Abbvie Inc. · NYSE:ABBV
Abbvie — Merger or Acquisition (June 2014)
40 slides from Abbvie's merger presentation, Jun 25, 2014
Slide 1: AbbVie's proposed combination with Shire
AbbVie’s proposed combination with Shire: Creating immediate and long-term value for all shareholders June 25, 2014
Slide 2: Forward-Looking Statements
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 Forward-Looking Statements This document contains certain forward-looking
Slide 3: Proposed combination with compelling strategic rationale
Proposed combination with compelling strategic rationale The proposed combination is strategically compelling to AbbVie and Shire and would create a larger and more diversified biopharmaceutical company with multiple leading franchises and significant financial capacity for future acquisitions, inve
Slide 4: A compelling proposal for Shire to engage
A compelling proposal for Shire to engage AbbVie has put forth a highly attractive third indicative proposal which offers Shire shareholders immediate and long-term value creation o Significant upfront premium recognizes the value of Shire's platform o Headline indicative value of £46.261 does not t
Slide 5: AbbVie is a strong and ideal merger partner for Shire
AbbVie is a strong and ideal merger partner for Shire • AbbVie believes its strong management team would drive value creation via this combination o AbbVie’s experienced management team has operational depth and proven experience in sourcing, executing and integrating value creating combinations o S
Slide 6: AbbVie has a strong track record of value creation
AbbVie has a strong track record of value creation
Slide 7: AbbVie has built a global, biopharmaceutical leader
AbbVie has built a global, biopharmaceutical leader • Global, research-based biopharmaceutical leader formed from the split of Abbott in 2013 • 25,000 employees worldwide with strong global footprint across over 170 countries • Market capitalization of ~$88 billion1 and sales of ~$19 billion in 2013
Slide 8: Robust portfolio of leading commercial products and exciting pipeline
Robust portfolio of leading commercial products and exciting pipeline • Positioned for continued growth and cash flow generation • Strong and differentiated clinical profile World’s #1 global • Superior patient-focused model pharmaceutical • Strong managed care positions product • Strong execution f
Slide 9: The Humira franchise has grown through increased penetration and expansion
The Humira franchise has grown through increased penetration in existing indications, geographic expansion and approvals in new indications $10.7 $9.3 Worldwide Sales ($ billion) $7.9 $6.5 Ex-US $5.5 $4.5 $3.1 $2.0 $1.4 US $0.9 $0.3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Humira is ap
Slide 10: AbbVie's large portfolio of additional leading products
AbbVie’s large portfolio of additional leading products Leading pancreatic enzyme Leading hormone therapy Leading testosterone replacement therapy for advanced prostate cancer replacement therapy Key approved product for prevention of serious lower- Leading branded Novel therapy respiratory-tract di
Slide 11: Strong and robust pipeline including multiple potential blockbuster medicines
Strong and robust pipeline including multiple potential blockbuster medicines • Potential sales from late-stage ABT-199 Veliparib pipeline represent significant (Chronic Lymphocytic (Triple-Negative Breast Cancer, opportunity Leukemia ) Non-Small Cell Lung Cancer) • Numerous clinical trial read-outs
Slide 12: Near-term catalysts to drive increased value for AbbVie shareholders
AbbVie expects a number of near-term catalysts to drive increased value for AbbVie shareholders Commercialization of HCV therapy in Humira Hidradenitis Suppurativa Phase III US (late 2014) and EU (early 2015) data readout and regulatory submissions Next-generation HCV (ABT-530, US approval and launc
Slide 13: Management team with experience in value creating combinations
