S-4
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As filed with the Securities and Exchange Commission on March 4, 2016

Registration No. 333-             

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

ALLERGAN PLC

(Exact name of registrant as specified in its charter)

 

 

 

Ireland   2834   98-1114402
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

Clonshaugh Business and Technology Park

Coolock, Dublin, D17 E400, Ireland

(862) 261-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Brenton L. Saunders

Chief Executive Officer and President

Allergan plc

Morris Corporate Center III

400 Interpace Parkway

Parsippany, New Jersey 07054

(862) 261-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

 

Paul J. Shim, Esq.

James E. Langston, Esq.

Cleary Gottlieb Steen &
Hamilton LLP

One Liberty Plaza

New York, New York 10006

(212) 225-2000

 

A. Robert D. Bailey

Chief Legal Officer and
Corporate Secretary

Allergan plc

Morris Corporate Center III

400 Interpace Parkway

Parsippany, New Jersey 07054

(862) 261-7000

 

Douglas M. Lankler

Executive Vice President,
General Counsel

Pfizer Inc.

235 East 42nd Street

New York, New York 10017

(212) 733-2323

   Edward D. Herlihy, Esq.

David K. Lam, Esq.

Alison Z. Preiss, Esq.

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

(212) 403-1000

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon consummation of the merger.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

  x    Accelerated filer   ¨

Non-accelerated filer

  ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

If applicable, place an x in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

 

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be
Registered(1)

  Proposed
Maximum
Offering Price
per Share
  Proposed
Maximum
Aggregate
Offering Price(2)
 

Amount of

Registration Fee(3)

Ordinary Shares

  6,487,230,033 shares   N/A  

$184,230,277,786

  $18,508,082

 

 

(1) Represents the maximum number of ordinary shares of the registrant (“Allergan ordinary shares”) estimated to be issuable, or subject to options or other equity-based awards that are to be assumed by Allergan plc (“Allergan”), upon the consummation of the merger described herein. The number of Allergan ordinary shares being registered is based upon 6,487,230,033 shares of common stock, par value $0.05 per share, of Pfizer Inc. (“Pfizer common stock”) outstanding as of March 1, 2016 or subject to options and other equity-based awards of Pfizer Inc. (“Pfizer”) outstanding as of March 1, 2016 or that may be granted after such date and prior to consummation of the merger.
(2) Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and calculated in accordance with Rule 457(c) and 457(f)(1) of the Securities Act, based on the market value of 6,487,230,033 shares of Pfizer common stock (the total number of shares of Pfizer common stock outstanding or issuable pursuant to options or other equity-based awards as of March 1, 2016 or that may be granted after such date and prior to consummation of the merger), as established by the average of the high and low sales prices of Pfizer common stock on the New York Stock Exchange on March 3, 2016 of $29.79, minus $6,000,000,000 (the estimated minimum amount of cash to be paid to Pfizer’s stockholders in the merger).
(3) Pursuant to Rule 457(p) under the Securities Act, the total amount of the registration fee due is offset by $43,907.34, representing (i) the dollar amount of the filing fee previously paid by the Registrant of $53,811.19 that corresponds to unsold shares registered pursuant to the Registrant’s Registration Statement on Form S-4 (File No. 333-205726) filed under the Securities Act on July 17, 2015 and subsequently withdrawn minus (ii) the dollar amount of $9,903.85 paid by the Registrant in connection with the filing described in the foregoing clause (i), which was used to offset the filing fee payable in connection with the Registrant’s Registration Statement on Form S-8 (File No. 333-207324) filed under the Securities Act on October 1, 2015. Accordingly, the filing fee transmitted herewith is $18,508,082, which has been calculated by multiplying the estimated aggregate offering price of securities to be registered by Allergan by 0.0001007 and subtracting the offset described in the immediately preceding sentence.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the U.S. Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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Information contained herein is subject to completion or amendment. A registration statement relating to the securities to be issued in the merger has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This joint proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS

DATED MARCH 4, 2016, SUBJECT TO COMPLETION

 

LOGO                                                                   LOGO

To Our Shareholders:

As previously announced, on November 22, 2015, Pfizer Inc. (“Pfizer”) and Allergan plc (“Allergan”) entered into an Agreement and Plan of Merger (as amended by Amendment No. 1, dated March 4, 2016, and as it may be further amended from time to time, the “merger agreement”), pursuant to which they agreed to combine their respective businesses under a single company. The combined company is expected to be a leading global pharmaceutical company with best-in-class innovative products and established products businesses.

The transaction is structured as a “reverse merger,” in which Pfizer will merge with a wholly owned subsidiary of Allergan, and the existing Allergan entity will become the parent entity of the combined company. Allergan, following the merger, is therefore referred to as the “combined company.” In the merger, each share of Pfizer common stock (other than certain shares described in the merger agreement) will be converted into, at the election of the holder of such share, either: (i) one combined company ordinary share; or (ii) an amount in cash, without interest, equal to the volume weighted average price per share of Pfizer common stock on the New York Stock Exchange (the “NYSE”) on the trading day immediately preceding the date of the consummation of the merger. Elections by Pfizer stockholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement such that Pfizer stockholders will receive in the aggregate no less than $6 billion and no more than $12 billion in cash. Accordingly, if you are a Pfizer stockholder, depending on the elections made by other Pfizer stockholders, you may receive share consideration and cash consideration in a proportion different from what you request on your election form.

Immediately prior to the merger, Allergan shareholders will receive 11.3 combined company ordinary shares for each Allergan ordinary share they hold. Allergan shareholders will receive these shares by virtue of an 11.3-for-one share split (the “Allergan share split”). As a result of the merger and the Allergan share split, it is currently estimated that the combined company will issue or reserve for issuance approximately [          ] combined company ordinary shares.

As of [                      ], 2016, and assuming that each combined company ordinary share will have a value equal to the closing price of a share of Pfizer common stock on the NYSE on such date, the implied value of the 11.3 combined company ordinary shares to Allergan shareholders was approximately $[              ]. Because Pfizer’s and Allergan’s share prices will fluctuate between now and the consummation of the merger, the value of the combined company ordinary shares received in the transactions contemplated by the merger agreement by the Pfizer stockholders and Allergan shareholders as of the date of consummation may differ from the implied value based on the share prices on [                      ], 2016 or at the time of the Pfizer special meeting or the Allergan extraordinary general meeting (the “Allergan EGM”).

Following the merger, it is expected that the combined company will be named “Pfizer plc” and the combined company ordinary shares will be listed on the NYSE under the symbol “PFE.” Shares of Pfizer common stock currently trade on the NYSE under the symbol “PFE,” and Allergan ordinary shares currently trade on the NYSE under the symbol “AGN.” It is anticipated that, immediately after the consummation of the merger, the former Pfizer stockholders and Allergan shareholders will hold, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer preferred shares and Allergan preferred shares, approximately 56% and 44%, respectively, of the issued and outstanding combined company ordinary shares, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015.

The Pfizer special meeting will be held on [                      ], 2016 at [          ], local time, at [          ].


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At the Pfizer special meeting, Pfizer stockholders will be asked to consider and vote on the following items:

 

    a proposal to adopt the merger agreement (the “Pfizer merger proposal”);

 

    a proposal to adjourn the Pfizer special meeting to another date and place if necessary or appropriate to solicit additional votes in favor of the Pfizer merger proposal; and

 

    a non-binding, advisory proposal to approve the compensation that may become payable to Pfizer’s named executive officers that is based on or otherwise relates to the merger (all of the foregoing proposals are collectively referred to as the “Pfizer proposals”).

The Pfizer board of directors recommends that Pfizer stockholders vote “FOR” each of the Pfizer proposals.

The Allergan EGM will be held on [                    ], 2016 at [        ], local time, at [          ].

At the Allergan EGM, Allergan shareholders will be asked to consider and vote on the following items:

 

    the issuance of Allergan ordinary shares to stockholders of Pfizer in connection with the merger as contemplated by the merger agreement;

 

    the sub-division of the Allergan ordinary shares whereby, immediately prior to the effective time of the merger, each existing Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares;

 

    the increase to the maximum number of directors of Allergan from 14 to 15 effective as of or prior to the effective time of the merger;

 

    the increase of the authorized share capital of Allergan from €40,000 and $101,000 to €40,000 and $[        ], respectively, effective as of or prior to the effective time of the merger (together with the proposals reflected in the first, second and third bullet points, the “Allergan required proposals”);

 

    the change of name of the combined company from “Allergan plc” to “Pfizer plc” effective as of the effective time of the merger or as promptly as reasonably practicable thereafter;

 

    the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allergan’s share premium account immediately after the effective time, to allow the reserve resulting from the cancellation to be treated as additional profits available for distribution;

 

    the increase in nominal value of each Allergan ordinary share up to $0.00001 as of immediately following the Allergan share split and as of immediately prior to the effective time; and

 

    the adjournment of the Allergan EGM to another date and place if necessary or appropriate to solicit additional votes in favor of the Allergan proposals (all of the foregoing proposals are collectively referred to as the “Allergan proposals”).

The Allergan board of directors recommends that Allergan shareholders vote “FOR” each of the Allergan proposals.

The merger cannot be consummated unless Pfizer stockholders approve the Pfizer merger proposal and Allergan shareholders approve each of the Allergan required proposals. Your vote is very important. Whether or not you plan to attend the Pfizer special meeting or the Allergan EGM, as applicable, please promptly complete and return the enclosed proxy card by mail or submit your proxy by telephone or through the Internet. Submitting a proxy now will not prevent you from being able to vote in person at the Pfizer special meeting or the Allergan EGM, as applicable.

The obligations of Pfizer and Allergan to consummate the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement, a copy of which is included as Annex A to the accompanying joint proxy statement/prospectus. The accompanying joint proxy statement/prospectus provides you with detailed information about the proposed merger. It also contains or references information about Pfizer


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and Allergan and certain related matters. You are encouraged to read the accompanying joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference in the accompanying joint proxy statement/prospectus, carefully and in their entirety. In particular, you should read the “Risk Factors” section beginning on page 22 of the accompanying joint proxy statement/prospectus for a discussion of the risks you should consider in evaluating the proposed transactions and how they will affect you.

On behalf of the Pfizer board of directors and the Allergan board of directors, thank you for your consideration and continued support.

 

Ian C. Read

Chairman and Chief Executive Officer

Pfizer Inc.

 

Brenton L. Saunders

Chief Executive Officer and President

Allergan plc

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the securities to be issued in connection with the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is not intended to be and is not a prospectus for the purposes of the Companies Act 2014 of Ireland (“Companies Act”), the Prospectus (Directive 2003/71/EC) Regulations 2005 of Ireland (as amended) or the Prospectus Rules issued by the Central Bank of Ireland, and the Central Bank of Ireland has not approved this document.

The accompanying joint proxy statement/prospectus is dated [                      ], 2016, and is first being mailed to the Pfizer stockholders and the Allergan shareholders on or about [                      ], 2016.


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LOGO

PFIZER INC.

235 East 42nd Street

New York, New York 10017

NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON [                      ], 2016

NOTICE IS HEREBY GIVEN that a SPECIAL MEETING of the stockholders of Pfizer Inc. will be held at [          ], on [                      ], 2016, at [          ] [a/p].m. (local time), for the following purposes:

 

  1. To approve the adoption of the Agreement and Plan of Merger, dated as of November 22, 2015 (as amended by Amendment No. 1, dated March 4, 2016, and as it may be further amended from time to time, the “merger agreement”), by and among Pfizer, Allergan plc and certain other parties named therein, including Watson Merger Sub Inc. (the “Pfizer merger proposal”);

 

  2. To approve the adjournment of the Pfizer special meeting to another date and place if necessary or appropriate to solicit additional votes in favor of the Pfizer merger proposal (the “Pfizer adjournment proposal”); and

 

  3. To approve, on a non-binding, advisory basis, the compensation that may become payable to Pfizer’s named executive officers that is based on or otherwise relates to the merger, as disclosed in “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger” in the accompanying joint proxy statement/prospectus (the “Pfizer advisory compensation proposal,” and, together with the Pfizer merger proposal and the Pfizer adjournment proposal, the “Pfizer proposals”).

Approval of the Pfizer merger proposal is a condition to the merger and requires the affirmative vote of holders of a majority of the voting power of the outstanding shares of Pfizer common stock and Pfizer preferred shares (defined below), voting together as a single class, with each share of Pfizer common stock entitled to one vote per share and each Pfizer preferred share entitled to 2,574.87 votes per share. The joint proxy statement/prospectus refers to the Pfizer common stock and Pfizer preferred shares, taken together, along with their respective votes per share as described in the preceding sentence, as the “voting stock of Pfizer.” Approval of each of the Pfizer adjournment proposal and the Pfizer advisory compensation proposal is not a condition to the merger and requires that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal.

Pfizer will transact no other business at the special meeting except for business properly brought before the special meeting or any adjournment or postponement thereof.

Each of the Pfizer proposals is described in more detail in the accompanying joint proxy statement/prospectus, which you should read carefully and in its entirety before you vote. A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

The Pfizer board of directors has set [                      ], 2016 as the record date for the Pfizer special meeting. Only holders of record of shares of Pfizer common stock and Series A Convertible Perpetual Preferred Stock of Pfizer (“Pfizer preferred shares”) as of the close of business on [                      ], 2016 will be entitled to notice of and to vote at the Pfizer special meeting or any adjournments or postponements thereof. Any stockholder entitled to attend and vote at the Pfizer special meeting is entitled to appoint a proxy to attend the Pfizer special meeting and vote on such stockholder’s behalf. Such proxy need not be a holder of shares of Pfizer common stock or Pfizer preferred shares.


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Pfizer stockholders may have the right to seek appraisal in connection with the merger to the extent such rights are available under Delaware law with respect to their shares of Pfizer common stock or Pfizer preferred shares. To exercise appraisal rights, holders of record of Pfizer stock must strictly follow the procedures and satisfy the conditions prescribed by Delaware law, including, among other things, submitting a written demand for appraisal to Pfizer before the vote is taken on the adoption of the merger agreement, and they must not vote in favor of adoption of the merger agreement. These procedures are summarized in the accompanying joint proxy statement/prospectus in “Appraisal Rights,” and the text of the applicable provisions of Delaware law as in effect with respect to this transaction is included as Annex F to the accompanying joint proxy statement/prospectus.

The Pfizer board of directors has approved and declared advisable the merger agreement and recommends that you vote “FOR” the Pfizer merger proposal, “FOR” the Pfizer adjournment proposal and “FOR” the Pfizer advisory compensation proposal.

 

BY ORDER OF THE BOARD OF DIRECTORS
Margaret M. Madden

Vice President and Corporate Secretary, Chief Governance Counsel

Pfizer Inc.

New York, New York

[                      ], 2016

PLEASE SUBMIT A PROXY FOR YOUR SHARES OF PFIZER COMMON STOCK AND/OR PFIZER PREFERRED SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR DOING SO ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PFIZER PROPOSALS OR ABOUT VOTING YOUR PFIZER SHARES, PLEASE CALL [              ] (TOLL-FREE) OR [              ] (COLLECT).


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YOUR VOTE IS IMPORTANT

You may vote your shares of Pfizer common stock and Pfizer preferred shares by using a toll-free telephone number or electronically over the Internet as described on the proxy card. We encourage you to file your proxy using either of these options if they are available to you. Alternatively, you may complete, sign, date and mail your proxy card in the postage-paid envelope provided. The method by which you vote does not limit your right to vote in person at the Pfizer special meeting. We strongly encourage you to vote.

Notes:

 

1. Whether or not you plan to attend the Pfizer special meeting in person, it is important that your shares of Pfizer common stock and/or Pfizer preferred shares be represented and voted at the Pfizer special meeting. Holders of record may submit a proxy via the Internet, by telephone or by completing, signing and dating the enclosed proxy card and returning it as promptly as possible in the enclosed postage-paid, return-addressed reply envelope. Holders of record must vote in accordance with the instructions listed on the proxy card. Beneficial holders whose shares of Pfizer common stock and/or Pfizer preferred shares are held in “street name” must vote in accordance with the instructions provided to them by their broker, bank or other nominee. Such holders may be eligible to submit a proxy electronically or by telephone. Any holder of record who is present at the Pfizer special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. If you are a holder of record entitled to attend and vote at the Pfizer special meeting, then you are entitled to appoint a proxy or proxies to attend, speak and vote on your behalf at the Pfizer special meeting. A holder of record wishing to name any person other than the individual specified on the proxy card as his or her proxy holder may do so by crossing out the name of the designated proxy holder specified on the proxy card, inserting the name of such other person to act as his or her proxy and initialing such alteration. In that case, it will be necessary for the stockholder to sign the proxy card and deliver it in accordance with the instructions on the enclosed proxy card, with a copy to the person named as his or her proxy holder, and for the person so named to be present to vote at the Pfizer special meeting.

Please note that if you plan to attend the Pfizer special meeting in person, you must have an admission ticket or proof of ownership of Pfizer stock, as well as a valid government-issued photo identification (for example, a driver’s license or passport). An admission ticket is attached to your proxy card. If you misplace your admission ticket, we will verify your ownership onsite at the special meeting venue. Holders of record, whose shares of Pfizer common stock and/or Pfizer preferred shares are registered in their name, should bring a valid form of photo identification to the Pfizer special meeting. Beneficial holders whose shares of Pfizer common stock and/or Pfizer preferred shares are held in “street name” will need to bring a letter from their broker, bank or other nominee that confirms that such holder is the beneficial owner of such shares of Pfizer common stock and/or Pfizer preferred shares as of the record date, together with a valid form of photo identification. Beneficial holders whose shares of Pfizer common stock and/or Pfizer preferred shares are held in “street name” and who plan to vote at the Pfizer special meeting must also obtain a legal proxy, executed in their favor by or on behalf of their broker, bank or other nominee, to be able to vote at the Pfizer special meeting. Pfizer reserves the right to deny admittance to anyone who cannot adequately show proof of share ownership as of [                    ], 2016. See “The Pfizer Special Meeting” in the accompanying joint proxy statement/prospectus.

 

2. If you sign and return your proxy card without indicating how to vote on any particular proposal, the Pfizer common stock or Pfizer preferred shares represented by your proxy will be voted “FOR” each proposal in accordance with the recommendation of the Pfizer board of directors.

 

3. The completion and return of the proxy card will not preclude a Pfizer stockholder from attending and voting at the meeting in person.

 

4. The Pfizer board of directors has determined that only holders of record of Pfizer common stock and/or Pfizer preferred shares as of the close of business on [                    ], 2016 may vote at the Pfizer special meeting or any adjournment or postponement thereof.

 

5. Terms used in this notice but not otherwise defined herein shall have the same meaning in this notice as they have in the merger agreement included in the joint proxy statement/prospectus accompanying this notice.


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6. Any alteration to the proxy card must be initialed by the person who signs it.

 

7. Pfizer stockholders should also refer to “The Pfizer Special Meeting” in the accompanying joint proxy statement/prospectus, which further describes the matters being voted on at the Pfizer special meeting and the ultimate effect of each of the Pfizer proposals.


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LOGO

ALLERGAN PLC

Clonshaugh Business and Technology Park

Coolock, Dublin, D17 E400, Ireland

NOTICE OF THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON [          ], 2016

NOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING (the “Allergan EGM”) of Allergan plc will be held at [          ], on [          ], 2016 at [          ] [a/p].m. (local time) for the purpose of considering and, if thought fit, passing the following proposals (the “Allergan proposals”). Each of the Allergan proposals is described in more detail in the accompanying joint proxy statement/prospectus. The Allergan proposals may be voted on in such order as is determined by the Chairman of the Allergan EGM:

 

Time:

[          ] local time

 

Date:

[          ], 2016

 

Place:

[          ]

 

Purpose:

(1) To approve the issuance of Allergan ordinary shares to stockholders of Pfizer Inc. in connection with the merger as contemplated by the Agreement and Plan of Merger, dated as of November 22, 2015 (as amended by Amendment No. 1, dated March 4, 2016, and as it may be further amended from time to time, the “merger agreement”), by and among Allergan, Pfizer and certain other parties named therein, including Watson Merger Sub Inc. (the “Allergan share issuance proposal”);

 

  (2) To approve the sub-division of the Allergan ordinary shares whereby, immediately prior to the effective time of the merger, each existing Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares (the “Allergan share split proposal”);

 

  (3) To approve the increase to the maximum number of directors of Allergan from 14 to 15 effective as of or prior to the effective time of the merger (the “Allergan board increase proposal”);

 

  (4) To approve the increase of the authorized share capital of Allergan from €40,000 and $101,000 to €40,000 and $[          ], respectively, effective as of or prior to the effective time of the merger (the “Allergan authorized share capital increase proposal” and, together with the Allergan share issuance proposal, the Allergan share split proposal and the Allergan board increase proposal, the “Allergan required proposals”);

 

  (5) To approve the change of name of the combined company from “Allergan plc” to “Pfizer plc” effective as of the effective time of the merger or as promptly as reasonably practicable thereafter (the “Allergan name change proposal”);


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  (6) To approve the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allergan’s share premium account immediately after the effective time, to allow the reserve resulting from the cancellation to be treated as additional profits available for distribution (the “Allergan distributable reserves creation proposal”);

 

  (7) To approve the increase in nominal value of each Allergan ordinary share up to $0.00001 as of immediately following the Allergan share split and as of immediately prior to the effective time (the “Allergan renominalisation proposal”); and

 

  (8) To approve the adjournment of the Allergan EGM to another date and place if necessary or appropriate to solicit additional votes in favor of the Allergan proposals (the “Allergan adjournment proposal”).

 

  Consummation of the merger is conditioned on, among other things, approval of each of the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal and the Allergan authorized share capital increase proposal. The merger is not conditioned on approval of the Allergan name change proposal, the Allergan distributable reserves creation proposal, the Allergan renominalisation proposal or the Allergan adjournment proposal. Accordingly, if all of the other conditions to the merger are satisfied or waived, Allergan intends to consummate the merger, whether or not any or all of the Allergan name change proposal, the Allergan distributable reserves creation proposal, the Allergan renominalisation proposal or the Allergan adjournment proposal have been approved. In addition, the implementation of the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal, the Allergan authorized share capital increase proposal, the Allergan name change proposal, the Allergan distributable reserves creation proposal and the Allergan renominalisation proposal are each conditioned on the consummation of the merger.

 

  The accompanying joint proxy statement/prospectus describes the purpose and business of the Allergan EGM, contains a detailed description of the merger agreement and the merger and includes a copy of the merger agreement as Annex A. Please read these documents carefully before deciding how to vote.

 

  The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on each of the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal, the Allergan authorized share capital increase proposal, the Allergan renominalisation proposal and the Allergan adjournment proposal at the Allergan EGM is required to approve each such proposal. The affirmative vote of 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on each of the Allergan name change proposal and the Allergan distributable reserves creation proposal at the Allergan EGM is required to approve each such proposal.


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Record Date:

The record date for the Allergan EGM has been fixed by the Allergan board of directors as the close of business on [          ], 2016. Allergan shareholders of record at that time are entitled to vote at the Allergan EGM or any adjournments or postponements thereof.

More information about the transaction and the Allergan proposals is contained in the accompanying joint proxy statement/prospectus. We urge all Allergan shareholders to read the accompanying joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference in the accompanying joint proxy statement/prospectus, carefully and in their entirety. In particular, we urge you to read carefully the Risk Factors section beginning on page 22 of the accompanying joint proxy statement/prospectus.

The Allergan board of directors recommends that Allergan shareholders vote “FOR” the Allergan share issuance proposal, “FOR” the Allergan share split proposal, “FOR” the Allergan board increase proposal, “FOR” the Allergan authorized share capital increase proposal, “FOR” the Allergan name change proposal, “FOR” the Allergan distributable reserves creation proposal, “FOR” the Allergan renominalisation proposal and “FOR” the Allergan adjournment proposal.

BY ORDER OF THE BOARD OF DIRECTORS

A. Robert D. Bailey

Chief Legal Officer and Corporate Secretary

[          ], 2016


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YOUR VOTE IS IMPORTANT

You may vote your Allergan ordinary shares by using a toll-free telephone number or electronically over the Internet as described on the proxy card. We encourage you to file your proxy using either of these options if they are available to you. Alternatively, you may complete, sign, date and mail your proxy card in the postage-paid envelope provided. The method by which you vote does not limit your right to vote in person at the Allergan EGM. We strongly encourage you to vote.

Notes:

 

1. Whether or not you plan to attend the Allergan EGM in person, it is important that your Allergan ordinary shares be represented and voted at the Allergan EGM. Holders of record may submit a proxy via the Internet, by telephone or by completing, signing and dating the enclosed proxy card and returning it as promptly as possible in the enclosed postage-paid, return-addressed reply envelope. Holders of record must vote in accordance with the instructions contained on the proxy card. Beneficial holders whose Allergan ordinary shares are held in “street name” must vote in accordance with the instructions provided to them by their broker, bank or other nominee. Such holders should check the voting instruction card furnished to you by that firm to determine whether you may vote by telephone or the Internet. Any holder of record who is present at the Allergan EGM may vote in person instead of by proxy, thereby canceling any previous proxy. If you are a holder of record entitled to attend and vote at the Allergan EGM, then you are entitled to appoint a proxy or proxies to attend, speak and vote on your behalf at the Allergan EGM. A holder of record wishing to name any person other than the individual specified on the proxy card as his or her proxy holder may do so by crossing out the name of the designated proxy holder specified on the proxy card, inserting the name of such other person to act as his or her proxy and initialing such alteration. In that case, it will be necessary for the shareholder to sign the proxy card and deliver it in accordance with the instructions on the enclosed proxy card, with a copy to the person named as his or her proxy holder, and for the person so named to be present to vote at the Allergan EGM.

Please note that if shareholders plan to attend the Allergan EGM in person, they will need to register in advance to be admitted. Holders of record can register for the Allergan EGM by checking the appropriate box on their proxy card. The Allergan EGM will start promptly at [                    ] (local time).

In addition to registering in advance, shareholders will be required to present a valid government-issued photo identification (for example, a driver’s license or passport) and proof of ownership as of the record date to enter the Allergan EGM. Holders of record, whose ordinary shares are registered in their name, should bring a valid form of photo identification to the Allergan EGM. Beneficial holders whose Allergan ordinary shares are held in “street name” will need to bring a letter from their broker, bank or other nominee that confirms that such holder is the beneficial owner of such Allergan ordinary shares as of the record date, together with a valid form of photo identification. Beneficial holders whose Allergan ordinary shares are held in “street name” and who plan to vote at the Allergan EGM must also obtain a legal proxy, executed in their favor by or on behalf of their broker, bank or other nominee, to be able to vote at the Allergan EGM. Allergan reserves the right to deny admittance to anyone who cannot adequately show proof of share ownership as of [                    ], 2016. See “The Allergan Extraordinary General Meeting” in the accompanying joint proxy statement/prospectus.

If you are a shareholder of record of Allergan and you choose to submit your proxy by telephone by calling the toll-free number on your proxy card, your use of that telephone system and in particular the entry of your pin number/other unique identifier, will be deemed to constitute your appointment, in writing and under hand, and for all purposes of the Irish Companies Act, 2014, of the Chairman as your proxy to vote your shares on your behalf in accordance with your telephone instructions.

 

2. If you sign and return your proxy card without indicating how to vote on any particular proposal, the Allergan ordinary shares represented by your proxy will be voted “FOR” each proposal in accordance with the recommendation of the Allergan board of directors.

 

3. The completion and return of the proxy card will not preclude a shareholder from attending, speaking and voting at the meeting in person.


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4. In accordance with article 54 of Allergan’s articles of association, the Allergan board of directors has determined that only holders of record of Allergan ordinary shares as of the close of business on [                    ], 2016 may vote at the Allergan EGM or any adjournment or postponement thereof.

 

5. Terms used in this notice but not otherwise defined herein shall have the same meaning in this notice as they have in the merger agreement included in the joint proxy statement/prospectus accompanying this notice.

 

6. Any alteration to the proxy card must be initialed by the person who signs it.

 

7. Allergan shareholders should also refer to “The Allergan Extraordinary General Meeting” in the accompanying joint proxy statement/prospectus, which further describes the matters being voted on at the Allergan EGM and the ultimate effect of each of the Allergan proposals.


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ADDITIONAL INFORMATION

The accompanying joint proxy statement/prospectus incorporates by reference important business and financial information about Pfizer and Allergan from documents that are not included in or delivered with the accompanying joint proxy statement/prospectus. This information is available without charge to you upon written or oral request. You can obtain the documents incorporated by reference in the accompanying joint proxy statement/prospectus by requesting them in writing, by email or by telephone from Pfizer or Allergan at their respective addresses and telephone numbers listed below or by accessing the websites listed below. The information provided on the websites listed below is not a part of the accompanying joint proxy statement/prospectus and therefore is not incorporated by reference into the accompanying joint proxy statement/prospectus.

 

For Pfizer Stockholders:

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Attention: Shareholder Services

Telephone: (908) 901-1547

Email: Cecilia.Rueda-Stephens@pfizer.com

www.pfizer.com/investors

  

For Allergan Shareholders:

Allergan plc

Morris Corporate Center III

400 Interpace Parkway

Parsippany, NJ 07054

Attention: Investor Relations

Telephone: (862) 261-7488

Email: investor.relations@allergan.com

ir.allergan.com

In addition, if you have questions about the merger or the other transactions contemplated by the merger agreement, the Allergan extraordinary general meeting (the “Allergan EGM”) or the Pfizer special meeting, or if you need to obtain copies of the accompanying joint proxy statement/prospectus, proxy cards or other documents incorporated by reference in the accompanying joint proxy statement/prospectus, you may contact the appropriate contact listed below. You will not be charged for any of the documents you request.

 

For Pfizer Stockholders:

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Attention: Shareholder Services

Telephone: (908) 901-1547

Email: Cecilia.Rueda-Stephens@pfizer.com

www.pfizer.com/investors

  

For Allergan Shareholders:

Allergan plc

Morris Corporate Center III

400 Interpace Parkway

Parsippany, NJ 07054

Attention: Investor Relations

Telephone: (862) 261-7488

Email: investor.relations@allergan.com

ir.allergan.com

To obtain timely delivery of these documents before the Pfizer special meeting and the Allergan EGM, you must request the information no later than [                    ], 2016.

For a more detailed description of the information incorporated by reference in the accompanying joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information.”


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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (“SEC”) by Allergan (File No. 333-[            ]), constitutes a prospectus of Allergan under Section 5 of the U.S. Securities Act of 1933, as amended (the “Securities Act”), with respect to the combined company ordinary shares to be issued to Pfizer stockholders pursuant to the merger agreement. This joint proxy statement/prospectus also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to each of the Pfizer special meeting and the Allergan EGM.

Neither Pfizer nor Allergan has authorized anyone to give any information or make any representation about the merger or any of the other transactions contemplated by the merger agreement, Pfizer or Allergan that is different from, or in addition to, that contained in this joint proxy statement/prospectus or in any of the materials that have been incorporated by reference. Therefore, neither Pfizer nor Allergan takes any responsibility for, or can provide any assurance as to the reliability of, any information other than the information contained in or incorporated by reference into this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [                  ], 2016. The information contained in this joint proxy statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this joint proxy statement/prospectus to Pfizer stockholders or Allergan shareholders nor the issuance by Allergan of combined company ordinary shares pursuant to the merger agreement will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

The information concerning Pfizer contained in or incorporated by reference into this joint proxy statement/prospectus has been provided by Pfizer, and the information concerning Allergan contained in this joint proxy statement/prospectus has been provided by Allergan.

Unless otherwise indicated or as the context otherwise requires, all references in this joint proxy statement/prospectus to:

 

    “Allergan” refers to Allergan plc, an Irish public limited company;

 

    “Allergan divestiture transaction” refers to the pending divestiture of Allergan’s generics business to Teva Pharmaceutical Industries Ltd. pursuant to the Allergan divestiture transaction agreement;

 

    “Allergan divestiture transaction agreement” refers to the Master Purchase Agreement, dated as of July 26, 2015, by and between Allergan and Teva Pharmaceutical Industries Ltd., as amended pursuant to the letter agreement dated November 11, 2015 by and between Allergan and Teva Pharmaceutical Industries Ltd. and as may be further amended in accordance with the terms of the merger agreement;

 

    “Allergan ordinary shares” refers to the ordinary shares, par value $0.0001 per share, of Allergan;

 

    “Allergan preferred shares” refers to the 5.500% mandatorily convertible preferred shares, Series A, par value $0.0001 per share, of Allergan;

 

    “Allergan shareholders” refers to holders of Allergan ordinary shares;

 

    “combined company” refers to the Allergan entity immediately following the consummation of the merger, as the parent entity under which the Pfizer and Allergan businesses will be combined;

 

    “combined company ordinary shares” refers to the combined company ordinary shares, par value $0.00001 per share (subject to the approval of the Allergan renominalisation proposal and the effectuation of the renominalisation contemplated thereby), following the consummation of the merger;

 

    “dollars” or “$” refers to U.S. dollars;

 

    “effective time” refers to the time at which the merger becomes effective;


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    “merger” refers to the merger of Merger Sub with and into Pfizer, with Pfizer being the surviving corporation in the merger;

 

    “merger agreement” refers to the Agreement and Plan of Merger, dated as of November 22, 2015, as amended by Amendment No. 1, dated March 4, 2016, and as it may be further amended from time to time, by and among Pfizer, Allergan and certain other parties named therein including Merger Sub;

 

    “Merger Sub” refers to Watson Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of Allergan;

 

    “Pfizer” refers to Pfizer Inc., a Delaware corporation;

 

    “Pfizer common stock” refers to the common stock, par value $0.05 per share, of Pfizer;

 

    “Pfizer preferred shares” refers to the Series A Convertible Perpetual Preferred Stock of Pfizer; and

 

    “Pfizer stockholders” refers to holders of both Pfizer common stock and Pfizer preferred shares.


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QUESTIONS AND ANSWERS ABOUT THE MERGER, THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, THE PFIZER SPECIAL MEETING AND THE ALLERGAN EXTRAORDINARY GENERAL MEETING

     vi   

SUMMARY

     1   

Transaction Structure

     1   

Consideration to Pfizer Stockholders

     1   

Allergan Share Split and Name Change

     2   

Treatment of Pfizer Equity-Based Awards

     2   

Treatment of Allergan Equity-Based Awards

     4   

Comparative Per Share Market Price Information

     4   

Recommendation of the Pfizer Board of Directors and Pfizer’s Reasons for the Merger

     4   

Opinions of Pfizer’s Financial Advisors

     5   

Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger

     6   

Opinions of Allergan’s Financial Advisors

     7   

The Pfizer Special Meeting

     9   

The Allergan Extraordinary General Meeting

     9   

Interests of the Pfizer Directors and Executive Officers in the Merger

     10   

Interests of the Allergan Directors and Executive Officers in the Merger

     10   

Certain Governance Matters Following the Merger

     10   

Regulatory Approvals Required for the Merger

     11   

Appraisal Rights

     11   

No Solicitation; Third-Party Acquisition Proposals

     12   

Change of Recommendation

     13   

Conditions to the Consummation of the Merger

     15   

Termination of the Merger Agreement; Termination Fees; Expense Reimbursement

     16   

Transaction-Related Costs of the Merger

     18   

Accounting Treatment of the Merger

     19   

Listing Combined Company Ordinary Shares

     19   

Certain U.S. Federal Income Tax Consequences of the Merger and the Allergan Share Split

     19   

Comparison of the Rights of Pfizer Stockholders and Allergan Shareholders

     20   

Risk Factors

     20   

Information about the Companies

     20   

RISK FACTORS

     22   

Risks Related to the Merger

     22   

Risks Related to the Business of the Combined Company

     29   

Risks Related to Pfizer’s Business

     38   

Risks Related to Allergan’s Business

     38   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     39   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PFIZER

     40   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ALLERGAN

     41   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     43   

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE FINANCIAL DATA

     45   

THE PFIZER SPECIAL MEETING

     47   

Date, Time and Place of the Pfizer Special Meeting

     47   

Purpose of the Pfizer Special Meeting

     47   

Recommendation of the Pfizer Board of Directors

     47   

Pfizer Record Date and Quorum

     47   

Required Vote

     48   

Treatment of Abstentions; Failure to Vote

     48   

Voting of Proxies; Incomplete Proxies

     49   

 

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Shares Held in “Street Name”

     49   

Revocability of Proxies and Changes to a Pfizer Stockholder’s Vote

     50   

Solicitation of Proxies

     50   

Attending the Pfizer Special Meeting

     51   

Assistance

     51   

PFIZER PROPOSALS

     52   

Pfizer Merger Proposal

     52   

Pfizer Adjournment Proposal

     52   

Pfizer Advisory Compensation Proposal

     52   

Other Matters to Come Before the Pfizer Special Meeting

     53   

THE ALLERGAN EXTRAORDINARY GENERAL MEETING

     54   

Date, Time and Place of the Allergan Extraordinary General Meeting

     54   

Purpose of the Allergan Extraordinary General Meeting

     54   

Recommendation of the Allergan Board of Directors

     54   

Allergan Record Date and Quorum

     55   

Required Vote

     55   

Treatment of Abstentions; Failure to Vote

     55   

Voting on Proxies; Incomplete Proxies

     56   

Shares Held in “Street Name”

     57   

Revocability of Proxies and Changes to an Allergan Shareholder’s Vote

     57   

Solicitation of Proxies

     58   

Attending the Allergan Extraordinary General Meeting

     58   

Assistance

     58   

ALLERGAN PROPOSALS

     59   

Allergan Share Issuance Proposal

     59   

Allergan Share Split Proposal

     59   

Allergan Board Increase Proposal

     61   

Allergan Authorized Share Capital Increase Proposal

     62   

Allergan Name Change Proposal

     62   

Allergan Distributable Reserves Creation Proposal

     63   

Allergan Renominalisation Proposal

     64   

Allergan Adjournment Proposal

     65   

Other Matters to Come Before the Extraordinary General Meeting

     65   

INFORMATION ABOUT THE COMPANIES

     66   

Pfizer

     66   

Allergan

     66   

Merger Sub

     66   

THE TRANSACTIONS

     67   

Transaction Structure

     67   

Consideration to Pfizer Stockholders

     67   

Allergan Share Split and Name Change

     68   

Background of the Merger

     69   

Recommendation of the Pfizer Board of Directors and Pfizer’s Reasons for the Merger

     76   

Opinions of Pfizer’s Financial Advisors

     80   

Other Considerations

     96   

Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger

     97   

Opinions of Allergan’s Financial Advisors

     102   

Pfizer Unaudited Prospective Financial Information

     120   

Allergan Unaudited Prospective Financial Information

     123   

Board of Directors and Management after Consummation of the Merger

     126   

Interests of the Pfizer Directors and Executive Officers in the Merger

     126   

Interests of the Allergan Directors and Executive Officers in the Merger

     126   

 

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Regulatory Approvals Required for the Merger

     127   

Dividend Policy

     127   

Listing of Combined Company Ordinary Shares

     128   

Delisting and Deregistration of Pfizer Common Stock

     128   

Transaction-Related Costs

     128   

Accounting Treatment of the Merger

     128   

Resale of Combined Company Ordinary Shares

     129   

THE MERGER AGREEMENT

     130   

Explanatory Note Regarding the Merger Agreement

     130   

Merger Agreement

     130   

Closing and Effective Time of the Merger

     130   

Consideration to Pfizer Stockholders

     131   

Appraisal Rights

     135   

Treatment of Pfizer Equity-Based Awards

     136   

Treatment of Allergan Equity-Based Awards

     137   

Withholding

     137   

No Fractional Shares

     137   

Representations and Warranties

     138   

No Survival of Representations and Warranties

     140   

Covenants and Agreements

     140   

Conditions to the Consummation of the Merger

     156   

Termination of the Merger Agreement; Termination Fees; Expense Reimbursement

     158   

Limitation on Remedies

     162   

Fees and Expenses

     162   

Indemnification; Directors’ and Officers’ Insurance

     162   

Amendment and Waiver

     163   

Governing Law

     163   

Assignment

     163   

Specific Performance

     164   

CERTAIN TAX CONSEQUENCES OF THE MERGER

     165   

U.S. Federal Income Tax Considerations

     165   

Information Reporting and Backup Withholding

     174   

Irish Tax Considerations

     174   

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

     181   

COMPARATIVE PER SHARE MARKET PRICE INFORMATION

     199   

COMPARISON OF THE RIGHTS OF PFIZER STOCKHOLDERS AND ALLERGAN SHAREHOLDERS

     201   

CERTAIN GOVERNANCE MATTERS FOLLOWING THE MERGER

     235   

Combined Company Board of Directors

     235   

Combined Company Officers

     235   

DESCRIPTION OF ALLERGAN ORDINARY SHARES

     237   

Capital Structure

     237   

Preemption Rights, Share Warrants and Options

     238   

Dividends

     238   

Share Repurchases, Redemptions and Conversions

     239   

Lien on Shares, Calls on Shares and Forfeiture of Shares

     240   

Bonus Shares

     240   

Consolidation and Division; Subdivision

     240   

Reduction of Share Capital

     240   

Annual Meetings of Shareholders

     241   

Extraordinary General Meetings of Shareholders

     241   

Quorum for General Meetings

     242   

 

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Voting

     242   

Action by Written Consent

     243   

Variation of Rights Attaching to a Class or Series of Shares

     243   

Inspection of Books and Records

     243   

Acquisitions

     244   

Appraisal Rights

     244   

Disclosure of Interests in Shares

     244   

Anti-Takeover Provisions

     245   

Insider Dealing

     247   

Corporate Governance

     248   

Legal Name; Formation; Fiscal Year; Registered Office

     248   

Appointment of Directors

     248   

Removal of Directors

     249   

Duration; Dissolution; Rights upon Liquidation

     249   

Uncertificated Shares

     249   

Stock Exchange Listing

     249   

No Sinking Fund

     249   

Transfer and Registration of Shares

     249   

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF PFIZER

     251   

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF ALLERGAN

     253   

APPRAISAL RIGHTS

     255   

EXPERTS

     260   

ALLERGAN ANNUAL GENERAL MEETING SHAREHOLDER PROPOSALS

     261   

Shareholder Proposals in the Proxy Statement for the 2016 Annual General Meeting

     261   

Other Shareholder Proposals and Nominations for Directors to Be Presented at the Annual General Meeting

     261   

PFIZER ANNUAL MEETING STOCKHOLDER PROPOSALS

     262   

Stockholder Proposals for Inclusion in Proxy Statement

     262   

Other Stockholder Proposals for Annual Meeting

     262   

Stockholder Nominations of Directors at Pfizer’s Annual Meeting

     262   

Future Annual Meetings

     262   

IRISH TAKEOVER RULES—RESPONSIBILITY STATEMENT

     263   

VALIDITY OF ORDINARY SHARES

     264   

NO LIABILITY FOR FURTHER CALLS OR ASSESSMENTS

     264   

ENFORCEABILITY OF CIVIL LIABILITIES

     264   

OTHER MATTERS

     264   

HOUSEHOLDING OF PROXY MATERIALS

     264   

WHERE YOU CAN FIND MORE INFORMATION

     265   

ADDITIONAL INFORMATION

     268   

Annex A—Merger Agreement

     A-1   

Annex B—Opinion of Guggenheim Securities, LLC

     B-1   

Annex C—Opinion of Goldman, Sachs & Co.

     C-1   

Annex D—Opinion of J.P. Morgan Limited

     D-1   

Annex E—Opinion of Morgan Stanley & Co. LLC

     E-1   

Annex F—Section 262 of the General Corporation Law of the State of Delaware

     F-1   

Annex G—List of Relevant Territories for the Purposes of Irish Dividend Withholding Tax

     G-1   

 

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NOTICE TO INVESTORS

This joint proxy statement/prospectus is not a prospectus within the meaning of the Companies Act 2014 of Ireland, the Prospectus Directive (2003/71/EC) Regulations 2005 of Ireland (as amended) or the Prospectus Rules issued by the Central Bank of Ireland. This joint proxy statement/prospectus has not been approved or reviewed by or registered with the Central Bank of Ireland or any other competent authority or regulatory authority in the European Economic Area. This joint proxy statement/prospectus does not constitute investment advice or the provision of investment services within the meaning of the European Communities (Markets in Financial Instruments) Regulations 2007 of Ireland (as amended) or the Markets in Financial Instruments Directive (2004/39/EC). Neither Allergan nor Pfizer is an authorized investment firm within the meaning of the European Communities (Markets in Financial Instruments) Regulations 2007 of Ireland (as amended) or the Markets in Financial Instruments Directive (2004/39/EC) and the recipients of this joint proxy statement/prospectus should seek independent legal and financial advice in determining their actions in respect of or pursuant to this joint proxy statement/prospectus.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER, THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, THE PFIZER SPECIAL MEETING AND THE ALLERGAN EXTRAORDINARY GENERAL MEETING

The following are answers to certain questions you may have regarding the merger, the other transactions contemplated by the merger agreement, the Pfizer special meeting and the Allergan extraordinary general meeting (the “Allergan EGM”). You are urged to read carefully this entire joint proxy statement/prospectus, because the information in this section may not provide all of the information that might be important to you in determining how to vote. Additional important information is also contained in the Annexes to, and the documents incorporated by reference into, this joint proxy statement/prospectus. See “Where You Can Find More Information.” If you are in any doubt about this transaction you should consult an independent financial advisor who, if you are obtaining advice in Ireland, is authorized or exempted by the Investment Intermediaries Act 1995, or the European Communities (Markets in Financial Instruments) Regulations (Nos. 1 to 3) 2007 (as amended).

 

Q: WHAT IS THE PROPOSED TRANSACTION UPON WHICH I AM BEING ASKED TO VOTE?

 

A: On November 22, 2015, Pfizer and Allergan entered into a merger agreement pursuant to which they agreed to combine their respective businesses under a single company. The combined company is expected to be a leading global pharmaceutical company with best-in-class innovative products and established products businesses.

The merger is structured as a “reverse merger,” in which Pfizer will merge with a wholly owned subsidiary of Allergan and the existing Allergan entity will become the parent entity of the combined company. In the merger, each share of Pfizer common stock (other than certain shares described in the merger agreement and below under “The Merger Agreement—Consideration to Pfizer Stockholders”) will be converted into, at the election of the holder of such share, either: (i) one combined company ordinary share (the “exchange ratio”); or (ii) an amount in cash, without interest, equal to the volume weighted average price per share of Pfizer common stock on the New York Stock Exchange (“NYSE”) on the trading day immediately preceding the date of consummation of the merger. Elections by Pfizer stockholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement, such that Pfizer stockholders will receive in the aggregate no less than $6 billion and no more than $12 billion in cash.

Immediately prior to the merger, Allergan shareholders will receive 11.3 combined company ordinary shares (the “share split ratio”) for each Allergan ordinary share they hold. Allergan shareholders will receive these shares by virtue of an 11.3-for-one share split (the “Allergan share split”). It is anticipated that, immediately after consummation of the merger, the former Pfizer stockholders and Allergan shareholders will hold, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer preferred shares and Allergan preferred shares, approximately 56% and 44%, respectively, of the issued and outstanding combined company ordinary shares, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015. As a result of the merger and the Allergan share split, it is currently estimated that the combined company will issue or reserve for issuance approximately [          ] ordinary shares.

