Preliminary Prospectus Supplement
Table of Contents

Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 333-202168

 

The information in this preliminary prospectus supplement and the accompanying prospectus is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to completion, dated February 19, 2015

Preliminary prospectus supplement

(To prospectus dated February 19, 2015)

$4,200,000,000

 

LOGO

Actavis plc

            % Mandatory Convertible Preferred Shares, Series A

We are offering             of our     % Mandatory Convertible Preferred Shares, Series A, par value $0.0001 per share (the “Mandatory Convertible Preferred Shares”).

Dividends on the Mandatory Convertible Preferred Shares will be payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee thereof, at an annual rate of     % on the liquidation preference of $1,000.00 per Mandatory Convertible Preferred Share. We may pay declared dividends in cash, by delivery of our ordinary shares or by delivery of any combination of cash and our ordinary shares, as determined by us in our sole discretion, subject to certain limitations, on March 1, June 1, September 1 and December 1 of each year commencing June 1, 2015, to and including March 1, 2018.

Each Mandatory Convertible Preferred Share will automatically convert on March 1, 2018, into between             and             ordinary shares, subject to anti-dilution adjustments. The number of our ordinary shares issuable on conversion of the Mandatory Convertible Preferred Shares will be determined based on the average VWAP (as defined herein) per ordinary share over the 20 consecutive trading day period beginning on and including the 22nd scheduled trading day immediately preceding the mandatory conversion date (as defined herein). At any time prior to March 1, 2018, other than during a fundamental change conversion period (as defined herein), holders of the Mandatory Convertible Preferred Shares may elect to convert each Mandatory Convertible Preferred Share into our ordinary shares at the minimum conversion rate of             ordinary shares per Mandatory Convertible Preferred Share, subject to anti-dilution adjustments. In addition, holders may elect to convert any Mandatory Convertible Preferred Shares during a specified period beginning on the fundamental change effective date (as defined herein), in which case such Mandatory Convertible Preferred Shares will be converted into our ordinary shares at the fundamental change conversion rate (as defined herein) and converting holders will also be entitled to receive a fundamental change dividend make-whole amount and accumulated dividend amount (each as defined herein).

We intend to use the net proceeds of this offering, together with the net proceeds of the Ordinary Shares Offering and the proposed Debt Financing (each as described herein) to finance our pending acquisition of Allergan, Inc. (“Allergan”) (as described herein), and to pay related fees and expenses. The completion of this offering is not contingent on the closing of the Ordinary Shares Offering (nor is the completion of the Ordinary Shares Offering contingent on the closing of this offering) or the completion of our acquisition of Allergan, which, if completed, will occur subsequent to the closing of this offering.

Concurrently with this offering, we are offering             of our ordinary shares, par value $0.0001 per share (the “Ordinary Shares Offering”). The Ordinary Shares Offering is being made by means of a separate prospectus supplement and not by means of this prospectus supplement. This prospectus supplement is not an offer to sell or a solicitation of an offer to buy any securities being offered in the Ordinary Shares Offering. See “Summary—Allergan Acquisition” and “Use of Proceeds”.

Prior to this offering, there has been no public market for the Mandatory Convertible Preferred Shares. We intend to apply to have the Mandatory Convertible Preferred Shares listed on the New York Stock Exchange under the symbol “ACTPRA”. Our ordinary shares are listed on the New York Stock Exchange (the “NYSE”) under the symbol “ACT”. On February 13, 2015 the last reported sale price of our ordinary shares on the NYSE was $285.37 per share.

Investing in the Mandatory Convertible Preferred Shares involves risk. See “Risk factors” beginning on page S-24 of this prospectus supplement and page 8 of the accompanying prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Mandatory Convertible Preferred Shares or determined that this prospectus supplement or the accompanying prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

      Per share      Total  

Public offering price

   $                    $                

Underwriting discounts and commissions

   $         $     

Proceeds to us(1)

   $         $     
(1)   Before deducting expenses payable by us related to this offering, estimated at $7.0 million.

We have granted the underwriters the option to purchase up to an additional                  Mandatory Convertible Preferred Shares from us solely to cover overallotments, if any, at the public offering price, less the underwriting discounts and commissions within 30 days from the date of this prospectus supplement. See the section of this prospectus supplement entitled “Underwriting” beginning on page S-105 of this prospectus supplement.

The underwriters expect to deliver the Mandatory Convertible Preferred Shares to purchasers on or about                     , 2015.

Joint book-running managers

 

J.P. Morgan  

Mizuho

Securities

 

Wells Fargo

Securities

  Morgan Stanley

 

Barclays   Citigroup

The date of this prospectus supplement is February     , 2015.


Table of Contents

Table of contents

 

Prospectus supplement   

About this prospectus supplement

     S-1   

Trademarks and trade names

     S-2   

Where you can find more information

     S-3   

Incorporation of certain documents by reference

     S-4   

Cautionary note regarding forward-looking statements

     S-5   

Summary

     S-8   

The offering

     S-13   

Summary historical and pro forma financial data

     S-22   

Risk factors

     S-24   

Use of proceeds

     S-40   

Capitalization

     S-42   

Price range of ordinary shares and dividend policy

     S-44   

Unaudited pro forma combined financial information

     S-45   

Description of Mandatory Convertible Preferred Shares

     S-62   

Certain United States federal income tax considerations

     S-90   

Certain Irish tax considerations

     S-97   

Underwriting

     S-105   

Legal matters

     S-113   
Prospectus   

About this prospectus

     4   

Where you can find more information

     4   

Incorporation of certain documents by reference

     5   

Company overview

     7   

Risk factors

     8   

Cautionary note regarding forward looking statements

     9   

Ratio of earnings to fixed charges and ratio of earnings to combined fixed charges and preferred dividends

     12   

Use of proceeds

     13   

Description of Actavis Funding SCS debt securities

     14   

Description of Actavis share capital

     37   

Description of Actavis ordinary shares

     38   

Description of Actavis serial preferred shares

     43   

Description of Actavis depositary shares

     45   

Description of Actavis ordinary share warrants

     46   

Description of Actavis ordinary share purchase contracts and ordinary share purchase units

     47   

Plan of distribution

     48   

Legal matters

     50   

Experts

     50   

Enforcement of civil liability under United States federal securities laws

     51   

Certain insolvency considerations under Luxembourg law

     52   

 

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We are responsible for the information contained and incorporated by reference in this prospectus supplement, the accompanying prospectus and in any related free writing prospectus we prepare or authorize. We have not, and the underwriters have not, authorized anyone to provide you with any other information, and we and the underwriters take no responsibility for any other information that others may give you. Neither we nor the underwriters are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or in any related free writing prospectus is accurate as of any date other than the date of the document containing such information.

 

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About this prospectus supplement

This document is in two parts. The first part is this prospectus supplement, which describes certain matters relating to us and this offering of Mandatory Convertible Preferred Shares and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into the accompanying prospectus. The second part, the accompanying prospectus, dated February 19, 2015, gives more general information about us and the securities we may offer from time to time under our shelf registration statement, some of which may not apply to this offering of Mandatory Convertible Preferred Shares. If the description of this offering of Mandatory Convertible Preferred Shares in the accompanying prospectus is different from the description in this prospectus supplement, you should rely on the information contained in this prospectus supplement.

You should read this prospectus supplement, the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus in their entirety, including the additional information described under “Where you can find more information” and “Incorporation of certain documents by reference” in this prospectus supplement, before deciding whether to invest in the Mandatory Convertible Preferred Shares offered by this prospectus supplement.

You should not consider any information in this prospectus supplement or the accompanying prospectus to be investment, legal or tax advice. You should consult your own counsel, accountants and other advisers for legal, tax, business, financial and related advice regarding the purchase of the Mandatory Convertible Preferred Shares offered by this prospectus supplement.

Unless indicated otherwise, or the context otherwise requires, references in this document to “Actavis plc,” “issuer,” “the Company,” “we,” “us,” and “our” are to Actavis plc and its consolidated subsidiaries. References to “dollars” and “$” are to United States dollars.

 

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Trademarks and trade names

This prospectus supplement contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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Where you can find more information

This prospectus supplement is part of a registration statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration process under the Securities Act of 1933, as amended (the “Securities Act”), relating to the securities to be offered in this offering. This prospectus supplement does not contain all of the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and the securities offered hereby, reference is hereby made to the registration statement. The registration statement, including the exhibits thereto, may be inspected at the Public Reference Room maintained by the SEC at the address set forth below. Statements contained herein concerning any document filed as an exhibit are not necessarily complete, and, in each instance, reference is made to the copy of such document filed as an exhibit to the registration statement. Each such statement is qualified in its entirety by such reference.

Actavis plc and Allergan file annual, quarterly and current reports and other information with the SEC. You may read and copy reports and other information that we file with the SEC at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the public reference rooms. The SEC also maintains an Internet site at http://www.sec.gov from which you can access our filings. The information contained on the SEC’s website is not incorporated by reference into this prospectus supplement or the accompanying prospectus and should not be considered to be part of the prospectus supplement or accompanying prospectus except as described in this section or in the “Incorporation of certain documents by reference” section.

 

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Incorporation of certain documents by reference

The rules of the SEC allow us to “incorporate by reference” information into this prospectus supplement, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus supplement. Information in this prospectus supplement supersedes information incorporated by reference from documents filed with the SEC prior to the date of this prospectus supplement, while information that we file later with the SEC will automatically update and supersede information contained in or previously incorporated by reference into this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying prospectus incorporate by reference the documents that we and Allergan have previously filed with the SEC. These documents contain important information about us and Allergan, respectively. The accompanying prospectus incorporates by reference certain documents that Actavis plc and Allergan filed with the SEC.

See “Incorporation of certain documents by reference” in the accompanying prospectus. This prospectus supplement and the accompanying prospectus incorporate by reference any future filings other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K, that Actavis plc and Allergan make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or after the date of this prospectus supplement and before the termination of the offering of the securities covered by this prospectus supplement.

We encourage you to read our and Allergan’s periodic and current reports, as they provide additional information about us and Allergan that prudent investors find important. You can obtain a copy of our filings at no cost on our website, http://www.actavis.com under the “Investors” link, then under the heading “Financial Information” and then under the subheading “SEC Filings.” You can obtain a copy of Allergan’s filings on its website, http://www.allergan.com. You can also obtain a copy of our filings at no cost by writing to our administrative headquarters, calling or emailing the following address, phone number and email address:

Actavis plc

Morris Corporate Center III

400 Interpace Parkway

Parsippany, New Jersey 07054

Attn: Investor Relations

(862) 261-7000

investor.relations@actavis.com

The information contained on or that can be accessed through our website or Allergan’s is not incorporated in, and is not part of, this prospectus supplement, the accompanying prospectus or the registration statement, and you should not rely on that information in making your investment decision unless that information is also in this prospectus supplement or the accompanying prospectus or has been expressly incorporated by reference into this prospectus supplement or the accompanying prospectus. Please note that we have included our website address and Allergan’s website address in this prospectus supplement solely as an inactive textual reference.

 

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Cautionary note regarding forward-looking statements

Any statements contained in this prospectus supplement, the accompanying prospectus and the information incorporated by reference herein and therein that refer to our estimated or anticipated future results or other non-historical facts are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) that reflect our current perspective of existing trends and information as of the date of the relevant document. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “should,” “future,” “estimate,” “expect,” “forecast,” “outlook,” “guidance,” “intend,” “may,” “might,” “will,” “possible,” “potential,” “predict,” “project,” “targets,” or other similar words, phrases or expressions. It is important to note that our goals and expectations are not predictions of actual performance. Actual results may differ materially from our current expectations depending upon a number of factors affecting our business. These factors include, among others:

 

 

our ability to successfully develop and commercialize new products;

 

 

our ability to conform to regulatory standards and receive requisite regulatory approvals;

 

 

availability of raw materials and other key ingredients;

 

 

uncertainty and costs of legal actions and government investigations;

 

 

the inherent uncertainty associated with financial projections;

 

 

fluctuations in our operating results and financial condition, particularly given our manufacturing and sales of branded and generic products;

 

 

risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs, and adverse tax consequences;

 

 

the adverse impact of substantial debt and other financial obligations on the ability to fulfill and/or refinance debt obligations;

 

 

risks associated with relationships with employees, vendors or key customers as a result of acquisitions of businesses, technologies or products;

 

 

our compliance with federal and state healthcare laws, including laws related to fraud, abuse, privacy security;

 

 

risks of the generic industry generally;

 

 

generic product competition with our branded products;

 

 

uncertainty associated with the development of commercially successful branded pharmaceutical products;

 

 

uncertainty associated with development and approval of commercially successful biosimilar products;

 

 

costs and efforts to defend or enforce technology rights, patents or other intellectual property;

 

 

expiration of our patents on our branded products and the potential for increased competition from generic manufacturers;

 

 

risks associated with owning the branded and generic version of a product;

 

 

competition between branded and generic products;

 

 

the ability of branded product manufacturers to limit the production, marketing and use of generic products;

 

 

our ability to obtain and afford third-party licenses and proprietary technology we need;

 

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our potential infringement of others’ proprietary rights;

 

 

our dependency on third-party service providers and third-party manufacturers and suppliers that in some cases may be the only source of finished products or raw materials that we need;

 

 

our competition with certain of our significant customers;

 

 

the impact of our returns, allowance and chargeback policies on our future revenue;

 

 

successful compliance with governmental regulations applicable to Actavis plc’s and our third party providers’ facilities, products and/or businesses;

 

 

the difficulty of predicting the timing or outcome of product development efforts and regulatory agency approvals or actions, if any;

 

 

our vulnerability to and ability to defend against product liability claims and obtain sufficient or any product liability insurance;

 

 

our ability to retain qualified employees and key personnel;

 

 

the effect of intangible assets and resulting impairment testing and impairment charges on our financial condition;

 

 

our ability to obtain additional debt or raise additional equity on terms that are favorable to us;

 

 

difficulties or delays in manufacturing;

 

 

our ability to manage environmental liabilities;

 

 

global economic conditions;

 

 

our ability to continue foreign operations in countries that have deteriorating political or diplomatic relationships with the United States;

 

 

our ability to continue to maintain global operations;

 

 

risks associated with tax liabilities, or changes in U.S. federal or international tax laws to which we are subject, including the risk that the Internal Revenue Service disagrees that we are a foreign corporation for U.S. federal tax purposes;

 

 

risks of fluctuations in foreign currency exchange rates;

 

 

risks associated with cyber-security and vulnerability of our information and employee, customer and business information that we store digitally;

 

 

our ability to maintain internal control over financial reporting;

 

 

changes in the laws and regulations, affecting among other things, availability, pricing and reimbursement of pharmaceutical products;

 

 

the highly competitive nature of the pharmaceutical industry;

 

 

our ability to successfully navigate consolidation of our distribution network and concentration of our customer base;

 

 

the difficulty of predicting the timing or outcome of pending or future litigation or government investigations;

 

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developments regarding products once they have reached the market; and

 

 

other risks and uncertainties including those discussed in “Risk factors” in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein. Additional information concerning factors that could cause actual results to differ materially from those in forward-looking statements include those discussed under “Risk factors” beginning on page S-25 of this prospectus supplement and page 8 of the accompanying prospectus, in “Forward looking statements” beginning on page 9 of the accompanying prospectus and in our periodic reports referred to in “Where you can find more information” above, including the risk factors summarized and included in Actavis plc’s and Allergan’s Annual Reports on Form 10-K for the year ended December 31, 2014. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this prospectus. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by these forward-looking statements.

 

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Summary

This summary highlights information contained elsewhere in this prospectus supplement and does not contain all of the information you should consider in making your investment decision. You should carefully read the entire prospectus supplement and accompanying prospectus and the information included or incorporated or deemed to be incorporated by reference herein and therein, including the section entitled “Risk factors” included in this prospectus supplement and the consolidated financial statements and the accompanying notes incorporated by reference in this prospectus supplement, before making an investment decision.

About Actavis plc

We are a global specialty pharmaceutical company engaged in the development, manufacturing, marketing, and distribution of generic, branded generic, brand name (“brand”), biosimilar and over-the-counter (“OTC”) pharmaceutical products. We also develop and out-license generic pharmaceutical products primarily in Europe through our Medis third-party business.

We have operations in more than 60 countries throughout North America (U.S., Canada and Puerto Rico) and the rest of world. The U.S. remains our largest commercial market and represented more than half of our total net revenues for each of 2014, 2013 and 2012. As of December 31, 2014, we marketed approximately 250 generic pharmaceutical product families and approximately 80 brand pharmaceutical product families in the U.S. and distributed approximately 12,650 stockkeeping units through our Anda Distribution segment.

As a result of the differences between the types of products we market and/or distribute and the methods by which we distribute these products, we operate and manage our business in three distinct operating segments: North American Brands, North American Generics and International and Anda Distribution.

Our North American Brands business is focused on maintaining a leading position within North America, and in particular, the U.S. market. We market our brand products through our active sales professionals in North America. Our sales and marketing efforts focus on general and specialty physicians who specialize in the diagnosis and treatment of particular medical conditions. Each group offers products to satisfy the unique needs of these physicians. We believe this focused sales and marketing approach enables us to foster close professional relationships with specialty physicians, as well as cover the primary care physicians who also prescribe in selected therapeutic areas. We believe that the current structure of sales professionals is very adaptable to the additional products we plan to add to our brand portfolio. Key therapeutic areas of focus for this segment include:

 

 

Central Nervous System (“CNS”). Key products include the Namenda franchise for dementia and Viibryd® for major depressive disorders.

 

 

Women’s Health and Urology. Key products include Lo Loestrin® Fe oral contraceptive, Minastrin® 24 Fe oral contraceptive and Estrace® Cream for relief from menopausal symptoms.

 

 

Gastroenterology (“GI”). Key products include Linzess® for irritable bowel syndrome and Asacol® HD/Delzicol® for ulcerative colitis.

 

 

Cardiovascular. Key products include Bystolic® for hypertension.

Our North American Generics and International business is focused on maintaining a leading position within both the North American, and in particular, the U.S. market and our key international markets and

 

 

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strengthening our global position by offering a consistent and reliable supply of quality brand and generic products. Our strategy in the U.S. is to develop pharmaceuticals that are difficult to formulate or manufacture or will complement or broaden our existing product lines. Internationally, we seek to grow our market share in key markets while expanding our presence in new markets. We plan to accomplish this through new product launches, filing existing products overseas and in-licensing products through acquisitions and strategic alliances. In the U.S., we predominantly market our generic products to various drug wholesalers, mail order, government and national retail drug and food store chains utilizing a small team of sales and marketing professionals. We also develop and out-license generic pharmaceutical products through our Medis third party business.

Our Anda Distribution segment distributes generic and brand pharmaceutical products manufactured by third parties, as well as by Actavis plc, primarily to independent pharmacies, pharmacy chains, pharmacy buying groups and physicians’ offices. Sales are principally generated through our national accounts relationships, an in-house telemarketing staff and through internally developed ordering systems. We believe that we are able to effectively compete in the distribution market, and therefore optimize our market share, based on competitive pricing, high levels of inventory for responsive customer service that includes next day delivery to the entire U.S., and well-established relationships with our customers, supplemented by electronic ordering capabilities. We are the only U.S. pharmaceutical company that has meaningful distribution operations with direct access to independent pharmacies.

We devote significant resources to the research and development (“R&D”) of brand products, generic products, biosimilars and proprietary drug delivery technologies. We conduct R&D through a network of more than 20 global R&D centers. We are presently developing a number of products through a combination of internal and collaborative programs. As of December 31, 2014, we are developing a number of brand products, some of which utilize novel drug-delivery systems, through a combination of internal and collaborative programs, and we had more than 200 Abbreviated New Drug Applications on file in the U.S. Our R&D strategy focuses on the following product development areas:

 

 

Application of proprietary drug-delivery technology for new product development in specialty areas;

 

 

Acquisition of mid-to-late development-stage brand drugs and biosimilars;

 

 

Off-patent drugs that are difficult to develop or manufacture, or that complement or broaden our existing product lines; and

 

 

Development of sustained-release, semi-solid, liquid, oral transmucosal, transdermal, gel, injectable and other drug delivery technologies and the application of these technologies to proprietary drug forms.

The Allergan acquisition

On November 17, 2014, Actavis plc and Allergan announced a definitive agreement (the “Merger Agreement”) under which we will acquire Allergan for a combination of $129.22 in cash (the “Cash Consideration Portion”) and 0.3683 Actavis plc ordinary shares (the “Stock Consideration Portion” and, together with the Cash Consideration Portion, the “Merger Consideration”) for each share of Allergan common stock (the “Acquisition”). Based on the closing price of our shares on November 14, 2014, the transaction was valued at approximately $66.0 billion. The transaction is expected to close in the late first quarter or early second quarter of 2015.

Our combination with Allergan will create one of the top 10 global pharmaceutical companies by sales revenue. We believe the combination provides a strong foundation for long-term growth, anchored by leading franchises

 

 

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complemented by a late-stage pipeline focused on innovative and durable value-enhancing products within brands, generics, biologics and OTC portfolios.

In the U.S., the combination makes us more relevant to a broader group of physicians and customers through the addition of key Allergan products. We believe that the addition of Allergan’s therapeutic franchises in ophthalmology, neurosciences and medical aesthetics/dermatology will complement our existing CNS, GI, women’s health and urology franchises. The combined company will also benefit from Allergan’s global brand equity and consumer awareness of key products, including Botox® and Restasis® .

Overseas, the combination will enhance our commercial position, expand our portfolio and broaden our footprint. The transaction expands our presence, market and product reach across 100 international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.

We intend to use the net proceeds of this offering, together with the net proceeds of the Ordinary Shares Offering and the proposed Debt Financing described below to finance the Cash Consideration Portion of the Acquisition and to pay related fees and expenses. In the event that we do not consummate the Acquisition on or prior to November 30, 2015 or the Merger Agreement is terminated at any time prior to such date, then we expect to use the net proceeds from this offering the Mandatory Convertible Preferred Shares as described under “Description of Mandatory Convertible Preferred Shares—Acquisition Termination Redemption.” This offering is not contingent upon the closing of the Ordinary Shares Offering (nor is the completion of the Ordinary Shares Offering contingent on the closing of this offering) or the completion of the Acquisition, which, if completed, will occur subsequent to the closing of this offering. We cannot assure you that the Acquisition will be completed or, if completed, that it will be completed within the time period or on the terms and with the anticipated benefits described in this prospectus supplement.

Upon the successful closing of the Acquisition, we intend to use the Allergan name as our corporate name for our global branded pharmaceuticals business, and will retain the Actavis name for our global generic pharmaceutical business. The change in our corporate name will be subject to approval by our shareholders.

About Allergan

Allergan is a multi-specialty health care company focused on developing and commercializing innovative pharmaceuticals, biologics, medical devices and over-the-counter products. Allergan discovers, develops and commercializes a diverse range of products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, urological and other specialty markets around the world.

Allergan sells its products directly through its own sales subsidiaries in approximately 40 countries and, supplemented by independent distributors, in over 100 countries worldwide. Allergan maintains a global strategic marketing team, as well as regional sales and marketing organizations, to support the promotion and sale of products.

Allergan’s global research and development efforts are focused on eye care, neurology, urology, skin care and medical aesthetics. Allergan supplements its own R&D activities with a commitment to identify and obtain new technologies through in-licensing, research collaborations, joint ventures and acquisitions.

Allergan’s diversified business model includes products for which patients may be eligible for reimbursement and cash pay products that consumers pay for directly out-of-pocket.

 

 

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Allergan operates its business on the basis of two reportable segments—specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces a broad range of pharmaceutical products, including: ophthalmic products for dry eye, glaucoma, inflammation, infection, allergy and retinal disease; Botox® for certain therapeutic and aesthetic indications; skin care products for acne, psoriasis, eyelash growth and other prescription and OTC skin care products; and urologics products. The medical devices segment produces a broad range of medical devices, including: breast implants for augmentation, revision and reconstructive surgery and tissue expanders; and facial aesthetics products.

Key therapeutic areas of focus for the specialty pharmaceuticals segment include:

 

 

Eye Care Pharmaceuticals. Key products include Restasis® for chronic dry eye, Alphagan® and Lumigan® for glaucoma, and Ozurdex® for macular edema and uveitis.

 

 

Neuromodulators. The key product in this area is Botox®, which is approved in the United States for both therapeutic indications (including adult chronic migraine, overactive bladder, urinary incontinence and cervical dystonia) and for cosmetic uses (including the temporary improvement in the appearance of moderate to severe glabellar lines in adults age 65 or younger).

 

 

Skin Care. Key products include Aczone® and Tazorac® for acne treatment, Latisse® for growing longer, fuller and darker eyelashes, and the SkinMedica® family of various physician-dispensed, non-prescription aesthetic products.

Key areas of focus for the medical devices segment include:

 

 

Facial Aesthetics. The key product in this area is the Juvéderm® dermal filler family of products.

 

 

Breast Aesthetics. Key products include silicone gel and saline breast implants in a variety of shapes, sizes and textures for breast augmentation, revision and reconstructive surgery.

 

 

Plastic Surgery. The key product in this area is the Seri® Surgical Scaffold product indicated for use as a transitory scaffold for soft tissue support and repair.

Financing transactions

In addition to this offering, we expect to obtain or otherwise incur additional financing for the Acquisition as described below.

Ordinary Shares Offering.    Concurrently with this offering, we are offering, by means of a separate prospectus supplement,              of our ordinary shares, plus up to              additional ordinary shares that the underwriters of the Ordinary Shares Offering have the option to purchase from us solely to cover overallotments, if any, in each case, at the public offering price of $         per share. For a description of certain of the terms of our ordinary shares, see “Description of Actavis Ordinary Shares” in the accompanying prospectus. This prospectus supplement is not an offer to sell or a solicitation of an offer to buy the securities being offered in the Ordinary Shares Offering.

Debt Financing.    Subsequent to this offering and, if completed, the Ordinary Shares Offering, we or one or more of our subsidiaries expect to offer approximately $22.0 billion in aggregate principal amount of senior notes (the “Senior Notes”) to fund a portion of the Cash Consideration Portion, and related fees and expenses,

 

 

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for the Acquisition. In connection with the Acquisition, we also expect that one or more of our subsidiaries will borrow up to $5.5 billion under senior unsecured term loan facilities (the “Term Facilities’), consisting of a tranche of three-year senior unsecured term loans in an original aggregate principal amount of $2.75 billion and a tranche of five-year senior unsecured term loans in an original aggregate principal amount of $2.75 billion, and will borrow amounts under a 60-day senior unsecured bridge loan facility in an original aggregate principal amount of up to $4.698 billion (the “Cash Bridge Facility”). We expect to repay any amount borrowed under the Cash Bridge Facility with available cash on hand. In addition, if and to the extent the Mandatory Convertible Preferred Shares offered hereby, the ordinary shares issued substantially concurrently herewith or the proposed Senior Notes are not issued and sold (or are issued in lesser amounts), we will borrow up to $30.9 billion in loans under a 364-day senior unsecured bridge facility (the “Bridge Facility”). We refer to any debt financing that we expect to incur to fund the Cash Consideration Portion for the Acquisition and to pay related fees and expenses as the “Debt Financing”. This prospectus supplement is not an offer to sell or a solicitation of an offer to buy any debt that may be sold or placed in the proposed Debt Financing.

Completion of this offering is not contingent upon completion of (1) the closing of the Ordinary Shares Offering, (2) the closing of the proposed Debt Financing or (3) the completion of the Acquisition. Accordingly, even if the Acquisition or the other financing transactions do not occur, the Mandatory Convertible Preferred Shares sold in this offering may remain outstanding, and we will not have any obligation to offer to repurchase any or all of the Mandatory Convertible Preferred Shares sold in this offering though we may, at our option, redeem the Mandatory Convertible Preferred Shares if the Acquisition has not closed on or before 5:00 p.m. (New York City time) on November 30, 2015, the Merger Agreement is terminated or we determine the Acquisition will not occur.