Management team with experience in value creating combinations Vascular assets • Date: December 2000 • Date: January 2006 • Size: $6.9 billion • Size: $4.3 billion • Annual sales: ~$2 billion • Annual sales: ~$1 billion • Key assets acquired: D2E7 (Humira), Meridia, Synthroid • Key assets acquired:
Slide 14: AbbVie has raised 2014 guidance
AbbVie has raised 2014 guidance based on strong business performance year to date and expected continued positive trends • AbbVie raised the midpoint of its full-year 2014 guidance by $0.06 and anticipates a full- year diluted earnings-per-share range of $3.06 to $3.16 on an adjusted basis1 o Exclud
Slide 15: AbbVie has had a strong record of steady shareholder returns
AbbVie has had a strong record of steady shareholder returns December 10, 2013: 70% 96% SVR(12) Total shareholder return since spin-off: +64%1 demonstrated in Phase May 13, 2013: HCV regimen III Study for hepatitis C receives Breakthrough 60% treatment Therapy designation from FDA for hepatitis C 50
Slide 16: AbbVie management
AbbVie management • 30-year Abbott veteran leading global pharmaceutical business, including commercial operations, R&D and manufacturing • Led overall efforts to acquire variety of organizations, including Solvay Pharmaceuticals, Kos Pharmaceuticals, Perclose, TheraSense and Richard A. Gonzalez Gui
Slide 17: The combination has compelling strategic rationale
The combination has compelling strategic rationale
Slide 18: Compelling strategic rationale for all shareholders
AbbVie believes the combination has compelling strategic rationale for all shareholders Strong complementary Leverage AbbVie’s Accelerate growth of Broader and deeper fit across existing substantial and Substantial combined both companies through pipeline of attractive platforms is better than well-
Slide 19: Combination would create leadership positions within growing therapeutic areas
The combination would create leadership positions within growing therapeutic areas, a diversified portfolio of marketed products, and stronger growth platforms Core therapeutic areas SHIRE Core therapeutic areas Liver RA GI Derm Disease / Neuroscience Other Neuroscience Rare Disease GI Other Virolog
Slide 20: Complementary platforms would enhance innovation and R&D capabilities
Complementary platforms would enhance innovation and end-to- end R&D capabilities of the new company Phase I Phase II Phase III Registration ABT-399: Solid Tumors Veliparib: WBRT for brain mets ABT-199: CLL Humira: Pediatric Crohn’s disease ABT-165: Solid Tumors Veliparib: Ovarian Cancer Veliparib:
Slide 21: Greater financial profile than Shire's standalone capabilities
Greater financial profile than Shire’s standalone capabilities • Expected strong and consistent free cash flow generation to support enhanced business development and an enhanced shareholder return of capital policy • Enhanced R&D capacity • Maintain investment-grade credit profile of the combined e
Slide 22: AbbVie has made a compelling offer
AbbVie has made a compelling offer
Slide 23: AbbVie's third proposal at £46.26 – a compelling offer to engage
AbbVie’s third proposal at £46.261 – a compelling offer to engage • Compelling premium of 33% to Shire’s closing share price of £34.67 on May 2, 2014 (the last trading date prior to our initial Potential to realize a proposal) and 58% to Shire’s closing share price of £29.25 on April considerable pr
Slide 24: A compelling premium
A compelling premium £50.00 May 30, 2014: £46.261 (indicative offer price) £45.00 Immediately prior to Immediately prior to 52 week low: 1st proposal: Pfizer/AZ news: 58% £40.00 148% premium 33% premium premium May 2, 2014: £34.672 (price prior to initial offer) £35.00 £30.00 April 17, 2014: £29.253
Slide 25: External perspectives indicate our offer is compelling
External perspectives indicate our offer is compelling Comparison of AbbVie’s proposal vs. Street views on value AbbVie believes the 23% premium current proposal offers compelling value, and Shire should engage to 2 £46.26 explain the gap between £37.50 Shire’s LRP and Street estimates AbbVie's May
Slide 26: Additional value upside of a merger beyond headline price