 

Q: WHY AM I RECEIVING THIS JOINT PROXY STATEMENT/PROSPECTUS?

 

A: Each of Pfizer and Allergan is sending these materials to its respective stockholders or shareholders to help them decide how to vote their shares of Pfizer common stock or Pfizer preferred shares, or Allergan ordinary shares, as the case may be, with respect to the matters to be considered at the Pfizer special meeting and the Allergan EGM, respectively.

At the Pfizer special meeting, Pfizer stockholders are being asked:

 

    To approve the adoption of the merger agreement (the “Pfizer merger proposal”);

 

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    To approve the adjournment of the Pfizer special meeting to another date and place if necessary or appropriate to solicit additional votes in favor of the Pfizer merger proposal (the “Pfizer adjournment proposal”); and

 

    To approve, on a non-binding, advisory basis, the compensation that may become payable to Pfizer’s named executive officers that is based on or otherwise relates to the merger, as disclosed in “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger” (the “Pfizer advisory compensation proposal” and, together with the Pfizer merger proposal and the Pfizer adjournment proposal, the “Pfizer proposals”).

At the Allergan EGM, Allergan shareholders are being asked:

 

    To approve the issuance of Allergan ordinary shares to stockholders of Pfizer in connection with the merger as contemplated by the merger agreement (the “Allergan share issuance proposal”);

 

    To approve the sub-division of the Allergan ordinary shares whereby, immediately prior to the effective time, each existing Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares (the “Allergan share split proposal”);

 

    To approve the increase to the maximum number of directors of Allergan from 14 to 15 effective as of or prior to the effective time (the “Allergan board increase proposal”);

 

    To approve the increase of the authorized share capital of Allergan from €40,000 and $101,000 to €40,000 and $[          ], respectively, effective as of or prior to the effective time (the “Allergan authorized share capital increase proposal” and, together with the Allergan share issuance proposal, the Allergan share split proposal and the Allergan board increase proposal, the “Allergan required proposals”);

 

    To approve the change of name of the combined company from “Allergan plc” to “Pfizer plc” effective as of the effective time or as promptly as reasonably practicable thereafter (the “Allergan name change proposal”);

 

    To approve the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allergan’s share premium account immediately after the effective time, to allow the reserve resulting from the cancellation to be treated as additional profits available for distribution (the “Allergan distributable reserves creation proposal”);

 

    To approve the increase in nominal value of each Allergan ordinary share up to $0.00001 as of immediately following the Allergan share split and as of immediately prior to the effective time (the “Allergan renominalisation proposal”); and

 

    To approve the adjournment of the Allergan EGM to another date and place if necessary or appropriate to solicit additional votes in favor of the Allergan proposals (the “Allergan adjournment proposal” and, together with the Allergan required proposals, the Allergan name change proposal, the Allergan distributable reserves creation proposal and the Allergan renominalisation proposal, the “Allergan proposals”).

The approval of the Pfizer merger proposal and the approval of the Allergan required proposals are conditions to the consummation of the merger.

The merger is not conditioned on the approval of the Pfizer adjournment proposal, the Pfizer advisory compensation proposal, the Allergan name change proposal, the Allergan distributable reserves creation proposal, the Allergan renominalisation proposal or the Allergan adjournment proposal.

Further information about the Pfizer special meeting, the Allergan EGM, the merger and the other transactions contemplated by the merger agreement is contained in this joint proxy statement/prospectus. This joint proxy statement/prospectus constitutes both a joint proxy statement of Pfizer and Allergan and a prospectus of Allergan. It is a joint proxy statement because each of the Pfizer board of directors and the

 

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Allergan board of directors is soliciting proxies from its respective stockholders or shareholders using this joint proxy statement/prospectus. It is a prospectus because Allergan is offering Allergan ordinary shares in exchange for a portion of the outstanding shares of Pfizer common stock and Pfizer preferred shares in the merger.

The enclosed proxy materials allow you to grant a proxy or vote your shares by telephone or Internet without attending your respective company’s special meeting or extraordinary general meeting in person.

Your vote is very important. You are encouraged to submit your proxy or vote your shares by telephone or Internet as soon as possible, even if you do plan to attend the Pfizer special meeting or the Allergan EGM in person.

This joint proxy statement/prospectus is not intended to be and is not a prospectus for the purposes of the Investment Funds, Companies and Miscellaneous Provisions Act of 2005 of Ireland (the “2005 Act”), the Prospectus (Directive 2003/71/EC) Regulations 2005 of Ireland (as amended) or the Prospectus Rules issued under the 2005 Act, and the Central Bank of Ireland has not approved this joint proxy statement/prospectus.

 

Q: WHAT WILL PFIZER COMMON STOCKHOLDERS RECEIVE IN THE TRANSACTION?

 

A: In the merger, each share of Pfizer common stock issued and outstanding immediately prior to the effective time (other than (i) shares of Pfizer common stock owned by Pfizer, Allergan or Merger Sub, (ii) shares of Pfizer common stock held by holders who have properly exercised their appraisal rights under Delaware law (the “dissenting shares”), and (iii) shares of Pfizer common stock owned by subsidiaries of Pfizer immediately prior to the effective time) will be converted into the right to receive, at the election of its holder and subject to the proration procedures described in the merger agreement, either:

 

    one combined company ordinary share (the “share consideration”); or

 

    an amount in cash, without interest, equal to the volume-weighted average price per share of Pfizer common stock on the NYSE on the trading day immediately preceding the date of consummation of the merger (determined as provided in the merger agreement) (the “cash consideration”).

The share consideration and the cash consideration are collectively referred to as the “common stock merger consideration.” Any share of Pfizer common stock with respect to which a holder elects to receive the share consideration is referred to as a “share electing share,” and any share of Pfizer common stock with respect to which a holder elects to receive the cash consideration is referred to as a “cash electing share.” If a holder makes no election with respect to a share (or fails to properly make an election) (a “non-electing share”), then such share of Pfizer common stock will be deemed to be a share electing share.

Elections by Pfizer stockholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement, such that Pfizer stockholders will receive in the aggregate no less than $6 billion and no more than $12 billion in cash. Accordingly, if you are a Pfizer stockholder, depending on the elections made by other Pfizer stockholders, you may receive share consideration and cash consideration in a proportion different from what you request on your election form.

 

Q: WHAT WILL PFIZER PREFERRED STOCKHOLDERS RECEIVE IN THE TRANSACTION?

 

A:

In the merger, each Pfizer preferred share issued and outstanding immediately prior to the effective time will be converted into the number of shares of Pfizer common stock into which such Pfizer preferred share could have been converted at that time in accordance with the certificate of designations for the Pfizer preferred shares, and the holder of such Pfizer preferred share will be entitled to receive the common stock merger consideration in respect of the shares of Pfizer common stock into which such Pfizer preferred share was converted (the “preferred stock merger consideration,” which, together with the common stock merger consideration is collectively referred to as the “merger consideration”). As of the date of this joint proxy statement/prospectus, each Pfizer preferred share would have been converted into 2,574.87 shares of

 

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  Pfizer common stock at the effective time. In lieu of receiving such preferred stock merger consideration, holders of Pfizer preferred shares may elect to receive the liquidation preference for their Pfizer preferred shares, plus any accrued and unpaid dividends on such shares as of the effective time, in accordance with the certificate of designations for the Pfizer preferred shares, and if a holder so elects, each Pfizer preferred share with respect to which such election is made will be cancelled and converted into the right to receive such amount in cash (the “preferred stock liquidation amount”). As of the date of this joint proxy statement/prospectus, the liquidation preference plus accrued and unpaid dividends on the Pfizer preferred shares was $40,300 per share. Holders of Pfizer preferred shares who do not elect to receive the preferred stock liquidation amount will be entitled to elect between the share consideration and the cash consideration for each share of Pfizer common stock into which their Pfizer preferred shares are converted as of immediately prior to the effective time (subject to the proration procedures described in the merger agreement).

 

Q: WHAT WILL ALLERGAN SHAREHOLDERS RECEIVE IN THE TRANSACTION?

 

A: Immediately prior to consummation of the merger, Allergan shareholders will receive 11.3 combined company ordinary shares for each of their Allergan ordinary shares. Allergan shareholders will receive these shares by virtue of the Allergan share split. Allergan preferred shares will remain outstanding following the merger in accordance with designations of the terms of such shares and will undergo required adjustments in respect of the Allergan share split.

 

Q: WHAT WILL BE THE RESPECTIVE OWNERSHIP PERCENTAGES OF FORMER PFIZER STOCKHOLDERS AND ALLERGAN SHAREHOLDERS IN THE COMBINED COMPANY?

 

A: It is anticipated that former Pfizer stockholders and Allergan shareholders will hold, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer preferred shares and Allergan preferred shares, approximately 56% and 44%, respectively, of the issued and outstanding combined company ordinary shares immediately after consummation of the merger, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015.

 

Q: WHAT IS THE VALUE OF THE CONSIDERATION TO THE PFIZER STOCKHOLDERS AND THE ALLERGAN SHAREHOLDERS?

 

A:

The merger consideration payable in respect of each share of Pfizer common stock will be, at the election of the holder and subject to the proration procedures discussed below, either one combined company ordinary share or an amount in cash determined based upon the volume-weighted average price per share of Pfizer common stock on the NYSE for the trading day immediately preceding the date of consummation of the merger. In the Allergan share split that will occur immediately prior to the effective time, each Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares. The exact value of the transaction consideration to Pfizer stockholders and Allergan shareholders will therefore depend in part on the prices per share of Pfizer common stock and/or combined company ordinary shares at the consummation of the merger. These prices will not be known at the time of the Pfizer special meeting or the Allergan EGM and may be greater than, less than or the same as the prices at the time of entry into the merger agreement, the date of this joint proxy statement/prospectus or the time of the Pfizer special meeting or the Allergan EGM. As of November 20, 2015, the last full trading day before the public announcement of the signing of the merger agreement, assuming that each combined company ordinary share will have a value equal to the closing price of a share of Pfizer common stock on the NYSE on such date, the implied value of the 11.3 combined company ordinary shares to Allergan shareholders was approximately $363.63. As of the date of this joint proxy statement/prospectus, assuming that each combined company ordinary share will have a value equal to the closing price of a share of Pfizer common stock on the NYSE on such date, the implied value of the 11.3 combined company ordinary shares to Allergan shareholders was approximately $[          ]. You should obtain current market price quotations for Pfizer common stock and Allergan ordinary shares

 

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  before deciding how to vote with respect the Pfizer merger proposal or the Allergan required proposals, as applicable; however, as noted above, the prices at the effective time may be greater than, less than or the same as such price quotations.

 

Q: WHAT WILL HOLDERS OF PFIZER EQUITY-BASED AWARDS RECEIVE IN THE MERGER?

 

A: Stock Options. As of the effective time, by virtue of the merger and without any action on the part of the holders thereof, each option to purchase shares of Pfizer common stock (each, a “Pfizer stock option”) granted under any Pfizer equity plan, whether vested or unvested, that is outstanding and unexercised as of immediately prior to the effective time will be assumed by the combined company and will be converted into a combined company stock option to acquire a number of combined company ordinary shares (rounded down to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer stock option as of immediately prior to the effective time, at an exercise price per combined company ordinary share (rounded up to the nearest whole cent) equal to the exercise price per share of Pfizer common stock of such Pfizer stock option. Each Pfizer stock option that is an “incentive stock option” (as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)) will be adjusted in accordance with the foregoing in a manner consistent with the requirements of Section 424 of the Code. Each Pfizer stock option so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer stock option as of immediately prior to the effective time.

Total Shareholder Return Units. As of the effective time, by virtue of the merger and without any action on the part of the holders thereof, each award of total shareholder return units denominated with respect to shares of Pfizer common stock (each, a “Pfizer TSRU award”) granted under any Pfizer equity plan, whether vested or unvested, that is outstanding as of immediately prior to the effective time will be assumed by the combined company and will be converted into an award of total shareholder return units (a “combined company TSRU award”) denominated with respect to a number of combined company ordinary shares (rounded to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer TSRU award as of immediately prior to the effective time, at a grant price per combined company ordinary share (rounded to the nearest whole cent) equal to the grant price per share of Pfizer common stock of such Pfizer TSRU award. Each Pfizer TSRU award so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer TSRU award as of immediately prior to the effective time.

Restricted Stock Units. As of the effective time, by virtue of the merger and without any action on the part of the holders thereof, each award of time-based restricted stock units that corresponds to a number of shares of Pfizer common stock (each, a “Pfizer RSU award”) granted under any Pfizer equity plan, whether vested or unvested, that is outstanding as of immediately prior to the effective time will be assumed by the combined company and will be converted into a restricted stock unit award corresponding to combined company ordinary shares (each, a “combined company RSU award”) with respect to a number of combined company ordinary shares (rounded to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer RSU award as of immediately prior to the effective time. Each Pfizer RSU award so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer RSU award as of immediately prior to the effective time.

Performance Stock Units. As of the effective time, each award of restricted shares or restricted stock units that corresponds to a number of shares of Pfizer common stock that is subject to performance-based vesting conditions (including any performance share award or portfolio performance share award but excluding any Pfizer TSRU award) (each, a “Pfizer PSU award”) and that was granted under any Pfizer equity plan, whether vested or unvested, that is outstanding immediately prior to the effective time will, by virtue of the merger and without any action on the part of the holders thereof, be assumed by the combined company and will be converted into a performance-based restricted share or restricted stock unit award corresponding to combined company ordinary shares (each a “combined company PSU award”) with respect to a number of combined company ordinary shares (rounded to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer PSU award as of immediately prior to the effective time. Each

 

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Pfizer PSU award so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer PSU award as of immediately prior to the effective time.

Deferred Awards. As of the effective time, each stock unit (excluding any Pfizer stock options, Pfizer TSRU awards, Pfizer RSU awards and Pfizer PSU awards (collectively, the “Pfizer equity awards”)) that is deemed invested in shares of Pfizer common stock as of immediately prior to the effective time under the Pfizer deferred compensation plans (such stock units, the “Pfizer deferred awards”) will, by virtue of the merger and without any action on the part of the holders thereof, be deemed to be invested in combined company ordinary shares, with the number of combined company ordinary shares subject to the Pfizer deferred awards in a participant’s account under each Pfizer deferred compensation plan as of the effective time to be equal to the number of shares of Pfizer common stock subject to such Pfizer deferred awards as of immediately prior to the effective time. Following the effective time, the Pfizer deferred compensation plans will otherwise continue to have the same terms, including payment terms and investment options, that were applicable as of immediately prior to the effective time, with the Pfizer common stock fund to be replaced with a combined company ordinary shares fund.

Change in Control. A “change of control” (or similar phrase) within the meaning of Pfizer’s 2014 Stock Plan, 2004 Stock Plan, as amended and restated, and 2001 Stock and Incentive Plan will occur or will be deemed to occur at the effective time for purposes of such Pfizer equity plans, and will trigger the commencement of the relevant double-trigger protection period thereunder. Prior to the effective time, Pfizer will pass resolutions, provide any notices, obtain any consents, make any amendments to the Pfizer equity plans, Pfizer equity awards and Pfizer deferred compensation plans and take such other actions as are necessary to provide for the treatment of the Pfizer equity awards and the Pfizer deferred awards as contemplated by the merger agreement.

 

Q: WHAT WILL HOLDERS OF ALLERGAN EQUITY-BASED AWARDS RECEIVE IN THE MERGER?

 

A: The merger will constitute a “change of control” for purposes of all outstanding Allergan equity-based awards, and will trigger the commencement of the relevant double-trigger protection period under such awards. Allergan or the combined company will take such actions as it determines are reasonably appropriate and necessary to provide for the treatment of the Allergan equity-based awards in accordance with the terms and conditions provided for in the applicable plan and the applicable award agreement, including adjusting such awards in connection with the Allergan share split or otherwise and the determination of achievement of any performance-based criteria in a manner consistent with the terms of any such plan and any applicable award agreement.

 

Q: ARE PFIZER STOCKHOLDERS GUARANTEED TO RECEIVE THE FORM OF MERGER CONSIDERATION THEY ELECT TO RECEIVE?

 

A: No. Elections by Pfizer stockholders for the share consideration and the cash consideration will be subject to proration procedures set forth in the merger agreement, such that Pfizer stockholders will receive in the aggregate no less than $6 billion and no more than $12 billion in cash. In order to achieve these minimum and maximum amounts, the merger agreement provides for adjustments to and reallocation of the share elections and cash elections made by Pfizer stockholders in the event that either the share consideration or the cash consideration is oversubscribed. Specifically:

 

    If Pfizer stockholders elect an aggregate of at least $6 billion of cash consideration and no more than $12 billion of cash consideration, all of the cash electing shares will be converted into the right to receive cash consideration and all of the share electing shares and non-electing shares will be converted into the right to receive share consideration.

 

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    If Pfizer stockholders elect to receive an aggregate of less than $6 billion of cash consideration, all of the cash electing shares will be converted into the right to receive cash consideration and a portion of the share electing shares and non-electing shares of each Pfizer stockholder will be converted into the right to receive cash consideration, with the remaining shares of such Pfizer stockholder converted into the right to receive share consideration.

 

    If Pfizer stockholders elect to receive an aggregate of more than $12 billion of cash consideration, all of the share electing shares and non-electing shares will be converted into the right to receive share consideration and a portion of the cash electing shares of each Pfizer stockholder will be converted into the right to receive cash consideration, with the remaining shares of such Pfizer stockholder converted into the right to receive share consideration.

Accordingly, depending on the elections made by other Pfizer stockholders, each Pfizer stockholder who elects to receive share consideration for all of their shares of Pfizer common stock in the merger may receive a portion of their merger consideration in cash and each Pfizer stockholder who elects to receive cash consideration for all of their shares of Pfizer common stock in the merger may receive a portion of their merger consideration in combined company ordinary shares. A Pfizer stockholder who elects to receive a combination of cash consideration and share consideration for their shares of Pfizer common stock in the merger may receive cash and combined company ordinary shares in a proportion different from that which such stockholder elected. For further information, including hypothetical scenarios demonstrating the possible effects of proration on a holder of 1,000 shares of Pfizer common stock, see “The Merger AgreementConsideration to Pfizer Stockholders.”

 

Q: HOW DO I MAKE AN ELECTION IF I AM A PFIZER STOCKHOLDER?

 

A: Under the merger agreement, Pfizer stockholders are required to make an election to receive share consideration or cash consideration in respect of each share held by 5:00 p.m., [time zone], on [          ], 2016, the date of the Pfizer special meeting (the “election deadline”), unless otherwise agreed in advance by Pfizer and Allergan, in which event Pfizer will reasonably promptly announce the rescheduled election deadline. At least 20 business days prior to the election deadline, an election form will be mailed to each Pfizer stockholder of record for the Pfizer special meeting. Pfizer will make available one or more election forms as may be reasonably requested from time to time by all persons who become Pfizer stockholders of record during the period following the Pfizer record date and prior to the election deadline. To elect to receive share consideration, cash consideration or a combination of both, you must indicate on the election form the number of shares of Pfizer common stock with respect to which you elect to receive share consideration, the number of shares of Pfizer common stock with respect to which you elect to receive cash consideration and the particular shares for which you desire to make either such election, and the order in which either such election is to apply to any such shares if the election is subject to proration under the terms of the merger agreement. You must return your properly completed and signed form accompanied by the Pfizer share certificates, if any, in respect of which the form of election relates and any additional documents specified in the election form by the election deadline. You are encouraged to return your election form as promptly as practicable. If you hold your shares of Pfizer common stock or Pfizer preferred shares through a broker, bank or other nominee, you should follow the instructions provided by such broker, bank or other nominee to ensure that your election instructions are timely returned. See “The Merger AgreementConsideration to Pfizer Stockholders.”

 

Q: CAN I REVOKE OR CHANGE MY ELECTION AFTER I MAIL MY ELECTION FORM?

 

A:

Yes. Pfizer stockholders may revoke or change their elections by sending written notice thereof to the exchange agent, which notice must be received by the exchange agent prior to the election deadline. In the event an election form is revoked, under the merger agreement the shares of Pfizer common stock represented by such election form will be treated as shares in respect of which no election has been made, except to the extent a subsequent election is properly made by the Pfizer stockholder prior to the election

 

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  deadline. After an election is validly made with respect to any shares of Pfizer common stock, any subsequent transfer of such shares will automatically revoke such election. See “The Merger AgreementConsideration to Pfizer Stockholders.”

 

Q: WHAT HAPPENS IF I DO NOT MAKE AN ELECTION OR MY ELECTION FORM IS NOT RECEIVED BEFORE THE ELECTION DEADLINE?

 

A: For any shares of Pfizer common stock with respect to which the exchange agent does not receive a properly completed and timely election form, the holder of those shares will be deemed not to have made an election. Under the merger agreement, non-electing shares will be deemed to have elected to receive share consideration, and will be subject to the proration procedures provided in the merger agreement as if they were share electing shares. See “The Merger AgreementConsideration to Pfizer Stockholders.”

 

Q: WHEN WILL THE MERGER BE CONSUMMATED?

 

A: The parties currently expect that the merger will be consummated in the second half of 2016, subject to certain conditions. Neither Pfizer nor Allergan can predict, however, the actual date on which the merger will be consummated, or whether it will be consummated, because the merger is subject to factors beyond each company’s control, including whether or when the required regulatory approvals will be received. See “The Merger Agreement—Conditions to the Consummation of the Merger” and “The Transactions—Regulatory Approvals Required for the Merger.”

 

Q: WHAT ARE THE CONDITIONS TO THE CONSUMMATION OF THE MERGER?

 

A: In addition to approval of the Pfizer merger proposal by Pfizer stockholders and approval of the Allergan required proposals by Allergan shareholders, consummation of the merger and the other transactions contemplated by the merger agreement is subject to the satisfaction or waiver of a number of other conditions, including the receipt of certain regulatory clearances and the closing of the Allergan divestiture transaction. See “The Merger Agreement—Conditions to the Consummation of the Merger.”

 

Q: WHAT EFFECT WILL THE MERGER HAVE ON PFIZER AND ALLERGAN?

 

A: Upon consummation of the merger, Pfizer will cease to be a publicly traded company. Merger Sub will merge with and into Pfizer, with Pfizer surviving the merger as a wholly owned subsidiary of the combined company. Following consummation of the merger, the registration of Pfizer common stock and the related reporting obligations under the Exchange Act will be terminated. In addition, following consummation of the merger, Pfizer common stock will no longer be listed on the NYSE or any other stock exchange or quotation system. Although Pfizer stockholders will no longer be stockholders of Pfizer, if you receive share consideration in the merger, you will have an interest in both Pfizer and Allergan through your interest in the combined company.

Allergan ordinary shares, which will be combined company ordinary shares as of consummation of the merger, will continue to be registered and subject to reporting obligations under the Exchange Act following consummation of the merger. In connection with the consummation of the merger, Allergan will become the parent entity of the combined company and, subject to the approval of the Allergan name change proposal, will be renamed “Pfizer plc.” Such combined company ordinary shares will also continue to be listed on the NYSE, however they will trade under the symbol “PFE” following the merger. If you are an Allergan shareholder, following the merger, you will have an interest in both Pfizer and Allergan through your interest in the combined company.

 

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Q: WHO IS ENTITLED TO VOTE?

 

A: Pfizer: The Pfizer board of directors has fixed the close of business on [          ], 2016 as the record date of the Pfizer special meeting (the “Pfizer record date”). If you were a holder of record of shares of Pfizer common stock or Pfizer preferred shares as of the close of business on [          ], 2016, you are entitled to receive notice of and to vote at the Pfizer special meeting or any adjournments or postponements thereof.

Allergan: The Allergan board of directors has fixed the close of business on [          ], 2016 as the record date of the Allergan EGM (the “Allergan record date”). If you were a holder of record of Allergan ordinary shares as of the close of business on [          ], 2016, you are entitled to receive notice of and to vote at the Allergan EGM or any adjournments or postponements thereof.

 

Q: WHAT ARE PFIZER STOCKHOLDERS BEING ASKED TO VOTE ON?

 

A: At the Pfizer special meeting, Pfizer stockholders will be asked to vote on the following proposals:

 

  1. the adoption of the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus;

 

  2. the adjournment of the Pfizer special meeting to another date and place if necessary or appropriate to solicit additional votes in favor of the Pfizer merger proposal; and

 

  3. on a non-binding, advisory basis, the compensation that may become payable to Pfizer’s named executive officers that is based on or otherwise relates to the merger, as described in “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger” .

Approval of the Pfizer merger proposal is required for the consummation of the merger. Approval of the Pfizer adjournment proposal and the Pfizer advisory compensation proposal is not required for the consummation of the merger. The merger agreement provides that the Pfizer special meeting will not be adjourned or postponed without the mutual agreement of Pfizer and Allergan.

No other matters are intended to be brought before the Pfizer special meeting by Pfizer.

 

Q: WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE PFIZER SPECIAL MEETING?

 

A: The Pfizer Merger Proposal: Approval of the Pfizer merger proposal is a condition to the consummation of the merger and requires the affirmative vote of the holders of a majority of the outstanding voting stock of Pfizer. For the Pfizer merger proposal, an abstention or a failure to vote will have the same effect as a vote cast “AGAINST” this proposal. However, if you are a Pfizer employee holding Pfizer shares in a savings plan and/or Grantor Trust and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your plan administrator and/or trustee on how to vote on the Pfizer proposals, your shares will be voted in accordance with the terms of your plan and/or Grantor Trust.

The Pfizer Adjournment Proposal: Approval of the Pfizer adjournment proposal requires that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal. For the Pfizer adjournment proposal, an abstention or a failure to vote will not be counted as a vote in favor of or against this proposal. However, if you are a Pfizer employee holding Pfizer shares in a savings plan and/or Grantor Trust and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your plan administrator and/or trustee on how to vote on the Pfizer proposals, your shares will be voted in accordance with the terms of your plan and/or Grantor Trust. Notwithstanding the outcome of the Pfizer adjournment proposal vote, the Pfizer special meeting will not be adjourned or postponed without the mutual agreement of Pfizer and Allergan.

 

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The Pfizer Advisory Compensation Proposal: Approval of the Pfizer advisory compensation proposal requires that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal. For the Pfizer advisory compensation proposal, an abstention or a failure to vote will not be counted as a vote in favor of or against this proposal. However, if you are a Pfizer employee holding Pfizer shares in a savings plan and/or Grantor Trust and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your plan administrator and/or trustee on how to vote on the Pfizer proposals, your shares will be voted in accordance with the terms of your plan and/or Grantor Trust.

 

Q: HOW DOES THE PFIZER BOARD OF DIRECTORS RECOMMEND PFIZER STOCKHOLDERS VOTE?

 

A: The Pfizer board of directors has determined that the merger agreement and the transactions contemplated thereby, including, without limitation, the merger, are advisable and fair to, and in the best interests of, Pfizer and its stockholders, and has approved and adopted the merger agreement and the transactions contemplated thereby. The Pfizer board of directors recommends that the Pfizer stockholders vote their shares of Pfizer common stock and Pfizer preferred shares:

 

  1. FOR” the Pfizer merger proposal;

 

  2. FOR” the Pfizer adjournment proposal; and

 

  3. FOR” the Pfizer advisory compensation proposal.

 

Q: WHY ARE PFIZER STOCKHOLDERS BEING ASKED TO APPROVE ON A NON-BINDING BASIS THE PFIZER ADVISORY COMPENSATION PROPOSAL?

 

A: The rules promulgated by the SEC under Section 14A of the Exchange Act require Pfizer to submit a proposal to the Pfizer stockholders for a non-binding, advisory vote to approve the compensation that may be paid or become payable to Pfizer’s named executive officers in connection with the merger. For more information regarding such payments, see “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger.”

 

Q: WHAT HAPPENS IF PFIZER STOCKHOLDERS DO NOT APPROVE ON A NON-BINDING BASIS THE ADVISORY COMPENSATION PROPOSAL?

 

A; The vote on the Pfizer advisory compensation proposal is a vote separate and apart from the vote on the Pfizer merger proposal. Accordingly, Pfizer stockholders may vote in favor of the Pfizer merger proposal and not in favor of the Pfizer advisory compensation proposal, or vice versa. Approval of the Pfizer advisory compensation proposal is not a condition to consummation of the merger, and it is advisory in nature only, meaning it will not be binding on Pfizer or the combined company. Accordingly, if the merger is consummated, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Pfizer stockholders.

 

Q: ARE THERE ANY RISKS RELATING TO THE MERGER, ALLERGAN’S BUSINESS OR THE COMBINED COMPANY THAT PFIZER STOCKHOLDERS SHOULD CONSIDER IN DECIDING WHETHER TO VOTE ON THE PROPOSALS?

 

A: Yes. Before making any decision on whether and how to vote, Pfizer stockholders are urged to read carefully and in its entirety the information contained in “Risk Factors.” Pfizer stockholders should also read and carefully consider the risk factors of Pfizer and Allergan and the other risk factors that are incorporated by reference into this joint proxy statement/prospectus.

 

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Q: DO ANY OF THE PFIZER DIRECTORS OR EXECUTIVE OFFICERS HAVE INTERESTS IN THE MERGER THAT MAY DIFFER FROM THOSE OF PFIZER STOCKHOLDERS?

 

A: Yes. The Pfizer directors and executive officers have interests in the merger that are different from, or in addition to, their interests as Pfizer stockholders. See “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger.” The members of the Pfizer board of directors were aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending that Pfizer stockholders approve the adoption of the merger agreement.

 

Q: WHAT ARE ALLERGAN SHAREHOLDERS BEING ASKED TO VOTE ON?

 

A: At the Allergan EGM, Allergan shareholders will be asked to vote on the following proposals:

 

  1. the issuance of Allergan ordinary shares to stockholders of Pfizer in connection with the merger as contemplated by the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus;

 

  2. the sub-division of the Allergan ordinary shares whereby, immediately prior to the effective time, each existing Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares;

 

  3. the increase to the maximum number of directors of Allergan from 14 to 15 effective as of or prior to the effective time;

 

  4. the increase of the authorized share capital of Allergan from €40,000 and $101,000 to €40,000 and $[          ], respectively, effective as of or prior to the effective time;

 

  5. the change of name of the combined company from “Allergan plc” to “Pfizer plc” effective as of the effective time or as promptly as reasonably practicable thereafter;

 

  6. the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allergan’s share premium account immediately after the effective time, to allow the reserve resulting from the cancellation to be treated as additional profits available for distribution;

 

  7. the increase in nominal value of each Allergan ordinary share up to $0.00001 as of immediately following the Allergan share split and as of immediately prior to the effective time; and

 

  8. the adjournment of the Allergan EGM to another date and place if necessary or appropriate to solicit additional votes in favor of the Allergan proposals.

Under the NYSE rules, shareholder approval is required prior to the issuance of shares if the number of shares to be issued in a transaction equals 20% or more of the number of shares outstanding prior to the issuance. It is currently expected that the issuance of ordinary shares by Allergan pursuant to the merger agreement will result in the issuance of a number of ordinary shares in excess of 125% of the Allergan ordinary shares expected to be outstanding prior to the merger. Accordingly, Allergan shareholders are being asked to consider and vote on the issuance of Allergan ordinary shares pursuant to the merger agreement. Under Irish law, Allergan shareholders are required to approve the other Allergan proposals.

Allergan shareholders are not required to approve the adoption of the merger agreement under Irish law. Accordingly, Allergan shareholders are not being asked to vote on the merger or the adoption of the merger agreement.

Approval of each of the Allergan required proposals (the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal and the Allergan authorized share capital increase proposal) is required for consummation of the merger.

 

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Approval of each of the Allergan name change proposal, the Allergan distributable reserves creation proposal, the Allergan renominalisation proposal and the Allergan adjournment proposal is not required for consummation of the merger.

If the Allergan name change proposal is not approved, the name of the combined company will be “Allergan plc,” but, following the effective time, the combined company is expected to do business as “Pfizer” and to ask combined company shareholders to approve the change of name of the combined company to “Pfizer plc.” If the Allergan distributable reserves creation proposal is not approved, the combined company will not create additional profits available for distribution from the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allegan’s share premium account resulting from the merger in order to make dividends and distributions in respect of, and repurchase, combined company ordinary shares from such distributable reserves, but, following the effective time, is expected to ask combined company shareholders to approve the creation of such distributable reserves.

The merger agreement provides that the Allergan EGM will not be adjourned or postponed without the mutual agreement of Pfizer and Allergan.

No other matters are intended to be brought before the Allergan EGM by Allergan.

 

Q: WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE ALLERGAN EXTRAORDINARY GENERAL MEETING?

 

A: The Allergan Share Issuance Proposal: The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan share issuance proposal at the Allergan EGM is required to approve the Allergan share issuance proposal.

The Allergan Share Split Proposal: The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan share split proposal at the Allergan EGM is required to approve the Allergan share split proposal.

The Allergan Board Increase Proposal: The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan board increase proposal at the Allergan EGM is required to approve the Allergan board increase proposal.

The Allergan Authorized Share Capital Increase Proposal: The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan authorized share capital increase proposal at the Allergan EGM is required to approve the Allergan authorized share capital increase proposal.

The Allergan Name Change Proposal: The affirmative vote of 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan name change proposal at the Allergan EGM is required to approve the Allergan name change proposal.

The Allergan Distributable Reserves Creation Proposal: The affirmative vote of 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan distributable reserves creation proposal at the Allergan EGM is required to approve the Allergan distributable reserves creation proposal.

The Allergan Renominalisation Proposal: The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan renominalisation proposal at the Allergan EGM is required to approve the Allergan renominalisation proposal.

The Allergan Adjournment Proposal: The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan adjournment proposal at the Allergan EGM is required to approve the Allergan adjournment proposal. Notwithstanding the outcome of the Allergan adjournment proposal vote, the Allergan EGM will not be adjourned or postponed without the mutual agreement of Pfizer and Allergan.

 

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Because the vote required to approve each of the Allergan proposals is based on votes properly cast at the Allergan EGM, and because abstentions are not considered votes properly cast, abstentions, along with failures to vote, will have no effect on such proposals.

 

Q: HOW DOES THE ALLERGAN BOARD OF DIRECTORS RECOMMEND ALLERGAN SHAREHOLDERS VOTE?

 

A: The Allergan board of directors has approved the merger agreement and determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are in the best interests of Allergan and its shareholders. The Allergan board of directors recommends that the Allergan shareholders vote their Allergan ordinary shares:

 

  1. FOR” the Allergan share issuance proposal;

 

  2. FOR” the Allergan share split proposal;

 

  3. FOR” the Allergan board increase proposal;

 

  4. FOR” the Allergan authorized share capital increase proposal;

 

  5. FOR” the Allergan name change proposal;

 

  6. FOR” the Allergan distributable reserves creation proposal;

 

  7. FOR” the Allergan renominalisation proposal; and

 

  8. FOR” the Allergan adjournment proposal.

 

Q: WHY ARE ALLERGAN SHAREHOLDERS BEING ASKED TO APPROVE THE ALLERGAN DISTRIBUTABLE RESERVES CREATION PROPOSAL?

 

A: Under Irish law, dividends may be paid (and share repurchases and redemptions must generally be funded) only out of “distributable reserves.” Distributable reserves generally means accumulated realized profits less accumulated realized losses and includes reserves created by way of capital reduction. Shareholders of Allergan are therefore being asked to approve the creation of additional distributable reserves of the combined company (through the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allergan’s share premium account) in order to facilitate the combined company’s ability to pay dividends (and repurchase or redeem shares) after the merger. Shareholder approval of the Allergan distributable reserves creation proposal is not a guarantee that if the merger occurs, the combined company will pay dividends or make share repurchases at any time in the future.

The approval of the Allergan distributable reserves creation proposal is not a condition to the consummation of the transaction. Accordingly, if stockholders of Pfizer approve the Pfizer merger proposal and shareholders of Allergan approve the Allergan required proposals, but shareholders of Allergan do not approve the Allergan distributable reserves creation proposal, and the merger is consummated, the combined company may not have sufficient distributable reserves to pay dividends (or to repurchase or redeem shares) following the transaction unless and until the combined company otherwise accumulates distributable reserves. In addition, the creation of additional distributable reserves of the combined company requires the approval of the Irish High Court. Although the combined company is not aware of any reason why the Irish High Court would not approve the creation of additional distributable reserves, the issuance of the required order is a matter for the discretion of the Irish High Court. See “Risk Factors.”

 

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Q: ARE THERE ANY RISKS RELATING TO THE MERGER, PFIZER’S BUSINESS OR THE COMBINED COMPANY THAT ALLERGAN SHAREHOLDERS SHOULD CONSIDER IN DECIDING WHETHER TO VOTE ON THE PROPOSALS?

 

A: Yes. Before making any decision on whether and how to vote, Allergan shareholders are urged to read carefully and in its entirety the information contained in “Risk Factors.” Allergan shareholders should also read and carefully consider the risk factors of Pfizer and Allergan and the other risk factors that are incorporated by reference into this joint proxy statement/prospectus.

 

Q: DO ANY OF THE ALLERGAN DIRECTORS OR EXECUTIVE OFFICERS HAVE INTERESTS IN THE MERGER THAT MAY DIFFER FROM THOSE OF ALLERGAN SHAREHOLDERS?

 

A: Yes. The Allergan directors and executive officers have interests in the merger that are different from, or in addition to, their interests as Allergan shareholders. See “The Transactions—Interests of the Allergan Directors and Executive Officers in the Merger.” The members of the Allergan board of directors were aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending that Allergan shareholders approve the Allergan proposals.

 

Q: WHAT DO I NEED TO DO NOW?

 

A: After carefully reading and considering the information contained in this joint proxy statement/prospectus, please submit your proxy or voting instruction card for your Pfizer or Allergan shares, as applicable, as soon as possible so that your shares will be represented at your respective company’s meeting of stockholders or shareholders. Please follow the instructions set forth on the proxy card or on the voting instruction card provided by the record holder if your shares are held in “street name” through your broker, bank or other nominee.

 

Q: HOW DO I VOTE?

 

A: If you are a stockholder of record of Pfizer as of the Pfizer record date, or a shareholder of record of Allergan as of the Allergan record date, you may submit your proxy before the Pfizer special meeting or the Allergan EGM, respectively, in one of the following ways:

 

  1. visit the website shown on your proxy card to submit your proxy via the Internet;

 

  2. call the toll-free number for telephone proxy submission shown on your proxy card; or

 

  3. complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

You may also cast your vote in person at your respective company’s meeting of stockholders or shareholders.

If you are a shareholder of record of Allergan and you choose to submit your proxy by telephone by calling the toll-free number on your proxy card, your use of that telephone system and in particular the entry of your pin number/other unique identifier, will be deemed to constitute your appointment, in writing and under hand, and for all purposes of the Irish Companies Act, 2014, of the Chairman as your proxy to vote your shares on your behalf in accordance with your telephone instructions.

If your shares are held in “street name,” through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. “Street name” stockholders or shareholders who wish to vote in person at the meeting will need to obtain a proxy form from their broker, bank or other nominee.

 

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Q: HOW MANY VOTES DO I HAVE?

 

A: Pfizer: You are entitled to one vote for each share of Pfizer common stock and 2,574.87 votes for each Pfizer preferred share that you owned as of the close of business on the Pfizer record date. As of the close of business on the Pfizer record date, [          ] shares of Pfizer common stock and [          ] Pfizer preferred shares were outstanding and entitled to vote at the Pfizer special meeting.

Allergan: You are entitled to one vote for each Allergan ordinary share that you owned as of the close of business on the Allergan record date. Allergan preferred shares are not entitled to vote on the Allergan proposals. As of the close of business on the Allergan record date, [          ] Allergan ordinary shares were outstanding and entitled to vote at the Allergan EGM.

 

Q: WHAT IF I SELL MY SHARES OF PFIZER COMMON STOCK OR PFIZER PREFERRED SHARES BEFORE THE PFIZER SPECIAL MEETING, OR I SELL MY ALLERGAN ORDINARY SHARES BEFORE THE ALLERGAN EGM?

 

A: Pfizer: If you transfer your shares of Pfizer common stock or your Pfizer preferred shares after the Pfizer record date but before the Pfizer special meeting, you will, unless you provide the transferee of your shares with a proxy, retain your right to vote at the Pfizer special meeting, but will have transferred the right to receive the merger consideration. In order to receive the share consideration, the cash consideration or the preferred stock liquidation amount, as applicable, as a result of the merger, you must hold your shares through the effective time.

Allergan: If you transfer your Allergan ordinary shares after the Allergan record date but before the Allergan EGM, you will, unless you provide the transferee of your shares with a proxy, retain your right to vote at the Allergan EGM, but will have transferred the right to receive 11.3 combined company ordinary shares for each Allergan ordinary share by virtue of the Allergan share split. In order to receive combined company ordinary shares as a result of the Allergan share split and the consummation of the merger, you must hold your shares through the effective time.

 

Q: SHOULD I SEND IN MY PFIZER STOCK CERTIFICATES NOW?

 

A: No. To the extent Pfizer stockholders have certificated shares, such Pfizer stockholders should keep their existing stock certificates at this time. If Pfizer stockholders intend to make an election, they must send in any certificates that they hold at the time they send in the election form. After the merger is consummated, Pfizer stockholders will receive from the exchange agent a letter of transmittal and written instructions for exchanging their stock certificates for the share consideration and/or the cash consideration. Pfizer stockholders who have not previously sent in their certificates should send in their certificates at such time.

 

Q: WHO IS THE EXCHANGE AGENT FOR THE MERGER?

 

A: [          ] is the exchange agent for the merger.

 

Q: SHOULD I SEND IN MY ALLERGAN ORDINARY SHARE CERTIFICATES NOW?

 

A: No. To the extent Allergan shareholders have certificated shares, such Allergan shareholders should keep their existing stock certificates at this time. After the effective date of the Allergan share split, Allergan shareholders will receive from the transfer agent of the combined company a letter of transmittal and written instructions for exchanging their Allergan ordinary share certificates for the combined company ordinary shares that they are entitled to receive as a result of the Allergan share split. Allergan shareholders should send in their certificates at such time.

 

Q: WHO IS THE TRANSFER AGENT FOR THE COMBINED COMPANY?

 

A: [          ] is the transfer agent for the combined company.

 

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Q: WHEN AND WHERE ARE THE PFIZER SPECIAL MEETING OF STOCKHOLDERS AND THE ALLERGAN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS?

 

A: Pfizer: The special meeting of Pfizer stockholders will be held at [          ], at [          ] [a/p].m. (local time), on [          ], 2016.

Allergan: The Allergan EGM will be held at [          ], at [          ] [a/p].m. (local time), on [          ], 2016.

 

Q: WHAT CONSTITUTES A QUORUM?

 

A: Pfizer: The presence of the holders of stock representing a majority of the voting power of all shares of Pfizer stock issued and outstanding and entitled to vote at the Pfizer special meeting, in person or represented by proxy, is necessary to constitute a quorum. Abstentions will be counted as present and entitled to vote for purposes of determining a quorum. Broker non-votes (shares of Pfizer common stock or Pfizer preferred shares held by brokers, banks or nominees that are present in person or by proxy at the Pfizer special meeting but with respect to which the broker or other stockholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will not be counted as present for purposes of determining a quorum.

Allergan: The presence of two or more persons holding or representing by proxy (whether or not such holder actually exercises his voting rights in whole, in part or at all) more than 50% of the total issued voting rights of Allergan’s shares is necessary to constitute a quorum. Abstentions will be counted as present for purposes of determining whether there is a quorum. Broker non-votes (Allergan ordinary shares held by brokers, banks or nominees that are present in person or by proxy at the Allergan EGM but with respect to which the broker or other shareholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will also be counted as present for purposes of determining a quorum. As brokers do not have discretionary authority to vote on the Allergan proposals, it is expected that there will be no broker non-votes.

 

Q: IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?

 

A: If your shares are held in “street name” in a stock brokerage account or by a bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to Pfizer or Allergan or by voting in person at your respective company’s special meeting unless you obtain a “legal proxy,” which you must obtain from your broker, bank or other nominee.

Under the rules of the NYSE, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the NYSE determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the Pfizer special meeting and the Allergan EGM will be “non-routine” matters.

If you are a Pfizer stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

 

  1. your broker, bank or other nominee may not vote your shares on the Pfizer merger proposal, which will have the same effect as a vote “AGAINST” this proposal;

 

  2. your broker, bank or other nominee may not vote your shares on the Pfizer adjournment proposal, which will have no effect on the vote count for this proposal (and your shares will not be counted towards determining whether a quorum is present); and

 

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  3. your broker, bank or other nominee may not vote your shares on the Pfizer advisory compensation proposal, which will have no effect on the vote count for this proposal (and your shares will not be counted towards determining whether a quorum is present).

If you are an Allergan shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

 

  1. your broker, bank or other nominee may not vote your shares on the Allergan share issuance proposal, which will have no effect on this proposal (but your shares will be counted towards determining whether a quorum is present);

 

  2. your broker, bank or other nominee may not vote your shares on the Allergan share split proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present);

 

  3. your broker, bank or other nominee may not vote your shares on the Allergan board increase proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present);

 

  4. your broker, bank or other nominee may not vote your shares on the Allergan authorized share capital increase proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present);

 

  5. your broker, bank or other nominee may not vote your shares on the Allergan name change proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present);

 

  6. your broker, bank or other nominee may not vote your shares on the Allergan distributable reserves creation proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present);

 

  7. your broker, bank or other nominee may not vote your shares on the Allergan renominalisation proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present); and

 

  8. your broker, bank or other nominee may not vote your shares on the Allergan adjournment proposal, which will have no effect on the vote count for this proposal (but your shares will be counted towards determining whether a quorum is present).

 

Q: HOW DO I VOTE SHARES HELD OR ACQUIRED THROUGH AN EMPLOYEE PROGRAM?

 

A: Pfizer: If you are a Pfizer employee, you will receive a proxy card or voting instruction card for the following shares of Pfizer common stock or Pfizer preferred shares that you hold in the following plans, if applicable:

 

    shares held in a Pfizer, Wyeth and/or Hospira savings plan; and/or

 

    shares held in Grantor Trusts for deferred stock received by certain Pfizer and legacy Wyeth employees.

Your proxy card will serve as a voting instruction card for the applicable savings plan and/or Grantor Trust.

See the Q&A above entitled “How do I vote?” for further information on how to vote such shares.

If you do not vote your Pfizer shares or specify your voting instructions on your proxy or voting instruction card, the administrator of the applicable savings plan, and/or the trustee of a Grantor Trust, as the case may be, will vote your shares in accordance with the terms of your plan and/or Grantor Trust. To allow sufficient time for voting by the administrator of the applicable savings plan and/or the trustee of a Grantor Trust, your voting instructions must be received by 10:00 a.m. (U.S. Eastern Time), on [    ], 2016.

