Date: 2014-10-20
Type of information: Company acquisition
Acquired company: Shire (UK - USA)
Acquiring company: Abbvie (USA - IL)
Amount: £32 billion ($53 billion - € 40.5 billion)
Terms: * On October 20, 2014, AbbVie and Shire have agreed to terminate their proposed merger following the decision by AbbVie’s Board to withdraw support for the proposed transaction. The Company’s decision was based upon its assessment of the September 22, 2014 notice issued by the U.S. Department of Treasury, which re-interpreted longstanding tax principles in a uniquely selective manner designed specifically to destroy the financial benefits of these types of transactions. The notice introduced an unacceptable level of risk and uncertainty given the magnitude of the proposed changes and the stated intention of the Department of Treasury to continue to revise tax principles to further impact such transactions. The Company conducted a thorough review of the September 22, 2014 notice to explore available options to preserve the transaction. This review included the advice of external tax, legal, and financial advisors in both the U.S. and the U.K. The executive management team ultimately concluded that the transaction was no longer in the bestinterests of stockholders at the agreed upon valuation, and the Board fully supported that conclusion. Under the U.K. Takeover Code, except with consent of the U.K. Takeover Panel, AbbVie must not, among other things, announce a further offer for Shire within 12 months from the date of this announcement. AbbVie has agreed to pay Shire the break fee of approximately $1.635 billion. Shire’s right to receive the break fee will be Shire’s sole and exclusive remedy for all losses and damages in connection with the transaction. * On October 16, 2014, the Board of Shire notes the announcement by AbbVie of its Board’s decision to withdraw its recommendation of the offer for Shire. The Board of Shire is considering the current situation and a further announcement will be made in due course. * On July 18, 2014, the Boards of AbbVie and Shire have announced that they have reached agreement on the terms of a recommended combination of Shire with AbbVie. Under the terms of the merger, Shire shareholders will be entitled to receive £24.44 per share in cash and 0.8960 new AbbVie shares. The indicative value of £53.19 per Shire Share values the entire issued and to be issued share capital of Shire on a fully diluted basis at approximately £32 billion and represents a premium of approximately 53 per cent. to the price of Shire shares of £34.67 on 2 May 2014, being the lastb usiness day prior to AbbVie's initial proposal. Immediately following the Transaction, Shire Shareholders are expected to hold New AbbVie Shares representing approximately 25 per cent. of the issued share capital of New AbbVie, thus offering Shire Shareholders the ability to participate in the future prospects of the Combined Group. AbbVie Stockholders are expected to hold New AbbVie Shares representing approximately 75 per cent. of the issued share capital of New AbbVie. In order to undertake the Transaction, AbbVie has formed a new company, New AbbVie, which is incorporated in Jersey, Shire's current place of incorporation. Following completion of the Transaction, New AbbVie will become the holding company of the Shire Group and the AbbVie Group. Pursuant to the AbbVie Merger, AbbVie Stockholders will receive one New AbbVie Share for each AbbVie Share. It is intended that the New AbbVie Shares will be listed on the New York Stock Exchange (NYSE). The Merger will be conditional on, amongst other things, the approval of the Scheme by Scheme Shareholders, the sanction of the Scheme by the Court, the adoption of the US Merger Agreement by AbbVie Stockholders, and the receipt of certain anti-trust clearances. The Conditions to the Merger are set out in full in Appendix I to this announcement. It is expected the Scheme Circular will be published in autumn 2014 and that, subject to the satisfaction, or where relevant waiver, of all relevant Conditions, the Scheme will become Effective and the Transaction will be completed in the fourth quarter of 2014. The New AbbVie Group would operate under a new holding company, New AbbVie, and would retain operational headquarters in Chicago, as well as a strong presence in the US and the UK. New AbbVie is a private limited company incorporated in Jersey, being Shire's current place of incorporation, and following completion of the Transaction is expected to be resident in the UK for tax purposes. New AbbVie was formed solely for the purpose of effecting the Transaction. Prior to the Effective Date, New AbbVie will be converted, pursuant to the Companies Law, to a public limited company. To date, New AbbVie has not According to GlobalData, AbbVie’s acquisition of Shire and subsequent relocation to Ireland will mean substantial tax savings for the US pharmaceutical giant. Shire, which itself relocated to Ireland from the UK back in 2008, has since seen a notable drop in its tax expenses, with a five-year average Effective Tax Rate (ETR) of 20.6% between 2008 and 2013, compared with 36.9% in 2008. By comparison, AbbVie’s ETR was 22.6% in 2013. Aparna Krishnan, MS, GlobalData’s Analyst says: “By shifting the legal headquarters of the newly-combined entity to Ireland, AbbVie could lower its annual tax expense by as much as 7%, which would have equated to increased earnings of more than $350 million in 2013. “To put this further into perspective, even after accounting for the impact of the arrival of biosimilars, a tax gain of this magnitude would translate into more than $5 billion in additional free cash flows from Humira alone over the next 15 years. Dampening the impact of biosimilars would see the tax savings on projected cash flows from Humira jump even further to around $8 billion.” Humira®, the world’s top selling medicine globally in 2013 with $ 10.65 billion, accounted for 56.7% of Abbvie's top-line sales in 2013.
