AbbVie to Acquire Allergan in Transformative Move for Both Companies
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THIS ANNOUNCEMENT IS BEING MADE PURSUANT TO RULE 2.5 OF THE IRISH TAKEOVER RULES - Provides immediate scale and profitability to AbbVie's growth platform, excluding Humira, significantly expanding and diversifying its revenue base with new therapeutic areas, including Allergan's leading medical aesthetics business - Enhances long-term R&D funding capacity, allowing for continued investment and sustained focus on innovative science and advancement of an industry-leading pipeline - Increases global commercial scale to further maximize the value of Allergan's attractive portfolio of fast-growing products - Combined company will produce robust cash flow to support continued dividend growth, further investment in the pipeline and reduction of debt levels - Transaction delivers significant and immediate accretion and provides an attractive return on invested capital - Creates substantial value for shareholders of both companies and is expected to close in early 2020 - Allergan Shareholders will receive 0.8660 AbbVie Shares and $120.30 in cash for each Allergan Share, for a total consideration of $188.24 per Allergan Share
- Transaction equity value of approximately $63 billion
THIS ANNOUNCEMENT IS BEING MADE PURSUANT TO RULE 2.5 OF THE IRISH TAKEOVER RULES - Provides immediate scale and profitability to AbbVie's growth platform, excluding Humira, significantly expanding and diversifying its revenue base with new therapeutic areas, including Allergan's leading medical aesthetics business - Enhances long-term R&D funding capacity, allowing for continued investment and sustained focus on innovative science and advancement of an industry-leading pipeline - Increases global commercial scale to further maximize the value of Allergan's attractive portfolio of fast-growing products - Combined company will produce robust cash flow to support continued dividend growth, further investment in the pipeline and reduction of debt levels - Transaction delivers significant and immediate accretion and provides an attractive return on invested capital - Creates substantial value for shareholders of both companies and is expected to close in early 2020 - Allergan Shareholders will receive 0.8660 AbbVie Shares and $120.30 in cash for each Allergan Share, for a total consideration of $188.24 per Allergan Share
- Transaction equity value of approximately $63 billion
NORTH CHICAGO, Ill.?and?DUBLIN,?June 25, 2019?/PRNewswire/ --?AbbVie Inc. (NYSE: ABBV) and Allergan plc (NYSE: AGN)? announced that the companies have entered into a definitive transaction agreement under which AbbVie will acquire Allergan in a cash and stock transaction for a transaction equity value of approximately?$63 billion, based on the closing price of AbbVie's common stock of?$78.45?on?June 24, 2019.
"This is a transformational transaction for both companies and achieves unique and complementary strategic objectives," said?Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie's business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future."
"This acquisition creates compelling value for Allergan's stakeholders, including our customers, patients and shareholders. With 2019 annual combined revenue of approximately?$48 billion, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone," said?Brent Saunders, chairman and chief executive officer, Allergan.? "Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie's strong growth platform and create substantial value for shareholders of both companies."
Strategic Rationale
In addition, an infographic highlighting the key attributes of this transaction is available?here.
AbbVie's lead financial advisor is Morgan Stanley & Co. LLC who has delivered a fairness opinion and has provided the committed financing for the transaction, and its legal advisors are Kirkland & Ellis LLP and?McCann FitzGerald. PJT Partners LP is also serving as a financial advisor to AbbVie. Allergan's exclusive financial advisor is J.P. Morgan Securities LLC and its legal advisors are Wachtell, Lipton, Rosen &?Katz and Arthur Cox.
Key Questions and Answers
1. What are the strategic and financial benefits of this transaction?
This transaction achieves unique and complementary strategic objectives for both organizations. Combining Allergan's diversified on-market product portfolio with AbbVie's growth platform and deep expertise in R&D, commercial strength and international footprint will create a leading biopharmaceutical company with approximately?$48 billion?in combined 2019 revenue. This combination also enhances AbbVie's ability for robust investment in its industry-leading pipeline of innovative therapies throughout the next decade and enables AbbVie to deliver on its mission to better serve patients.
The financial benefits include immediate 10% earnings-per-share accretion over the first full year of the combination, with peak accretion of greater than 20%. The transaction will generate annual pre-tax synergies and other cost reductions of at least?$2 billion?in year three, with a return on invested capital to exceed AbbVie's cost of capital within the first full year.
2. When do you anticipate this transaction to close and what is the leadership structure for the new combined company?
We anticipate closing of the transaction by early 2020, subject to regulatory and Allergan's shareholder approvals. The combined company will continue to be incorporated in?Delaware?and have its principal executive offices in?North Chicago, Ill.?Richard A. Gonzalez?will serve as the chairman and chief executive officer through the Humira loss of exclusivity in 2023.? AbbVie's Board will include two Allergan board members, including Allergan's chairman and chief executive officer,?Brent Saunders.