 

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If you hold Pfizer shares through any other Pfizer plan, you will receive voting instructions from that plan’s administrator, as applicable.

If your Pfizer shares are held through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares.

Allergan: If you are an Allergan shareholder of record, the shares listed on your proxy card will include the following shares that you hold in the following plans, if applicable:

 

    shares held in the Actavis, Inc. 401(k) Plan;

 

    shares held in the Forest Tosara Share Participation Scheme;

 

    shares held in the Allergan, Inc. Savings and Investment Plan;

 

    shares held in the Allergan Irish Share Participation Scheme;

 

    shares held in the Allergan, Inc. Dividend Reinvestment Plan;

 

    shares held in the Allergan, Inc. Savings Plan Canada; and

 

    shares held in the Allergan, Inc. Deferred Directors’ Fee Program.

If you do not vote your Allergan ordinary shares or specify your voting instructions on your proxy card, the administrator or trustee of the applicable Allergan benefit plan will vote your shares in accordance with the terms of the relevant Allergan benefit plan.

If your Allergan ordinary shares are held through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares.

 

Q: WHAT IF I DO NOT VOTE?

 

A: If you are a Pfizer stockholder and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your broker, bank or other nominee how to vote on the merger proposal, this will have the same effect as a vote cast against the merger proposal and will not count towards determining whether a quorum is present.

If you are a Pfizer stockholder and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your broker, bank or other nominee how to vote on the Pfizer adjournment proposal or the Pfizer advisory compensation proposal, this will have no effect on the vote count for such proposal, and will not count towards determining whether a quorum is present.

However, if you are a Pfizer employee holding Pfizer shares in a savings plan and/or Grantor Trust and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your plan administrator and/or trustee on how to vote on the Pfizer proposals, your shares will be voted in accordance with the terms of your plan and/or Grantor Trust.

If you are an Allergan shareholder and you fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your broker, bank or other nominee how to vote on any of the Allergan proposals, this will have no effect on the vote count for such proposal, but in the case of broker no-votes only will count towards determining whether a quorum is present.

If you do not vote your Allergan ordinary shares or specify your voting instructions on your proxy card, the administrator or trustee of the applicable Allergan benefit plan will vote your shares in accordance with the terms of the relevant Allergan benefit plan.

An abstention occurs when a stockholder or shareholder attends the applicable meeting in person and does not vote or returns a proxy or voting instruction card with an “abstain” vote. If you respond with an “abstain” vote on the merger proposal, this will have the same effect as a vote cast against the merger proposal, but will count towards determining whether a quorum is present. If you respond with an “abstain”

 

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vote on the Pfizer adjournment proposal or the Pfizer advisory compensation proposal, this will have no effect on the vote count for such proposal, but will count towards determining whether a quorum is present. If you respond with an “abstain” vote on any of the Allergan proposals, this will have no effect on the vote count for any such proposal, but will count towards determining whether a quorum is present.

 

Q: WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

If you sign and return your proxy or voting instruction card without indicating how to vote on any particular proposal (and you do not change your vote after delivering your proxy or voting instruction card), the shares of Pfizer common stock and Pfizer preferred shares represented by your proxy or voting instruction card will be voted for each Pfizer proposal in accordance with the recommendation of the Pfizer board of directors or the Allergan ordinary shares represented by your proxy or voting instruction card will be voted for each Allergan proposal in accordance with the recommendation of the Allergan board of directors.

 

Q: MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING INSTRUCTION CARD?

 

A: Pfizer: As a Pfizer stockholder, you may change your vote or revoke a proxy before the Pfizer special meeting. If you are a Pfizer stockholder of record, you can do this by:

 

    sending a written notice of revocation that is received by Pfizer prior to 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting, stating that you would like to revoke your proxy, to:

Corporate Secretary

Pfizer Inc.

235 East 42nd Street

New York, New York 10017-5755

 

    submitting a new proxy bearing a later date (by Internet, telephone or mail) that is received by Pfizer prior to 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting; or

 

    attending the Pfizer special meeting and voting in person.

Attending the Pfizer special meeting will not automatically revoke a proxy that was submitted through the Internet or by telephone or mail. If you wish to change your vote at the Pfizer special meeting, you must vote by ballot at such meeting to change your vote.

If you are a Pfizer stockholder whose shares are held in “street name” by a broker, bank or other nominee, you may revoke your proxy and vote your shares in person at the Pfizer special meeting only in accordance with applicable rules and procedures as employed by such broker, bank or other nominee. If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

If you hold shares indirectly in the Pfizer benefits plans, you should contact the administrator and/or trustee of your plan, as applicable, to change your vote of the shares allocated to your benefit plan.

 

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Allergan: As an Allergan shareholder, you may change your vote or revoke a proxy before the Allergan EGM. If you are an Allergan shareholder of record, you can do this by:

 

    delivering written notice to the company secretary of Allergan that is received prior to the commencement of the Allergan EGM stating that you have revoked your proxy to the company secretary of Allergan at the following address:

Allergan plc

Clonshaugh Business and Technology Park

Coolock, Dublin, D17 E400, Ireland

Attention: Company Secretary

 

    submitting a new proxy again by telephone or over the Internet prior to the commencement of the Allergan EGM;

 

    signing and returning by mail a proxy card with a later date so that it is received by Allergan prior to the commencement of the Allergan EGM; or

 

    attending the Allergan EGM and voting by ballot in person.

Attending the Allergan EGM will not automatically revoke a proxy that was submitted through the Internet or by telephone or mail. If you wish to change your vote at the Allergan EGM, you must vote by ballot at such meeting to change your vote.

If you are an Allergan shareholder whose shares are held in “street name” by a broker, bank or other nominee, you may revoke your proxy and vote your shares in person at the Allergan EGM only in accordance with applicable rules and procedures as employed by such broker, bank or other nominee. If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your voting instructions.

If you hold shares indirectly in the Allergan benefit plans, you should contact the administrator and/or trustee of your plan, as applicable, to change your vote of the shares allocated to you under the relevant Allergan benefit plan, in accordance with the terms of such benefit plan.

 

Q: WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

 

A: Pfizer stockholders and Allergan shareholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold Pfizer common stock or Pfizer preferred shares, or Allergan ordinary shares, in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of Pfizer common stock or Pfizer preferred shares, or Allergan ordinary shares, and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a holder of both Pfizer common stock or Pfizer preferred shares, and Allergan ordinary shares, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus to ensure that you vote every share of Pfizer common stock, every Pfizer preferred share and/or every Allergan ordinary share, that you own.

 

Q: WHAT IF I HOLD SHARES IN BOTH PFIZER AND ALLERGAN?

 

A: If you are both a stockholder of Pfizer and a shareholder of Allergan, you will receive two separate packages of proxy materials. A vote cast as a Pfizer stockholder will not count as a vote cast as an Allergan shareholder, and a vote cast as an Allergan shareholder will not count as a vote cast as a Pfizer stockholder. Therefore, please separately submit a proxy or voting instruction card for each of your shares of Pfizer common stock and/or Pfizer preferred shares, and your Allergan ordinary shares.

 

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Q: WHERE CAN I FIND THE VOTING RESULTS OF THE PFIZER SPECIAL MEETING AND THE ALLERGAN EGM?

 

A: Preliminary voting results will be announced at the Pfizer special meeting and the Allergan EGM and will be set forth in press releases that Pfizer and Allergan intend to issue after the Pfizer special meeting and the Allergan EGM, respectively. Final voting results for the Pfizer special meeting and the Allergan EGM are expected to be published in Current Reports on Form 8-K to be filed by Pfizer and Allergan with the SEC within four business days after the Pfizer special meeting and the Allergan EGM, as applicable.

 

Q: ARE PFIZER STOCKHOLDERS ENTITLED TO APPRAISAL RIGHTS?

 

A: Pfizer stockholders may seek appraisal rights in connection with the merger to the extent such rights are available under Delaware law and, if such rights are perfected, such stockholders will be entitled to receive payment of the appraised value of such shares in accordance with Delaware law instead of receiving the merger consideration payable in respect of such shares in the merger. In order to preserve any appraisal rights that a Pfizer stockholder may have, in addition to otherwise complying with the applicable provisions of Delaware law, such Pfizer stockholder must not vote in favor of the Pfizer merger proposal, and must submit a written demand for appraisal prior to the vote at the Pfizer special meeting.

 

Q: ARE ALLERGAN SHAREHOLDERS ENTITLED TO APPRAISAL RIGHTS?

 

A: No. Allergan shareholders are not entitled to appraisal rights under Irish law in connection with the merger or the other transactions contemplated by the merger agreement.

 

Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION TO HOLDERS OF PFIZER COMMON STOCK?

 

A: For U.S. federal income tax purposes, the receipt of combined company ordinary shares or a combination of combined company ordinary shares and cash in exchange for Pfizer common stock pursuant to the merger will be treated as a taxable transaction. U.S. holders of Pfizer common stock will generally recognize gain, but not loss, equal to the difference, if any, between (i) the sum of (1) the fair market value of the combined company ordinary shares received by such holder in the merger, and (2) the amount of any cash received by such holder in the merger, including any cash received in lieu of fractional combined company ordinary shares, and (ii) the holder’s adjusted tax basis in the Pfizer common stock surrendered in the exchange. Such gain generally will be long-term capital gain if the U.S. holder’s holding period of the Pfizer common stock surrendered exceeds one year at the effective time.

Pfizer stockholders should consult their tax advisors as to the particular consequences to them of the merger, including the effect of U.S. federal, state and local tax laws and non-U.S. tax laws. For a more detailed discussion of the U.S. federal income tax consequences of the merger, see “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger to Holders of Pfizer Common Stock.

 

Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION TO ALLERGAN SHAREHOLDERS?

 

A: Except with respect to cash received in lieu of fractional shares, a holder of Allergan ordinary shares generally should not recognize gain or loss upon such holder’s exchange of its Allergan ordinary shares for the combined company ordinary shares received pursuant to the Allergan share split.

Allergan shareholders should consult their tax advisors as to the particular tax consequences to them of the Allergan share split, including the effect of U.S. federal, state and local tax laws and non-U.S. tax laws. For

 

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a more detailed discussion of the U.S. federal income tax consequences of the Allergan share split, see “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Allergan Share Split to Allergan Shareholders.”

 

Q: WHAT HAPPENS IF THE MERGER IS NOT CONSUMMATED?

 

A: If the merger is not consummated, Pfizer stockholders will not receive any consideration for their shares of Pfizer common stock or Pfizer preferred shares and the Allergan share split will not occur in respect of the Allergan ordinary shares. Instead, Pfizer and Allergan will remain independent public companies and their shares of common stock or ordinary shares, respectively, will continue to be listed and traded separately on the NYSE. Under specified circumstances, Pfizer or Allergan (or its wholly owned subsidiary) may be required to pay to, or be entitled to receive from, the other party a fee or reimbursement of expenses with respect to the termination of the merger agreement, as described under “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.

 

Q: WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS OR VOTING?

 

A: If you have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact the proxy solicitation agent for the company in which you hold shares.

Pfizer stockholders should contact [                    ], the proxy solicitation agent for Pfizer, at [          ]. Pfizer stockholders may call [          ] collect at [          ] or toll-free at [          ].

Allergan shareholders should contact [                    ], the proxy solicitation agent for Allergan, at [          ]. Allergan shareholders may call [          ] collect at [          ] or toll-free at [          ].

 

Q: WHERE CAN I FIND MORE INFORMATION ABOUT PFIZER AND ALLERGAN?

 

A: You can find more information about Pfizer and Allergan from the various sources described under “Where You Can Find More Information.

 

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SUMMARY

This summary highlights selected information included in this joint proxy statement/prospectus. You should read carefully this entire joint proxy statement/prospectus and its Annexes and the other documents incorporated by reference into this joint proxy statement/prospectus, because the information in this section may not provide all of the information that might be important to you in determining how to vote. For a description of, and instructions as to how to obtain, additional information, see “Where You Can Find More Information.” Each item in this summary includes a page reference directing you to a more complete description of that item.

Transaction Structure (page [])

The terms and conditions of the merger are contained in the merger agreement which is attached to this joint proxy statement/prospectus as Annex A. You should read the merger agreement carefully as it is the legal document that governs the merger.

Under the terms of the merger agreement, the businesses of Pfizer and Allergan will be combined under a single company. The merger is structured as a “reverse merger,” in which the existing Allergan entity will become the parent entity of the combined company. Specifically, pursuant to the merger agreement, Merger Sub will merge with and into Pfizer with Pfizer surviving as a wholly owned subsidiary of Allergan. Subject to approval of the Allergan name change proposal by Allergan shareholders at the Allergan EGM and the approval of the Registrar of Companies in Ireland, Allergan will change its name to “Pfizer plc.” Following the merger, the Pfizer common stock will be delisted from the NYSE, the London Stock Exchange and the Swiss SIX Stock Exchange and deregistered under the Exchange Act and cease to be publicly traded. It is expected that the combined company ordinary shares will be traded on the NYSE under the current Pfizer ticker symbol “PFE.”

Consideration to Pfizer Stockholders (page [])

In the merger, each share of Pfizer common stock issued and outstanding immediately prior to the effective time (other than (i) such shares owned by Pfizer, Allergan or Merger Sub, (ii) dissenting shares, and (iii) such shares owned by subsidiaries of Pfizer immediately prior to the effective time) will be converted into the right to receive, at the election of the holder and subject to the proration procedures described in the merger agreement, either:

 

    one (1) combined company ordinary share; or

 

    an amount in cash, without interest, equal to the volume-weighted average price per share of Pfizer common stock on the NYSE for the trading day immediately preceding the date of consummation of the merger (determined as provided in the merger agreement).

Any holder of Pfizer common stock that does not elect to receive the cash consideration or the share consideration with respect to a share, or has not properly elected to receive any such consideration with respect to a share, will be deemed to have elected to receive the share consideration for such share.

It is anticipated that former Pfizer stockholders and Allergan shareholders will hold, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer preferred shares and Allergan preferred shares, approximately 56% and 44% respectively, of the issued and outstanding combined company ordinary shares immediately after consummation of the merger, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015.

In addition, in the merger, each Pfizer preferred share issued and outstanding immediately prior to the effective time will be converted into the number of shares of Pfizer common stock into which such Pfizer

 



 

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preferred share could have been converted at that time in accordance with the certificate of designations for the Pfizer preferred shares, and the holder of such Pfizer preferred share will be entitled to receive the common stock merger consideration (and participate in the election described above) in respect of the shares of Pfizer common stock into which such Pfizer preferred share was converted. As of the date of this joint proxy statement/prospectus, each Pfizer preferred share would have been converted into 2,574.87 shares of Pfizer common stock at the effective time had the effective time occurred on such date. In lieu of receiving such preferred stock merger consideration, holders of Pfizer preferred shares may instead elect to receive the preferred stock liquidation amount. As of the date of this joint proxy statement/prospectus, the liquidation preference plus accrued and unpaid dividends on the Pfizer preferred shares was $40,300 per share. Holders of Pfizer preferred shares who do not elect to receive the preferred stock liquidation amount will be entitled to elect between the share consideration and the cash consideration for each share of Pfizer common stock into which their Pfizer preferred shares are converted as of immediately prior to the effective time. The election of holders of Pfizer preferred shares to receive the preferred stock liquidation amount will not be taken into account in determining whether shares of Pfizer common stock (including Pfizer common stock in respect of Pfizer preferred shares converted as described above) will be subject to the proration procedures described in the merger agreement, which will be determined solely based on the amount of cash electing shares and share electing shares.

No holder of Pfizer common stock (including Pfizer common stock in respect of Pfizer preferred shares converted as described above) will be issued a fraction of a combined company ordinary share in the merger. Each holder of Pfizer common stock converted pursuant to the merger, who would otherwise have been entitled to receive a fraction of a combined company ordinary share (after aggregating all shares represented by the certificates and book-entry shares delivered by such holder), will instead receive the Pfizer fractional share consideration described in “Allergan Proposals—Allergan Share Split Proposal” and “The Merger Agreement—No Fractional Shares.”

Allergan Share Split and Name Change (page [])

The merger agreement provides that immediately prior to the consummation of the merger, Allergan shareholders will receive 11.3 combined company ordinary shares for each of their Allergan ordinary shares. Allergan shareholders will receive these shares by virtue of the Allergan share split.

No holder of Allergan ordinary shares will be issued fractional shares in the Allergan share split. Each holder of Allergan ordinary shares subject to the Allergan share split, who would otherwise have been entitled to receive a fraction of a combined company ordinary share (after aggregating all shares held by such holder), will receive the Allergan fractional share consideration as described in “The Merger Agreement—No Fractional Shares.”

Following the merger, subject to the approval of the Allergan name change proposal by Allergan shareholders at the Allergan EGM and the approval of the Registrar of Companies in Ireland, Allergan will effect a change of name so that the name of the combined company will be “Pfizer plc.”

As of the effective time of the Allergan share split, pursuant to and in accordance with the anti-dilution provisions of Allergan’s equity incentive plans, Allergan will appropriately and proportionately adjust the number of Allergan ordinary shares issuable in respect of outstanding equity incentive awards, the exercise price of all outstanding options, the total number of Allergan ordinary shares that may be the subject of future grants as well as the individual ordinary share limits under Allergan’s equity incentive plans.

Treatment of Pfizer Equity-Based Awards (page [])

Stock Options. As of the effective time, by virtue of the merger and without any action on the part of the holders thereof, each Pfizer stock option granted under any Pfizer equity plan, whether vested or unvested, that is

 



 

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outstanding and unexercised as of immediately prior to the effective time will be assumed by the combined company and will be converted into a combined company stock option to acquire a number of combined company ordinary shares (rounded down to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer stock option as of immediately prior to the effective time, at an exercise price per combined company ordinary share (rounded up to the nearest whole cent) equal to the exercise price per share of Pfizer common stock of such Pfizer stock option. Each Pfizer stock option that is an “incentive stock option” (as defined in Section 422 of the Code) will be adjusted in accordance with the foregoing in a manner consistent with the requirements of Section 424 of the Code. Each Pfizer stock option so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer stock option as of immediately prior to the effective time.

Total Shareholder Return Units. As of the effective time, by virtue of the merger and without any action on the part of the holders thereof, each Pfizer TSRU award granted under any Pfizer equity plan, whether vested or unvested, that is outstanding as of immediately prior to the effective time will be assumed by the combined company and will be converted into a combined company TSRU award denominated with respect to a number of combined company ordinary shares (rounded to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer TSRU award as of immediately prior to the effective time, at a grant price per combined company ordinary share (rounded to the nearest whole cent) equal to the grant price per share of Pfizer common stock of such Pfizer TSRU award. Each Pfizer TSRU award so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer TSRU award as of immediately prior to the effective time.

Restricted Stock Units. As of the effective time, by virtue of the merger and without any action on the part of the holders thereof, each Pfizer RSU award granted under any Pfizer equity plan, whether vested or unvested, that is outstanding as of immediately prior to the effective time will be assumed by the combined company and will be converted into a combined company RSU award with respect to a number of combined company ordinary shares (rounded to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer RSU award as of immediately prior to the effective time. Each Pfizer RSU award so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer RSU award as of immediately prior to the effective time.

Performance Stock Units. As of the effective time, each Pfizer PSU award granted under any Pfizer equity plan, whether vested or unvested, that is outstanding as of immediately prior to the effective time will, by virtue of the merger and without any action on the part of the holders thereof, be assumed by the combined company and will be converted into a combined company PSU award with respect to a number of combined company ordinary shares (rounded to the nearest whole share) equal to the number of shares of Pfizer common stock subject to such Pfizer PSU award as of immediately prior to the effective time. Each Pfizer PSU award so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Pfizer PSU award as of immediately prior to the effective time.

Deferred Awards. As of the effective time, each Pfizer deferred award will, by virtue of the merger and without any action on the part of the holders thereof, be deemed to be invested in combined company ordinary shares, with the number of combined company ordinary shares subject to the Pfizer deferred awards in a participant’s account under each Pfizer deferred compensation plan as of the effective time to be equal to the number of shares of Pfizer common stock subject to such Pfizer deferred awards as of immediately prior to the effective time. Following the effective time, the Pfizer deferred compensation plans will otherwise continue to have the same terms, including payment terms and investment options, that were applicable as of immediately prior to the effective time, with the Pfizer common stock fund to be replaced with a combined company ordinary shares fund.

 



 

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Change in Control. A “change of control” (or similar phrase) within the meaning of Pfizer’s 2014 Stock Plan, 2004 Stock Plan, as amended and restated, and 2001 Stock and Incentive Plan will occur or will be deemed to occur at the effective time for purposes of such Pfizer equity plans, and will trigger the commencement of the relevant double-trigger protection period thereunder. Prior to the effective time, Pfizer will pass resolutions, provide any notices, obtain any consents, make any amendments to the Pfizer equity plans, Pfizer equity awards and Pfizer deferred compensation plans and take such other actions as are necessary to provide for the treatment of the Pfizer equity awards and the Pfizer deferred awards as contemplated by the merger agreement.

Treatment of Allergan Equity-Based Awards (page [])

The merger will constitute a “change of control” for purposes of all outstanding Allergan equity-based awards, and will trigger the commencement of the relevant double-trigger protection period under such awards. Allergan or the combined company will take such actions as it determines are reasonably appropriate and necessary to provide for the treatment of the Allergan equity-based awards in accordance with the terms and conditions provided for in the applicable plan and the applicable award agreement, including adjusting such awards in connection with the Allergan share split or otherwise and the determination of achievement of any performance-based criteria in a manner consistent with the terms of any such plan and any applicable award agreement.

Comparative Per Share Market Price Information (page [])

Allergan ordinary shares are listed on the NYSE under the symbol “AGN.” Pfizer common stock is listed on the NYSE under the symbol “PFE.” The following table shows the closing prices of Allergan ordinary shares and Pfizer common stock as reported on the NYSE on November 20, 2015, the last full trading day before the public announcement of the signing of the merger agreement, and on [          ], 2016, the last practicable full trading day before the date of this joint proxy statement/prospectus.

 

     Allergan
Ordinary
Shares
     Pfizer
Common
Stock
 

November 20, 2015

   $ 312.46       $ 32.18   

[                     ], 2016

     [                  [            

Recommendation of the Pfizer Board of Directors and Pfizer’s Reasons for the Merger (page [])

At its meeting on November 22, 2015, the Pfizer board of directors determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and fair to, and in the best interests of, Pfizer and its stockholders, and approved and adopted the merger agreement and the transactions contemplated by the merger agreement. The Pfizer board of directors recommends that the Pfizer stockholders vote “FOR” the Pfizer merger proposal, “FOR” the Pfizer adjournment proposal and “FOR” the Pfizer advisory compensation proposal.

In arriving at this determination and recommendation, the Pfizer board of directors reviewed and discussed a significant amount of information, consulted with Pfizer’s management, legal advisors and financial advisors, and considered a number of factors in support of its decision to approve and adopt the merger agreement, including, among others, the expectation that the combined company will be able to leverage the respective strengths of each of Pfizer and Allergan to position itself as a leading global biopharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world; the belief that the merger will accelerate the growth potential of Pfizer’s innovative business and capabilities of Pfizer’s established products business; the view that the combined company will have a strong capital structure and credit profile; the fact that, upon consummation of the merger, Pfizer stockholders will own, on a fully

 



 

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diluted basis, approximately 56% of the equity of the combined company, which will provide the Pfizer stockholders with an opportunity to participate in the equity value of the combined company; the expectation that the combination could result in potential aggregate annual operating synergies of more than $2 billion; the combined company’s expected pro forma adjusted effective tax rate; the belief that the complementary cultures of the two companies will allow for a successful integration of Pfizer and Allergan following the consummation of the merger; and the opinions of each of Guggenheim Securities and Goldman Sachs as to the fairness, from a financial point of view, of the merger consideration to holders of shares of Pfizer common stock.

The Pfizer board of directors weighed these factors against a number of uncertainties, risks and potentially negative factors relevant to the merger, including, among others, the risk that the transaction might not be consummated in a timely manner or at all; the risk that a change in applicable U.S. tax law, or official interpretations thereof, could cause the combined company to be treated as a U.S. domestic corporation for U.S. federal income tax purposes following the consummation of the merger; the challenges inherent in the combination of two business enterprises of the size and scope of Pfizer and Allergan; the risks related to certain terms of the merger agreement (including the requirement that in certain circumstances Pfizer may become obligated to reimburse certain of Allergan’s expenses up to $400 million or pay a termination fee to Allergan of up to $3.5 billion); the risk that the merger may divert management focus and resources; and the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

At its meeting on November 22, 2015, the Pfizer board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the merger were outweighed by the potential benefits that it expected Pfizer and Pfizer stockholders would achieve as a result of the merger.

In considering the recommendation of the Pfizer board of directors, Pfizer stockholders should be aware that directors and executive officers of Pfizer have interests in the merger that are different from, or in addition to, any interests they might have as stockholders. See “—Interests of the Pfizer Directors and Executive Officers in the Merger.”

This discussion of the information and factors considered by the Pfizer board of directors includes the principal positive and negative factors considered by the Pfizer board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the Pfizer board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger, and the complexity of these matters, the Pfizer board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the transaction and to make its recommendations to Pfizer stockholders. Rather, the Pfizer board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Pfizer board of directors may have given differing weights to different factors.

For a more complete description of Pfizer’s reasons for entering into the merger agreement and the recommendations of the Pfizer board of directors, see “The Transactions—Recommendation of the Pfizer Board of Directors and Pfizer’s Reasons for the Merger.”

Opinions of Pfizer’s Financial Advisors (page [])

Opinion of Guggenheim Securities, LLC

Guggenheim Securities, LLC (“Guggenheim Securities”) delivered its opinion on November 22, 2015 to the Pfizer board of directors to the effect that, as of November 22, 2015 and based on the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken, the common stock merger consideration was fair, from a financial point of view, to the common stockholders of Pfizer. The full text of Guggenheim Securities’ written opinion, which is attached as Annex B to

 



 

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this joint proxy statement/prospectus and which you should read carefully and in its entirety, is subject to the assumptions, limitations, qualifications and other conditions contained in such opinion and is necessarily based on economic, capital markets and other conditions, and the information made available to Guggenheim Securities, as of the date of such opinion.

Guggenheim Securities’ opinion was provided to the Pfizer board of directors (in its capacity as such) for its information and assistance in connection with its evaluation of the common stock merger consideration, did not and does not constitute a recommendation to the Pfizer board of directors with respect to the merger and did not and does not constitute advice or a recommendation to any holder of Pfizer common stock or Allergan ordinary shares as to how to vote in connection with the merger or otherwise or, in the case of Pfizer stockholders, what form of consideration any such holder should elect to receive pursuant to the election mechanism described in the merger agreement (as to which Guggenheim Securities expresses no view or opinion). Guggenheim Securities’ opinion addressed and addresses only the fairness, from a financial point of view, of the common stock merger consideration to the common stockholders of Pfizer and did not and does not address any other term or aspect of the merger, the merger agreement or any other agreement, transaction document or instrument contemplated by the merger agreement or to be entered into or amended in connection with the merger. See “The Transactions—Opinions of Pfizer’s Financial Advisors—Opinion of Guggenheim Securities, LLC.”

Opinion of Goldman, Sachs & Co.

Goldman, Sachs & Co. (“Goldman Sachs” and, together with Guggenheim Securities, “Pfizer’s financial advisors”) delivered its opinion on November 22, 2015 to the Pfizer board of directors that, as of November 22, 2015 and based upon and subject to the factors and assumptions set forth therein, the common stock merger consideration to be paid to the holders (other than Allergan and its affiliates) of Pfizer common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders of Pfizer common stock.

The full text of the written opinion of Goldman Sachs dated November 22, 2015, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C to this joint proxy statement/prospectus and should be read carefully and in its entirety. Goldman Sachs provided its opinion for the information and assistance of the Pfizer board of directors in connection with its consideration of the merger. Goldman Sachs’ opinion is not a recommendation as to how any holder of shares of Pfizer common stock should vote or make any election with respect to such merger or any other matter. See “The Transactions—Opinions of Pfizer’s Financial Advisors—Opinion of Goldman, Sachs & Co.

Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger (page [])

After careful consideration, the Allergan board of directors recommends that Allergan shareholders vote “FOR” the Allergan share issuance proposal, “FOR” the Allergan share split proposal, “FOR” the Allergan board increase proposal, “FOR” the Allergan authorized share capital increase proposal, “FOR” the Allergan name change proposal, “FOR” the Allergan distributable reserves creation proposal, “FOR” the Allergan renominalisation proposal and “FOR” the Allergan adjournment proposal.

In reaching its decision, the Allergan board of directors considered a number of factors as generally supporting its decision to enter into the merger agreement, including, among others, that the Allergan share split implies an exchange ratio of 11.3x, which ratio, when multiplied by the closing price per share of Pfizer common stock on November 20, 2015, the last full trading day before public announcement of the signing of the merger agreement, of $32.18, produces an implied offer price that represents more than a 30% premium to the closing price per Allergan ordinary share on October 28, 2015 (the last trading day prior to the companies’ public confirmation that they were engaged in preliminary friendly discussions); the expectation that the combined

 



 

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company would create long-term value for Allergan shareholders by combining innovation and growth with substantial sources of reliable earnings and cash flow; the potential strategic opportunities in combining the businesses; an enhanced credit profile; expected synergies; the potential risks and uncertainties associated with the continued execution of Allergan’s standalone business strategy; the expectation that the combined company will remain committed to a dividend policy that targets a 50% dividend payout ratio; the opinion of J.P. Morgan, Allergan’s financial advisor, as to the fairness, from a financial point of view, of the Allergan stock consideration to the holders of Allergan ordinary shares; the opinion of Morgan Stanley, Allergan’s financial advisor, as to the fairness, from a financial point of view, of the split exchange ratio to the holders of Allergan ordinary shares; and the overall terms of the merger agreement. The Allergan board of directors also considered a variety of risks and other potentially negative factors concerning the merger, including, among others, the risks related to the diversion of management and resources from other strategic opportunities and challenges; the potential difficulties relating to integrating the operations of Allergan and Pfizer; the risk that the merger might not be completed in a timely manner or at all; the risks related to certain terms of the merger agreement (including restrictions on the conduct of Allergan’s business prior to the consummation of the merger and the requirement that in certain circumstances Allergan pay Pfizer a termination fee or reimburse certain expenses incurred by Pfizer in connection with the merger); and the risks related to Pfizer’s business.

In considering the recommendation of the Allergan board of directors, Allergan shareholders should be aware that the Allergan directors and executive officers have interests in the merger that are different from, or in addition to, their interests as Allergan shareholders. See “—Interests of the Pfizer Directors and Executive Officers in the Merger.”

The foregoing discussion of the information and factors considered by the Allergan board of directors is not intended to be exhaustive, but includes the material factors considered by the Allergan board of directors. In view of the variety of factors considered in connection with its evaluation of the combination, the Allergan board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Allergan board of directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Allergan board of directors based its recommendation on the totality of the information presented and the factors it considered. The explanation of the Allergan board of directors’ reasons for the merger and the other transactions contemplated by the merger agreement and all other information presented in this section is forward-looking in nature and therefore should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements.”

For a more complete description of Allergan’s reasons for entering into the merger agreement and the recommendations of the Allergan board of directors, see “The Transactions—Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger.”

Opinions of Allergan’s Financial Advisors (page [])

Opinion of J.P. Morgan Limited

Allergan retained J.P. Morgan Limited (“J.P. Morgan”) to act as its financial advisor in connection with the transactions contemplated by the merger agreement. At the meeting of the Allergan board of directors on November 21, 2015, J.P. Morgan rendered its oral opinion to the board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Allergan stock consideration (as defined below) to be issued to the Allergan shareholders as part of the transactions contemplated by the merger agreement was fair, from a financial point of view, to the holders of Allergan ordinary shares, other than Pfizer and its affiliates. J.P. Morgan confirmed this oral opinion by delivering its written opinion on November 22, 2015. In the

 



 

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description of the opinion of J.P. Morgan set forth in this summary and in the sections of this joint proxy statement/prospectus entitled “The Transactions—Opinions of Allergan’s Financial Advisors—Opinion of J.P. Morgan Limited,” “The Transactions—Background of the Merger” and “The Transactions—Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger,” the term “Allergan stock consideration” is used to mean the sub-division of each Allergan ordinary share into 11.3 Allergan ordinary shares immediately prior to the effective time (which Allergan ordinary shares will subsequently become combined company ordinary shares in connection with the merger).

The full text of the written opinion of J.P. Morgan, dated November 22, 2015, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex D to this joint proxy statement/prospectus. The shareholders of Allergan are urged to read the opinion in its entirety. J.P. Morgan’s written opinion is addressed to the Allergan board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the transactions contemplated by the merger agreement and is directed only to the fairness to holders of Allergan ordinary shares (other than Pfizer and its affiliates) of the Allergan stock consideration to be issued as part of the transactions contemplated by the merger agreement. Further, the opinion does not constitute a recommendation to any shareholder of Allergan as to how such shareholder should vote or act with respect to the transactions contemplated by the merger agreement or any other matter.

For a description of the opinion that the Allergan board of directors received from J.P. Morgan, see “The Transactions—Opinions of Allergan’s Financial Advisors—Opinion of J.P. Morgan.”

Opinion of Morgan Stanley & Co. LLC

Morgan Stanley & Co. LLC (“Morgan Stanley”) was retained by the Allergan board of directors to act as its financial advisor in connection with the transactions contemplated by the merger agreement, pursuant to an engagement letter dated November 21, 2015. On November 21, 2015, Morgan Stanley rendered its oral opinion, which was subsequently confirmed in writing on November 22, 2015, to the Allergan board of directors to the effect that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the split exchange ratio (giving effect to the merger and taking into account the share consideration and the cash consideration payable to holders of Pfizer common stock) pursuant to the merger agreement was fair from a financial point of view to the holders of Allergan ordinary shares (other than Pfizer and its affiliates). In the description of the opinion of Morgan Stanley set forth in this summary and in the sections of this joint proxy statement/prospectus entitled “The Transactions—Opinions of Allergan’s Financial Advisors—Opinion of Morgan Stanley & Co. LLC,” “The Transactions—Background of the Merger” and “The Transactions—Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger,” the term “split exchange ratio” is used to mean the sub-division of each Allergan ordinary share into 11.3 Allergan ordinary shares immediately prior to the effective time of the merger (which Allergan ordinary shares will subsequently become combined company ordinary shares in connection with the merger).

The full text of Morgan Stanley’s written opinion to the Allergan board of directors, dated November 22, 2015, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion, is attached to this joint proxy statement/prospectus as Annex E. The foregoing summary of Morgan Stanley’s opinion is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Morgan Stanley’s opinion, this section and the summary of Morgan Stanley’s opinion below carefully and in their entirety. Morgan Stanley’s opinion was for the benefit of the Allergan board of directors, in its capacity as such, and addressed only the fairness from a financial point of view of the split exchange ratio (giving effect to the

 



 

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merger and taking into account the share consideration and the cash consideration payable to holders of Pfizer common stock) to the holders of Allergan ordinary shares (other than Pfizer and its affiliates) pursuant to the merger agreement as of the date of the opinion and did not address any other aspects or implications of the merger. Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation as to how Pfizer’s stockholders or Allergan’s shareholders should vote at any special or extraordinary general meeting to be held in connection with the merger and the other transactions contemplated by the merger agreement, or whether to take any other action with respect to the merger or any other matter.

For a description of the opinion that the Allergan board of directors received from Morgan Stanley, see “The Transactions—Opinions of Allergan’s Financial Advisors—Opinion of Morgan Stanley & Co. LLC”.

The Pfizer Special Meeting (page [])

Pfizer will convene the Pfizer special meeting on [          ], 2016, at [          ] [a/p].m. (local time), at [          ]. At the Pfizer special meeting, Pfizer stockholders will be asked to approve the Pfizer merger proposal, the Pfizer adjournment proposal and the Pfizer advisory compensation proposal.

Only holders of shares of Pfizer common stock or Pfizer preferred shares as of the close of business on [         ], 2016, the record date for the Pfizer special meeting, will be entitled to receive notice of, and to vote at, the Pfizer special meeting or any adjournments or postponements thereof. On the Pfizer record date, there were [          ] shares of Pfizer common stock outstanding and entitled to vote at the Pfizer special meeting, held by a total of [          ] holders of record, and [          ] Pfizer preferred shares outstanding and entitled to vote at the Pfizer special meeting, all of which are held of record by [          ]. Each share of Pfizer common stock entitles the holder to one vote at the Pfizer special meeting on each proposal to be considered at the Pfizer special meeting. Each Pfizer preferred share entitles the holder to a number of votes equal to the number of shares of Pfizer common stock into which such Pfizer preferred share could be converted on the record date for determining the stockholders entitled to vote, rounded to the nearest one one-hundredth of a vote, or 2,574.87 votes, subject to adjustment under certain circumstances provided in the certificate of designations for the Pfizer preferred shares. The Pfizer common stock and Pfizer preferred shares will vote together as one class on all of the Pfizer proposals. As of the Pfizer record date, directors and executive officers of Pfizer and their affiliates owned and were entitled to vote [          ] shares of Pfizer common stock and [          ] Pfizer preferred shares, representing less than 1% of the votes of the Pfizer common stock and Pfizer preferred shares, taken together as a single class, outstanding on that date. Pfizer currently expects that the Pfizer directors and executive officers will vote their shares in favor of each of the Pfizer proposals, although none of them has entered into any agreements obligating him or her to do so.

Approval of the Pfizer merger proposal is a condition to the merger and requires the affirmative vote of the holders of a majority of the outstanding voting stock of Pfizer. Approval of each of the Pfizer adjournment proposal and the Pfizer advisory compensation proposal requires that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal.

The Allergan Extraordinary General Meeting (page [])

Allergan will convene the Allergan EGM on [          ], 2016, at [          ] [a/p].m. (local time), at [          ]. At the Allergan EGM, Allergan shareholders will be asked to consider and vote on the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal, the Allergan authorized share capital increase proposal, the Allergan name change proposal, the Allergan distributable reserves creation proposal, the Allergan renominalisation proposal and the Allergan adjournment proposal.

 



 

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Only holders of Allergan ordinary shares as of the close of business on [          ], 2016, the record date for the Allergan EGM, will be entitled to notice of, and to vote at, the Allergan EGM or any adjournments or postponements thereof. On the Allergan record date, there were [          ] Allergan ordinary shares outstanding, held by a total of [          ] registered holders. Each outstanding Allergan ordinary share is entitled to one vote on each proposal and any other matter properly coming before the Allergan EGM. Allergan preferred shares are not entitled to vote on the Allergan proposals. As of the record date, directors and executive officers of Allergan and their affiliates owned and were entitled to vote [          ] Allergan ordinary shares, representing [less than 1%] of Allergan ordinary shares outstanding on that date. Allergan currently expects that the Allergan directors and executive officers will vote their shares in favor of each of the Allergan proposals, although none of them has entered into any agreements obligating them to do so.

The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on each of the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal, the Allergan authorized share capital increase proposal, the Allergan renominalisation proposal and the Allergan adjournment proposal at the Allergan EGM is required to approve each such proposal. The affirmative vote of 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on each of the Allergan name change proposal and the Allergan distributable reserves creation proposal at the Allergan EGM is required to approve each such proposal.

Interests of the Pfizer Directors and Executive Officers in the Merger (page [])

In considering the recommendation of the Pfizer board of directors with respect to the merger, Pfizer stockholders should be aware that the directors and executive officers of Pfizer have certain interests in the merger that may be different from, or in addition to, the interests of Pfizer stockholders generally. The Pfizer board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated thereby and making its recommendation that Pfizer stockholders vote to approve the Pfizer proposals. A future amendment to this joint proxy statement/prospectus will disclose, in accordance with SEC requirements, information regarding any interests that Pfizer’s executive officers might have in the merger that may be different from, or in addition to, the interests of Pfizer stockholders generally.

Interests of the Allergan Directors and Executive Officers in the Merger (page [])

In considering the recommendation of the Allergan board of directors with respect to the Allergan proposals, Allergan shareholders should be aware that the directors and executive officers of Allergan have certain interests in the merger that may be different from, or in addition to, the interests of Allergan shareholders generally. The Allergan board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated thereby and making its recommendation that Allergan shareholders vote to approve the Allergan proposals. A future amendment to this joint proxy statement/prospectus will disclose, in accordance with SEC requirements, information regarding any interests that Allergan’s executive officers and directors might have in the merger that may be different from, or in addition to, the interests of Allergan shareholders generally.

Certain Governance Matters Following the Merger (page [])

Pursuant to the merger agreement, effective as of the effective time, the combined company board of directors will be comprised of a total of 15 directors, 11 of whom will be the directors serving on the Pfizer board of directors prior to the closing of the merger and four of whom will be directors serving on the Allergan board of directors prior to the closing of the merger, and will include Paul M. Bisaro, the current Executive Chairman

 



 

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of Allergan, and Brenton L. Saunders, the current Chief Executive Officer and President of Allergan, with the remaining two directors to be mutually agreed between Pfizer and Allergan prior to the consummation of the merger.

In addition, pursuant to the merger agreement, as of the effective time:

 

    Ian C. Read, the current Chairman and Chief Executive Officer of Pfizer, will become the Chairman and Chief Executive Officer of the combined company; and

 

    Brenton L. Saunders, the current Chief Executive Officer and President of Allergan, will become the President and Chief Operating Officer of the combined company.

For additional information on the directors and executive officers of the combined company, see “Certain Governance Matters Following the Merger.”

Regulatory Approvals Required for the Merger (page [])

United States Antitrust

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the rules and regulations promulgated thereunder by the U.S. Federal Trade Commission (the “FTC”), the transaction cannot be consummated until, among other things, notifications have been given and certain information has been provided to the FTC and the Antitrust Division of the Department of Justice (the “Antitrust Division”) and all applicable waiting periods have expired or been terminated.

On January 27, 2016, each of Pfizer and Allergan filed a Pre-Merger Notification and Report Form pursuant to the HSR Act with the Antitrust Division and the FTC. Prior to the expiration of the initial 30-day waiting period, on February 26, 2016, Allergan withdrew its Pre-Merger Notification and Report Form. Allergan promptly refiled on February 29, 2016, which initiated a new 30-day waiting period. Pfizer and Allergan intend to cooperate fully with the FTC. While we believe that HSR clearance will ultimately be obtained, this clearance is not assured.

Other Regulatory Approvals

Pfizer and Allergan derive revenues in other jurisdictions where regulatory filings or clearances are or may be required including Australia, Brazil, Canada, China, the European Union, India and Japan. The transaction cannot be consummated until the closing conditions relating to applicable filings and clearances under antitrust laws have been satisfied or waived. Apart from these closing conditions, additional filings and regulatory reviews in other jurisdictions must occur. Pfizer and Allergan are in the process of filing notices and applications to satisfy the filing requirements and to obtain the necessary regulatory clearances. Although Pfizer and Allergan believe that they will be able to complete all filings and to obtain the requisite regulatory clearances in a timely manner, they cannot be certain when or if they will do so, or if any clearances will contain terms, conditions, or restrictions that will be detrimental to or adversely affect Pfizer, Allergan, the combined company or their respective subsidiaries after the consummation of the merger.

The United States Antitrust and Other Regulatory Approvals are discussed under “The Transactions—Regulatory Approvals Required for the Merger.

Appraisal Rights (page [])

Appraisal rights will be available to holders of Pfizer common stock and holders of Pfizer preferred shares in connection with the merger only under the circumstances set forth in Section 262 of the DGCL and subject to their compliance with the requirements of Section 262. In order to preserve any appraisal rights that a Pfizer stockholder may have, in addition to otherwise complying with the applicable provisions of Delaware law, such Pfizer stockholder must not vote in favor of the Pfizer merger proposal and must submit a written demand for appraisal prior to the vote at the Pfizer special meeting.

 



 

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To the extent appraisal rights are available under Delaware law, a Pfizer stockholder who properly seeks appraisal and otherwise complies with the applicable requirements under Delaware law (a “dissenting stockholder”) will be entitled to receive a cash payment equal to the fair value of his, her or its shares in connection with the merger in lieu of the merger consideration. Fair value will be determined by the Delaware Court of Chancery (the “Court”) following an appraisal proceeding. Dissenting stockholders will not know the appraised fair value at the time such stockholders must elect whether to seek appraisal.

The ultimate amount dissenting stockholders receive in an appraisal proceeding may be more than, the same as or less than the value of the merger consideration such stockholders would have received under the merger agreement. To seek appraisal, a Pfizer stockholder must comply strictly with all of the procedures required under Delaware law, including delivering a written demand for appraisal to Pfizer before the vote is taken on the merger agreement at the Pfizer special meeting, not voting in favor of the Pfizer merger proposal and continuing to hold his, her or its shares through the effective time. Failure to comply strictly with all of the procedures required under Delaware law will result in the loss of appraisal rights.

For a further description of the appraisal rights available to Pfizer stockholders and the procedures required to exercise such appraisal rights, see “Appraisal Rights” and the provisions of Section 262 of the DGCL that grant appraisal rights and govern such procedures, which are attached as Annex F to this joint proxy statement/prospectus. If a Pfizer stockholder holds shares through a broker, bank or other nominee and the Pfizer stockholder wishes to exercise appraisal rights, such stockholder should consult with such stockholder’s broker, bank or other nominee sufficiently in advance of the Pfizer special meeting to permit such nominee to exercise appraisal rights on such stockholder’s behalf. In view of the complexity of Delaware law, Pfizer stockholders who may wish to pursue appraisal rights should promptly consult their legal and financial advisors.

Allergan shareholders will not be entitled to dissenters’ or appraisal rights under Irish law in connection with the merger.

No Solicitation; Third-Party Acquisition Proposals (page [])

The merger agreement contains detailed provisions outlining the circumstances in which Pfizer and Allergan may respond to competing proposals received from third parties. Under these reciprocal provisions, each of Pfizer and Allergan has agreed that it will not (and will not permit any of its subsidiaries to), and that it will direct and use its reasonable best efforts to cause its respective representatives not to, directly or indirectly:

 

    solicit, initiate or knowingly encourage any inquiry with respect to, or the making or submission of any inquiry, proposal or offer (including any inquiry, proposal or offer to its shareholders or stockholders, as applicable) which constitutes or would be reasonably expected to lead to a “competing proposal” (as defined in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Covenants and Agreements—No Solicitation; Third-Party Acquisition Proposals”);

 

    participate in any discussions or negotiations regarding a competing proposal with, or furnish any nonpublic information in furtherance of a competing proposal to any person or entity that has made or, to Pfizer’s or Allergan’s knowledge, as applicable, is considering making, a competing proposal; or

 

    waive, terminate, modify or release any person or entity (other than Pfizer, Allergan, Merger Sub and their respective affiliates, as applicable) from any provision of or grant any permission, waiver or request under any “standstill” or similar agreement or obligation (provided that Pfizer or Allergan, as applicable, will not be required to take, or be prohibited from taking, any action otherwise prohibited or required under this provision if its board of directors determines in good faith (after consultation with outside legal counsel) that such action or inaction would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law).