conducted any activities other than those incidental to its formation and the execution of the Co-operation Agreement. Following completion of the Transaction, New AbbVie will become the holding company of the Shire Group and the AbbVie Group.
Application will be made for the listing of New AbbVie Shares on the NYSE. It is expected that on the Effective Date New AbbVie will be listed on the NYSE.
Details: The transaction will create a focused specialty biopharmaceutical company, with sustainable leadership positions within areas of unmet need, including immunology, rare diseases, neuroscience, metabolic diseases and liver disease (HCV) and multiple emerging oncology programs. The combination is expected to be well positioned to enhance innovation and end-to-end R&D capabilities, generating a best-in-class product development platform, with near-term new product launches in liver disease (HCV), neuroscience, immunology, oncology, rare diseases, ophthalmology, and renal diseases. AbbVie\'s key products include Humira® (the world’s top selling medicine globally in 2013 with $ 10.65 billion, however Humira®'s US patent protection will expire in 2016), Duodopa®, Synagis®, Kaletra®, Synthroid®, AndroGel®, Creon® and Lupron®, amongst others. In addition to its key products, AbbVie has a strong pipeline within several therapeutic categories, including assets in oncology, immunology, liver disease, neuroscience, renal, ophthalmology and women’s health. AbbVie’s pipeline also includes a broad range of late-stage development and/or registration programs, as well as programs in earlier phases of clinical development. This pipeline include several assets currently in Phase III such as ABT-199 for chronic lymphocytic leukemia, veliparib for breast and non-small cell lung cancer, daclizumab for multiple sclerosis, elagolix for endometriosis, atrasentan for diabetic nephropathy, Humira® for uveitis and hidradenitis suppurativa, Duopa® for advanced Parkinson’s disease and elotuzumab for multiple myeloma. Marketing Authorization Applications (MAAs) for its investigational, all-oral, interferon-free regimen (ABT-450/ritonavir (150/100mg) co-formulated with ombitasvir (ABT-267) 25mg, dosed once daily, and dasabuvir (ABT-333) 250mg) for the treatment of adult patients with chronic genotype 1 (GT1) hepatitis C virus (HCV) infection have been validated and are under accelerated assessment by the European Medicines Agency (EMA) and by the FDA. AbbVie believes that a potential re-rating of New AbbVie is possible due to continued strength in the Humira® franchise, the launch of this HCV therapy, advancement of exciting late-stage opportunities in oncology, immunology and other areas, and Shire\\\'s complementary rare disease and neuroscience platform. AbbVie’s HCV combination in the US could be launched in the US later this year and in Europe in early 2015. Based on projected sales for the underlying business and the anticipated launch of HCV, management expects AbbVie to return to growth in 2015. The four Shire's business units that focus exclusively on the commercial execution of its marketed products in the following specialist therapeutic areas (Rare Diseases, Neuroscience, Gastrointestinal and Internal Medicine) include several leading brands as Vyvanse®. Lialda®, Cinryze®, Elaprase® and Replagal®. In the financial year to 31 December 2013, Shire generated reported continuing revenues of $4.9 billion, non-GAAP EBITDA of $2.0 billion and net income of $0.7 billion. From 30 April 2013 to 19 June 2014 (the last day prior to the offer period), Shire delivered a total shareholder return of 87% and its market capitalisation increased by £10.9 billion. Shire’s early stage research is primarily focused on rare diseases. Shire has recently moved to a single R&D organisation that focuses on developing a pipeline of innovative treatments to address unmet patient needs. Shire has a number of late-stage product candidates in development and prioritises the treatments that have the highest chance of clinical success and that are also aligned with its current priority therapeutic areas as listed above, as well as potential new therapeutic areas such as ophthalmology and hematology/oncology. Thanks to the recent acquisitions of FerroKin BioSciences, Pervasis Therapeutics in 2012, Lotus Tissue Repair, Premacure, Sarcode Biosciences and Viropharma in 2013 and earlier this year, Fibrotech Therapeutics and Lumena Pharmaceuticals.
Related: Rares diseases CNS diseases Gastrointestinal diseases