We cannot assure you that we will complete the Acquisition or any of the other financing transactions on the terms contemplated by this prospectus supplement or at all.

After the closing of the Acquisition, if completed, we may also replenish our cash or repay any borrowings made in connection with the Acquisition with the proceeds of additional financings.

 

 

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The offering

The summary below contains basic information about this offering. It does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus supplement and the accompanying prospectus and the information included or incorporated and deemed to be incorporated by reference herein and therein, including the section entitled “Risk factors” included in this prospectus supplement and the consolidated financial statements and the accompanying notes incorporated by reference in this prospectus supplement, before making an investment decision. As used in this section, “we”, “our” and “us” refer only to Actavis plc and not to its consolidated subsidiaries.

 

Issuer

Actavis plc, an Irish public limited company.

 

Securities Offered

                 of our     % Mandatory Convertible Preferred Shares, Series A, par value $0.0001 per share.

 

Public Offering Price

$         per Mandatory Convertible Preferred Share.

 

Overallotment Option

We have granted the underwriters a 30-day option to purchase up to                  additional Mandatory Convertible Preferred Shares (10% of the total offering) solely to cover overallotments, if any, at the public offering price, less the underwriting discounts and commissions.

 

Dividends

    % of the liquidation preference of $1,000.00 per Mandatory Convertible Preferred Share per annum. Dividends shall accumulate from the most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the first original issue date, whether or not in any dividend period or periods there have been funds legally available for the payment of such dividends, and, to the extent that we are legally permitted to pay dividends and our board of directors (which term, as used in this summary, includes an authorized committee of the board) declares a dividend with respect to the Mandatory Convertible Preferred Shares, we will pay such dividend in cash or, subject to certain limitations, in our ordinary shares or by delivery of any combination of cash and our ordinary shares, as determined by us in our sole discretion, on each dividend payment date; provided that any undeclared or unpaid dividends will continue to accumulate. Dividends that are declared will be payable on the dividend payment dates to holders of record of the Mandatory Convertible Preferred Shares on the immediately preceding February 15, May 15, August 15 and November 15 (each a “record date”), whether or not such holders convert their shares, or such shares are automatically converted, after a record date and on or prior to the immediately succeeding dividend payment date. Assuming the initial issue date is                     , 2015, the expected dividend payable on the first dividend payment date is $         per share. Each subsequent dividend is expected to be $         per share. See “Description of Mandatory Convertible Preferred Shares—Dividends”.

 

 

If we elect to make any payment of a declared dividend, or any portion thereof, in our ordinary shares, such shares shall be valued for such purpose at the average VWAP per ordinary share (as defined under “Description of Mandatory Convertible Preferred Shares—Method of Payment of Dividends”) over the five

 

 

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consecutive trading day period beginning on and including the seventh scheduled trading day prior to the applicable dividend payment date (the “average price”), multiplied by 97%. In no event will the number of our ordinary shares delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by $         , which amount represents 35% of the initial price (as defined below) (subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each fixed conversion rate as described below) (such dollar amount, as adjusted, the “floor price”). To the extent that the amount of the declared dividend exceeds the product of the number of our ordinary shares delivered in connection with such declared dividend and 97% of the average price, we will, if we are legally able to do so, declare and pay such excess amount in cash.

 

  The “initial price” is $         , which equals the per share public offering price of our ordinary shares in the Ordinary Shares Offering.

 

  Under Irish law, our board of directors (or an authorized committee) may only declare and pay cash dividends on the Mandatory Convertible Preferred Shares out of our “distributable reserves.” While as of December 31, 2014 we did not have distributable reserves, we have filed a petition with the Irish High Court to confirm the creation of approximately $5.79 billion of distributable reserves by decreasing our share premium account. We have undertaken to the underwriters to use reasonable best efforts to create distributable reserves if the Irish High Court declines our petition. If distributable reserves are not created, we may deliver ordinary shares instead of cash to satisfy our obligations under the Mandatory Convertible Preferred Shares.

 

Dividend Payment Dates

March 1, June 1, September 1 and December 1 of each year, commencing on June 1, 2015 and to, and including, the mandatory conversion date.

 

Acquisition Termination Redemption

If the Acquisition has not closed on or before 5:00 p.m. (New York City time) on November 30, 2015, the Merger Agreement is terminated or if we determine in our reasonable judgment that the Acquisition will not occur, we may, at our option, give notice of acquisition termination redemption to the holders of the Mandatory Convertible Preferred Shares. If we provide such notice, then, on the acquisition termination redemption date (as defined herein), we will be required to redeem the Mandatory Convertible Preferred Shares, in whole but not in part, at a redemption amount per Mandatory Convertible Preferred Share equal to the acquisition termination make-whole amount described herein.

 

  If redeemed, we will pay the acquisition termination make-whole amount in cash unless the acquisition termination share price described herein is greater than the initial price. If the acquisition termination share price is greater than the initial price, we will pay the acquisition termination make-whole amount in ordinary shares and cash, unless we elect, subject to certain limitations, to pay

 

 

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cash or ordinary shares in lieu of such amounts. See “Description of Mandatory Convertible Preferred Shares—Acquisition termination redemption.”

Other than pursuant to the provisions described in this prospectus supplement, the Mandatory Convertible Preferred Shares will not be redeemable by us. See “Description of Mandatory Convertible Preferred Shares—Acquisition termination redemption.”

 

Mandatory Conversion Date

March 1, 2018.

 

Mandatory Conversion

On the mandatory conversion date, each Mandatory Convertible Preferred Share, unless previously converted, will automatically convert into our ordinary shares based on the conversion rate.

 

  If we declare a dividend for the dividend period ending on the mandatory conversion date, we will pay such dividend to the holders of record as of the immediately preceding record date, as described above. If, prior to the mandatory conversion date, we have not declared all or any portion of the accumulated dividends on the Mandatory Convertible Preferred Shares, the conversion rate will be adjusted so that holders receive an additional number of our ordinary shares equal to the amount of such undeclared, accumulated and unpaid dividends (such amount, the “additional conversion amount”) divided by the greater of the floor price and 97% of the average price. To the extent that the additional conversion amount exceeds the product of the number of additional shares and 97% of the average price, we will, if we are legally able to do so, declare and pay such excess amount in cash pro rata to the holders of the Mandatory Convertible Preferred Shares.

 

Conversion Rate

The conversion rate for each Mandatory Convertible Preferred Share will be not more than             of our ordinary shares and not less than             of our ordinary shares (the “minimum conversion rate”), depending on the applicable market value of our ordinary shares, and subject to certain anti-dilution adjustments. The “applicable market value” of our ordinary shares is the average VWAP per ordinary share over the 20 consecutive trading day period beginning on and including the 22nd scheduled trading day immediately preceding the mandatory conversion date.

 

  The conversion rate will be calculated as described under “Description of Mandatory Convertible Preferred Shares—Mandatory conversion”, and the following table illustrates the conversion rate per Mandatory Convertible Preferred Share, subject to certain anti-dilution adjustments.

 

 

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Applicable market value of
our ordinary shares
   Conversion rate (number of our ordinary shares to be
received upon mandatory conversion of each
Mandatory Convertible Preferred Share)

Greater than $         (which is the threshold appreciation price)

               shares (approximately equal to $1,000.00 divided by the threshold appreciation price).

Equal to or less than $        but greater than or equal to $        

   Between             and             shares, determined by dividing $1,000.00 by the applicable market value of our ordinary shares.

Less than $        (which is the initial price)

               shares (approximately equal to $1,000.00 divided by the initial price).

 

 

Conversion at the Option of the Holder

At any time prior to March 1, 2018, other than during a fundamental change conversion period (as defined below), holders of the Mandatory Convertible Preferred Shares may elect to convert their Mandatory Convertible Preferred Shares in whole or in part (but in no event less than one Mandatory Convertible Preferred Share), into our ordinary shares at the minimum conversion rate of             ordinary shares per Mandatory Convertible Preferred Share (“early conversion”) as described under “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder”. The minimum conversion rate is subject to certain anti-dilution adjustments.

 

  If, as of the effective date of any early conversion (the “early conversion date”), we have not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Shares at such time receive an additional number of our ordinary shares equal to such amount of undeclared, accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per ordinary share over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). To the extent that the cash amount of the undeclared, accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant early conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, we will not have any obligation to pay the shortfall in cash.

 

 

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Conversion at the Option of the Holder Upon Fundamental Change; Fundamental Change Dividend Make-Whole Amount

If a “fundamental change” (as defined under “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount”) occurs on or prior to March 1, 2018, holders of the Mandatory Convertible Preferred Shares will have the right to convert their Mandatory Convertible Preferred Shares, in whole or in part (but in no event less than one Mandatory Convertible Preferred Share), into ordinary shares at the “fundamental change conversion rate” during the period (the “fundamental change conversion period”) beginning on the effective date of such fundamental change (the “fundamental change effective date”) and ending on the date that is 20 calendar days after the fundamental change effective date (or, if earlier, the mandatory conversion date). The fundamental change conversion rate will be determined based on the fundamental change effective date and the price paid or deemed paid per ordinary share in the transaction resulting in such fundamental change (the “fundamental change share price”).

 

  Holders who convert their Mandatory Convertible Preferred Shares within the fundamental change conversion period will also receive a “fundamental change dividend make-whole amount”, in cash or in our ordinary shares or any combination thereof, equal to the present value (computed using a discount rate of     % per annum) of all remaining dividend payments on their Mandatory Convertible Preferred Shares (excluding any accumulated dividend amount (as defined under “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount—Fundamental change dividend make-whole amount and accumulated dividend amount”) and declared dividends for a dividend period during which the fundamental change effective date falls) from such fundamental change effective date to, but excluding, the mandatory conversion date. If we elect to pay the fundamental change dividend make-whole amount in our ordinary shares in lieu of cash, the number of our ordinary shares that we will deliver will equal (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the fundamental change share price.

 

 

In addition, to the extent that the accumulated dividend amount exists as of the fundamental change effective date, holders who convert their Mandatory Convertible Preferred Shares within the fundamental change conversion period will be entitled to receive such accumulated dividend amount in cash (to the extent we are legally permitted to do so) or our ordinary shares or any combination thereof, at our election, upon conversion. If we elect to pay the accumulated dividend amount in our ordinary shares in lieu of cash, the number of our ordinary shares that we will deliver will equal (x) the accumulated

 

 

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dividend amount divided by (y) the greater of the floor price and 97% of the fundamental change share price. To the extent that the fundamental change dividend make-whole amount or the accumulated dividend amount or any portion thereof paid in our ordinary shares exceeds the product of the number of additional shares we deliver in respect thereof and 97% of the fundamental change share price, we will, if we are legally able to do so, declare and pay such excess amount in cash. See “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder upon fundamental change; Fundamental change dividend make-whole amount”.

 

Anti-Dilution Adjustments

The conversion rate may be adjusted in the event of, among other things: (1) dividends or distributions of ordinary shares; (2) certain issuances of ordinary share rights or warrants to purchase our ordinary shares at less than the current market price; (3) subdivisions or combinations of our ordinary shares; (4) certain distributions of evidences of our indebtedness, shares of our share capital, securities, rights to acquire shares of our share capital, cash or other assets, including share capital of subsidiaries or other business units in spin-offs; (5) dividends or other distributions consisting exclusively of cash other than in connection with certain reorganization events, a voluntary or involuntary liquidation, dissolution or winding up, or a tender or exchange offer; and (6) certain self-tender or exchange offers for our ordinary shares. See “Description of Mandatory Convertible Preferred Shares—Anti-dilution adjustments”.

 

Liquidation Preference

$1,000.00 per Mandatory Convertible Preferred Share.

 

Voting Rights

Except as specifically required by Irish law or our Amended and Restated Memorandum and Articles of Association (“Articles”) or the extract resolutions of the board of directors, or an authorized committee thereof, of Actavis plc setting forth the terms of the Mandatory Convertible Preferred Shares (the “Designations”), the holders of Mandatory Convertible Preferred Shares will have no voting rights.

 

  Whenever dividends on the Mandatory Convertible Preferred Shares (i) have not been declared and paid, or (ii) have been declared but a sum of cash or number of our ordinary shares sufficient to discharge our obligations in respect thereof has not been set aside for the benefit of the holders thereof on the applicable record date, for the equivalent of six or more dividend periods, whether or not consecutive, the authorized number of directors on our board of directors will, at the next annual meeting of shareholders or at a special meeting of shareholders, automatically be increased by two and the holders of the Mandatory Convertible Preferred Shares, voting together as a single class with holders of any and all other series of voting preferred shares then outstanding, will be entitled, at our next annual meeting or at a special meeting of shareholders, to elect two directors to fill such newly created directorships created thereby, subject to certain limitations.

 

 

We will not, without the affirmative vote or consent of holders of at least two-thirds of the outstanding Mandatory Convertible Preferred Shares and all other series of voting preferred shares entitled to vote thereon, voting together as a

 

 

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single class (1) amend or alter the provisions of our Articles or the Designations so as to authorize or create, or increase the authorized amount of, any specific class or series of senior shares (as defined below); (2) amend, alter or repeal the provisions of our Articles or the Designations so as to adversely affect the special rights, preferences, privileges or voting powers of the Mandatory Convertible Preferred Shares; or (3) consummate a binding share exchange or reclassification involving the Mandatory Convertible Preferred Shares or a merger or consolidation of us with another entity, unless in each case the Mandatory Convertible Preferred Shares remain outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity, are replaced by preferred shares of the surviving or resulting entity, and the Mandatory Convertible Preferred Shares that remain outstanding or such preferred shares, as the case may be, have terms, taken as a whole, not materially less favorable to holders, in each case subject to certain exceptions. For more information about voting rights, see “Description of Mandatory Convertible Preferred Shares—Voting rights”.

 

  Certain matters, such as increasing the amount of authorized but unissued preferred shares or the issuance of additional Mandatory Convertible Preferred Shares or additional preferred shares of a class or series of parity shares (as defined below) or junior shares (as defined below), will not require the affirmative vote of holders of Mandatory Convertible Preferred Shares. For more information, see “Description of Mandatory Convertible Preferred Shares—Voting rights” and “Risk factors—Risks relating to the Mandatory Convertible Preferred Shares and Ordinary Shares—You will have no voting rights except under limited circumstances.”

 

Ranking

The Mandatory Convertible Preferred Shares will rank with respect to dividend rights and distribution rights upon our liquidation, winding-up or dissolution:

 

   

senior to our ordinary shares and each class or series of our share capital established in the future unless the terms of such shares expressly provide that they will rank senior to, or on parity with, the Mandatory Convertible Preferred Shares (“junior shares”);

 

   

on parity with each class or series of our share capital established in the future the terms of which expressly provide that they will rank on parity with the Mandatory Convertible Preferred Shares (“parity shares”);

 

   

junior to each class or series of our share capital established in the future the terms of which expressly provide that they will rank senior to the Mandatory Convertible Preferred Shares (“senior shares”); and

 

   

junior to our existing and future indebtedness.

 

  For information concerning the ranking of the Mandatory Convertible Preferred Shares, see “Description of Mandatory Convertible Preferred Shares—Ranking”.

 

 

As of December 31, 2014, we had a total of approximately $15.5 billion of outstanding indebtedness and, on an as-adjusted basis after giving effect to the

 

 

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proposed Debt Financing, other than the Cash Bridge Facility, and the Acquisition, would have had approximately $45.2 billion of outstanding indebtedness, in each case including long-term debt and short-term debt. We have the ability to, and may incur, additional indebtedness in the future.

 

Use of Proceeds

We estimate that the net proceeds to us from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $                 (or approximately $                 if the underwriters exercise their overallotment option in full).

 

  We expect to use the net proceeds of this offering, together with the net proceeds of the Ordinary Shares Offering and the proposed Debt Financing, to finance the Cash Consideration Portion of the purchase price for the Acquisition and to pay related fees and expenses. In the event that we do not consummate the Acquisition on or prior to November 30, 2015 or the Agreement is terminated at any time prior to such date, then we expect to use the net proceeds from this offering to redeem the Mandatory Convertible Preferred Shares as described under “Description of Mandatory Convertible Preferred Shares—Acquisition termination redemption.”

 

Certain United States Federal Income Tax Considerations

The material United States federal income tax consequences of purchasing, owning and disposing of the Mandatory Convertible Preferred Shares and any ordinary shares received upon conversion are described in “Certain United States federal income tax considerations.”

 

Certain Irish Tax Considerations

The material Irish tax consequences of purchasing, owning and disposing of the Mandatory Convertible Preferred Shares and any ordinary shares received upon conversion are described in “Certain Irish tax considerations.” Affected holders of the Mandatory Convertible Preferred Shares may take actions so Irish dividend withholding tax is not withheld from dividends, as described in “Certain Irish tax considerations—Withholding tax on dividends (DWT).”

 

Listing

We intend to apply to have the Mandatory Convertible Preferred Shares listed on the NYSE under the symbol “ACTPRA”. Our ordinary shares are listed on the NYSE under the symbol “ACT”.

 

Concurrent Ordinary Shares Offering

Concurrently with this offering, we are offering, by means of a separate prospectus supplement,         of our ordinary shares, plus up to an additional         of our ordinary shares that the underwriters of such offering have the option to purchase from us solely to cover overallotments, if any, in each case, at the actual public offering price of $             per ordinary share in connection with the financing of the Acquisition.

 

Transfer Agent and Registrar

Computershare Trust Company, N.A. is the transfer agent and registrar for the Mandatory Convertible Preferred Shares.

 

 

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Payment and Settlement

The Mandatory Convertible Preferred Shares are expected to be delivered against payment on                     , 2015. The Mandatory Convertible Preferred Shares will be registered in the name of a nominee of Depository Trust Company (“DTC”) in New York, New York. In general, beneficial ownership interests in the Mandatory Convertible Preferred Shares will be shown on, and transfers of these beneficial ownership interests will be effected only through, records maintained by DTC and its direct and indirect participants.

Immediately after the consummation of this offering, we will have             Mandatory Convertible Preferred Shares issued and outstanding (or             if the underwriters exercise their overallotment option in full). Immediately after the completion of the Ordinary Shares Offering, we will have             of our ordinary shares issued and outstanding. The number of our ordinary shares outstanding immediately after the Ordinary Shares Offering that appears in the preceding sentence is based on 266.3 million of our ordinary shares outstanding as of February 13, 2015 plus             of our ordinary shares that we are offering pursuant to the Ordinary Shares Offering, but excluding:

 

 

            of our ordinary shares issuable on the exercise of the underwriters’ overallotment option in the Ordinary Shares Offering;

 

 

the estimated issuance of 110 million ordinary shares in the Ordinary Shares Offering to pay the aggregate Stock Consideration Portion of the Acquisition;

 

 

up to             of our ordinary shares (up to             of our ordinary shares if the underwriters in this offering exercise their overallotment option in full), in each case assuming mandatory conversion based on an applicable market value of our ordinary shares equal to the threshold appreciation price of $         and subject to anti-dilution, make-whole and other adjustments, that would be issuable upon conversion of Mandatory Convertible Preferred Shares issued in this offering; and

 

 

an aggregate of approximately 15.2 million of our ordinary shares reserved for issuance under our various share compensation plans as of December 31, 2014.

Risk factors

See “Risk factors” beginning on page S-25 of this prospectus supplement and page 8 of the accompanying prospectus for a discussion of factors to which you should refer and carefully consider prior to making an investment in the Mandatory Convertible Preferred Shares.

 

 

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Summary historical and pro forma financial data

The following table sets forth the summary historical and pro forma financial data of Actavis plc. The following summary selected historical financial data should be read in conjunction with “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto of Actavis plc, which are incorporated by reference in this prospectus supplement. The following table sets forth summary selected financial data of Actavis plc as of and for the years ended December 31, 2014 and 2013. The financial data as of December 31, 2014 and 2013 and for the years ended December 31, 2014 and 2013 have been derived from the audited financial statements of Actavis plc. The unaudited pro forma financial information of Actavis plc is based upon the historical financial statements of Actavis plc and Allergan for the year ended December 31, 2014, each of which are incorporated by reference herein, adjusted to give effect to the transactions described under “Unaudited pro forma combined financial information” included in this prospectus supplement.

 

      Years ended December 31,  
                 Pro Forma  
(In millions, except per share amounts)    2013     2014     2014  

Net revenues

   $ 8,677.6      $ 13,062.3      $ 22,595.5   
  

 

 

   

 

 

 

Operating expenses:

      

Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)

     4,690.7        6,303.8        7,602.2   

Research and development

     616.9        1,085.9        2,801.4   

Selling and marketing

     1,020.3        1,850.0        4,870.9   

General and administrative

     1,027.5        1,743.2        3,158.9   

Amortization

     842.7        2,597.5        7,668.5   

Goodwill impairments

     647.5        17.3        17.3   

In-process research and development impairments

     4.9        424.3        424.3   

Loss on assets held for sale

     42.7        190.8        190.8   

Assets sales, impairments, and contingent consideration adjustment, net

     207.6        117.2        145.4   
  

 

 

   

 

 

 

Total operating expenses

     9,100.8        14,330.0        26,879.7   
  

 

 

   

 

 

 

Operating income (loss)

     (423.2     (1,267.7     (4,284.2
  

 

 

   

 

 

 

Interest income

     4.8        8.9        30.4   

Interest expense

     (239.8     (411.8     (1,605.0

Other income (expense), net

     19.8        (41.5     52.3   
  

 

 

   

 

 

 

Total other income (expense), net

     (215.2     (444.4     (1,522.3
  

 

 

   

 

 

 

(Loss) before income taxes and noncontrolling interest

     (638.4     (1,712.1     (5,806.5

(Benefit) / provision for income taxes

     112.7        (81.9     (733.4
  

 

 

   

 

 

 

Net (loss)

     (751.1     (1,630.2     (5,073.1

(Income) / loss attributable to noncontolling interest

     0.7        (0.3     (4.9
  

 

 

   

 

 

 

Net (loss) attributable to ordinary shareholders

   $ (750.4   $ (1,630.5   $ (5,078.0
  

 

 

   

 

 

 

(Loss) per share attributable to ordinary shareholders:

      

Basic

   $ (5.27   $ (7.42   $ (13.04
  

 

 

   

 

 

 

Diluted

   $ (5.27   $ (7.42   $ (13.04
  

 

 

   

 

 

 

Weighted average shares outstanding:

      

Basic

     142.3        219.7        389.4   
  

 

 

   

 

 

 

Diluted

     142.3        219.7        389.4   

 

 

 

 

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      At December 31,  
                   Pro forma  
(in millions)    2013      2014     

2014

 

Current assets

   $ 4,434.7       $ 6,881.7       $ 11,507.4   

Working capital, excluding assets and liabilities held for sale

     1,115.4         939.8         3,711.4   

Total assets

     22,725.9         52,529.1         139,497.5   

Total debt and capital leases

     9,052.0         15,543.7         45,211.3   

Total equity

     9,537.1         28,335.5         70,211.7   

 

 

 

 

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Risk factors

Investing in the Mandatory Convertible Preferred Shares involves risk. We and our subsidiaries are subject to various regulatory, operating and other risks as a result of the nature of our operations and the marketplace in which we operate. Many of these risks are beyond our control and several pose significant challenges to our business, operations, revenues, net income and cash flows. Before you decided to buy any Mandatory Convertible Preferred Shares, you should carefully consider the risks described below, which include risks associated with our acquisition of Allergan, together with the risk factors described in the accompanying prospectus and with all the other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. The risks described herein and therein are not the only ones we face. Additional risks of which we are not presently aware or that we currently believe are immaterial may also harm our business. If any of the risks actually occur, our business, financial condition or results of operations could suffer. In that event, you may lose all or part of your investment in the Mandatory Convertible Preferred Shares.

For more information about the risks, uncertainties and assumptions relating to us and our business, we refer you to the discussion under the caption “Risk factors” included in our Annual Report on Form10-K for the year ended December 31, 2014, as updated by annual, quarterly and other reports and documents we file with the SEC, which are incorporated by reference in this prospectus supplement and the accompanying prospectus.

For more information about the risks, uncertainties and assumptions relating to Allergan and its business, we refer you to the discussion under the caption “Risk factors” included in Allergan’s Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference in this prospectus supplement and the accompanying prospectus.

Risks relating to the Mandatory Convertible Preferred Shares and ordinary shares

You will bear the risk of a decline in the market price of our ordinary shares between the pricing date for the Mandatory Convertible Preferred Shares and the mandatory conversion date.

The number of our ordinary shares that you will receive upon mandatory conversion of the Mandatory Convertible Preferred Shares is not fixed but instead will depend on the applicable market value of our ordinary shares, which is the average VWAP per ordinary share over the 20 consecutive trading day period beginning on and including the 22nd scheduled trading day immediately preceding the mandatory conversion date. The aggregate market value of our ordinary shares that you would receive upon mandatory conversion may be less than the aggregate liquidation preference of the Mandatory Convertible Preferred Shares. Specifically, if the applicable market value of our ordinary shares is less than the initial price of $        , the market value of our ordinary shares that you would receive upon mandatory conversion of each Mandatory Convertible Preferred Shares will be less than the $1,000.00 liquidation preference, and an investment in the Mandatory Convertible Preferred Shares would result in a loss. Accordingly, you will bear the risk of a decline in the market price of our ordinary shares. Any such decline could be substantial.

The opportunity for equity appreciation provided by your investment in the Mandatory Convertible Preferred Shares is less than that provided by a direct investment in our ordinary shares.

The market value of our ordinary shares that you would receive upon mandatory conversion of each Mandatory Convertible Preferred Share on the mandatory conversion date will only exceed the liquidation preference of $1,000.00 per Mandatory Convertible Preferred Share if the applicable market value of our ordinary shares exceeds the threshold appreciation price of $        . The threshold appreciation price represents an appreciation of     % over the initial price. In this event, you would receive on the mandatory conversion date approximately

 

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    % (which percentage is equal to the initial price divided by the threshold appreciation price) of the value of our ordinary shares that you would have received if you had made a direct investment in our ordinary shares on the date of this prospectus supplement. This means that the opportunity for equity appreciation provided by an investment in the Mandatory Convertible Preferred Shares is less than that provided by a direct investment in our ordinary shares.

In addition, if the market value of our ordinary shares appreciates and the applicable market value of our ordinary shares is equal to or greater than the initial price but less than or equal to the threshold appreciation price, the aggregate market value of our ordinary shares that you would receive upon mandatory conversion will only be equal to the aggregate liquidation preference of the Mandatory Convertible Preferred Shares, and you will realize no equity appreciation on our ordinary shares.

Our ability to declare and pay cash dividends on the Mandatory Convertible Preferred Shares may be limited.

Our declaration and payment of cash dividends on the Mandatory Convertible Preferred Shares in the future will be determined by our board of directors (or an authorized committee thereof) in its sole discretion and will depend on business conditions, our financial condition, earnings and liquidity and other factors. See “—Risks Relating to Our Business” for a discussion of some of these factors.

The agreements governing any of our and our subsidiaries’ existing or future indebtedness may limit our ability to declare and pay cash dividends on our ordinary shares and the Mandatory Convertible Preferred Shares. In the event that the agreements governing any such indebtedness restrict our ability to declare and pay dividends in cash on the Mandatory Convertible Preferred Shares, we may be unable to declare and pay dividends in cash on the Mandatory Convertible Preferred Shares unless we can repay or refinance the amounts outstanding under such agreements.