 



 

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If Pfizer or Allergan receives a written competing proposal or inquiry or proposal from a person or entity that intends to make a competing proposal, which its board of directors determines in good faith (after consultation with its outside legal counsel and financial advisors):

 

    constitutes a “superior proposal” (as defined in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Covenants and Agreements—No Solicitation; Third-Party Acquisition Proposals”) or could reasonably be expected to result in a superior proposal; and

 

    failure to take the actions described in either of the bullet points below would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law and which competing proposal, inquiry or proposal was made after the date of the merger agreement and did not otherwise result from a breach of the merger agreement,

then Pfizer or Allergan, as applicable, may take the following actions:

 

    furnish nonpublic information to the third party making or intending to make such competing proposal, if, and only if, prior to so furnishing such information, it receives from the third party an executed confidentiality agreement with terms no less restrictive of such person or entity than the confidentiality agreement between Pfizer and Allergan (except that such confidentiality agreement may not include the “fall away” provisions to the “standstill” terms set forth in the confidentiality agreement between Pfizer and Allergan); and

 

    engage in discussions or negotiations with the third party with respect to the competing proposal.

The merger agreement permits each of the Pfizer board of directors and the Allergan board of directors to comply with Rule 14d-9, Rule 14e-2(a) or Item 1012(a) of Regulation M-A promulgated under the Exchange Act or other applicable law or make any disclosure to its stockholders or shareholders, as applicable, if such board of directors determines in good faith, after consultation with outside legal counsel, that the failure to do so would violate applicable law. However, any disclosure of a position contemplated by Rule 14d-9 and Rule 14e-2(a) that relates to the approval, recommendation or declaration of advisability by the Pfizer board of directors or the Allergan board of directors with respect to a competing proposal will be deemed a change of recommendation, except in certain circumstances described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Covenants and Agreements—No Solicitation; Third-Party Acquisition Proposals.”

Change of Recommendation (page [])

Pfizer, through its board of directors, has agreed to recommend to and solicit, and use its reasonable best efforts to obtain from, the Pfizer stockholders their approval of the Pfizer merger proposal and include such recommendation in this joint proxy statement/prospectus. In addition, Allergan, through its board of directors, has agreed to recommend to and solicit, and use its reasonable best efforts to obtain from, the Allergan shareholders their approval of the Allergan proposals and include such recommendation in this joint proxy statement/prospectus. Each of the Pfizer board of directors and the Allergan board of directors is required not to:

 

    approve, recommend or declare advisable, or propose publicly to approve, recommend or declare advisable, any competing proposal, or withdraw or fail to make when required pursuant to the merger agreement, or propose publicly to withdraw or fail to make when required pursuant to the merger agreement (or qualify or modify in any manner adverse to Allergan or Pfizer, as applicable) its recommendation in favor of the Pfizer merger proposal or the Allergan required proposals, the Allergan distributable reserves creation proposal and the Allergan name change proposal, as applicable (any of the foregoing, a “change of recommendation”); or

 

   

cause or allow Pfizer or Allergan or any of their respective subsidiaries, as applicable, to execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger

 



 

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agreement, acquisition agreement, transaction agreement, implementation agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or other agreement constituting or with respect to, or that would reasonably be expected to lead to any, any competing proposal, or requiring, or reasonably expected to cause, Pfizer or Allergan, as applicable, to abandon, terminate, delay or fail to consummate the merger (other than a confidentiality agreement as permitted by the merger agreement).

However, prior to the approval of the Pfizer merger proposal or the Allergan proposals by the Pfizer stockholders or the Allergan shareholders, as applicable, each of the Pfizer board of directors and the Allergan board of directors is permitted to make a change of recommendation, if:

 

    such board of directors has concluded in good faith (after consultation with its financial advisors and outside legal counsel) that (i) a competing proposal constitutes a superior proposal and (ii) the failure to take such action would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law; or

 

    in response to any effect that occurs after the date of the merger agreement, including any change in or issuance or interpretation of, or proposed change in or issuance or interpretation of, applicable law (whether or not yet approved or effective), but excluding the receipt, existence or terms or consequences of a competing proposal or any inquiry related thereto (an “intervening event”), such board of directors has concluded in good faith (after consultation with its financial advisors and outside legal counsel) that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law.

Prior to making a change of recommendation in response to a competing proposal, the party so doing must provide the other party with at least three business days’ prior written notice advising the other party of its board of directors’ intention to make such a change of recommendation, and must also take into account any changes to the terms of the merger agreement proposed by the other party in response to such prior written notice or otherwise, and during such three business day period, the party intending to make the change of recommendation must engage in good faith negotiations with the other party regarding any changes to the terms of the merger agreement proposed by the other party.

Prior to making a change of recommendation in response to an intervening event, the party so doing must provide the other party with at least three business days’ prior written notice advising the other party of its board of directors’ intention to make such a change of recommendation and the reasons therefore, and must take into account any changes to the terms of the merger agreement proposed by the other party in response to such prior written notice or otherwise, and during such three business day period, the party intending to make the change of recommendation must engage in good faith negotiations with the other party regarding any changes to the terms of the merger agreement proposed by the other party.

In the event that the Allergan board of directors makes a change in recommendation prior to receipt of approval of the Allergan required proposals, then Pfizer will have the right to terminate the merger agreement. In the event that the Pfizer board of directors makes a change in recommendation prior to receipt of approval of the Pfizer merger proposal, then Allergan will have the right to terminate the merger agreement. Unless the merger agreement has been terminated in accordance with its terms, the party making the change of recommendation must hold the Pfizer special meeting or the Allergan EGM, as applicable, for the purpose of obtaining approval of the Pfizer proposals or the Allergan proposals, as applicable. Under the terms of the merger agreement, Pfizer and Allergan have also agreed to certain additional procedures and obligations described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Covenants and Agreements—Change of Recommendation.”

 



 

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Conditions to the Consummation of the Merger (page [])

Under the merger agreement, the respective obligations of each party to effect the merger are subject to the satisfaction or, to the extent permitted by applicable law, waiver on or prior to the date of the consummation of the merger of each of the following conditions:

 

    approval by Allergan shareholders of the Allergan required proposals and by Pfizer stockholders of the Pfizer merger proposal;

 

    the effectiveness of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part;

 

    the absence of any (i) law, (ii) injunction, restraint or prohibition by any court of competent jurisdiction or (iii) injunction, order or prohibition under any antitrust law by any relevant governmental authority of competent jurisdiction, which prohibits consummation of the merger;

 

    receipt of the required regulatory approvals;

 

    approval of an Irish prospectus in relation to the Allergan ordinary shares, if required, by the Central Bank of Ireland;

 

    the occurrence of the Allergan share split; and

 

    the approval for listing on the NYSE of the Allergan ordinary shares to be issued in the merger, subject to official notice of issuance.

Under the merger agreement, the respective obligations of Allergan and Merger Sub to effect the merger are also subject to the satisfaction or waiver on or prior to the date of the consummation of the following additional conditions:

 

    the accuracy of the representations and warranties of Pfizer, subject to specified materiality standards;

 

    Pfizer’s performance of or compliance in all material respects with the covenants and agreements required to be performed or complied with by it under the merger agreement; and

 

    the delivery by Pfizer of an officer’s certificate certifying such accuracy of its representations and warranties and such performance of and compliance with its covenants and agreements.

Under the merger agreement, the obligation of Pfizer to effect the merger is also subject to the satisfaction or waiver at the effective time of the following additional conditions:

 

    the accuracy of the representations and warranties of Allergan, subject to specified materiality standards;

 

    Allergan’s performance of or compliance in all material respects with the covenants and agreements required to be performed or complied with by it under the merger agreement;

 

    the delivery by Allergan of an officer’s certificate certifying such accuracy of its representations and warranties and such performance of and compliance with its covenants and agreements; and

 

    the closing of the Allergan divestiture transaction.

Neither Pfizer nor Allergan can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be consummated. For a more complete description of the conditions to the consummation of the merger, see “The Merger Agreement—Conditions to the Consummation of the Merger.

 



 

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Termination of the Merger Agreement; Termination Fees; Expense Reimbursement (page [])

Termination of the Merger Agreement

The merger agreement may be terminated and the merger and the other transactions contemplated by the merger agreement abandoned as follows:

 

    by mutual written consent of Pfizer and Allergan;

 

    by either Pfizer or Allergan, prior to the effective time, if there has been a breach by Allergan or Merger Sub, on the one hand, or Pfizer, on the other hand, of any representation, warranty, covenant or agreement set forth in the merger agreement, which breach would result in the conditions to the other parties’ obligation to consummate the merger not being satisfied (and such breach is not curable prior to the outside date (as defined below), or, if curable prior to the outside date, has not been cured within the earlier of (i) 30 calendar days following notice thereof to the defaulting party from the non-defaulting party or (ii) three business days before the outside date, so long as the terminating party is not then in material breach of any representation, warranty, covenant or agreement set forth in the merger agreement;

 

    by either Pfizer or Allergan, if the effective time has not occurred by 5: 00 p.m., New York City time, on October 31, 2016 (as may be extended pursuant to the terms of the merger agreement, the “outside date”), except that if on such date all of the conditions to the consummation of the merger have been satisfied or waived (other than the conditions regarding the stockholder and shareholder approvals, registration statement, regulatory approvals, Irish prospectus, the Allergan share split and the share listing and those conditions that by their nature can only be satisfied at the consummation of the merger), then such date will be extended to 5: 00 p.m., New York City time, on March 31, 2017;

 

    by Allergan, if, prior to receipt of approval of the Pfizer merger proposal, the Pfizer board of directors makes a change of recommendation;

 

    by Pfizer, if, prior to receipt of approval of the Allergan required proposals, the Allergan board of directors makes a change of recommendation;

 

    by either Pfizer or Allergan, if a governmental authority of competent jurisdiction that is in a jurisdiction that is material to the business and operations of Pfizer and Allergan, taken together, has issued a final, non-appealable order, injunction, decree, ruling or law in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the merger;

 

    by either Pfizer or Allergan, if the Pfizer special meeting has concluded and approval of the Pfizer merger proposal has not been obtained;

 

    by either Pfizer or Allergan, if the Allergan EGM has been concluded and approval of the Allergan required proposals has not been obtained; or

 

    by either Pfizer or Allergan, if, following the date of the merger agreement, there has been an “adverse tax law change” (as defined in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”).

Termination Fees

Termination Fees Payable by Pfizer

The merger agreement requires Pfizer to pay a wholly owned subsidiary of Allergan a termination fee of $1.5 billion if either Pfizer or Allergan terminates the merger agreement because the Pfizer special meeting has concluded and approval of the Pfizer merger proposal has not been obtained from the Pfizer stockholders and the Allergan board of directors has not made a change of recommendation and the Allergan required proposals have been approved by the Allergan shareholders.

 



 

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In addition, the merger agreement requires Pfizer to pay a termination fee of $3.5 billion if:

 

    (i) either Pfizer or Allergan terminates the merger agreement because the Pfizer special meeting (as it may be adjourned or postponed) has concluded and approval of the Pfizer merger proposal has not been obtained from the Pfizer stockholders, (ii) after the date of the merger agreement, a competing proposal (as such term is described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”) for Pfizer is publicly disclosed and not publicly, irrevocably withdrawn prior to the date of the Pfizer special meeting, and (iii) (a) a competing proposal is consummated within 12 months of such termination or (b) Pfizer enters into a definitive agreement providing for a competing proposal within 12 months of such termination and such competing proposal is consummated; or

 

    (i) Allergan terminates the merger agreement because prior to receipt of approval of the Pfizer merger proposal, the Pfizer board of directors makes a change of recommendation in response to a superior proposal and (ii) the Allergan board of directors has not made a change of recommendation, and Allergan confirms to Pfizer in writing that the Allergan board of directors has determined in good faith (after consultation with its financial advisors and outside legal counsel) that it continues to recommend the approval of the Allergan proposals and does not intend to make a change of recommendation.

Furthermore, the merger agreement requires Pfizer to pay a termination fee of $3.0 billion if the Pfizer board of directors makes a change of recommendation (other than in response to a superior proposal) on or prior to March 1, 2016, or $3.5 billion if the Pfizer board of directors makes a change of recommendation (other than in response to a superior proposal) after March 1, 2016, if:

 

    (i) Allergan terminates the merger agreement because prior to receipt of approval of the Pfizer merger proposal, the Pfizer board of directors made such a change of recommendation and (ii) the Allergan board of directors has not made a change of recommendation, and Allergan confirms to Pfizer in writing that the Allergan board of directors has determined in good faith (after consultation with its financial advisors and outside legal counsel) that it continues to recommend the approval of the Allergan proposals and does not intend to make a change of recommendation; or

 

    either Pfizer or Allergan terminates the merger agreement if the Pfizer special meeting (as it may be adjourned or postponed) has concluded and approval of the Pfizer merger proposal has not been obtained.

The merger agreement also requires Pfizer to reimburse Allergan for certain expenses, in an aggregate amount not to exceed $400 million, under certain circumstances described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.” To the extent this reimbursement is required, any payment made for this reason will be credited against Pfizer’s obligation, if any, to pay any of the termination fees described above.

Termination Fees Payable by Allergan

The merger agreement requires a wholly owned subsidiary of Allergan to pay Pfizer a termination fee of $1.5 billion if either Pfizer or Allergan terminates the merger agreement because the Allergan EGM has concluded and approval of the Allergan required proposals has not been obtained and the Pfizer board of directors has not made a change of recommendation and the Pfizer merger proposal has been approved by the Pfizer stockholders.

 



 

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In addition, the merger agreement requires a wholly owned subsidiary of Allergan to pay to Pfizer a termination fee of $3.5 billion if:

 

    (i) either Pfizer or Allergan terminates the merger agreement because the Allergan EGM (as it may be adjourned or postponed) has concluded and approval of the Allergan required proposals has not been obtained, (ii) after the date of the merger agreement, a competing proposal (as such term is described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”) for Allergan is publicly disclosed and not publicly, irrevocably withdrawn prior to the date of the Allergan EGM, and (iii) (a) a competing proposal is consummated within 12 months of such termination or (b) Allergan enters into a definitive agreement providing for a competing proposal within 12 months of such termination and such competing proposal is consummated; or

 

    (i) Pfizer terminates the merger agreement because prior to receipt of the approval of the Allergan required proposals, the Allergan board of directors makes a change of recommendation in response to a superior proposal and (ii) the Pfizer board of directors has not made a change of recommendation, and Pfizer confirms to Allergan in writing that the Pfizer board of directors has determined in good faith (after consultation with its financial advisors and outside legal counsel) that it continues to recommend the approval of the Pfizer merger proposal and does not intend to make a change of recommendation.

Furthermore, the merger agreement requires a wholly owned subsidiary of Allergan to pay to Pfizer a termination fee of $3.0 billion if the Allergan board of directors makes a change of recommendation (other than in response to a superior proposal) on or prior to March 1, 2016, or $3.5 billion if the Allergan board of directors makes a change of recommendation (other than in response to a superior proposal) after March 1, 2016, if:

 

    (i) Pfizer terminates the merger agreement because prior to receipt of the approval of the Allergan required proposals, the Allergan board of directors made such change of recommendation and (ii) the Pfizer board of directors has not made a change of recommendation, and Pfizer confirms to Allergan in writing that the Pfizer board of directors has determined in good faith (after consultation with its financial advisors and outside legal counsel) that it continues to recommend the approval of the Pfizer merger proposal and does not intend to make a change of recommendation; or

 

    either Allergan or Pfizer terminates the merger agreement if the Allergan EGM (as it may be adjourned or postponed) has concluded and approval of the Allergan required proposals has not been obtained.

The merger agreement also requires Allergan to reimburse Pfizer for certain expenses, in an aggregate amount not to exceed $400 million, under certain circumstances described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.” To the extent this reimbursement is required, any payment made for this reason will be credited against Allergan’s obligation, if any, to pay any of the termination fees described above.

For a more complete description of the circumstances under which the merger agreement may be terminated and the termination fees and expense reimbursement that may become payable under the merger agreement, see “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.”

Transaction-Related Costs of the Merger (page [])

Pfizer and Allergan currently estimate that, upon the effective time, transaction-related costs incurred by the combined company, including fees and expenses relating to the merger, will be approximately $[          ].

 



 

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Accounting Treatment of the Merger (page [])

The combined company will account for the acquisition contemplated by the merger agreement using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”). The combined company will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing of the merger. Any excess of the purchase price over those fair values will be recorded as goodwill.

Generally accepted accounting principles require that one of Pfizer or Allergan be designated as the acquirer for accounting purposes based on the evidence available, Pfizer will be treated as the acquiring entity for accounting purposes, while Allergan is the acquiring entity from a legal perspective. In identifying Pfizer as the acquiring entity, the companies took into account a variety of factors, including, but not limited to, the structure of the merger and the other transactions contemplated by the merger agreement, relative outstanding share ownership, the composition of the combined company board of directors and the designation of certain senior management positions of the combined company. Accordingly, the historical financial statements of Pfizer will become the historical financial statements of the combined company.

Definite lived intangible assets will be amortized over their estimated useful lives. Intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill are also tested for impairment when certain indicators are present, which may occur more frequently than on an annual basis.

The allocation of the purchase price to the assets acquired and liabilities assumed reflected in the unaudited pro forma condensed combined financial statements is based on preliminary estimates using assumptions Pfizer management believes are reasonable based on currently available information as of the date of filing. Due to the preliminary nature of this valuation, certain asset or liability values are based on a preliminary assessment using data available to Pfizer management at the time of this filing for purposes of the unaudited pro forma condensed combined financial statements. Upon consummation of the merger, such valuation will be finalized, with the final purchase price and fair value assessment of assets and liabilities based on a detailed analysis that has not yet been consummated. See “The Transactions—Accounting Treatment of the Merger.”

Listing Combined Company Ordinary Shares (page [])

The combined company ordinary shares to be issued in the merger must be approved for listing on the NYSE, subject to official notice of issuance, prior to the effective time. Following the merger, the combined company ordinary shares will trade on the NYSE under the ticker “PFE.”

Certain U.S. Federal Income Tax Consequences of the Merger and the Allergan Share Split (page [])

For U.S. federal income tax purposes, the receipt of combined company ordinary shares or a combination of combined company ordinary shares and cash in exchange for Pfizer common stock pursuant to the merger will be treated as a taxable transaction. U.S. holders of Pfizer common stock will generally recognize gain, but not loss, on the exchange of Pfizer common stock for combined company ordinary shares, or a combination of combined company ordinary shares and cash, in the merger. For a more detailed description of the U.S. federal income tax consequences of the merger, see “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations.”

Except with respect to cash received in lieu of fractional shares, a U.S. holder of Allergan ordinary shares generally should not recognize gain or loss upon such holder’s exchange of its Allergan ordinary shares for the

 



 

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ordinary shares received pursuant to the Allergan share split. A U.S. holder of Allergan ordinary shares that receives cash in lieu of fractional combined company shares pursuant to the Allergan share split should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the Allergan ordinary shares surrendered that is allocated to such fractional combined company shares.

Comparison of the Rights of Pfizer Stockholders and Allergan Shareholders (page [])

As a result of the merger, the holders of shares of Pfizer common stock and Pfizer preferred shares (other than shares converted into the right to receive the cash consideration or the preferred stock liquidation amount) will become holders of Allergan ordinary shares, which will become the combined company ordinary shares, and their rights will be governed by Irish law (instead of Delaware law) and by the constitution of Allergan (the “Allergan constitution,” which includes the memorandum of association and the articles of association of Allergan) (instead of the amended and restated certificate of incorporation of Pfizer (the “Pfizer certificate of incorporation”) or the amended and restated bylaws of Pfizer (the “Pfizer bylaws”)). Following the merger, former Pfizer stockholders will have different rights as combined company shareholders than they had as Pfizer stockholders. Certain differences between the rights of stockholders of Pfizer and the rights of shareholders of Allergan include differences with respect to, among other things, distributions, dividends, share repurchases and redemptions, the election of directors, the removal of directors, the fiduciary and statutory duties of directors, conflicts of interests of directors, the indemnification of directors and officers, limitations on director liability, the convening of annual meetings of shareholders and special shareholder meetings, notice provisions for meetings, the quorum for shareholder meetings, the adjournment of shareholder meetings, the exercise of voting rights, shareholder action by written consent, shareholder suits, shareholder approval of certain transactions, rights of dissenting shareholders, anti-takeover measures and provisions relating to the ability to amend the governing documents. See “Comparison of the Rights of Pfizer Stockholders and Allergan Shareholders.

Risk Factors (page [])

In deciding how to vote your shares of Pfizer common stock or Pfizer preferred shares or your Allergan ordinary shares, you should read carefully this entire joint proxy statement/prospectus, including the documents incorporated by reference herein and the Annexes hereto, and in particular, you should read the “Risk Factors” section.

Information about the Companies (page [])

Pfizer

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Phone: (212) 733-2323

Pfizer was incorporated in the State of Delaware in 1942. Pfizer is a research-based, global biopharmaceutical company. Pfizer applies science and its global resources to bring therapies to people that extend and significantly improve their lives through the discovery, development and manufacture of healthcare products. Its global portfolio includes medicines, vaccines and medical devices, as well as many of the world’s best-known consumer healthcare products. Pfizer works across developed and emerging markets to advance wellness, prevention, treatments and cures, and collaborates with healthcare providers, governments and local communities to support and expand access to reliable, affordable healthcare around the world.

 



 

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Allergan

Allergan plc

Clonshaugh Business and Technology Park

Coolock, Dublin, D17 E400, Ireland

Phone: (862) 261-7000

Allergan (formerly known as Actavis plc) was incorporated in Ireland as Actavis Limited on May 16, 2013 as a private limited company and re-registered effective September 20, 2013 as a public limited company. On June 15, 2015, Actavis plc changed its name to Allergan plc, following the acquisition of Allergan, Inc. (“Legacy Allergan”) by Actavis plc on March 17, 2015 and the approval of the name change by Actavis plc’s shareholders. Allergan is a global specialty pharmaceutical company and a leader in a new industry model — Growth Pharma engaged in the development, manufacturing, marketing and distribution of brand name, medical aesthetics, biosimilar and over-the-counter (“OTC”) pharmaceutical products. Allergan has operations in more than 100 countries. Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, dermatology, plastic surgery, gastroenterology, women’s health and urology therapeutic categories. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry. Allergan is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives.

On July 26, 2015, Allergan entered into the Allergan divestiture transaction agreement, under which Teva Pharmaceutical Industries Ltd. (“Teva”) agreed to acquire Allergan’s global generic pharmaceuticals business and certain other assets.

Merger Sub

Watson Merger Sub Inc.

c/o Allergan plc

Clonshaugh Business and Technology Park

Coolock, Dublin, D17 E400, Ireland

Phone: (862) 261-7000

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of Allergan. Merger Sub was incorporated on November 20, 2015 for the sole purpose of effecting the merger. As of the date of this joint proxy statement/prospectus, Merger Sub has not conducted any activities other than those incidental to its formation, the execution of the merger agreement and the transactions contemplated by the merger agreement.

 



 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” of this joint proxy statement/prospectus, Pfizer stockholders should carefully consider the following risks in deciding whether to vote for the approval of the Pfizer proposals, and Allergan shareholders should carefully consider the following risks in deciding whether to vote for the approval of the Allergan proposals. Descriptions of some of these risks can be found in the Annual Reports of Pfizer and Allergan on Form 10-K for the fiscal year ended December 31, 2015, and any amendments thereto, for each of Pfizer and Allergan, as such risks may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this joint proxy statement/prospectus. You should read carefully this entire joint proxy statement/prospectus and its Annexes and the other documents incorporated by reference into this joint proxy statement/prospectus. See also “Where You Can Find More Information.

Risks Related to the Merger

Because the market price of Allergan ordinary shares and shares of Pfizer common stock will fluctuate, Pfizer stockholders and Allergan shareholders cannot be sure of the value of the combined company ordinary shares they will receive in the merger or the Allergan share split, as applicable.

As a result of the merger, each issued and outstanding share of Pfizer common stock (including Pfizer common stock in respect of Pfizer preferred shares that are converted in connection with the merger), other than shares owned by Pfizer, Allergan or Merger Sub, dissenting shares, shares owned by subsidiaries of Pfizer immediately prior to the effective time and shares that are converted into the right to receive the cash consideration, will be converted into the right to receive one combined company ordinary share. In addition, as a result of the merger, each issued and outstanding share of Pfizer common stock (including Pfizer common stock in respect of Pfizer preferred shares that are converted in connection with the merger), other than shares owned by Pfizer, Allergan or Merger Sub, dissenting shares, shares owned by subsidiaries of Pfizer immediately prior to the effective time and shares that are converted into the right to receive the share consideration, will be converted into an amount in cash, without interest, equal to the volume-weighted average price per share of Pfizer common stock on the NYSE for the trading day immediately preceding the date of consummation of the merger (determined as provided in the merger agreement and described in “The Merger Agreement—Consideration to Pfizer Stockholders”). Finally, immediately prior to the merger, Allergan shareholders will receive 11.3 combined company ordinary shares for each of their Allergan ordinary shares by virtue of the Allergan share split.

The merger consideration payable in respect of each share of Pfizer common stock will be, at the election of the holder and subject to the proration procedures discussed below, either a fixed number of combined company ordinary shares or an amount in cash determined based upon the volume-weighted average price per share of Pfizer common stock on the NYSE for the trading day immediately preceding the date of closing of the merger or a combination thereof. The consideration to the Allergan shareholders will be a fixed number of combined company ordinary shares. The exact value of the transaction consideration to Pfizer stockholders and Allergan shareholders will therefore depend in part on the prices per share of Pfizer common stock and/or Allergan ordinary shares at the consummation of the merger. These prices will not be known at the time of the Pfizer special meeting or the Allergan EGM and may be greater than, less than or the same as the prices at the time of entry into the merger agreement, the date of this joint proxy statement/prospectus or the time of the Pfizer special meeting or the Allergan EGM. As of [          ], 2016, and assuming that each combined company ordinary share will have a value equal to the closing price of a share of Pfizer common stock on the NYSE on such date, the implied value of the 11.3 combined company ordinary shares to Allergan shareholders was approximately $[        ]. The market prices of Pfizer common stock and Allergan ordinary shares are subject to general price fluctuations in the market for publicly traded equity securities and have experienced volatility in the past. Stock

 

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price changes may result from a variety of factors, including general market and economic conditions, changes in the respective businesses, operations and prospects of Pfizer and Allergan, and an evolving regulatory landscape. Market assessments of the benefits of the merger and the likelihood that the merger will be consummated, as well as general and industry specific market and economic conditions, may also impact market prices of Pfizer common stock and Allergan ordinary shares. Many of these factors are beyond Pfizer’s and Allergan’s control. You should obtain current market price quotations for Pfizer common stock and for Allergan ordinary shares; however, as noted above, the prices at the effective time may be greater than, the same as or less than such price quotations.

Because the exchange ratio and the share split ratio are fixed, the number of combined company ordinary shares to be received by holders of Pfizer common stock in the merger, and the number of combined company ordinary shares to be received by holders of Allergan ordinary shares in the Allergan share split, will not change between now and the time the merger is consummated to reflect changes in the trading prices of Pfizer common stock or Allergan ordinary shares, share repurchases or other factors.

The exact value of the transaction consideration to Pfizer stockholders and Allergan shareholders will depend in part on the prices per share of Pfizer common stock and/or Allergan ordinary shares at the closing of the merger. The merger agreement does not provide for any adjustment to the exchange ratio or the share split ratio as a result of changes in the trading prices of Pfizer common stock or Allergan ordinary shares.

In addition, prior to the closing of the merger, Pfizer anticipates executing an approximately $5 billion accelerated share repurchase program in the ordinary course of its business. The effect of this transaction will be to reduce the number of shares of Pfizer common stock outstanding prior to the effective time by a number of shares that will depend on the purchase price of the shares repurchased (for illustrative purposes, if the average purchase price is $[          ] (the closing price of Pfizer common stock on the date of announcement of the accelerated share repurchase program), the number of outstanding shares of Pfizer common stock will be reduced by approximately [            ] as a result of this transaction). However, the exchange ratio is fixed and will not be adjusted prior to consummation of the merger to account for the accelerated share repurchase program or, except as otherwise set forth in the merger agreement, other changes in the number of outstanding shares of Pfizer common stock or Allergan ordinary shares. As a result, changes in the number of outstanding shares of Pfizer common stock will reduce the proportion of the outstanding combined company ordinary shares held by former Pfizer stockholders immediately after the consummation of the merger and may affect the value of the merger consideration that Pfizer stockholders will receive as a result of the merger. Additionally, in connection with carrying out the accelerated share repurchase program, Pfizer’s counterparty in the accelerated share repurchase program may purchase Pfizer common stock in the open market, which may have an impact on the price of Pfizer common stock.

Pfizer stockholders may receive a form of consideration different from what they elect.

Pfizer stockholders will be entitled to elect to receive, for each share of Pfizer common stock held at the effective time, the share consideration or the cash consideration. Elections by Pfizer stockholders for the share consideration and cash consideration will be subject to proration procedures set forth in the merger agreement, such that Pfizer stockholders will receive in the aggregate no less than $6 billion and no more than $12 billion in cash. Depending on the elections made by other Pfizer stockholders, each Pfizer stockholder who elects to receive share consideration for all of their shares of Pfizer common stock in the merger may receive a portion of their merger consideration in cash and each Pfizer stockholder who elects to receive cash consideration for all of their shares of Pfizer common stock in the merger may receive a portion of their merger consideration in share consideration. A Pfizer stockholder who elects to receive a combination of cash consideration and share consideration for their shares of Pfizer common stock in the merger may receive cash consideration and share consideration in a proportion different from that which such stockholder elected. This could result in, among other things, tax consequences that differ from those that would have resulted if such Pfizer stockholder had received the form of consideration that the stockholder elected. For further information, including hypothetical scenarios demonstrating the possible effects of proration on a holder of 1,000 shares of Pfizer common stock, see “The Merger Agreement—Consideration to Pfizer Stockholders.”

 

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The market price for combined company ordinary shares following the closing of the merger may be affected by factors different from those that historically have affected or currently affect Pfizer common stock and Allergan ordinary shares.

Upon consummation of the merger, holders of shares of Pfizer common stock (other than Pfizer, Allergan, Merger Sub, subsidiaries of Pfizer, holders of dissenting shares and holders of shares that are converted into the right to receive the cash consideration) will receive combined company ordinary shares. In addition, upon consummation of the merger, holders of Allergan ordinary shares will receive combined company ordinary shares as a result of the Allergan share split. Allergan’s businesses differ from those of Pfizer, and vice versa, and accordingly the results of operations of the combined company will be affected by some factors that are different from those currently affecting the results of operations of Pfizer and those currently affecting the results of operations of Allergan. The results of operations of the combined company may also be affected by factors different from those currently affecting Pfizer and Allergan. For a discussion of the businesses of Pfizer and Allergan and of some important factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information.”

Changes to tax laws and regulations may jeopardize or delay the merger.

Each of Pfizer and Allergan may terminate the merger agreement if, following the date of the merger agreement, there has been an “adverse tax law change” (as defined in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”). In addition, each of the Pfizer board of directors and the Allergan board of directors may change its recommendation in response to any effect that occurs after the date of the merger agreement, including any actual or proposed change in or issuance or interpretation of applicable law (whether or not yet approved or effective), if such board of directors has concluded in good faith (after consultation with its financial advisors and outside legal counsel) that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law. In the event of such a change of recommendation, the other party may terminate the merger agreement. Accordingly, any changes in applicable tax laws or regulations could jeopardize or delay the merger.

Pfizer and Allergan must obtain required stockholder or shareholder approvals and governmental and regulatory approvals to consummate the merger, which, if delayed or not granted or granted with unacceptable conditions, may prevent, delay or impair the consummation of the merger, result in additional expenditures of money and resources and/or reduce the anticipated benefits of the merger.

The closing conditions to the merger include, among others, the receipt of required approvals from the Pfizer stockholders and the Allergan shareholders, clearance of the merger by certain governmental and regulatory authorities, including the expiration or termination of applicable waiting periods under the HSR Act and other filings or approvals as may be required pursuant to the antitrust and competition laws of certain foreign countries. The governmental agencies with which the parties will make these filings and seek certain of these approvals and consents have broad discretion in administering the governing regulations. Pfizer and Allergan can provide no assurance that all required approvals and consents will be obtained. Moreover, as a condition to their approval of the transaction, certain governmental agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of the business of the combined company after the closing of the merger. Any one of these requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the effective time or reduce the anticipated benefits of the merger. Further, no assurance can be given that the required stockholder and shareholder approvals will be obtained or that the required closing conditions will be satisfied, and, if all required consents and approvals are obtained and the closing conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals or clearances. Finally, the closing of the merger is subject to the closing of the Allergan divestiture transaction, which itself is subject to certain closing conditions, including receipt of governmental and regulatory approvals, and no assurance can be given that the closing of this transaction will occur on a timely basis or at all. If Pfizer and

 

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Allergan agree to any requirements, limitations, costs, divestitures or restrictions in order to obtain any approvals or clearances required to consummate the transaction, these requirements, limitations, costs, divestitures or restrictions could adversely affect the integration of the two companies’ operations and/or reduce the anticipated benefits of the merger. The occurrence of any of the foregoing could result in a failure to consummate the merger or have a material adverse effect on the business and results of operations of the combined company. For additional information, see “The Transactions—Regulatory Approvals Required for the Merger.”

The merger agreement may be terminated in accordance with its terms and the merger may not be consummated.

The merger agreement contains a number of conditions that must be fulfilled to close the merger. Those conditions include: the approval of the Pfizer merger proposal by the Pfizer stockholders; the approval of each of the Allergan required proposals by the Allergan shareholders; the consummation of the Allergan share split; receipt of the requisite regulatory and antitrust approvals, including clearance under the HSR Act; the absence of orders prohibiting the closing of the merger; the effectiveness of the registration statement of which this joint proxy statement/prospectus is a part; the approval of an Irish prospectus, if required by Irish Prospectus Law; the approval for listing on the NYSE of the Allergan ordinary shares to be issued to Pfizer stockholders; 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 under the merger agreement in all material respects; and the closing of the Allergan divestiture transaction. These conditions to the closing of the merger may not be fulfilled and, accordingly, the merger may not be consummated. In addition, if the merger is not consummated by October 31, 2016 (subject to extension to March 31, 2017 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 merger, which conditions are capable of being satisfied) are conditions relating to the Pfizer stockholder and Allergan shareholder approvals, occurrence of the Allergan share split, certain required regulatory filings and clearances, effectiveness of the registration statement, listing on the NYSE of the Allergan ordinary shares and approval of an Irish prospectus), either Pfizer or Allergan may terminate the merger agreement. In addition, Pfizer or Allergan may elect to terminate the merger agreement in certain other circumstances, including by Pfizer, if, prior to receipt of approval of the Allergan required proposals, the Allergan board of directors makes a change of recommendation, by Allergan, if, prior to receipt of approval of the Pfizer merger proposal, the Pfizer board of directors makes a change of recommendation, and by either Pfizer or Allergan, if, following the date of the merger agreement, there has been an “adverse tax law change” (as defined in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”). The parties can also mutually decide to terminate the merger agreement at any time prior to the consummation of the merger. See “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.”

The merger agreement contains provisions that restrict the ability of the Allergan board of directors to pursue alternatives to the merger and to change its recommendation that Allergan shareholders vote for the approval of the Allergan proposals. In specified circumstances Pfizer may be entitled to receive a termination fee of up to $3.5 billion.

Under the merger agreement, Allergan is generally prohibited from soliciting, initiating or knowingly encouraging, or negotiating regarding or furnishing information in furtherance of, any inquiry, proposal or offer which constitutes or would reasonably be expected to lead to a competing proposal. In addition, Allergan may not terminate the merger agreement to enter into any agreement with respect to a superior proposal. If the Allergan board of directors (after consultation with Allergan’s financial advisors and legal counsel) effects a change of recommendation in response to a superior proposal and the Pfizer board of directors confirms (after consultation with Pfizer’s financial advisors and legal counsel) that it does not intend to change its recommendation, Pfizer may be entitled to terminate the merger agreement and receive a termination fee of $3.5 billion. If a competing proposal for Allergan is made public after the date of the merger agreement, the merger agreement is terminated as a result of the Allergan shareholders’ subsequent failure to approve the Allergan

 

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required proposals at the Allergan EGM and Allergan consummates a transaction with respect to a competing proposal within 12 months of termination of the merger agreement or enters into a definitive agreement with respect to a competing proposal within 12 months of termination of the merger agreement which is later consummated, Pfizer may be entitled to receive a termination fee of $3.5 billion. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Allergan from considering or proposing an acquisition, even if such third party were prepared to enter into a transaction that would be more favorable to Allergan and its shareholders than the merger and the other transactions contemplated by the merger agreement. Additionally, Pfizer may be entitled to receive a termination fee of $1.5 billion upon termination of the merger agreement by Pfizer or Allergan due to the failure of the Allergan shareholders to approve the Allergan required proposals at the Allergan EGM, or a termination fee of $3.0 billion or $3.5 billion if Pfizer terminates the merger agreement because the Allergan board of directors has made a change of recommendation (other than in response to a superior proposal) on or prior to March 1, 2016, or after March 1, 2016, respectively, in each case if the Pfizer board of directors has not made a change of recommendation. See “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.”

The merger agreement contains provisions that restrict the ability of the Pfizer board of directors to pursue alternatives to the merger and to change its recommendation that Pfizer stockholders vote for the approval of the Pfizer proposals. In specified circumstances, Allergan may be entitled to receive termination fee of up to $3.5 billion.

Under the merger agreement, Pfizer is generally prohibited from soliciting, initiating or knowingly encouraging, negotiating regarding or furnishing information in furtherance of, any inquiry, proposal or offer which constitutes or would reasonably be expected to lead to a competing proposal. In addition, Pfizer may not terminate the merger agreement to enter into any agreement with respect to a superior proposal. If the Pfizer board of directors (after consultation with Pfizer’s financial advisors and legal counsel) effects a change of recommendation in response to a superior proposal and the Allergan board of directors confirms (after consultation with Allergan’s financial advisors and legal counsel) that it does not intend to change its recommendation, Allergan may be entitled to terminate the merger agreement and receive a termination fee of $3.5 billion. If a competing proposal for Pfizer is made public after the date of the merger agreement, the merger agreement is terminated as a result of the Pfizer stockholders’ subsequent failure to approve the Pfizer merger proposal at the Pfizer special meeting and Pfizer consummates a transaction with respect to a competing proposal within 12 months of termination of the merger agreement or enters into a definitive agreement with respect to a competing proposal within 12 months of termination of the merger agreement and such transaction is later consummated, Allergan may be entitled to receive a termination fee of $3.5 billion. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Pfizer from considering or proposing an acquisition, even if such third party were prepared to enter into a transaction that would be more favorable to Pfizer and its stockholders than the merger. Additionally, Allergan may be entitled to receive a termination fee of $1.5 billion upon termination of the merger agreement by Allergan or Pfizer due to the failure of the Pfizer stockholders to approve the Pfizer merger proposal at the Pfizer special meeting, or a termination fee of $3.0 billion or $3.5 billion if Allergan terminates the merger agreement because the Pfizer board of directors has made a change of recommendation (other than in response to a superior proposal) on or prior to March 1, 2016, or after March 1, 2016, respectively, in each case if the Allergan board of directors has not made a change of recommendation. See “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.”

While the merger is pending, Pfizer and Allergan will be subject to contractual restrictions and business uncertainties that could adversely affect their businesses and operations. These uncertainties could also adversely affect the combined company following the consummation of the merger.

Uncertainty about the effect of the merger on employees, customers and suppliers may have an adverse effect on Pfizer and Allergan. These uncertainties may impair Pfizer’s and Allergan’s ability to attract, retain and

 

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motivate key personnel until the merger is consummated and for a period of time thereafter, and could cause customers, suppliers and others who deal with Pfizer and Allergan to seek to change existing business relationships with Pfizer and/or Allergan. Employee retention may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the businesses, the business of the combined company following the merger could be seriously harmed.

In addition, the merger agreement restricts Allergan and Pfizer from taking specified actions until the merger occurs without the consent of the other party. These restrictions may, among other things, prevent Allergan or Pfizer from pursuing attractive business opportunities that may arise prior to the consummation of the merger. See “The Merger Agreement—Covenants and Agreements” for a description of the restrictive covenants applicable to Allergan and Pfizer.

Pfizer and Allergan directors and officers may have interests in the merger different from the interests of Pfizer stockholders and Allergan shareholders.

Certain of the directors and executive officers of Pfizer and Allergan negotiated the terms of the merger agreement, and the Pfizer board of directors and the Allergan board of directors, respectively, recommended that the stockholders of Pfizer and the shareholders of Allergan vote in favor of the Pfizer proposals and the Allergan proposals, respectively. Pfizer and Allergan directors and executive officers may have interests in the merger that are different from, or in addition to, those of Pfizer stockholders and Allergan shareholders, respectively. These interests include, but are not limited to, the continued service of certain directors of Pfizer and Allergan as directors of the combined company, the continued employment of certain executive officers of Pfizer and Allergan by the combined company, the treatment in the merger of stock options, total shareholder return units, restricted stock, restricted stock units, performance stock units, restricted shares, restricted share awards, deferred awards, bonus awards, change of control employment agreements and other rights held by Pfizer and Allergan directors and executive officers, and provisions in the merger agreement regarding continued indemnification of and advancement of expenses to Pfizer and Allergan directors and officers. Pfizer stockholders and Allergan shareholders should be aware of these interests when they consider their respective board of directors’ recommendation that they vote in favor of the Pfizer proposals and the Allergan proposals, respectively.

The members of the Pfizer board of directors were aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending that Pfizer stockholders approve the adoption of the merger agreement. The interests of Pfizer directors and executive officers are described in more detail in the section of this joint proxy statement/prospectus entitled “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger.”

The members of the Allergan board of directors were aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending that Allergan shareholders approve the Allergan proposals. The interests of Allergan directors and executive officers are described in more detail in the section of this joint proxy statement/prospectus entitled “The Transactions—Interests of the Allergan Directors and Executive Officers in the Merger.”

Allergan shareholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

Allergan shareholders currently have the right to vote in the election of the Allergan board of directors and on other matters affecting Allergan. Upon the consummation of the merger, each Allergan shareholder will become a shareholder of the combined company with a percentage ownership of the combined company that is smaller than such shareholder’s prior percentage ownership of Allergan. It is currently expected that the former shareholders of Allergan as a group will receive shares in the merger constituting, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer and Allergan preferred

 

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shares, approximately 44% of the outstanding combined company ordinary shares immediately following the effective time, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015. Because of this, Allergan shareholders will have less influence on the management and policies of the combined company than they now have on the management and policies of Allergan.

Pfizer stockholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

Pfizer stockholders currently have the right to vote in the election of the Pfizer board of directors and on other matters affecting Pfizer. Upon the consummation of the merger, each Pfizer stockholder that receives share consideration in the merger will become a shareholder of the combined company with a percentage ownership of the combined company that is smaller than such stockholder’s prior percentage ownership of Pfizer. It is expected that the former stockholders of Pfizer as a group will receive shares in the merger constituting, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer preferred shares and Allergan preferred shares, approximately 56% of the outstanding combined company ordinary shares immediately following the effective time, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015. Because of this, Pfizer stockholders will have less influence on the management and policies of the combined company than they now have on the management and policies of Pfizer.

Pfizer stockholders will receive combined company ordinary shares as a result of the merger, which have rights different from shares of Pfizer common stock and Pfizer preferred shares.

Upon consummation of the merger, the rights of former Pfizer stockholders who receive Allergan ordinary shares, which will become the combined company ordinary shares, and become shareholders of the combined company will be governed by the Allergan constitution, which, subject to the amendments contemplated by the merger agreement, will become the constitution of the combined company, and by Irish law. The rights associated with shares of Pfizer common stock and Pfizer preferred shares are different from the rights associated with Allergan ordinary shares. Material differences between the rights of stockholders of Pfizer and the rights of shareholders of Allergan include differences with respect to, among other things, distributions, dividends, share repurchases and redemptions, the election of directors, the removal of directors, the fiduciary and statutory duties of directors, conflicts of interests of directors, the indemnification of directors and officers, limitations on director liability, the convening of annual meetings of shareholders and special shareholder meetings, notice provisions for meetings, the quorum for shareholder meetings, the adjournment of shareholder meetings, the exercise of voting rights, shareholder action by written consent, shareholder suits, shareholder approval of certain transactions, rights of dissenting shareholders, anti-takeover measures and provisions relating to the ability to amend the governing documents. See “Comparison of the Rights of Pfizer Stockholders and Allergan Shareholders” for a discussion of the different rights associated with Allergan ordinary shares and Pfizer common stock.

Following the merger, the composition of the combined company board of directors will be different than the composition of the current Pfizer board of directors or the current Allergan board of directors.

Upon consummation of the merger, the composition of the board of directors of the combined company will be different than the current Pfizer board of directors and the current Allergan board of directors. The Pfizer board of directors currently consists of 11 directors and the Allergan board of directors currently consists of 12 directors. Upon the consummation of the merger, the board of directors of the combined company will consist of 15 members, 11 of whom will be the 11 directors serving on the Pfizer board of directors prior to the closing of the merger and four of whom will be directors serving on the Allergan board of directors prior to the closing of the merger, including Paul M. Bisaro, the current Executive Chairman of Allergan, and Brenton L. Saunders, the current Chief Executive Officer and President of Allergan, and two other Allergan directors to be mutually agreed between Pfizer and Allergan prior to the consummation of the merger. This new composition of the board of directors of the combined company may affect the future decisions of the combined company.

 

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The opinions of Pfizer’s and Allergan’s respective financial advisors do not reflect changes in circumstances that may have occurred or that may occur between the original signing of the merger agreement and the consummation of the merger.

Neither the Pfizer board of directors nor the Allergan board of directors has obtained updated opinions from their respective financial advisors as of the date of this joint proxy statement/prospectus, nor does either expect to receive updated, revised or reaffirmed opinions prior to the consummation of the merger. Changes in the operations and prospects of Pfizer or Allergan, general market and economic conditions and other factors that may be beyond the control of Pfizer or Allergan, and on which Pfizer’s and Allergan’s financial advisors’ opinions were based, may significantly alter the value of Pfizer or Allergan or the prices of shares of Pfizer common stock or Allergan ordinary shares by the time the merger is consummated. The opinions do not speak as of the time the merger will be consummated or as of any date other than the date of such opinions. Because Pfizer’s and Allergan’s financial advisors will not be updating their opinions, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger is consummated. The Pfizer board of directors’ recommendation that Pfizer stockholders vote “FOR” the Pfizer proposals and the Allergan board of directors’ recommendation that Allergan shareholders vote “FOR” the Allergan proposals, however, are made as of the date of this joint proxy statement/prospectus. For a description of the opinions that the Pfizer board of directors and the Allergan board of directors received from their respective financial advisors, see “The Transactions—Opinions of Pfizer’s Financial Advisors” and “The Transactions—Opinions of Allergan’s Financial Advisors.”

