Viagra meets Botox: Pfizer buys Allergan for US$160 billion in biggest ever health care deal

Pfizer's acquisition of Allergan is the biggest ever such deal in the health care sector

PUBLISHED : Tuesday, 24 November, 2015, 2:07am
UPDATED : Tuesday, 24 November, 2015, 2:07am

Pfizer, the maker of Viagra and Lipitor, has struck a deal to buy Botox-maker Allergan in a deal valued at about US$160 billion.

The biggest ever takeover in the health care sector will allow Pfizer to shift its legal base to Ireland in a so-called "inversion" that would reduce its tax rate.

Pfizer Chief Executive Ian Read will be CEO of the combined company, while Allergan CEO Brent Saunders will be chief operating officer.

New York-based Pfizer and Allergan, headquartered in Ireland, said Allergan shareholders will receive 11.3 shares in the combined company for each share held.

The deal values Allergan's shares at US$363.63 each, compared with the stock's close of US$312.46 on Friday.

Pfizer stockholders will have the option of receiving one share of the combined company for each of their Pfizer shares or receive cash.

The tax aspect of the deal has been seen as critical.

The U.S. corporate tax rate of 35 percent is among the world's highest, and compares with Ireland's rate of 12.5 percent.

The companies said the combined entity was expected to maintain Allergan's Irish legal domicile.

The U.S. Treasury, concerned about losing tax revenue, has been taking steps to clamp down on tax inversion deals.

But experts have said these moves will do little to prevent Pfizer from shifting its domicile.

Reports that the companies were in talks emerged a month ago.

Since then, speculation had centred on the terms, the domicile issue and the roles for Read, who is known for his focus on research and development, and for Saunders, who is an inveterate dealmaker .

Apart from male libido drug Viagra and cholesterol control drug Lipitor, Pfizer's major products include nerve pain treatment Lyrica and Prevnar, which is used to treat pneumonia.

Allergan, best known for its anti-wrinkle treatment Botox, also makes Alzheimer's drug Namenda and dry-eye medication Restasis.

Up to Friday's close, Allergan shares had risen 8.8 percent since reports of the deal talks emerged on October 28.

Pfizer's shares had fallen 9.2 percent.