In addition, under Irish law, our board of directors (or an authorized committee thereof) may only declare and pay dividends on shares of our share capital out of our “distributable reserves”. Distributable reserves generally means the excess of our accumulated realized profits over our accumulated realized losses, and also includes distributable reserves created by way of a reduction of capital, as reflected in our most recent unconsolidated accounts presented to our shareholders at our annual general meeting or such other interim financial statements prepared for such purpose. In addition, under Irish law, we can only make a distribution or pay a dividend to the extent our net assets are equal to, or in excess of, the aggregate of our called up share capital plus undistributable reserves and the distribution or dividend would not reduce our net assets below such aggregate amount. Undistributable reserves include our share premium account and the amount by which our accumulated unrealized profits, so far as not previously utilized by any capitalization, exceed our accumulated unrealized losses, so far as not previously written off in a reduction or reorganization of our capital. While as of December 31, 2014 we did not have distributable reserves out of which to pay cash dividends on the Mandatory Convertible Preferred Shares, we have filed a petition with the Irish High Court to confirm the creation of approximately $5.79 billion of distributable reserves by reducing some of the share premium created by the issuance of our ordinary shares in connection with the Warner Chilcott Acquisition. We expect to receive approval of the Irish High Court in advance of the first dividend payment on the Mandatory Convertible Preferred Shares. We are not aware of any reason why the Irish High Court would not approve the creation of distributable reserves; however, the issuance of the required order is a matter for the discretion of the Irish High Court. In the event that distributable reserves are not created, no distributions (whether by way of dividends, redemptions or otherwise) will be permitted under Irish law until such time as the Company has created sufficient distributable reserves from its trading activities. Further, even if we are permitted under our contractual obligations and Irish law to declare and pay cash dividends on the Mandatory Convertible Preferred Shares, we may not have sufficient cash to declare and pay dividends in cash on the Mandatory Convertible Preferred Shares. In such circumstances, we may elect to deliver our ordinary shares to satisfy our obligations

 

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under the Mandatory Convertible Preferred Shares instead of paying a cash dividend or distribution. Delivering ordinary shares amounts to a capitalization of our reserves as opposed to a distribution under Irish law.

If upon (i) mandatory conversion, (ii) an early conversion at the option of a holder or (iii) an early conversion upon a fundamental change, we have not declared and paid all or any portion of the accumulated dividends payable on the Mandatory Convertible Preferred Shares for specified periods, converting holders will receive an additional number of our ordinary shares having a market value generally equal to the amount of such undeclared, accumulated and unpaid dividends, subject to the limitations described under “Description of Mandatory Convertible Preferred Shares—Mandatory conversion”, “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder” and “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder upon fundamental change; Fundamental change dividend make-whole amount”, respectively. In the case of mandatory conversion or conversion upon a fundamental change, if these limits to the adjustment of the conversion rate are reached, we will pay the shortfall in cash if we have sufficient distributable reserves, are otherwise legally permitted to do so and are not restricted by the terms of our indebtedness at that time. We will not have an obligation to pay the shortfall in cash if these limits to the adjustment of the conversion rate are reached in the case of an early conversion at the option of the holder.

Recent regulatory actions may adversely affect the trading price and liquidity of the Mandatory Convertible Preferred Shares.

Investors in, and potential purchasers of, the Mandatory Convertible Preferred Shares who employ, or seek to employ, a convertible arbitrage strategy with respect to the Mandatory Convertible Preferred Shares may be adversely impacted by regulatory developments that may limit or restrict such a strategy. The SEC and other regulatory and self-regulatory authorities have implemented various rules and may adopt additional rules in the future that restrict and otherwise regulate short selling and over-the-counter swaps and security-based swaps, which restrictions and regulations may adversely affect the ability of investors in, or potential purchasers of, the Mandatory Convertible Preferred Shares to conduct a convertible arbitrage strategy with respect to the Mandatory Convertible Preferred Shares. This could, in turn, adversely affect the trading price and liquidity of the Mandatory Convertible Preferred Shares.

The adjustment to the conversion rate and the payment of the fundamental change dividend make-whole amount upon the occurrence of certain fundamental changes may not adequately compensate you.

If a fundamental change (as defined in “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder upon fundamental change; Fundamental change dividend make-whole amount”) occurs on or prior to the mandatory conversion date, holders will be entitled to convert their Mandatory Convertible Preferred Shares during the fundamental change conversion period at the fundamental change conversion rate (in each case as defined in “Description of Mandatory Convertible Preferred Shares—Conversion at the option of the holder upon fundamental change; Fundamental change dividend make-whole amount”). The fundamental change conversion rate represents an adjustment to the conversion rate otherwise applicable unless the fundamental change share price (as defined in “Description of Mandatory Convertible Preferred Shares—Conversion at the Option of the Holder upon Fundamental Change; Fundamental Change Dividend Make-whole Amount”) is less than $         or above $         (in each case, subject to adjustment). In addition, with respect to any Mandatory Convertible Preferred Shares converted during the fundamental change conversion period, you will also receive, among other consideration, a fundamental change dividend make-whole amount in cash (provided we have sufficient distributable reserves), ordinary shares or a combination thereof. Although this adjustment to the conversion rate and the payment of the fundamental change dividend make-whole amount are designed to compensate you for the lost option value of the Mandatory Convertible Preferred Shares and lost dividends as a result of a fundamental change, they are only an approximation of such lost value and lost dividends and may not adequately compensate you for your actual loss. Furthermore, our obligation to adjust

 

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the conversion rate in connection with a fundamental change and pay the fundamental change dividend make-whole amount (whether in cash or by delivering our ordinary shares or any combination thereof) could possibly be construed as a penalty under Irish law and therefore be deemed invalid.

Investors will not have any rights to require us to redeem the Mandatory Convertible Preferred Shares in the event that an acquisition termination event occurs or the Acquisition is not completed by November 30, 2015.

Investors will not have any rights to require us to redeem the Mandatory Convertible Preferred Shares if an acquisition termination event occurs or the Acquisition is not completed by 5:00 p.m. (New York City time) on November 30, 2015. Further, investors will not have any right to require us to redeem the Mandatory Convertible Preferred Shares if, subsequent to the completion of this offering, we or Allergan experience any changes in our business or financial condition or if the terms of the Acquisition or the financing thereof change. Even if we redeem the Mandatory Convertible Preferred Shares, investors may not obtain their expected return and may not be able to reinvest the proceeds from such redemption in an investment that results in a comparable return.

Actavis plc may fail to realize all of the anticipated benefits of the Acquisition or those benefits may take longer to realize than expected. Actavis plc may also encounter significant difficulties in integrating the two businesses.

The ability of Actavis plc to realize the anticipated benefits of the Acquisition will depend, to a large extent, on Actavis plc’s ability to integrate the two businesses. The combination of two independent businesses is a complex, costly and time-consuming process. As a result, Actavis plc and Allergan will be required to devote significant management attention and resources prior to closing to prepare for integrating, and Actavis plc will be required to devote significant management attention and resources post-closing to integrate, the business practices and operations of Actavis plc and Allergan. The integration process may disrupt the businesses and, if implemented ineffectively, would restrict the realization of the full expected benefits. The failure to meet the challenges involved in integrating the two businesses and to realize the anticipated benefits of the transactions could cause an interruption of, or a loss of momentum in, the activities of the combined company and could adversely affect the results of operations of the combined company.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer and other business relationships, and diversion of management’s attention. The difficulties of combining the operations of the companies include, among others:

 

 

the diversion of management’s attention to integration matters;

 

 

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination;

 

 

difficulties in the integration of operations and systems;

 

 

conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;

 

 

difficulties in the assimilation of employees;

 

 

difficulties in managing the expanded operations of a significantly larger and more complex company;

 

 

challenges in keeping existing customers and obtaining new customers;

 

 

potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the Acquisition, including possible adverse tax consequences to the Actavis plc group pursuant to the anti-inversion rules under section 7874 of the Internal Revenue Code of 1986, as amended, as a result of the Acquisition or otherwise;

 

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challenges in attracting and retaining key personnel; and

 

 

coordinating a geographically dispersed organization.

Many of these factors will be outside of the control of Actavis plc or Allergan and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and results of operations of the combined company. In addition, even if the operations of the businesses of Actavis plc and Allergan are integrated successfully, the full benefits of the transactions may not be realized, including the synergies, cost savings or sales or growth opportunities that are expected. These benefits may not be achieved within the anticipated time frame, or at all. Further, additional unanticipated costs may be incurred in the integration of the businesses of Actavis plc and Allergan. All of these factors could cause dilution to the earnings per share of Actavis plc, decrease or delay the expected accretive effect of the transactions, and negatively impact the price of our ordinary shares. As a result, it cannot be assured that the combination of Actavis plc and Allergan will result in the realization of the full benefits anticipated from the transactions.

Actavis plc and Allergan will incur direct and indirect costs as a result of the Acquisition.

Actavis plc and Allergan will incur substantial expenses in connection with and as a result of completing the Acquisition and, over a period of time following the completion of the Acquisition, Actavis plc further expects to incur substantial expenses in connection with coordinating the businesses, operations, policies and procedures of Actavis plc and Allergan. While Actavis plc has assumed that a certain level of transaction expenses will be incurred, factors beyond Actavis plc’s control could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately.

If the Acquisition is consummated, Actavis plc will incur a substantial amount of debt to finance the aggregate Cash Consideration Portion and certain other amounts to be paid in connection with the Acquisition, which could adversely affect Actavis plc’s business, including by restricting its ability to engage in additional transactions or incur additional indebtedness or resulting in a downgrade or other adverse action with respect to Actavis plc’s credit rating.

In connection with the Acquisition, Actavis plc expects that one or more of its subsidiaries, including Actavis Funding SCS, will (i) borrow up to $5.5 billion under the Term Facilities, (ii) issue and sell up to $22.0 billion of Senior Notes, (iii) borrow up to $4.698 billion under the Cash Bridge Facility and (iv) if and to the extent the Senior Notes, our ordinary shares or the Mandatory Convertible Preferred Shares are not issued and sold, borrow up to $30.9 billion under the Bridge Facility. Following the completion of the Acquisition, the combined company will have a significant amount of debt outstanding. On a pro forma basis, giving effect to the incurrence of debt, the consolidated debt of Actavis plc would have been approximately $45.2 billion as of December 31, 2014. Actavis plc’s net consolidated borrowing costs, which cannot be predicted at this time, will depend on rates in effect from time to time, the structure of the indebtedness, taxes and other factors.

This substantial level of debt could have important consequences to Actavis plc’s business, including, but not limited to:

 

 

reducing the benefits Actavis plc expects to receive from the Acquisition;

 

 

making it more difficult for Actavis plc to satisfy its obligations;

 

 

limiting Actavis plc’s ability to borrow additional funds and increasing the cost of any such borrowing;

 

 

increasing Actavis plc’s vulnerability to, and reducing its flexibility to respond to, general adverse economic and industry conditions;

 

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limiting Actavis plc’s flexibility in planning for, or reacting to, changes in its business and the industry in which it operates;

 

 

placing Actavis plc at a competitive disadvantage as compared to its competitors, to the extent that they are not as highly leveraged; and

 

 

restricting Actavis plc from pursuing certain business opportunities.

Actavis plc’s credit ratings impact the cost and availability of future borrowings and, accordingly, Actavis plc’s cost of capital. Actavis plc’s ratings at any time will reflect each rating organization’s then opinion of Actavis’ financial strength, operating performance and ability to meet its debt obligations. Following the announcement of the Acquisition, Standard & Poor’s Rating Services, Moody’s Investor Service, Inc. and Fitch Ratings, Inc. each reaffirmed its respective ratings of Actavis plc. However, there can be no assurance that Actavis plc will achieve a particular rating or maintain a particular rating in the future. Any reduction in Actavis plc’s credit ratings may limit Actavis plc’s ability to borrow at interest rates consistent with the interest rates that have been available to Actavis plc prior to the Acquisition. If Actavis plc’s credit ratings are downgraded or put on watch for a potential downgrade, Actavis plc may not be able to sell additional debt securities or borrow money in the amounts, at the times or interest rates or upon the more favorable terms and conditions that might be available if Actavis plc’s current credit ratings are maintained. Any impairment of Actavis plc’s ability to obtain future financing on favorable terms could have an adverse effect on Actavis plc’s ability to refinance the Bridge Facility, if drawn, with the issuance of debt securities or alternatives to the Bridge Facility on terms more favorable than under the Bridge Facility, or to refinance, to the extent the Cash Bridge Facility is not otherwise repaid using Allergan’s cash on hand, the Cash Bridge Facility.

Actavis plc expects that, for a period of time following the consummation of the Acquisition, Actavis plc will have significantly less cash on hand than the sum of cash on hand of Actavis plc and Allergan prior to the Acquisition. This reduced amount of cash could adversely affect Actavis plc’s ability to grow.

Actavis plc is expected to have, for a period of time following the consummation of the Acquisition, significantly less cash and cash equivalents on hand than the approximately $5.16 billion of combined cash and cash equivalents of the two companies as of December 31, 2014. On a pro forma basis, giving effect to the Acquisition as if it had been consummated on December 31, 2014, Actavis plc would have had $1.92 billion of cash and cash equivalents. Although the management of Actavis plc believes that it will have access to cash sufficient to meet Actavis plc’s business objectives and capital needs, the lessened availability of cash and cash equivalents for a period of time following the consummation of the Acquisition could constrain Actavis plc’s ability to grow its business. Actavis plc’s more leveraged financial position following the Acquisition could also make it vulnerable to general economic downturns and industry conditions, and place it at a competitive disadvantage relative to its competitors that have more cash at their disposal. In the event that Actavis plc does not have adequate capital to maintain or develop its business, additional capital may not be available to Actavis plc on a timely basis, on favorable terms, or at all.

The Merger Agreement may be terminated in accordance with its terms and the Acquisition may not be completed.

The Merger Agreement contains a number of conditions that must be fulfilled to complete the Acquisition. Those conditions include: the approval of the Merger Agreement and Plan of Merger, dated as of November 16, 2014, as it may be amended from time to time, by and among Actavis plc, Avocado Acquisition Inc. and Allergan (the “Merger Proposal”), by Allergan stockholders; the approval of Actavis plc’s proposal for the issuance of Actavis plc ordinary shares pursuant to the Merger Agreement (the “Actavis Share Issuance Proposal”) by Actavis plc’s shareholders; receipt of requisite regulatory and antitrust approvals; absence of orders prohibiting the closing of the Acquisition; approval of the Actavis plc’s ordinary shares to be issued to Allergan

 

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stockholders for listing on the NYSE; the continued accuracy of the representations and warranties of both parties subject to specified materiality standards; the performance by both parties of their covenants and agreements and that, since the date of the Merger Agreement, no material adverse effect of Allergan or Actavis plc has occurred and is continuing. These conditions to the closing of the Acquisition may not be fulfilled and, accordingly, the Acquisition may not be completed. In addition, if the Acquisition is not completed by September 30, 2015 (subject to extension to November 16, 2015, if the only conditions not satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing of the Acquisition, which conditions are capable of being satisfied) are conditions relating to certain required filings and clearances under antitrust laws, the absence of certain proceedings under certain antitrust laws and the absence of any orders, judgments or decrees under certain antitrust laws), either Actavis plc or Allergan may choose not to proceed with the Acquisition. In addition, Actavis plc or Allergan may elect to terminate the Merger Agreement in certain other circumstances, and the parties can mutually decide to terminate the Merger Agreement at any time prior to the consummation of the Acquisition, whether before or after Allergan stockholder approval or Actavis plc shareholder approval.

While we intend to use the proceeds of this offering to fund the Acquisition, this offering is not contingent on the completion of the Acquisition. If we fail to consummate the Acquisition we may decide not to redeem the Mandatory Convertible Preferred Shares in our sole discretion, and we will not be obligated to return any of the proceeds from this offering to investors under any circumstances. If we do not redeem the Mandatory Convertible Preferred Shares, the Mandatory Convertible Preferred Shares will become permanent capital of Actavis plc and, if the Acquisition is not consummated, holders of the Mandatory Convertible Preferred Shares will be exposed to the risks faced by the Company’s existing business without any of the potential benefits from the Acquisition. In these circumstances, such holders will also be relying on the judgment of our management and board of directors with regard to the use of the proceeds from this offering, and will not have the opportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately. In these circumstances it is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for us or our securityholders.

Actavis plc’s and Allergan’s actual financial positions and results of operations may differ materially from the unaudited pro forma financial data included in this prospectus supplement.

The pro forma financial information contained in this prospectus supplement is presented for illustrative purposes only and may not be an indication of what Actavis plc’s financial position or results of operations would have been had the transactions been completed on the dates indicated. The pro forma financial information has been derived from the audited and unaudited historical financial statements of Actavis plc, certain companies previously acquired by Actavis plc, and Allergan and certain adjustments and assumptions have been made regarding the combined company after giving effect to the transactions. The assets and liabilities of Allergan have been measured at fair value based on various preliminary estimates using assumptions that Actavis plc’s management believes are reasonable utilizing information currently available. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates may be revised as additional information becomes available and as additional analyses are performed. Differences between preliminary estimates in the pro forma financial information and the final acquisition accounting will occur and could have a material impact on the pro forma financial information and the combined company’s financial position and future results of operations. In addition, Actavis plc, Allergan and their respective affiliates are involved in various disputes, governmental and/or regulatory inspections, investigations and proceedings, and litigation matters that arise from time to time, and it is possible that an unfavorable resolution of these matters will adversely affect Actavis plc or Allergan and their respective results of operations, financial condition and cash flows. They and their respective affiliates also engage from time to time in settlement discussions regarding

 

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such proceedings, including matters involving federal and state authorities. The impact of such settlements could be material to their results of operation, however, there can be no assurance that any such ongoing settlement discussions will result in actual settlements.

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect Actavis plc’s financial condition or results of operations following the closing. Any potential decline in Actavis plc’s financial condition or results of operations may cause significant variations in the share price of Actavis plc.

We would be adversely affected if, either based on current law or in the event of a change in law, the Internal Revenue Service did not agree that Actavis plc is a foreign corporation for U.S. federal tax purposes. In addition, future changes to international tax laws not specifically related to inversions could adversely affect us.

Actavis plc believes that, under current law, it is treated as a foreign corporation for U.S. federal tax purposes, because it is an Irish incorporated entity. However, the IRS may assert that Actavis plc should be treated as a U.S. corporation for U.S. federal tax purposes pursuant to Section 7874. Under Section 7874, a corporation created or organized outside the United States (i.e., a foreign corporation) will be treated as a U.S. corporation for U.S. federal tax purposes when (i) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a U.S. corporation (including the indirect acquisition of assets of the U.S. corporation by acquiring all the outstanding shares of the U.S. corporation), (ii) the shareholders of the acquired U.S. corporation hold at least 80% (by either vote or value) of the shares of the foreign acquiring corporation after the acquisition by reason of holding shares in the U.S. acquired corporation (including the receipt of the foreign corporation’s shares in exchange for the U.S. corporation’s shares), and (iii) the foreign corporation’s “expanded affiliated group” does not have substantial business activities in the foreign corporation’s country of organization or incorporation relative to such expanded affiliated group’s worldwide activities. For purposes of Section 7874, multiple acquisitions of U.S. corporations by a foreign corporation, if treated as part of a plan or series of related transactions, may be treated as a single acquisition. If multiple acquisitions of U.S. corporations are treated as a single acquisition, all shareholders of the acquired U.S. corporations would be aggregated for purposes of the test set forth above concerning such shareholders holding at least 80% (by either vote or value) of the shares of the foreign acquiring corporation after the acquisitions by reason of holding shares in the acquired U.S. corporations.

Actavis plc believes that the test set forth above to treat Actavis plc as a foreign corporation was satisfied in connection with the acquisition of Actavis, Inc., a Nevada corporation, and Warner Chilcott plc, a company incorporated under the laws of Ireland (the “Warner Chilcott Transaction”) on October 1, 2013. However, the law and Treasury regulations promulgated under Section 7874 are relatively new and somewhat unclear, and thus it cannot be assured that the IRS will agree that the ownership requirements to treat Actavis plc as a foreign corporation were met. Moreover, even if such ownership requirements were met in the Warner Chilcott Transaction and the subsequent acquisition of all of the common stock of Forest Laboratories Inc., a company incorporated under the laws of the State of Delaware (the “Forest Transaction”), the IRS may assert that, even though the Acquisition is a separate transaction from the Warner Chilcott Transaction and the Forest Transaction, the Acquisition should be integrated with the Warner Chilcott Transaction and the Forest Transaction as a single transaction. In the event the IRS were to prevail with such assertion, Actavis plc would be treated as a U.S. corporation for U.S. federal tax purposes and significant adverse tax consequences would result for Actavis plc.

In addition, changes to the inversion rules in Section 7874 or the U.S. Treasury Regulations promulgated thereunder or other IRS guidance could adversely affect Actavis plc’s status as a foreign corporation for U.S. federal tax purposes, and any such changes could have prospective or retroactive application to Actavis plc,

 

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Allergan, their respective stockholders, shareholders and affiliates, and/or the Acquisition. For example, in March 2014, the President of the United States proposed legislation that would amend the anti-inversion rules. In September 2014, the U.S. Treasury and the IRS issued additional guidance stating that they intend to issue regulations that will address certain inversion transactions.

Even if Actavis plc is treated as a foreign corporation for U.S. federal tax purposes, Actavis plc might be adversely impacted by recent proposals that have aimed to make other changes in the taxation of multinational corporations. For example, the Organisation for Economic Co-operation and Development has released proposals to create an agreed set of international rules for fighting base erosion and profit shifting. As a result, the tax laws in the United States, Ireland, and other countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect Actavis plc and its affiliates (including Allergan and its affiliates after the Acquisition).

Moreover, U.S. and foreign tax authorities may carefully scrutinize companies that result from cross-border business combination, such as Actavis plc, which may lead such authorities to assert that Actavis plc owes additional taxes.

Section 7874 likely will limit Actavis plc’s and its U.S. affiliates’ ability to utilize certain U.S. tax attributes of Allergan and its U.S. affiliates to offset certain U.S. taxable income, if any, generated by the Acquisition or certain specified transactions for a period of time following the Acquisition.

Following the acquisition of a U.S. corporation by a foreign corporation, Section 7874 can limit the ability of the acquired U.S. corporation and its U.S. affiliates to utilize certain U.S. tax attributes such as net operating losses to offset U.S. taxable income resulting from certain transactions. Based on the limited guidance available, Actavis plc believes that this limitation applies to Actavis plc and its U.S. affiliates following the Warner Chilcott Transaction and as a result, Actavis plc currently does not expect that it or its U.S. affiliates (including Allergan and its U.S. affiliates after the Acquisition) will be able to utilize certain U.S. tax attributes of Allergan and its U.S. affiliates to offset their U.S. taxable income, if any, resulting from certain specified taxable transactions.

The Mandatory Convertible Preferred Shares are subject to redemption at our option upon the occurrence of an acquisition termination event or if the Acquisition is not completed on or prior to 5:00 p.m. (New York City time) on November 30, 2015.

If the Acquisition is not completed on or before 5:00 p.m. (New York City time) on November 30, 2015, or if an acquisition termination event (as defined herein) occurs, we will be entitled, but not required, to redeem the Mandatory Convertible Preferred Shares, in whole but not in part, at a redemption price equal to $1,010 per Mandatory Convertible Preferred Share plus accumulated and unpaid dividends to the date of redemption or, in certain circumstances, at an early redemption price that includes a make-whole adjustment. Although the redemption price is designed to compensate you for the lost option value of your Mandatory Convertible Preferred Shares and lost dividends as a result of the acquisition termination redemption, it is only an approximation of such lost value and may not adequately compensate you for your actual loss.

The proceeds of this offering will not be deposited into an escrow account pending any acquisition termination redemption of the Mandatory Convertible Preferred Shares. Our ability to pay the redemption price to holders of the Mandatory Convertible Preferred Shares in connection with an acquisition termination redemption may be limited by our then-existing financial resources, and sufficient funds may not be available when necessary to make any required purchases of the Mandatory Convertible Preferred Shares following our election to redeem the Mandatory Convertible Preferred Shares. Furthermore, as any redemption of Mandatory Convertible Preferred Shares would be a distribution under Irish law, we may only pay the redemption price to holders of the Mandatory Convertible Preferred Shares in connection with an acquisition termination redemption to the extent we have sufficient distributable reserves to do so.

 

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The conversion rate of the Mandatory Convertible Preferred Shares may not be adjusted for all dilutive events that may adversely affect the market price of the Mandatory Convertible Preferred Shares or our ordinary shares issuable upon conversion of the Mandatory Convertible Preferred Shares.

The number of our ordinary shares that you are entitled to receive upon conversion of the Mandatory Convertible Preferred Shares is subject to adjustment for share splits and combinations, share dividends and certain other transactions described in “Description of Mandatory Convertible Preferred Shares”. See “Description of Mandatory Convertible Preferred Shares—Anti-dilution adjustments” for further discussion of anti-dilution adjustments. However, other events, such as employee and director option grants or offerings of our ordinary shares or securities convertible into our ordinary shares (other than those set forth in “Description of Mandatory Convertible Preferred Shares—Anti-dilution adjustments”) for cash or in connection with acquisitions, which may adversely affect the market price of our ordinary shares, may not result in any adjustment. Further, if any of these other events adversely affects the market price of our ordinary shares, it may also adversely affect the market price of the Mandatory Convertible Preferred Shares. In addition, the terms of the Mandatory Convertible Preferred Shares do not restrict our ability to offer ordinary shares or securities convertible into ordinary shares in the future or to engage in other transactions that could dilute our ordinary shares. We have no obligation to consider the interests of the holders of the Mandatory Convertible Preferred Shares in engaging in any such offering or transaction.

You will have no rights with respect to our ordinary shares until the Mandatory Convertible Preferred Shares are converted, but you may be adversely affected by certain changes made with respect to our ordinary shares.

You will have no rights with respect to our ordinary shares, including voting rights, rights to respond to tender offers for our ordinary shares, if any, and rights to receive dividends or other distributions on our ordinary shares, if any (other than through a conversion rate adjustment), prior to the conversion date with respect to a conversion of the Mandatory Convertible Preferred Shares, but your investment in the Mandatory Convertible Preferred Shares may be negatively affected by these events. Upon conversion, you will be entitled to exercise the rights of a holder of ordinary shares only as to matters for which the record date occurs after the conversion date. For example, in the event that an amendment is proposed to our Articles requiring shareholder approval and the record date for determining the shareholders of record entitled to vote on the amendment occurs prior to the conversion date, you will not be entitled to vote on the amendment, unless the proposed amendment will adversely affect the rights, preferences, privileges or voting powers of the Mandatory Convertible Preferred Shares (in which case the holders of at least two-thirds of the outstanding Mandatory Convertible Preferred Shares and all other series of voting preferred shares entitled to vote thereon, voting together as a single class, must consent, in person or by proxy, either in writing or at an annual or special meeting of such shareholders, to the amendment), although you will nevertheless be subject to any changes in the powers, preferences or rights of our ordinary shares. See “Description of ordinary shares” for further discussion of our ordinary shares.

You will have no voting rights except under limited circumstances.

You will have no voting rights, except with respect to certain amendments to the terms of the Mandatory Convertible Preferred Shares, in the case of certain dividend arrearages and certain other limited circumstances and as specifically required by Irish law. You will have no right to vote for any members of our board of directors except in the case of certain dividend arrearages.

If dividends on any Mandatory Convertible Preferred Shares (i) have not been declared and paid, or (ii) have been declared but a sum of cash or number of our ordinary shares sufficient to discharge our obligations in respect thereof has not been set aside for the benefit of the holders thereof on the applicable record date, for the equivalent of six or more dividend periods, whether or not for consecutive dividend periods, the holders of Mandatory Convertible Preferred Shares, voting together as a single class with holders of any and all other

 

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series of our preferred shares then outstanding ranking equally with the Mandatory Convertible Preferred Shares either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and having similar voting rights, will be entitled to elect a total of two additional members of our board of directors, subject to the terms and limitations described in the section of this prospectus supplement entitled “Description of Mandatory Convertible Preferred Shares—Voting rights”.

