Proposed placing of new ordinary shares

28 March 2019 23:35 GMT

This announcement contains inside information

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

AstraZeneca announces today its intention to raise up to approximately $3.5bn (the Placing Proceeds) through a placing of new ordinary shares in the Company (Placing Shares) with both existing and new institutional investors (the Placees) (the Placing).

The net proceeds of the proposed Placing are intended to be used: (i) to fund upfront and near-term payments in respect of the Company’s global development and commercialisation collaboration agreement with Daiichi Sankyo Company Limited (Daiichi Sankyo) for trastuzumab deruxtecan (DS-8201) announced by the Company today (the Transaction); (ii) for the repayment of the Company’s $1bn, 1.95% notes due on 18 September 2019; and (iii) for general corporate purposes, to improve the Company’s overall balance-sheet strength and liquidity.

The net impact of the Transaction and the Placing is expected to be neutral to AstraZeneca’s Core Earnings Per Share (EPS) in 2019, growing Core EPS accretion from 2020 to a significant contribution in 2023. AstraZeneca reconfirms its 2019 Product Sales and Core EPS guidance at constant exchange rates post-placing and transaction and confirms there is no change to the Company’s progressive dividend policy.

Further details in respect of the Transaction were announced today and can be found on https://www.astrazeneca.com/investor-relations/stock-exchange-announcements.html. The Transaction will become effective on 29 March 2019. The Placing is not conditional on completion of the Transaction.

Background

The collaboration with Daiichi Sankyo is expected to reinforce AstraZeneca’s science-led strategy in Oncology that is based on four key scientific platforms: tumour drivers & resistance, DNA damage response, Immuno-Oncology and antibody drug conjugates. It is also consistent with the Company’s financial objectives and investment priorities.

A total $1.35bn of the net Placing Proceeds will be used to pay the initial transaction consideration to Daiichi Sankyo, comprising $675m upfront and a further payment of $675m in 12 months’ time. In addition, it is expected to fund around $1bn of approval and sales-related contingent milestone payments of the Transaction that are projected to be incurred from 2020 to 2022.

The Company is committed to maintaining its strong, investment-grade credit ratings and the Transaction and the Placing have been structured as part of its deleveraging priority. As such, the remainder of the net Placing Proceeds will be used to reduce the Company’s net indebtedness, including the provision of funds to meet the upcoming maturity of the Company’s $1bn, 1.95% notes due on 18 September 2019. The remaining net Placing Proceeds will be held as cash and used for general corporate purposes.

The Company has consulted with a number of its leading shareholders regarding the rationale for the Placing and its non-pre-emptive nature ahead of this announcement. The proposed issue and allotment of the Placing Shares will be within the existing shareholder authorities granted to the Company at its annual general meeting held on 18 May 2018.

Financial considerations

The Board’s general capital-allocation policies remain unchanged, striking a balance between the interests of the business, financial creditors and the Company’s shareholders. After providing for investment in the business, supporting the progressive dividend policy and maintaining a strong, investment-grade credit rating, the Board will review potential investment in immediately earnings-accretive, value-enhancing opportunities.

The Core EPS impact of the Transaction is expected to be neutral in 2019, growing Core EPS accretion from 2020 to a significant contribution in 2023. As such, the Company considers it appropriate to make an exception to the aforementioned ‘immediately-accretive’ capital-allocation policy. As a result, the Transaction and the Placing do not affect the Company's financial guidance for 2019. Payments from Daiichi Sankyo will be recorded as Collaboration Revenue (formerly Externalisation Revenue) in the Company’s financial statements.

Details of the Placing

Goldman Sachs International (Goldman Sachs) and Morgan Stanley & Co. International are acting as joint global coordinators and joint bookrunners on behalf of the Company in connection with the Placing. Ondra LLP is acting as financial adviser to AstraZeneca in connection with the Placing.

The Placing is subject to the terms and conditions set out in the Appendix. The Bookrunners will today commence a book-building process in respect of the Placing (the Bookbuilding Process). The price per ordinary share at which the Placing Shares are to be placed (the Placing Price) will be decided at the close of the Bookbuilding Process. The book will open with immediate effect following publication of this Announcement. The timing of the closing of the book, pricing and allocations are at the joint discretion of the Bookrunners and the Company. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuilding Process.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing ordinary shares of the Company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

Application will be made for the Placing Shares to be admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to be admitted to trading on the main market for listed securities of the London Stock Exchange plc (together, Admission). Settlement for the Placing Shares and Admission is expected to take place on or around 8am on 2 April 2019. The Placing is conditional, among other things, upon Admission becoming effective. The Placing is also conditional upon the placing agreement, which was entered into between the Company and the Bookrunners shortly before this announcement (the Placing Agreement) not being terminated. The Appendix sets out further information relating to the Bookbuilding Process and the terms and conditions applicable to the Placing.