Failure to consummate the merger could negatively impact Pfizer and Allergan and their respective future operations.

If the merger is not consummated for any reason, Pfizer and Allergan may be subjected to a number of material risks. The price of Pfizer common stock and of Allergan ordinary shares may decline to the extent that their current market prices reflect a market assumption that the merger will be consummated. In addition, some costs related to the merger must be paid by Pfizer and Allergan whether or not the merger is consummated. Furthermore, Pfizer and Allergan may experience negative reactions from their respective stockholders or shareholders, customers and employees.

Combined company ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.

Irish capital acquisitions tax (“CAT”) (currently levied at a rate of 33% above certain tax-free thresholds) could apply to a gift or inheritance of combined company ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because combined company ordinary shares may 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 Tax Consequences of the Merger—Irish Tax Considerations—Capital Acquisitions Tax (CAT).”

Risks Related to the Business of the Combined Company

Pfizer and Allergan may fail to realize all of the anticipated benefits of the merger or those benefits may take longer to realize than expected. The combined company may also encounter significant difficulties in integrating the two businesses.

The ability of Pfizer and Allergan to realize the anticipated benefits of the merger will depend, to a large extent, on the combined company’s ability to integrate the two businesses. The combination of two independent businesses is a complex, costly and time-consuming process. As a result, Pfizer and Allergan will be required to devote significant management attention and resources to integrating their business practices and operations. The integration process may disrupt the businesses and, if the planned integration is implemented ineffectively, the combined company may not realize the full expected benefits of the merger. The failure to meet the challenges

 

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involved in integrating the two businesses and to realize the anticipated benefits of the merger 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 attention. The difficulties of combining the operations of the companies include, among others:

 

    the diversion of management attention to integration matters;

 

    difficulties in integrating operations and systems;

 

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

 

    difficulties in assimilating employees and in attracting and retaining key personnel;

 

    challenges in keeping existing customers and obtaining new customers;

 

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

 

    difficulties in managing the expanded operations of a significantly larger and more complex company and in coordinating a geographically dispersed organization; and

 

    potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the merger, including possible adverse tax consequences to the combined company pursuant to the rules under Section 7874 (“Section 7874”) of the Code, as a result of the merger or otherwise.

Many of these factors are outside of the control of Pfizer and Allergan and/or will be outside the control of the combined company, and any one of them could result in increased costs, decreased expected revenues and diversion of management 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 Pfizer and Allergan are integrated successfully, the full benefits of the merger may not be realized, including, among others, 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 Pfizer and Allergan. All of these factors could cause dilution to the earnings per share of the combined company, decrease or delay the expected accretive effect of the merger, and negatively impact the price of the combined company ordinary shares. As a result, it cannot be assured that the combination of Pfizer and Allergan will result in the full realization of the benefits anticipated from the transaction within the anticipated time frames or at all.

Pfizer and Allergan will incur direct and indirect costs as a result of the merger.

Pfizer and Allergan will incur substantial expenses in connection with and as a result of completing the merger, and over a period of time following the consummation of the merger, the combined company also expects to incur substantial expenses in connection with integrating and coordinating the businesses, operations, policies and procedures of Pfizer and Allergan. A portion of the transaction costs related to the merger will be incurred regardless of whether the merger is consummated. While Pfizer and Allergan have assumed that a certain level of transaction expenses will be incurred, factors beyond Pfizer’s and Allergan’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. These expenses may exceed the costs historically borne by Pfizer and Allergan. These costs could adversely affect the financial condition and results of operations of Pfizer and Allergan prior to the merger and of the combined company following the merger.

 

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The combined company’s actual financial position and results of operations may differ materially from the unaudited pro forma financial data included in this joint proxy statement/prospectus.

The pro forma financial information contained in this joint proxy statement/prospectus is presented for illustrative purposes only and may not be an indication of what the combined company’s financial position or results of operations would have been had the merger been consummated on the dates indicated. The pro forma financial information has been derived from the audited and unaudited historical financial statements of Pfizer, Allergan and certain companies previously acquired by Allergan, and certain adjustments and assumptions have been made regarding the combined company after giving effect to the merger. Certain assets and liabilities of Allergan have been measured at fair value based on various preliminary estimates using assumptions that Pfizer 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 and may include additional assets acquired or liabilities assumed 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, Pfizer, 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 could adversely affect Pfizer or Allergan and their respective results of operations, financial condition and cash flows. Pfizer, Allergan and their respective affiliates also engage from time to time in settlement discussions regarding such proceedings, including matters involving federal and state authorities. The impact of such settlements could be material to their results of operations, financial condition and cash flows. 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 the combined company’s financial condition or results of operations following the closing. Any material variance from the pro forma financial information may cause significant variations in the market price of the combined company ordinary shares. See “Unaudited Pro Forma Combined Financial Information.”

The merger may not be accretive and may cause dilution to the earnings per share of the combined company, which may negatively affect the market price of the combined company ordinary shares.

As a result of the merger and the Allergan share split, it is currently estimated that the combined company will issue or reserve for issuance approximately [          ] ordinary shares. The issuance of these new shares could have the effect of depressing the market price of the combined company ordinary shares.

In addition, Pfizer or Allergan (or the combined company after the merger) could encounter other transaction-related costs, such as the failure to realize all of the benefits anticipated in the merger, which could cause dilution to the combined company’s earnings per share or decrease or delay the expected accretive effect of the merger and cause a decrease in the market price of the combined company ordinary shares.

Finally, Pfizer’s and Allergan’s expectations regarding the timing and amount of accretion following the consummation of the merger reflect the impact of anticipated share repurchases by Pfizer and the combined company. The actual timing and size of any such share repurchases will depend on actual and expected financial results and the sufficiency of distributable reserves, as well as assessments at the time regarding capital allocation alternatives. Reduced or delayed share repurchase activity may result in less accretion.

 

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The IRS may not agree with the conclusion that the combined company should be treated as a non-U.S. corporation for U.S. federal income tax purposes following the merger.

As described more fully below, under current law, the combined company is not expected to be treated as a U.S. corporation for U.S. federal income tax purposes as a result of the merger. A corporation is generally considered a tax resident in the jurisdiction of its organization or incorporation for U.S. federal income tax purposes. Because the combined company will be an Irish incorporated entity, it would generally be classified as a non-U.S. corporation (and, therefore, a non-U.S. tax resident) under the applicable rules. However, Section 7874 of the Code provides an exception under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes.

The percentage (by vote and value) of the combined company ordinary shares considered held for purposes of Section 7874 of the Code by former shareholders of an acquired U.S. corporation (e.g., Pfizer) immediately after the merger by reason of holding stock of an acquired U.S. corporation (e.g., Pfizer common stock) is referred to as the “Section 7874 percentage.”

Under Section 7874 of the Code, if the Section 7874 percentage is 80% or more, and certain other circumstances exist, the combined company will be treated as a U.S. corporation for U.S. federal income tax purposes. If the combined company were to be treated as a U.S. corporation for U.S. federal income tax purposes, it would be subject to U.S. corporate income tax on its worldwide income, and the income of its non-U.S. subsidiaries would be subject to U.S. tax when repatriated or when deemed recognized under the U.S. tax rules for controlled foreign subsidiaries, including as a result of such subsidiaries having any investments in certain U.S. property such as stock or debt obligations of U.S. affiliates. In such case, the combined company would be subject to substantially greater U.S. tax liability than currently contemplated. Additionally, any transactions undertaken by Pfizer or Allergan to integrate their combined operations might give rise to U.S. taxable gain. Moreover, in such case, a non-U.S. shareholder of the combined company would be subject to U.S. withholding tax on the gross amount of any dividends paid by the combined company to such shareholder (subject to an exemption or reduced rate available under an applicable tax treaty).

Based on the rules for determining share ownership under Section 7874 of the Code and certain factual assumptions, after the merger, the Section 7874 percentage is expected to be less than 80% (and is, in fact, expected to be less than 60%). Therefore, under current law, the combined company is not expected to be treated as a U.S. corporation for U.S. federal income tax purposes as a result of the merger.

However, the determination of the Section 7874 percentage is subject to various adjustments under the Code and the U.S. Treasury Regulations promulgated thereunder, and there is limited guidance regarding Section 7874 of the Code, including with respect to the application of the ownership test described above. As such, determining the Section 7874 percentage is complex and is subject to factual and legal uncertainties. Thus, there can be no assurance that the Internal Revenue Service (the “IRS”) will agree with the position that the combined company should not be treated as a U.S. corporation. In addition, the U.S. Treasury has recently announced that it intends to issue U.S. Treasury Regulations interpreting Section 7874 of the Code. These U.S. Treasury Regulations would, among other things, disregard, for purposes of determining the Section 7874 percentage, certain non-ordinary course distributions made by Pfizer during the 36 months preceding the merger, including ordinary course dividends and share repurchases, as well as the distribution of the stock of Zoetis Inc. (“Zoetis”) to Pfizer’s stockholders in June 2013. Such U.S. Treasury Regulations have not yet been issued and their scope and precise effect are unclear. Such U.S. Treasury Regulations will apply to the merger even if promulgated after the merger is consummated and will likely have the effect of increasing the Section 7874 percentage. Even taking into account the anticipated effect of these proposed U.S. Treasury Regulations, however, the Section 7874 percentage is expected to be less than 80% (and is, in fact, expected to be less than 60%). There can be no assurance that the IRS will agree with the position that the Section 7874 percentage is less than 80%.

Even if the Section 7874 percentage were determined to be less than 80% in the merger, it is possible that the IRS could assert that Allergan should be treated as a U.S. corporation for U.S. federal income tax purposes as

 

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a result of prior transactions. On October 1, 2013, Actavis plc acquired all of the capital stock of Actavis, Inc., a Nevada corporation, and Warner Chilcott plc, a company incorporated under the laws of Ireland (the “Warner Chilcott transaction”). Subsequently, on July 1, 2014, Actavis plc acquired all of the common stock of Forest Laboratories, Inc., a company incorporated under the laws of the State of Delaware (the “Forest transaction”). In addition, on March 17, 2015, Actavis plc acquired all of the capital stock of Allergan, Inc., a company incorporated under the laws of Delaware (the “Legacy Allergan transaction”). Following the completion of the Legacy Allergan transaction, Actavis plc was renamed Allergan plc. Allergan believes that in the Warner Chilcott transaction, the Section 7874 percentage was less than 80% and consequently that Actavis plc should have been treated as a non-U.S. corporation following the Warner Chilcott transaction. In addition, Allergan believes that in the Forest transaction, the Section 7874 percentage was less than 80% and consequently that Actavis plc should have been treated as a non-U.S. corporation following the Forest transaction. Finally, Allergan believes that in the Legacy Allergan transaction, the Section 7874 percentage was less than 80% and consequently that Allergan should be treated as a non-U.S. corporation following the Legacy Allergan transaction. However, as described above, there is limited guidance regarding the application of Section 7874 of the Code, and the IRS may assert that the Section 7874 percentage was 80% or more in one or more of such transactions. In the event that the IRS were to prevail with such assertion, Allergan could be treated as a U.S. corporation for U.S. federal income tax purposes and, as a result, the combined company could be treated as a U.S. corporation for U.S. federal income tax purposes.

In addition, for purposes of Section 7874 of the Code, multiple acquisitions of U.S. corporations by a non-U.S. 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 determining the Section 7874 percentage.

As a result, even if the Section 7874 percentage was less than 80% in each of the Warner Chilcott, Forest, and Legacy Allergan transactions, the IRS may assert that the merger of Pfizer and Allergan should be integrated with one or more of such transactions and treated as a single transaction. Each of Allergan and Pfizer believes that the merger of Pfizer and Allergan is a separate transaction from such prior transactions and should not be integrated with one or more of such transactions. However, there can be no assurance that the IRS will agree with that position and, in the event that the IRS were to prevail with an assertion that the merger of Pfizer and Allergan should be integrated with more than one such prior transaction, the combined company could be treated as a U.S. corporation for U.S. federal tax purposes.

See “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger to Pfizer and Allergan” for a more detailed discussion of the application of Section 7874 of the Code to the merger.

The IRS may not agree with the conclusion that the combined company is not subject to certain adverse consequences for U.S. federal income tax purposes following the merger.

As described above, based on the rules for determining share ownership under Section 7874 of the Code and certain factual assumptions, after the merger, the Section 7874 percentage (as defined above in “—The IRS may not agree with the conclusion that the combined company should be treated as a non-U.S. corporation for U.S. federal income tax purposes following the merger”) is expected to be less than 60%. However, if the Section 7874 percentage were determined to be at least 60% (but less than 80%), and certain other circumstances exist, Section 7874 of the Code would cause the combined company to be treated as a “surrogate foreign corporation,” which could erode some of the synergies expected from the combination during the 10-year period following the merger. In addition, regardless of the Section 7874 percentage, it is possible that these certain adverse tax consequences would apply to the combined company as a result of prior transactions entered into by Allergan. In either case, Pfizer could be prohibited from using its foreign tax credits or other attributes to offset the income or gain recognized by reason of the transfer of property to a foreign related person or any income received or accrued by reason of a license of any property by Pfizer to a foreign related person. In addition, the

 

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IRS has announced that it will promulgate new rules, which, in such situation, may limit the combined company’s ability to integrate certain of its non-U.S. operations or access cash earned by Pfizer’s non-U.S. subsidiaries, in each case without incurring substantial U.S. tax liabilities. Moreover, in such case, Section 4985 of the Code and rules related thereto would impose an excise tax on the value of certain Pfizer stock compensation held directly or indirectly by certain “disqualified individuals” (including officers and directors of Pfizer) at a rate equal to 15%.

As previously discussed, based on the rules for determining share ownership under Section 7874 of the Code and the U.S. Treasury Regulations promulgated thereunder, and certain factual assumptions, the Section 7874 percentage is expected to be less than 60%. However, as described above, there is limited guidance regarding the application of Section 7874 of the Code, and there can be no assurance that the IRS will agree with the position that the Section 7874 percentage is less than 60%. Moreover, even if the Section 7874 percentage were determined to be less than 60%, the IRS may assert that the merger should be integrated with the Legacy Allergan transaction as a single transaction. As described above, each of Allergan and Pfizer believes that the merger of Pfizer and Allergan is a separate transaction from such prior transactions and should not be integrated with one or more of such transactions; however, there can be no assurance that the IRS will agree with that position. In addition, it is possible that the combined company (including Pfizer) will remain subject to certain adverse tax consequences as a result of prior transactions entered into by Allergan. In the event that the IRS were to prevail with any such assertion, Section 7874 of the Code would subject Pfizer and its U.S. affiliates to the limitations described above.

See “Certain Tax Consequences of the Merger—U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Consequences of the Merger to Pfizer and Allergan” for a more detailed discussion of the application of Section 7874 of the Code to the merger.

Future potential changes to the tax laws could result in the combined company being treated as a U.S. corporation for U.S. federal tax purposes, and if adopted prior to closing, could jeopardize the consummation of the merger.

As discussed above, under current law, the combined company is expected to be treated as a non-U.S. corporation for U.S. federal income tax purposes. However, changes to Section 7874 of the Code, or the U.S. Treasury Regulations promulgated thereunder, could affect the combined company’s status as a non-U.S. corporation for U.S. federal income tax purposes. Any such changes could have prospective or retroactive application, and may apply even if enacted or asserted after the merger is consummated. If the combined company were to be treated as a U.S. corporation for federal tax purposes, it could be subject to substantially greater U.S. tax liability than currently contemplated as a non-U.S. corporation.

Prior to the closing of the merger, each of Pfizer and Allergan may terminate the merger agreement if, following the date of the merger agreement, there has been any change in applicable law (whether or not such change in law is yet effective) with respect to Section 7874 of the Code (or any other U.S. tax law), or any official interpretations thereof as set forth in published guidance by the IRS (other than IRS News Releases) (whether or not such change in official interpretation is yet effective), or there has been a bill or bills that would implement such a change which has been passed in identical form (or substantially identical form such that a conference committee is not required prior to submission of such legislation for the President’s approval or veto) by both houses of the U.S. Congress and for which the time period for the President of the United States to sign or veto such bill has not yet elapsed, in each case such that, once effective, in the opinion of nationally recognized U.S. tax counsel, would cause the combined company to be treated as a U.S. domestic corporation for U.S. federal income tax purposes following the merger.

Recent legislative proposals have aimed to expand the scope of U.S. corporate tax residence, including in such a way as would cause the combined company to be treated as a U.S. corporation if the management and control of the combined company and its affiliates were determined to be located primarily in the United States,

 

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or would reduce the Section 7874 percentage at or above which the combined company would be treated as a U.S. corporation. Thus, the rules under Section 7874 and other relevant provisions could change on a prospective or retroactive basis in a manner that could adversely affect the combined company and its affiliates.

Future changes to U.S. and non-U.S. tax laws could adversely affect the combined company.

The U.S. Congress, the Organisation for Economic Co-operation and Development and other government agencies in jurisdictions where the combined company and its affiliates will conduct business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, Ireland and other countries in which the combined company and its affiliates will do business, and any treaties to which such countries are parties, could change on a prospective or retroactive basis, and any such changes could adversely affect the combined company.

The tax rate that will apply to the combined company is uncertain and may vary from expectations.

There can be no assurance that the merger will improve the combined company’s ability to maintain any particular worldwide effective corporate tax rate. Pfizer and Allergan cannot give any assurance as to what the combined company’s effective tax rate will be after the merger because of, among other things, uncertainty regarding the tax laws (including future changes to such tax laws and interpretations thereof) of the jurisdictions in which the combined company and its affiliates will operate. The combined company’s actual effective tax rate may vary from Pfizer’s and Allergan’s expectations, and any such variance may be material. Additionally, tax laws or their implementation and applicable tax authority practices in any particular jurisdiction could change in the future, possibly on a retroactive basis, and any such change could have an adverse impact on the combined company and its affiliates.

Legislative or other governmental action in the U.S. could adversely affect the combined company’s business.

Various U.S. federal and state legislative and other proposals that would deny governmental contracts to U.S. companies (and subsidiaries of U.S. companies) that move (or have moved) their corporate location to a jurisdiction abroad may affect Pfizer, Allergan or the combined company if adopted. The likelihood that any such proposals might be adopted, the nature of the regulations that might be promulgated, or the effect such adoptions and increased regulatory scrutiny might have on Pfizer’s, Allergan’s or the combined company’s business cannot be predicted.

The laws of Ireland differ from the laws in effect in the United States and may afford less protection to holders of securities in the combined company.

It may not be possible to enforce court judgments obtained in the United States against the combined company in Ireland, based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against the combined company or its directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws, or hear actions against the combined company or those persons based on those laws. Allergan and Pfizer have been advised that the United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.

 

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A judgment obtained against the combined company will be enforced by the courts of Ireland if the following general requirements are met:

 

    U.S. courts must have had jurisdiction in relation to the particular defendant according to Irish conflict of law rules (the submission to jurisdiction by the defendant would satisfy this rule); and

 

    the judgment must be final and conclusive and the decree must be final and unalterable in the court which pronounces it.

A judgment can be final and conclusive even if it is subject to appeal or even if an appeal is pending. But where, however, the effect of lodging an appeal under the applicable law is to stay execution of the judgment, it is possible that in the meantime the judgment may not be actionable in Ireland. It remains to be determined whether final judgment given in default of appearance is final and conclusive. However, Irish courts may also refuse to enforce a judgment of the U.S. courts which meets the above requirements for one of the following reasons:

 

    the judgment is not for a definite sum of money;

 

    the judgment was obtained by fraud;

 

    the enforcement of the judgment in Ireland would be contrary to natural or constitutional justice;

 

    the judgment is contrary to Irish public policy or involves certain U.S. laws which will not be enforced in Ireland; or

 

    jurisdiction cannot be obtained by the Irish courts over the judgment debtors in the enforcement proceedings by personal service in Ireland or outside Ireland under Order 11 of the Irish Superior Courts Rules.

As an Irish company, the combined company will be governed by the Companies Act, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. The duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of securities of the combined company may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States. See “Comparison of the Rights of Pfizer Stockholders and Allergan Shareholders.

The combined company will seek Irish High Court approval of the creation of additional distributable reserves. Neither Pfizer nor Allergan is aware of any reason why the Irish High Court would not approve the creation of additional distributable reserves; however, the issuance of the required order is a matter for the discretion of the Irish High Court.

Under Irish law, dividends may be paid and share repurchases and redemptions must generally be funded only out of “distributable reserves.” While Pfizer and Allergan expect that the combined company will have some distributable reserves following consummation of the merger, the proposed creation of additional distributable reserves of the combined company involves either a reduction in the combined company’s share premium account, which requires the approval of the Irish High Court (and, in connection with seeking such court approval, the approval of the Allergan shareholders is being sought) and/or the generation of additional distributable reserves from its business activities. Neither Pfizer nor Allergan is aware of any reason why the Irish High Court would not approve the creation of additional distributable reserves; however, the issuance of the required order is a matter for the discretion of the Irish High Court. There is also no guarantee that the approval by Allergan shareholders will be obtained. Notwithstanding that Allergan shareholder approval and Irish High Court approval may be obtained, there is no guarantee that dividends will be paid. In the event that distributable

 

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reserves of the combined company are not created, the combined company’s ability to make distributions by way of dividends or otherwise, or to make share repurchases, may be restricted until such time as the combined company group has created sufficient distributable reserves from its business activities.

Transfers of combined company ordinary shares, other than by means of the transfer of book-entry interests in the Depository Trust Company, may be subject to Irish stamp duty.

It is expected that, for the majority of transfers of combined company ordinary shares, there will not be any Irish stamp duty. Transfers of combined company ordinary shares effected by means of the transfer of book-entry interests in the Depository Trust Company (“DTC”) are not subject to Irish stamp duty. However, if you hold your combined company ordinary shares directly rather than beneficially through DTC, any transfer of your combined company 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 shareholder who directly holds combined company 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 beneficial ownership of the shares 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 combined company ordinary shares. See “Certain Tax Consequences of the Merger—Irish Tax Considerations—Stamp Duty.”

In certain limited circumstances, dividends paid by Allergan may be subject to Irish dividend withholding tax.

In certain limited circumstances, Irish dividend withholding tax (“DWT”) (currently at a rate of 20%) may arise in respect of dividends paid on combined company ordinary shares. A number of exemptions from DWT exist pursuant to which shareholders resident in the United States and shareholders resident in the countries listed in Annex G attached to this joint proxy statement/prospectus (the “Relevant Territories”) may be entitled to exemptions from DWT.

See “Certain Tax Consequences of the Merger—Irish Tax Considerations—Withholding Tax on Dividends (DWT)” and, in particular, please note the requirement to complete certain relevant Irish Revenue Commissioners DWT forms (“DWT Forms”) in order to qualify for many of the exemptions.

Dividends paid in respect of combined company ordinary shares that are owned by a U.S. resident and held through DTC will not be subject to DWT provided 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 the combined company). Similarly, dividends paid in respect of combined company ordinary shares that are held outside of DTC and are owned by a former Pfizer stockholder who is a resident of the United States will not be subject to DWT if such shareholder satisfies the conditions of one of the exemptions, including the requirement to furnish a completed IRS Form 6166 or a valid DWT Form to the combined company’s transfer agent to confirm U.S. residence and claim an exemption. Combined company shareholders resident in other Relevant Territories may also be eligible for exemption from DWT on dividends paid in respect of their combined company ordinary shares provided they satisfy the conditions of one of the exemptions, including the requirement to furnish 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 the combined company) or to the combined company’s transfer agent (in respect of such shares held outside of DTC). However, other combined company shareholders may be subject to DWT, which could adversely affect the price of your combined company ordinary shares. See “Certain Tax Consequences of the Merger—Irish Tax Considerations—Withholding Tax on Dividends (DWT)” for more information on DWT.

 

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Risks Related to Pfizer’s Business

You should read and consider the risk factors specific to Pfizer’s business that will also affect the combined company after the merger. These risks are described in Part I, Item 1A of Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and in other documents that are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

Risks Related to Allergan’s Business

You should read and consider the risk factors specific to Allergan’s businesses that will also affect the combined company after the merger. These risks are described in Part I, Item 1A of Allergan’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and in other documents that are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements contained in, or incorporated by reference in, this joint proxy statement/prospectus or such other communication, as applicable that refer to Pfizer’s or Allergan’s estimated or anticipated future results, including estimated synergies, or other non-historical facts are forward-looking statements that reflect Pfizer’s or Allergan’s, as applicable, current perspective of existing trends and information as of the date of this joint proxy statement/prospectus. Forward-looking statements often use future dates or words such as “anticipate”, “target”, “possible”, “potential”, “predict”, “project”, “forecast”, “outlook”, “guidance”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aim”, “continue”, “will”, “may”, “might”, “would”, “could” or “should” or other words, phrases or expressions of similar meaning or the negative thereof. Such forward-looking statements include, but are not limited to, statements about the benefits of the merger and the other transactions contemplated by the merger agreement, including future financial and operating results, synergies, accretion and growth rates, Pfizer’s, Allergan’s or the combined company’s plans, objectives, expectations and intentions, plans relating to share repurchases and dividends and the expected timing of consummation of the merger. It is important to note that Pfizer’s and Allergan’s goals and expectations are not predictions of actual performance. Actual results may differ materially from Pfizer’s and Allergan’s current expectations depending upon a number of factors affecting Pfizer’s business, Allergan’s business and risks associated with business combination transactions and the combined company. These factors include, among others, the inherent uncertainty associated with financial projections; restructuring in connection with, and successful closing of, the merger; the subsequent integration of the businesses and the ability to recognize the anticipated synergies and benefits of the merger; the ability to obtain required regulatory approvals for the transactions (including the approval of antitrust authorities necessary to complete the transaction), the timing of obtaining such approvals and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transactions; the ability to obtain the requisite Pfizer stockholder and Allergan shareholder approvals; the risk that a condition to closing of the merger may not be satisfied on a timely basis or at all; the failure of the proposed merger to close for any other reason; risks relating to the value of the combined company ordinary shares to be issued in the Allergan share split and the merger; the loss of key senior management or scientific staff; the risks and uncertainties normally incident to the pharmaceutical industry, including product liability claims and the availability of product liability insurance on reasonable terms; the uncertainties inherent in research and development; the timing and success of product launches; the difficulty of predicting the timing or outcome of product development efforts and regulatory agency approvals or actions, if any; difficulties or delays in manufacturing; periodic dependence on a small number of products for a material source of net revenue or income; variability of trade buying patterns; market acceptance of and continued demand for Pfizer’s and Allergan’s products; the impact of competitive products and pricing; the availability and pricing of products and materials sourced from third parties; costs and efforts to defend or enforce intellectual property rights; risks that the carrying values of assets may be negatively impacted by future events and circumstances; successful compliance with governmental regulations applicable to Pfizer’s and Allergan’s facilities, products and/or businesses; the difficulty of predicting the timing or outcome of pending or future litigation or government investigations; changes in the laws and regulations affecting, among other things, pricing and reimbursement of pharmaceutical products; changes in tax laws or interpretations or guidance that could increase the combined company’s consolidated tax liabilities or reduce the expected benefits of the merger; changes in generally accepted accounting principles; the risks of fluctuations in foreign currency exchange rates; changes in global, political, economic, business, competitive, market and regulatory forces; and such other risks and uncertainties detailed in Pfizer’s periodic public filings with the SEC, including but not limited to Pfizer’s Annual Report on Form 10-K for the year ended December 31, 2015, and in other documents that are incorporated by reference into this joint proxy statement/prospectus and from time to time in Pfizer’s other investor communications, and such other risks and uncertainties detailed in Allergan’s periodic public filings with the SEC, including but not limited to Allergan’s Annual Report on Form 10-K for the year ended December 31, 2015, and in other documents that are incorporated by reference into this joint proxy statement/prospectus and from time to time in Allergan’s other investor communications. Except as expressly required by law, Pfizer and Allergan disclaim any intent or obligation to update or revise these forward-looking statements.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PFIZER

The following selected historical consolidated financial data is derived from Pfizer’s audited consolidated financial statements for each of the years ended December 31, 2015, 2014, 2013, 2012 and 2011. The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of Pfizer and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 that Pfizer previously filed with the SEC and that is incorporated by reference into this joint proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. For more information, see “Where You Can Find More Information.”

 

     Year Ended/As of December 31,(a)  

(in millions, except per common share data)

   2015      2014      2013      2012      2011  

Revenues(b)

   $ 48,851       $ 49,605       $ 51,584       $ 54,657       $ 61,035   

Income from continuing operations(b)

     6,975         9,119         11,410         9,021         7,860   

Total assets(b),(c)

     167,460         167,566         170,415         182,974         184,629   

Long-term obligations(b),(c),(d)

     73,064         74,357         73,801         77,758         79,287   

Earnings per common share—basic:

              

Income from continuing operations attributable to Pfizer Inc. common shareholders

   $ 1.13       $ 1.43       $ 1.67       $ 1.21       $ 1.00   

Discontinued operations—net of tax(e)

     —           0.01         1.56         0.75         0.28   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to Pfizer Inc. common shareholders

   $ 1.13       $ 1.44       $ 3.23       $ 1.96       $ 1.28   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share—diluted:

              

Income from continuing operations attributable to Pfizer Inc. common shareholders

   $ 1.11       $ 1.41       $ 1.65       $ 1.20       $ 0.99   

Discontinued operations—net of tax(e)

     —           0.01         1.54         0.74         0.28   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to Pfizer Inc. common shareholders

   $ 1.11       $ 1.42       $ 3.19       $ 1.94       $ 1.27   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash dividends paid per common share

   $ 1.12       $ 1.04       $ 0.96       $ 0.88       $ 0.80   

 

(a)  Reflects the acquisition of Hospira, Inc. on September 3, 2015 and the acquisition of King Pharmaceuticals, Inc. on January 31, 2011.
(b)  All amounts reflect the June 24, 2013 disposition of Zoetis and its presentation as a discontinued operation in all periods prior to 2014 presented.
(c)  All amounts reflect the retrospective adoption of a new accounting standard as of December 31, 2015 that requires all deferred tax assets and liabilities to be classified as noncurrent in the balance sheet.
(d)  Defined as Long-term debt, Pension benefit obligations, net, Postretirement benefit obligations, net, Noncurrent deferred tax liabilities, Other taxes payable and Other noncurrent liabilities.
(e)  Includes (i) the Animal Health (Zoetis) business through June 24, 2013, the date of disposal, (ii) the Nutrition business through November 30, 2012, the date of disposal and (iii) the Capsugel business through August 1, 2011, the date of disposal.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ALLERGAN

The financial information as of and for the fiscal years ended December 31, 2011 through December 31, 2015 was derived from the audited consolidated financial statements of Allergan. The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of Allergan and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Allergan’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 that Allergan previously filed with the SEC and that is incorporated by reference into this joint proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. For more information, see the section entitled “Where You Can Find More Information.”

 

     Years Ended December 31,  

(in millions, except per share amounts)

   2015(1)(2)(3)     2014(1)(6)     2013(1)(7)     2012(1)     2011(1)  

Operating Highlights:

          

Net revenues

   $ 15,071.0      $ 6,738.9      $ 2,602.5      $ 1,651.4      $ 4,584.4   

Net (loss) from continuing operations, net of tax

     (2,868.3     (2,407.1     (467.5     (240.9     **   

Net income/(loss) attributable to ordinary shareholders

     3,683.2        (1,630.5     (750.4     97.3        260.9   

Basic earnings/(loss) per share from continuing operations

   $ (8.44   $ (10.96   $ (3.29   $ (1.92     **   

Diluted earnings/(loss) per share from continuing operations

   $ (8.44   $ (10.96   $ (3.29   $ (1.92     **   

Basic earnings/(loss) per share

   $ 10.01      $ (7.42   $ (5.27   $ 0.77        **   

Diluted earnings/(loss) per share

   $ 10.01      $ (7.42   $ (5.27   $ 0.76      $ 2.06   

Weighted average shares outstanding:

          

Basic

     367.8        219.7        142.3        125.8        124.5   

Diluted

     367.8        219.7        142.3        128.4        126.5   

 

     At December 31,  

(in millions)

   2015(1)(2)(3)      2014(1)(4)(5)(6)      2013(1)(7)      2012(1)      2011(1)  

Balance Sheet Highlights:

              

Total assets

   $ 135,840.7       $ 52,758.0       $ 22,725.9       $ 14,114.8       $ 6,698.3   

Total debt and capital leases

     42,726.2         15,531.1         9,052.0         6,433.3         1,033.0   

Total equity

     76,589.3         28,335.5         9,537.1         3,856.4         3,562.5   

 

** Refer to note (1) below.
(1) On July 26, 2015 Allergan entered into the Allergan divestiture transaction agreement, under which Teva agreed to acquire Allergan’s global generic pharmaceuticals business and certain other assets. As a result of the transaction, Allergan is accounting for the assets and liabilities to be divested as held for sale. Further, the financial results of the business held for sale have been reclassified to discontinued operations for all periods presented in Allergan’s consolidated financial statements, except for the year ended December 31, 2011. Substantially all of Allergan’s results of operations for 2011 relate to the generics business being divested to Teva. Results of continuing operations for the year ended December 31, 2011 are de minimis and, therefore, the results presented are the combined business.
(2) On October 1, 2015, Allergan completed its acquisition of Kythera Biopharmaceuticals, Inc. The acquisition had the impact of increasing Allergan’ intangible assets.
(3) On March 17, 2015, Allergan completed the acquisition of Legacy Allergan. Legacy Allergan was a leading, fully integrated, specialty pharmaceutical company that specialized in ophthalmology, neurosciences and medical/aesthetics/dermatology/plastic surgery. Beginning March 17, 2015, the following items were included in Allergan’s operating results:

 

    total revenues and related cost of sales for Legacy Allergan products;

 

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    selling, general and administrative expenses and research and development expenses;

 

    amortization expense for intangible assets acquired;

 

    impairment losses on select assets; and

 

    increased interest expense from the senior secured notes assumed and the indebtedness incurred.

 

(4) On November 17, 2014, Allergan completed its acquisition of Durata Therapeutics, Inc. The acquisition had the impact of increasing Allergan’s intangible assets and lowering working capital.
(5) On July 2, 2014, Allergan completed its acquisition of Furiex Pharmaceuticals, Inc. The acquisition had the impact of increasing Allergan’s intangible assets and lowering working capital.
(6) On July 1, 2014, Allergan completed the Forest transaction. Forest Laboratories, Inc. was a leading, fully integrated, specialty pharmaceutical company largely focused on the United States market. Forest Laboratories, Inc. marketed a portfolio of branded drug products and developed new medicines to treat patients suffering from diseases principally in the following therapeutic areas: central nervous system, cardiovascular, gastrointestinal, respiratory, anti-infective, and cystic fibrosis. Beginning July 1, 2014, the following items were included in Allergan’s operating results:

 

    total revenues and related cost of sales for products of Forest Laboratories, Inc.;

 

    selling, general and administrative expenses and research and development expenses;

 

    amortization expense for intangible assets acquired;

 

    impairment losses on select assets; and

 

    increased interest expense from the senior secured notes assumed and the indebtedness incurred.

 

(7) On October 1, 2013, Allergan completed the Warner Chilcott transaction. Warner Chilcott plc was a leading specialty pharmaceutical company focused on women’s healthcare, gastroenterology, urology and dermatology segments of the branded pharmaceuticals market, primarily in North America. Beginning October 1, 2013, the following items were included in Allergan’s operating results:

 

    total revenues and related cost of sales for products of Warner Chilcott plc;

 

    selling, general and administrative expenses and research and development expenses;

 

    amortization expense for intangible assets acquired; and

 

    increased interest expense from the senior secured notes assumed and the $2.0 billion aggregate term loan indebtedness assumed, and subsequently refinanced, in connection with the Warner Chilcott transaction.

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following selected unaudited pro forma combined financial data is presented to illustrate the estimated effects of (i) the merger and the other transactions contemplated by the merger agreement and (ii) the acquisition of Legacy Allergan by Actavis plc on March 17, 2015. The selected pro forma financial data has been prepared using the acquisition method of accounting in accordance with GAAP under which the assets and liabilities of Allergan will be recorded by Pfizer at their respective fair values as of the date the merger is completed. Pfizer has been determined to be the accounting acquirer in the merger, while Allergan is treated as the legal acquirer.

The selected unaudited pro forma combined statement of income data gives preliminary effect of the merger and the Legacy Allergan transaction as if each occurred on January 1, 2015. The selected unaudited pro forma combined balance sheet data combines the historical consolidated balance sheets of Pfizer and Allergan, giving effect to the merger as if it had occurred on December 31, 2015.

The selected unaudited Pfizer pro forma financial data is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included in this joint proxy statement/prospectus. See “Unaudited Pro Forma Combined Financial Information.” In addition, the selected unaudited pro forma combined financial data was based on and should be read in conjunction with:

 

    the separate historical financial statements of Pfizer as of and for the year ended December 31, 2015 and the related notes contained in Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this joint proxy statement/prospectus, and

 

    the separate historical financial statements of Allergan as of and for the year ended December 31, 2015 and the related notes contained in Allergan’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this joint proxy statement/prospectus.

 

    the unaudited pro forma combined financial statements for the three months ended March 31, 2015, which give effect to the Legacy Allergan transaction included in the Current Report on Form 8-K of Allergan dated July 17, 2015, which is incorporated by reference into this joint proxy statement/prospectus.

The selected unaudited pro forma combined financial data has been presented for illustrative and informational purposes only. The selected unaudited pro forma combined financial data is not intended to represent what the selected results of operations or selected balances of the combined company actually would have been had the merger and the Legacy Allergan transaction been completed as of the dates indicated. In addition, the selected unaudited pro forma combined financial data does not purport to project the future financial position or operating results of the combined company. The pro forma adjustments reflect the assets and liabilities of Allergan at their preliminary estimated fair values. Differences between these preliminary estimates and the final acquisition accounting will occur and these differences could have a material impact on the selected unaudited pro forma financial data.

The historical consolidated financial information has been adjusted in the selected unaudited pro forma combined financial data to give effect to pro forma events that are (1) directly attributable to the merger and the Legacy Allergan transaction, (2) factually supportable, and (3) with respect to the statement of income, expected to have a continuing impact on the results of operations of the combined company.

The selected unaudited pro forma combined financial data does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the merger or the costs to integrate the operations of Pfizer and Allergan or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.

 

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Selected Unaudited Pro Forma Combined Statement of Income Data:

 

(MILLIONS, EXCEPT PER ORDINARY SHARE DATA)

   For the Year
Ended
December 31, 2015
 

Revenues

   $ 65,363   

Income/(loss) from continuing operations

     5,680   

Earnings per ordinary share – basic:

  

Income from continuing operations attributable to ordinary shareholders

   $ 0.51   

Earnings per ordinary share – diluted:

  

Income from continuing operations attributable to ordinary shareholders

   $ 0.51   
     As of December 31,
2015
 

Total assets(1)

   $         365,285   

Long-term obligations(1), (2)

     135,720   

 

(1)  Includes Allergan assets and liabilities held for sale related to the Allergan divestiture transaction.
(2) Defined as pro forma Long-term debt, Pension benefit obligations, net, Postretirement benefit obligations, net, Noncurrent deferred tax liabilities, Other taxes payable and Other noncurrent liabilities.

 

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE FINANCIAL DATA

The following table sets forth selected historical per share information of Pfizer and Allergan and unaudited pro forma combined per share information after giving effect to (i) the merger and the other transactions contemplated by the merger agreement and (ii) the acquisition of Legacy Allergan by Actavis plc on March 17, 2015, and the following:

 

    Allergan shareholders will receive 11.3 combined company ordinary shares for each Allergan ordinary share they hold in the Allergan share split.
    Each share of Pfizer common stock will be converted into one combined company ordinary share.
    Each Pfizer preferred share issued and outstanding immediately prior to the effective time will be converted into the number of shares of Pfizer common stock into which such Pfizer preferred share could have been converted at that time in accordance with the certificate of designations for the Pfizer preferred shares.
    Allergan preferred shares will remain outstanding following the merger.

The merger is structured as a “reverse merger,” in which the existing Allergan entity will become the parent entity of the combined company. Pfizer has been determined to be the accounting acquirer in the merger, while Allergan is treated as the legal acquirer. The combined company will account for the acquisition contemplated by the merger agreement using the acquisition method of accounting in accordance with GAAP. The combined company will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing of the merger. Any excess of the purchase price over those fair values will be recorded as goodwill. The acquisition accounting is dependent upon certain valuations of Allergan’s assets and liabilities and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement. The allocation of the purchase price to the assets acquired and liabilities assumed reflected in the unaudited pro forma condensed combined financial statements is based on preliminary estimates using assumptions Pfizer management believes are reasonable based on currently available information. Upon consummation of the merger, such valuation will be finalized, with the final purchase price and fair value assessment of assets and liabilities based on a detailed analysis that has not yet been consummated. See “The Transactions—Accounting Treatment of the Merger.”

Accordingly, the pro forma adjustments reflect the assets and liabilities of Allergan at their preliminary estimated fair values. Differences between these preliminary estimates and the final acquisition accounting will occur and these differences could have a material impact on the unaudited pro forma combined per share information set forth in the following table. In accordance with the requirements of the SEC, the pro forma and pro forma equivalent per share information gives effect to the merger as if the merger had been effective on January 1, 2015, in the case of income from continuing operations and dividends paid data, and December 31, 2015, in the case of book value per share data.

You should read this information in conjunction with the selected historical financial information, included elsewhere in this joint proxy statement/prospectus, and the historical financial statements of Pfizer and Allergan and related notes that have been filed with the SEC, certain of which are incorporated in this joint proxy statement/prospectus by reference. See “Selected Consolidated Historical Financial Data of Pfizer,” “Selected Consolidated Historical Financial Data of Allergan” and “Where You Can Find More Information”.

The unaudited Pfizer pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included in this joint proxy statement/prospectus. See “Unaudited Pro Forma Combined Financial Information.” The historical per share information of Pfizer and Allergan below is derived from audited financial statements as of and for the year ended December 31, 2015.

 

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The unaudited pro forma combined per share information does not purport to represent what the actual results of operations of Pfizer and Allergan would have been had been had the companies been combined during these periods or to project Pfizer’s and Allergan’s results of operations that may be achieved after the merger.

 

COMPARATIVE PER SHARE DATA    As of and for the
Year Ended
December 31, 2015
 

UNAUDITED PFIZER PRO FORMA COMBINED

  

Per ordinary share data:

  

Income from continuing operations:

  

Basic

   $ 0.51   

Cash dividends paid(1)

     N/A   

Book value(2)

     17.96   

PFIZER HISTORICAL

  

Per common share data:

  

Income from continuing operations:

  

Basic

   $ 1.13   

Cash dividends paid(1)

     1.12   

Book value(2)

     10.48   

ALLERGAN HISTORICAL

  

Per ordinary share data:

  

Income from continuing operations:

  

Basic

   $ (8.44

Cash dividend paid

     —     

Book value(2)

     194.14   

UNAUDITED PRO FORMA ALLERGAN EQUIVALENTS(3)

  

Per ordinary share data:

  

Income from continuing operations:

  

Basic

   $ 5.76   

Cash dividends (1)

     N/A   

Book value

     202.95   

 

(1)  The merger agreement includes a provision that Pfizer may continue to pay regular quarterly cash dividends on Pfizer’s common stock of not more than $0.28 per share per quarter (subject to annual adjustment, if any, in a manner consistent with past practice by the Pfizer Board of Directors), consistent with past practice as to timing of declaration, record date and payment date. On December 14, 2015, Pfizer declared a $0.30 dividend per share for the first quarter of 2016, payable on March 2, 2016, to stockholders of record at the close of business on February 5, 2016. The unaudited pro forma condensed combined financial statements do not present a combined dividend per share amount. The dividend policy of the combined company will be determined by the combined company board of directors following the merger.

 

(2)  Amount is calculated by dividing shareholders’ equity by common shares (for Pfizer historical) or ordinary shares (for unaudited Pfizer pro forma combined and for Allergan historical) outstanding.

 

(3)  Amounts are calculated by multiplying unaudited Pfizer pro forma combined per share amounts by the 11.3 Allergan share split.

 

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THE PFIZER SPECIAL MEETING

Date, Time and Place of the Pfizer Special Meeting

The special meeting of Pfizer stockholders will be held at [            ], at [            ] (local time), on [                    ], 2016. On or about [                    ], 2016, Pfizer commenced mailing this joint proxy statement/prospectus and the enclosed form of proxy to its stockholders entitled to vote at the Pfizer special meeting.

Purpose of the Pfizer Special Meeting

At the Pfizer special meeting, Pfizer stockholders will be asked to vote on the following items:

 

  1. the adoption of the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus;

 

  2. the adjournment of the Pfizer special meeting to another date and place if necessary or appropriate to solicit additional votes in favor of the Pfizer merger proposal; and

 

  3. on a non-binding, advisory basis, the compensation that may become payable to Pfizer’s named executive officers that is based on or otherwise relates to the merger, as disclosed in “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger.

Recommendation of the Pfizer Board of Directors

The Pfizer board of directors recommends that Pfizer stockholders vote “FOR” the Pfizer merger proposal, “FOR” the Pfizer adjournment proposal and “FOR” the Pfizer advisory compensation proposal. See “The Transactions—Recommendation of the Pfizer Board of Directors and Pfizer’s Reasons for the Merger.”

Consummation of the merger is conditioned upon approval of the Pfizer merger proposal by the Pfizer stockholders, but is not conditioned on the approval of the Pfizer adjournment proposal or the Pfizer advisory compensation proposal by the Pfizer stockholders.

Pfizer Record Date and Quorum

Record Date

The Pfizer board of directors has fixed the close of business on [                    ], 2016 as the record date for determining the holders of shares of Pfizer common stock and Pfizer preferred shares entitled to receive notice of and to vote at the Pfizer special meeting or any adjournments or postponements thereof.

As of the Pfizer record date, there were [        ] shares of Pfizer common stock outstanding and entitled to vote at the Pfizer special meeting held by [            ] holders of record. Each share of Pfizer common stock entitles the holder to one vote at the Pfizer special meeting on each proposal to be considered at the Pfizer special meeting. In addition, as of the Pfizer record date, there were [        ] Pfizer preferred shares outstanding and entitled to vote at the Pfizer special meeting, all of which are held of record by [        ]. Each Pfizer preferred share entitles the holder to a number of votes equal to the number of shares of Pfizer common stock into which such Pfizer preferred share could be converted on the record date for determining the stockholders entitled to vote, rounded to the nearest one one-hundredth of a vote, or 2,574.87 votes, subject to adjustment under certain circumstances provided in the certificate of designations for the Pfizer preferred shares. The Pfizer common stock and Pfizer preferred shares will vote together as one class as the “voting stock of Pfizer” on all of the Pfizer proposals. Pfizer shares that are held in treasury will not be entitled to vote at the Pfizer special meeting.