In certain circumstances where the rights, preferences, privileges or voting powers of the Mandatory Convertible Preferred Shares are adversely affected thereby, holders of the Mandatory Convertible Preferred Shares will have the right to vote with respect to certain amendments to our Articles or in connection with certain reclassifications, mergers or consolidation transactions. See “Description of Mandatory Convertible Preferred Shares—Voting rights”.

The Mandatory Convertible Preferred Shares will rank junior to all of our consolidated liabilities.

In the event of a bankruptcy, liquidation, dissolution or winding up, our assets will be available to pay obligations on the Mandatory Convertible Preferred Shares only after all of our consolidated liabilities have been paid. In the event of a bankruptcy, liquidation, dissolution or winding up, there may not be sufficient assets remaining, after paying our and our subsidiaries’ liabilities, to pay amounts due on any or all of the Mandatory Convertible Preferred Shares then outstanding. As of December 31, 2014, we had a total of approximately $15.5 billion of outstanding debt and, on an as-adjusted basis after giving effect to the Acquisition and the proposed Debt Financing, other than the Cash Bridge Facility, would have had approximately $45.2 billion of outstanding debt, in each case including long-term debt and short-term debt. We have the ability to, and may incur, additional debt in the future.

You may be subject to tax with respect to the Mandatory Convertible Preferred Shares even though you do not receive a corresponding cash distribution.

The conversion rate of the Mandatory Convertible Preferred Shares is subject to adjustment in certain circumstances. See “Description of Mandatory Convertible Preferred Shares—Anti-dilution adjustments”. If, as a result of an adjustment (or failure to make an adjustment), your proportionate interest in our assets or earnings and profits is increased, you may be deemed to have received for U.S. federal or Irish income tax purposes a taxable distribution without the receipt of any cash. In addition, we may satisfy our obligations under the Mandatory Convertible Preferred Shares by delivering ordinary shares to holders of the Mandatory Convertible Preferred Shares. Any such delivery of ordinary shares would be taxable to the same extent as a cash distribution of the same amount. In these circumstances and possibly others, a holder of Mandatory Convertible Preferred Shares may be subject to tax even though it has received no cash with which to pay that tax, thus giving rise to an out-of-pocket expense. See “Certain United States federal income tax considerations” and “Certain Irish tax considerations” for a further discussion of the U.S. federal tax implications and Irish tax implications for U.S. shareholders and Irish resident or ordinarily resident shareholders.

Certain rights of the holders of the Mandatory Convertible Preferred Shares and certain contractual and statutory provisions could delay or prevent an otherwise beneficial takeover or takeover attempt of us and, therefore, the ability of holders of Mandatory Convertible Preferred Shares to exercise their rights associated with a potential fundamental change.

Certain rights of the holders of the Mandatory Convertible Preferred Shares could make it more difficult or more expensive for a third party to acquire us. For example, if a fundamental change were to occur on or prior to March 1, 2018, holders of the Mandatory Convertible Preferred Shares may have the right to convert their Mandatory Convertible Preferred Shares, in whole or in part, at an increased conversion rate and will also be entitled to receive a fundamental change dividend make-whole amount equal to the present value of all remaining dividend payments on their Mandatory Convertible Preferred Shares. See “Description of Mandatory Convertible

 

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Preferred Shares—Conversion at the option of the holder upon fundamental change; Fundamental change dividend make-whole amount”. These features of the Mandatory Convertible Preferred Shares could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management.

In addition, our Articles contain provisions that could have the effect of deterring certain takeover practices, takeover bids and unsolicited offers. These provisions include, amongst others:

 

 

provisions of our Articles which allow our board of directors to adopt a shareholder rights plan (commonly known as a “poison pill”) upon such terms and conditions as the board of directors deems expedient and in our best interests;

 

 

rules regarding how our shareholders may present proposals or nominate directors for election at shareholder meetings;

 

 

the right of our board of directors to issue preferred shares, such as the Mandatory Convertible Preferred Shares, without shareholder approval in certain circumstances, subject to applicable law; and

 

 

the ability of our board of directors to fill vacancies on our board of directors in certain circumstances.

These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if a takeover offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in our or our shareholders best interests. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

In addition, certain mandatory provisions of Irish law could prevent or delay an acquisition of us. For example, Irish law does not currently permit shareholders of an Irish public limited company to take action by written consent with less than unanimous consent. We are also subject to various provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in our ordinary shares in certain circumstances. Also, as an Irish company, we may only alter our memorandum and articles of association with the approval of holders of at least three-quarters of our ordinary shares present and voting in person or by proxy at a general meeting of the Company, subject to any specific voting rights of holders of the Mandatory Convertible Preferred Shares.

An active trading market for the Mandatory Convertible Preferred Shares does not exist and may not develop.

The Mandatory Convertible Preferred Shares are a new issue of securities with no established trading market. We intend to apply to have the Mandatory Convertible Preferred Shares listed on the New York Stock Exchange under the symbol “ACTPRA”. Even if the Mandatory Convertible Preferred Shares are approved for listing on the New York Stock Exchange, such listing does not guarantee that a trading market for the Mandatory Convertible Preferred Shares will develop or, if a trading market for the Mandatory Convertible Preferred Shares does develop, the depth or liquidity of that market or the ability of the holders to sell the Mandatory Convertible Preferred Shares, or to sell the Mandatory Convertible Preferred Shares at a favorable price.

The price of the Mandatory Convertible Preferred Shares and ordinary shares may be volatile.

We expect that generally the market price of our ordinary shares will affect the market price of the Mandatory Convertible Preferred Shares more than any other single factor. The market price of our ordinary shares may be influenced by many factors, some of which are beyond our control, including those described in this “Risk factors” section and the following:

 

 

the factors described above under the heading “Cautionary note regarding forward-looking statements”;

 

 

actual or anticipated fluctuations in our operating results or our competitors’ operating results;

 

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announcements by us or our competitors of new products, capacity changes, significant contracts, acquisitions or strategic investments;

 

 

our growth rate and our competitors’ growth rates;

 

 

the financial market and general economic conditions;

 

 

changes in stock market analyst recommendations regarding us, our competitors or the pharmaceutical industry generally, or lack of analyst coverage of our ordinary shares;

 

 

sales of our ordinary shares by our executive officers, directors and significant shareholders or any sales of substantial amounts of our ordinary shares;

 

 

satisfaction of our dividend obligations in respect of the Mandatory Convertible Preferred Shares by delivery of our ordinary shares;

 

 

developments indicating the Acquisition will or will not occur or if an acquisition termination event occurs;

 

 

changes in accounting principles; and

 

 

changes in tax laws and regulations.

In addition, we expect that the market price of the Mandatory Convertible Preferred Shares will be influenced by yield and interest rates in the capital markets, the time remaining to the mandatory conversion date, our creditworthiness and the occurrence of certain events affecting us that do not require an adjustment to the conversion rate. Fluctuations in yield rates in particular may give rise to arbitrage opportunities based upon changes in the relative values of our ordinary shares and Mandatory Convertible Preferred Shares. Any such arbitrage could, in turn, cause a decrease in the market prices of our ordinary shares and the Mandatory Convertible Preferred Shares.

The Acquisition may not be accretive and may cause dilution to our earnings per share, which may negatively affect the market price of our ordinary shares and the Mandatory Convertible Preferred Shares.

Although we currently anticipate that the Acquisition will be accretive to earnings per share (on an adjusted earnings basis that is not pursuant to generally accepted accounting principles (“GAAP”)) from and after the Acquisition, this expectation is based on preliminary estimates, which may change materially.

Our issuance of approximately 110 million ordinary shares to Allergan stockholders to pay the Stock Consideration Portion and certain other amounts to be paid in connection with the Acquisition, assumption of Allergan equity-based awards at the closing of the Acquisition and issuance of ordinary shares at the closing of the Ordinary Shares Offering to finance a portion of the Cash Consideration Portion and certain other amounts to be paid in connection with the Acquisition may cause dilution to our earnings per share or decrease or delay the expected accretive effect of the Acquisition and cause a decrease in the market price of our ordinary shares and the Mandatory Convertible Preferred Shares.

In addition, we could encounter additional transaction-related costs or other factors such as the failure to realize all of the benefits anticipated in the Acquisition. All of these factors could cause a reduction in our earnings per share or decrease or delay the expected accretive effect of the Acquisition and cause a decrease in the market price of our ordinary shares.

 

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The market price for our ordinary shares and the Mandatory Convertible Preferred Shares following the closing of the Acquisition may be affected by factors different from those that historically have affected or may currently affect our ordinary shares.

Upon completion of the Acquisition, holders of our ordinary shares will become holders of shares in the combined company. The results of operation of the combined company may be affected by factors different from those currently affecting us. For a discussion of our business and of Allergan’s business and of important factors to consider in connection with those businesses, see the discussion under the caption “Risk factors” in each of our and Allergan’s Annual Reports on Form 10-K for the year ended December 31, 2014, which are incorporated by reference herein.

Sales of substantial amounts of our ordinary shares in the public market, or the perception that these sales may occur, could cause the market price of our ordinary shares, and thus the Mandatory Convertible Preferred Shares, to decline.

Sales of substantial amounts of our ordinary shares in the public market, or the perception that these sales may occur, or the conversion of the Mandatory Convertible Preferred Shares or the payment of dividends on the Mandatory Convertible Preferred Shares in the form of our ordinary shares, or the perception that such conversions or dividends could occur, could cause the market price of our ordinary shares and thus, the market price of the Mandatory Convertible Preferred Shares, to decline. This could also impair our ability to raise additional capital through the sale of our equity securities.

The availability of our ordinary shares for sale in the future could reduce the market price of our ordinary shares.

In the future we may issue additional securities to raise capital. We may also acquire interests in other companies using our ordinary shares or a combination of cash and our ordinary shares. We may also issue securities convertible into our ordinary shares in addition to the Mandatory Convertible Preferred Shares offered hereby. Any of these events may dilute your ownership interest in us and have an adverse impact on the price of our ordinary shares.

We may issue additional series of preferred shares that rank on a parity with the Mandatory Convertible Preferred Shares as to dividend payments and liquidation preference and that vote with the Mandatory Convertible Preferred Shares on most issues on which the preferred shares are permitted to vote, which may negatively affect your investment.

Without giving effect to the Mandatory Convertible Preferred Shares that we are offering hereby, we have the authority under our Articles to issue 10,000,000 serial preferred shares. Our Articles do not prohibit us from issuing additional series of preferred shares that would rank on a parity with the Mandatory Convertible Preferred Shares. The issuance of any such series of preferred shares could have the effect of reducing the amounts available to the holders of the Mandatory Convertible Preferred Shares in the event of our liquidation. If we do not have sufficient funds to pay dividends on the outstanding Mandatory Convertible Preferred Shares and such other series of preferred shares, it would also reduce amounts available to the holders of the Mandatory Convertible Preferred Shares for the payment of dividends. Except with respect to changes to our Articles that adversely affect only one series of our preferred shares, the holders of the Mandatory Convertible Preferred Shares and any other series of preferred shares that we issue vote together, as a class, on the issues on which our preferred shares have the right to vote, including our consolidation or merger with another corporation. The interests of the holders of any other series of preferred shares that we issue may be different from the interests of the holders of the Mandatory Convertible Preferred Shares.

 

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Mandatory Convertible Preferred Shares and our ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.

Irish capital acquisitions tax (which we refer to as “CAT”) (currently levied at a rate of 33% above certain tax-free thresholds) could apply to a gift or inheritance of Mandatory Convertible Preferred Shares or a gift or inheritance of ordinary shares irrespective of the place of residence, ordinary residence, or domicile of the parties. This is because Mandatory Convertible Preferred Shares and our ordinary shares will be regarded as property situated in Ireland for CAT purposes. The person who receives the gift or inheritance has primary liability for CAT. See “Certain Irish tax considerations—Capital acquisitions tax (CAT)” beginning on page S-103 of this prospectus supplement.

Transfers of Mandatory Convertible Preferred Shares or our ordinary shares, other than by means of the transfer of book-entry interests in DTC, may be subject to Irish stamp duty.

Transfers of Mandatory Convertible Preferred Shares or our ordinary shares effected by means of the transfer of book-entry interests in DTC should not be subject to Irish stamp duty. However, if you hold your Mandatory Convertible Preferred Shares or our ordinary shares directly rather than beneficially through DTC, any transfer of your Mandatory Convertible Preferred Shares or ordinary shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired). A person who directly holds Mandatory Convertible Preferred Shares or our ordinary shares may transfer those shares into his or her own broker account to be held through DTC (or vice versa) without giving rise to Irish stamp duty provided that there is no change in the ultimate beneficial ownership of the Mandatory Convertible Preferred Shares or ordinary shares, as the case may be, as a result of the transfer and the transfer is not in contemplation of a sale of the shares by a beneficial owner to a third party. Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty could adversely affect the price of your Mandatory Convertible Preferred Shares or ordinary shares, as the case may be. See “Certain Irish tax considerations—Stamp duty” beginning on page S-98 of this prospectus supplement.

In certain limited circumstances, dividends we pay may be subject to Irish dividend withholding tax.

In certain limited circumstances, Irish dividend withholding tax (which we refer to as “DWT”) (currently at a rate of 20%) may arise in respect of dividends paid on Mandatory Convertible Preferred Shares or our ordinary shares. A number of exemptions from DWT exist pursuant to which persons resident in the United States and persons resident in the countries listed under “Certain Irish tax considerations—Withholding tax on dividends (DWT)” beginning on page S-99 of this prospectus supplement (which we refer to as the “Relevant Territories”) may be entitled to exemptions from DWT.

See “Certain Irish tax considerations—Withholding tax on dividends (DWT)” beginning on page S-99 of this prospectus supplement and, in particular, please note the requirement to complete certain relevant Irish Revenue Commissioners DWT forms (which we refer to as “DWT Forms”) in order to qualify for many of the exemptions.

Dividends paid in respect of Mandatory Convertible Preferred Shares or our ordinary shares that are held through DTC should not be subject to DWT where the address of the beneficial owner of such shares in the records of the broker holding such shares is recorded as being in the United States (and such broker has further transmitted the relevant information to a qualifying intermediary appointed by us). Similarly, dividends paid in respect of Mandatory Convertible Preferred Shares or our ordinary shares that are held outside of DTC and are owned by a resident of the United States will not be subject to DWT if such person has provided a completed IRS Form 6166 or a valid DWT Form to our transfer agent to confirm its U.S. residence and claim an exemption. Holders of Mandatory Convertible Preferred Shares resident in other Relevant Territories may also be eligible for exemption from DWT on dividends paid in respect of their Mandatory Convertible Preferred Shares or our

 

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ordinary shares provided they have furnished valid DWT Forms to their brokers (in respect of such shares held through DTC) (and such broker has further transmitted the relevant information to a qualifying intermediary appointed by us) or to our transfer agent (in respect of such shares held outside of DTC). See “Certain Irish tax considerations—Withholding tax on dividends (DWT)” on page S-99 of this prospectus supplement. However, other holders of Mandatory Convertible Preferred Shares or our ordinary shares may be subject to DWT, which if you are such a shareholder could adversely affect the price of your shares.

Dividends received by Irish resident shareholders and certain other shareholders may be subject to Irish income tax.

Holders of Mandatory Convertible Preferred Shares or our ordinary shares who are neither resident nor ordinarily resident in Ireland and are entitled to an exemption from DWT generally have no liability to Irish income tax (and, in the case of an individual, the universal social charge) on dividends received from us, unless such persons hold their Mandatory Convertible Preferred Shares or our ordinary shares through a branch or agency in Ireland through which a trade is carried on. Holders of Mandatory Convertible Preferred Shares or our ordinary shares who are not resident nor ordinarily resident in Ireland but who are not entitled to an exemption from DWT generally have no further liability to Irish income tax (and, in the case of an individual, the universal social charge). The DWT we deduct discharges the liability to income tax and the universal social charge. An exception to this position may apply where such persons hold their Mandatory Convertible Preferred Shares or our ordinary shares through a branch or agency in Ireland through which a trade is carried on.

Holders of Mandatory Convertible Preferred Shares or our ordinary shares who are resident or ordinarily resident in Ireland may be subject to Irish tax (and, in the case of an individual, the universal social charge) on dividends received from us. Dividends paid on preferred shares issued by an Irish resident company to a holder which is within the charge to Irish corporation tax may, in certain circumstances, be subject to Irish corporation tax under Schedule D Case IV (currently at a rate of 25%).

It is recommended that you consult your own tax advisor as to the tax consequences of holding Mandatory Convertible Preferred Shares in, and receiving dividends from, us.

 

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Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $                 (or approximately $                 if the underwriters exercise their overallotment option in full). We expect to use the net proceeds of this offering, together with the net proceeds of the Ordinary Shares Offering and the proposed Debt Financing, to finance the Cash Consideration Portion of the Acquisition and to pay related fees and expenses. In the event that we do not consummate the Acquisition on or prior to November 30, 2015 or the Agreement is terminated at any time prior to such date, then we expect to use the net proceeds from this offering to redeem the Mandatory Convertible Preferred Shares as described under “Description of Mandatory Convertible Preferred Shares—Acquisition Termination Redemption.” This offering is not contingent upon the completion of the Acquisition, which, if completed, will occur subsequent to the closing of this offering. We cannot assure you that the Acquisition will be completed or, if completed, that it will be completed within the time period or on the terms and with the anticipated benefits contemplated by this prospectus supplement.

The following table outlines the expected sources and uses of funds for the Acquisition. The table assumes that the Acquisition and the financing transactions are completed simultaneously, although a portion of the financing transactions are expected to occur before completion of the Acquisition.

Amounts in the following table are estimated as of December 31, 2014, except offering-specific figures. The actual amounts may vary from the estimated amounts set forth in the following table.

 

Sources of funds     Uses of funds  
(Dollars in millions)  

Cash

  $ 0     

Allergan Acquisition consideration

  $ 72,389   

Stock consideration issued directly to Allergan shareholders

  $ 33,754     

Transaction fees and expenses, including discounts, commissions and financing(4)

  $ 503   

Mandatory Convertible Preferred Shares Offering(1)

  $ 4,200     

Assumption of existing Allergan
debt(3)

  $ 2,168   

Ordinary Shares Offering(1)

  $ 4,200       

Senior Notes(1)

  $ 22,000       

Term Facilities(2)

  $ 5,500       

Cash Bridge Facility(2)

  $ 3,238       

Assumption of existing debt from Allergan(3)

  $ 2,168       
 

 

 

     

 

 

 

Total sources of funds

  $ 75,060      Total uses of funds   $ 75,060   

 

 

 

(1)   Before discounts, commissions and expenses.
(2)   Before financing fees and expenses.
(3)   Includes fair market value adjustment to the Allergan debt as of December 31, 2014.
(4)   Represents fees and expenses incurred after December 31, 2014.

The estimated net proceeds from this offering have been calculated by assuming a public offering price of $1,000 per Mandatory Convertible Preferred Share.

 

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To the extent that the aggregate net proceeds from this offering and the Ordinary Shares Offering are less than the aggregate amount set forth in the foregoing table, we intend to increase the amount of debt borrowed in the proposed Debt Financing (which may include borrowings under the Bridge Facility) in order to finance the Cash Consideration Portion of the Acquisition.

 

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Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2014:

 

 

on an actual basis;

 

 

on an as adjusted basis after giving effect to this offering (but not the application of the net proceeds therefrom);

 

 

on an as further adjusted basis to also give effect to the Ordinary Shares Offering (but not the application of the net proceeds therefrom), assuming a public offering price of $285.37 per ordinary share, which is equal to the last reported sale price of our ordinary shares on the NYSE on February 13, 2015;

 

 

on an as further adjusted basis to also give effect to the proposed Debt Financing, other than the Cash Bridge Facility and assuming no borrowings under the Bridge Facility (but not the application of the net proceeds therefrom); and

 

 

on a pro forma basis to give effect to the consummation of the Acquisition and the application of the net proceeds from this offering, the Ordinary Shares Offering and the proposed Debt Financing, other than the Cash Bridge Facility.

The following data are qualified in their entirety by our financial statements and other information incorporated by reference herein. You should read this table in conjunction with “Summary—The Allergan acquisition”, “Risk factors” and “Use of proceeds”. Investors in the Mandatory Convertible Preferred Stock should not place undue reliance on the as adjusted information included in this prospectus supplement because this offering is not contingent upon any of the transactions reflected in the adjustments included in the following information.

 

      As of December 31, 2014  
      Actual      As Adjusted
for this
Offering
     As Further
Adjusted
for the
Ordinary
Shares
Offering
     As Further
Adjusted
for the
proposed
Debt
Financing
     Pro Forma
for the
Acquisition
 
            (unaudited)      (unaudited)      (unaudited)      (unaudited)  
              

Cash and cash equivalents

   $ 250.0       $ 4,339.7       $ 8,429.4       $ 35,776.9       $ 1,923.5   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Capital Leases

   $ 16.7       $ 16.7       $ 16.7       $ 16.7       $ 16.7   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Long-term debt, including the current portion of long-term debt:

              

ACT Term Loan Agreement

   $ 2,832.6       $ 2,832.6       $ 2,832.6       $ 2,832.6       $ 2,832.6   

Revolving borrowings

     255.0         255.0         255.0         255.0         255.0   

Term Facilities

                             5,500.0         5,500.0   

Senior Notes

                             22,000.0         22,000.0   

Allergan existing debt facilities

                                     2,167.6   

Warner Chilcott Term Loan Agreement

     1,251.6         1,251.6         1,251.6         1,251.6         1,251.6   

1.300% Senior Notes due 2017

     500.0         500.0         500.0         500.0         500.0   

1.875% Senior Notes due 2017

     1,200.0         1,200.0         1,200.0         1,200.0         1,200.0   

4.375% Senior Notes due 2019

     1,050.0         1,050.0         1,050.0         1,050.0         1,050.0   

2.450% Senior Notes due 2019

     500.0         500.0         500.0         500.0         500.0   

6.125% Senior Notes due 2019

     400.0         400.0         400.0         400.0         400.0   

4.875% Senior Notes due 2021

     750.0         750.0         750.0         750.0         750.0   

5.000% Senior Notes due 2021

     1,200.0         1,200.0         1,200.0         1,200.0         1,200.0   

 

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      As of December 31, 2014  
      Actual     As Adjusted
for this
Offering
    As Further
Adjusted
for the
Ordinary
Shares
Offering
    As Further
Adjusted
for the
proposed
Debt
Financing
    Pro Forma
for the
Acquisition
 
           (unaudited)     (unaudited)     (unaudited)     (unaudited)  

3.250% Senior Notes due 2022

     1,700.0        1,700.0        1,700.0        1,700.0        1,700.0   

3.850% Senior Notes due 2024

     1,200.0        1,200.0        1,200.0        1,200.0        1,200.0   

4.625% Senior Notes due 2042

     1,000.0        1,000.0        1,000.0        1,000.0        1,000.0   

4.850% Senior Notes due 2044

     1,500.0        1,500.0        1,500.0        1,500.0        1,500.0   

Unamortized Discount of notes above

     239.9        239.9        239.9        239.9        239.9   

Additional Debt Financing

     (52.1     (52.1     (52.1     (52.1     (52.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total long-term debt

   $ 15,527.0      $ 15,527.0      $ 15,527.0      $ 43,027.0      $ 45,194.6   

 

 

Equity:

          

Mandatory Convertible Preferred Shares

   $        4,089.7        4,089.7      $ 4,089.7      $ 4,089.7   

Ordinary Shares $0.0001 par value per share; 1.0 billion shares authorized, 265.9 million shares issued and 174.2 million shares outstanding; 241.0 million issued and outstanding, as adjusted for this offering

                                   

Additional paid-in capital

     28,994.7        28,994.7        33,084.4        33,084.4        66,838.4   

Member’s capital

                                   

(Accumulated deficit) / retained earnings

     (198.2     (198.2     (198.2     (198.2     (265.4

Accumulated other comprehensive (loss)

     (465.4     (465.4     (465.4     (465.4     (465.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity:

     28,331.1        32,420.8        36,510.5        36,510.5        70,197.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noncontrolling interest

     4.4        4.4        4.4        4.4        14.4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     28,335.5        32,425.2        36,514.9        36,514.9        70,211.7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capitalization

   $ 43,862.5      $ 47,952.2      $ 52,041.9      $ 79,541.9      $ 115,406.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Price range of ordinary shares and dividend policy

Our ordinary shares are listed on the New York Stock Exchange under the symbol “ACT”. The following table sets forth, for the periods indicated, the high and low last sale prices per ordinary share as reported on the New York Stock Exchange and dividends paid per ordinary share.

 

      High      Low  

Fiscal year ended December 31, 2015

     

First quarter (through February 13, 2015)

   $ 287.12       $ 253.00   

Fiscal year ended December 31, 2014

     

First quarter

   $ 230.77       $ 166.38   

Second quarter

   $ 226.23       $ 184.71   

Third quarter

   $ 249.94       $ 201.91   

Fourth quarter

   $ 272.75       $ 208.64   

Fiscal year ended December 31, 2013

     

First quarter

   $ 92.37       $ 82.02   

Second quarter

   $ 133.00       $ 91.88   

Third quarter

   $ 145.50       $ 121.22   

Fourth quarter

   $ 170.51       $ 136.52   

Fiscal year ending December 31, 2012

     

First quarter

   $ 67.50       $ 55.00   

Second quarter

   $ 77.73       $ 65.70   

Third quarter

   $ 86.07       $ 73.39   

Fourth quarter

   $ 91.47       $ 81.73   

 

 

On February 13, 2015, the last reported sale price of our ordinary shares on the New York Stock Exchange was $285.37 per share. As at February 13, 2015 there were 266,252,295 of our ordinary shares issued and outstanding.

We have not paid any cash dividends since our initial public offering in February 1993.

Our ability to declare and pay dividends may be limited by the terms of our debt instruments under certain circumstances.

 

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Unaudited pro forma combined financial information

The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of (i) the assumed issuance of $22.0 billion aggregate principle amount of notes (the “Senior Notes”), (ii) the assumed issuance of $4.2 billion of ordinary shares (the “Ordinary Shares”), (iii) the assumed issuance of $4.2 billion of mandatorily convertible preferred shares (the “Mandatory Convertible Preferred Shares”), (iv) the borrowing under the Term Loan Credit Agreement (the “Term Facilities” and together with the Senior Notes, the Ordinary Shares and the Mandatory Convertible Preferred Shares, the “Debt and Equity Financing”) of $5.5 billion (v) the acquisition of Allergan Inc. (“Allergan”) by the Company, which was announced on November 17, 2014 (the “Acquisition”), (vi) the acquisition of Forest Laboratories, Inc. (“Forest”) by the Company which closed on July 1, 2014, (the “Forest Transaction”), (vii) the acquisition of Aptalis Holdings Inc. (“Aptalis”) by Forest, which closed on January 31, 2014 (the “Aptalis Transaction”), and (viii) the related financings and assumed financings to fund the acquisitions in (vi) and (vii) based on the historical financial position and results of operations of Actavis.

Warner Chilcott Limited is an indirect wholly-owned subsidiary of Actavis plc, the ultimate parent of the group. The results of Warner Chilcott Limited are consolidated into the results of Actavis plc. Due to the deminimis activity between Actavis plc and Warner Chilcott Limited, references throughout this filing relate to both Actavis plc and Warner Chilcott Limited, unless otherwise indicated. References in this section to “we,” “our,” “us,” “Actavis,” or the “Company” refer to both Actavis plc and Warner Chilcott Limited. As related to the Unaudited Pro Forma Combined Financial Information, except where otherwise indicated all adjustments (in millions) are applicable to both Warner Chilcott Limited and Actavis plc.

The following historical pro forma combined balance sheet as of December 31, 2014 is based upon and derived from the historical financial information of the Company and Allergan.

