US-based Pfizer and Ireland-based Allergan said Monday they will merge to create the world’s biggest pharmaceutical group in a deal worth about 160 billion.
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According to the newspaper, terms of the deal include 11.3 Pfizer shares for every Allergan share, along with a small cash component.
“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, Pfizer’s chairman and chief executive officer in a statement.
While Pfizer cried poor in an effort to justify the merger-saying the USA corporate tax regime was forcing it to compete against foreign rivals “with one hand tied behind our back”-the coalition Americans for Tax Fairness showed earlier this month that the company had in fact “dramatically overstated its corporate tax rates” and was already enjoying a significant competitive advantage over those who pay their fair share”.
Allergan has its headquarters in Dublin – even though the bulk of its operations are based in New Jersey – allowing the planned transaction to avoid the treasury rules. The companies expect that shares of the combined company will be listed on the NY Stock Exchange and trade under the “PFE” ticker.
Allergan is best known for its wrinkle smoothening cosmetic injection treatment Botox, a neurotoxic protein which helped push the company’s turnover in the first quarter of 2015 was $4.2 billion.
Pfizer also said it will delay making a decision about splitting up its innovative and established (i.e. old and generic) products into two or three businesses, a move that had been expected next year, until 2018.
Allergan chief executive Brent Saunders said the deal brought together “two biopharma powerhouses”. The USA corporate tax rate of 35 per cent is among the world’s highest, while Ireland’s is just 12.5 per cent.
Pfizer is headquartered in Manhattan and has a large facility in Collegeville, Montgomery County, though its presence there has shrunk in recent years.
The companies estimated the merger would increase earnings per share by 10 percent, excluding special items, in 2019 and add by a high-teens percentage rate in 2020. Pfizer stockholders will receive one share.
They would join Pfizer’s extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions. Shares of Pfizer were down 2.6 percent or $0.88 to $31.30 on the news.
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GlaxoSmithKline Plc’s strategy head David Redfern said last week that sheer scale was not needed for success, following suggestions that the British drugmaker might have made an alternative target for Pfizer, which failed to buy AstraZeneca Plc in 2014.
