Shire Confirms Rejection of AbbVie Proposal

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION Shire plc Shire Confirms Rejection of AbbVie Proposal Dublin, Ireland - June 20, 2014 - Shire plc ("Shire" or the "Company") (LSE:SHP, NASDAQ: SHPG) notes the announcement made by AbbVie Inc. ("AbbVie") andconfirms that on 30 May 2014, Shire received an unsolicited and highlyconditional proposal from AbbVie (the "Proposal") regarding a possible cash andshare offer for Shire. This Proposal has been rejected. The Proposal comprised £20.44 in cash and 0.7988 AbbVie shares per Shire share.The Proposal involved a new US listed holding company with a UK tax domicile. Based on AbbVie's 30 day volume weighted average share price of US$54.10, theProposal represents a value of £46.11 per Shire share (comprising 44% cash and56% AbbVie shares). The Proposal represents: * A premium of 23% to Shire's share price of £37.38 on 19 June 2014 (the business day prior to this announcement); and * A premium of 30% to Shire's 30 day volume weighted average share price of £ 35.43. The Proposal follows two earlier proposals, which were also rejected. AtAbbVie's request, Shire met with AbbVie to enable AbbVie to explain key aspectsof the Proposal. Following this meeting, the Board of Shire decided unanimouslyto reject the Proposal on the basis that it fundamentally undervalued theCompany and its prospects. The Board also had concerns regarding the execution risks associated with theproposed inversion structure, as AbbVie would redomicile in the UK for taxpurposes. In particular, the Board of Shire believes: * The Proposal fundamentally undervalued Shire and its prospects as a leader in Rare Diseases and Specialty Markets * New management has achieved a step-change in Shire's performance, resulting in significantly accelerated growth and increased shareholder returns over the last 12 months * Shire will more than double its 2013 annual product sales to US$10 billion by 2020 * The Proposal would deny Shire shareholders the full benefits of Shire's growth strategy Susan Kilsby, Chairman of Shire, said: "Shire has a long track record ofdelivering for shareholders and addressing unmet patient needs. Ourhigh-performing management team and focused strategy are producing evenstronger results, reflected in our recent top-line growth and increasedprofitability. With an expanded portfolio focused on high-growth opportunities, an efficientcost base and an enhanced innovative pipeline, we have put in place a platformfor long-term value creation. We believe that Shire has a strong independentfuture. The Board believes the Proposal fundamentally undervalued Shire and itsprospects and that as an independent company Shire's focused growth strategywill continue to deliver significant shareholder value and patient benefits." Shareholders are strongly advised to take no action in relation to theProposal. There can be no certainty that any firm offer will be made, nor as tothe terms on which any firm offer might be made. This statement is being made by Shire without the prior agreement or approvalof AbbVie. Shire's Strong Independent Prospects The Board of Shire believes strongly that the Company has created a platform todeliver sustainable sales growth and superior patient outcomes. The Board'sconfidence is built upon the Company's strong track record of growth andtransformation under new management. From 2008 to 2013, Shire's product sales increased at a compound annual rate of11.6% and Non GAAP diluted earnings per ADS grew at a compound annual rate of14.7% over the same time frame(1). New management has since sharpened strategic focus and improved operationaldiscipline, achieving a step-change in Shire's performance. These initiativeshave produced: * 19% product sales growth from Q12013 to Q12014 * Non GAAP EBITDA margin up eight percentage points over the last year from 37% (Q12013) to 45% (Q12014)(2) * Rare Diseases business unit growth to US$2 billion in product sales to become Shire's largest business unit(3) * An innovative pipeline significantly strengthened with multiple late stage opportunities * Total shareholder returns, including reinvestment of dividends, of 99% from 2 May 2013 to 19 June 2014 (the business day prior to this announcement) Shire has assembled the core elements required to drive innovation and generatesuperior returns over the long-term with an experienced and high-performingmanagement team, enhanced capabilities and lean infrastructure, competitiveoperational and financial scale, and a portfolio focused on high-growthopportunities. These elements are reflected in Shire's Long Range Plan ("LRP"). The LRP was updated as part of Shire's normal annual planning cycle inSeptember 2013 and was reviewed by the Board in October 2013. A revised LRP wasdeveloped to reflect the acquisition of ViroPharma, the disposal of Dermagraft,the termination of the Vyvanse Major Depressive Disorder program, 2013 fullyear reported financial results and other events in 2014. This revised LRP wasreviewed by the Board most recently in June 2014. The LRP underpins the Board's confidence that Shire will deliver double-digitcompound annual product sales growth from its current portfolio through 2020,more than doubling its 2013 annual product sales to US$10 billion. Furthermore,the LRP does not include the potential upside from further accretive M&A. Investor Call The Company will be hosting an investor call on Monday, 23 June 2014. Detailsof this call will be provided in due course. Key Sources, Bases and Assumptions The Shire forecasts and targets