The fiscal years of the Company and Allergan ended on December 31. The fiscal years of Forest and Aptalis ended on March 31 and September 30, respectively. The following unaudited pro forma combined statement of operations for the year ended December 31, 2014 was prepared based on (i) the historical consolidated statement of operations of the Company for the year ended December 31, 2014, (ii) the historical consolidated statement of earnings of Allergan for the year ended December 31, 2014, (iii) the historical consolidated statement of operations of Forest for the six months ended June 30, 2014, which was derived by subtracting the consolidated statement of operations for the nine months ended December 31, 2013 and adding the consolidated statement of operations for the fiscal year ended March 31, 2014 from and to the consolidated statement of operations for the three months ended June 30, 2014, and (iv) the historical consolidated statement of operations of Aptalis for the one month ended January 31, 2014.

The Acquisition, the Forest Transaction and the Aptalis Transaction have been accounted for as business combinations using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) 805, “Business Combinations,” (“ASC 805”). The unaudited pro forma combined financial information set forth below primarily give effect to the following:

 

 

Effect of application of the acquisition method of accounting in connection with the acquisitions referred to above;

 

 

Effect of issuing the Senior Notes to partially fund the Acquisition;

 

 

Effect of issuing the Ordinary Shares to partially fund the Acquisition;

 

 

Effect of issuing the Mandatory Convertible Preferred Shares to partially fund the Acquisition;

 

 

Effect of borrowing under the Term Facilities; and

 

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Effect of transaction costs in connection with the acquisitions and financings.

The pro forma adjustments are preliminary and are based upon available information and certain assumptions, described in the accompanying notes to the unaudited pro forma combined financial information that Actavis management believes are reasonable under the circumstances. Actual results and valuations may differ materially from the assumptions within the accompanying unaudited pro forma combined financial information. Under ASC 805, assets acquired and liabilities assumed are recorded at fair value. The fair value of identifiable tangible and intangible assets acquired and liabilities assumed from the Acquisition are based on a preliminary estimate of fair value as of December 31, 2014. Any excess of the purchase price over the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill. Significant judgment is required in determining the estimated fair values of in-process research and development (“IPR&D”), identifiable intangible assets and certain other assets and liabilities. Such a valuation requires estimates and assumptions including, but not limited to, determining the timing and estimated costs to complete each in-process project, projecting the timing of regulatory approvals, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. Actavis’ management believes the fair values recognized for the assets to be acquired and the liabilities to be assumed are based on reasonable estimates and assumptions. Preliminary fair value estimates may change as additional information becomes available.

The unaudited pro forma combined statements of operations for the fiscal year ended December 31, 2014 assume all of the transactions were completed on January 1, 2014. The unaudited pro forma combined balance sheet as of December 31, 2014 assumes all of the transactions occurred on December 31, 2014, except for the acquisitions of Forest and Aptalis and their related financings, which are already reflected in Actavis’ historical balance sheet as of December 31, 2014. The unaudited pro forma combined financial information has been prepared by Actavis management in accordance with SEC Regulation S-X Article 11 for illustrative purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the transactions been completed as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that Actavis will experience after the transactions are completed. In addition, the accompanying unaudited pro forma combined statements of operations do not include any pro forma adjustments to reflect expected cost savings or restructuring actions which may be achievable or the impact of any non-recurring activity and one-time transaction related costs.

Certain financial information of Allergan, Forest and Aptalis, as presented in their respective consolidated financial statements, has been reclassified to conform to the historical presentation in Actavis’ consolidated financial statements for purposes of preparation of the unaudited pro forma combined financial information.

 

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Actavis plc

Unaudited pro forma combined balance sheet

As of December 31, 2014

 

(In millions)    Historical
Actavis
plc
     Historical
Allergan (after
conforming
reclassifications)
     Acquisition
adjustments
    Debt and
Equity
Financing
adjustments
     Footnote
reference
  

Actavis plc

pro forma

 

ASSETS

                

Current assets:

                

Cash and cash equivalents

   $ 250.0       $ 4,911.4      $ (38,764.8   $ 35,526.9       6h, 6l    $ 1,923.5   

Marketable securities

     1.0         55.0                          56.0   

Accounts receivable, net

     2,372.3         914.5                          3,286.8   

Inventories

     2,075.5         296.0        979.3              6c      3,350.8   

Prepaid expenses and other
current assets

     733.4         350.8               12.2            1,096.4   

Current assets held for sale

     949.2                                   949.2   

Deferred tax assets

     500.3         344.4                          844.7   
  

 

 

       

 

 

 

Total current assets

     6,881.7         6,872.1        (37,785.5     35,539.1            11,507.4   

Property, plant and equipment, net

     1,594.7      

 
1,006.3                          2,601.0   

Investments and other assets

     235.4         271.9        (8.6     140.3       6e, 6m      639.0   

Deferred tax assets

     107.4         437.6                          545.0   

Product rights and other intangibles

     19,188.4      

 
1,786.5        53,253.5              6c      74,228.4   

Goodwill

     24,521.5         2,392.9        23,062.3              6d      49,976.7   
  

 

 

       

 

 

 

Total assets

   $ 52,529.1       $ 12,767.3      $ 38,521.7      $ 35,679.4          $ 139,497.5   
  

 

 

       

 

 

 

LIABILITIES AND EQUITY

                

Current liabilities:

                

Accounts payable and accrued expenses

   $ 4,170.6       $ 1,480.3      $      $          $ 5,650.9   

Income taxes payable

     50.4                                   50.4   

Current portion of long-term
debt and capital leases

     697.4         72.1               68.7       6n      838.2   

Deferred revenue

     27.0         4.9                          31.9   

Current liabilities held for sale

     25.9                                   25.9   

Deferred tax liabilities

     47.3         0.9        227.2              6g      275.4   
  

 

 

       

 

 

 

Total current liabilities

     5,018.6         1,558.2        227.2        68.7              6,872.7   

 

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Table of Contents
(In millions)    Historical
Actavis
plc
    Historical
Allergan (after
conforming
reclassifications)
    Acquisition
adjustments
    Debt and
Equity
Financing
adjustments
     Footnote
reference
  

Actavis plc

pro forma

 

Long-term debt and capital leases

     14,846.3        2,085.3       10.2        27,431.3       6f, 6o      44,373.1   

Deferred revenue

     38.8        72.8                         111.6   

Other long-term liabilities

     335.8        841.3                         1,177.1   

Other taxes payable

     892.2        96.0                         988.2   

Deferred tax liabilities

     3,061.9        350.7       12,350.5              6g      15,763.1   
  

 

 

       

 

 

 

Total liabilities

     24,193.6        5,004.3       12,587.9        27,500.0            69,285.8   
  

 

 

       

 

 

 

Commitments and contingencies

              

Equity:

              

Preferred Shares

                          4,089.7       6q      4,089.7   

Common stock

            3.1       (3.1           6i, 6p        

Additional paid-in capital

     28,994.7        3,353.7       30,400.3        4,089.7       6i, 6p      66,838.4   

(Accumulated deficit) / retained earnings

     (198.2     5,894.8       (5,962.0           6j      (265.4

Accumulated other comprehensive (loss) income

     (465.4     (408.6 )     408.6              6k      (465.4

Treasury shares, at cost

            (1,090.0 )     1,090.0              6k        
  

 

 

       

 

 

 

Total stockholders’ equity

     28,331.1        7,753.0       25,933.8        8,179.4            70,197.3   

Noncontrolling interest

     4.4        10.0                         14.4   
  

 

 

       

 

 

 

Total equity

     28,335.5        7,763.0       25,933.8        8,179.4            70,211.7   
  

 

 

       

 

 

 

Total liabilities and equity

   $ 52,529.1      $ 12,767.3     $ 38,521.7      $ 35,679.4          $ 139,497.5   

 

 

See the accompanying notes to the unaudited pro forma combined financial information, which are an integral part of these pro forma financial statements.

 

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Table of Contents

Actavis plc

Unaudited pro forma combined statement of operations

For the year ended December 31, 2014

 

(In millions, except for per share data)  

Historical

Actavis
plc

   

Historical

Forest (after

conforming
reclassifications)

   

Aptalis
Transaction

and financing
adjustments

    Footnote
reference
  Forest subtotal -
after the Aptalis
Transaction
    Forest
Transaction
adjustments
   

Forest

financing
adjustments

    Footnote
reference
  Pro forma for
Forest
Transaction
 

Net revenues

    13,062.3        2,258.9        65.6      7s   $ 2,324.5      $ (16.7   $      7h   $ 2,307.8   
 

 

 

     

 

 

     

 

 

 

Operating expenses:

                 

Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)

    6,303.8        543.2        19.5      7s     562.7        (16.7          7h     546.0   

Research and development

    1,085.9        360.2        12.9      7s     373.1        45.7             7i     418.8   

Selling and marketing

    1,850.0        699.9        9.6      7s     709.5        60.5             7i     770.0   

General and administrative

    1,743.2        434.4        107.5      7o, 7s     541.9        24.7             7j     566.6   

Amortization

    2,597.5        81.8        24.3      7p, 7s     106.1        849.2             7k     955.3   

Goodwill impairment

    17.3                                                 

In-process research and development impairments

    424.3                                                 

Loss on assets held for sale

    190.8                                                 

Asset sales, impairments, and contingent consideration adjustment, net

    117.2               0.2      7s     0.2                        0.2   
 

 

 

     

 

 

     

 

 

 

Total operating expenses

    14,330.0        2,119.5        174.0          2,293.5        963.4                 3,256.9   
 

 

 

     

 

 

     

 

 

 

Operating (loss) / income

    (1,267.7     139.4        (108.4       31.0        (980.1              (949.1
 

 

 

     

 

 

     

 

 

 

Non-Operating income (expense):

                 

Interest income

    8.9        13.8                 13.8                        13.8   

Interest expense

    (411.8     (87.1     (7.1   7q, 7s     (94.2            (81.2   7m     (175.4

Other income (expense), net

    (41.5     4.3                 4.3                        4.3   
 

 

 

     

 

 

     

 

 

 

Total other income (expense), net

    (444.4     (69.0     (7.1       (76.1            (81.2       (157.3
 

 

 

     

 

 

     

 

 

 

(Loss) / income before income taxes and noncontrolling interest

    (1,712.1     70.4        (115.5       (45.1     (980.1     (81.2       (1,106.4

Provision / (benefit) for income taxes

    (81.9     (74.7     15.0      7r, 7s     (59.7     (127.3          7l, 7n     (187.0
 

 

 

     

 

 

     

 

 

 

Net (loss) / income

    (1,630.2     145.1        (130.5       14.6        (852.8     (81.2       (919.4

(Income) attributable to noncontrolling interest

    (0.3                                              
 

 

 

     

 

 

     

 

 

 

Net (loss) / income attributable to shareholders

    (1,630.5     145.1        (130.5       14.6        (852.8     (81.2       (919.4

Dividends on preferred stock

                                                    
 

 

 

     

 

 

     

 

 

 

Net (loss) / income attributable to ordinary shareholders

  $ (1,630.5   $ 145.1      $ (130.5     $ 14.6      $ (852.8   $ (81.2     $ (919.4
 

 

 

     

 

 

     

 

 

 

(Loss) per share attributable to ordinary shareholders:

                 

Basic

  $ (7.42                
 

 

 

                 

Diluted

  $ (7.42                
 

 

 

                 

Weighted average shares outstanding :

                 

Basic

    219.7                   
 

 

 

                 

Diluted

    219.7                                                           

 

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Table of Contents

(In millions, except for

per share data)

  

Historical

Allergan

(after conforming
reclassifications)

    Acquisition
adjustments
    Debt and
Equity
Financing
adjustments
    Footnote
reference
  

Actavis plc

pro forma

 

Net revenues

   $ 7,237.9      $ (12.5   $      7a      22,595.5   
  

 

 

      

 

 

 

Operating expenses:

           

Cost of sales (excludes amortization and impairment of acquired intangibles including product rights)

     754.2        (1.8          7a, 7b      7,602.2   

Research and development

     1,251.8        44.9             7b      2,801.4   

Selling and marketing

     2,179.5        71.4             7b      4,870.9   

General and administrative

     902.7        (53.6          7b, 7c      3,158.9   

Amortization

     112.4        4,003.3             7d      7,668.5   

Goodwill impairment

                             17.3   

In-process research and development impairments

                             424.3   

Loss on assets held for sale

                             190.8   

Asset sales, impairments, and contingent consideration adjustment, net

     28.0                         145.4   
  

 

 

      

 

 

 

Total operating expenses

     5,228.6        4,064.2                  26,879.7   
  

 

 

      

 

 

 

Operating (loss) / income

     2,009.3        (4,076.7               (4,284.2
  

 

 

      

 

 

 

Non-Operating income (expense):

           

Interest income

     7.7                         30.4   

Interest expense

     (69.4            (948.4   7f      (1,605.0

Other income (expense), net

     41.7        47.8             7c      52.3   
  

 

 

      

 

 

 

Total other income (expense), net

     (20.0     47.8        (948.4        (1,522.3
  

 

 

      

 

 

 

(Loss) / income before income taxes and noncontrolling interest

     1,989.3        (4,028.9     (948.4        (5,806.5

Provision / (benefit) for income taxes

     456.7        (921.2          7e, 7g      (733.4
  

 

 

      

 

 

 

Net (loss) / income

     1,532.6        (3,107.7     (948.4        (5,073.1

(Income) attributable to noncontrolling interest

     (4.6                      (4.9
  

 

 

      

 

 

 

Net (loss) / income attributable to shareholders

     1,528.0        (3,107.7     (948.4        (5,078.0

Dividends on preferred stock

                               
  

 

 

      

 

 

 

Net (loss) / income attributable to ordinary shareholders

   $ 1,528.0      $ (3,107.7   $ (948.4      $ (5,078.0
  

 

 

      

 

 

 

(Loss) per share attributable to ordinary shareholders:

           

Basic

            $ (13.04
           

 

 

 

Diluted

            $ (13.04
           

 

 

 

Weighted average shares outstanding :

           

Basic

              389.4   
           

 

 

 

Diluted

                                  389.4   

See the accompanying notes to the unaudited pro forma combined financial information, which are an integral part of these pro forma financial statements.

 

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Table of Contents

1. Description of transactions

The Acquisition:    On November 16, 2014, Actavis entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”) with Avocado Acquisition Inc. (“Merger Sub”), a wholly owned subsidiary of Actavis plc, and Allergan, that provides for the acquisition of Allergan by Actavis. Pursuant to the Merger Agreement, Merger Sub will merge with and into Allergan, with Allergan continuing as the surviving corporation. Following the Acquisition, Allergan will be an indirect wholly owned subsidiary of Actavis. At the effective time of the Acquisition, each share of Allergan’s common stock issued and outstanding immediately prior to the Acquisition (other than excluded shares and dissenting shares) will be converted into the right to receive (i) $129.22 in cash (the “Cash Consideration Portion”), without interest, and (ii) 0.3683 of an ordinary share of Actavis plc.

Actavis plans to pay the aggregate Cash Consideration Portion with the anticipated proceeds of the Debt and Equity Financing, which may consist of any of the following: (i) up to $22.0 billion in aggregate principal amount of the Senior Notes, (ii) assumed $4.2 billion in Ordinary Shares issuance, (iii) assumed $4.2 billion in Mandatory Convertible Preferred Shares issuance, (iv) up to $5.5 billion under the Term Facilities, (v) up to $4.698 billion in loans under a 60-day senior unsecured bridge loan (the “Cash Bridge Facility”) and (vi) if and to the extent all or part of the Senior Notes, the Ordinary Shares or the Mandatory Convertible Preferred Shares are not issued and sold, up to $30.9 billion in loans under the 364-day senior unsecured bridge facility (the ”Bridge Facility”).

On December 17, 2014, the Company entered into a credit agreement with respect to the Bridge Facility (the “Bridge Credit Agreement”) and term loan credit agreement with respect to the Term Facilities (the “Term Loan Credit Agreement”). On November 16, 2014, Actavis obtained a commitment letter (the “Commitment Letter”) from certain financial institutions party thereto (the “Commitment Parties”) pursuant to which the Commitment Parties agreed to provide, subject to certain conditions, the entire principal amount of the Cash Bridge Facility and commitments for certain other portions of the debt financing for the Acquisition that have been replaced by the Bridge Credit Agreement and the Term Loan Credit Agreement. The commitments under the Commitment Letter with respect to the Cash Bridge Facility remain outstanding.

Forest Transaction:    On July 1, 2014, the Company acquired Forest for $30.9 billion, including outstanding indebtedness assumed of $3.3 billion, equity consideration of $20.6 billion, which included the assumption of outstanding Forest equity awards, and cash consideration of $7.1 billion. Under the terms of the Forest Transaction, Forest stockholders and holders of Forest equity awards received 89.8 million of Actavis plc ordinary shares, 6.1 million of Actavis plc non-qualified stock options and 1.1 million of Actavis plc share units. Included in the consideration is the portion of outstanding equity awards deemed to have been earned as of July 1, 2014 of $568.1 million (amount deemed not to have been earned as of July 1, 2014 was $570.4 million).

The Company’s historical consolidated statement of operations for the year ended December 31, 2014 includes results of operations of Forest since July 1, 2014.

Aptalis Transaction:    On January 31, 2014, Forest acquired Aptalis in a series of merger transactions for an aggregate purchase price equal to the total enterprise value of Aptalis, plus the aggregate exercise price applicable to Aptalis’ outstanding options and other equity awards, plus the amount of closing date cash, minus Aptalis’ existing indebtedness, minus certain selling stockholders’ expenses.

2. Basis of presentation

The historical consolidated financial information of the Company has been adjusted in the accompanying unaudited pro forma combined financial information to give effect to pro forma events that are (i) directly

 

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attributable to the transactions, (ii) factually supportable, and (iii) with respect to the unaudited pro forma combined statements of operations, are expected to have a continuing impact on the results of operations.

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, which requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The acquisition method of accounting uses the fair value concepts defined in ASC 820, “Fair Value Measurement,” (referred to in this registration statement/prospectus as “ASC 820”) as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of an asset or liability. Market participants are assumed to be buyers or sellers in the most advantageous market for the asset or liability. Fair value measurement for an asset assumes the highest and best use by these market participants. Fair value measurements can be highly subjective and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances.

3. Accounting policies

Following the Acquisition, the Company will conduct a review of accounting policies of Allergan in an effort to determine if differences in accounting policies require restatement or reclassification of results of operations or reclassification of assets or liabilities to conform to the Company’s accounting policies and classifications. As a result of that review, the Company may identify differences among the accounting policies of the Company and Allergan that, when conformed, could have a material impact on this unaudited pro forma combined financial information. During the preparation of this unaudited pro forma combined financial information, the Company was not aware of any material differences between accounting policies of the Company and Allergan, except for certain reclassifications necessary to conform to the Company’s financial presentation, and accordingly, this unaudited pro forma combined financial information does not assume any material differences in accounting policies among the Company and Allergan.

4. Historical Allergan

Financial information of Allergan in the “Historical Allergan (after conforming reclassifications)” column in the unaudited pro forma combined balance sheet represents the historical consolidated balance sheet of Allergan as of December 31, 2014. Financial information presented in the “Historical Allergan (after conforming reclassifications)” column in the unaudited pro forma combined statement of operations represents the historical consolidated statement of earnings of Allergan for the year ended December 31, 2014. Such financial information has been reclassified or classified to conform to the historical presentation in the Company’s consolidated financial statements as set forth below (in millions). Unless otherwise indicated, defined line items included in the footnotes have the meanings given to them in the historical financial statements of Allergan.

 

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Reclassification and classification of the unaudited combined pro forma balance sheet as of December 31, 2014

 

     

Before

reclassification

    Reclassification    

After

reclassification

 

 

 

Marketable securities

   $ 55.0  (i)     $ 55.0   

Prepaid expenses and other current assets

     694.3        (343.5)  (ii)     350.8   

Deferred tax assets—short term

       344.4  (ii,iii)     344.4   

Deferred tax assets—long-term

     86.9        350.7  (iii)     437.6   

Accounts payable and accrued expenses

     1,485.2   (v)     (4.9)  (iv)     1,480.3   

Deferred tax liabilities—short-term

       0.9  (iii)     0.9  

Deferred tax liabilities—long-term

       350.7  (iii)     350.7  

Deferred revenue

       72.8  (vii)     72.8  

Other taxes payable

       96.0  (vi)     96.0  

Other long-term liabilities

     1,010.1        (168.8)  (vi,vii)     841.3   

 

(i)   Includes “Short-term investments” consisting of commercial paper and foreign time deposits with original maturities over 92 days.

 

(ii)   Represents the reclassification of “Short-term deferred tax assets” from the “Prepaid expenses and other current assets” line item in the table set forth above.

 

(iii)   Represent the gross-up and reversal of short-term and long-term deferred tax netting.

 

(iv)   Represents the reclassification of “Deferred revenue” from “Other accrued expenses.”

 

(v)   Includes “Accounts payable” of $287.4 million, “Accrued compensation” of $292.8 million and “Other accrued expenses” of $905.0 million.

 

(vi)   Represents the reclassification of “Other liabilities payable.”

 

(vii)   Represents the reclassification of “Long-term deferred revenue.”

Reclassifications and classifications in the unaudited pro forma combined statement of operations for the year ended December 31, 2014

 

     

Before

reclassification

    Reclassification    

After

reclassification

 

 

 

Net revenue

   $ 7,237.9 (i)     $ 7,237.9   

Cost of sales

     842.4      $ (88.2 )(vi,vii)     754.2   

Selling and marketing

       2,179.5  (v-vii)      2,179.5   

General and administrative

     2,837.2 (ii)     (1,934.5 )(iv-vi)     902.7   

Research and development

     1,191.6        60.2  (vi)     1,251.8   

Asset sales, impairments, contingent consideration adjustments, net

     245.0 (iii)     (217.0 )(iv)     28.0   

 

(i)   Includes “Total revenue” of $7,237.9 million.

 

(ii)   Includes “Selling, general and administrative” of $2,837.2 million.

 

(iii)   Includes “Restructuring charges” of $245.0 million.

 

(iv)   Represents the reclassification of “Selling, general and administrative” of $28.0 million related to the loss on disposals of fixed assets.

 

(v)   Represents the reclassification of “Selling, general and administrative” of $2,004.2 million relating to selling and marketing activities.

 

(vi)   Represents the allocation of restructuring charges of $245.0 million to “Cost of sales” of $12.7 million, “Selling and marketing” of $74.4 million, “General and administrative” of $97.7 million and “Research and development” of $60.2 million.

 

(vii)   Represents the reclassification of “Cost of sales” from $100.9 million related to product distribution to customers for select fees treated by Actavis as selling expenses.

5. Historical Forest

Financial information presented in the “Historical Forest (after conforming reclassifications)” column in the unaudited pro forma combined statement of operations of Forest for the year ended December 31, 2014, is for the six months Forest was a stand-alone entity and was derived by subtracting the consolidated statement of operations for the nine months ended December 31, 2013 and adding the consolidated statement of operations

 

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for the fiscal year ended March 31, 2014 from and to the consolidated statement of operations for the three months ended June 30, 2014 as follows (in millions):

 

      (E)
Year ended
March  31,
2014
    (F)
Nine months
ended
December  31,
2013
     (G)
Three months
ended
June  30,

2014
    (H)=(E)-(F)+(G)
Six months
ended

June 30,
2014
 

Total revenue

   $ 3,646.9     $ 2,554.7       $ 1,166.7     $ 2,258.9  

Cost of goods sold

     760.6       511.4         319.1       568.3  
  

 

 

 

Gross profit

     2,886.3       2,043.3         847.6       1,690.6  
  

 

 

 

Operating expenses

         

Selling, general and administrative

     1,986.2       1,307.4         512.2       1,191.0  

Research and development

     788.3       596.3         168.2       360.2  
  

 

 

 

Total operating expenses

     2,774.5       1,903.7         680.4       1,551.2  
  

 

 

 

Operating income

     111.8       139.6         167.2       139.4  

Interest and other income (expense), net

     (30.2 )     12.6         (26.2 )     (69.0 )
  

 

 

 

Income before income taxes

     81.6       152.2         141.0       70.4  

Income tax (benefit) expense

     (83.7 )     41.0         50.0       (74.7 )
  

 

 

 

Net income

   $ 165.3     $ 111.2       $ 91.0     $ 145.1  

 

 

Financial information of Forest subsequent to July 1, 2014 is included in the results of the Company.

Financial information presented in the “Historical Forest (after conforming reclassifications)” column in the unaudited pro forma statement of operations for the year ended December 31, 2014, of which six months represents the Forest results, has been reclassified or classified to conform to the historical presentation in the Company’s consolidated financial statements as set forth below (in millions). Unless otherwise indicated, defined line items included in the footnotes have the meanings given to them in the historical financial statements of Forest.

Reclassifications and classifications in the unaudited pro forma combined statement of operations for the year ended December 31, 2014

 

      Before
reclassification
    Reclassification     After
reclassification
 

Net revenues

   $ 2,258.9 (i)    $     $ 2,258.9  

Cost of sales

     568.3 (ii)      (25.1 )     543.2  

Selling and marketing

     1,191.0 (iii)      (491.1 )     699.9  

General and administrative

            434.4       434.4  

Amortization

            81.8       81.8  

Loss on asset sales, impairments and contingent consideration adjustment, net

                   

Interest income

     (69.0 )(iv)     82.8       13.8  

Interest expense

            (87.1 )     (87.1 )

Other income (expense), net

            4.3       4.3  

 

(i)   Includes “Total revenue” of $2,258.9 million.

 

(ii)   Includes “Amortization” of $25.1 million.

 

(iii)   Includes “General and administrative expense” of $434.4 million and “Amortization” of $56.7 million.

 

(iv)   Includes “Interest and other income (expense), net” of $(69.0) million.

 

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6. Unaudited pro forma combined balance sheet adjustments

Adjustments included in the “Acquisition Adjustments” column in the accompanying unaudited pro forma combined balance sheet at December 31, 2014 are as follows (in millions):

 

      Note      Amount  

Purchase consideration

     

Preliminary estimate of fair value of Actavis plc ordinary shares issued

     6a       $ 31,424.3   

Preliminary estimate of fair value of Actavis plc equity awards issued

     6a         2,329.7   

Cash consideration

     6b         38,635.4   
     

 

 

 

Fair value of total consideration transferred

      $ 72,389.4   
     

 

 

 

Historical book value of net assets acquired

     

Book value of Allergan’s historical net assets as of December 31, 2014

      $ 7,753.0   

Less Allergan’s M&A costs expected to incur

     6h         (62.2
     

 

 

 

Net assets to be acquired

      $ 7,690.8   
     

 

 

 

Adjustments to reflect preliminary fair value of assets acquired and liabilities assumed

     

Inventories

     6c       $ 979.3   

Product rights and other intangibles, net

     6c         53,253.5   

Goodwill

     6d         23,062.3   

Investments and Other Assets

     6e         (8.6

Long-term debt.

     6f        (10.2

Deferred tax liabilities—current

     6g         (227.2

Deferred tax liabilities—non-current

     6g         (12,350.5
     

 

 

 

Total

      $ 64,698.6   

 

 

 

a.   “Preliminary estimate of fair value of ordinary shares issued” was estimated based on approximately 299.0 million shares of Allergan’s common stock outstanding as of December 31, 2014, after factoring in outstanding but unvested equity awards, multiplied by the exchange ratio of 0.3683 and the closing price of Actavis ordinary shares on February 13, 2015 of $285.37. All equity awards of Allergan were replaced with equity awards of Actavis plc with similar terms, except for restricted stock units with performance conditions. “Preliminary estimate of fair value of equity awards” issued represents the estimated aggregate fair value of Actavis plc replacement awards attributable to the service periods prior to the Acquisition, which is considered as part of purchase consideration, and was calculated based on Allergan’s equity awards outstanding (including restricted stock) as of December 31, 2014, multiplied by the assumed exchange ratio of 0.8211 and estimated fair value of equity awards.

