8-KMaterial AgreementsSecurities & ListingRegulation FD+1

AbbVie Inc. 8-K Report, Material Agreement (Apr 29, 2016)

Filed April 29, 2016For Securities:ABBV

Summary

AbbVie Inc. has announced a significant acquisition via an Agreement and Plan of Merger with Stemcentrx, Inc., filed on April 29, 2016. This strategic move involves acquiring all outstanding equity interests in Stemcentrx for an upfront consideration of approximately $5.8 billion. The deal comprises $2.0 billion in cash and $3.8 billion in AbbVie common stock (valued at $60.664 per share), with provisions to ensure at least 40.1% of the upfront consideration is in stock. Additionally, former Stemcentrx security holders are eligible for up to $4.0 billion in future milestone payments tied to the development and regulatory approval of Stemcentrx compounds, notably Rova-T. This acquisition is a substantial investment aimed at bolstering AbbVie's oncology pipeline, particularly with Stemcentrx's lead candidate Rova-T. The transaction is expected to close by the end of Q2 2016, subject to customary closing conditions, including antitrust review. In parallel, AbbVie's board has authorized an additional $4 billion for its share repurchase program, with plans for an accelerated share repurchase upon the closing of the Stemcentrx acquisition, indicating confidence in shareholder value and future growth.

Key Highlights

  • 1AbbVie to acquire Stemcentrx for approximately $5.8 billion upfront consideration, composed of $2.0 billion cash and $3.8 billion in AbbVie stock.
  • 2Potential for up to $4.0 billion in future milestone payments contingent on development and regulatory success of Stemcentrx compounds, including Rova-T.
  • 3The acquisition aims to significantly enhance AbbVie's oncology portfolio, with Rova-T identified as a key development candidate.
  • 4The deal structure includes a provision for at least 40.1% of the upfront merger consideration to be paid in AbbVie common stock.
  • 5Transaction is expected to close by the end of the second quarter of 2016, pending standard closing conditions and antitrust approval.
  • 6AbbVie announced an additional $4 billion increase to its share repurchase program, signaling a commitment to returning capital to shareholders.

Frequently Asked Questions

The primary strategic rationale is to significantly strengthen AbbVie's oncology pipeline, particularly with the addition of Stemcentrx's lead development candidate, Rova-T. This acquisition represents a major expansion into oncology, a key growth area for AbbVie.

The upfront consideration is approximately $5.8 billion. Additionally, former Stemcentrx security holders are eligible to receive up to $4.0 billion in milestone payments, bringing the potential total value of the transaction to approximately $9.8 billion if all milestones are achieved.

The upfront consideration will be paid using approximately $2.0 billion in cash and $3.8 billion in AbbVie common stock. The agreement specifies that at least 40.1% of the upfront consideration will be in AbbVie stock. The issuance of stock is exempt from registration under Section 4(2) of the Securities Act of 1933.

The merger is anticipated to be completed by the end of the second quarter of 2016. Key closing conditions include the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions.