Shire finally says yes to AbbVie

Companies reach agreement on the terms of a recommended merger

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NORTH CHICAGO, Ill.—After declining at least four previous offers, Shire has agreed to a merger with AbbVie that is valued at approximately $54 billion. Under the terms of the Merger, Shire Shareholders will be entitled to receive for each Shire share £24.44 in cash and 0.8960 New AbbVie Shares.
Commenting on the merger, Richard A. Gonzalez, chairman of the board and CEO of AbbVie said "By combining AbbVie and Shire, we’re creating a unique, diversified biopharmaceutical company.  The combined company would benefit from a best-in-class product development platform, a stronger pipeline and more enhanced R&D capabilities.”
The transaction will create a well-positioned and focused specialty biopharmaceutical company, AbbVie said in a statement announcing the merger, 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. Immediately following the transaction, Shire shareholders are expected to hold New AbbVie shares representing approximately 25 per cent. of the issued share capital of the New AbbVie holding company, “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.”
AbbVie expects the transaction to be accretive to AbbVie's adjusted EPS in the first year following completion, growing to above $1.00 per share by 2020. AbbVie stipulated that the statement that the transaction is earning accretive should not be construed as a profit forecast and is therefore not subject to the requirements of Rule 28.
The AbbVie Board also expects the transaction to reduce New AbbVie’s effective tax rate to approximately 13 per cent. by 2016 and provide New AbbVie with access to its global cash flows.
AbbVie believes that a potential re-rating of New AbbVie is possible due to continued strength in the Humira® franchise (the world's top selling medicine globally in 2013), the launch of a HCV therapy, advancement of exciting late-stage opportunities in oncology, immunology and other areas, and Shire's complementary rare disease and neuroscience platform.
The Shire board, which has been so advised by Citi, Deutsche Bank, Evercore, Goldman Sachs and Morgan Stanley, considers the terms of the transaction to be fair and reasonable. In providing their advice to the Shire Board, Citi, Deutsche Bank, Evercore, Goldman Sachs and Morgan Stanley have taken into account the commercial assessments of the Shire directors., “Accordingly, the Shire Board believes that the terms of the Transaction are in the best interests of Shire Shareholders as a whole and intends to recommend that Shire Shareholders vote in favor of the resolutions to be proposed at the Court Meeting and the General Meeting as the Shire Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 43,242 Shire Shares representing, in aggregate, approximately 0.01 per cent. of the ordinary share capital of Shire in issue on the Latest Practicable Date,” the AbbVie release stated.
“The AbbVie Board has approved the Transaction and intends to recommend that AbbVie Stockholders vote in favor of the adoption of the US Merger Agreement. 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,” the announcement said.

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