This Announcement should be read in its entirety. In particular, the information provided in the Important Notices section of this Announcement should be read and understood and the reader’s attention is drawn to the detailed terms and conditions of the Placing and further information relating to the Placing described in the Appendix to this Announcement (which forms part of this Announcement).

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions of the Placing contained therein, and to be providing the representations, warranties and acknowledgements contained in the Appendix.

All investors who participate in the Placing will be required to indicate whether they wish to settle their allocation in Sterling or in US dollars at the same time as they place their order. The Placing Price in Sterling and US dollars will be provided by the Bookrunners at the time of communicating allocations to the Placees. The Placing Price in US dollars will be based on the WM/Reuters mid-point Dollar/Sterling exchange rate at the first hourly fixing time after the closing of the Bookbuilding Process

About AstraZeneca

AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three therapy areas - Oncology, Cardiovascular, Renal & Metabolism and Respiratory. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information, please visit astrazeneca.com and follow us on Twitter @AstraZeneca.

CONTACTS

Adrian Kemp
Company Secretary
AstraZeneca PLC

Important Notices

Subject to certain limited exceptions, this Announcement and the information contained in it is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or from the United States (including its territories and possessions, any state of the United States and the District of Columbia, collectively the United States), Australia, Canada, Japan or South Africa or any other state or jurisdiction in which the same would be unlawful, restricted, or unauthorised (each a Restricted Territory). This Announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in any Restricted Territory or to any person to whom it is unlawful to make such offer or solicitation. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Subject to certain exemptions, the securities referred to herein may not be offered or sold in any Restricted Territory or for the account or benefit of any national resident or citizen of any Restricted Territory. The Placing Shares have not been and will not be registered under the US Securities Act of 1933, as amended (Securities Act) or the securities laws or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. Any offering of the Placing Shares to be made in the United States will be made only to a limited number of “qualified institutional buyers” as defined in Rule 144A under the Securities Act pursuant to an exemption from the registration requirements of the Securities Act in a transaction not involving any public offering and will be made outside the United States in offshore transactions in accordance with Regulation S under the Securities Act (Regulation S). No public offering of the shares referred to in this announcement is being made in the United States, the United Kingdom, any Restricted Territory or elsewhere.

The distribution of this Announcement and the Placing of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required to inform themselves about, and to observe, such restrictions. The information contained in this Announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of any information contained in this Announcement in whole or in part is unauthorised. Failure to comply with these restrictions may constitute a violation of the Securities Act or the applicable laws of other jurisdictions.

The Placing Shares have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended; the "FIEA"). The Bookrunners have represented and agreed that it will not offer or sell any Placing Shares, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949, as amended)), or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan.

The offer and sale of the Placing Shares in Canada will only be made in Alberta, British Columbia, Quebec and Ontario (the Relevant Provinces) or to residents thereof and not in, or to the residents of, any other Province or Territory of Canada. The Placing Shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or Subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Placing Shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if there is a misrepresentation, provided that the remedies of rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal adviser. Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the Bookrunners are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this Placing.

This Announcement is directed only at: (A) persons in member states of the European Economic Area (the EEA) who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in the relevant member state of the EEA) and includes any relevant implementing measure in each relevant member state of the EEA) (Qualified Investors); (B) persons in the United Kingdom who are Qualified Investors and who (i) have professional experience in matters relating to investments and who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order); or (ii) who are high net worth companies, unincorporated associations and other persons to whom it may lawfully be communicated in accordance with Article 49(2)(a) to (d) of the Order; or (iii) other persons to whom it may lawfully be communicated; or (C) other persons to whom it may lawfully be communicated (all such persons together being referred to as Relevant Persons). Any investment activity in connection with the Placing will only be available to, and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

This Announcement, including the Appendix, has been issued by, and is the sole responsibility, of the Company. This Announcement is for information only and does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction in which such an offer or solicitation is unlawful, including without limitation, the United States, Australia, Canada, Japan or South Africa. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the Prospectus Directive) to be published. Persons needing advice should consult an independent financial adviser.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and aside from the responsibilities and liabilities, if any, which may be imposed by the Financial Services and Markets Act 2000, as amended or the regulatory regime established thereunder or any other applicable regulatory regime, no responsibility or liability is or will be accepted by Goldman Sachs or Morgan Stanley nor any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings or any of their respective directors, officers, employees, agents or advisers or any other person as to or in relation to, the accuracy, completeness or sufficiency of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers in connection with the Company, the Placing Shares or the Placing (including, without prejudice to the generality of the foregoing, any such information or opinions or for any errors or omissions), and any liability therefore is expressly disclaimed.