3.? Does this transaction represent a change in your fundamental strategy for AbbVie?
This transaction enhances our ability to continue to advance our mission to develop a consistent stream of innovative medicines to create a remarkable impact on people's lives.? AbbVie will now have a more diversified product portfolio with several leadership positions in high value therapeutic areas and an industry-leading pipeline of next-generation therapies with ensured capacity for continued investment across our innovative pipeline.
4.? What is the benefit of doing a transaction of this size versus smaller bolt-on acquisitions?
This transaction is designed to meet a different strategic imperative than smaller bolt-on acquisitions. Its ability to deliver immediate scale to the AbbVie growth platform with Allergan's on-market diversified product portfolio meets our strategic goal to reduce reliance on Humira and allows us to continue expanding our focus on high-innovation science throughout the next decade.
Smaller bolt-on acquisitions provide opportunities for future growth, but also require significant R&D investment amid scientific and clinical uncertainty. This transaction offers immediate compelling financial and strategic value to our shareholders with a much lower risk profile.
5.? What is your level of confidence in your ability to operate the combined company given that it represents somewhat of a change in the mix of businesses from what AbbVie has been?
We are highly confident in our ability to enhance the value of Allergan's existing commercial franchises and capitalize on next-generation pipeline programs. AbbVie has a proven track record of industry leading financial performance and commercial expertise in building market-leading franchises in immunology, hematologic oncology, and other areas, and our geographic scale will enable us to unlock additional value in Allergan's franchises. Our senior leadership team is experienced in leading diverse businesses and we are confident in our future success.
6.? What are your plans for capital allocation for the combined company?? How do you intend to address the debt levels of the combined company?
The combined company will produce robust cash flow which will support continued growth of our dividend, further investment in our pipeline, and reduction of debt. We intend to reduce debt levels by?$15-$18 billion?by the end of 2021, with further deleveraging through 2023.
7.? What do you view as the largest risks associated with the transaction?
Any transaction of this magnitude involves a series of regulatory approvals and integration complexities. Both companies have organizations that are highly experienced at integrating businesses and we expect that process to be efficient and thorough.
About AbbVie and Acquirer Sub
AbbVie is a global, research-driven biopharmaceutical company committed to developing innovative advanced therapies for some of the world's most complex and critical conditions. The company's mission is to use its expertise, dedicated people and unique approach to innovation to markedly improve treatments across four primary therapeutic areas: immunology, oncology, virology and neuroscience. In more than 75 countries, AbbVie employees are working every day to advance health solutions for people around the world. For more information about AbbVie, please visit us at?www.abbvie.com. Follow @abbvie on Twitter, Facebook or LinkedIn.
Acquirer Sub, a wholly-owned subsidiary of AbbVie, is a limited liability company organized in?Delaware?solely for the purpose of effecting the Acquisition. To date, Acquirer Sub has not conducted any activities other than those incidental to its formation and the execution of the Transaction Agreement.
About Allergan
Allergan, headquartered in?Dublin,?Ireland, is a global pharmaceutical leader focused on developing, manufacturing and commercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patients around the world.?Allergan markets a portfolio of brands and products primarily focused on four key therapeutic areas including medical aesthetics, eye care, central nervous system and gastroenterology. As part of its approach to delivering innovation for better patient care,?Allergan?has built a broad pharmaceutical and device research and development pipelines.
With employees and commercial operations in approximately 100 countries,?Allergan?is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives every day.? For more information about Allergan, please visit?www.allergan.com.
- New growth platforms and leadership positions to diversify and expand revenue base:?The combined company will consist of several attractive franchises with leadership positions across immunology, hematologic oncology, medical aesthetics, neuroscience, women's health, eye care and virology.? Allergan's product portfolio will be enhanced by AbbVie's commercial strength, expertise and international infrastructure.
- Immediate scale and enhanced profitability for AbbVie's growth platform:?AbbVie's enhanced growth platform, comprised of growing and durable franchises across highly-attractive therapeutic areas, is expected to grow at a high-single digit annual growth rate well into the next decade, from more than?$30 billion?in 2020.
- Financially attractive with immediate EPS accretion:?This transaction is expected to be 10% accretive to adjusted earnings per share over the first full year following the close of the transaction, with peak accretion of greater than 20%.1??ROIC is expected to exceed AbbVie's cost of capital within the first full year.
- Significant cash flow generation:?The success and scale of the combined commercial business ensures funding capacity and flexibility for simultaneous robust pipeline investment, debt reduction and capital return to shareholders. The combined companies generated?$19 billion?in operating cash flow in 2018.
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Tuesday, June 25, 2019 |
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