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AbbVie Inc. ("AbbVie") and Shire plc ("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 best interests of stockholders at the agreed upon valuation, and the Board fully supported that conclusion.

Commenting on the transaction termination, AbbVie's Chairman and Chief Executive Officer, Richard A. Gonzalez said:

"AbbVie has built a strong, sustainable strategy with a robust pipeline. Over the past 22 months we have delivered industry leading stockholder returns, our performance and business fundamentals remain strong, and we are on the cusp of a major new product launch with our treatment for HCV. We remain focused on building AbbVie's business through enhanced internal R&D platforms, partnerships, strong commercial execution and licensing and acquisitions."

"The unprecedented unilateral action by the U.S. Department of Treasury may have destroyed the value in this transaction, but it does not resolve a critical issue facing American businesses today. The U.S. tax code is outdated and is putting global U.S.-based companies at a disadvantage to foreign competitors in an area of critical importance, specifically investing in the United States. Comprehensive tax reform is essential to create competitiveness and to stimulate investment in the economy."

Because AbbVie's Board of Directors has withdrawn its recommendation to proceed with the transaction, AbbVie believes it is unlikely that AbbVie stockholders would support the combination, which is a condition to closing the transaction. Shire and AbbVie have agreed to the termination of the Co-operation Agreement and not to proceed with the proposed scheme of arrangement. In addition, AbbVie has confirmed that it does not wish to switch to a contractual takeover offer. As a result, the U.K. Takeover Panel has confirmed that upon Shire announcing:

its withdrawal of its recommendation;
that it will not proceed with the scheme of arrangement; and
it has agreed to the release of AbbVie from its obligation to proceed with the offer, the offer period will end with effect from the publication of Shire's announcement, and the transaction will lapse.
As a result, AbbVie will not be convening an AbbVie stockholder meeting to consider the transaction. 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 USD$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.

AbbVie will host an investor call on Monday, October 20, 2014 at 4:45 pm CDT.

Dial-in Time:
4:30 p.m. Central time

Call Start Time:
4:45 p.m. Central time

Dial-in Numbers:
U.S. Toll Free: 1-877-934-8565

U.K. Toll Free: 0800-376-8334

International: 1-210-795-9161


There will not be a question and answer portion of the investor call.


AbbVie investor contacts
Larry Peepo (Tel: +1 847 935 6722)
Liz Shea (Tel: +1 847 935 6722)

AbbVie media contacts
Jennifer Smoter (Tel: +1 847 935 8865)
Adelle Infante (Tel: +1 847 938 8745)

J.P. Morgan (Financial Adviser)
Jeffrey Hoffman / Henry Gosebruch / Ben Wallace (New York, Tel: +1 212 270 6000)
Laurence Hollingworth / Dwayne Lysaght / James Robinson (London, Tel: +44 207 742 4000)

Richard Jacques
Brunswick Group, U.K.
+44 207 404 5959

Posted-In: News Press Releases


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