AbbVie 2012 Annual Report Download - page 34

•merging, consolidating, or liquidating;
• issuing equity securities beyond certain thresholds;
• repurchasing its capital stock; and
• ceasing to actively conduct its business.
These restrictions may limit AbbVie’s ability to pursue certain strategic transactions or other
transactions that it may believe to be in the best interests of its stockholders or that might increase the
value of its business. In addition, under the tax sharing agreement, AbbVie is required to indemnify
Abbott against any such tax liabilities as a result of the acquisition of AbbVie’s stock or assets, even if
it did not participate in or otherwise facilitate the acquisition.
Certain of AbbVie’s executive officers and directors may have actual or potential conflicts of interest because
of their previous or continuing positions at Abbott.
Because of their former positions with Abbott, certain of these executive officers and directors own
Abbott common shares, options to purchase Abbott common shares or other equity awards. Even
though AbbVie’s board of directors consists of a majority of directors who are independent, and
AbbVie’s executive officers who were formerly employees of Abbott ceased to be employees of Abbott,
some AbbVie executive officers and directors continue to have a financial interest in Abbott common
shares. In addition, four of AbbVie’s directors currently serve on the board of directors of Abbott.
Continuing ownership of Abbott common shares and equity awards, or service as a director at both
companies could create, or appear to create, potential conflicts of interest if AbbVie and Abbott pursue
the same corporate opportunities or face decisions that could have different implications for AbbVie
and Abbott.
AbbVie may not achieve some or all of the expected benefits of the separation, and the separation may
adversely affect AbbVie’s business.
AbbVie may not be able to achieve the full strategic and financial benefits expected to result from
the separation, or such benefits may be delayed or not occur at all. The separation and distribution is
expected to provide the following benefits, among others: (i) a distinct investment identity allowing
investors to evaluate the merits, performance, and future prospects of AbbVie separately from Abbott;
(ii) more efficient allocation of capital for AbbVie; and (iii) direct access by AbbVie to the capital
markets.
AbbVie may not achieve these and other anticipated benefits for a variety of reasons, including,
among others: (a) AbbVie may be more susceptible to market fluctuations and other adverse events
than if it were still a part of Abbott; (b) AbbVie’s business is less diversified than Abbott’s business
prior to the separation; and (c) the other actions required to separate Abbott’s and AbbVie’s respective
businesses could have diverted management’s attention from planning to grow and operate AbbVie’s
business or created disruptions of AbbVie’s operations that could, in each case, impact AbbVie’s
performance in the future. If AbbVie fails to achieve some or all of the benefits expected to result
from the separation, or if such benefits are delayed, the business, financial conditions, and results of
operations of AbbVie could be adversely affected.
AbbVie may have received better terms from unaffiliated third parties than the terms it will receive in its
agreements with Abbott.
The agreements AbbVie entered into with Abbott in connection with the separation, including
transition services agreements, a tax sharing agreement, international commercial operations
agreements, finished goods supply agreements, contract manufacturing agreements, an employee
matters agreement, a special products master agreement, an information technology agreement, and a
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