Pfizer to Buy Allergan in 160 Billion Dollar Deal

In the largest ever deal in the health care sector, Pfizer (New York, NY, USA) will buy Botox maker Allergan (Dublin, Ireland), in a deal worth USD 160 billion.

The inversion acquisition, which would create the world's largest pharmaceutical conglomerate and shift Pfizer's headquarters to Ireland, would also be the biggest-ever instance of a US company reincorporating overseas to lower its taxes, from about 25% to about 17%–18% within the year. The merger would also give Pfizer access to tens of billions of dollars that are outside the borders of the United States, allowing for more buybacks, dividend payments, and business development. The combined company would have annual sales of about USD 64 billion. The deal is expected to close in the second half of 2016.

The transaction was structured so that smaller, Ireland- based Allergan would buy Pfizer so as to avoid potential regulatory restrictions, although the combined company will be known as Pfizer and will continue to be led by CEO Ian Read. Allergan CEO Brent Saunders will become president and COO of the combined company, with oversight of all commercial businesses. The acquisition comes 18 months after an USD 118 billion bid to acquire AstraZeneca (London, United Kingdom) in a similar inversion failed due to stiff opposition from management and UK politicians.

“The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world,” said Ian Read, Chairman and CEO of Pfizer. “Allergan's businesses align with and enhance Pfizer's businesses, creating best-in-class, sustainable, innovative and established businesses that are poised for growth.”

“The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better,” said Brent Saunders, CEO of Allergan. “Joining forces with Pfizer matches our leading products in seven high-growth therapeutic areas and our robust R&D pipeline with Pfizer's leading innovative and established businesses, vast global footprint, and strength in discovery and development research to create a new biopharma leader.”

US President Barack Obama has called such inversion deals “unpatriotic” and has tried to crack down on the practice, and democratic presidential candidate Hillary Clinton has pledged to establish measures to prevent such deals. The merger was also criticized by rival democratic candidate Senator Bernie Sanders and Republican presidential candidate Donald Trump.

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