The fair values of Actavis plc ordinary shares and equity awards were estimated based on Actavis plc’s closing share price on February 13, 2015 of $285.37 per share. A 28% increase in the price of Actavis plc ordinary shares would increase the aggregate Merger Consideration by $9,681.7 million, and a 28% decrease in the price of Actavis plc’s ordinary shares would decrease the aggregate Merger Consideration by $9,665.1 million, both with a corresponding change to Actavis’ assets. The market price of Actavis plc’s ordinary shares which Allergan stockholders will receive in the Acquisition as a portion of the Merger Consideration will continue to fluctuate from the date of this registration statement/prospectus through the effective time of the Acquisition and the final valuation could differ significantly from the current estimates.

 

b.   “Cash consideration” was estimated based on approximately 299.0 million shares of Allergan’s common stock outstanding as of December 31, 2014, multiplied by the $129.22 cash consideration per share.

 

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c.   Represents the estimated fair value adjustment to step-up Allergan’s inventory and identifiable intangible assets by $979.3 million and $53,253.5 million, to their preliminary fair values of $1,275.3 million and $55,040.0 million, respectively, which, when added to the Company’s historical inventory and identifiable intangible assets of $2,075.5 million and $19,188.4 million, respectively, total $3,350.8 million and $74,288.4 million, respectively.

The estimated step-up in inventory will increase cost of sales as the acquired inventory is sold within the first year after the Acquisition. As there is no continuing impact, the effect on cost of sales from the inventory step-up is not included in the unaudited pro forma combined statement of operations.

Identified intangible assets of $55,040.0 million primarily consist of (i) currently marketed products (“CMP”) of $45,190.0 million (weighted average useful life of 6.5 years using the economic benefit model) and (ii) IPR&D of $9,850.0 million. The IPR&D amounts will be capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project and launch of the product, the Company will make a separate determination of useful life of the IPR&D intangibles and amortization will be recorded as an expense. As the IPR&D intangibles are not currently marketed, no amortization of these items is reflected in the unaudited pro forma combined statement of operations.

The fair value estimate for identifiable intangible assets is preliminary and is determined based on the assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). This preliminary fair value estimate could include assets that are not intended to be used, may be sold or are intended to be used in a manner other than their best use. For purposes of the accompanying unaudited pro forma combined financial information, it is assumed that all assets will be used in a manner that represents their highest and best use. The final fair value determination for identified intangibles, including the IPR&D intangibles, may differ from this preliminary determination.

The fair value of identifiable intangible assets is determined primarily using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participants’ expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of the identifiable intangible assets valuations, from the perspective of a market participant, include the estimated net cash flows for each year for each project or product (including net revenues, cost of sales, research and development costs, selling and marketing costs and working capital asset/contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream as well as other factors. The major risks and uncertainties associated with the timely and successful completion of the IPR&D projects include legal risk and regulatory risk. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change or the timely completion of each project to commercial success will occur. For these and other reasons, actual results may vary significantly from estimated results.

 

d.   Goodwill is calculated as the difference between the fair value of the consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The adjustment represents a net increase of Actavis’ total goodwill by $25,455.2 million to $49,976.7 million after giving effect to the Acquisition.

 

e.   Represents the removal of Allergan’s deferred debt issuance costs of $8.6 million.

 

f.   Represents the estimated fair value adjustment of $10.2 million to Allergan’s historical long-term debt.

 

g.  

Represents deferred income tax liabilities of $227.2 million (current) and $12,350.5 million (non-current), resulting from fair value adjustments for the identifiable tangible assets and intangible assets as well as

 

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liabilities assumed and other acquisition accounting adjustments, respectively. This estimate of deferred tax liabilities was determined based on the excess book basis over the tax basis of the assets acquired and liabilities assumed at a 23.2% weighted average statutory tax rate of where most of Allergan’s taxable income was generated historically.

 

h.   Represents cash outflows from the (i) payment of cash purchase consideration of $38,635.4 million and (ii) $62.2 million of transaction costs that are expected to be incurred by Allergan and $67.2 million of transaction costs that are expected to be incurred by the Company.

 

i.   Represents the addition of common stock and additional paid-in capital (excluding restricted shares) of $31,424.3 million, the addition of shareholder’s equity related to the replacement equity awards (including restricted shares) of $2,329.7 million and the elimination of Allergan’s common stock and additional paid in capital of $3.1 million and $3,353.7 million respectively.

 

j.   Represents the elimination of Allergan’s retained earnings of $5,894.8 million and $67.2 million of estimated future transaction costs the Company expects to incur related to the Acquisition.

 

k.   Represents the elimination of Allergan’s historical treasury stock and accumulated other comprehensive income.

Adjustments included in the “Financing Adjustments” column in the accompanying unaudited pro forma combined balance sheet at December 31, 2014 are as follows (in millions):

 

l.   The adjustment to cash is as follows:

 

Senior Notes

   $  22,000.0   

Net proceeds from issuance of Ordinary Shares

     4,089.7   

Net proceeds from issuance of Mandatory Convertible Preferred Shares

     4,089.7   

Term Facilities

     5,500.0   

Total financing costs

     (152.5
  

 

 

 

Total net financing

   $ 35,526.9   

The Company has excluded potential borrowings under the Cash Bridge Facility as borrowings under the facility, if any, are temporary with no ongoing impact to the financial statements. Actavis also has a committed Bridge Facility for up to $30.9 billion; however, for the pro forma financials it is assumed that the Bridge Facility will not be drawn upon. If the Company is unable to finance a portion of the cash consideration for Allergan as anticipated, and assuming $22.0 billion is drawn under the committed Bridge Facility, on a pro forma basis interest expense would increase by approximately $442.3 million, tax benefit would not change, and the net loss to ordinary shareholders would increase approximately $1.14 per share, leaving all other pro forma adjustments constant. The amount of loss is dependent on several factors, including whether alternative sources of equity or debt financing are available as well as timing of raising anticipated borrowings.

Assuming an increase of $1.0 billion in proceeds from the Senior Notes, on a pro forma basis interest expense would increase by $39.2 million, tax benefit would not change, and the net loss to ordinary shareholders would increase by approximately $0.10 per share, leaving all other pro forma adjustments constant.

 

m.   Represents capitalized deferred financing costs assumed of $152.5 million related to the Senior Notes and the Term Facilities in place for Actavis’ new borrowings to fund the Acquisition.

 

n.   Represents the current portion of the Term Facilities of $68.7 million.

 

o.   Represents the long-term portions of the Senior Notes $22,000.0 million and Term Facilities of $5,431.3 million.

 

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p.   Represents the Actavis plc offering of the Ordinary Shares with estimated net proceeds of $4,089.7 million, assuming no exercise of the underwriters’ overallotment option.

 

q.   Represents the Actavis plc offering of the Mandatory Convertible Preferred Shares with estimated net proceeds of $4,089.7 million, assuming no exercise of the underwriters’ overallotment option.

7. Unaudited pro forma combined statement of operations adjustments

Adjustments related to the Acquisition

Adjustments included in the “Acquisition Adjustments” column in the accompanying unaudited pro forma combined statement of operations are as follows:

 

a.   Represents the elimination of net revenues and cost of sales for product sales of $12.5 million for the year ended December 31, 2014 between the Company and Allergan.

 

b.   Represents the incremental stock-based compensation of $156.5 million for the year ended December 31, 2014 in connection with the replacement equity awards granted at the close of the Acquisition. The replacement charge is accounted for as a modification to the awards.

 

c.   Represents the elimination of transaction costs that have been incurred by Actavis and Allergan related to the Acquisition.

 

d.   Represents increased amortization for the fair value of identified intangible assets with definite lives for the year ended December 31, 2014. The increase in amortization expense for intangible assets is calculated using the economic benefit model with a weighted average life of 6.5 years, less the historical Allergan amortization expense.

 

e.   Represents the income tax effect for unaudited pro forma combined statement of operations adjustments related to the Acquisition using a 23.2% weighted average statutory tax rate where most of Allergan’s taxable income was generated historically, offset, in part, by the removal of historical tax expenses related to the adjusted line items.

Adjustments included in the “Debt and Equity Financing Adjustments” column in the accompanying unaudited pro forma combined statement of operations are as follows:

 

f.   Represents estimated interest expense, including amortization of deferred financing costs based on effective interest rate method, related to the Senior Notes and the Term Facilities as follows (in millions):

 

      Year ended
December 31, 2014
 

Senior Notes

   $ 851.4   

3 year tranche of the Term Facilities

     46.9   

5 year tranche of the Term Facilities

     50.1   

 

 

Assuming $22,000.0 million is drawn under the Senior Notes and the Term Facilities are fully drawn, each 0.125% change in assumed interest rates for the Senior Notes and the Term Facilities would change pro forma interest expense by approximately $34.4 million for the year ended December 31, 2014.

 

g.   Based on the financing structure available at the time of this filing, there would be no tax benefit on the new borrowings.

 

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Adjustments related to the Forest Transaction

Adjustments included in the “Forest Transaction Adjustments” column in the accompanying unaudited pro forma combined statement of operations are as follows:

 

h.   Represents the elimination of net revenues and cost of sales of product sales of $16.7 million for the year ended December 31, 2014, between the Company and Forest after the Aptalis Transaction.

 

i.   Represents the stock-based compensation in connection with the replacement equity awards granted at the close of the Forest Transaction.

 

j.   Represents the stock-based compensation of $55.8 million for the year ended December 31, 2014, in connection with the replacement equity awards granted at the close of the Forest Transaction. For the year ended December 31, 2014, this has been offset by the reversal of M&A costs of $(30.7) million and $(0.4) million recorded by the Company and Forest, respectively in connection with the Forest Transaction.

 

k.   Represents increased amortization for the fair value of identified intangible assets with definite lives for the year ended December 31, 2014. The increase in amortization expense for intangible assets is based on the actual useful lives assigned to each product as follows:

 

(in millions)    Amount recognized
as of acquisition
date
     Weighted
average
lives (years)
     Year ended
December 31,
2014
 

CMP:

        

Namenda Franchise

   $ 2,125.0        1.7     

Bystolic Franchise

     1,810.0        3.3     

Linzess

     1,052.0        5.0     

Zenpep

     978.0        6.8     

Carafate

     915.0        6.2     

Armour Thyroid

     747.0         5.9     

Viibryd

     413.0        4.5     

Fetzima

     392.0        5.0     

Teflaro

     343.0        3.0     

Canasa

     327.0        2.6     

Daliresp

     269.0        3.5     

Other CMP Products

     1,904.0        5.7     
  

 

 

       
   $ 11,275.0        4.3     
  

 

 

       

IPR&D:

        

Gastroenterology

     791.0        

Central nervous system

     304.0        

Cardiovascular

     193.0        

Other

     74.0        
  

 

 

       
   $ 1,362.0        
  

 

 

       

Customer relationships

     60.0        4.5     

Other

     173.5        4.2     
  

 

 

       

Total identifiable intangible assets

   $ 12,877.5         $ 923.6  
  

 

 

       

Less historical amortization inclusive of Aptalis deal

           106.1  
         $ 817.5  

 

 

 

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l.   Represents the income tax effect for unaudited pro forma combined statement of operations adjustments related to the Forest Transaction using a 13% blended statutory tax rate primarily related to the United States and Ireland, for the year ended December 31, 2014. These two countries are where most of Forest’s taxable income was generated historically.

Adjustments included in the “Forest Financing Adjustments” column in the accompanying unaudited pro forma combined statement of operations are as follows:

 

m.   Represents estimated interest expense, including amortization of deferred financing costs based on effective interest rate method, related to the term facilities and the notes associated with the Forest Transaction as follows:

 

(in millions)   

Year ended

December 31,

2014

 

Term facilities (Forest Transaction)

   $ 20.1   

Notes (Forest Transaction)

     61.1   
  

 

 

 

Total net financing

   $ 81.2   

For the term facilities associated with the Forest Transaction of $2,000.0 million, a five year maturity was assumed. For the notes associated with the Forest Transaction, various maturity dates were assumed ranging from 2017 to 2044. The assumed interest rate for these borrowings was 3.3% on a weighted average basis. Interest expense from the cash bridge loans associated with the Forest Transaction was not reflected in the unaudited combined pro forma statement of operations as it will not have a continuing impact due to the short-term nature.

 

n.   Represents the income tax effect for unaudited pro forma combined statement of operations adjustments related to the financing for the Forest Transaction using a 0% tax rate, as that is the rate for the debt issued for the transaction in Luxembourg.

Adjustments related to the Aptalis Transaction

Adjustments included in the “Aptalis Transaction and Financing Adjustments” column in the accompanying unaudited pro forma combined statement of operations for the year ended December 31, 2014 is as follows:

 

o.   Represents $38.7 million of M&A costs incurred for the year ended December 31, 2014.

 

p.   Represents increased amortization resulting in the Aptalis Transaction by Forest for the fair value of identified intangible assets with definite lives as follows (in millions):

 

      Weighted
average useful
lives
     Fair value      One month ended
January 30, 2014
 

CMP intangible assets

     10      $ 2,912.2       $ 24.3   

Less historical amortization

           5.3   
        

 

 

 
        

 

$19.0

  

 

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q.   Represents (a) new interest expense related to the $1,050.0 million of Forest’s 4.375% notes due 2019 and $750.0 million of Forest’s 4.875% notes due 2021, issued in January 2014 for the year ended December 31, 2014, (b) the elimination of Aptalis’ historical interest expense of $60.6 million (inclusive of termination charges) for the year ended December 31, 2014 in connection with the repayment of Aptalis’ existing long-term debt in the principal amount of $1,250.0 million upon the Aptalis Transaction as follows (in millions):

 

     

One month

ended

January 30,

2014

 

New interest expense from Forest’s 4.375% Notes

   $ 4.0   

New interest expense from Forest’s 4.875% Notes

     3.1   

New interest expense from Forest’s 5.000% Notes

      

Elimination of Aptalis’ historical interest (income)

     (60.6 )
  

 

 

 

Total expense / (income)

   $ (53.5 )

 

 

 

r.   Represents the income tax effect for unaudited pro forma combined statement of operations adjustments related to the Aptalis Transaction and the related financing using a 24.1% weighted average blended statutory tax rate of the United States, Canada and Ireland, where most of Aptalis’ taxable income was generated historically.

 

s.   Financial information presented in the “Aptalis Transaction and Financing Adjustments” column in the unaudited pro forma combined statement of operations for the year ended December 31, 2014 includes Aptalis historical activities for the one month ended January 30, 2014 prior to the close of the Aptalis Transaction.

8. Earnings per share

The unaudited pro forma combined basic and diluted earnings per share calculations are based on Actavis plc’s consolidated basic and diluted weighted average number of shares. The pro forma weighted average number of shares outstanding reflects the following adjustments assumed to occur on January 1, 2014:

 

 

Elimination of Allergan historical common stock;

 

 

The estimated issuance of 110.1 million Actavis plc ordinary shares to Allergan stockholders in the Acquisition, calculated using the 0.3683 exchange ratio based on Allergan’s common stock outstanding as of December 31, 2014;

 

 

The estimated issuance of 14.7 million Actavis plc ordinary shares expected to be issued in the offering of Ordinary Shares to fund the Acquisition with gross proceeds assumed of $4.2 billion assuming a per share price in the offering equal to Actavis plc’s last reported Ordinary Share price of $285.37 on February 13, 2015; and

 

 

The issuance of 89.8 million Actavis plc ordinary shares associated with the Forest Transaction, which are included in Actavis’ historical balance sheet as of December 31, 2014.

 

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Description of Mandatory Convertible Preferred Shares

The following is a summary of certain provisions of our     % Mandatory Convertible Preferred Shares, Series A, par value of $0.0001 per share, which we refer to as our “Mandatory Convertible Preferred Shares”. A copy of the extract resolutions of the board of directors, or an authorized committee thereof, of Actavis plc setting forth the terms of the Mandatory Convertible Preferred Shares, which we refer to as the “Designations”, as well as our Amended and Restated Memorandum and Articles of Association, which we refer to as our “Articles”, is available upon request from us at the address set forth in the section of this prospectus supplement entitled “Where you can find more information”. This description of the terms of the Mandatory Convertible Preferred Shares is not complete and is subject to, and qualified in its entirety by reference to, the provisions of our Articles and the Designations.

As used in this section, unless otherwise expressly stated or the context otherwise requires, the terms “Actavis plc”, “the Company”, “us”, “we” or “our” refer to Actavis plc and not any of its subsidiaries.

General

Under our Articles, our board of directors is authorized, without any approval of our shareholders, to issue up to 10,000,000 serial preferred shares, par value $0.0001 per share, in one or more series by filing extract resolutions with the Irish Registrar of Companies. Such extract resolutions may set forth the designations, preferences and rights of the shares of each such series of preferred shares and the qualifications, limitations and restrictions thereof, including the dividend rate, the redemption provisions, if any, the amount payable in the event of our dissolution or the distribution of our assets, the terms and conditions, if any, of conversion and the voting rights. As of the date of this prospectus supplement, no preferred shares are outstanding. At the consummation of this offering, we will issue             Mandatory Convertible Preferred Shares. In addition, we have granted the underwriters an option to purchase up to             additional Mandatory Convertible Preferred Shares solely to cover overallotments as described under “Underwriting”.

When issued, the Mandatory Convertible Preferred Shares and any ordinary shares issued upon the conversion of the Mandatory Convertible Preferred Shares will be fully paid and nonassessable. The holders of the Mandatory Convertible Preferred Shares will have no preemptive or preferential rights to purchase or subscribe for our ordinary shares, obligations, warrants or other securities of ours of any class. Computershare Trust Company, N.A. serves as the transfer agent and registrar of our ordinary shares and will serve as transfer agent, registrar, conversion and dividend disbursing agent for the Mandatory Convertible Preferred Shares.

Ranking

The Mandatory Convertible Preferred Shares, with respect to dividend rights and distribution rights upon our liquidation, winding-up or dissolution, will rank:

 

 

senior to (i) our ordinary shares and (ii) each class or series of our share capital established after the first original issue date of shares of the Mandatory Convertible Preferred Shares (which we refer to as the “initial issue date”) the terms of which do not expressly provide that such class or series ranks senior to or on parity with the Mandatory Convertible Preferred Shares as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as “junior shares”);

 

 

on parity with each class or series of our share capital established after the initial issue date the terms of which expressly provide that such class or series will rank on parity with the Mandatory Convertible Preferred Shares as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as “parity shares”);

 

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junior to each class or series of our share capital established after the initial issue date the terms of which expressly provide that such class or series will rank senior to the Mandatory Convertible Preferred Shares as to dividend rights and distribution rights upon our liquidation, winding-up or dissolution (which we refer to collectively as “senior shares”); and

 

 

junior to our existing and future indebtedness.

Dividends

Subject to the rights of holders of any class or series of our share capital ranking senior to the Mandatory Convertible Preferred Shares with respect to dividends, holders of the Mandatory Convertible Preferred Shares will be entitled to receive, when, as and if declared by our board of directors, or an authorized committee thereof, out of funds legally available for payment, cumulative dividends at the rate per annum of     % on the liquidation preference of $1,000.00 per Mandatory Convertible Preferred Share (equivalent to $         per annum per share), payable in cash, by delivery of our ordinary shares or by delivery of any combination of cash and our ordinary shares, as determined by us in our sole discretion (subject to the limitations described below). See “—Method of payment of dividends” below. Declared dividends on the Mandatory Convertible Preferred Shares will be payable quarterly on March 1, June 1, September 1 and December 1 of each year to and including the mandatory conversion date (as defined below), commencing June 1, 2015 (each, a “dividend payment date”), at such annual rate, and dividends shall accumulate from the most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the initial issue date of the Mandatory Convertible Preferred Shares, whether or not in any dividend period or periods there have been funds legally available for the payment of such dividends. Declared dividends will be payable on the relevant dividend payment date to holders of record of the Mandatory Convertible Preferred Shares as they appear on our share register at 5:00 p.m., New York City time, on the immediately preceding February 15, May 15, August 15 and November 15 (each, a “record date”), whether or not such holders convert their shares, or such shares are automatically converted, after a record date and on or prior to the immediately succeeding dividend payment date. These record dates will apply regardless of whether a particular record date is a business day. A “business day” means any day other than a Saturday or Sunday or other day on which commercial banks in New York City are authorized or required by law or executive order to close. If a dividend payment date is not a business day, payment will be made on the next succeeding business day, without any interest or other payment in lieu of interest accruing with respect to this delay.

A dividend period is the period from and including a dividend payment date to but excluding the next dividend payment date, except that the initial dividend period will commence on and include the initial issue date of the Mandatory Convertible Preferred Shares and will end on and exclude the June 1, 2015 dividend payment date. The amount of dividends payable on each Mandatory Convertible Preferred Share for each full dividend period (after the initial dividend period) will be computed by dividing the annual dividend rate by four. Dividends payable on the Mandatory Convertible Preferred Shares for any period other than a full dividend period will be computed based upon the actual number of days elapsed during the period over a 360-day year (consisting of 12 30-day months). Accordingly, the dividend on the Mandatory Convertible Preferred Shares for the first dividend period, assuming the initial issue date is                     , 2015 will be $         per share (based on the annual dividend rate of     % and a liquidation preference of $1,000.00 per share) and will be payable, when, as and if declared, on June 1, 2015 to the holders of record thereof on May 15, 2015. The dividend on the Mandatory Convertible Preferred Shares for each subsequent dividend period, when, as and if declared, will be $         per share (based on the annual dividend rate of     % and a liquidation preference of $1,000.00 per share). Accumulations of dividends on shares of the Mandatory Convertible Preferred Shares will not bear interest.

No dividend will be declared or paid upon, or any sum of cash or number of our ordinary shares set apart for the payment of dividends upon, any outstanding Mandatory Convertible Preferred Shares with respect to any

 

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dividend period unless all dividends for all preceding dividend periods have been declared and paid upon, or a sufficient sum of cash or number of our ordinary shares has been set apart for the payment of such dividends upon, all outstanding Mandatory Convertible Preferred Shares.

Our ability to declare and pay cash dividends and to make other distributions with respect to our share capital, including the Mandatory Convertible Preferred Shares, may be limited by the terms of our and our subsidiaries’ existing and any future indebtedness. In addition, our ability to declare and pay dividends may be limited by applicable Irish law, including whether we have sufficient “distributable reserves” to declare and pay a dividend in cash. See “Risk factors—Risks Relating to the Mandatory Convertible Preferred Shares and Ordinary Shares—Our ability to declare and pay dividends on the Mandatory Convertible Preferred Shares may be limited”.

So long as any Mandatory Convertible Preferred Share remains outstanding, no dividend or distribution shall be declared or paid on our ordinary shares or any other class or series of junior shares, and none of our ordinary shares or any other class or series of junior shares shall be purchased, redeemed or otherwise acquired for consideration by us or any of our subsidiaries unless all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid upon, or a sufficient sum of cash or number of our ordinary shares has been set apart for the payment of such dividends upon, all outstanding Mandatory Convertible Preferred Shares. The foregoing limitation shall not apply to: (i) any dividend or distribution payable in ordinary shares or other junior shares, (ii) purchases, redemptions or other acquisitions of ordinary shares or other junior shares in connection with the administration of any benefit or other incentive plan, including any employment contract, in the ordinary course of business (including purchases to offset the share dilution amount pursuant to a publicly announced repurchase plan); provided that any purchases to offset the share dilution amount shall in no event exceed the share dilution amount; (iii) any dividends or distributions of rights in connection with a shareholders’ rights plan or any redemption or repurchase of rights pursuant to any shareholders’ rights plan; (iv) purchases of ordinary shares or junior shares pursuant to a contractually binding requirement to buy ordinary shares or junior shares existing prior to the preceding dividend period, including under a contractually binding share repurchase plan; or (v) the deemed purchase or acquisition of fractional interests in our ordinary shares or junior shares pursuant to the conversion or exchange provisions of such shares or the security being converted or exchanged. The phrase “share dilution amount” means the increase in the number of diluted shares outstanding (determined in accordance with U.S. GAAP, and as measured from the initial issue date) resulting from the grant, vesting or exercise of equity-based compensation to directors, employees and agents and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

When dividends on the Mandatory Convertible Preferred Shares (i) have not been declared and paid in full on any dividend payment date, or (ii) have been declared but a sum of cash or number of our ordinary shares sufficient to discharge our obligations in respect thereof has not been set aside for the benefit of the holders thereof on the applicable record date, no dividends may be declared or paid on any parity shares unless dividends are declared on the Mandatory Convertible Preferred Shares such that the respective amounts of such dividends declared on the Mandatory Convertible Preferred Shares and such parity shares shall bear the same ratio to each other as all accumulated dividends and all declared and unpaid dividends per share on the Mandatory Convertible Preferred Shares and such parity shares bear to each other; provided that any unpaid dividends will continue to accumulate.

Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by our board of directors, or an authorized committee thereof, may be declared and paid on any securities, including our ordinary shares, from time to time out of any funds legally available for such payment, and holders of the Mandatory Convertible Preferred Shares shall not be entitled to participate in any such dividends.

 

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Method of payment of dividends

Subject to the limitations described below, we may pay any declared dividend (or any portion of any declared dividend) on the Mandatory Convertible Preferred Shares (whether or not for a current dividend period or any prior dividend period, including in connection with the payment of declared and unpaid dividends pursuant to the provisions described in “—Mandatory conversion” and “—Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount”), determined in our sole discretion:

 

 

in cash;

 

by delivery of our ordinary shares; or

 

by delivery of any combination of cash and our ordinary shares.

We will make each payment of a declared dividend on the Mandatory Convertible Preferred Shares in cash, except to the extent we elect to make all or any portion of such payment in our ordinary shares. We will give the holders of the Mandatory Convertible Preferred Shares notice of any such election and the portion of such payment that will be made in cash and the portion that will be made in our ordinary shares no later than 10 scheduled trading days (as defined below) prior to the dividend payment date for such dividend; provided that if we do not provide timely notice of this election, we will be deemed to have elected to pay the relevant dividend in cash.

If we elect to make any such payment of a declared dividend, or any portion thereof, in our ordinary shares, such shares shall be valued for such purpose, in the case of any dividend payment or portion thereof, at 97% of the average VWAP per ordinary share (as defined below) over the five consecutive trading day (as defined below) period beginning on and including the seventh scheduled trading day (as defined below) prior to the applicable dividend payment date (the “average price”).

No fractional shares of our ordinary shares will be delivered to the holders of the Mandatory Convertible Preferred Shares in payment or partial payment of a dividend. We will instead pay a cash adjustment to each holder that would otherwise be entitled to a fraction of an ordinary share based on the average price with respect to such dividend.

To the extent a shelf registration statement is required in our reasonable judgment in connection with the issuance of or for resales of our ordinary shares issued as payment of a dividend on the shares of Mandatory Convertible Preferred Shares, including dividends paid in connection with a conversion, we will, to the extent such a shelf registration statement is not currently filed and effective, use our commercially reasonable efforts to file and maintain the effectiveness of such a shelf registration statement until the earlier of such time as all such ordinary shares have been resold thereunder and such time as all such shares would be freely tradable without registration by holders thereof that are not “affiliates” of ours for purposes of the Securities Act. To the extent applicable, we will also use our commercially reasonable efforts to have the ordinary shares qualified or registered under applicable U.S. state securities laws, if required, and approved for listing on the New York Stock Exchange (or if our ordinary shares are not listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which our ordinary shares are then listed).