Quorum

The presence of the holders of stock representing a majority of the voting power of all shares of Pfizer stock issued and outstanding and entitled to vote at the Pfizer special meeting, in person or represented by proxy, is

 

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necessary to constitute a quorum. Abstentions will be counted as present and entitled to vote for purposes of determining a quorum. Broker non-votes (shares of Pfizer common stock or Pfizer preferred shares held by brokers, banks or nominees that are present in person or by proxy at the Pfizer special meeting but with respect to which the broker or other stockholder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal), if any, will not be counted as present for purposes of determining a quorum. Shares of Pfizer common stock and Pfizer preferred shares held in treasury will not be included in the calculation of the number of shares of Pfizer stock represented at the Pfizer special meeting for purposes of determining a quorum.

Required Vote

Approval of the Pfizer merger proposal requires the affirmative vote of the holders of a majority of the outstanding voting stock of Pfizer.

Approval of each of the Pfizer adjournment proposal and the Pfizer advisory compensation proposal require that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal.

As of the Pfizer record date, directors and executive officers of Pfizer and their affiliates owned and were entitled to vote [        ] shares of Pfizer common stock and [        ] Pfizer preferred shares, representing less than 1% of the votes of the Pfizer common stock and Pfizer preferred shares, taken together as a single class, outstanding on that date. Pfizer currently expects that the Pfizer directors and executive officers will vote their shares in favor of the Pfizer merger proposal, the Pfizer adjournment proposal and the Pfizer advisory compensation proposal, although none of them has entered into any agreement obligating him or her to do so.

Treatment of Abstentions; Failure to Vote

For purposes of the Pfizer special meeting, an abstention occurs when a Pfizer stockholder attends the Pfizer special meeting in person and does not vote or returns a proxy marked “ABSTAIN.”

 

    For the Pfizer merger proposal, an abstention or a failure to vote will have the same effect as a vote cast “AGAINST” this proposal. An abstention will be counted towards determining whether a quorum is present. A failure to vote will not be counted towards determining whether a quorum is present.

 

    For the Pfizer adjournment proposal, an abstention will have no effect on the vote count for this proposal (but will be counted towards determining whether a quorum is present). If a Pfizer stockholder fails to vote or to instruct his or her broker, bank or other nominee to vote and is not present in person or by proxy at the Pfizer special meeting, it will also have no effect on the vote count for the Pfizer adjournment proposal (and will not be counted towards determining whether a quorum is present).

 

    For the Pfizer advisory compensation proposal, an abstention will have no effect on the vote count for this proposal (but will be counted towards determining whether a quorum is present). If a Pfizer stockholder fails to vote and is not present in person or by proxy at the Pfizer special meeting, it will also have no effect on the vote count for the Pfizer advisory compensation proposal (and will not be counted towards determining whether a quorum is present).

However, if you are a Pfizer employee holding Pfizer shares in a savings plan and/or Grantor trust and you abstain from voting or fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your plan administrator and/or trustee on how to vote on the Pfizer proposals, your shares will be voted in accordance with the terms of your plan and/or Grantor Trust.

 

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Voting of Proxies; Incomplete Proxies

Giving a proxy means that a Pfizer stockholder authorizes the persons named in the enclosed proxy card to vote its shares at the Pfizer special meeting in the manner it directs. A Pfizer stockholder as of the record date of the Pfizer special meeting may vote by proxy or in person at the Pfizer special meeting. If you hold your shares of Pfizer common stock or Pfizer preferred shares in your name as a stockholder of record as of the record date of the Pfizer special meeting, to submit a proxy, you, as a Pfizer stockholder, may use one of the following methods:

 

    By Internet. The web address and instructions for Internet proxy submission can be found on the enclosed proxy card. You will be required to provide your assigned control number located on the proxy card. Internet proxy submission via the web address indicated on the enclosed proxy card is available 24 hours a day. If you choose to submit your proxy by Internet, then you do not need to return the proxy card. To be valid, your Internet proxy must be received by 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting.

 

    By Telephone. The toll-free number for telephone proxy submission can be found on the enclosed proxy card. You will be required to provide your assigned control number located on the proxy card. Telephone proxy submission is available 24 hours a day. If you choose to submit your proxy by telephone, then you do not need to return the proxy card. To be valid, your telephone proxy must be received by 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting.

 

    By Mail. Mark the enclosed proxy card, sign and date it, and return it in the postage-paid envelope you have been provided. To be valid, your proxy by mail must be received by 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting.

 

    In Person. You may also vote your shares in person at the Pfizer special meeting.

Pfizer requests that Pfizer stockholders submit their proxies over the Internet, by telephone or by completing and signing the accompanying proxy card and returning it to Pfizer as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed (including proper proxy submission by Internet or telephone), the shares of Pfizer common stock or Pfizer preferred shares represented by it will be voted at the Pfizer special meeting in accordance with the instructions contained on the proxy card.

If you sign and return your proxy or voting instruction card without indicating how to vote on any particular proposal, the Pfizer common stock or Pfizer preferred shares represented by your proxy will be voted “FOR” each such proposal in accordance with the recommendation of the Pfizer board of directors. Unless you check the box on your proxy card to withhold discretionary authority, the proxy holders may use their discretion to vote on the proposals relating to the Pfizer special meeting.

If your shares of Pfizer common stock or Pfizer preferred shares are held in “street name” by a broker, bank or other nominee, you should check the voting instruction card furnished to you by that firm to determine whether you may give voting instructions by telephone or the Internet.

EVERY PFIZER STOCKHOLDER’S VOTE IS IMPORTANT. ACCORDINGLY, EACH PFIZER STOCKHOLDER SHOULD SUBMIT ITS PROXY VIA THE INTERNET OR BY TELEPHONE, OR SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD BY MAIL, WHETHER OR NOT THE PFIZER STOCKHOLDER PLANS TO ATTEND THE PFIZER SPECIAL MEETING IN PERSON.

Shares Held in “Street Name”

If your shares of Pfizer common stock or Pfizer preferred shares are held in “street name” through a broker, bank or other nominee, you must instruct such broker, bank or other nominee on how to vote the shares by following the instructions that the broker, bank or other nominee provides you along with this joint proxy statement/prospectus. Your broker, bank or other nominee, as applicable, may have an earlier deadline by which you must provide instructions to it as to how to vote your shares of Pfizer common stock or Pfizer preferred shares, so you should read carefully the materials provided to you by your broker, bank or other nominee.

 

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You may not vote shares held in “street name” by returning a proxy card directly to Pfizer or by voting in person at the Pfizer special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of Pfizer common stock or Pfizer preferred shares on behalf of their customers may not give a proxy to Pfizer to vote those shares with respect to any of the Pfizer proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on any of the Pfizer proposals. Therefore, if your shares of Pfizer common stock or Pfizer preferred shares are held in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares,

 

    your broker, bank or other nominee may not vote your shares on the Pfizer merger proposal, which will have the same effect as a vote “AGAINST” this proposal;

 

    your broker, bank or other nominee may not vote your shares on the Pfizer adjournment proposal, which will have no effect on the vote count for this proposal (and will not be counted towards determining whether a quorum is present); and

 

    your broker, bank or other nominee may not vote your shares on the Pfizer advisory compensation proposal, which will have no effect on the vote count for this proposal (and will not be counted towards determining whether a quorum is present).

However, if you are a Pfizer employee holding Pfizer shares in a savings plan and/or Grantor trust and you abstain from voting or fail to vote, fail to submit a proxy or fail to return a voting instruction card instructing your plan administrator and/or trustee on how to vote on the Pfizer proposals, your shares will be voted in accordance with the terms of your plan and/or Grantor Trust.

Revocability of Proxies and Changes to a Pfizer Stockholder’s Vote

If you are a Pfizer stockholder of record, you may revoke or change your proxy at any time before it is voted at the Pfizer special meeting by:

 

    sending a written notice of revocation to the Pfizer Corporate Secretary, Pfizer Inc., 235 East 42nd Street, New York, New York 10017-5755 that is received by Pfizer prior to 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting, stating that you would like to revoke your proxy; or

 

    submitting a new proxy bearing a later date (by Internet, telephone or mail) that is received by Pfizer prior to 11: 59 p.m. (U.S. Eastern Time) on the day preceding the Pfizer special meeting; or

 

    attending the Pfizer special meeting and voting in person.

If you are a Pfizer stockholder whose shares are held in “street name” by a broker, bank or other nominee, you may revoke your proxy or voting instructions and vote your shares in person at the Pfizer special meeting only in accordance with applicable rules and procedures as employed by your broker, bank or other nominee. If your shares are held in an account at a broker, bank or other nominee, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your proxy or voting instructions and should contact your broker, bank or other nominee to do so.

Attending the Pfizer special meeting will NOT automatically revoke a proxy that was submitted through the Internet or by telephone or mail. You must vote by ballot at the Pfizer special meeting to change your vote.

Solicitation of Proxies

The cost of solicitation of proxies from Pfizer stockholders will be borne by Pfizer. Pfizer will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of Pfizer common stock and Pfizer preferred shares. Pfizer has

 

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retained a professional proxy solicitation firm, [        ], [        ], to assist in the solicitation of proxies for a fee of $[        ] plus reasonable out-of-pocket expenses. In addition to solicitations by mail, the Pfizer directors, officers and regular employees may solicit proxies personally or by telephone without additional compensation.

Attending the Pfizer Special Meeting

Admission to the Pfizer special meeting is limited to Pfizer stockholders as of the close of business on [                    ], 2016, and one immediate family member or one individual designated as a stockholder’s authorized proxy holder. In each case, the individual must have an admission ticket or proof of ownership of Pfizer common stock or Pfizer preferred shares, as well as a valid government-issued photo identification, such as a valid driver’s license or passport, to be admitted to the special meeting.

If you hold your shares in your name as a stockholder of record, you will need an admission ticket or proof of ownership of Pfizer common stock or Pfizer preferred shares. An admission ticket is attached to your proxy card. If you plan to attend the Pfizer special meeting, please vote your shares but keep the admission ticket and bring it with you to the meeting.

If you misplace your admission ticket, Pfizer will verify your ownership onsite at the special meeting venue.

If your shares are held in the name of a broker, bank or other holder of record and you plan to attend the Pfizer special meeting, you must present proof of your ownership of Pfizer common stock or Pfizer preferred shares, such as a bank or brokerage account statement, to be admitted to the meeting.

A Pfizer stockholder may appoint a representative to attend the meeting and/or vote on his/her behalf. An admission ticket must be requested by the stockholder but will be issued in the name of the authorized representative. Any individual holding an admission ticket that is not issued in his or her name will not be admitted to the Pfizer special meeting. To request an admission ticket, contact Pfizer Shareholder Services, 235 East 42nd Street, New York, New York 10017-5755.

No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the special meeting. Photography or recording of the event is strictly prohibited.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Pfizer special meeting, please contact [        ], the proxy solicitation agent for Pfizer, by mail at [            ], or by telephone toll-free at [        ] or collect at [        ].

 

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PFIZER PROPOSALS

Pfizer Merger Proposal

As discussed throughout this joint proxy statement/prospectus, Pfizer is asking its stockholders to approve the Pfizer merger proposal. Under the terms of the merger agreement, the businesses of Pfizer and Allergan will be combined under a single company. The merger is structured as “reverse merger,” in which the existing Allergan entity will become the parent entity of the combined company. Specifically, pursuant to the merger agreement, Merger Sub will merge with and into Pfizer, with Pfizer surviving as a wholly owned subsidiary of Allergan. Allergan, following the merger, is referred to as the “combined company” and, subject to approval of the Allergan name change proposal by Allergan shareholders at the Allergan EGM and the approval of the Registrar of Companies in Ireland, Allergan will change its name to “Pfizer plc.” Following the merger, the Pfizer common stock will be delisted from the NYSE, the London Stock Exchange and the Swiss SIX Stock Exchange and deregistered under the Exchange Act and cease to be publicly traded. The combined company ordinary shares are expected to trade on the NYSE using the current Pfizer ticker symbol “PFE.”

Holders of shares of Pfizer common stock and Pfizer preferred shares should carefully read this joint proxy statement/prospectus in its entirety, including the Annexes, for more detailed information concerning the merger agreement and the merger. In particular, holders of shares of Pfizer common stock and Pfizer preferred shares are directed to the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus.

Consummation of the merger is conditioned on approval of the Pfizer merger proposal by the Pfizer stockholders.

Vote Required and Pfizer Board Recommendation

Approval of the Pfizer merger proposal requires the affirmative vote of the holders of a majority of the outstanding voting stock of Pfizer.

The Pfizer board of directors recommends a vote “FOR” the Pfizer merger proposal.

Pfizer Adjournment Proposal

Pfizer is asking its stockholders to approve the adjournment of the Pfizer special meeting, or any adjournments or postponements thereof, to another date and place if necessary or appropriate to solicit additional votes in favor of the Pfizer merger proposal. The merger agreement provides that the Pfizer special meeting will not be adjourned or postponed without the mutual agreement of Pfizer and Allergan.

Consummation of the merger is not conditioned on the approval of the Pfizer adjournment proposal.

Vote Required and Pfizer Board Recommendation

Approval of the Pfizer adjournment proposal requires that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal by the Pfizer stockholders.

The Pfizer board of directors recommends a vote “FOR” the Pfizer adjournment proposal.

Pfizer Advisory Compensation Proposal

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) of the Exchange Act, Pfizer is seeking non-binding, advisory stockholder approval of the compensation of Pfizer’s named executive officers that is based on or otherwise relates to the merger as disclosed in “The

 

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Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger.” The proposal gives Pfizer’s stockholders the opportunity to express their views on the merger-related compensation of Pfizer’s named executive officers. Accordingly, Pfizer is requesting stockholders to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to Pfizer’s named executive officers in connection with the merger, as disclosed pursuant to Item 402(t) of Regulation S-K in “The Transactions—Interests of the Pfizer Directors and Executive Officers in the Merger,” is hereby APPROVED.”

Consummation of the merger is not conditioned on approval of the Pfizer advisory compensation proposal by the Pfizer stockholders. Because the vote is advisory in nature only, it will not be binding on either Pfizer or the combined company. Accordingly, to the extent Pfizer or the combined company is contractually obligated to pay the compensation, the compensation will be payable to the named executive officers, subject only to the conditions applicable thereto, if the merger agreement is approved and adopted and the merger consummated, regardless of the outcome of the advisory vote.

Vote Required and Pfizer Board Recommendation

The vote on this proposal is a vote separate and apart from the vote to approve the Pfizer merger proposal. Accordingly, you may vote not to approve the Pfizer advisory compensation proposal and vote to approve the Pfizer merger proposal or vice versa. The vote to approve the Pfizer advisory compensation proposal is advisory in nature and, therefore, is not binding on Pfizer, the combined company or their respective boards of directors or the compensation committees of their respective boards of directors, regardless of whether the Pfizer merger proposal is approved. Approval of the Pfizer advisory compensation proposal is not a condition to consummation of the merger, and failure to approve this advisory matter will have no effect on the vote to approve the Pfizer merger proposal. The merger-related named executive officer compensation that may become payable in connection with the merger is based on contractual arrangements with the named executive officers and accordingly the outcome of this advisory vote will not affect Pfizer’s obligation to make these payments.

Approval of the Pfizer advisory compensation proposal requires that the votes cast by Pfizer stockholders present in person or represented by proxy at the Pfizer special meeting and entitled to vote on the proposal, voting together as a single class, in favor of the proposal exceed the votes cast by such stockholders against the proposal.

The Pfizer board of directors recommends a vote “FOR” the Pfizer advisory compensation proposal.

Other Matters to Come Before the Pfizer Special Meeting

No other matters are intended to be brought before the Pfizer special meeting by Pfizer and Pfizer does not know of any other matters to be acted upon at the Pfizer special meeting. If, however, any other matters properly come before the Pfizer special meeting, the persons named in the proxy will vote the shares represented thereby in accordance with the recommendation of Pfizer management on any such matter (unless the Pfizer stockholder checks the box on the proxy card to withhold discretionary voting authority).

 

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THE ALLERGAN EXTRAORDINARY GENERAL MEETING

Date, Time and Place of the Allergan Extraordinary General Meeting

The Allergan EGM will be held at [            ], at [            ] (local time), on [                    ], 2016. On or about [                    ], 2016, Allergan commenced mailing this joint proxy statement/prospectus and the enclosed form of proxy to its shareholders entitled to vote at the Allergan EGM.

Purpose of the Allergan Extraordinary General Meeting

This joint proxy statement/prospectus is being provided to Allergan shareholders as part of a solicitation of proxies by the Allergan board of directors for use at the Allergan EGM. This joint proxy statement/prospectus provides Allergan’s shareholders with important information they need to know to be able to vote, or instruct their brokers, banks and other nominees to vote, at the Allergan EGM.

At the Allergan EGM, the Allergan shareholders will be asked to consider and vote on the Allergan proposals, each of which are described below:

 

  1. the issuance of Allergan ordinary shares to stockholders of Pfizer in connection with the merger as contemplated by the merger agreement;

 

  2. the sub-division of the Allergan ordinary shares whereby, immediately prior to the effective time, each existing Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares;

 

  3. the increase to the maximum number of directors of Allergan from 14 to 15 effective as of the effective time;

 

  4. the increase of the authorized share capital of Allergan from €40,000 and $101,000 to €40,000 and $[        ], respectively, effective as of the effective time;

 

  5. the change of name of the combined company from “Allergan plc” to “Pfizer plc” effective as of the effective time or as promptly as reasonably practicable thereafter;

 

  6. the reduction of the company capital of Allergan by the cancellation of some or all of the amount standing to the credit of Allergan’s share premium account immediately after the effective time, to allow the reserve resulting from the cancellation to be treated as additional profits available for distribution;

 

  7. the increase in nominal value of each Allergan ordinary share up to $0.00001 as of immediately following the Allergan share split and as of immediately prior to the effective time; and

 

  8. any adjournment or postponement of the Allergan EGM to another date and place if necessary or appropriate to solicit additional votes in favor of the Allergan proposals.

Recommendation of the Allergan Board of Directors

The Allergan board of directors recommends that Allergan shareholders vote “FOR” the Allergan share issuance proposal, “FOR” the Allergan share split proposal, “FOR” the Allergan board increase proposal, “FOR” the Allergan authorized share capital increase proposal, “FOR” the Allergan name change proposal, “FOR” the Allergan distributable reserves creation proposal, “FOR” the Allergan renominalisation proposal and “FOR” the Allergan adjournment proposal. See “The Transactions—Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger.”

Consummation of the merger is conditioned on approval of the Allergan share issuance proposal, the Allergan share split proposal, the Allergan board increase proposal and the Allergan authorized share capital increase proposal, but is not conditioned on the approval of the Allergan name change proposal, the Allergan

 

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distributable reserves creation proposal, the Allergan renominalisation proposal or the Allergan adjournment proposal. The corporate actions contemplated by the Allergan proposals (other than the Allergan adjournment proposal) will become effective only if the merger is consummated.

For each of the Allergan proposals, because the votes required to approve such proposals are based on votes properly cast at the Allergan EGM, and because abstentions are not considered votes properly cast, abstentions, along with failures to vote, will have no effect on the Allergan proposals (except that failures to vote will not, but abstentions will, be counted towards determining whether a quorum is present).

Allergan Record Date and Quorum

Record Date

Only holders of Allergan ordinary shares as of the close of business on [                    ], 2016, the record date for the Allergan EGM, will be entitled to notice of, and to vote at, the Allergan EGM or any adjournments or postponements thereof. On the Allergan record date, there were [        ] Allergan ordinary shares outstanding, held by [        ] registered holders. Each outstanding Allergan ordinary share is entitled to one vote on each proposal and any other matter properly coming before the Allergan EGM.

As of the Allergan record date, there were [        ] Allergan ordinary shares outstanding and entitled to vote at the Allergan EGM held by [        ] holders of record. Each Allergan ordinary share entitles the holder to one vote at the Allergan EGM on each proposal to be considered at the Allergan EGM. Allergan ordinary shares that are held in treasury will not be entitled to vote at the Allergan EGM.

Quorum

At least two persons holding or representing by proxy (whether or not such holder actually exercises his voting rights in whole, in part or at all at the Allergan EGM) more than 50% of the total issued voting rights of Allergan’s shares will constitute a quorum for the Allergan EGM. Abstentions and broker non-votes will be counted as present for purposes of determining whether there is a quorum. Allergan ordinary shares held in treasury will not be included in the calculation of the number of Allergan ordinary shares represented at the Allergan EGM for purposes of determining a quorum.

Required Vote

The affirmative vote of a majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan share issuance proposal, Allergan share split proposal, Allergan board increase proposal, Allergan authorized share increase proposal, Allergan renominalisation proposal and Allergan adjournment proposal at the Allergan EGM, is required to approve such proposals.

The affirmative vote of at least 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan name change proposal and the Allergan distributable reserves creation proposal at the Allergan EGM, is required to approve such proposals.

As of the Allergan record date, directors and executive officers of Allergan and their affiliates owned and were entitled to vote [        ] Allergan ordinary shares, representing less than 1% of the Allergan ordinary shares outstanding on that date. Allergan currently expects that the Allergan directors and executive officers will vote their shares in favor of each of the Allergan proposals, although none of them has entered into any agreements obligating him or her to do so.

Treatment of Abstentions; Failure to Vote

For purposes of the Allergan EGM, an abstention occurs when an Allergan shareholder attends the Allergan EGM in person and does not vote or returns a proxy with an “abstain” vote. For each of the Allergan proposals, because the votes required to approve such proposals are based on votes properly cast at the EGM, and because

 

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abstentions are not considered votes properly cast, abstentions, along with failures to vote, will have no effect on the Allergan proposals (except that failures to vote will not, but abstentions will, be counted towards determining whether a quorum is present).

If you do not vote your Allergan ordinary shares or specify your voting instructions on your proxy card, the administrator or trustee of the applicable Allergan benefit plan will vote your shares in accordance with the terms of the relevant Allergan benefit plan.

Voting on Proxies; Incomplete Proxies

Giving a proxy means that an Allergan shareholder authorizes the persons named in the enclosed proxy card to vote its Allergan ordinary shares at the Allergan EGM in the manner it directs. An Allergan shareholder as of the record date of the Allergan EGM may vote by proxy or in person at the Allergan EGM. If you hold Allergan ordinary shares in your name as a registered Allergan shareholder as of the record date of the Allergan EGM, to submit a proxy, you may use one of the following methods:

 

    By Internet. The web address and instructions for Internet voting can be found on the enclosed proxy card. You will be required to provide your assigned control number located on the proxy card. Internet voting via [          ] is available 24 hours a day. To be valid, your vote by Internet must be received prior to the commencement of the Allergan EGM.

 

    By Telephone. The toll-free number for telephone proxy submission is [          ]. You will be required to provide your assigned control number located on the proxy card. Telephone proxy submission is available 24 hours a day. If you choose to vote by telephone, then you do not need to return the proxy card. To be valid, your vote by telephone must be received prior to the commencement of the Allergan EGM.

 

    By Mail. Mark the enclosed proxy card, sign and date it, and return it in the postage-paid envelope we have provided. To be valid, your vote by mail must be received prior to the commencement of the Allergan EGM. Please do not send in your stock certificates with your proxy card.

 

    In Person. You may also vote your Allergan ordinary shares in person at the Allergan EGM.

Allergan requests that Allergan shareholders vote over the Internet, by telephone or by completing and signing the accompanying proxy card and returning it to Allergan as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed (including proper voting by Internet or phone) and not later revoked, the Allergan ordinary shares represented by it will be voted at the Allergan EGM in accordance with the instructions contained on the proxy card.

If you sign and return your proxy or voting instruction card without indicating how to vote on any of the Allergan proposals, the Allergan ordinary shares represented by your proxy will be voted “FOR” each such proposal in accordance with the recommendation of the Allergan board of directors.

If you are a shareholder of record of Allergan and you choose to submit your proxy by telephone by calling the toll-free number on your proxy card, your use of that telephone system and in particular the entry of your pin number/other unique identifier will be deemed to constitute your appointment, in writing and under hand, and for all purposes of the Irish Companies Act, 2014, of the Chairman as your proxy to vote your shares on your behalf in accordance with your telephone instructions.

If an Allergan shareholder’s ordinary shares are held in “street name” by a broker, bank or other nominee, the shareholder should check the voting instruction card furnished to you by that firm to determine whether he or she may vote by telephone or the Internet.

EVERY ALLERGAN SHAREHOLDER’S VOTE IS IMPORTANT. ACCORDINGLY, EACH ALLERGAN SHAREHOLDER SHOULD VOTE VIA THE INTERNET OR BY TELEPHONE, OR SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD BY MAIL, WHETHER OR NOT THE ALLERGAN SHAREHOLDER PLANS TO ATTEND THE ALLERGAN EGM IN PERSON.

 

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Shares Held in “Street Name”

If your Allergan ordinary shares are held in “street name” by a broker, bank or other nominee, you must instruct such broker, bank or other nominee how to vote your Allergan ordinary shares by following the instructions that the broker, bank or other nominee provides you along with this joint proxy statement/prospectus. Your broker, bank or other nominee, as applicable, may have an earlier deadline by which you must provide instructions to it as to how to vote your Allergan ordinary shares, so you should read carefully the materials provided to you by your broker, bank or other nominee. You may be eligible to submit such instructions electronically or by telephone.

If you do not provide a signed voting instruction card (or otherwise submit your voting instructions in accordance with the procedures specified by your broker, bank or other nominee) to your broker, bank or other nominee, your Allergan ordinary shares will not be voted on any proposal on which such broker, bank or other nominee does not have discretionary authority to vote. Brokers, banks and other nominees do not have discretionary voting with respect to any of the Allergan proposals. Accordingly, if you fail to provide a signed voting instruction card (or otherwise submit your voting instructions in accordance with the procedures specified by your broker, bank or other nominee) to your broker, bank or other nominee, your Allergan ordinary shares held through such broker, bank or other nominee will not be voted.

Broker non-votes are ordinary shares held by a broker, bank or other nominee that are present in person or represented by proxy at the Allergan EGM, but with respect to which such broker, bank or other nominee is not instructed by the beneficial owner of such shares. As brokers do not have discretionary authority to vote on the Allergan proposals, it is expected that there will be no broker non-votes.

Revocability of Proxies and Changes to an Allergan Shareholder’s Vote

If you are an Allergan shareholder of record, you may revoke or change your proxy before it is voted at the Allergan EGM by:

 

    delivering written notice to the company secretary of Allergan that is received prior to the commencement of the Allergan EGM stating that you have revoked your proxy to the company secretary of Allergan at the following address:

Allergan plc

Clonshaugh Business and Technology Park

Coolock, Dublin, D17 E400, Ireland

Attention: Company Secretary

 

    submitting a new proxy again by telephone or over the Internet prior to the commencement of the Allergan EGM;

 

    signing and returning by mail a proxy card with a later date so that it is received by Allergan prior to the commencement of the Allergan EGM; or

 

    attending the Allergan EGM and voting by ballot in person.

Attending the Allergan EGM will NOT automatically revoke a proxy that was submitted through the Internet or by telephone or mail. You must vote by ballot at the Allergan EGM to change your vote.

If you are an Allergan shareholder whose shares are held in “street name” by a broker, bank or other nominee, you may revoke your proxy and vote your shares in person at the Allergan EGM only in accordance with the applicable rules and procedures as employed by your broker, bank or other nominee. If your Allergan ordinary shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

 

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Solicitation of Proxies

Allergan will bear the cost of soliciting proxies from its shareholders.

Allergan will solicit proxies by mail. In addition, the directors, officers and employees of Allergan may solicit proxies from its shareholders by telephone, electronic communication, or in person, but will not receive any additional compensation for their services. Allergan will make arrangements with brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy solicitation materials to the beneficial owners of Allergan ordinary shares held of record by those persons and will reimburse them for their reasonable out-of-pocket expenses incurred in forwarding such proxy solicitation materials.

Allergan has engaged a professional proxy solicitation firm, [            ], [            ], to assist in the solicitation of proxies for a fee of approximately $[        ], and will reimburse [        ] for its reasonable disbursements.

Attending the Allergan Extraordinary General Meeting

Attendance at the Allergan EGM is limited to Allergan shareholders on the Allergan record date. Please indicate on the enclosed proxy card if you plan to attend the Allergan EGM. If your Allergan ordinary shares are held through a broker, bank or other nominee and you would like to attend, you will need to bring to the Allergan EGM a letter from such broker, bank or other nominee confirming beneficial ownership of the Allergan ordinary shares as of the Allergan record date for the Allergan EGM. Any beneficial holder who plans to vote at the Allergan EGM must also obtain a legal proxy, executed in their favor by or on behalf of their broker, bank or other nominee, and should contact such broker, bank or other nominee for instructions on how to obtain a legal proxy. Each Allergan shareholder will be asked to provide valid government-issued photo identification, such as a driver’s license or passport, and proof of ownership as of the Allergan record date. The use of cell phones, smartphones, pagers, recording and photographic equipment will not be permitted in the meeting rooms.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Allergan EGM please contact [        ], the proxy solicitation agent for Allergan, by mail at [        ], or by telephone toll-free at [        ] or collect at [        ].

 

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ALLERGAN PROPOSALS

Allergan Share Issuance Proposal

Allergan is asking its shareholders to approve the Allergan share issuance proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is an ordinary resolution:

RESOLVED, as an ordinary resolution that, subject to applicable rules and listing standards of the New York Stock Exchange and to applicable rules and regulations of the U.S. Securities and Exchange Commission, the directors of Allergan be and they are hereby generally and unconditionally authorized pursuant to section 1021 of the Companies Act 2014 to exercise all the powers of Allergan to allot relevant securities (within the meaning of section 1021 of the Companies Act 2014) as contemplated by the merger agreement, up to an aggregate nominal amount of Allergan ordinary shares necessary for purposes of satisfying the aggregate issuance of Allergan ordinary shares to the Pfizer stockholders in connection with the merger, provided that such authority shall (a) expire on [            ] or such later date as may be determined by the Allergan board of directors (provided that under the Companies Act 2014, such later date cannot be more than five years after the date on which this resolution is passed), (b) be without prejudice and in addition to the authority under the said section 1021 previously granted to the Allergan board of directors pursuant to an ordinary resolution effective October 1, 2013 and (c) not authorize the directors of Allergan to issue more than the authorized but unissued share capital of Allergan at the time the merger becomes effective.”

Vote Required and Allergan Board Recommendation

“Ordinary resolution” means a resolution passed by a simple majority of the votes cast by shareholders of the company as, being entitled to do so, vote in person or by proxy at a general meeting of the company. The affirmative vote of a simple majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan share issuance proposal at the Allergan EGM, is required to approve the Allergan share issuance proposal.

Approval of the Allergan share issuance proposal is required for consummation of the merger. The issuance of the Allergan ordinary shares contemplated by the Allergan share issuance proposal will become effective only if the merger is consummated.

The Allergan board of directors recommends a vote “FOR” the Allergan share issuance proposal.

Allergan Share Split Proposal

Allergan is asking its shareholders to approve the Allergan share split proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is an ordinary resolution:

“RESOLVED, as an ordinary resolution that, with effect from immediately prior to the consummation of the merger:

 

  (a) every authorized Allergan ordinary share of US$0.0001 each (the “existing ordinary shares”) that, immediately prior to the effective time of the merger (the “sub-division record time”), are shown in the books of Allergan as unissued shall be sub-divided into 11.3 new Allergan ordinary shares of US$0.000008849557522 each in the capital of Allergan; and

 

  (b) each existing ordinary share in issue at the sub-division record time shall be sub-divided into 11.3 new Allergan ordinary shares of US$0.000008849557522 each (the “sub-divided ordinary shares”).

 

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Overview

By approving the Allergan share split proposal, the Allergan shareholders approve, subject to the consummation of the merger, the Allergan share split which will occur immediately prior to the consummation of the merger. If the Allergan shareholders approve the Allergan share split proposal and the Allergan renominalisation proposal and Allergan effects the Allergan share split and the contemplated renominalisation, then each issued and outstanding Allergan ordinary share of nominal value $0.0001 will be sub-divided into 11.3 new Allergan ordinary shares of nominal value $0.00001. However, if the Allergan share split occurs and the Allergan renominalisation proposal is not approved or the contemplated renominalisation does not occur for any other reason, the Allergan shareholders will receive 11.3 new Allergan ordinary shares of par value $0.000008849557522.

If Allergan effects the Allergan share split, then, except for adjustments that may result from the treatment of fractional shares as described below, prior to giving effect to the merger each Allergan shareholder will hold the same percentage of then-outstanding Allergan ordinary shares immediately following the Allergan share split as such Allergan shareholder held immediately prior to the Allergan share split.

Principal Effects of the Allergan Share Split

If Allergan shareholders approve the Allergan share split proposal and Allergan effects the Allergan share split, each Allergan shareholder will own an increased number of Allergan ordinary shares upon the effectiveness of the Allergan share split. Allergan will effect the Allergan share split simultaneously for all outstanding Allergan ordinary shares. The Allergan share split will change the nominal value of Allergan ordinary shares from $0.0001 to $0.000008849557522 per share and, if the Allergan renominalisation proposal is approved and contemplated renominalisation is effected, the nominal value of each Allergan ordinary share will be increased to $0.00001. The Allergan share split will affect all Allergan shareholders uniformly and will not change any Allergan shareholder’s percentage ownership interest in Allergan, except to the extent that the Allergan share split would result in any Allergan shareholders otherwise owning a fractional share that will be cashed out. Therefore, voting rights and other rights and preferences of the holders of Allergan ordinary shares will not be affected by the Allergan share split (other than as a result of the payment of cash in lieu of fractional shares). Allergan ordinary shares issued pursuant to the Allergan share split will remain fully paid and nonassessable.

As of the effective time of the Allergan share split, pursuant to and in accordance with the anti-dilution provisions of Allergan’s equity incentive plans, Allergan will appropriately and proportionately adjust the number of Allergan ordinary shares issuable in respect of outstanding equity incentive awards, the exercise price of all outstanding options, the total number of Allergan ordinary shares that may be the subject of future grants as well as the individual ordinary share limits under Allergan’s equity incentive plans.

Fractional Shares

Allergan will not issue any fractional Allergan ordinary share in connection with the Allergan share split. Each Allergan shareholder who would otherwise be entitled to receive a fractional Allergan ordinary share as a result of the Allergan share split will, with respect to such fractional share, be entitled to receive cash in lieu of such fractional share in an amount equal to the net cash proceeds attributable to the sale of such fractional share following the aggregation and sale by Allergan’s transfer agent of all fractional Allergan ordinary shares otherwise issuable, on the basis of prevailing market prices at such time.

Effect on Registered “Book-Entry” Shareholders

Registered Allergan shareholders may hold some or all of their Allergan ordinary shares in book-entry form. These Allergan shareholders will not have share certificates evidencing their ownership of Allergan ordinary shares. They are, however, provided with a statement reflecting the number of shares registered in their accounts.

 

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If you hold registered shares in book-entry form, you do not need to take any action to receive your additional Allergan ordinary shares following the Allergan share split.

If you are entitled to post-Allergan share split shares, a transaction statement will automatically be sent to your address of record indicating the number of shares you hold.

Effect on Registered Certificated Shareholders

Some registered Allergan shareholders may hold all of their Allergan ordinary shares in certificate form or a combination of certificate and book-entry form. If you hold any of your Allergan ordinary shares in certificate form, you will receive a letter of transmittal from the combined company’s transfer agent as soon as practicable after the effective date of the Allergan share split. The letter of transmittal will contain instructions on how to surrender your certificate(s) representing your pre-Allergan share split Allergan ordinary shares to the transfer agent. Upon receipt of your share certificate, Allergan will issue to you the appropriate number of combined company ordinary shares electronically in book-entry form and provide a statement reflecting the number of shares registered in your account. Allergan will not issue any combined company ordinary shares in book-entry form to you until you surrender your outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the transfer agent. Beginning at the effective time of the Allergan share split (which will occur immediately prior to the consummation of the merger), each certificate representing pre-Allergan share split Allergan ordinary shares will be deemed for all corporate purposes to evidence ownership of post-Allergan share split combined company ordinary shares.

ALLERGAN SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNLESS AND UNTIL REQUESTED TO DO SO.

Accounting Matters

The Allergan share split will not affect the total ordinary shareholders’ equity on Allergan’s balance sheet.

Vote Required and Allergan Board Recommendation

The affirmative vote of a simple majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan share split proposal at the Allergan EGM is required to approve the Allergan share split proposal.

Approval and implementation of the Allergan share split proposal is required for consummation of the merger. The Allergan share split contemplated by the Allergan share split proposal will become effective only if the merger is consummated.

The Allergan board of directors recommends a vote “FOR” the Allergan share split proposal.

Allergan Board Increase Proposal

Allergan is asking its shareholders to approve the Allergan board increase proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is an ordinary resolution:

RESOLVED, as an ordinary resolution that, in accordance with article 121 of Allergan’s Articles of Association, effective immediately prior to the consummation of the merger, the maximum number of directors of Allergan be increased from 14 to 15.”

 

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Vote Required and Allergan Board Recommendation

The affirmative vote of a simple majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan board increase proposal at the Allergan EGM, is required to approve the Allergan board increase proposal.

Approval and implementation of the Allergan board increase proposal is required for consummation of the merger. The increase in the number of directors contemplated by the Allergan board increase proposal will become effective only if the merger is consummated.

The Allergan board of directors recommends a vote “FOR” the Allergan board increase proposal.

Allergan Authorized Share Capital Increase Proposal

Allergan is asking its shareholders to approve the Allergan authorized share capital increase proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is an ordinary resolution:

RESOLVED, as an ordinary resolution that, effective as of or prior to the consummation of the merger as contemplated by the merger agreement, the authorized share capital of Allergan be and is hereby increased from EUR40,000 and US$101,000 to EUR40,000 and US$[        ], respectively. This is divided into 40,000 deferred ordinary shares of €1.00 each, [            ] ordinary shares of US$0.0001 each and 10,000,000 serial preferred shares of US$0.0001 each, all having the rights and being subject to the restrictions as set out in Allergan’s Articles of Association.”

Vote Required and Allergan Board Recommendation

The affirmative vote of a simple majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan authorized share capital increase proposal at the Allergan EGM, is required to approve the Allergan authorized share capital increase proposal.

Approval and implementation of the Allergan authorized share capital increase proposal is required for consummation of the merger. The authorized share capital increase contemplated by the Allergan authorized share capital increase proposal will become effective only if the merger is consummated.

The Allergan board of directors recommends a vote “FOR” the Allergan authorized share capital increase proposal.

Allergan Name Change Proposal

Allergan is asking its shareholders to approve the Allergan name change proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is a special resolution:

RESOLVED, as a special resolution that, subject to and conditioned upon the consummation of the merger as contemplated by the merger agreement and subject to the approval of the Registrar of Companies in Ireland, the name of Allergan plc shall be changed to Pfizer plc.”

Vote Required and Allergan Board Recommendation

“Special resolution” means a resolution passed by not less than 75% of the votes cast by shareholders of the company as, being entitled to do so, vote in person or by proxy at a general meeting of the company, and which complies with the other requirements of section191 of the Companies Act.

 

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The affirmative vote of at least 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan name change proposal at the Allergan EGM, is required to approve the Allergan name change proposal.

If Allergan and Pfizer do not consummate the merger, Allergan will not effect the name change contemplated by the Allergan name change proposal, notwithstanding that Allergan shareholders may have previously approved the Allergan name change proposal.

Approval of the Allergan name change proposal is not required for consummation of the merger. Accordingly, if all of the conditions to the merger are satisfied or waived, Allergan intends to consummate the merger, whether or not the Allergan name change proposal has been approved.

The Allergan board of directors recommends a vote “FOR” the Allergan name change proposal.

Allergan Distributable Reserves Creation Proposal

Allergan is asking its shareholders to approve the Allergan distributable reserves creation proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is a special resolution:

“RESOLVED, as a special resolution, subject to and with the consent of the High Court, that:

(1) in accordance with the provisions of section 84 of the Companies Act 2014, the company capital of Allergan be reduced by the cancellation of the entire amount standing to the credit of Allergan’s share premium account immediately after the consummation of the transactions contemplated pursuant to the terms of the merger agreement (the “authorised amount”) or such other lesser amount as the Allergan board of directors or the High Court may determine and for the reserve resulting from the cancellation of the share premium to be treated as profits available for distribution as defined by section 117 of the Companies Act 2014; and

(2) the Allergan board of directors, acting through one or more of the Allergan directors, secretaries or executive officers, be and is hereby authorized on behalf of Allergan plc, to (i) proceed to seek the confirmation of the High Court to a reduction of company capital by the authorised amount or such lesser amount as the Allergan board or directors or the High Court may determine and (ii) determine not to proceed to seek the approval of the High Court.”

Overview

Pursuant to the terms of the merger agreement, as of the effective time, Pfizer stockholders will be entitled to receive one combined company ordinary share in exchange for each share of Pfizer common stock held by such holder. This is expected to significantly increase the amount standing to the credit of the combined company’s share premium account. In order to help ensure that the combined company has the flexibility to pay dividends, repurchase shares or make other distributions, if and when its board of directors determines to do so following the merger, we are asking Allergan shareholders to approve the proposal described above.

Under Irish law, the combined company must have “distributable reserves” in its unconsolidated balance sheet (prepared in accordance with Irish law) in order for it to legally make distributions (including the payment of cash dividends) to its shareholders or to buy back shares. Distributable reserves generally means the accumulated realized profits of the combined company less accumulated realized losses of the combined company and can include reserves created by way of capital reductions. Dividends, repurchases and distributions by the combined company would also be subject to additional limitations under Irish law.

 

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We expect that, as soon as practicable following the consummation of the merger, the combined company will seek to obtain the approval of the High Court of Ireland to convert some or all of its share premium to distributable reserves, which we refer to in this joint proxy statement/prospectus as the “Allergan distributable reserves creation.” The board of directors of the combined company will make a determination of the final amount of the share premium to be reduced following consummation of the merger. The approval of the High Court of Ireland is required for the Allergan distributable reserves creation to be effective, and the amount of the reduction of the share premium of the combined company will always be subject to the approval of the court (which may approve a lesser amount than that requested). Before such approval can be obtained, the shareholders of Allergan must first have passed a special resolution authorizing the Allergan distributable reserves creation. Accordingly, we are proposing that Allergan shareholders approve the Allergan distributable reserves creation proposal at the Allergan EGM.

Shareholder approval of the Allergan distributable reserves creation is not a guarantee that the merger will occur or that, if it occurs, the combined company will pay dividends or make share repurchases at any time. Even if each of the merger and the Allergan distributable reserves creation is consummated, the combined company board of directors may decide not to pay dividends or make share repurchases. In addition, although we are not aware of any reason why the High Court of Ireland would not approve the Allergan distributable reserves creation, there is no guarantee that such approval will be forthcoming.

Vote Required and Allergan Board Recommendation

The affirmative vote of at least 75% of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan distributable reserves creation proposal at the Allergan EGM, is required to approve the Allergan distributable reserves creation proposal.

If Allergan and Pfizer do not consummate the merger, Allergan will not effect the distributable reserves creation by way of capital reductions contemplated by the Allergan distributable reserves creation proposal, notwithstanding that Allergan shareholders may have previously approved the Allergan distributable reserves creation proposal.

Approval of the Allergan distributable reserves creation proposal is not required for the consummation of the merger. Accordingly, if all of the conditions to the merger are satisfied or waived, Allergan intends to consummate the merger, whether or not the Allergan distributable reserves creation proposal has been approved.

The Allergan board of directors recommends a vote “FOR” the Allergan distributable reserves creation proposal.

Allergan Renominalisation Proposal

Allergan is asking its shareholders to approve the Allergan renominalisation proposal.

Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is an ordinary resolution:

“RESOLVED, as an ordinary resolution that, with effect from immediately prior to the consummation of the merger, and immediately following the Allergan share split, the nominal value of each sub-divided ordinary share shall be increased by US$0.000001150442478 up to US$0.00001 in accordance with section 83(1)(c) of the Companies Act 2014 by the addition to them of any undenominated capital, the “Allergan renominalisation.”

Overview

By approving the Allergan renominalisation proposal, the Allergan shareholders approve, subject to the consummation of the merger, an increase in the nominal value of each sub-divided ordinary share by

 

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$0.000001150442478 up to $0.00001 by the addition to them of any undenominated capital, which will occur immediately prior to the consummation of the merger. If the Allergan shareholders approve the Allergan share split proposal and the Allergan renominalissation proposal and Allergan effects the Allergan share split and the contemplated renominalsiation, then each issued and outstanding Allergan ordinary share of nominal value $0.0001 will be sub-divided into 11.3 new Allergan ordinary shares of nominal value $0.00001.

Vote Required and Allergan Board Recommendation

The affirmative vote of a simple majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan renominalisation proposal at the Allergan EGM is required to approve the Allergan renominalisation proposal.

If Allergan and Pfizer do not consummate the merger, Allergan will not effect the renominalisation contemplated by the Allergan renominalisation proposal, notwithstanding that Allergan shareholders may have previously approved the Allergan renominalisation proposal.

Approval of the Allergan renominalisation proposal is not required for the consummation of the merger. Accordingly, if all of the conditions to the merger are satisfied or waived, Allergan intends to consummate the merger, whether or not the Allergan renominalisation proposal has been approved.

The Allergan board of directors recommends a vote “FOR” the Allergan renominalisation proposal.

Allergan Adjournment Proposal

Allergan is asking its shareholders to approve the Allergan adjournment proposal. Accordingly, Allergan is requesting its shareholders adopt the following resolution, which is an ordinary resolution:

“RESOLVED, as an ordinary resolution, to approve any motion of the Chairman to adjourn the Allergan extraordinary general meeting to another time or place if deemed necessary or appropriate by the Chairman (in his sole discretion) in the circumstances.”

Vote Required and Allergan Board Recommendation

The affirmative vote of a simple majority of the votes cast, either in person or by proxy, by shareholders entitled to vote on the Allergan adjournment proposal at the Allergan EGM, is required to approve the Allergan adjournment proposal. The merger agreement provides that the Allergan EGM will not be adjourned or postponed without the mutual agreement of Pfizer and Allergan.

The Allergan board of directors recommends a vote “FOR” the Allergan adjournment proposal.

Holders of ordinary shares should carefully read this document in its entirety, including the Annexes, for more detailed information concerning the merger agreement and the transactions contemplated thereby. In particular, holders of Allergan ordinary shares are directed to the merger agreement, a copy of which is attached as Annex A to this document and “The Transactions—Recommendation of the Allergan Board of Directors and Allergan’s Reasons for the Merger”.

