Pharmaceutical giant Pfizer on Sunday said it would merge with Botox maker Allergan in a $160 billion deal that would shift the company's executive offices to Ireland in a tax-saving "inversion" deal that is sure to come under heavy regulatory scrutiny.
If approved, the deal would be the largest ever in the healthcare sector.
According to Pfizer, the company will pay more than $363 per share for Allergan shares, giving current shareholders 11.3 shares of Pfizer stock if the deal closes.
""The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better," said Allergan CEO Brent Saunders in the announcement. "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.
Pfizer would pay far lower U.S. corporate taxes by shifting its principal executive offices to Ireland, where Allergan is based. It would still keep a global operations headquarters in New York, the company said.
Pfizer is best known for its erectile dysfunction drug Viagra, though it's portfolio boast billions of dollars in other common prescription drugs. The merged company, which would be renamed Pfizer plc, would trade on the New York Stock Exchange under the PFE ticker.
Inversion deals like this have come under fire by President Barack Obama's administration, which has modified regulations to make it harder for large U.S. corporations to buy up foreign businesses to shift their headquarters there. Much of that ire came in 2014 when fast food giant Burger King said it would buy Canadian coffee shop chain Tim Hortons and shift its base to Canada.
However, the feds may find it difficult to block Pfizer, since it has structured the deal so that Ireland-based Allergan appears to be buying up the U.S.-based Pfizer.
The combined company would see $25 billion in revenue annually starting in 2018, the company said.
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The deal is expected to close in the second half of 2016.
Pfizer CEO Ian Read would hold the offices of CEO and chairman for the new company, while Saunders would assume the role of president and chief operating officer.
"Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry," Read said in the announcement.