included in this announcement are derived fromShire's LRP, business papers produced to support the LRP and Shire paperssubsequently produced as part of the business planning process. The forecast product sales targets in this announcement are consistent with theLRP for the period from 2014 to 2020, which is at constant exchange rates, andreflects net sales for each product and key line extensions currentlyidentified as in Phase III, Phase II and those in (or soon to enter) Phase Iincluded in the LRP as launching before the end of 2020. The forecast product sales included in the LRP are risk-adjusted to reflectShire's assessment of the individual probability of launch of products indevelopment, and the probability of success in further life cycle managementtrials. Estimates for these probabilities are based on industry wide data forrelevant clinical trials in the pharmaceutical industry at a similar stage ofdevelopment. For each pharmaceutical product, there is a range of possible outcomes fromclinical development, driven by a number of variables, including safety,efficacy and product labelling. In addition, if a product is approved, theeffect of commercial factors including the patient population, the competitiveenvironment, pricing and reimbursement is also uncertain. As a result, theactual net sales achieved by a product over its commercial life will bedifferent, perhaps materially so, from the risk adjusted net sales figures inthis announcement and should be considered in this light. Attention is drawn to the notice set out under the heading Forward-LookingStatements below. Notes The first proposal from AbbVie, received on 5 May 2014, comprised £16.23 incash and 0.7680 AbbVie shares per Shire share, representing a value of £38.97per Shire share (based on AbbVie's 30 day volume weighted average share priceof US$49.64). The second proposal from AbbVie received on 13 May 2014,comprised £17.13 in cash and 0.7680 AbbVie shares per Shire share, representinga value of £39.96 per Shire share (based on AbbVie's 30 day volume weightedaverage share price of US$50.05). The Board of Shire unanimously rejected bothproposals. The value of the 5 May 2014 proposal of £38.97 is based on US$49.64 per AbbVieshare (30 day volume weighted average share price to 2 May 2014 (the businessday prior to the 5 May 2014 proposal being received)) and a GBP/US$ foreignexchange rate of 1/1.6761 (30 day average exchange rate to 2 May 2014).US$49.64 per AbbVie share (30 day volume weighted average share price) iscalculated using the price and volume of each AbbVie share trade between 3April 2014 and 2 May 2014 as provided by Bloomberg. The value of the 13 May 2014 proposal of £39.96 is based on US$50.05 per AbbVieshare (30 day volume weighted average share price to 12 May 2014 (the businessday prior to the 13 May 2014 proposal being received)) and a GBP/US$ foreignexchange rate of 1/1.6836 (30 day average exchange rate to 12 May 2014).US$50.05 per AbbVie share (30 day volume weighted average share price) iscalculated using the price and volume of each AbbVie share trade between 13April 2014 and 12 May 2014 as provided by Bloomberg. The 30 day volume weighted average share price value of the Proposal of £46.11is based on US$54.10 per AbbVie share (30 day volume weighted average shareprice to 19 June 2014 (the business day prior to this announcement)) and a GBP/US$ foreign exchange rate of 1/1.6836 (30 day average exchange rate to 19 June2014). US$54.10 per AbbVie share (30 day volume weighted average share price)is calculated using the price and volume of each AbbVie share trade between 21May 2014 and 19 June 2014 as provided by Bloomberg. £37.38 per Shire share on 19 June 2014 (the business day prior to thisannouncement) is provided by the London Stock Exchange. £35.43 per Shire share (30 day volume weighted average share price) iscalculated using the price and volume of each Shire share trade between 21 May2014 and 19 June 2014 as provided by the London Stock Exchange. 1. On a US GAAP basis diluted earnings per ADS compound annual growth rate was 32.7% over the same 2008 to 2013 period. 2. The most directly comparable measure under US GAAP is net income, which was US$230 million in Q12014 (Q12013: $65 million). 3. Product sales of US$2 billion for the 2013 financial year on a pro forma basis including Cinryze product sales (which was acquired in January 2014). CONTACTS Media enquiries ShireJessica Mann +44 1256 894 280Stephanie Fagan +1 201 572 9581 FTI Consulting (Media Adviser to the Company)Andrew Lorenz (London) +44 77 7564 1807Ben Atwell (London) +44 20 3727 1000David B. Roady (New York) +1 212 850 5600Robert Stanislaro (New York) +1 212 850 5600 Citi (Financial Adviser to the Company)Christopher Hite +1 212 816 1818Jan Skarbek +44 20 7986 4000 Evercore (Financial Adviser to the Company)Francois Maisonrouge +44 20 7653 6000Edward Banks Morgan Stanley (Financial Adviser to the Company)Michele Colocci +44 20 7425 8000Colm DonlonPeter Moorhouse (Corporate Broking) A copy of this announcement will be available at www.Shire.com. The content ofthe website referred to in this announcement is not incorporated into and doesnot form part of this announcement. NOTES TO EDITORS Shire enables people with life-altering conditions to lead better lives. We provide treatments in Rare Diseases, Neuroscience, Gastrointestinal andInternal Medicine and we are developing treatments for symptomatic conditionstreated by specialist physicians in other targeted therapeutic areas. Shire's product sales from continuing operations have increased from US$2,754million