The High Court sanctioned a scheme of arrangement for the acquisition of Allergan plc by Venice Subsidiary LLC, a wholly owned subsidiary of AbbVie Inc., and confirmed a related reduction in Allergan’s share capital.
In a written judgment delivered on 11 May 2020, Mr Justice David Barniville set out his reasons for orders he had made at a hearing on 6 May. He also ordered that the creditor-list requirements in section 85(4) of the Companies Act 2014 would not apply to the reduction, and made consequential orders. The judgment does not itself establish that the acquisition was completed.
The proposed scheme provides for the acquisition of all issued and to-be-issued Allergan shares. More than 99% of the shares were held in book-entry form through the US Depository Trust Corporation, with its nominee, Cede & Co, as registered legal owner. The underlying investors were beneficial owners, not members registered as legal owners. The judge said the layered holding structure made it impossible for Allergan to be completely certain of the identity of every underlying investor.
The court was satisfied that extensive steps had been taken to notify registered shareholders, DTC participants and underlying investors about the meeting. At the meeting on 14 October 2019, the scheme received 91.36% of votes by number and 99.64% by value. Cede cast votes both for and against, reflecting voting instructions from beneficial owners. The court said this was permitted under the meeting order and company law.
The judge also upheld the decision to treat scheme shareholders as one class. He found their rights and treatment under the scheme were the same, and that separate meetings were not required. No one had objected to the single-class arrangement or appeared to oppose or support the application.
The capital reduction cancels specified shares, with the issued capital to be restored through an equivalent issue of new shares to Venice or its nominee. The judge accepted evidence that the reduction served the acquisition, treated shareholders equitably and would not prejudice creditors. Allergan had advertised notices and notified non-resident creditors. For potential contingent creditors connected with US proceedings, notices were sent to their counsel; holders of certain group debt were not directly notified because the company lacked their details, but the judge considered the notice steps sufficient, including a public announcement filed with the US Securities and Exchange Commission.