AbbVie : to Acquire Allergan

NORTH CHICAGO - 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.

Under the terms of the Transaction Agreement, Allergan Shareholders will receive 0.8660 AbbVie Shares and $120.30 in cash for each Allergan Share that they hold, for a total consideration of $188.24 per Allergan Share.2 The transaction represents a 45% premium to the closing price of Allergan's Shares on June 24, 2019.

If the Acquisition would otherwise result in the issuance of AbbVie Shares in excess of 19.99% of the AbbVie Shares outstanding immediately prior to the Completion (as reasonably determined by AbbVie) (the "Share Cap"), the Exchange Ratio shall be reduced by the smallest number (rounded to the nearest 0.0001) that causes the total number of AbbVie Shares issuable in the Acquisition to not exceed the Share Cap (the "Exchange Ratio Modification Number"), and the Cash Consideration shall be increased by an amount in cash equal to (x) the Exchange Ratio Modification Number multiplied by (y) the VWAP of the AbbVie Shares.

Questions: 1. Can someone please explain paragraph 3. Not getting it at all. 2. Is it fair to say that in this acquisition, there are no "arbitrage" opportunities? 3. Is this a fixed exchange ratio or floating based on paragraph 3?

Thank you kindly for any help.

2 Comments
 
Most Helpful
  1. It's a mechanism to avoid triggering a shareholder vote, which would be required if they issued 20% or more of their stock as part of the deal (and which introduces risk and extends the closing timeline)
  2. There's always an arbitrage opp
  3. Fixed, with an asterisk I guess. That option to change the cash/stock mix probably takes into account that by the time the regulatory approvals and other delays are out of the way, AbbVie's diluted share count might have changed. Probably very little likelihood that it gets exercised.
 

Labore quia in pariatur ea. Assumenda veniam optio qui dolores. Non ea deserunt autem ut esse aliquid nesciunt.

Dolores et aperiam eos vel quo. Dolor necessitatibus assumenda dignissimos dicta quod. Sit et laboriosam laudantium pariatur necessitatibus. Quis cupiditate et aut modi amet odit beatae. Perspiciatis nisi dolorum qui perspiciatis consequuntur esse. Molestiae qui accusamus quis dolores temporibus. Alias quod sit autem et deserunt enim.

Aut voluptas saepe accusantium et cupiditate. Officia nesciunt harum dolores laboriosam perspiciatis. Impedit est cupiditate magnam atque corrupti. Corrupti velit nobis dolore culpa eveniet.

Neque maiores quia in ad accusantium maiores. Libero quis magnam quae. Dolor et nam est tenetur debitis. Nulla cupiditate modi ipsa velit ut. Dignissimos quae ducimus officiis et dignissimos est. Eius dolor aut omnis atque ut vero deserunt.

Career Advancement Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • JPMorgan 01 98.4%
  • Guggenheim Partners 02 97.9%
  • Morgan Stanley 06 97.4%

Overall Employee Satisfaction

October 2026 Investment Banking

  • Moelis & Company No 99.5%
  • Morgan Stanley 02 99.0%
  • Evercore 01 98.4%
  • Banco Santander 02 97.9%
  • BMO Capital Markets 13 97.4%

Professional Growth Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • Morgan Stanley 05 98.4%
  • Goldman Sachs 01 97.9%
  • JPMorgan No 97.4%

Total Avg Compensation

October 2026 Investment Banking

  • Vice President (16) $429
  • Associates (57) $264
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (28) $184
  • Intern/Summer Associate (16) $161
  • 1st Year Analyst (84) $151
  • Intern/Summer Analyst (76) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
kanon's picture
kanon
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Secyh62's picture
Secyh62
99.0
5
DrApeman's picture
DrApeman
98.9
6
GameTheory's picture
GameTheory
98.9
7
Betsy Massar's picture
Betsy Massar
98.9
8
CompBanker's picture
CompBanker
98.9
9
dosk17's picture
dosk17
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”