Additional value upside of a merger beyond “headline price” Shire shareholders would potentially own approximately 23% of an exciting growth story with significant value upside potential • AbbVie expects the proposed transaction to be materially accretive to AbbVie’s adjusted EPS1 in the first year
Slide 27: Strong EPS accretion and competitive tax structure
AbbVie believes proposed combination would drive strong EPS accretion and enable a competitive tax structure • Meaningful EPS accretion o Materially accretive to AbbVie’s adjusted EPS1 in the first year following completion o Expected to increase above $1.00 per share by 2020 o Includes material ong
Slide 28: AbbVie has made a good faith effort to engage in discussions with Shire
AbbVie has made a good faith effort to engage in discussions with Shire
Slide 29: Offering compelling value and strategic rationale to engage
Offering compelling value and strategic rationale to engage • AbbVie has recently submitted three non-binding indications of interest to Shire’s board of directors, each of which offered a substantial premium to Shire’s undisturbed price o Compelling initial offer: The initial indicative proposal of
Slide 30: Next steps
abbvie Next steps
Slide 31: Shire should engage to maximize value for its shareholders
Shire should engage to maximize value for its shareholders • AbbVie is interested in working toward a recommended transaction and would welcome the opportunity to discuss further with Shire with a view to achieving an agreed, recommended proposal o AbbVie started evaluating a business combination wi
Slide 32: Appendix 1
abbvie APPENDIX 1
Slide 33: Brokers' future stock price targets average around £38.00
Brokers’ future stock price targets average around £38.00 Offer represents premium to broker Current proposed offer: £46.261 Broker Date Target price (£) Third offer premium to target price Buckingham Research Group June 18, 2014 £43.00 7.6% Susquehanna Financial Group June 17, 2014 £43.00 7.6% CRT
Slide 34: Shire has been a subject of constant takeover speculation
Shire has been a subject of constant takeover speculation Date of Shire closing Market Event speculation price1 reaction2 Reports emerge regarding Allergan’s imminent June 18, 2014 £37.85 +3.4% bid for Shire Shire’s share Shire reported to have hired Citi as an adviser price has June 16, 2014 £36.60
Slide 35: Indicative offer price assumptions
Indicative offer price assumptions 1. Initial indicative offer of £39.50 based on AbbVie’s closing share price of $51.18 (and an exchange rate of $1.00:£0.5920) on May 2, 2014 and assuming one New AbbVie share is issued for each existing AbbVie share in the simultaneous AbbVie holding company restru
Slide 36: Appendix 2
abbvie APPENDIX 2
Slide 37: Profit Forecast for AbbVie Inc for the Financial Year ended December 31, 2014
Profit Forecast for AbbVie Inc for the Financial Year ended December 31, 2014 (extracted from AbbVie’s announcement dated June 23, 2014) In accordance with Rule 28.4(a) of the Code, the principal assumptions upon which the profit forecast is based are included in this Schedule 1 to the announcement.
Slide 38: Report of PricewaterhouseCoopers pursuant to Rule 28.1(a)(i)
Report of PricewaterhouseCoopers pursuant to Rule 28.1(a)(i) of the City Code on Takeovers and Mergers The Directors (the “Directors”) AbbVie Inc. 1 North Waukegan Road North Chicago Illinois 60064 United States of America J.P. Morgan Limited (the “Financial Adviser”) 25 Bank Street Canary Wharf Lon
Slide 39: Report of PricewaterhouseCoopers (cont'd)
Report of PricewaterhouseCoopers pursuant to Rule 28.1(a)(i) of the City Code on Takeovers and Mergers (cont’d) Basis of Opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included evaluating
Slide 40: Report of J.P. Morgan pursuant to Rule 28.1(a)(ii)
Report of J.P. Morgan pursuant to Rule 28.1(a)(ii) of the City Code on Takeovers and Mergers The Directors (the “Directors”) AbbVie Inc. 1 North Waukegan Road North Chicago Illinois 60064 United States of America June 23, 2014 Dear Sirs Report by the financial adviser to AbbVie Inc. (the “Company”)