Pfizer and Allergan Agree to $160 Billion Merger, Creating World’s Largest

Billionaire investor Carl Icahn recently announced that he was setting up a $150 million super PAC bent on revising US corporate tax law and ending the practice, ratcheting up political pressure even more.

Pfizer’s $15 billion purchase earlier this year of hospital products maker Hospira, which sells generic injectable drugs and is developing biosimilar versions of top-selling biotech medicines, was widely seen as a move to make its generics business more attractive ahead of a sale.

It is unclear how this deal will impact the companies’ agency relations.

The $160 billion deal is the largest example so far of a corporate inversion, in which a US company merges with a foreign company and shifts its domicile overseas in order to lower its corporate taxes.

Under the terms of the deal, Allergan shareholders will receive 11.3 shares of the combined company for each of their Allergan shares, while Pfizer stockholders will get one share of the combined company for each of their Pfizer shares.

“Through this combination, Pfizer will have greater financial flexibility”, said Read.

Several USA drugmakers have performed inversions through acquisitions in the past several years, in part to escape higher US corporate tax rates.

The deal, which was approved unanimously by the boards of the two companies on Sunday, brings together the makers of Viagra and Botox, creating a drug industry powerhouse, The Wall Street Journal reports.

The two companies have been in talks for a number of weeks.

Pfizer and Allergan produce a few of the world’s best known drugs.

Buying Allergan would add its brand-name medicines for eye conditions, infections and heart disease to Pfizer’s extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions. There will also be a small cash component, accounting for less than 10 percent of the value of the deal, the people said.

It is expected to complete in the second half of 2016, subject to approval by shareholders, and regulators in the United States and European Union as well as the completion of the sale of a division of Allergan’s business to another drugs firm.

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.