Notwithstanding the foregoing, in no event will the number of our ordinary shares delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to the total dividend payment divided by $        , which amount represents 35% of the initial price (as defined below), subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each fixed conversion rate as set forth below in “—Anti-dilution adjustments” (such dollar amount, as adjusted, the “floor price”). To the extent that the amount of the declared dividend exceeds the product of (x) the number of our ordinary shares delivered in connection with such declared dividend and (y) 97% of the average price, we will, if we are legally able to do so, declare and pay such excess amount in cash.

 

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A “trading day” is a day on which our ordinary shares:

 

 

are not suspended from trading, and on which trading in our ordinary shares is not limited, on any national or regional securities exchange or association or over-the-counter market during any period or periods aggregating one half-hour or longer; and

 

 

have traded at least once on the national or regional securities exchange or association or over-the- counter market that is the primary market for the trading of our ordinary shares;

provided that if our ordinary shares are not traded on any such exchange, association or market, “trading day” means any business day.

A “scheduled trading day” is any day that is scheduled to be a trading day.

“VWAP” per ordinary share on any trading day means the per share volume-weighted average price as displayed on Bloomberg page “ACT <Equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such trading day; or, if such price is not available, “VWAP” means the market value per ordinary share on such trading day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by us for this purpose. The “average VWAP” means the average of the VWAPs for each trading day in the relevant period.

Under Irish law, our board of directors (or an authorized committee) may only declare and pay cash dividends on the Mandatory Convertible Preferred Shares out of our “distributable reserves.” While as of December 31, 2014 we did not have distributable reserves, we have filed a petition with the Irish High Court to confirm the creation of approximately $5.79 billion of distributable reserves by decreasing our share premium account. We have undertaken to the underwriters to use reasonable best efforts to create distributable reserves if the Irish High Court declines our petition. If distributable reserves are not created, we may deliver ordinary shares instead of cash to satisfy our obligations under the Mandatory Convertible Preferred Shares.

Where we elect to satisfy our obligations under the Mandatory Convertible Preferred Shares by delivering our ordinary shares instead of cash, we will do so by capitalizing our reserves. Under Irish law, a capitalization of our reserves is not treated as a distribution and accordingly we will not require distributable reserves where we elect to deliver our ordinary shares in satisfaction of our obligations under the Mandatory Convertible Preferred Shares.

Acquisition termination redemption

We expect to use the net proceeds from this offering in connection with the acquisition of Allergan, Inc. (the “Acquisition”), as described under “Summary”. Within ten Business Days following the earlier of (a) the date on which an acquisition termination event (as defined below) occurs and (b) 5:00 p.m. (New York City time) on November 30, 2015, if the Acquisition has not closed on or prior to such time on such date, we will be entitled, but not required, to mail a notice of acquisition termination redemption to the holders of the Mandatory Convertible Preferred Shares (provided that, if the Mandatory Convertible Preferred Shares are held in book-entry form through DTC we may give such notice in any manner permitted by DTC). If we provide notice of acquisition termination redemption to holders of the Mandatory Convertible Preferred Shares, then, on the acquisition termination redemption date (as defined below), we will be required to redeem the Mandatory Convertible Preferred Shares, in whole but not in part, at a redemption amount per Mandatory Convertible Preferred Share equal to the acquisition termination make-whole amount (as defined below).

“acquisition termination event” means either (1) the Merger Agreement (as such term is defined under “Summary”) is terminated or (2) we determine in our reasonable judgment that the Acquisition will not occur.

 

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“acquisition termination make-whole amount” means, for each Mandatory Convertible Preferred Share, an amount in cash equal to $1,010 plus accumulated and unpaid dividends to the acquisition termination redemption date (whether or not declared); provided, however, that if the acquisition termination share price (as defined below) exceeds the initial price, the acquisition termination make-whole amount will equal the reference amount (as defined below).

The “acquisition termination share price” means the average VWAP per ordinary share over the 10 consecutive trading day period ending on the trading day preceding the date on which we provide notice of acquisition termination redemption.

The “reference amount” will equal the sum of the following amounts:

(i) a number of ordinary shares equal to the acquisition termination conversion rate (as defined below); plus

(ii) cash in an amount equal to the acquisition termination dividend amount (as defined below);

provided that we may deliver cash in lieu of all or any portion of the ordinary shares set forth in clause (i) above, and we may deliver ordinary shares in lieu of all or any portion of the cash amount set forth in clause (ii) above, in each case, as described below.

“acquisition termination conversion rate” means a rate equal to the fundamental change conversion rate assuming for such purpose that the date on which we provide notice of acquisition termination redemption is the fundamental change effective date (as defined below) and that the fundamental change share price is the acquisition termination share price.

“acquisition termination dividend amount” means an amount of cash equal to the sum of (x) the fundamental change dividend make-whole amount and (y) the accumulated dividend amount, assuming in each case, for such purpose that the date on which we provide notice of acquisition termination redemption is the fundamental change effective date.

For a description of the terms fundamental change conversion rate, fundamental change dividend make-whole amount, accumulated dividend amount and fundamental change share price, see “—Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount.”

If the acquisition termination share price exceeds the initial price, we may pay cash (computed to the nearest cent) in lieu of delivering all or any portion of the number of ordinary shares equal to the acquisition termination conversion rate. If we make such an election, we will deliver cash (computed to the nearest cent) in an amount equal to such number of ordinary shares in respect of which we have made this election multiplied by the acquisition termination market value.

In addition, if the acquisition termination share price exceeds the initial price, we may deliver ordinary shares in lieu of cash for some or all of the acquisition termination dividend amount. If we make such an election, we will deliver a number of ordinary shares equal to such portion of the acquisition termination dividend amount to be paid in ordinary shares divided by the greater of the floor price and 97% of the acquisition termination market value; provided that, if the acquisition termination dividend amount or portion thereof in respect of which ordinary shares are delivered exceeds the product of such number of ordinary shares multiplied by 97% of the acquisition termination market value, we will, if we are legally able to do so, declare and pay such excess amount in cash (computed to the nearest cent).

“acquisition termination market value” means the average VWAP per ordinary share over the 20 consecutive trading day period commencing on and including the third trading day following the date on which we provide notice of acquisition termination redemption.

 

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“acquisition termination redemption date” means the date specified by us in our notice of acquisition termination redemption that is not less than 30 nor more than 60 days following the date on which we provide notice of such acquisition termination redemption; provided, that, if the acquisition termination share price is greater than the initial price and we elect to pay cash in lieu of delivering all or any portion of the ordinary shares equal to the acquisition termination conversion rate, or if we elect to deliver ordinary shares in lieu of all or any portion of the acquisition termination dividend amount, the acquisition termination redemption date will be the third business day following the last trading day of the 20 consecutive trading day period used to determine the acquisition termination market value.

The notice of acquisition termination redemption will specify, among other things:

 

 

the acquisition termination make-whole amount;

 

 

if the acquisition termination share price exceeds the initial price, the number of ordinary shares and the amount of cash comprising the reference amount per Mandatory Convertible Preferred Share (before giving effect to any election to pay or deliver, with respect to each Mandatory Convertible Preferred Share, cash in lieu of a number of ordinary shares equal to the acquisition termination conversion rate or ordinary shares in lieu of cash in respect of the acquisition termination dividend amount);

 

 

if applicable, whether we will deliver cash in lieu of all or any portion of the number of ordinary shares equal to the acquisition termination conversion rate comprising a portion of the reference amount (specifying, if applicable, the number of such ordinary shares in respect of which cash will be delivered);

 

 

if applicable, whether we will deliver ordinary shares in lieu of all or any portion of the acquisition termination dividend amount comprising a portion of the reference amount (specifying, if applicable, the percentage of the acquisition termination dividend amount in respect of which ordinary shares will be delivered in lieu of cash); and

 

 

the acquisition termination redemption date.

If any portion of the acquisition termination make-whole amount is to be paid in ordinary shares, no fractional ordinary shares will be delivered to the holders of the Mandatory Convertible Preferred Shares. We will instead pay a cash adjustment (computed to the nearest cent) to each holder that would otherwise be entitled to a fraction of an ordinary share based on the average VWAP per ordinary share over the five consecutive trading day period beginning on, and including, the seventh scheduled trading day immediately preceding the acquisition termination redemption date. If more than one Mandatory Convertible Preferred Share is to be redeemed from a holder, the number of our ordinary shares issuable in connection with the payment of the reference amount shall be computed on the basis of the aggregate number of Mandatory Convertible Preferred Shares so redeemed. The provisions with respect to delivery of ordinary shares in lieu of cash set forth in the penultimate paragraph of “—Method of payment of dividends” shall apply to any delivery of ordinary shares upon an acquisition termination redemption.

All cash payments to which a holder of the Mandatory Convertible Preferred Shares are entitled in connection with an acquisition termination redemption will be rounded to the nearest cent.

The proceeds of this offering will not be deposited into an escrow account pending any acquisition termination redemption of the Mandatory Convertible Preferred Shares. Our ability to pay the acquisition termination make-whole amount to holders of the Mandatory Convertible Preferred Shares in connection with an acquisition termination redemption may be limited by our then-existing financial resources, and sufficient funds may not be available when necessary to make any required purchases of the Mandatory Convertible Preferred Shares following our election to redeem the Mandatory Convertible Preferred Shares. Furthermore, as any redemption of Mandatory Convertible Preferred Shares would be a distribution under Irish law, we may

 

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only pay the redemption price to holders of the Mandatory Convertible Preferred Shares in connection with an acquisition termination redemption to the extent we have sufficient distributable reserves to do so.

To the extent a shelf registration statement is required in our reasonable judgment in connection with the issuance of or for resales of our ordinary shares issued as payment of any portion of the acquisition termination make-whole amount, we will, to the extent such a shelf registration statement is not currently filed and effective, use our commercially reasonable efforts to file and maintain the effectiveness of such a shelf registration statement until the earlier of such time as all such ordinary shares have been resold thereunder and such time as all such shares would be freely tradable without registration by holders thereof that are not “affiliates” of ours for purposes of the Securities Act. To the extent applicable, we will also use our commercially reasonable efforts to have such ordinary shares qualified or registered under applicable U.S. state securities laws, if required, and approved for listing on the New York Stock Exchange (or if our ordinary shares are not listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which our ordinary shares are then listed).

Other than pursuant to the acquisition termination redemption provisions described above, the Mandatory Convertible Preferred Shares will not be redeemable.

Liquidation preference

In the event of our voluntary or involuntary liquidation, winding-up or dissolution, each holder of the Mandatory Convertible Preferred Shares will be entitled to receive a liquidation preference in the amount of $1,000.00 per Mandatory Convertible Preferred Share (the “liquidation preference”), plus an amount equal to accumulated and unpaid dividends on the shares to but excluding the date fixed for liquidation, winding-up or dissolution to be paid out of our assets legally available for distribution to our shareholders, after satisfaction of liabilities to our creditors and holders of any senior shares and before any payment or distribution is made to holders of junior shares (including our ordinary shares). If, upon our voluntary or involuntary liquidation, winding-up or dissolution, the amounts payable with respect to the liquidation preference plus an amount equal to accumulated and unpaid dividends on the Mandatory Convertible Preferred Shares and all parity shares are not paid in full, the holders of the Mandatory Convertible Preferred Shares and any other such parity shares will share equally and ratably in any distribution of our assets in proportion to their liquidation preference and an amount equal to accumulated and unpaid dividends to which they are entitled. After payment of the full amount of the liquidation preference and an amount equal to accumulated and unpaid dividends to which they are entitled, the holders of the Mandatory Convertible Preferred Shares will have no right or claim to any of our remaining assets. See “—General” and “Risk factors—Risks Relating to the Mandatory Convertible Preferred Shares and Ordinary Shares—The Mandatory Convertible Preferred Shares will rank junior to all of our consolidated liabilities”.

Neither the sale of all or substantially all of our assets, nor our merger or consolidation into or with any other person, will be deemed to be our voluntary or involuntary liquidation, winding-up or dissolution.

Our Articles, together with the Designations, do not contain any provision requiring funds to be set aside to protect the liquidation preference of the Mandatory Convertible Preferred Shares even though it is substantially in excess of the par value thereof.

Voting rights

The holders of the Mandatory Convertible Preferred Shares will not have voting rights except as described below and as specifically required by Irish law from time to time.

 

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Whenever dividends on any shares of the Mandatory Convertible Preferred Shares (i) have not been declared and paid, or (ii) have been declared but a sum of cash or number of our ordinary shares sufficient to discharge our obligations in respect thereof has not been set aside for the benefit of the holders thereof on the applicable record date, for the equivalent of six or more dividend periods, whether or not for consecutive dividend periods (a “nonpayment”), the authorized number of directors on our board of directors will, at the next annual meeting of shareholders or at a special meeting of shareholders as provided below, automatically be increased by two and the holders of such Mandatory Convertible Preferred Shares, voting together as a single class with holders of any and all other series of voting preferred shares (as defined below) then outstanding, will be entitled, at our next annual meeting or at a special meeting of shareholders, to fill such newly created directorships by electing two additional directors (the “preferred share directors”); provided that the election of any such directors will not cause us to violate the corporate governance requirements of the New York Stock Exchange (or any other exchange or automated quotation system on which our securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors; and provided further that our board of directors shall, at no time, include more than two preferred share directors. In the event of a nonpayment, the holders of at least 25% of the Mandatory Convertible Preferred Shares and any other series of voting preferred shares may request that a special meeting of shareholders be called to elect such preferred share directors (provided, however, that if our next annual or a special meeting of shareholders is scheduled to be held within 90 days of the receipt of such request, the election of such preferred share directors, to the extent otherwise permitted by our Articles, will be included in the agenda for and will be held at such scheduled annual or special meeting of shareholders). The preferred share directors will stand for reelection annually, at each subsequent annual meeting of the shareholders, so long as the holders of the Mandatory Convertible Preferred Shares continue to have such voting rights.

At any meeting at which the holders of the Mandatory Convertible Preferred Shares are entitled to elect preferred share directors, the holders of a majority of the then outstanding Mandatory Convertible Preferred Shares and all other series of voting preferred shares, present in person or represented by proxy, will constitute a quorum and the vote of the holders of a majority of such Mandatory Convertible Preferred Shares and other voting preferred shares so present or represented by proxy at any such meeting at which there shall be a quorum shall be sufficient to elect the preferred share directors.

As used in this prospectus supplement, “voting preferred shares” means any series of our preferred shares, in addition to the Mandatory Convertible Preferred Shares, ranking equally with the Mandatory Convertible Preferred Shares either as to dividends or to the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights for the election of directors have been conferred and are exercisable. Whether a plurality, majority or other portion in voting power of the Mandatory Convertible Preferred Shares and any other voting preferred shares have been voted in favor of any matter shall be determined by reference to the respective liquidation preference amounts of the Mandatory Convertible Preferred Shares and such other voting preferred shares voted.

If and when all accumulated and unpaid dividends have been paid in full, or declared and a sum (which may include our ordinary shares) sufficient to discharge our obligations in respect thereof shall have been set aside (a “nonpayment remedy”), the holders of the Mandatory Convertible Preferred Shares shall immediately and, without any further action by us, be divested of the foregoing voting rights, subject to the revesting of such rights in the event of each subsequent nonpayment. If such voting rights for the holders of the Mandatory Convertible Preferred Shares and all other holders of voting preferred shares have terminated, the term of office of each preferred share director so elected will terminate at such time and the authorized number of directors on our board of directors shall automatically decrease by two.

Any preferred share director will be removed automatically where the director is restricted or disqualified from acting as a director under Irish law or at any time by the holders of record of a majority in voting power of the

 

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outstanding Mandatory Convertible Preferred Shares and any other series of voting preferred shares then outstanding (voting together as a single class) when they have the voting rights described above. In the event that a nonpayment shall have occurred and there shall not have been a nonpayment remedy, any vacancy in the office of a preferred share director (other than prior to the initial election after a nonpayment) may be filled by the written consent of the preferred share director remaining in office or, if none remains in office, filled by the holders of Mandatory Convertible Preferred Shares, voting together as a single class with holders of any and all other series of voting preferred shares then outstanding, at our next annual meeting or at a special meeting of shareholders, by electing two preferred share directors when they have the voting rights described above; provided that the filling of each vacancy will not cause us to violate the corporate governance requirements of the New York Stock Exchange (or any other exchange or automated quotation system on which our securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors. The preferred share directors will each be entitled to one vote per director on any matter.

So long as any Mandatory Convertible Preferred Shares remain outstanding, we will not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding Mandatory Convertible Preferred Shares and all other series of voting preferred shares entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing or at an annual or special meeting of such shareholders:

 

(1)   amend or alter the provisions of our Articles or the Designations so as to authorize or create, or increase the authorized amount of, any class or series of senior shares; or

 

(2)   amend, alter or repeal the provisions of our Articles or the Designations so as to adversely affect the rights, preferences, privileges or voting powers of the Mandatory Convertible Preferred Shares, including, without limitation, the right to payment of additional amounts as described under “—Payment of Additional Amounts”; or

 

(3)   consummate a binding share exchange or reclassification involving the Mandatory Convertible Preferred Shares or a merger or consolidation of us with another entity, unless in each case: (i) the Mandatory Convertible Preferred Shares remain outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity (or the Mandatory Convertible Preferred Shares are otherwise exchanged or reclassified), are converted or reclassified into or exchanged for preferred shares of the surviving or resulting entity or its ultimate parent; and (ii) such Mandatory Convertible Preferred Shares that remain outstanding or such preferred shares, as the case may be, have rights, preferences, privileges and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, taken as a whole, of the Mandatory Convertible Preferred Shares immediately prior to the consummation of such transaction (any such preferred shares being referred to herein as “qualifying preferred shares”),

provided, however, that (1) any increase in the amount of our authorized but unissued shares of our preferred shares, (2) any increase in the amount of our authorized Mandatory Convertible Preferred Shares or the issuance of any additional Mandatory Convertible Preferred Shares or (3) the authorization or creation of any class or series of parity or junior shares, any increase in the amount of authorized but unissued shares of such class or series of parity or junior shares or the issuance of additional shares of such class or series of parity or junior shares will be deemed not to adversely affect (or to otherwise cause to be materially less favorable) the rights, preferences, privileges or voting powers of the Mandatory Convertible Preferred Shares and shall not require the affirmative vote of holders of the Mandatory Convertible Preferred Shares.

If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation described above would adversely affect one or more but not all series of voting preferred shares, then only the series of voting preferred shares adversely affected and entitled to vote shall vote as a class in lieu of all other series of voting preferred shares.

 

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Mandatory conversion

Each Mandatory Convertible Preferred Share, unless previously converted or redeemed as is described under “—Acquisition termination redemption”, will automatically convert on March 1, 2018 (the “mandatory conversion date”), into a number of our ordinary shares equal to the conversion rate described below. If we declare a dividend for the dividend period ending on the mandatory conversion date, we will pay such dividend to the holders of record as of the immediately preceding record date, as described above under “—Dividends”. If prior to the mandatory conversion date we have not declared all or any portion of the accumulated dividends on the Mandatory Convertible Preferred Shares, the conversion rate will be adjusted so that holders receive an additional number of our ordinary shares equal to the amount of such undeclared, accumulated and unpaid dividends (the “additional conversion amount”) divided by the greater of the floor price and 97% of the average price. To the extent that the additional conversion amount exceeds the product of the number of additional shares and 97% of the average price, we will, if we are legally able to do so, declare and pay such excess amount in cash pro rata to the holders of the Mandatory Convertible Preferred Shares.

The conversion rate, which is the number of our ordinary shares issuable upon conversion of each Mandatory Convertible Preferred Share on the mandatory conversion date, will, subject to adjustment as described above for any additional conversion amount or as described in “—Anti-dilution adjustments” below, be as follows:

 

 

if the applicable market value (as defined below) of our ordinary shares is greater than $         (the “threshold appreciation price”), then the conversion rate will be             of our ordinary shares per Mandatory Convertible Preferred Share (the “minimum conversion rate”), which is approximately equal to $1,000.00 divided by the threshold appreciation price;

 

 

if the applicable market value of our ordinary shares is less than or equal to the threshold appreciation price but greater than or equal to $         (the “initial price”, which equals the per share public offering price of our ordinary shares in the Ordinary Shares Offering), then the conversion rate will be equal to $1,000.00 divided by the applicable market value of our ordinary shares, which will be between             and             of our ordinary shares per Mandatory Convertible Preferred Share; or

 

 

if the applicable market value of our ordinary shares is less than the initial price, then the conversion rate will be             of our ordinary shares per Mandatory Convertible Preferred Share (the “maximum conversion rate”), which is approximately equal to $1,000.00 divided by the initial price.

We refer to the minimum conversion rate and the maximum conversion rate collectively as the “fixed conversion rates”. The fixed conversion rates, the initial price, the threshold appreciation price and the applicable market value are each subject to adjustment as described above for any additional conversion amount or as described in “—Anti-dilution adjustments” below.

“applicable market value” means the average VWAP per ordinary share over the 20 consecutive trading day period (the “settlement period”) beginning on and including the 22nd scheduled trading day immediately preceding the mandatory conversion date.

The “threshold appreciation price” represents a     % appreciation over the initial price.

Hypothetical conversion values upon mandatory conversion

For illustrative purposes only, the following table shows the number of our ordinary shares that a holder of the Mandatory Convertible Preferred Shares would receive upon mandatory conversion of one Mandatory Convertible Preferred Share at various applicable market values for our ordinary shares. The table assumes that there will be no conversion adjustments as described above for any additional conversion amount or as

 

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described below in “—Anti-dilution adjustments” and that any declared dividends on the Mandatory Convertible Preferred Shares will be paid in cash and not in additional ordinary shares. The actual applicable market value of our ordinary shares may differ from those set forth in the table below. Given an initial price of $         and a threshold appreciation price of $        , a holder of the Mandatory Convertible Preferred Shares would receive on the mandatory conversion date the number of ordinary shares per Mandatory Convertible Preferred Shares set forth below:

 

Applicable market

value of our

ordinary shares

  

Number of our

ordinary shares to

be received upon

mandatory

conversion

  

Conversion value
(applicable market value

multiplied by the number of

our ordinary shares to be

received upon mandatory
conversion)

                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            
                $                                   $            

 

Accordingly, if the applicable market value of our ordinary shares is greater than the threshold appreciation price, the aggregate market value of our ordinary shares delivered upon conversion of each Mandatory Convertible Preferred Share will be greater than the $1,000.00 liquidation preference of a Mandatory Convertible Preferred Share, assuming that the market price of our ordinary shares on the mandatory conversion date is the same as the applicable market value of our ordinary shares. If the applicable market value for our ordinary shares is equal to or greater than the initial price and equal to or less than the threshold appreciation price, the aggregate market value of our ordinary shares delivered upon conversion of each Mandatory Convertible Preferred Share will be equal to the $1,000.00 liquidation preference of a Mandatory Convertible Preferred Share, assuming that the market price of our ordinary shares on the mandatory conversion date is the same as the applicable market value of our ordinary shares. If the applicable market value of our ordinary shares is less than the initial price, the aggregate market value of our ordinary shares delivered upon conversion of each Mandatory Convertible Preferred Share will be less than the $1,000.00 liquidation preference of a Mandatory Convertible Preferred Share, assuming that the market price of our ordinary shares on the mandatory conversion date is the same as the applicable market value of our ordinary shares.

Conversion at the option of the holder

Other than during a fundamental change conversion period (as defined below in “—Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount”), holders of the Mandatory Convertible Preferred Shares have the right to convert their Mandatory Convertible Preferred Shares, in whole or in part (but in no event less than one Mandatory Convertible Preferred Share), at any time

 

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prior to the mandatory conversion date (“early conversion”), into our ordinary shares at the minimum conversion rate of of our ordinary shares per Mandatory Convertible Preferred Share, subject to adjustment as described in “—Anti-dilution adjustments” below.

If, as of the effective date of any early conversion (the “early conversion date”), we have not declared all or any portion of the accumulated dividends for all dividend periods ending on a dividend payment date prior to such early conversion date, the conversion rate for such early conversion will be adjusted so that holders converting their Mandatory Convertible Preferred Shares at such time receive an additional number of our ordinary shares equal to such amount of undeclared, accumulated and unpaid dividends for such prior dividend periods, divided by the greater of the floor price and the average VWAP per ordinary share over the 20 consecutive trading day period (the “early conversion settlement period”) commencing on and including the 22nd scheduled trading day immediately preceding the early conversion date (the “early conversion average price”). Notwithstanding the last sentence under “—Method of payment of dividends” above, to the extent that the cash amount of the undeclared, accumulated and unpaid dividends for all dividend periods ending on a dividend payment date prior to the relevant early conversion date exceeds the value of the product of the number of additional shares added to the conversion rate and the early conversion average price, we will not have any obligation to pay the shortfall in cash.

Except as described above, upon any early conversion of any Mandatory Convertible Preferred Shares, we will make no payment or allowance for unpaid dividends on such Mandatory Convertible Preferred Shares, unless such early conversion date occurs after the record date for a declared dividend and on or prior to the immediately succeeding dividend payment date, in which case such dividend will be paid on such dividend payment date to the holder of record of the converted Mandatory Convertible Preferred Shares as of such record date, as described in the section above entitled “—Dividends”.

Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount

General

If a “fundamental change” (as defined below) occurs on or prior to the mandatory conversion date, holders of the Mandatory Convertible Preferred Shares will have the right to:

 

(i)   convert their Mandatory Convertible Preferred Shares, in whole or in part (but in no event less than one Mandatory Convertible Preferred Share), into ordinary shares at the fundamental change conversion rate described below;

 

(ii)   with respect to such converted shares, receive a fundamental change dividend make-whole amount (as defined below) payable in cash or our ordinary shares; and

 

(iii)   with respect to such converted shares, receive the accumulated dividend amount (as defined below) payable in cash or our ordinary shares,

subject in the case of clauses (ii) and (iii) to certain limitations with respect to the number of our ordinary shares that we will be required to deliver, all as described below. Notwithstanding clauses (ii) and (iii) above, if the effective date of a fundamental change falls during a dividend period for which we have declared a dividend, we will pay such dividend on the relevant dividend payment date to the holders of record on the immediately preceding record date, as described in “—Dividends”, and the accumulated dividend amount will not include the amount of such dividend, and the fundamental change dividend make-whole amount will not include the present value of such dividend.

 

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To exercise this right, holders must submit their Mandatory Convertible Preferred Shares for conversion at any time during the period (the “fundamental change conversion period”) beginning on the effective date of such fundamental change (as defined below) and ending at 5:00 p.m., New York City time, on the date that is 20 calendar days after the effective date (or, if earlier, the mandatory conversion date) at the conversion rate specified in the table below (the “fundamental change conversion rate”). Holders of the Mandatory Convertible Preferred Shares who do not submit their shares for conversion during the fundamental change conversion period will not be entitled to convert their Mandatory Convertible Preferred Shares at the relevant fundamental change conversion rate or to receive the relevant fundamental change dividend make-whole amount or the relevant accumulated dividend amount.

We will notify holders of the anticipated effective date of a fundamental change at least 20 calendar days prior to such anticipated effective date or, if such prior notice is not practicable, notify holders of the effective date of a fundamental change no later than the second business day following the actual effective date. If we notify holders of a fundamental change later than the 20th calendar day prior to the effective date of a fundamental change, the fundamental change conversion period will be extended by a number of days equal to the number of days from, and including, the 20th calendar day prior to the effective date of the fundamental change to, but excluding, the date of the notice; provided that the fundamental change conversion period will not be extended beyond the mandatory conversion date.