Goldman Sachs and Morgan Stanley, each of which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority in the United Kingdom, are each acting solely for the Company and no one else in connection with the Placing and Admission and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Placing and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Placing and Admission or any transaction, arrangement or other matter referred to in this Announcement.

This Announcement contains certain forward-looking statements, including within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934, as amended with respect to the operations, performance and financial condition of the Company and its group, including, among other things, statements about expected revenues, margins, earnings per share or other financial or other measures. Although we believe our expectations are based on reasonable assumptions, any forward-looking statements, by their very nature, involve risks and uncertainties and may be influenced by factors that could cause actual outcomes and results to be materially different from those predicted. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and AstraZeneca undertakes no obligation to update these forward-looking statements. We identify the forward-looking statements by using the words 'anticipates', 'believes', 'expects', 'intends' and similar expressions in such statements. Important factors that could cause actual results to differ materially from those contained in forward-looking statements, certain of which are beyond our control, include, among other things: the loss or expiration of, or limitations to, patents, marketing exclusivity or trademarks, or the risk of failure to obtain and enforce patent protection; effects of patent litigation in respect of IP rights; the impact of any delays in the manufacturing, distribution and sale of any of our products; the impact of any failure by third parties to supply materials or services; the risk of failure of outsourcing; the risks associated with manufacturing biologics; the risk that R&D will not yield new products that achieve commercial success; the risk of delay to new product launches; the risk that new products do not perform as we expect; the risk that strategic alliances and acquisitions, including licensing and collaborations, will be unsuccessful; the risks from pressures resulting from generic competition; the impact of competition, price controls and price reductions; the risks associated with developing our business in emerging markets; the risk of illegal trade in our products; the difficulties of obtaining and maintaining regulatory approvals for products; the risk that regulatory approval processes for biosimilars could have an adverse effect on future commercial prospects; the risk of failure to successfully implement planned cost reduction measures through productivity initiatives and restructuring programmes; the risk of failure of critical processes affecting business continuity; economic, regulatory and political pressures to limit or reduce the cost of our products; failure to achieve strategic priorities or to meet targets or expectations; the risk of substantial adverse litigation/government investigation claims and insufficient insurance coverage; the risk of substantial product liability claims; the risk of failure to adhere to applicable laws, rules and regulations; the risk of failure to adhere to applicable laws, rules and regulations relating to anti-competitive behaviour; the impact of increasing implementation and enforcement of more stringent anti-bribery and anti-corruption legislation; taxation risks; exchange rate fluctuations; the risk of an adverse impact of a sustained economic downturn; political and socio-economic conditions; the risk of environmental liabilities; the risk of occupational health and safety liabilities; the risk associated with pensions liabilities; the impact of failing to attract and retain key personnel and to successfully engage with our employees; the risk of misuse of social medial platforms and new technology; and the risk of failure of information technology and cybercrime.

Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Any forward-looking statements in this Announcement reflect the Company’s view with respect to future events as at the date of this Announcement and are subject to risks relating to future events and other risks, uncertainties and assumptions. No assurances can be given that any forward-looking statements in this Announcement will be realised. The Company’s actual performance may differ materially from the impression created by any forward-looking statements contained in this Announcement. In addition, even if the Company’s actual performance is consistent with any forward-looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods.

The information contained in this Announcement is subject to change without notice and the Company does not undertake any responsibility or obligation nor does it intend to revise or update publicly or review any of the forward-looking statements in this Announcement to reflect events or circumstances after the date of this Announcement (except to the extent required by the Financial Conduct Authority, the London Stock Exchange or by applicable law, the Listing Rules or the Disclosure Rules and Transparency Rules). Prospective investors should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement, as a prediction of actual results or otherwise.

No statement in this Announcement is or is intended to be a profit forecast or profit estimate and no statement in this Announcement should be interpreted to mean or to imply that the earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical or published earnings per share of the Company. The price of the Company’s shares and the Placing Shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Placing Shares.

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange and Nasdaq Stockholm.

Neither the content of the Company’s website nor any website accessible by hyperlinks on the Company’s website is incorporated in, or forms part of, this Announcement.