA adjusted for DERMAGRAFT divestiture per Shire management guidance, calculated as of Q1 2014 per Shire full year results presentation on February 13, 2014 and Shire Q1 2014 earnings presentation as of May 1, 2014.

Key conditions

The making of any firm offer by AbbVie is subject to pre-conditions (which may be waived in whole or in part by AbbVie):

-- The satisfactory completion of confirmatory due diligence on the business and prospects of Shire;

-- The directors of Shire having provided a unanimous and unqualified recommendation of the Proposal; and

-- AbbVie having received irrevocable undertakings from all of the directors of Shire (and any person connected to them) in respect to their holdings in Shire shares to accept the Proposal.

The completion of the Proposal would be subject to the approval of AbbVie shareholders and regulatory approvals, amongst other conditions.

Terms

Whilst the cash and share mix of AbbVie's Fourth Proposal has an indicative value of GBP51.15(10) per Shire share as of July 7, 2014, under Rule 2.5 of the Code any firm offer announced by AbbVie under Rule 2.7 of the Code will, at the date of its announcement, need to be equivalent, on a per Shire share basis, to not less than the higher of:

   --     GBP46.26; or

-- The aggregate of GBP22.44 and the value of 0.8568 AbbVie shares at the closing price and relevant $/GBP exchange rate on the latest practicable date before AbbVie announces any such firm intention to make an offer under Rule 2.7,

(such higher amount being, the "Floor Price").

AbbVie reserves the right to introduce other forms of consideration and/or vary the mix of consideration. AbbVie also reserves the right to make an offer at any time for less than the equivalent of the Floor Price for each Shire share:

   --     With the agreement or recommendation of the Shire Board;

-- If a third party announces a firm intention to make an offer for Shire which, as at the date AbbVie announces a firm intention to make an offer for Shire, is valued at a lower price than the equivalent of the Floor Price for each Shire share; or

-- Following the announcement by Shire of a whitewash transaction pursuant to the Code.

In accordance with Rule 30.4 of the Code, a copy of this announcement will be available on AbbVie's website at www.abbvieinvestor.com. A further announcement will be made as appropriate.

_____________________________

(10) Based on AbbVie's closing share price of $57.40 (and an exchange rate of $1.00:GBP0.5837) on July 7, 2014, the latest practicable date before this announcement, and assuming one New AbbVie share is issued for each existing AbbVie share in the simultaneous AbbVie holding company restructuring described in AbbVie's Rule 2.4 announcement on June 25, 2014.

Enquiries:

AbbVie Investor Contacts

Larry Peepo (Tel: +1 847 935 6722)

Liz Shea (Tel: +1 847 935 2211)

AbbVie Media Contacts

Jennifer Smoter (Tel: +1 847 935 8865)

Adelle Infante (Tel: +1 847 938 8745)

Angela Sekston (Tel: +1 847 937 6636)

J.P. Morgan (Financial Adviser)

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


  (MORE TO FOLLOW) Dow Jones Newswires
  07-08-140805ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


This article appears in: News Headlines

Referenced Stocks: ABBV , SHPG

Dow Jones Business News


More from Dow Jones Business News:

Related Videos

Stocks

Referenced

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM