Pfizer & Allergan Merge in Record $160 Billion Deal

The all-stock transaction, expected to close in the second half of 2016, is based on $363.63 per Allergan share, and represents more than a 30% premium on the companies’ share prices at the end of October.

The agreement would also be the biggest deal in what has been a banner year for mergers, driven in part by consolidation in the health care and pharmaceutical sectors.

Mr. Read has railed against high US corporate tax rates, which he says puts American-based companies like Pfizer at a competitive disadvantage to their overseas rivals. Trump has been particularly critical of USA companies that shift their operations oversees.

The combined business, which will be named Pfizer, will be legally domiciled in Ireland, but will have its global operational headquarters in NY.

As Pfizer and Allergan merge in record breaking deal, here’s the significance to Ireland.

Many industry investors and analysts believe Pfizer will use Allergan’s rich portfolio to beef up its branded drug business, before going for a business split from the established, patented drug unit by 2017.

The U.S. Treasury Department last week unveiled new rules to clamp down on inversions, its second attempt to do so since a wave of these deals peaked in September 2014.

Chief Executive Officer Ian Read will be chairman and CEO of Pfizer Plc, with Allergan CEO Brent Saunders as president and chief operating officer, overseeing sales, manufacturing and strategy. These kinds of mergers, called inversions, are costing the U.S. Treasury billions of dollars a year in lost tax revenue.

Under the terms of the deal, Allergan shareholders would receive 11.3 shares of Pfizer for each share of Allergan they hold.

As for accretion and dilution, the merger will be neutral to Pfizer’s 2017 per-share earnings and begin adding to profits at the beginning of 2018, with 10% accretion in 2019 rising to the high teens in 2020.

Pfizer stockholders will have the option of receiving one share of the combined company for each of their Pfizer shares or receive cash, provided the aggregate amount of cash to be paid is not less than $US6 billion or more than $US12 billion. Last year, when it tried unsuccessfully to acquire British drug maker AstraZeneca, Pfizer didn’t hide the fact that tax savings were one of the main drivers. This bold action is the next chapter in the successful transformation of Allergan allowing us to operate with greater resources at a much bigger scale.

It was enough to kill a massive $US55 billion deal between pharmaceuticals AbbVie and Shire. The companies’ combined mid-to-late stage programmes total more than 100 candidates.

Then, earlier this year, Actavis bought the California-based Allergan and took its name.