in the financial year to 31 December 2008 to US$4,757 million in thefinancial year to 31 December 2013, representing a five-year compound annualgrowth rate of 11.6%. Shire's Non GAAP diluted earnings per ADS have increasedfrom US$3.86 in the financial year to 31 December 2008 to US$7.66 in thefinancial year to 31 December 2013, representing a five-year compound annualgrowth rate of 14.7%. Shire's US GAAP diluted earnings per ADS have increasedfrom US$0.86 in the financial year to 31 December 2008 to US$3.53 in thefinancial year to 31 December 2013, representing a five-year compound annualgrowth rate of 32.7%. www.shire.com RULE 2.10 REQUIREMENT In accordance with Rule 2.10 of the Code, the Company confirms that as at closeof business on 19 June 2014, its issued share capital consisted of 589,204,321ordinary shares of 5 pence each, with ISIN Number JE00B2QKY057, which carryvoting rights of one vote per share. Shire has an American Depositary Share ("ADS") programme for which Citibank,N.A. acts as Depositary. One ADS represents three ordinary shares of 5 penceeach, with ISIN Number US82481R1068. The ADSs trade on the NASDAQ Global SelectMarket. DISCLOSURE REQUIREMENTS OF THE TAKEOVER CODE (THE "CODE") Under Rule 8.3(a) of the Code, any person who is interested in 1% or more ofany class of relevant securities of an offeree company or of any securitiesexchange offeror (being any offeror other than an offeror in respect of whichit has been announced that its offer is, or is likely to be, solely in cash)must make an Opening Position Disclosure following the commencement of theoffer period and, if later, following the announcement in which any securitiesexchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interestsand short positions in, and rights to subscribe for, any relevant securities ofeach of (i) the offeree company and (ii) any securities exchange offeror(s). AnOpening Position Disclosure by a person to whom Rule 8.3(a) applies must bemade by no later than 3.30 p.m. (London time) on the 10th business dayfollowing the commencement of the offer period and, if appropriate, by no laterthan 3.30 p.m. (London time) on the 10th business day following theannouncement in which any securities exchange offeror is first identified.Relevant persons who deal in the relevant securities of the offeree company orof a securities exchange offeror prior to the deadline for making an OpeningPosition Disclosure must instead make a Dealing Disclosure. Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%or more of any class of relevant securities of the offeree company or of anysecurities exchange offeror must make a Dealing Disclosure if the person dealsin any relevant securities of the offeree company or of any securities exchangeofferor. A Dealing Disclosure must contain details of the dealing concerned andof the person's interests and short positions in, and rights to subscribe for,any relevant securities of each of (i) the offeree company and (ii) anysecurities exchange offeror, save to the extent that these details havepreviously been disclosed under Rule 8. A Dealing Disclosure by a person towhom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time)on the business day following the date of the relevant dealing. If two or more persons act together pursuant to an agreement or understanding,whether formal or informal, to acquire or control an interest in relevantsecurities of an offeree company or a securities exchange offeror, they will bedeemed to be a single person for the purpose of Rule 8.3. Opening Position Disclosures must also be made by the offeree company and byany offeror and Dealing Disclosures must also be made by the offeree company,by any offeror and by any persons acting in concert with any of them (see Rules8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect of whose relevantsecurities Opening Position Disclosures and Dealing Disclosures must be madecan be found in the Disclosure Table on the Takeover Panel's website atwww.thetakeoverpanel.org.uk, including details of the number of relevantsecurities in issue, when the offer period commenced and when any offeror wasfirst identified. If you are in any doubt as to whether you are required tomake an Opening Position Disclosure or a Dealing Disclosure, you should contactthe Panel's Market Surveillance Unit on +44 (0)20 7638 0129. FURTHER INFORMATION Evercore Partners International LLP ("Evercore"), which is authorised andregulated in the United Kingdom by the Financial Conduct Authority, is actingas financial adviser exclusively for Shire and no one else in connection withthe matters referred to in this announcement and will not regard any otherperson as its client in relation to the matters referred to in thisannouncement and will not be responsible to anyone other than Shire forproviding the protections afforded to clients of Evercore, nor for providingadvice in relation to the matters referred to in this announcement. Morgan Stanley & Co. International plc, which is authorised by the PrudentialRegulation Authority and regulated by the Financial Conduct Authority and thePrudential Regulation Authority in the United Kingdom, is acting as financialadviser to Shire and no one else in connection with the matters referred to inthis announcement. In connection with such matters, Morgan Stanley & Co.International plc, its affiliates and its and their respective directors,officers, employees and agents will not regard any other person as theirclient, nor will they be responsible to any other person other than Shire forproviding the protections afforded