8-KMaterial AgreementsOther EventsExhibits & Filings

AbbVie Inc. 8-K Report, Material Agreement (Oct 21, 2014)

Filed October 21, 2014For Securities:ABBV

Summary

AbbVie Inc. (ABBV) filed an 8-K on October 20, 2014, to report the mutual termination of its previously announced combination agreement with Shire plc. The decision followed AbbVie's Board of Directors withdrawing its recommendation for the transaction and advising its stockholders to vote against it. Consequently, AbbVie and Shire agreed to terminate the Scheme of Arrangement and the Merger Agreement. As part of the termination, AbbVie will pay Shire a break fee of approximately $1.635 billion. This fee represents Shire's sole and exclusive remedy for any losses related to the terminated agreement. The termination also triggered mandatory cancellation events under AbbVie's bridge credit and term loan agreements, leading to the termination of commitments under those facilities. Additionally, AbbVie's revolving credit agreement saw a reduction in commitments and the release of certain obligors and covenants.

Key Highlights

  • 1AbbVie and Shire have mutually terminated their proposed combination agreement.
  • 2AbbVie's Board of Directors withdrew its recommendation for the Shire transaction.
  • 3AbbVie will pay Shire a break fee of approximately $1.635 billion.
  • 4The termination triggers mandatory cancellation of commitments under AbbVie's 364-Day Bridge Credit Agreement and Term Loan Credit Agreement.
  • 5AbbVie's Revolving Credit Agreement commitments are reduced from $4 billion to $3 billion, with certain covenants and obligors released.
  • 6The termination signifies a significant shift in AbbVie's strategic direction and potential M&A activities at that time.

Frequently Asked Questions

AbbVie's Board of Directors withdrew its prior recommendation in favor of the combination and advised AbbVie stockholders to vote against it, leading to the mutual decision with Shire to terminate the agreement.

AbbVie will pay Shire a break fee of approximately $1.635 billion. This termination also led to the cancellation of commitments under its bridge and term loan credit agreements and a reduction in commitments under its revolving credit facility.

No, the Termination Agreement states that the break fee of approximately $1.635 billion is Shire's sole and exclusive remedy against AbbVie for any and all losses and damages suffered in connection with the Co-operation Agreement and the related transactions.

The termination triggered a 'Mandatory Cancellation Event' under AbbVie's 364-Day Bridge Credit Agreement and Term Loan Credit Agreement, causing automatic termination of commitments under these facilities. The Revolving Credit Agreement had its commitments reduced from $4 billion to $3 billion, and certain obligors, covenants, representations, and warranties related to the combination were released or eliminated.