New York: Pfizer Inc secured formal board approval on Sunday for its acquisition of Botox maker Allergan Plc for more than $150 billion, a deal that will create the world’s biggest drug maker, according to people familiar with the matter.
The deal, the largest ever in the healthcare sector, will be announced on Monday and is sure to draw political ire in a US presidential election year because Pfizer would redomicile to Ireland, where Allergan is registered, in a so-called “inversion” that would slash its corporate tax rate.
It will also reignite debate in the pharmaceutical industry over the role of research and development, with Allergan CEO Brent Saunders, a prolific dealmaker and a skeptic of in-house drug discovery, joining the combined company in a position to influence its strategy.
The deal would involve Pfizer paying with 11.3 of its shares for each Allergan share, the people said. There will also be a small cash component, accounting for less than 10 percent of the value of the deal, the people said.
Pfizer’s CEO Ian Read, 62, will be CEO of the combined company, with Allergan’s CEO Brent Saunders, 45, serving in a very senior role focused on operations and the integration, the people added.
Saunders will also have a seat on the combined company's board, one of the people said. Pfizer and Allergan, however, declined to comment. The deal would create a pharmaceutical colossus with annual sales of more than $60 billion, putting the merged group well ahead of No. 2 US drugmaker Merck & Co, which has annual sales of about $40 billion.
Widely used Pfizer drugs such as Lipitor, Viagra and nerve pain treatment Lyrica would be brought together with Allergan’s Namenda memory loss treatment, Restasis dry eye medication and other leading eye-care brands.
Pfizer’s talks with Allergan come more than a year after the US firm abandoned a bid to acquire AstraZeneca and move its tax headquarters to Britain. The US Treasury last year, and again last week, updated its rules on inversions to make it harder for companies to avoid US taxes by moving overseas.
But experts have said that these moves would do little to prevent Pfizer from inverting. Although Pfizer has decried the high US corporate tax rate, it has minimised its US taxes for years by selling its drug patents to overseas subsidiaries and then using them to make drugs that are sold back to the US affiliates.
While generating big profit margins for its overseas arm, the practice has allowed Pfizer to report losses on its higher-taxed US business in each of the past five years.
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