to their clients or for providing advice inconnection with the contents of this announcement or any other matter referredto herein. Citigroup Global Markets Limited, which is authorised by the PrudentialRegulation Authority and regulated by the Financial Conduct Authority and thePrudential Regulation Authority, each in the United Kingdom, is acting asfinancial adviser to Shire and for no one else in connection with the mattersset out in this announcement. In connection with such matters, Citigroup GlobalMarkets Limited, its affiliates and its and their respective directors,officers, employees and agents will not regard any other person as theirclient, nor will they be responsible to anyone other than Shire for providingthe protections afforded to its clients or for providing advice in connectionwith the contents of this announcement or any matter referred to herein. FORWARD - LOOKING STATEMENTS - "SAFE HARBOR" STATEMENT UNDER THE PRIVATESECURITIES LITIGATION REFORM ACT OF 1995 Statements included in this announcement that are not historical facts areforward-looking statements. Forward-looking statements involve a number ofrisks and uncertainties and are subject to change at any time. In the eventsuch risks or uncertainties materialize, Shire's results could be materiallyadversely affected. The risks and uncertainties include, but are not limitedto, that: * Shire's products may not be a commercial success; * revenues from ADDERALL XR are subject to generic erosion and revenues from INTUNIV will become subject to generic competition starting in December 2014; * the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues, financial condition and results of operations; * Shire conducts its own manufacturing operations for certain of its Rare Diseases products and is reliant on third party contractors to manufacture other products and to provide goods and services. Some of Shire's products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire's products may result in the Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time; * the development, approval and manufacturing of Shire's products is subject to extensive oversight by various regulatory agencies. Submission of an application for regulatory approval of any of Shire's product candidates, such as Shire's planned submission of a New Drug Application to the FDA for lifitegrast as a treatment for the signs and symptoms of dry eye disease in adults, may be delayed for any number of reasons and, once submitted, may be subjected to lengthy review and ultimately rejected. Moreover, regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches; * the actions of certain customers could affect Shire's ability to sell or market products profitably. Fluctuations in buying or distribution patterns by such customers can adversely impact Shire's revenues, financial conditions or results of operations; * investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire's activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines; * adverse outcomes in legal matters and other disputes, including Shire's ability to enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire's revenues, financial condition or results of operations; * Shire faces intense competition for highly qualified personnel from other companies, academic institutions, government entities and other organizations. Shire is undergoing a corporate reorganization and the consequent uncertainty could adversely impact Shire's ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives; * failure to achieve Shire's strategic objectives with respect to the acquisition of ViroPharma Incorporated may adversely affect Shire's financial condition and results of operations; and other risks and uncertainties detailed from time to time in Shire's filingswith the US Securities and Exchange Commission, including its most recentAnnual Report on Form 10-K. NON GAAP MEASURES * The announcement contains financial measures not prepared in accordance with US GAAP. * These Non GAAP financial measures are used by Shire's management to make operating decisions because they facilitate internal comparisons of the Company's performance to historical results and to competitors' results. They should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP. * The following items are excluded from these Non GAAP financial measures: * + Amortization and asset impairments: + o Intangible asset amortization and impairment charges; and o Other than temporary impairment of investments. + Acquisitions and integration activities: + o Upfront payments and milestones in respect of in-licensed and acquired products; o Costs associated with acquisitions, including transaction costs, and fair value adjustments on contingent consideration and acquired inventory; o Costs associated with the integration of companies; and o Non-controlling interest in consolidated variable interest entities. + Divestments, re-organizations and discontinued operations: + o Gains and losses on the sale of non-core assets; o Costs associated with restructuring and re-organization activities; o Termination costs; and o Income / (losses) from discontinued operations. + Legal and litigation costs: + o Net legal costs related to the settlement of litigation, government investigations and other disputes (excluding internal legal team costs). * A reconciliation of these Non GAAP financial measures to the most directly comparable measure under US GAAP can be found within the Investor's section on Shire's website at www.Shire.com. 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