A “fundamental change” will be deemed to have occurred, at such time after the initial issue date of the Mandatory Convertible Preferred Shares, upon: (i) the consummation of any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, recapitalization or otherwise) in connection with which 90% or more of our ordinary shares, depositary receipts or other securities representing common equity interests are exchanged for, converted into, acquired for or constitute solely the right to receive, consideration 10% or more of which is not common stock or ordinary shares that are listed on, or immediately after the transaction or event will be listed on, any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market; (ii) any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other than us, any of our majority-owned subsidiaries or any of our or our majority-owned subsidiaries’ employee benefit plans, becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power in the aggregate of all classes of share capital then outstanding entitled to vote generally in elections of our directors; or (iii) our ordinary shares (or, following a reorganization event, any ordinary shares, depositary receipts or other securities representing common equity interests into which the Mandatory Convertible Preferred Shares become convertible in connection with such reorganization event) cease to be listed for trading on the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors) or another United States national securities exchange (each, a “qualifying market”).

Fundamental change conversion rate

The fundamental change conversion rate will be determined by reference to the table below and is based on the effective date of the fundamental change (the “fundamental change effective date”) and the price (the “fundamental change share price”) paid or deemed paid per ordinary share therein. If the holders of our ordinary shares receive only cash in the fundamental change, the fundamental change share price shall be the cash amount paid per share. Otherwise, the fundamental change share price shall be the average VWAP per ordinary share over the 10 consecutive trading day period ending on the trading day preceding the fundamental change effective date.

The fundamental change share prices set forth in the first row of the table (i.e., the column headers) will be adjusted as of any date on which the fixed conversion rates of the Mandatory Convertible Preferred Shares are

 

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adjusted. The adjusted fundamental change share prices will equal the fundamental change share prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the minimum conversion rate immediately prior to the adjustment giving rise to the fundamental change share price adjustment and the denominator of which is the minimum conversion rate as so adjusted. Each of the fundamental change conversion rates in the table will be subject to adjustment in the same manner as each fixed conversion rate as set forth in “—Anti-dilution adjustments”.

The following table sets forth the fundamental change conversion rate per Mandatory Convertible Preferred Share for each fundamental change share price and fundamental change effective date set forth below.

 

     Fundamental change share price on the fundamental change effective date
Fundamental change
effective date
  $   $   $   $   $   $   $   $   $   $   $   $   $   $   $

                    , 2015

                             

March 1, 2016

                             

March 1, 2017

                             

March 1, 2018

                             

 

The exact fundamental change share price and fundamental change effective date may not be set forth in the table, in which case:

 

 

if the fundamental change share price is between two fundamental change share price amounts on the table or the fundamental change effective date is between two dates on the table, the fundamental change conversion rate will be determined by straight-line interpolation between the fundamental change conversion rates set forth for the higher and lower fundamental change share price amounts and the two fundamental change effective dates, as applicable, based on a 365-day year;

 

 

if the fundamental change share price is in excess of $         per share (subject to adjustment as described above), then the fundamental change conversion rate will be the minimum conversion rate, subject to adjustment; and

 

 

if the fundamental change share price is less than $         per share (subject to adjustment as described above), then the fundamental change conversion rate will be the maximum conversion rate, subject to adjustment.

Fundamental change dividend make-whole amount and accumulated dividend amount

For any Mandatory Convertible Preferred Shares that are converted during the fundamental change conversion period, in addition to the ordinary shares issued upon conversion at the fundamental change conversion rate, we will at our option:

 

(a)   pay you in cash, to the extent we are legally permitted to do so, the present value, computed using a discount rate of     % per annum, of all dividend payments on the Mandatory Convertible Preferred Shares for all the remaining dividend periods (excluding any accumulated dividend amount and declared dividends for a dividend period during which the fundamental change effective date falls) from such fundamental change effective date to but excluding the mandatory conversion date (the “fundamental change dividend make-whole amount”);

 

(b)   increase the number of our ordinary shares to be issued on conversion by a number equal to (x) the fundamental change dividend make-whole amount divided by (y) the greater of the floor price and 97% of the fundamental change share price; or

 

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(c)   pay the fundamental change dividend make whole amount in a combination of cash and our ordinary shares in accordance with the provisions of clauses (a) and (b) above.

In addition, to the extent that the accumulated dividend amount exists as of the fundamental change effective date, holders who convert their Mandatory Convertible Preferred Shares within the fundamental change conversion period will be entitled to receive such accumulated dividend amount upon conversion. As used herein, the term “accumulated dividend amount” means, in connection with a fundamental change, the aggregate amount of undeclared, accumulated and unpaid dividends, if any, for dividend periods prior to the relevant fundamental change effective date, including for the partial dividend period, if any, from, and including, the dividend payment date immediately preceding such fundamental change effective date to, but excluding, such fundamental change effective date (but excluding any declared dividends for a dividend period during which the fundamental change effective date falls). The accumulated dividend amount will be payable at our election:

 

 

in cash, to the extent we are legally permitted to do so;

 

 

in an additional number of our ordinary shares equal to (x) the accumulated dividend amount divided by (y) the greater of the floor price and 97% of the fundamental change share price; or

 

 

in a combination of cash and our ordinary shares in accordance with the provisions of the preceding two bullets.

We will pay the fundamental change dividend make-whole amount and the accumulated dividend amount in cash, except to the extent we elect on or prior to the second business day following the fundamental change effective date to make all or any portion of such payments in our ordinary shares. In addition, if we elect to deliver ordinary shares in respect of all or any portion of the fundamental change dividend make-whole amount or the accumulated dividend amount, to the extent that the fundamental change dividend make-whole amount or the accumulated dividend amount or the dollar amount of any portion thereof paid in ordinary shares exceeds the product of the number of additional shares we deliver in respect thereof and 97% of the fundamental change share price, we will, if we are legally able to do so, declare and pay such excess amount in cash. Any such payment in cash may not be permitted by our then existing debt instruments, including any restricted payments covenants.

No fractional shares of our ordinary shares will be delivered to converting holders of the Mandatory Convertible Preferred Shares in respect of the fundamental change dividend make-whole amount or the accumulated dividend amount. We will instead pay a cash adjustment to each converting holder that would otherwise be entitled to a fraction of an ordinary share based on the average VWAP per ordinary share over the five consecutive trading day period beginning on, and including, the seventh scheduled trading day immediately preceding the conversion date.

Not later than the second business day following a fundamental change effective date (or, if we provide notice to holders of the fundamental change prior to the anticipated fundamental change effective date as described above, on the date we give holders notice of the anticipated fundamental change effective date), we will notify holders of:

 

 

the fundamental change conversion rate;

 

 

the fundamental change dividend make-whole amount and whether we will pay such amount in cash, our ordinary shares or a combination thereof, specifying the combination, if applicable; and

 

 

the accumulated dividend amount as of the fundamental change effective date and whether we will pay such amount in cash, our ordinary shares or a combination thereof, specifying the combination, if applicable.

Our obligation to adjust the conversion rate in connection with a fundamental change and pay the fundamental change dividend make-whole amount (whether in cash, our ordinary shares or any combination thereof) could possibly be construed as a penalty under Irish law and therefore be deemed invalid.

 

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Conversion procedures

Upon mandatory conversion

Any outstanding Mandatory Convertible Preferred Shares will automatically convert into ordinary shares on the mandatory conversion date. The person or persons entitled to receive our ordinary shares issuable upon mandatory conversion of the Mandatory Convertible Preferred Shares will be treated as the record holder(s) of such shares as of 5:00 p.m., New York City time, on the mandatory conversion date. Except as provided in “—Anti-dilution adjustments”, prior to 5:00 p.m., New York City time, on the mandatory conversion date, the ordinary shares issuable upon conversion of the Mandatory Convertible Preferred Shares will not be outstanding for any purpose and you will have no rights with respect to such ordinary shares, including voting rights, rights to respond to tender offers and rights to receive any dividends or other distributions on the ordinary shares, by virtue of holding the Mandatory Convertible Preferred Shares. A certificate representing the ordinary shares issuable upon conversion will be issued and delivered to the converting holder or, if the Mandatory Convertible Preferred Share being converted is in global form, the ordinary shares issuable upon conversion will be delivered to the converting holder through the facilities of DTC, in each case together with delivery by the Company to the converting holder of any cash (including, without limitation, cash in lieu of fractional shares) to which the converting holder is entitled, on the later of (i) the third business day immediately succeeding the Mandatory Conversion Date and (ii) the third business day immediately succeeding the last day of the settlement period.

Upon early conversion

If you elect to convert the Mandatory Convertible Preferred Shares prior to the mandatory conversion date, in the manner described in “—Conversion at the option of the holder” or “—Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount”, you must observe the following conversion procedures:

If the Mandatory Convertible Preferred Shares are in global form, to convert the Mandatory Convertible Preferred Shares you must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program. If the Mandatory Convertible Preferred Shares are held in certificated form, you must comply with certain procedures set forth in the Designations. In either case, if required, you must pay all taxes or duties, if any.

The conversion date will be the date on which you have satisfied the foregoing requirements. You will not be required to pay any taxes or duties relating to the issuance or delivery of our ordinary shares if you exercise your conversion rights, but you will be required to pay any tax or duty that may be payable relating to any transfer involved in the issuance or delivery of the ordinary shares in a name other than your own. Ordinary shares will be issued and delivered only after all applicable taxes and duties, if any, payable by you have been paid in full and will be issued on the latest of (i) the third business day immediately succeeding the conversion date, (ii) the third business day immediately succeeding the last day of the early conversion settlement period and (iii) the business day after you have paid in full all applicable taxes and duties, if any.

The person or persons entitled to receive the ordinary shares issuable upon conversion of the Mandatory Convertible Preferred Shares will be treated as the record holder(s) of such shares as of 5:00 p.m., New York City time, on the applicable conversion date. Prior to 5:00 p.m., New York City time, on the applicable conversion date, the ordinary shares issuable upon conversion of the Mandatory Convertible Preferred Shares will not be outstanding for any purpose and you will have no rights with respect to such ordinary shares, including voting rights, rights to respond to tender offers and rights to receive any dividends or other distributions on the ordinary shares, by virtue of holding the Mandatory Convertible Preferred Shares.

 

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Fractional shares

No fractional shares of our ordinary shares will be issued to holders of the Mandatory Convertible Preferred Shares upon conversion. In lieu of any fractional shares of our ordinary shares otherwise issuable in respect of the aggregate number of Mandatory Convertible Preferred Shares of any holder that are converted, that holder will be entitled to receive an amount in cash (computed to the nearest cent) equal to the product of: (i) that same fraction; and (ii) the average VWAP of our ordinary shares over the five consecutive trading day period beginning on and including the seventh scheduled trading day immediately preceding the conversion date.

If more than one Mandatory Convertible Preferred Share is surrendered for conversion at one time by or for the same holder, the number of full ordinary shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of Mandatory Convertible Preferred Shares so surrendered.

Anti-dilution adjustments

Each fixed conversion rate will be adjusted if:

(1) We issue ordinary shares to all holders of our ordinary shares as a dividend or other distribution, in which event, each fixed conversion rate in effect at 5:00 p.m., New York City time, on the date fixed for determination of the holders of our ordinary shares entitled to receive such dividend or other distribution will be divided by a fraction:

 

 

the numerator of which is the number of our ordinary shares outstanding at 5:00 p.m., New York City time, on the date fixed for such determination; and

 

 

the denominator of which is the sum of the number of our ordinary shares outstanding at 5:00 p.m., New York City time, on the date fixed for such determination and the total number of our ordinary shares constituting such dividend or other distribution.

Any adjustment made pursuant to this clause (1) will become effective immediately after 5:00 p.m., New York City time, on the date fixed for such determination. If any dividend or distribution described in this clause (1) is declared but not so paid or made, each fixed conversion rate shall be readjusted, effective as of the date our board of directors, or an authorized committee thereof, publicly announces its decision not to pay or make such dividend or distribution, to such fixed conversion rate that would be in effect if such dividend or distribution had not been declared. For the purposes of this clause (1), the number of our ordinary shares outstanding at 5:00 p.m., New York City time, on the date fixed for such determination shall not include shares that we hold in treasury. We will not pay any dividend or make any distribution on our ordinary shares that we hold in treasury.

(2) We issue to all holders of our ordinary shares rights or warrants (other than rights or warrants issued pursuant to a dividend reinvestment plan or share purchase plan or other similar plans) entitling them, for a period of up to 45 calendar days from the date of issuance of such rights or warrants, to subscribe for or purchase our ordinary shares at less than the “current market price” (as defined below) of our ordinary shares, in which case each fixed conversion rate in effect at 5:00 p.m., New York City time, on the date fixed for determination of the holders of our ordinary shares entitled to receive such rights or warrants will be increased by multiplying such fixed conversion rate by a fraction:

 

 

the numerator of which is the sum of the number of our ordinary shares outstanding at 5:00 p.m., New York City time, on the date fixed for such determination and the number of our ordinary shares issuable or deliverable upon the exercise of such rights or warrants; and

 

 

the denominator of which is the sum of the number of our ordinary shares outstanding at 5:00 p.m., New York City time, on the date fixed for such determination and the number of our ordinary shares equal to the quotient of the aggregate offering price payable to exercise such rights or warrants divided by the current market price of our ordinary shares.

 

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Any adjustment made pursuant to this clause (2) will become effective immediately after 5:00 p.m., New York City time, on the date fixed for such determination. In the event that such rights or warrants described in this clause (2) are not so issued, each fixed conversion rate shall be readjusted, effective as of the date our board of directors, or an authorized committee thereof, publicly announces its decision not to issue such rights or warrants, to such fixed conversion rate that would then be in effect if such issuance had not been declared. To the extent that such rights or warrants are not exercised prior to their expiration or our ordinary shares are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, each fixed conversion rate shall be readjusted to such fixed conversion rate that would then be in effect had the adjustment made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of our ordinary shares actually delivered. In determining whether any rights or warrants entitle the holders thereof to subscribe for or purchase ordinary shares at less than the current market price, and in determining the aggregate offering price payable to exercise such rights or warrants, there shall be taken into account any consideration received for such rights or warrants and the value of such consideration (if other than cash, to be determined in good faith by our board of directors, or an authorized committee thereof, which determination shall be final). For the purposes of this clause (2), the number of our ordinary shares at the time outstanding shall not include shares that we hold in treasury. We will not issue any such rights or warrants in respect of our ordinary shares that we hold in treasury.

(3) We subdivide or combine our ordinary shares, in which event the conversion rate in effect at 5:00 p.m., New York City time, on the effective date of such subdivision or combination shall be multiplied by a fraction:

 

 

the numerator of which is the number of our ordinary shares that would be outstanding immediately after, and solely as a result of, such subdivision or combination; and

 

 

the denominator of which is the number of our ordinary shares outstanding immediately prior to such subdivision or combination.

Any adjustment made pursuant to this clause (3) shall become effective immediately after 5:00 p.m., New York City time, on the effective date of such subdivision or combination.

(4) We distribute to all holders of our ordinary shares evidences of our indebtedness, shares of our share capital, securities, rights to acquire shares of our share capital, cash or other assets, excluding:

 

 

any dividend or distribution covered by clause (1) or (3) above;

 

any rights or warrants covered by clause (2) above;

 

any dividend or distribution covered by clause (5) below; and

 

any spin-off to which the provisions set forth below in this clause (4) shall apply,

in which event each fixed conversion rate in effect at 5:00 p.m., New York City time, on the date fixed for the determination of holders of our ordinary shares entitled to receive such distribution will be multiplied by a fraction:

 

 

the numerator of which is the current market price of our ordinary shares; and

 

 

the denominator of which is the current market price of our ordinary shares minus the fair market value, as determined by our board of directors, or an authorized committee thereof, in good faith (which determination shall be final), on such date fixed for determination of the portion of the evidences of indebtedness, shares of our share capital, securities, rights to acquire shares of our share capital, cash or other assets so distributed applicable to one of our ordinary shares.

In the event that we make a distribution to all holders of our ordinary shares consisting of share capital of, or similar equity interests in, or relating to a subsidiary or other business unit of ours (herein referred to as a

 

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“spin-off”), each fixed conversion rate in effect at 5:00 p.m., New York City time, on the date fixed for the determination of holders of our ordinary shares entitled to receive such distribution will be multiplied by a fraction:

 

 

the numerator of which is the sum of the current market price of our ordinary shares and the fair market value, as determined by our board of directors, or an authorized committee thereof, in good faith (which determination shall be final), of the portion of those shares of share capital or similar equity interests so distributed applicable to one ordinary share as of the 15th trading day after the effective date for such distribution (or, if such shares of share capital or equity interests are listed on a U.S. national or regional securities exchange, the current market price of such securities); and

 

 

the denominator of which is the current market price of our ordinary shares.

Any adjustment made pursuant to this clause (4) shall become effective immediately after 5:00 p.m., New York City time, on the date fixed for the determination of the holders of our ordinary shares entitled to receive such distribution. In the event that such distribution described in this clause (4) is not so made, each fixed conversion rate shall be readjusted, effective as of the date our board of directors, or an authorized committee thereof, publicly announces its decision not to make such distribution, to such fixed conversion rate that would then be in effect if such distribution had not been declared. If an adjustment to each fixed conversion rate is required under this clause (4) during any settlement period or any early conversion settlement period in respect of Mandatory Convertible Preferred Shares that have been tendered for conversion, delivery of the ordinary shares issuable upon conversion will be delayed to the extent necessary in order to complete the calculations provided for in this clause (4).

(5) We pay or make a dividend or other distribution consisting exclusively of cash to all holders of our ordinary shares, excluding:

 

 

any cash that is distributed in a reorganization event (as described below);

 

 

any dividend or other distribution in connection with our voluntary or involuntary liquidation, dissolution or winding up; and

 

 

any consideration payable as part of a tender or exchange offer;

in which event, each fixed conversion rate in effect at 5:00 p.m., New York City time, on the date fixed for determination of the holders of our ordinary shares entitled to receive such dividend or other distribution will be multiplied by a fraction:

 

 

the numerator of which is the current market price of our ordinary shares; and

 

 

the denominator of which is the current market price of our ordinary shares minus the amount per share of such dividend or other distribution.

Any adjustment made pursuant to this clause (5) shall become effective immediately after 5:00 p.m., New York City time, on the date fixed for the determination of the holders of our ordinary shares entitled to receive such dividend or other distribution. In the event that any dividend or other distribution described in this clause (5) is not so paid or so made, each fixed conversion rate shall be readjusted, effective as of the date our board of directors, or an authorized committee thereof, publicly announces its decision not to pay such dividend or make such other distribution, to such fixed conversion rate which would then be in effect if such dividend or other distribution had not been declared.

(6) We or any of our subsidiaries successfully complete a tender or exchange offer pursuant to a Schedule TO or registration statement on Form S-4 for our ordinary shares (excluding any securities convertible or exchangeable for our ordinary shares), where the cash and the value of any other consideration included in the

 

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payment per ordinary share exceeds the current market price of our ordinary shares, in which event each fixed conversion rate in effect at 5:00 p.m., New York City time, on the date of expiration of the tender or exchange offer (the “expiration date”) will be multiplied by a fraction:

 

 

the numerator of which shall be equal to the sum of:

 

(i)   the aggregate cash and fair market value (as determined in good faith by our board of directors, or an authorized committee thereof, which determination shall be final) on the expiration date of any other consideration paid or payable for all shares purchased in such tender or exchange offer; and

 

(ii)   the product of:

 

  1.   the current market price of our ordinary shares; and

 

  2.   the number of our ordinary shares outstanding at the time such tender or exchange offer expires, less any purchased shares; and

 

 

the denominator of which shall be equal to the product of:

 

(i)   the current market price of our ordinary shares; and

 

(ii)   the number of our ordinary shares outstanding at the time such tender or exchange offer expires, including any purchased shares.

Any adjustment made pursuant to this clause (6) shall become effective immediately after 5:00 p.m., New York City time, on the 10th trading day following the expiration date but will be given effect as of the open of business on the expiration date for the tender or exchange offer. In the event that we are, or one of our subsidiaries is, obligated to purchase our ordinary shares pursuant to any such tender offer or exchange offer, but we are, or such subsidiary is, permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then each fixed conversion rate shall be readjusted to be such fixed conversion rate that would then be in effect if such tender offer or exchange offer had not been made. Except as set forth in the preceding sentence, if the application of this clause (6) to any tender offer or exchange offer would result in a decrease in each fixed conversion rate, no adjustment shall be made for such tender offer or exchange offer under this clause (6). If an adjustment to each fixed conversion rate is required pursuant to this clause (6) during any settlement period or any early conversion settlement period in respect of the Mandatory Convertible Preferred Shares that have been tendered for conversion, delivery of the related conversion consideration will be delayed to the extent necessary in order to complete the calculations provided for in this clause (6).

Except with respect to a spin-off, in cases where the fair market value of the evidences of our indebtedness, shares of share capital, securities, rights to acquire our share capital, cash or other assets as to which clauses (4) or (5) above apply, applicable to one ordinary share, distributed to shareholders equals or exceeds the current market price (as determined for purposes of calculating the conversion rate adjustment pursuant to such clause (4) or (5)), rather than being entitled to an adjustment in each fixed conversion rate, holders of the Mandatory Convertible Preferred Shares will be entitled to receive upon conversion, in addition to a number of our ordinary shares otherwise deliverable on the applicable conversion date, the kind and amount of the evidences of our indebtedness, shares of share capital, securities, rights to acquire our share capital, cash or other assets comprising the distribution that such holder would have received if such holder had owned, immediately prior to the record date for determining the holders of our ordinary shares entitled to receive the distribution, for each Mandatory Convertible Preferred Share, a number of our ordinary shares equal to the maximum conversion rate in effect on the date of such distribution.

 

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To the extent that we have a rights plan in effect with respect to our ordinary shares on any conversion date, upon conversion of any Mandatory Convertible Preferred Share, you will receive, in addition to ordinary shares, the rights under the rights plan, unless, prior to such conversion date, the rights have separated from our ordinary shares, in which case each fixed conversion rate will be adjusted at the time of separation as if we made a distribution to all holders of our ordinary shares as described in clause (4) above, subject to readjustment in the event of the expiration, termination or redemption of such rights. Any distribution of rights or warrants pursuant to a rights plan that would allow you to receive upon conversion, in addition to any ordinary shares, the rights described therein (unless such rights or warrants have separated from our ordinary shares) shall not constitute a distribution of rights or warrants that would entitle you to an adjustment to the conversion rate.

For the purposes of determining the adjustment to the fixed conversion rates for the purposes of:

 

 

clauses (2), (4) but only in the event of an adjustment thereunder not relating to a spin-off and (5) above, the “current market price” of our ordinary shares is the average VWAP per ordinary share over the five consecutive trading day period ending on the trading day before the “ex- date” (as defined below) with respect to the issuance or distribution requiring such computation;

 

 

clause (4) above in the event of an adjustment thereunder relating to a spin-off, the “current market price” of our ordinary shares and the share capital or equity interests of the subsidiary or other business unit being distributed, as applicable, is the average VWAP per ordinary share over the first 10 consecutive trading days commencing on and including the fifth trading day following the effective date of such distribution; and

 

 

clause (6) above, the “current market price” of our ordinary shares is the average VWAP per ordinary share over the 10 consecutive trading day period commencing on, and including, the trading day following the expiration date of the tender or exchange offer.

The term “ex-date”, when used with respect to any issuance or distribution, means the first date on which our ordinary shares trade without the right to receive such issuance or distribution.

In addition, we may make such increases in each fixed conversion rate as we deem advisable in order to avoid or diminish any income tax to holders of our ordinary shares resulting from any dividend or distribution of our ordinary shares (or issuance of rights or warrants to acquire our ordinary shares) or from any event treated as such for income tax purposes or for any other reason. We may only make such a discretionary adjustment if we make the same proportionate adjustment to each fixed conversion rate.

In the event of a taxable distribution to holders of our ordinary shares that results in an adjustment of each fixed conversion rate or an increase in each fixed conversion rate in our discretion, holders of the Mandatory Convertible Preferred Shares may, in certain circumstances, be deemed to have received a distribution subject to U.S. Federal income tax as a dividend. See “Material United States federal income tax considerations”.

Adjustments to the fixed conversion rates will be calculated to the nearest 1/10,000th of an ordinary share. Prior to the mandatory conversion date, no adjustment in a fixed conversion rate will be required unless the adjustment would require an increase or decrease of at least one percent in such fixed conversion rate. If any adjustment is not required to be made because it would not change the fixed conversion rates by at least one percent, then the adjustment will be carried forward and taken into account in any subsequent adjustment; provided, however, that on the earlier of the mandatory conversion date, an acquisition termination redemption date, an early conversion date and the fundamental change effective date, adjustments to the fixed conversion rates will be made with respect to any such adjustment carried forward that has not been taken into account before such date.

 

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No adjustment to the fixed conversion rates will be made if holders may participate, at the same time, upon the same terms and otherwise on the same basis as holders of our ordinary shares and solely as a result of holding Mandatory Convertible Preferred Shares, in the transaction that would otherwise give rise to such adjustment as if they held, for each of the Mandatory Convertible Preferred Share, a number of our ordinary shares equal to the maximum conversion rate then in effect.

The fixed conversion rates will not be adjusted:

 

(a)   upon the issuance of any of our ordinary shares pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in ordinary shares under any plan;

 

(b)   upon the issuance of any of our ordinary shares or rights or warrants to purchase those shares pursuant to any present or future benefit or other incentive plan or program of or assumed by us or any of our subsidiaries;

 

(c)   upon the issuance of any of our ordinary shares pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date the Mandatory Convertible Preferred Shares were first issued;

 

(d)   for a change in the par value of our ordinary shares;

 

(e)   for accumulated dividends on the Mandatory Convertible Preferred Shares, except as described above under “—Mandatory conversion”, “—Conversion at the option of the holder” and “—Conversion at the option of the holder upon fundamental change; Fundamental change dividend make-whole amount”; or

 

(f)   for share repurchases that are not tender offers, including structured or derivative transactions.

We will be required, within 10 business days after the fixed conversion rates are adjusted, to provide or cause to be provided written notice of the adjustment to the holders of the Mandatory Convertible Preferred Shares. We will also be required to deliver a statement setting forth in reasonable detail the method by which the adjustment to each fixed conversion rate was determined and setting forth each revised fixed conversion rate.

If an adjustment is made to the fixed conversion rates, (x) an inversely proportional adjustment also will be made to the threshold appreciation price and the initial price solely for the purposes of determining which clause of the definition of the conversion rate will apply on the mandatory conversion date and (y) an inversely proportional adjustment will also be made to the floor price. Whenever the terms of the Mandatory Convertible Preferred Shares require us to calculate the VWAP per ordinary share over a span of multiple days, our board of directors or an authorized committee thereof will make appropriate adjustments (including, without limitation, to the applicable market value, the early conversion average price, the current market price and the average price (as the case may be)) to account for any adjustments to the initial price, the threshold appreciation price, the floor price and the fixed conversion rates (as the case may be) that become effective, or any event that would require such an adjustment if the ex-date, effective date or expiration date (as the case may be) of such event occurs, during the relevant period used to calculate such prices or values (as the case may be).

If:

 

 

the record date for a dividend or distribution on ordinary shares occurs after the end of the 20 consecutive trading day period used for calculating the applicable market value and before the mandatory conversion date; and

 

 

that dividend or distribution would have resulted in an adjustment of the number of ordinary shares issuable to the holders of the Mandatory Convertible Preferred Shares had such record date occurred on or before the last trading day of such 20-trading day period,

 

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then we will deem the holders of the Mandatory Convertible Preferred Shares to be holders of record of our ordinary shares for purposes of that dividend or distribution. In this case, the holders of the Mandatory Convertible Preferred Shares would receive the dividend or distribution on our ordinary shares together with the number of ordinary shares issuable upon mandatory conversion of the Mandatory Convertible Preferred Shares.

Recapitalizations, reclassifications and changes of our ordinary shares

In the event of:

 

 

any consolidation or merger of us with or into another person (other than a merger or consolidation in which we are the surviving corporation and in which our ordinary shares outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of us or another person);

 

 

any sale, transfer, lease or conveyance to another person of all or substantially all of our property and assets;