8-KOther EventsExhibits & Filings

AbbVie Inc. 8-K Report, Corporate Update (May 7, 2015)

Filed May 7, 2015For Securities:ABBV

Summary

AbbVie Inc. (ABBV) filed this Form 8-K on May 7, 2015, to report on the execution of an Underwriting Agreement for the issuance and sale of $16.7 billion aggregate principal amount of senior notes. These notes, issued across various maturities from 2018 to 2045 and bearing interest rates ranging from 1.800% to 4.700%, are being used primarily to finance the cash component of AbbVie's acquisition of Pharmacyclics, Inc. This significant debt issuance highlights AbbVie's strategic capital allocation to fund a major acquisition aimed at expanding its portfolio. The offering of these notes is not contingent on the completion of the Pharmacyclics acquisition. However, the company has outlined a provision for a special mandatory redemption at 101% of the principal amount plus accrued interest if the acquisition does not close by February 3, 2016, or if the merger agreement is terminated. This structure ensures that the proceeds are earmarked for the acquisition, while providing a mechanism to return capital to noteholders if the deal falls through, mitigating risk for both parties.

Key Highlights

  • 1AbbVie issued $16.7 billion in senior notes to fund the acquisition of Pharmacyclics, Inc.
  • 2The notes have maturities ranging from 2018 to 2045 with interest rates between 1.800% and 4.700%.
  • 3Proceeds will also be used for potential share repurchases related to the acquisition and for general corporate purposes.
  • 4The note offering is independent of the Pharmacyclics acquisition closing.
  • 5A special mandatory redemption clause exists if the Pharmacyclics acquisition does not close by February 3, 2016.
  • 6The redemption price in case of a failed acquisition is 101% of the principal amount plus accrued interest.
  • 7The closing of the notes offering was scheduled for May 14, 2015.

Frequently Asked Questions

The primary purpose of this substantial debt issuance is to fund the cash component of AbbVie's acquisition of Pharmacyclics, Inc. A portion of the proceeds may also be used for share repurchases related to this acquisition and for general corporate purposes.

If the Pharmacyclics acquisition does not close by February 3, 2016, or if the merger agreement is terminated, AbbVie is obligated to redeem all of the issued senior notes. The redemption price will be 101% of the principal amount, plus any accrued and unpaid interest.

AbbVie is issuing a total of $16.7 billion in senior notes across several tranches: $3 billion of 1.800% notes due 2018, $3.75 billion of 2.500% notes due 2020, $1 billion of 3.200% notes due 2022, $3.75 billion of 3.600% notes due 2025, $2.5 billion of 4.500% notes due 2035, and $2.7 billion of 4.700% notes due 2045.

No, the offering of the senior notes is not contingent on the completion of the Pharmacyclics acquisition. AbbVie can proceed with the debt offering and use the proceeds for other approved purposes, such as general corporate uses, even if the acquisition does not materialize, although specific redemption terms apply if the acquisition fails.