Allergan said that it is in “preliminary friendly discussions” about a potential tie-up.
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Asked Thursday about the potential Pfizer-Allergan inversion deal, White House spokesman Josh Earnest declined to address it specifically but said Obama “has made quite clear that this is the kind of loophole that leaves a lot of Americans shaking their head and wondering”.
Companies and organization providing health care and medicine have seen their revenues reduce and merging with one another can help them cope. As Chief Executive Ian Read pointed out this week, 2016 US elections could bring a new Congress inclined to eliminate inversions.
Shares of Allergan shot up by about 8%, while Pfizer’s stock traded sideways. More upbeat reports came from Nokia, whose shares rose 9 percent after it raised its forecast, and German airline Lufthansa. “We’re not yet close to a deal, which could take about a year to complete, and it could face a few political opposition”. “We need leadership in Washington to get the tax code changed so companies will be coming to America, not looking for ways to leave”. Allergan, which makes Botox, jumped 8 percent after saying it has held talks with Pfizer about a sale.
Icahn, 79, also sent a letter to Congress urging the end of so-called “tax inversions”, a way for US companies to cut their tax rates by joining with a foreign company that has a lower rate.
Pfizer spent months in the spring of past year pursuing another top 10 drugmaker, Britain’s AstraZeneca PLC, in an attempted inversion, but those talks eventually collapsed when the two sides couldn’t agree on a price.
Allergan said these talks are still in the very early stages and could fall apart, but the Wall Street Journal (WSJ) suggests one why this team-up would be advantageous for both parties.
Still, Saunders-who has been making deals right and left since selling his then-company, Bausch + Lomb, to Valeant ($VRX) in 2013-seems more open to a deal than any of the other skippers on Anderson’s list of possible Pfizer pickups-provided it meets certain conditions.
On the campaign trail, Republican presidential hopefuls Jeb Bush and Donald Trump have expressed support for lowering the corporate tax rate, which they say would reduce the incentives to move overseas. Low interest rates have been a boon for stock markets for several years.
The merger would make Pfizer the largest drugmaker in the world and continue the company’s acquisitive spree of recent years. Allergan is big in the branded sector and growing faster than Pfizer. According to sources, the deal will give Pfizer control of the Botox cosmetic drug. Pfizer earlier this year bought Hospira Inc.in a transaction valued at about $17 billion.
“When you’re the size of Pfizer, an acquisition like this might be the only choice you have in order to be able to move the needle for sequential growth…so the question now becomes, if not this, what, and if not now, when?”
“Pfizer desperately needs a large acquisition and the resulting synergies to reinvigorate its tepid earnings growth rate”, Maxim Jacobs, an analyst at Edison Investment Research, said in a statement.
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Such a takeover would create a pharmaceutical colossus, with a market value likely exceeding $300 billion. The stock gained 4.05 dollars, or 14.7%, to 31.65 dollars. “I’m not so sure there has been an adjustment in their expectations of what they want to sell the company”.
