Pfizer, Allergan in $160-bn merger

It would be one of the biggest ever takeovers in the health care industry

The pharmaceutical giant Pfizer said on Monday that it had struck a $160-billion deal, including debt, to merge with Allergan, the maker of Botox, in one of the biggest takeovers in the health care industry.

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. Merger and acquisition activity worldwide surpassed $4 trillion as of Thursday, for only the second time since Thomson Reuters began keeping records in 1980.

The deal is the latest - and the largest - to be aimed at helping an American company lower its taxes by reincorporating overseas, a practice known as a corporate inversion.

GIANT IMPENDING DEALS THIS YEAR

• $104 billion: The world's largest brewer, Anheuser-Busch InBev, maker of Budweiser, will acquire its closest rival, SABMiller
   
• About $67 billion: Dell is buying EMC in the biggest takeover ever of a technology company
   
• $55 billion: Trying to succeed where Comcast failed, Charter Communications will buy Time Warner Cable

President Obama has called inversions "unpatriotic." His administration has tried to crack down on the strategy this year, with the Treasury Department and the Internal Revenue Service announcing additional rules last week meant to further restrict the practice. The US government has already lost billions of dollars in tax revenue from inversions, particularly in recent years.

Rules introduced last year have deterred some companies from pursuing inversions, including the drug maker AbbVie calling off a planned $54-billion takeover of Shire, an Irish counterpart. The transaction would be structured as a so-called reverse merger, in which Allergan, the smaller of the two companies, would technically be the buyer.

Allergan has its headquarters in Dublin - even though the bulk of its operations are based in Parsippany, New Jersey - allowing the planned transaction to avoid the Treasury rules. But Pfizer is expected to lead the combined company, which would have more than $63 billion in combined sales and a product portfolio that includes Viagra, Celebrex, Botox and the cosmetic treatment Juvederm. It would have about 110,000 employees worldwide.

Under the terms of the all-share deal, Pfizer would essentially pay $363.63 for each Allergan share, representing a more than 30 per cent premium to Allergan's share price in late October before news emerged that they were in talks.

"The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world," Ian Read, the Pfizer chief executive, said in a news release on Monday.

Read would be chief executive of the combined firm, while Brent Saunders, the Allergan chief executive, would serve as president and chief operating officer. Saunders would also have a seat on the combined company's board of directors.

©2015 The New York Times News Service