Other Matters to Come Before the Extraordinary General Meeting

No other matters are intended to be brought before the Allergan EGM by Allergan, and Allergan does not know of any other matters to be acted upon at the Allergan EGM. If, however, any other matters properly come before the Allergan EGM, including an adjournment of the Allergan EGM for any reason, and where you have named the Chairman of the Allergan EGM as your proxy he or she will vote the shares represented thereby in accordance with the judgment of management on any such matter.

 

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INFORMATION ABOUT THE COMPANIES

Pfizer

Pfizer Inc.

235 East 42nd Street

New York, New York 10017

Phone: (212) 733-2323

Pfizer was incorporated in the State of Delaware in 1942. Pfizer is a research-based, global biopharmaceutical company. Pfizer applies science and its global resources to bring therapies to people that extend and significantly improve their lives through the discovery, development and manufacture of healthcare products. Its global portfolio includes medicines, vaccines and medical devices, as well as many of the world’s best-known consumer healthcare products. Pfizer works across developed and emerging markets to advance wellness, prevention, treatments and cures, and collaborates with healthcare providers, governments and local communities to support and expand access to reliable, affordable healthcare around the world.

Allergan

Allergan plc

Clonshaugh Business and Technology Park

Coolock, Dublin D17 E400, Ireland

Phone: (862) 261-7000

Allergan (formerly known as Actavis plc) was incorporated in Ireland as Actavis Limited on May 16, 2013 as a private limited company and re-registered effective September 20, 2013 as a public limited company. On June 15, 2015, Actavis plc changed its name to Allergan plc, following the acquisition of Legacy Allergan by Actavis plc on March 17, 2015 and the approval of the name change by Actavis plc’s shareholders. Allergan is a global specialty pharmaceutical company and a leader in a new industry model—Growth Pharma engaged in the development, manufacturing, marketing and distribution of brand name, medical aesthetics, biosimilar and OTC pharmaceutical products. Allergan has operations in more than 100 countries. Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, dermatology, plastic surgery, gastroenterology, women’s health and urology therapeutic categories. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry. Allergan is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives.

On July 26, 2015, Allergan entered into the Allergan divestiture transaction agreement, under which Teva agreed to acquire Allergan’s global generic pharmaceuticals business and certain other assets.

Merger Sub

Watson Merger Sub Inc.

c/o Allergan plc

Clonshaugh Business and Technology Park

Coolock, Dublin D17 E400, Ireland

Phone: (862) 261-7000

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of Allergan. Merger Sub was incorporated on November 20, 2015 for the sole purpose of effecting the merger. As of the date of this joint proxy statement/prospectus, Merger Sub has not conducted any activities other than those incidental to its formation, the execution of the merger agreement and transaction contemplated by the merger agreement.

 

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THE TRANSACTIONS

This discussion of the merger and the other transactions contemplated by the merger agreement is qualified in its entirety by reference to the merger agreement, which is attached to this joint proxy statement/prospectus as Annex A and is incorporated by reference into this joint proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger and the other transactions contemplated by the merger agreement that are important to you. You should read the entire merger agreement carefully as it is the legal document that governs the merger and the other transactions contemplated by the merger agreement. This section is not intended to provide you with any factual information about Pfizer or Allergan. Such information can be found elsewhere in this joint proxy statement/prospectus and in the public filings Pfizer and Allergan make with the SEC that are incorporated by reference into this joint proxy statement/prospectus, as described under “Where You Can Find More Information.

Transaction Structure

Under the terms of the merger agreement, the businesses of Pfizer and Allergan will be combined under a single company. The merger is structured as a “reverse merger,” in which the existing Allergan entity will become the parent entity of the combined company. Specifically, pursuant to the merger agreement, Merger Sub will merge with and into Pfizer, with Pfizer surviving as a wholly owned subsidiary of Allergan. Allergan, following the merger, is referred to as the “combined company” and, subject to approval of the Allergan name change proposal by Allergan shareholders at the Allergan EGM and the approval of the Registrar of Companies in Ireland, Allergan will change its name to “Pfizer plc.” Following the merger, the Pfizer common stock will be delisted from the NYSE, the London Stock Exchange and the Swiss SIX Stock Exchange and deregistered under the Exchange Act and cease to be publicly traded. The combined company ordinary shares are expected to trade on the NYSE using the current Pfizer ticker symbol “PFE.”

Consideration to Pfizer Stockholders

In the merger, each share of Pfizer common stock issued and outstanding immediately prior to the effective time (other than (i) such shares owned by Pfizer, Allergan or Merger Sub, (ii) dissenting shares and (iii) such shares owned by subsidiaries of Pfizer immediately prior to the effective time) will be converted into the right to receive, at the election of the holder and subject to the proration procedures described in the merger agreement, either:

 

    one (1) combined company ordinary share; or

 

    an amount in cash, without interest, equal to the volume-weighted average price per share of Pfizer common stock on the NYSE for the trading day immediately preceding the date of consummation of the merger (determined as provided in the merger agreement).

Any holder of Pfizer common stock that does not elect to receive the cash consideration or the share consideration with respect to a share, or has not properly elected to receive any such consideration with respect to a share, will be deemed to have elected to receive the share consideration for such share.

It is anticipated that the former Pfizer stockholders and Allergan shareholders will hold, on a fully diluted basis (based on the treasury stock method) and assuming the conversion of all outstanding Pfizer preferred shares and Allergan preferred shares, approximately 56% and 44%, respectively, of the issued and outstanding combined company ordinary shares immediately after consummation of the merger, based on the closing price of Pfizer common stock and certain other assumptions as of November 20, 2015.

In addition, in the merger, each Pfizer preferred share issued and outstanding immediately prior to the effective time will be converted into the number of shares of Pfizer common stock into which such Pfizer preferred share could have been converted at that time in accordance with the certificate of designations for the

 

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Pfizer preferred shares, and the holder of such Pfizer preferred share will be entitled to receive the common stock merger consideration (and participate in the election described above) in respect of the shares of Pfizer common stock into which such Pfizer preferred share was converted. As of the date of this joint proxy statement/prospectus, each Pfizer preferred share would have been converted into 2,574.87 shares of Pfizer common stock at the effective time had the effective time occurred on such date. In lieu of receiving such preferred stock merger consideration, holders of Pfizer preferred shares may elect to receive the preferred stock liquidation amount, and if a holder so elects, each Pfizer preferred share with respect to which such election is made will be cancelled and converted into the right to receive such amount in cash. As of the date of this joint proxy statement/prospectus, the preferred stock liquidation amount was $40,300 per share. Holders of Pfizer preferred shares who do not elect to receive the preferred stock liquidation amount will be entitled to elect between the share consideration and the cash consideration for each share of Pfizer common stock into which their Pfizer preferred shares are converted as of immediately prior to the effective time. The election of holders of Pfizer preferred shares to receive the preferred stock liquidation amount will not be taken into account in determining whether or not shares of Pfizer common stock (including Pfizer common stock in respect of Pfizer preferred shares converted as described above) will be subject to the proration procedures described in the merger agreement, which will be determined solely based on the amount of cash electing shares and share electing shares.

No holder of Pfizer common stock (including Pfizer common stock in respect of Pfizer preferred shares converted as described above) will be issued a fraction of a combined company ordinary share in the merger. Each holder of Pfizer common stock converted pursuant to the merger, who would otherwise have been entitled to receive a fraction of a combined company ordinary share (after aggregating all shares represented by the certificates and book-entry shares delivered by such holder), will receive the Pfizer fractional share consideration as described in “The Merger Agreement—No Fractional Shares.”

The merger consideration will be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend, any dividend or distribution of securities convertible into Pfizer common stock or Allergan ordinary shares, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the shares of Pfizer common stock or Allergan ordinary shares outstanding after the date of the merger agreement and prior to the effective time (in each case, other than the Allergan share split).

Allergan Share Split and Name Change

The merger agreement provides that immediately prior to the consummation of the merger Allergan shareholders will receive 11.3 combined company ordinary shares for each of their Allergan ordinary shares. Allergan shareholders will receive these shares by virtue of the Allergan share split.

No holder of Allergan ordinary shares will be issued fractional shares in the Allergan share split. Each holder of Allergan ordinary shares subject to the Allergan share split, who would otherwise have been entitled to receive a fraction of a combined company ordinary share (after aggregating all shares held by such holder), will receive the Allergan fractional share consideration as described in “The Merger Agreement—No Fractional Shares.”

As of the effective time of the Allergan share split, pursuant to and in accordance with the anti-dilution provisions of Allergan’s equity incentive plans, Allergan will appropriately and proportionately adjust the number of Allergan ordinary shares issuable in respect of outstanding equity incentive awards, the exercise price of all outstanding options, the total number of Allergan ordinary shares that may be the subject of future grants as well as the individual ordinary share limits under Allergan’s equity incentive plans.

Following the merger, subject to the approval of the Allergan name change proposal by Allergan shareholders at the Allergan EGM and the approval of the Registrar of Companies in Ireland, Allergan will effect a change of name so that the name of the combined company will be “Pfizer plc.”

 

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Background of the Merger

In pursuing their respective objectives of enhancing shareholder value, both the Allergan board of directors and the Pfizer board of directors consider from time to time opportunities for a variety of transactions, including potential acquisitions, divestitures, business combinations, collaborations and other strategic alliances. In 2014 and 2015, the pharmaceutical industry was engaged in a significant wave of consolidation that presented Allergan and Pfizer with numerous opportunities for such transactions.

Allergan, then known as Actavis plc (which we refer to in this section as “Actavis” until its merger with Allergan, Inc. on March 17, 2015), was an active participant in this consolidation wave and held discussions with multiple other pharmaceutical companies during this time. One of these companies was Allergan, Inc. (which we refer to as “Legacy Allergan”), which had received an unsolicited acquisition proposal on April 22, 2014 from Valeant Pharmaceuticals International, Inc. That proposal, and subsequent proposals by Valeant, were rejected by the Legacy Allergan board of directors. Commencing in May 2014, Brenton L. Saunders, who would become President and Chief Executive Officer of Actavis on July 1, 2014, engaged in several conversations with David Pyott, Chairman of the Board and Chief Executive Officer of Legacy Allergan, regarding the possibility of a merger transaction between Actavis and Legacy Allergan. On each such occasion, Mr. Pyott advised Mr. Saunders that Legacy Allergan was not interested in pursuing a transaction at such time. On July 30, 2014, Mr. Saunders sent to Mr. Pyott a written non-binding proposal to acquire Legacy Allergan. On August 11, 2014, Mr. Pyott advised Mr. Saunders again that Legacy Allergan was not interested in pursuing a transaction at that time.

Another of the several companies with which Actavis engaged in discussions with respect to a potential transformational transaction was Pfizer. On July 21, 2014, Ian C. Read, Chairman and Chief Executive Officer of Pfizer, and Frank D’Amelio, Chief Financial Officer of Pfizer, met for dinner with Paul M. Bisaro, the then-Executive Chairman of Actavis, and Mr. Saunders. During dinner, they discussed the possibility of exploring a transaction in which Pfizer would combine with Actavis. At a regularly scheduled meeting of the Actavis board of directors on July 23, 2014, Mr. Saunders informed the Actavis board of directors of Pfizer’s approach. Further to those conversations, on August 1, 2014, Mr. Read contacted Mr. Saunders to express an interest in continuing to explore a potential business combination transaction between Pfizer and Actavis. Mr. Saunders advised Mr. Read that Actavis shareholders would have to receive a significant premium, but no specific price was discussed. At this time, Pfizer was not aware that Actavis was actively pursuing alternative transactions, and in particular did not know that Actavis had approached Legacy Allergan regarding a potential transaction between Actavis and Legacy Allergan.

Throughout the month of August 2014, executives of Pfizer, including Mr. Read, Mr. D’Amelio and Doug Giordano, Senior Vice President of Worldwide Business Development of Pfizer, and executives of Actavis, including Mr. Saunders and Mr. Bisaro, held various telephone conversations and in-person meetings to discuss the key terms of a potential transaction between Pfizer and Actavis.

On August 12, 2014, Pfizer and Actavis entered into a confidentiality and standstill agreement. Over the course of the following weeks, the parties determined that the company resulting from the proposed combination of the companies would be organized in Ireland. They also engaged in preliminary discussions regarding the mix of cash and Pfizer common stock, and the premium, to be paid to Actavis shareholders in the potential transaction. At a meeting on August 21, 2014, Mr. Read and Mr. D’Amelio indicated to Mr. Saunders and Mr. Bisaro that Pfizer was willing to pursue a transaction that would provide Actavis shareholders with cash and stock consideration having an implied value of $307 per Actavis common share. The parties also had several discussions regarding termination rights and remedies of the parties relating to adverse changes in law, but did not reach any agreement on these matters. The Actavis board of directors discussed the Pfizer proposal at a meeting on August 29, 2014.

During late August 2014 and September 2014, Pfizer and Actavis began negotiating a transaction agreement and conducted preliminary due diligence. On September 23, 2014, at a regularly scheduled meeting, the Pfizer

 

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board of directors reviewed the status of the negotiations and other considerations relevant to the potential transaction, and determined not to proceed further at that time. Later that day, Mr. Read informed Mr. Saunders that Pfizer wished to cease discussions regarding a potential transaction. At the time discussions between the parties ceased, Pfizer remained unaware that Actavis had approached Legacy Allergan regarding a possible combination transaction.

Actavis returned to its consideration of other potential combination transactions, including the possible business combination with Legacy Allergan. During the period following Actavis’ initial proposal to acquire Legacy Allergan, Valeant had continued its pursuit of Legacy Allergan and had increased its unsolicited takeover proposal twice. During the month of October 2014, Mr. Saunders spoke with Mr. Pyott on several occasions to reiterate Actavis’ interest in a transaction between Legacy Allergan and Actavis. On November 4, 2014, a California court ruled that, notwithstanding certain allegations of insider trading, Pershing Square Holdings, Ltd. would be able to vote its ten percent stake in Legacy Allergan in support of the Valeant takeover proposal. On November 5, 2014, Actavis and Legacy Allergan entered into a confidentiality agreement, and, over the following weeks, representatives of Actavis and Legacy Allergan engaged in due diligence and ultimately negotiated the terms and conditions of a potential transaction. Actavis and Legacy Allergan entered into a definitive agreement to combine on November 16, 2014, and the combination was completed on March 17, 2015. On June 15, 2015, Actavis changed its name to Allergan plc, and the combined company of such merger is hereinafter referred to as “Allergan.”

In October 2014, Pfizer also resumed evaluating other strategic alternatives, including a potential business combination with Hospira, Inc. In this regard, in December 2014, Mr. Read contacted F. Michael Ball, then-Chief Executive Officer of Hospira, to request a meeting to discuss a potential acquisition of Hospira by Pfizer. Negotiations commenced in late December 2014 and continued through early February 2015. On February 5, 2015, Pfizer and Hospira executed a definitive merger agreement, and on September 3, 2015, Pfizer completed its acquisition of Hospira.

In early 2015, Pfizer continued its internal evaluation of strategic business development opportunities, including possible combination transactions with both U.S. and non-U.S. multinational biopharmaceutical companies. As part of this evaluation, Mr. Read contacted Mr. Saunders to discuss whether Allergan would be interested in considering a possible business combination transaction with Pfizer. During April and May 2015, representatives of Pfizer and Allergan met to evaluate possible synergies that could be achieved from a possible transaction.

On June 25, 2015, the Pfizer board of directors held a meeting at which Pfizer’s current business development opportunities were discussed. During that meeting, the Pfizer board of directors determined that the company’s near-term focus should be on closing and integrating its acquisition of Hospira, and that it should cease its exploratory discussions with Allergan at that time. Consequently, on June 29, 2015, Mr. Read contacted Mr. Saunders and informed him that Pfizer was ceasing discussions regarding a possible transaction with Allergan.

During the same time frame, Allergan also was considering other potential strategic transactions. Teva, which had been engaged in a contested effort to acquire Mylan N.V., approached Allergan regarding a potential acquisition of Allergan’s generic pharmaceuticals business. Negotiations of the acquisition commenced thereafter and, on July 27, 2015, Allergan and Teva announced that they had entered into a definitive agreement for the sale of the business to Teva in a transaction valued at approximately $40.5 billion.

With the completion of the Hospira acquisition in the fall of 2015, Pfizer management explored a number of potential business development opportunities. Pfizer management reviewed these opportunities with the Pfizer board of directors at its September 25, 2015 meeting. With regard to Allergan, Mr. Read noted that a meeting with Mr. Saunders was scheduled to take place in October and that he believed Mr. Saunders might be willing to discuss a potential combination of Pfizer and Allergan to occur following the closing of Allergan’s transaction with Teva.

 

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On October 8, 2015, Messrs. Read and Bisaro met for lunch, at which time Mr. Read expressed his interest in a potential business combination transaction between Pfizer and Allergan that would involve all- or predominantly all-stock consideration. During that conversation, Mr. Bisaro indicated that Allergan was willing to discuss a transaction, provided that Allergan shareholders would receive a substantial premium for their shares. In light of the significant equity stake each of Pfizer’s stockholders and Allergan’s shareholders would own in the combined entity, Messrs. Read and Bisaro also discussed on a preliminary basis the continued representation of each company’s directors and executives on the combined company’s board of directors and executive leadership team. No agreement on these matters was reached at this time.

On October 22, 2015, Messrs. Read and Saunders held a meeting, portions of which were attended by additional representatives of Pfizer and Allergan, including Mr. D’Amelio and Maria Teresa Hilado, Chief Financial Officer of Allergan. During this meeting, Mr. Read expressed an interest in a potential business combination transaction that would involve all- or predominantly all-stock consideration at a price in the range of $375 per Allergan ordinary share (implying an exchange ratio of approximately 11.2 shares of Pfizer common stock per Allergan ordinary share based on the most recent closing price of Pfizer common stock at that time). Mr. Read indicated that these terms were preliminary and non-binding, and that a final price, as well as the structure of any transaction, would be determined following due diligence. Mr. Read explained that Pfizer was prepared to commence due diligence promptly. Mr. Read also indicated that any transaction agreement would need to contain a provision that would permit each of Pfizer and Allergan to protect their respective shareholders from potential regulatory or legal changes that could occur after the signing of a merger agreement and have a significant impact on the potential value resulting from the combination. Mr. Saunders acknowledged that any transaction agreement would need to contain terms to address potential regulatory or legal changes, but noted that such terms would also need to provide for substantial closing certainty, as this would be an important issue for the Allergan board of directors. Messrs. Read and Saunders also discussed potential governance arrangements for the combined company, and each of them indicated his intention to further discuss those matters with their respective boards of directors.

On October 22, 2015, the Pfizer board of directors held a telephonic meeting. Representatives from the Pfizer management team and Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”), outside counsel to Pfizer, were also present. At the meeting, Mr. Read updated the members of the Pfizer board of directors on the business development opportunities reviewed at the September board of directors meeting, and recommended that Pfizer focus on pursuing a combination with Allergan. Pfizer management discussed with the Pfizer board of directors the industrial logic of a combination with Allergan and the potential financial benefits of such a combination. Pfizer management and the Pfizer board of directors discussed that the potential transaction would be structured such that the combined company would be organized in Ireland, and that a key issue would be whether the parties could agree on the allocation of risks relating to events that might occur after the signing of any definitive agreement, including any right of the parties to terminate the agreement in the event of potential changes in U.S. tax laws that could adversely affect expected benefits of the potential transaction.

Over the following days, Pfizer and its advisors worked to develop a proposal with respect to each party’s right to terminate the agreement or for its board of directors to change its recommendation in the event of certain developments that might occur after the signing of the agreement, as well as the expenses to be reimbursed and/or fees payable in the event that those rights were exercised. Pfizer, Allergan and their respective advisors agreed that they needed to reach substantial agreement on these issues before engaging in diligence and negotiating definitive transaction documents.

On October 28, 2015, the Allergan board of directors held a meeting in Ireland. Representatives from the Allergan management team and J.P. Morgan Limited (“J.P. Morgan”), financial advisor to Allergan, were in attendance. Messrs. Saunders and Bisaro reported to the Allergan board of directors on their discussions with Pfizer. A discussion ensued regarding valuation metrics and governance issues, including the potential composition of the board of directors and management of the combined company, as well as transaction risks

 

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such as potential changes in law. Mr. Saunders then updated the Allergan board of directors on the anticipated next steps for the process, including a discussion of termination rights and remedies and due diligence. The Allergan board of directors authorized and directed management to proceed with its exploration of a transaction with Pfizer.

Later on October 28, 2015, The Wall Street Journal reported, based on information from anonymous sources, that Pfizer had approached Allergan about a potential merger, and that early-stage discussions were taking place between the parties.

On October 29, 2015, as required by the Irish Takeover Rules, both Pfizer and Allergan issued press releases confirming that the parties were engaged in preliminary, friendly discussions regarding a potential business combination transaction, but that no definitive agreement had been reached.

Later that day, Messrs. Read and Saunders spoke by telephone, and Mr. Read provided Mr. Saunders with an outline of the construct that Pfizer intended to propose relating to each party’s right to terminate the transaction or change its recommendation in various circumstances, including those related to adverse changes in tax laws, and the expenses to be reimbursed or fees payable by each party if those rights were exercised (referred to as the “termination rights proposal”).

Between October 30, 2015 and November 7, 2015, Wachtell Lipton and Cleary Gottlieb Steen & Hamilton LLP (“Cleary Gottlieb”), outside counsel to Allergan, exchanged drafts of and negotiated proposals relating to the rights of each party to terminate the merger agreement in the event of certain subsequent events (including adverse changes in tax laws), the circumstances in which each company’s board of directors would have the right to change its recommendation for the transaction and the termination fees payable or expenses reimbursable to the other party in connection with a termination of the transaction. Douglas Lankler, Executive Vice President and General Counsel of Pfizer, and A. Robert D. Bailey, Executive Vice President, Chief Legal Officer & Corporate Secretary of Allergan, also engaged in several telephone conversations during this time to discuss the various termination rights proposals.

On November 3, 2015, the Pfizer board of directors held a telephonic meeting. Representatives from the Pfizer management team and from Wachtell Lipton were also present. At the meeting, Pfizer management updated the directors on the market and investor reaction to the potential transaction with Allergan, as well as on the significant media coverage that had occurred following The Wall Street Journal report. Mr. Read provided an update on the status of negotiations with Allergan, noting that several key issues were under discussion by the parties. Mr. Read outlined for the directors the current negotiations surrounding the termination rights proposal. Representatives of Pfizer management discussed with the directors Pfizer’s plan to complete a full diligence review of Allergan in the following weeks.

On November 4, 2015, Pfizer and Allergan executed an amendment to the original confidentiality agreement between Pfizer and Actavis signed in August 2014, which, among other items, extended the duration of the confidentiality and standstill obligations contained in the original confidentiality agreement and provided for an exclusivity period through December 15, 2015.

On November 5, 2015, the parties commenced due diligence. Over the days that followed, the parties made diligence materials available to each other in electronic data rooms and for in-person review and representatives of the parties and their respective legal counsels participated in a series of in-person and telephonic due diligence meetings.

On November 6, 2015, Mr. Giordano and Sigurd Kirk, Executive Vice President – Corporate Business Development at Allergan, and other representatives of Pfizer and Allergan held a meeting during which Pfizer’s representatives discussed an indicative exchange ratio for the transaction in the range of 10.9 to 11.1 combined company ordinary shares for each Allergan ordinary share. Based on the most recent closing price of Pfizer

 

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common stock at that time, this range of exchange ratios implied a price per share in the range of approximately $372 to $379 per Allergan ordinary share, consistent with the October 22 discussion of a price in the range of $375 per Allergan ordinary share. No agreement on price or exchange ratio was reached at this meeting.

On November 8, 2015, Messrs. Read and Saunders met for dinner in New York to discuss certain governance matters relating to the combined company and the open issues in the termination rights proposal, including the size of the termination fee.

On November 9, 2015, the Allergan board of directors held a telephonic meeting. Representatives from the Allergan management team and from J.P. Morgan, Morgan Stanley & Co. LLC (“Morgan Stanley”), financial advisor to Allergan, Cleary Gottlieb and Arthur Cox (“Arthur Cox”), Irish legal counsel to Allergan, were also present. At the meeting, Mr. Saunders updated the Allergan board of directors on the status of the discussions and negotiations between members of the companies’ respective management teams and advisors regarding the potential business combination transaction and Allergan’s due diligence review of Pfizer. Mr. Saunders noted that the negotiations had been focused on (i) the merger consideration to be received by Allergan shareholders in the transaction, (ii) the termination rights proposal and (iii) the composition of the management team and board of directors of the combined company. Representatives from J.P. Morgan and Morgan Stanley described to the Allergan board of directors certain financial metrics that would be used to analyze the transaction, and representatives from Cleary Gottlieb and Arthur Cox discussed with the Allergan board of directors their fiduciary duties in connection with a potential transaction. Members of Allergan’s management team provided an overview to the Allergan board of directors of the anticipated transaction process. The Allergan directors also discussed the various concerns regarding potential changes to U.S. tax law that could prevent or limit the benefits of the transaction.

On the evening of November 10, 2015, on behalf of Pfizer, Wachtell Lipton sent an initial draft of the proposed merger agreement to Cleary Gottlieb, on behalf of Allergan. The draft merger agreement contemplated a “reverse merger” structure, whereby Pfizer would be merged with a subsidiary of the existing Allergan parent entity and, as a result of the merger, the former Pfizer stockholders would hold a majority of the equity of the combined company.

On November 11, 2015, Messrs. D’Amelio and Saunders held a telephone conversation during which they discussed certain aspects of the termination rights proposal, including the size of the termination fee that would be payable if a party’s board of directors were to change its recommendation in response to an intervening event and the merger agreement were terminated.

On November 13, 2015, Mr. Giordano spoke to Ms. Hilado and Mr. Kirk to present Pfizer’s proposal that the transaction include a stock and cash election that would enable Pfizer stockholders to receive cash in lieu of shares of the combined company, subject to a limit. Mr. Giordano explained that, under the proposal, Pfizer stockholders could elect to receive, in lieu of one combined company ordinary share for each of their shares of Pfizer common stock, cash equal to the volume weighted average price per share of Pfizer common stock over a period prior to the closing of the merger. The stock and cash elections would be subject to proration to ensure that no less than $6 billion and no more than $12 billion of cash would be paid in the merger to the Pfizer stockholders in the aggregate. Following that conversation, on the same day, on behalf of Pfizer, Wachtell Lipton sent Cleary Gottlieb, on behalf of Allergan, an updated draft of the merger agreement incorporating the stock and cash election mechanics.

On November 15, 2015, representatives from Pfizer management, and Allergan management, Guggenheim Securities, LLC (“Guggenheim Securities”) and Goldman, Sachs & Co. (“Goldman Sachs”), financial advisors to Pfizer, and J.P. Morgan and Morgan Stanley, financial advisors to Allergan, met at Wachtell Lipton’s offices. The Allergan management team made a presentation to Pfizer regarding certain aspects of Allergan’s business, and the Pfizer management team made a presentation to Allergan regarding certain aspects of Pfizer’s business. The parties discussed the logic of the combination, potential cost savings and other synergies and benefits of a combination. Later that afternoon, on behalf of Allergan, Cleary Gottlieb sent a revised draft of the merger agreement to Wachtell Lipton, on behalf of Pfizer.

 

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On November 16, 2015, Mr. D’Amelio and Mr. Saunders held a telephone conversation during which Mr. Saunders stated that Allergan had determined that the exchange ratio range of 10.9 to 11.1 combined company ordinary shares per Allergan ordinary share outlined by Pfizer on November 6, 2015 would not be sufficient in order for Allergan to proceed. After negotiation, they agreed to recommend to their respective board of directors an exchange ratio of 11.3 combined company ordinary shares for each Allergan ordinary share, which Allergan shareholders would receive through a share split effected concurrently with the closing of the merger. Assuming each combined company ordinary share had a value equal to one share of Pfizer common stock, and based on the closing price of Pfizer common stock on November 13, 2015, the exchange ratio implied that Allergan shareholders would receive shares of the combined company valued at approximately $376 for each Allergan ordinary share.

Later in the day on November 16, 2015, the Allergan board of directors convened a meeting. Representatives of the Allergan management team, and of J.P. Morgan, Morgan Stanley, Cleary Gottlieb and Arthur Cox were in attendance. Mr. Saunders updated the Allergan board of directors on the status of the transaction, including the ongoing negotiations with Pfizer. Mr. Saunders also discussed the ongoing due diligence review that each of Allergan and Pfizer were conducting on the other party and the preliminary findings of Allergan’s due diligence review of Pfizer. Representatives of J.P. Morgan and Morgan Stanley discussed certain preliminary financial analyses of the transaction with the Allergan board of directors. Mr. Saunders then updated the Allergan board of directors on the anticipated next steps for the process.

On November 18, 2015, the Pfizer board of directors held an in-person meeting at Pfizer’s offices in New York. Representatives from the Pfizer management team and from Wachtell Lipton and Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to Pfizer, were also present. Mr. Read provided the directors with a summary of the due diligence efforts that had been undertaken and stated that the investigation had not revealed any significant risks that would change management’s recommendation to proceed with the negotiations with Allergan. Mr. Read then began a discussion of the proposed exchange ratio for the transaction, stating that the parties had agreed to recommend to their respective board of directors that Allergan shareholders would receive 11.3 combined company ordinary shares for each of their Allergan ordinary shares, and that Pfizer stockholders would receive one combined company ordinary share for each of their shares of Pfizer common stock, subject to the right of Pfizer stockholders to make a stock and cash election so that no less than $6 billion and no more than $12 billion of cash would be paid to the Pfizer stockholders in the aggregate. Mr. Read further described to the directors the portion of the termination rights proposal that the parties had agreed to recommend to their respective board of directors, including that each party would have the right to terminate the merger agreement if changes to tax laws would cause the combined company to be treated as a U.S. corporation for U.S. tax purposes (in which case the terminating party would be obligated to reimburse the other party’s expenses up to $400 million), and that each party’s board of directors would have the right to make a change of recommendation if other events, such as changes to tax laws that significantly reduced expected benefits of the transaction, occurred and the board of directors believed that the failure to change its recommendation would be inconsistent with its fiduciary duties (in which case the party whose board of directors changed its recommendation would be required to pay a termination fee). Mr. Read explained that the parties had agreed to recommend to their respective boards of directors that their respective stockholder and shareholder meetings to approve the transaction be held immediately prior to the closing to ensure that the board of directors of each party would have the right to change its recommendation until shortly prior to the closing of the transaction. Mr. Read noted that the parties were still negotiating the amount of fees payable and/or expenses to be reimbursed if such change of recommendation were exercised.

Members of Pfizer management then described for the directors in further detail Pfizer’s due diligence findings, including that the investigation had confirmed the strategic fit of the businesses of Pfizer and Allergan, which reinforced the expectation that the proposed transaction would generate significant value for Pfizer’s stockholders. Representatives from Guggenheim Securities and Goldman Sachs, then joined the meeting and, together with members of Pfizer management, discussed with the directors certain financial aspects of Allergan’s business and the proposed transaction. Management explained to the Pfizer directors the structure of the transaction and the stock and cash elections to be provided to the Pfizer stockholders. The representatives from

 

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Guggenheim Securities and Goldman Sachs then provided the Pfizer directors with a presentation on their respective preliminary financial analyses of the proposed transaction. Representatives from Wachtell Lipton reviewed with the Pfizer directors their fiduciary duties to Pfizer and its stockholders and provided a summary of the key provisions of the merger agreement. At the conclusion of the meeting, Mr. Read confirmed to the Pfizer board of directors that it continued to be management’s belief that a transaction with Allergan was aligned with Pfizer’s strategic vision, could enhance the growth prospects of both the innovative and established businesses and would be in the best interests of Pfizer’s stockholders. Mr. Read indicated that the parties hoped to finalize the transaction documents over the coming days and that another meeting of the Pfizer board of directors was likely to be held over the weekend to consider whether to approve the transaction and enter into definitive transaction documents.

On November 19, 2015, Mr. D’Amelio and Mr. Saunders agreed that the amount of the termination fee that would be payable by a party if the transaction were terminated following a change in recommendation (other than in response to a superior proposal) by its board of directors would be $3 billion for a change in recommendation on or prior to March 1, 2016, and $3.5 billion for a change in recommendation after such date.

Between November 19, 2015 and November 22, 2015, Pfizer, Allergan and their respective advisors discussed the key remaining open issues, which included, among others, the efforts required to be taken by Pfizer to receive the regulatory approvals required for the transaction, the restrictions on the operation of both Pfizer’s and Allergan’s respective businesses during the pendency of the transaction and whether Pfizer would have a time limit on its exercise of its termination right relating to certain tax law changes, and continued to negotiate these issues and worked to finalize the merger agreement and related documents.

On November 20, 2015 and November 21, 2015, the Allergan board of directors held a meeting in Ireland to review the terms and conditions of the proposed transaction with Pfizer and to decide whether to authorize entering into a definitive merger agreement upon those terms. The meeting was also attended by members of Allergan management and representatives of J.P. Morgan, Morgan Stanley, Cleary Gottlieb and Arthur Cox. Allergan management discussed with the Allergan board of directors the 11.3 exchange ratio that the parties had agreed to recommend to their respective boards of directors, and summarized its view as to the strategic and financial benefits of the proposed transaction that would accrue to Allergan shareholders as shareholders of the combined company. Management also reviewed the background and status of discussions and presented a detailed overview of the results of the due diligence performed by it and Allergan’s advisors with respect to Pfizer. Representatives of J.P. Morgan and Morgan Stanley each made a presentation regarding their respective financial analyses of the transactions contemplated by the merger agreement, including the merger and the Allergan share split. Mr. Bailey reviewed the proposed terms of the latest draft of the merger agreement and noted that the merger agreement was in substantially final form, subject to approval by both companies’ boards of directors. Mr. Bailey described the cash election provisions of the merger agreement, pursuant to which Pfizer stockholders would have the ability to elect cash consideration in lieu of combined company ordinary shares, provided that no less than $6 billion and no more than $12 billion of cash would be paid to the Pfizer stockholders in the aggregate. Mr. Bailey also described to the Allergan directors various provisions relating to the parties’ termination rights, noting that each party would have the right to terminate the merger agreement if changes to tax laws would cause the combined company to be treated as a U.S. corporation for U.S. tax purposes (in which case, the terminating party would be obligated to reimburse the other party’s expenses up to $400 million), and that each party’s board of directors would have the right to make a change of recommendation in other specified circumstances (in which case the terminating party would be obligated to pay a termination fee of up to $3.5 billion), with the shareholder meetings being held immediately prior to the closing to ensure that the board of directors of each party would have the right to change its recommendation until shortly prior to the closing of the transaction. Mr. Bailey further noted that the closing of the transaction would be subject to the prior completion of Allergan’s pending transaction with Teva. A representative of Arthur Cox reviewed the directors’ fiduciary duties in connection with considering approval of the merger and the other transactions contemplated by the merger agreement as well as certain other Irish legal considerations. Allergan’s directors

 

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asked questions and discussed the various presentations and related matters throughout the meeting and members of Allergan’s management team and representatives of its financial and legal advisors responded to the directors’ comments and questions.

Following such discussions, on November 21, 2015, J.P. Morgan delivered to the Allergan board of directors its oral opinion, which was confirmed by delivery of a written opinion dated November 22, 2015, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Allergan stock consideration to be issued as part of the transactions contemplated by the merger agreement was fair, from a financial point of view, to the holders of Allergan ordinary shares, other than Pfizer and its affiliates. Morgan Stanley also rendered its oral opinion, which was subsequently confirmed in writing on November 22, 2015, to the Allergan board of directors to the effect that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the Split Exchange Ratio (giving effect to the merger and taking into account the share consideration and the cash consideration payable to holders of Pfizer common stock) pursuant to the merger agreement was fair from a financial point of view to the holders of Allergan ordinary shares (other than Pfizer and its affiliates). Following such presentations and discussions, the Allergan board of directors approved execution of the merger agreement and the consummation of the transactions contemplated by the merger agreement, including the merger and the Allergan share split and recommended that the Allergan required proposals, the Allergan name change proposal and the Allergan distributable reserves creation proposal be submitted for approval by the Allergan shareholders and recommended that Allergan shareholders approve such proposals.

On November 22, 2015, the Pfizer board of directors held a telephonic meeting. The Pfizer board of directors was joined by representatives of Pfizer management and its financial and legal advisors. Representatives from the Pfizer management team confirmed to the Pfizer board of directors that it continued to be management’s view that the proposed transaction with Allergan was financially compelling and was expected to generate significant value for Pfizer’s stockholders. Representatives from Guggenheim Securities and Goldman Sachs then presented their respective financial analyses to the Pfizer board of directors. Each of Guggenheim Securities and Goldman Sachs then delivered to the Pfizer board of directors its oral opinion, which was confirmed by delivery of a written opinion dated November 22, 2015, to the effect that, as of the date of the opinion and based upon and subject to the factors, assumptions, limitations and qualifications set forth in its opinion, the common stock merger consideration to be paid to Pfizer stockholders was fair, from a financial point of view, to such stockholders (in the case of Guggenheim Securities’ opinion) and to such stockholders other than Allergan and its affiliates (in the case of Goldman Sachs’ opinion). Representatives from Wachtell Lipton then discussed the fiduciary duties of the Pfizer directors and provided an update on the terms in the merger agreement. After discussion regarding the matters presented by management and Pfizer’s advisors at the meeting and at previous meetings, the Pfizer board of directors resolved that the transactions contemplated by the merger agreement are advisable and fair to, and in the best interests of, Pfizer and its stockholders and approved entry by Pfizer into the merger agreement.

Following the approval by Pfizer’s board of directors of the merger agreement, Pfizer and Allergan executed the merger agreement on the night of November 22, 2015, and, on the morning of November 23, 2015, they issued a press release prior to the opening of the U.S. financial markets announcing the entry into the merger agreement.

Recommendation of the Pfizer Board of Directors and Pfizer’s Reasons for the Merger

At its meeting on November 22, 2015, the Pfizer board of directors determined that the merger agreement and the transactions contemplated by the merger agreement were advisable and fair to, and in the best interests of, Pfizer and its stockholders, and approved and adopted the merger agreement and the transactions contemplated thereby. The Pfizer board of directors recommends that the Pfizer stockholders vote their shares in favor of the approval and adoption of the merger agreement and the transactions contemplated by the merger agreement.

 

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In arriving at this determination and recommendation, the Pfizer board of directors reviewed and discussed a significant amount of information and consulted with Pfizer’s management, legal advisors and financial advisors. The following are some of the significant factors that supported its decision to approve and adopt the merger agreement:

 

    the expectation that the combined company will be able to leverage the respective strengths of each of Pfizer and Allergan to position itself as a leading global biopharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world;

 

    the belief that the merger will accelerate the growth potential of Pfizer’s innovative business on a standalone basis through the addition of Allergan’s innovative products and pipeline and leadership positions in desirable therapeutic categories such as aesthetics and dermatology, eye care, gastrointestinal, neuroscience and urology, and enhance the scale and capabilities of Pfizer’s established products business;

 

    the view that the combined company will have a strong capital structure and credit profile, with anticipated increased earnings and cash flow, improved access to cash and enhanced financial flexibility, and that this capital structure and credit profile will help facilitate continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, as well as enabling pursuit of business development opportunities on a more competitive footing;

 

    the expectation that the complementary nature of the businesses and products of Pfizer and Allergan will allow for a successful integration of the two companies, and enhance the combined company’s future opportunity and flexibility in determining whether to elect to engage in a potential separation or other strategic transaction involving one or both of its businesses;

 

    the fact that, upon consummation of the merger, Pfizer stockholders will own, on a fully diluted basis, approximately 56% of the equity of the combined company, which will provide the Pfizer stockholders with an opportunity to participate in the equity value of the combined company, including potential future growth and expected synergies resulting from the merger;

 

    the expectation that the combination could result in potential aggregate annual operating synergies of more than $2 billion, anticipated to be achieved over the first three years of the merger becoming effective, with the potential for additional possible synergies to be identified during integration;

 

    the expectation that the combined company’s pro forma adjusted effective tax rate(1) will be approximately 17% - 18% by the first full year after the merger becomes effective;

 

    the expectation that, after giving effect to anticipated share repurchases, the merger will be accretive to adjusted diluted earnings per share(1) beginning in calendar year 2018, with expected combined operating cash flow in excess of $25 billion beginning in 2018;

 

    the belief that the merger will position the combined company to use Pfizer’s broad global footprint to better offer and deliver Allergan’s products to patients globally;

 

    the view that the merger would create opportunities to leverage the best practices of each of Pfizer and Allergan; and

 

    the belief that the complementary cultures of the two companies will allow for, and that the Pfizer management team will be able to work together with members of Allergan management to enable, a successful integration of Pfizer and Allergan following the consummation of the merger.

 

  (1) Adjusted income and its components and adjusted diluted earnings per share are defined as U.S. GAAP reported net income and its components and U.S. GAAP reported diluted earnings per share excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items.

 

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These beliefs are based in part on the following factors that the Pfizer board of directors considered:

 

    its knowledge and understanding of the Pfizer business, operations, financial condition, earnings, strategy and future prospects;

 

    information and discussions with Pfizer’s management, in consultation with representatives of Guggenheim Securities and Goldman Sachs, regarding Allergan’s business, operations, financial condition, earnings, strategy and future prospects, and the results of Pfizer’s due diligence review of Allergan;

 

    the fact that the board of directors of the combined company following consummation of the merger will consist of all of Pfizer’s 11 current directors and four current directors of Allergan, including Paul M. Bisaro, Allergan’s current Executive Chairman, and Brenton L. Saunders, Allergan’s current President and Chief Executive Officer;

 

    the fact that Ian Read, Chairman and Chief Executive Officer of Pfizer, will serve as Chairman and Chief Executive Officer of the combined company, and Brenton L. Saunders, Chief Executive Officer of Allergan, will serve as President and Chief Operating Officer of the combined company;

 

    the current and prospective economic climate generally and the competitive climate in the healthcare and pharmaceutical industries, including the potential for further consolidation;

 

    the fixed exchange ratio and share split ratio in the merger agreement, which will not be reduced or increased, respectively, in the event of a change in the price of Pfizer common stock or Allergan ordinary shares;

 

    the opinion of Guggenheim Securities to the Pfizer board of directors, dated November 22, 2015, to the effect that, as of such date and based upon and subject to the various assumptions and limitations set forth in such opinion, the common stock merger consideration pursuant to the merger agreement is fair, from a financial point of view, to holders of shares of Pfizer common stock, as more fully described in the section entitled “—Opinions of Pfizer’s Financial Advisors”;

 

    the opinion of Goldman Sachs to the Pfizer board of directors, dated November 22, 2015, to the effect that, as of such date and based upon and subject to the various assumptions and limitations set forth in such opinion, the common stock merger consideration pursuant to the merger agreement is fair, from a financial point of view, to holders of shares of Pfizer common stock (other than Allergan and its affiliates), as more fully described in the section entitled “—Opinions of Pfizer’s Financial Advisors”;

 

    the presentations and financial analyses of Goldman Sachs and Guggenheim Securities provided to the board of directors of Pfizer in connection with the rendering of their respective opinions, as more fully described in the section entitled “—Opinions of Pfizer’s Financial Advisors”;

 

    the right of Pfizer stockholders to elect an amount in cash equal to the volume-weighted average price per share of Pfizer common stock on the New York Stock Exchange for the trading day immediately preceding the effective time of the merger in lieu of combined company ordinary shares, subject to proration procedures such that Pfizer stockholders will receive no less than $6 billion and no more than $12 billion of cash consideration in the aggregate, which would allow Pfizer stockholders that elect and receive cash consideration to use the cash consideration to pay taxes payable by such stockholders resulting from the merger or for other purposes;

 

    the fact that under certain circumstances, the Pfizer board of directors may change its recommendation to Pfizer’s stockholders in response to an event that occurs after the date of the merger agreement, including any change in or issuance or interpretation of, or proposed change in or issuance or interpretation of, applicable law, as more fully described in the section entitled “The Merger Agreement—Change of Recommendation”, and may terminate the merger agreement in the event of the occurrence of an adverse tax law change, as more fully described in the section entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”;

 

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    the fact that under certain circumstances, the Pfizer board of directors may change its recommendation in response to a superior proposal, as more fully described in the section entitled “The Merger Agreement—Change of Recommendation”;

 

    the likelihood that the transaction will be completed on a timely basis; and

 

    the obligation of Allergan to reimburse certain of Pfizer’s expenses up to $400 million and the right of Pfizer to receive a termination fee of up to $3.5 billion in connection with a termination of the merger agreement under certain circumstances, as more fully described in the section entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement.”

The Pfizer board of directors weighed these factors against a number of uncertainties, risks and potentially negative factors relevant to the merger, including the following:

 

    the risk that regulatory or other governmental authorities might seek to impose conditions on or otherwise prevent or delay the merger, or impose restrictions or requirements on the operation of the businesses of the combined company after consummation of the merger, and that the transaction might not be consummated in a timely manner or at all;

 

    the risk that a change in applicable U.S. tax law, or official interpretations thereof, could cause the combined company to be treated as a U.S. domestic corporation for U.S. federal income tax purposes following the consummation of the merger or otherwise adversely affect the combined company and/or diminish or delay anticipated benefits of the merger;

 

    the risk that Pfizer may become obligated to reimburse certain of Allergan’s expenses up to $400 million or pay a termination fee to Allergan of up to $3.5 billion in connection with a termination of the merger agreement under certain circumstances, as more fully described in the section entitled “The Merger Agreement—Termination of the Merger Agreement; Termination Fees; Expense Reimbursement”;

 

    the challenges inherent in the combination of two business enterprises of the size and scope of Pfizer and Allergan, including the possibility that anticipated synergies and other benefits of the merger might not be achieved in the time frame contemplated or at all, and the other numerous risks and uncertainties that could adversely affect the combined company’s operating results;

 

    the risk of negative effects on Pfizer’s reputation among various stakeholders based on the fact that the combined company would be an Irish-domiciled company;

 

    the risk that failure to complete the transaction could cause Pfizer to incur significant fees and expenses and could lead to negative perceptions among investors and other stakeholders;

 

    the adverse impact that business uncertainty prior to the closing of the merger and during the post-closing integration period could have on the ability of both Pfizer and Allergan to attract, retain and motivate key personnel and to maintain business relationships;

 

    the risk that the merger may divert management focus and resources from operating Pfizer’s businesses, as well as other strategic opportunities, and that combining and integrating Pfizer and Allergan may result in potential disruption;

 

    the risk that the forecasted results in the unaudited prospective financial information of Pfizer and Allergan, as further described under “—Allergan Unaudited Prospective Financial Information” and “—Pfizer Unaudited Prospective Financial Information,” may not be achieved in the amounts or at the times anticipated;

 

    the fact that U.S. stockholders of Pfizer are expected to recognize gain, but not loss, with respect to their exchange of Pfizer shares for combined company ordinary shares in the merger, which could particularly affect long-term Pfizer stockholders with a low basis in their Pfizer shares and could, among other things, lead them to sell some of their shares to provide the cash to pay the tax;

 

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    the fact that, subject to certain limited exceptions, during the term of the merger agreement, Pfizer is prohibited from soliciting, initiating or knowingly encouraging any inquiry with respect to a competing proposal for Pfizer, or participating in any discussions or negotiations regarding a competing proposal for Pfizer, and is also prohibited from terminating the merger agreement in order to enter into a competing proposal transaction; and

 

    the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

At its meeting on November 22, 2015, the Pfizer board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the merger were outweighed by the potential benefits that it expected Pfizer and Pfizer stockholders would achieve as a result of the merger.

In considering the recommendation of the Pfizer board of directors, Pfizer stockholders should be aware that directors and executive officers of Pfizer have interests in the merger that are different from, or in addition to, any interests they might have solely as stockholders. See “—Interests of the Pfizer Directors and Executive Officers in the Merger.”

This discussion of the information and factors considered by the Pfizer board of directors includes the principal positive and negative factors, but is not intended to be exhaustive and may not include all of the factors considered by the Pfizer board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger, and the complexity of these matters, the Pfizer board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the transaction and to make its recommendations to Pfizer stockholders. Rather, the Pfizer board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Pfizer board of directors may have given differing weights to different factors.

Opinions of Pfizer’s Financial Advisors

Opinion of Guggenheim Securities, LLC

Pursuant to an engagement letter dated as of November 22, 2015, the Pfizer board of directors retained Guggenheim Securities to act as its financial advisor with respect to Pfizer’s possible acquisition of or merger with Allergan. In selecting Guggenheim Securities as its financial advisor, the Pfizer board of directors considered that, among other things, Guggenheim Securities is an internationally recognized investment banking, financial advisory and securities firm whose senior professionals have substantial experience advising companies in, among other industries, the pharmaceutical sector. Guggenheim Securities, as part of its investment banking, financial advisory and capital markets businesses, is regularly engaged in the valuation and financial assessment of businesses and securities in connection with mergers and acquisitions, recapitalizations, spin-offs/split-offs, restructurings, securities offerings in both the private and public capital markets and valuations for corporate and other purposes.

At the November 22, 2015 meeting of the Pfizer board of directors, Guggenheim Securities delivered its oral opinion, which subsequently was confirmed in writing, to the effect that, as of November 22, 2015 and based on the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken, the common stock merger consideration was fair, from a financial point of view, to the common stockholders of Pfizer.

This description of Guggenheim Securities’ opinion is qualified in its entirety by the full text of the written opinion, which is attached as Annex B to this joint proxy statement/prospectus and which you should read carefully and in its entirety. Guggenheim Securities’ written opinion sets forth the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review

 

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undertaken by Guggenheim Securities. Guggenheim Securities’ written opinion, which was authorized for issuance by the Fairness Opinion and Valuation Committee of Guggenheim Securities, is necessarily based on economic, capital markets and other conditions, and the information made available to Guggenheim Securities, as of the date of such opinion. Guggenheim Securities has no responsibility for updating or revising its opinion based on facts, circumstances or events occurring after the date of the rendering of the opinion.

In reading the discussion of Guggenheim Securities’ opinion set forth below, you should be aware that such opinion:

 

    was provided to the Pfizer board of directors (in its capacity as such) for its information and assistance in connection with its evaluation of the common stock merger consideration;

 

    did not and does not constitute a recommendation to the Pfizer board of directors with respect to the merger;

 

    does not constitute advice or a recommendation to any holder of Pfizer common stock or Allergan ordinary shares as to how to vote in connection with the merger or otherwise or, in the case of Pfizer stockholders, what form of consideration any such holder should elect to receive pursuant to the election mechanism described in the merger agreement (as to which Guggenheim Securities expresses no view or opinion);

 

    did not and does not address Pfizer’s underlying business or financial decision to pursue the merger, the relative merits of the merger as compared to any alternative business or financial strategies that might exist for Pfizer or the effects of any other transaction in which Pfizer might engage;

 

    addressed and addresses only the fairness, from a financial point of view, of the common stock merger consideration to the holders of Pfizer common stock;

 

    expressed and expresses no view or opinion as to any other term or aspect of the merger, the merger agreement or any other agreement, transaction document or instrument contemplated by the merger agreement or to be entered into or amended in connection with the merger or the fairness, financial or otherwise, of the merger to, or of any consideration to be paid to or received by, the holders of any class of securities, creditors or other constituencies of Pfizer or Allergan; and

 

    expressed and expresses no view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of the Pfizer or the Allergan directors, officers or employees, or any class of such persons, in connection with the merger relative to the common stock merger consideration or otherwise.

In the course of performing its reviews and analyses for rendering its opinion, Guggenheim Securities:

 

    reviewed a draft of the merger agreement dated as of November 22, 2015;

 

    reviewed certain publicly available business and financial information regarding each of Pfizer and Allergan;

 

    reviewed certain non-public business and financial information regarding Pfizer’s and Allergan’s respective businesses and prospects (including certain financial projections for each of Pfizer and Allergan, which are referred to by Pfizer’s financial advisors as the financial projections), all as prepared and provided to Pfizer’s financial advisors by Pfizer’s senior management (for more information regarding the Pfizer projections prepared by Pfizer’s senior management, see “—Pfizer Unaudited Prospective Financial Information”);

 

    reviewed certain non-public business and financial information regarding Allergan’s business and prospects (including certain financial projections), all as prepared and provided to Pfizer’s financial advisors by Allergan’s senior management (for more information regarding the Allergan projections prepared by Allergan’s senior management, see “—Allergan Unaudited Prospective Financial Information”);

 

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    reviewed certain estimated transaction-related synergies and estimated costs to achieve such synergies expected to result from the merger (which are referred to by Pfizer’s financial advisors as the synergy estimates or the synergies), all as prepared and provided to Pfizer’s financial advisors by Pfizer’s senior management;

 

    discussed with Pfizer’s senior management their strategic and financial rationale for the merger as well as their views of Pfizer’s and Allergan’s respective businesses, operations, historical and projected financial results and future prospects;

 

    discussed with Allergan’s senior management their views of Allergan’s business, operations, historical and projected financial results and future prospects;

 

    reviewed the historical prices, trading multiples and trading volumes of the shares of Pfizer common stock and the Allergan ordinary shares;

 

    compared the financial performance of Pfizer and Allergan and the trading multiples and trading activity of the shares of Pfizer common stock and the Allergan ordinary shares with corresponding data for certain other publicly traded companies that Guggenheim Securities deemed relevant in evaluating Pfizer and Allergan;

 

    reviewed the valuation and financial metrics of certain mergers and acquisitions that Guggenheim Securities deemed relevant in evaluating the merger;

 

    performed discounted cash flow analyses based on the financial projections and the synergy estimates, in each case as furnished to Pfizer’s financial advisors by Pfizer;

 

    reviewed the pro forma financial results, financial condition and capitalization of the combined company, all as prepared and provided to Pfizer’s financial advisors by Pfizer’s senior management; and

 

    conducted such other studies, analyses, inquiries and investigations as Guggenheim Securities deemed appropriate.

With respect to the information used in arriving at its opinion, Guggenheim Securities notes that:

 

    Guggenheim Securities has relied upon and assumed the accuracy, completeness and reasonableness of all industry, business, financial, legal, regulatory, tax, accounting, actuarial and other information (including, without limitation, any financial projections, synergy estimates, other estimates and other forward-looking information) furnished by or discussed with Pfizer and Allergan or obtained from public sources, data suppliers and other third parties.

 

    Guggenheim Securities (i) has not assumed any responsibility, obligation or liability for the accuracy, completeness, reasonableness, achievability or independent verification of, and Guggenheim Securities did not independently verify, any such information (including, without limitation, any financial projections, synergy estimates, other estimates and other forward-looking information), (ii) expressed no view, opinion, representation, guaranty or warranty (in each case, express or implied) regarding the reasonableness or achievability of any financial projections, synergy estimates, other estimates and other forward-looking information or the assumptions upon which they are based and (iii) has relied upon the assurances of Pfizer’s and Allergan’s (as the case may be) senior management that they were unaware of any facts or circumstances that would make such information (including, without limitation, any financial projections, synergy estimates, other estimates and other forward-looking information) incomplete, inaccurate or misleading.

 

   

Specifically, with respect to any (i) financial projections, synergy estimates, other estimates and other forward-looking information furnished by or discussed with Pfizer and Allergan, (a) Guggenheim Securities was advised by Pfizer’s and Allergan’s (as the case may be) senior management, and Guggenheim Securities assumed, that such financial projections, synergy estimates, other estimates and other forward-looking information utilized in its analyses had been reasonably prepared on bases

 

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reflecting the best then-currently available estimates and judgments of Pfizer’s and Allergan’s (as the case may be) senior management as to the expected future performance of Pfizer and Allergan (as the case may be) and the expected amounts and realization of such synergies, and Guggenheim Securities assumed that such synergies will be realized in the amounts and at the times projected and (b) Guggenheim Securities assumed that such financial projections, synergy estimates, other estimates and other forward-looking information had been reviewed by the Pfizer board of directors with the understanding that the financial projections and the synergy estimates would be used and relied upon by Guggenheim Securities in connection with rendering its opinion and (ii) financial projections, other estimates and other forward-looking information obtained by Guggenheim Securities from public sources, data suppliers and other third parties, Guggenheim Securities assumed that such information was reasonable and reliable.

Guggenheim Securities also notes certain other considerations with respect to its engagement and its opinion:

 

    Guggenheim Securities did not perform or obtain any independent appraisal of the assets or liabilities (including any contingent, derivative or off-balance sheet assets and liabilities) of Pfizer or Allergan or the solvency or fair value of Pfizer or Allergan, nor was Guggenheim Securities furnished with any such appraisals.

 

    Guggenheim Securities assumed that the merger will qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Code. Guggenheim Securities did not express any view or render any opinion regarding the tax consequences to Pfizer or its stockholders of the merger. Guggenheim Securities’ professionals are not legal, regulatory, tax, consulting, accounting, appraisal or actuarial experts and Guggenheim Securities’ opinion should not be construed as constituting advice with respect to such matters; accordingly, Guggenheim Securities relied on the assessments of Pfizer and its other advisors with respect to such matters.

 

    Guggenheim Securities further assumed that:

 

    in all respects material to its analyses, (i) the final executed form of the merger agreement would not differ from the draft that Guggenheim Securities reviewed, (ii) Pfizer and Allergan will comply with all terms of the merger agreement and (iii) the representations and warranties of Pfizer and Allergan contained in the merger agreement were true and correct and all conditions to the obligations of each party to the merger agreement to consummate the merger will be satisfied without any waiver thereof; and

 

    the merger will be consummated in a timely manner and in accordance with the terms of the merger agreement, without any limitations, restrictions, conditions, amendments or modifications (regulatory, tax-related or otherwise) that would have an adverse effect on Pfizer, Allergan, the merger or its contemplated benefits in any way material to Guggenheim Securities’ analyses.

 

    Guggenheim Securities expressed and expresses no view or opinion as to the price or range of prices at which the shares of Pfizer common stock or other securities of Pfizer and the Allergan ordinary shares or other securities of Allergan may trade at any time, including subsequent to the announcement or consummation of the merger.

 

    Guggenheim Securities based its financial analyses on assumptions that it deemed reasonable, including assumptions concerning general business and economic conditions, capital markets considerations and industry-specific and company-specific factors, all of which are beyond the control of Pfizer, Allergan and Guggenheim Securities.

 

    Peer group trading analysis and financial benchmarking and precedent merger and acquisition transaction analyses are not mathematical; rather, such analyses involve complex considerations and judgments concerning the differences in business, financial, operating and capital markets-related characteristics and other factors regarding the peer group companies and precedent merger and acquisition transactions to which Pfizer, Allergan and the merger were compared.

 

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Pursuant to the terms of Guggenheim Securities’ engagement letter, Pfizer has agreed to pay Guggenheim Securities a transaction fee of $65 million, $6.5 million of which became payable upon the public announcement of the merger and the remainder of which is payable upon consummation of the merger. In addition, Pfizer has agreed to indemnify Guggenheim Securities against certain liabilities that may arise out of Guggenheim Securities’ engagement.

Guggenheim Securities has been engaged since 2012 to act as a financial advisor to Pfizer in connection with its evaluation of various strategic and financial alternatives. Guggenheim Securities is currently engaged and during the past two years has been engaged by Pfizer to provide financial advisory or other investment banking services in connection with various matters unrelated to the merger, for which Guggenheim Securities has received (or expects to receive) customary fees. Specifically, during the past two years, Guggenheim Securities has served as a financial advisor to Pfizer in connection with (among other matters) its acquisition of Hospira, Inc. in 2015. During the aforementioned two-year period, the aggregate fees received by Guggenheim Securities from Pfizer were $25 million. Guggenheim Securities has not been engaged during the past two years by Allergan to provide financial advisory or investment banking services for which Guggenheim Securities received fees. However, Guggenheim Securities did act as a financial advisor to AqueSys, Inc. in connection with its acquisition by Allergan in 2015 and Guggenheim Securities has been or may be engaged to provide financial advisory or investment banking services to other third parties with which Allergan may engage in mergers, acquisitions and other such transactions. Guggenheim Securities may in the future seek to provide Pfizer, Allergan and their respective affiliates with certain financial advisory and investment banking services unrelated to the merger.

Guggenheim Securities and its affiliates and related entities engage in a wide range of financial services activities for its and their own accounts and the accounts of its and their customers, including: asset, investment and wealth management; investment banking, corporate finance, mergers and acquisitions and restructuring; merchant banking; fixed income and equity sales, trading and research; and derivatives, foreign exchange and futures. In the ordinary course of these activities, Guggenheim Securities or its affiliates and related entities may (i) provide such financial services to Pfizer, Allergan, other participants in the merger or their respective affiliates, subsidiaries, investment funds and portfolio companies, for which services Guggenheim Securities or its affiliates and related entities has received, and may receive, compensation and (ii) directly or indirectly, hold long or short positions, trade and otherwise conduct such activities in or with respect to certain bank debt, debt or equity securities and derivative products of or relating to Pfizer, Allergan, other participants in the merger or their respective affiliates, subsidiaries, investment funds and portfolio companies. Furthermore, Guggenheim Securities or its affiliates and related entities and its or their directors, officers, employees, consultants and agents may have investments in Pfizer, Allergan, other participants in the merger or their respective affiliates, subsidiaries, investment funds and portfolio companies.

Consistent with applicable legal and regulatory guidelines, Guggenheim Securities has adopted certain policies and procedures to establish and maintain the independence of its research departments and personnel. As a result, Guggenheim Securities’ research analysts may hold views, make statements or investment recommendations and publish research reports with respect to Pfizer, Allergan, other participants in the merger or their respective affiliates, subsidiaries, investment funds and portfolio companies and the merger that differ from the views of Guggenheim Securities’ investment banking personnel.

Opinion of Goldman, Sachs & Co.

Goldman Sachs rendered its opinion to the Pfizer board of directors that, as of November 22, 2015 and based upon and subject to the factors and assumptions set forth therein, the common stock merger consideration to be paid to the holders (other than Allergan and its affiliates) of Pfizer common stock pursuant to the merger agreement was fair from a financial point of view to such holders of Pfizer common stock.

 

 

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The full text of the written opinion of Goldman Sachs, dated November 22, 2015, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C to this joint proxy statement/prospectus. Goldman Sachs provided its opinion for the information and assistance of the Pfizer board of directors in connection with its consideration of the merger. Goldman Sachs’ opinion is not a recommendation as to how any holder of shares of Pfizer common stock should vote or make any election with respect to such merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

    a draft of the merger agreement dated as of November 22, 2015;

 

    annual reports to stockholders and Annual Reports on Form 10-K of Pfizer and Allergan for the five years ended December 31, 2014;

 

    certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Pfizer and Allergan;

 

    certain other communications from Pfizer and Allergan to their respective stockholders or shareholders;

 

    certain publicly available research analyst reports for Pfizer and Allergan;

 

    the financial projections, all as prepared and provided to Pfizer’s financial advisors by Pfizer senior management (for more information regarding the Pfizer projections prepared by Pfizer’s senior management as approved for Goldman Sachs’ use by Pfizer, see “—Pfizer Unaudited Prospective Financial Information”);

 

    certain internal financial analyses and certain financial forecasts for Allergan prepared by its management, as approved for Goldman Sachs’ use by Pfizer (for more information regarding the Allergan projections prepared by Allergan’s senior management, see “—Allergan Unaudited Prospective Financial Information”); and

 

    the synergy estimates, as approved for Goldman Sachs’ use by Pfizer.

Goldman Sachs also held discussions with members of the senior management of Pfizer regarding their assessment of the strategic rationale for, and the potential benefits of, the merger and the past and current business operations, financial condition, and future prospects of Pfizer and Allergan and held discussions with members of the senior management of Allergan regarding their assessment of the past and current business operations, financial condition and future prospects of Allergan; reviewed the reported price and trading activity for the shares of Pfizer common stock and the Allergan ordinary shares; compared certain financial and stock market information for Pfizer and Allergan with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the pharmaceutical sector and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with Pfizer’s consent, has relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with Pfizer’s consent that the financial projections and the synergy estimates were reasonably prepared on a basis reflecting the then-best currently available estimates and judgments of the management of Pfizer. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Pfizer or Allergan or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Pfizer or Allegan or on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs also assumed that the

 

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merger will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition or the failure to exercise any right of termination, in each case, the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion did not and does not address the underlying business decision of Pfizer to engage in the merger or the relative merits of the merger as compared to any strategic alternatives that may be available to Pfizer; nor did it or does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addressed and addresses only the fairness from a financial point of view to the holders (other than Allergan and its affiliates) of Pfizer common stock, as of the date of the opinion, of the common stock merger consideration to be paid to such holders pursuant to the merger agreement. Goldman Sachs’ opinion did not and does not express any view on, and did not and does not address, any other term or aspect of the merger agreement or the merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Pfizer; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Pfizer, or class of such persons, in connection with the merger, whether relative to the common stock merger consideration to be paid pursuant to the merger agreement or otherwise. In addition, Goldman Sachs did not and does not express any opinion as to the prices at which Pfizer common stock or Allergan ordinary shares will trade at any time or as to the impact of the merger on the solvency or viability of Pfizer or Allergan or the ability of Pfizer or Allergan to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it, as of the date of the opinion, and Goldman Sachs has assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Pfizer, Allergan, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction contemplated by the merger agreement. Goldman Sachs acted as financial advisor to Pfizer in connection with, and participated in certain of the negotiations leading to, the merger. Goldman Sachs has provided certain financial advisory and underwriting services to Pfizer and its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as joint dealer manager with respect to a change of obligor exchange offer for offerings by Hospira, a subsidiary of Pfizer, of its 6.050% notes due 2017 (aggregate principal amount $550,000,000), 5.200% notes due 2020 (aggregate principal amount $350,000,000), 5.800% notes due 2023 (aggregate principal amount $350,000,000), and 5.600% notes due 2040 (aggregate principal amount $500,000,000) in 2015. Goldman Sachs also has provided certain financial advisory and underwriting services to Allergan and its affiliates from time to time. During the two year period ended November 22, 2015, the Investment Banking Division of Goldman Sachs has received compensation for financial advisory and/or underwriting services provided to Pfizer and/or its affiliates of approximately $900,000 and compensation for financial advisory and/or underwriting services provided to Allergan and/or its affiliates of approximately $63.8 million. Goldman Sachs may also in the future provide investment banking services to Pfizer, Allergan and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

 

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The Pfizer board of directors selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to a letter agreement dated November 22, 2015, Pfizer engaged Goldman Sachs to act as its financial advisor in connection with the contemplated merger. Pursuant to the terms of Goldman Sachs’ engagement letter, Pfizer has agreed to pay Goldman Sachs a transaction fee of approximately $27 million, $5 million of which became payable upon the public announcement of the merger and the remainder of which is payable upon consummation of the merger. In addition, Pfizer has agreed to reimburse Goldman Sachs for certain of its expenses arising, and indemnify Goldman Sachs against certain liabilities that may arise, out of Goldman Sachs’ engagement.

Summary of Financial Analyses

Overview of Financial Analyses

This “—Summary of Financial Analyses” presents a summary of the material financial analyses performed—either jointly or separately as indicated herein—by Guggenheim Securities and Goldman Sachs and presented to the Pfizer board of directors in connection with Pfizer’s financial advisors’ rendering of their respective opinions.

Some of the jointly and separately prepared financial analyses summarized below include summary data and information presented in tabular format. In order to understand fully such financial analyses, the summary data and tables must be read together with the full text of the summary. Considering the summary data and tables alone could create a misleading or incomplete view of Pfizer’s financial advisors’ jointly and separately prepared financial analyses.

The preparation of a fairness opinion is a complex process and involves various judgments and determinations as to the most appropriate and relevant financial analyses and the application of those methods to the particular circumstances involved. A fairness opinion therefore is not readily susceptible to partial analysis or summary description, and taking portions of the jointly and separately prepared financial analyses set forth below, without considering such analyses as a whole, would in the view of Pfizer’s financial advisors create an incomplete and misleading picture of the processes underlying the jointly and separately prepared financial analyses considered in rendering Guggenheim Securities’ and Goldman Sachs’ respective opinions.

In arriving at their respective opinions, Pfizer’s financial advisors:

 

    did not form views or opinions as to whether any individual analysis or factor, whether positive or negative, considered in isolation, supported or failed to support their respective opinions;

 

    considered the results of all of their jointly and separately prepared financial analyses and did not attribute any particular weight to any one analysis or factor; and

 

    ultimately arrived at their respective opinions based on the results of all of their jointly and separately prepared financial analyses assessed as a whole and believe that the totality of the factors considered and the various jointly and separately prepared financial analyses performed by Pfizer’s financial advisors in connection with their respective opinions operated collectively to support their determination as to the fairness, from a financial point of view, of the common stock merger consideration to Pfizer’s common stockholders.

With respect to the jointly and separately prepared financial analyses performed by Pfizer’s financial advisors in connection with rendering their respective opinions:

 

    Such jointly and separately prepared financial analyses, particularly those based on estimates and projections, are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by these analyses.

 

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    None of the selected publicly traded companies used in the peer group trading analysis and financial benchmarking described below is identical or directly comparable to Pfizer or Allergan, and none of the selected precedent merger and acquisition transactions used in the precedent merger and acquisitions transaction analyses described below is identical or directly comparable to the merger; however, such companies and transactions were selected by Pfizer’s financial advisors because, among other reasons, they represented or involved target companies which may be considered broadly similar, for purposes of Pfizer’s financial advisors’ jointly and separately prepared financial analyses, to Pfizer or Allergan based on Pfizer’s financial advisors’ familiarity with the global pharmaceutical sector.

 

    Such jointly and separately prepared financial analyses do not purport to be appraisals or to reflect the prices at which any securities may trade at the present time or at any time in the future.

Certain Definitions

Throughout this “Summary of Financial Analyses,” the following financial terms are used in connection with Pfizer financial advisors’ various jointly and separately prepared financial analyses:

 

    Adjusted EPS: means the relevant company’s earnings per share (before the deduction of certain customary non-cash items and extraordinary items);

 

    DCF: means discounted cash flow;

 

    EBITDA: means the relevant company’s operating earnings before interest, taxes, depreciation and amortization;

 

    EBITDA multiple: means the relevant company’s enterprise value divided by its historical or projected EBITDA;

 

    Enterprise value: means the relevant company’s net equity value plus (i) the principal or face amount of total debt and non-convertible preferred stock and (ii) the estimated fair market value or book value of any non-controlling/minority interests less (iii) cash, cash equivalents and short- and long-term marketable investments, (iv) the estimated fair market value or book value of any non-consolidated investments and (v) the book value of any non-cash generating assets;

 

    Net equity value: means the relevant company’s (i) gross equity value as calculated by multiplying (a) the number of outstanding common shares plus shares issuable upon the conversion or exercise of all in-the-money convertible securities, stock options and stock warrants and (b) the relevant company’s stock price less (ii) the cash proceeds from the assumed exercise of all in-the-money stock options and stock warrants;

 

    P/E multiple: means the relevant company’s stock price divided by its historical or projected adjusted EPS;

 

    VWAP: means the relevant company’s volume-weighted average stock price for the period indicated; and

 

    WACC: means weighted average cost of capital.

 

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Summary of Merger Consideration

Pfizer’s financial advisors used (i) the merger exchange ratio of one combined company ordinary share for each share of Pfizer common stock, (ii) the Allergan share split whereby, immediately prior to the effective time, each existing Allergan ordinary share will be sub-divided into 11.3 combined company ordinary shares and (iii) Pfizer’s undisturbed closing stock price of $35.45 on October 28, 2015 (the date on which rumors of the merger were published in The Wall Street Journal after the market close of the NYSE) to calculate the implied merger consideration to be $400.59 per Allergan ordinary share. Based on these factors, Pfizer’s financial advisors calculated that the merger consideration implied (i) a net equity value and an enterprise value for Allergan of approximately $167 billion and approximately $176 billion, respectively, and (ii) various merger-implied premia and multiples as outlined in the table below:

Implied Merger Premia and Implied Merger Multiples

 

Implied Value of Merger Consideration per Allergan Ordinary Share

      $ 400.59   
     Allergan
Share
Price
        

Acquisition Premium/(Discount) Relative to Allergan’s:

     

Undisturbed Stock Price @ 10/28/15

   $ 287.20         39.5

Undisturbed VWAP:

     

30-Day

     271.26         47.7   

90-Day

     290.45         37.9   

Implied P/E Multiple for Allergan:

     

2016E—Based on Pfizer Projections for Allergan

        27.0

2017E—Based on Pfizer Projections for Allergan

        23.9   

Allergan Change-of-Control Financial Analyses

Discounted Cash Flow Analyses of Allergan and Estimated Synergies. Using Pfizer’s financial projections for Allergan on a standalone basis, Pfizer’s financial advisors each performed illustrative discounted cash flow analyses with respect to Allergan on a standalone intrinsic-value basis using the projected after-tax unlevered free cash flows for Allergan and an estimate of its terminal/continuing value beyond the five-year projection horizon. Using Pfizer’s financial projections for Allergan on a standalone basis and the synergy estimates, Pfizer’s financial advisors also each performed illustrative standalone discounted cash flow analyses including the estimated synergies.

Guggenheim Securities’ Discounted Cash Flow Analyses of Allergan and Estimated Synergies

 

    In performing its discounted cash flow analyses regarding the Allergan ordinary shares and the estimated synergies, Guggenheim Securities used a discount rate range of 7.25% – 8.25% reflecting its estimates of Allergan’s WACC.

 

    In estimating Allergan’s terminal/continuing value beyond the five-year projection horizon, Guggenheim Securities applied an illustrative perpetual growth rate range of 1.5% – 2.5% to Allergan’s projected terminal year after-tax unlevered free cash flow. The illustrative terminal/ continuing values implied by the foregoing perpetual growth rate range were cross-checked for reasonableness with Allergan’s implied terminal year EBITDA multiples. Guggenheim Securities utilized the same illustrative perpetual growth rate range for purposes of estimating the terminal/continuing value of the estimated synergies.

 

   

Guggenheim Securities’ illustrative discounted cash flow analyses resulted in an illustrative range of (i) $335 – $470 per share for purposes of valuing the Allergan ordinary shares on a standalone

 

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intrinsic-value basis and (ii) $491 – $689 per share for purposes of valuing the Allergan ordinary shares on an intrinsic-value basis including the net present value of the estimated synergies.

Goldman Sachs’ Discounted Cash Flow Analyses of Allergan and Estimated Synergies

 

    In performing its discounted cash flow analyses regarding the Allergan ordinary shares and the estimated synergies, Goldman Sachs used a discount rate range of 8.00% – 9.00% reflecting its estimates of Allergan’s WACC.

 

    In estimating Allergan’s terminal/continuing value beyond the five-year projection horizon, Goldman Sachs applied an illustrative perpetual growth rate range of 2.0% – 3.0% to Allergan’s projected terminal year after-tax unlevered free cash flow. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the financial projections and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs utilized the same illustrative perpetual growth rate range for purposes of estimating the terminal/continuing value of the estimated synergies.

 

    Goldman Sachs’ illustrative discounted cash flow analyses resulted in an illustrative range of (i) $308 – $425 per share for purposes of valuing the Allergan ordinary shares on a standalone intrinsic-value basis and (ii) $463 – $632 per share for purposes of valuing the Allergan ordinary shares on an intrinsic-value basis including the net present value of estimated synergies.

Allergan Precedent Merger and Acquisition Transaction Analyses. Pfizer’s financial advisors reviewed and analyzed the valuation and financial metrics associated with certain selected precedent merger and acquisition transactions involving companies in the global pharmaceutical sector that Pfizer’s financial advisors deemed relevant for purposes of this analysis. The following precedent merger and acquisition transactions were reviewed and considered by Pfizer’s financial advisors:

Selected Global Pharmaceutical Precedent M&A Transactions

 

 

Date
Announced

  Target Company   Acquiror

11/17/14

  Allergan, Inc.   Actavis plc

07/18/14

  Shire plc   AbbVie Inc.

02/18/14

  Forest Laboratories, Inc.   Actavis plc

02/16/11

  Genzyme Corporation   Sanofi-Aventis

03/09/09

  Schering-Plough Corporation   Merck & Co., Inc.

01/26/09

  Wyeth   Pfizer Inc.

03/23/06

  Schering Aktiengesellschaft   Bayer Aktiengesellschaft

04/26/04

  Aventis   Sanofi-Synthélabo

07/15/02

  Pharmacia Corporation   Pfizer Inc.

02/06/00

  Warner-Lambert Company   Pfizer Inc.

 

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Pfizer’s financial advisors calculated change-of-control valuation multiples using forward-year EPS (based on certain equity research consensus estimates and each company’s most recent publicly available financial filings) and implied transaction premia for the selected precedent merger and acquisition transactions, which are summarized in the table below:

Selected Global Pharmaceutical Precedent M&A Transaction Multiples and Premia

 

     Transaction
Price Per
Share /
Forward
Year Adjusted
EPS
     Transaction Premia Paid
versus Target Company’s
Unaffected Stock Price
 
      1-Day
Close
    30-Day
VWAP
    90-Day
VWAP
 

Precedent M&A Transactions:

         

Median

     21.4      32     40     45

Mean

     22.3         34        42        49   

High

     40.2         54        74        84   

Low

     13.9         25        28        18   

Pfizer/Allergan Merger

     27.0      39     48     38

Goldman Sachs participated in the precedent merger and acquisition transaction review and analysis discussed above only for reference purposes for the Pfizer board of directors and did not consider such review and analysis for purposes of rendering its opinion. In performing its separately prepared precedent merger and acquisition transaction analyses for purposes of valuing the Allergan ordinary shares on a change-of-control basis, Guggenheim Securities selected:

 

    A transaction-implied forward P/E multiple range of 18.0x – 26.0x, which Guggenheim Securities applied to Allergan’s 2016E adjusted EPS, resulting in an illustrative range of $267 – $386 per share for purposes of valuing the Allergan ordinary shares on a change-of-control basis.

 

    A transaction-implied premia range of 25% – 55%. In selecting this range, Guggenheim Securities considered each of the ranges of implied transaction premia in the table above, with a particular focus on the premia range implied by the targets stocks’ closing prices one day prior to the affected dates of the relevant transactions. Guggenheim Securities then applied this range to Allergan’s closing stock price one day prior to the affected date, resulting in an illustrative range of $359 – $445 per share for purposes of valuing the Allergan ordinary shares on a change-of-control basis.

Allergan Peer Group Trading Analysis. Pfizer’s financial advisors reviewed and analyzed Allergan’s historical stock price performance, trading valuation metrics and historical and projected/forecasted financial performance compared to corresponding data for certain publicly traded companies in the global pharmaceutical sector that Pfizer’s financial advisors deemed relevant for purposes of this analysis. The following publicly traded global pharmaceutical sector peer group companies were selected by Pfizer’s financial advisors for purposes of this analysis:

Selected Global Pharmaceutical Peer Group Companies

 

•     AbbVie Inc.

   •     Merck & Co., Inc.

•     Amgen Inc.

   •     Novartis AG

•     AstraZeneca plc

   •     Roche Holding Ltd

•     Eli Lilly and Company

   •     Sanofi

•     GlaxoSmithKline plc

   •     Shire plc

 

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Pfizer’s financial advisors calculated various public market trading multiples for the selected peer group companies (based on certain equity research consensus estimates and each company’s most recent publicly available financial filings), which are summarized in the table below:

Selected Global Pharmaceutical Peer Group Trading Multiples

 

     Enterprise
Value /
2016E
EBITDA
     Stock Price /
2016E Adjusted
EPS
 

Publicly Traded Peer Group Companies (Stock Price @11/20/15):

     

Median

     12.1      16.4

High

     16.2         23.1   

Low

     7.5         12.3   

Pfizer—Undisturbed Trading Basis

     10.1      15.1

Allergan:

     

Undisturbed Trading Basis

     14.3      17.5

Merger Basis

        27.0   

In performing its separately prepared peer group trading analysis for purposes of valuing the Allergan ordinary shares on a standalone public market trading basis:

 

    Guggenheim Securities selected a trading-implied forward P/E multiple range of 15.0x – 18.0x, which Guggenheim Securities applied to Allergan’s 2016E adjusted EPS, resulting in an illustrative range of $223 – $267 per share for purposes of valuing the Allergan ordinary shares on a standalone public market trading basis.

 

    Guggenheim Securities noted that the foregoing trading valuation of the Allergan ordinary shares (i) compares to Allergan’s undisturbed price of $287.20 as of October 28, 2015 and (ii) does not reflect any acquisition premium that typically is paid in connection with change-of-control transactions such as the merger.

Pfizer Standalone Financial Analyses

Discounted Cash Flow Analyses of Pfizer. Using Pfizer’s financial projections, Pfizer’s financial advisors each performed illustrative standalone discounted cash flow analyses with respect to Pfizer on a standalone intrinsic-value basis using the projected after-tax unlevered free cash flows for Pfizer and an estimate of its terminal/continuing value beyond the five-year projection horizon.

Guggenheim Securities’ Discounted Cash Flow Analysis of Pfizer

 

    In performing its discounted cash flow analysis regarding the Pfizer common stock, Guggenheim Securities used a discount rate range of 7.25% – 8.25% reflecting its estimates of Pfizer’s WACC.

 

    In estimating Pfizer’s terminal/continuing value beyond the five-year projection horizon, Guggenheim Securities applied an illustrative perpetual growth rate range of 1.5% – 2.5% to Pfizer’s projected terminal year after-tax unlevered free cash flow. The illustrative terminal/continuing values implied by the foregoing perpetual growth rate range were cross-checked for reasonableness by reference to Pfizer’s implied terminal year EBITDA multiples.

 

    Guggenheim Securities’ illustrative discounted cash flow analysis resulted in an illustrative range of $34 – $46 per share for purposes of valuing the Pfizer common stock on a standalone intrinsic-value basis.

 

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Goldman Sachs’ Discounted Cash Flow Analysis of Pfizer

 

    In performing its discounted cash flow analysis regarding the Pfizer common stock, Goldman Sachs used a discount rate range of 8.50% – 9.50% reflecting its estimates of Pfizer’s WACC.

 

    In estimating Pfizer’s terminal/continuing value beyond the five-year projection horizon, Goldman Sachs applied an illustrative perpetual growth rate range of 2.0% – 3.0% to Pfizer’s projected terminal year after-tax unlevered free cash flow.

 

    Goldman Sachs’ illustrative discounted cash flow analysis resulted in an illustrative range of $30 – $39 per share for purposes of valuing the Pfizer common stock on a standalone intrinsic-value basis.

Pfizer Peer Group Trading Analysis. Pfizer’s financial advisors reviewed and analyzed Pfizer’s historical stock price performance, trading valuation metrics and historical and projected/forecasted financial performance compared to corresponding data for certain publicly traded companies in the global pharmaceutical sector that Pfizer’s financial advisors deemed relevant for purposes of this analysis. Pfizer’s financial advisors utilized the same publicly traded peer group companies as described above under “—Allergan Change-of-Control Financial Analyses—Allergan Peer Group Trading Analysis.

In performing its separately prepared peer group trading analysis for purposes of valuing the Pfizer common stock on a standalone public market trading basis:

 

    Guggenheim Securities noted that Pfizer was trading at an EBITDA multiple of 10.1x based on 2016E EBITDA and a P/E multiple of 15.1x based on 2016E adjusted EPS, in each case based on Pfizer’s undisturbed closing stock price of $35.45 as of October 28, 2015.

 

    Guggenheim Securities selected a trading-implied forward P/E multiple range of 14.0x – 17.0x, which Guggenheim Securities applied to Pfizer’s 2016E adjusted EPS, resulting in an illustrative range of $33 – $40 per share for purposes of valuing the Pfizer common stock on a standalone public market trading basis.

Guggenheim Securities’ Additional Financial Analyses

Guggenheim Securities’ Illustrative Value Creation Analyses. Guggenheim Securities reviewed the illustrative value creation associated with the merger from the perspectives of both Pfizer’s stockholders and Allergan’s shareholders, in each case on a market value basis and on a discounted cash flow basis.

 

    Guggenheim Securities’ Illustrative Value Creation Analysis—Market Value Approach

 

    In performing this analysis, Guggenheim Securities added (i) Pfizer’s standalone net equity value as of November 13, 2015, (ii) Allergan’s standalone undisturbed net equity value as of October 28, 2015 and (iii) the estimated net present value of the estimated after-tax synergies (based on an assumed WACC of 7.75% and an assumed perpetuity growth rate of 2.0%), from which total Guggenheim Securities then subtracted the minimum amount of cash consideration to be paid to Pfizer’s common stockholders of $6 billion.

 

    Guggenheim Securities determined that from the perspective of the former Pfizer stockholders, who will own approximately 56% of the combined company on a fully diluted basis following the merger (based on the closing price of Pfizer common stock as of November 20, 2015 and share counts as provided by Pfizer’s senior management prior to the announcement of the transaction), (i) the merger would create significant value and (ii) the former Pfizer stockholders would participate in approximately 30% of the aggregate value created in the merger (including the minimum amount of cash consideration to be paid to Pfizer’s common stockholders of $6 billion).

 

    Guggenheim Securities also determined that from the perspective of the former Allergan ordinary shareholders, who will own approximately 44% of the combined company on a fully diluted basis following the merger (based on the closing price of Pfizer common stock as of November 20, 2015 and share counts as provided by Pfizer’s senior management prior to the announcement of the transaction), (i) the merger would create significant value and (ii) the former Allergan ordinary shareholders would participate in approximately 70% of the aggregate value created in the merger.

 

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    Guggenheim Securities’ Illustrative Value Creation Analysis—DCF Value Approach

 

    In performing this analysis, Guggenheim Securities added (i) Pfizer’s standalone DCF-based net equity value as of December 31, 2015, (ii) Allergan’s standalone DCF-based net equity value as of December 31, 2015 and (iii) the estimated net present value of the estimated after-tax synergies (in each of the foregoing cases, based on an assumed WACC of 7.75% and an assumed perpetuity growth rate of 2.0%), from which total Guggenheim Securities then subtracted the minimum amount of cash consideration to be paid to Pfizer’s common stockholders of $6 billion.

 

    Guggenheim Securities determined that from the perspective of the former Pfizer stockholders, who will own approximately 56% of the combined company on a fully diluted basis following the merger (based on the closing price of Pfizer common stock as of November 20, 2015 and share counts as provided by Pfizer’s senior management prior to the announcement of the transaction), (i) the merger would create significant value and (ii) the former Pfizer stockholders would participate in approximately 40% of the aggregate value created in the merger (including the minimum amount of cash consideration to be paid to Pfizer’s common stockholders of $6 billion).

 

    Guggenheim Securities also determined that from the perspective of the former Allergan ordinary shareholders, who will own approximately 44% of the combined company on a fully diluted basis following the merger (based on the closing price of Pfizer common stock as of November 20, 2015 and share counts as provided by Pfizer’s senior management prior to the announcement of the transaction), (i) the merger would create significant value and (ii) the former Allergan ordinary shareholders would participate in approximately 60% of the aggregate value created in the merger.

Guggenheim Securities’ Illustrative DCF-Based Contribution Analysis. Guggenheim Securities performed an illustrative DCF-based contribution analysis based on (i) Pfizer’s standalone DCF-based net equity value as of December 31, 2015, (ii) Allergan’s standalone DCF-based net equity value as of December 31, 2015 and (iii) the estimated net present value of the estimated synergies (in each of the foregoing cases, based on an assumed WACC of 7.75% and an assumed perpetuity growth rate of 2.0%), from which total Guggenheim Securities then subtracted the minimum amount and the maximum amount of cash consideration to be paid to Pfizer’s common stockholders of $6 billion and $12 billion, respectively. The results of such illustrative DCF-based contribution analysis are indicated in the graphic below:

Guggenheim Securities’ Illustrative DCF-Based Contribution Analysis

 

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Goldman Sachs’ Additional Financial Analyses

Goldman Sachs’ Illustrative Future Value of Pfizer Share Price Analysis. Goldman Sachs performed an illustrative analysis of the future value per share of Pfizer common stock on a standalone basis and of the pro forma combined company (inclusive of the estimated synergies), which analysis is intended to provide an indication of a theoretical future value of a company’s equity. For purposes of this analysis with respect to the future value per share of Pfizer common stock on a standalone basis, Goldman Sachs applied a range of P/E multiples of 14.0x –16.0x to the projected adjusted EPS of Pfizer for 2017 and 2018 as reflected in Pfizer’s financial projections. For purposes of this analysis with respect to the future value per share of the pro forma combined company, Goldman Sachs applied a range of P/E multiples of 15.0x – 17.0x to the projected adjusted EPS of the pro forma combined company for 2017 and 2018 as reflected in Pfizer’s financial projections for the combined company (inclusive of the estimated synergies). The analysis assumes share repurchases in the years 2016 through 2020 as projected by Pfizer’s management. The following table presents the results of this analysis:

Goldman Sachs’ Illustrative Future Value of Pfizer Share Price Analysis

 

   
            Pro Forma Combined Company with Indicated Cash
Merger Consideration Election by Pfizer  Stockholders
 
     Pfizer Standalone          $6B Cash Election              $12B Cash Election      

2017E

   $ 34.39 – $39.30       $ 35.54 – $40.28       $ 36.04 – $40.84   

2018E

   $ 35.79 – $40.90       $ 38.97 – $44.16       $ 39.53 – $44.81   

Goldman Sachs’ Illustrative Present Value of Implied Future Pfizer Share Price Analysis. Goldman Sachs performed an illustrative analysis of the implied present value of the future values per share of Pfizer common stock on a standalone basis, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity value per share as a function of such company’s estimated future earnings and its assumed P/E multiple. For purposes of this analysis, Goldman Sachs applied a range of P/E multiples of 14.0x – 16.0x to the projected adjusted EPS of Pfizer for 2016 – 2019 as reflected in Pfizer’s financial projections to derive a range of undiscounted prices per share for the Pfizer common stock. Goldman Sachs then added the cumulative dividends per share of Pfizer common stock payable to Pfizer stockholders through the end of the respective projected calendar year. The resulting values were then discounted to present value as of September 30, 2015 using an illustrative discount rate of 9.5%, reflecting an estimate of Pfizer’s cost of equity. This analysis resulted in an illustrative range of implied present values of $30.60 – $36.44 per share of Pfizer common stock.

Goldman Sachs’ Illustrative Present Value of Implied Future Combined Share Price Analysis. Goldman Sachs also performed an illustrative analysis of the present value of the implied future prices per share of the ordinary shares of the pro forma company, using the same methodology described in the preceding paragraph. For this analysis, Goldman Sachs applied multiples ranging from 14.0x – 17.0x to the pro forma combined company’s projected adjusted EPS for 2016 – 2019 as reflected in Pfizer’s financial projections for the combined company (inclusive of the estimated synergies) to derive a range of undiscounted prices per share for the Pfizer common stock, calculated for both a $6 billion and a $12 billion cash election by Pfizer’s stockholders. Goldman Sachs then added the cumulative dividends per share of Pfizer common stock payable to Pfizer stockholders through the end of the respective projected calendar year. The resulting values were then discounted to present value as of September 30, 2015 using a discount rate of 9.5%, reflecting an estimate of the pro forma combined company’s cost of equity. The analysis assumes share repurchases in the years 2016 through 2020 as projected by Pfizer’s management and also reflects the value to Pfizer stockholders of the $6 billion or $12 billion cash consideration election. This analysis resulted in an illustrative range of implied present values of $33.12 – $42.85 per share of the pro forma combined company ordinary shares and $33.60 – $43.52 per share of the combined company ordinary shares, calculated with a $6 billion and a $12 billion cash election, respectively.

Goldman Sachs’ Illustrative DCF-Based Contribution Analysis. Goldman Sachs conducted DCF-based contribution analyses, with and without the estimated synergies. Goldman Sachs calculated that, without the synergies, Pfizer’s and Allergan’s respective standalone DCF-based net equity values implied an exchange ratio

 

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of 10.5x. Taking into account the estimated synergies, Goldman Sachs calculated that Pfizer’s and Allergan’s respective standalone DCF-based net equity values implied an exchange ratio range of 7.8x to 15.7x, depending on the allocation of the synergies between the parties. For the analysis described in this paragraph, Goldman Sachs used the relevant WACC and perpetuity growth rate ranges referred to under “—Goldman Sachs’ Discounted Cash Flow Analyses of Allergan and Estimated Synergies” and “—Goldman Sachs’ Discounted Cash Flow Analysis of Pfizer.”

Goldman Sachs’ Illustrative Combined Company Contribution Analysis. Goldman Sachs also reviewed specific estimated future operating and financial information including, among other things, revenues, EBITDA and net income for Pfizer, Allergan and the combined company using the financial projections and the synergy estimates. Goldman Sachs analyzed and weighed relative income statement contributions from Pfizer and Allergan using appropriate blended revenue and EBITDA multiples. The following table presents the results of this analysis:

Goldman Sachs’ Illustrative Combined Company Contribution Analysis

 

     Metrics
(US$ in billions)
     Implied
Exchange
Ratio
 
     Pfizer      Allergan     

Revenue

        

2016E

   $ 52       $ 17         4.7

2020E

     56         24         6.3   

EBITDA

        

2016E

     22         8         5.4   

2020E

     24         13         7.8   

Net Income

        

2016E

     15         6         6.2   

2020E

     17         10         9.0   
          
 
 
Merger
Exchange
Ratio: 11.3x
 
 
  

Goldman Sachs’ Discounted Cash Flow Analysis of Pro Forma Combined Company. In addition to its discounted cash flow analysis of Pfizer, discussed above, Goldman Sachs used Pfizer’s financial projections for each of Pfizer and Allergan, together with the synergy estimates, to perform an illustrative discounted cash flow analysis with respect to the pro forma combined company on an intrinsic-value basis using the projected after-tax unlevered free cash flows for the pro forma combined company and an estimate of its terminal/