Pfizer and Allergan Strike Huge Inversion Deal
November 23 2015 - 7:50AM
Dow Jones News
Pfizer Inc. and Allergan PLC said Monday that they would merge,
a so-called inversion deal that would create the world's biggest
drug maker by sales.
The takeover would be the largest so-called inversion ever,
moving one of the top names in corporate America to a foreign
country. Such deals enable a U.S. company to move abroad and take
advantage of a lower corporate tax rate elsewhere, and have
remained popular in the face of U.S. efforts to curb them.
The deal is structured as a reverse merger, with Dublin-based
Allergan buying New York-based Pfizer, which will help secure a
lower tax rate.
The Wall Street Journal had reported the companies were on the
cusp of a deal, with terms having been hammered out, on Sunday.
Pfizer Chief Executive Ian Read will lead the combined company
with Allergan CEO Brent Saunders serving as operating chief.
The combination will create a pharmaceutical behemoth, with
top-selling products including Pfizer's Prevnar pneumonia vaccine
and Allergan's anti-wrinkle treatment Botox and industry-topping
R&D budget.
The company's drugs and vaccines would cover a range of
diseases, from Alzheimer's to cancer, eye health to rheumatoid
arthritis.
The deal brings together two pharmaceutical powerhouses with
more than $60 billion in combined sales. Last year, Actavis, which
bought Allergan and took its name, had more than $13 billion in
sales, while Pfizer had nearly $50 billion in revenue.
Aside from giving Pfizer the opportunity to lower its corporate
tax rate, the deal would increase its sales growth. For Allergan,
meantime, a combination will allow it to take sales, which are
predominantly in the U.S., to other international markets.
Allergan is the result of a number of mergers in quick
succession. It started off as a company called Watson
Pharmaceuticals Inc. In 2012, Watson acquired Swiss rival Actavis
Group and adopted that name. It also absorbed Warner Chilcott PLC
and Forest Laboratories Inc. in multibillion-dollar deals.
Mr. Saunders was CEO of Forest Labs, and became CEO of Actavis
after that deal. Shortly after, Allergan's predecessor was put into
play when Valeant Pharmaceuticals International Inc. made an
unsolicited offer to buy the California company. Actavis then
stepped in as a white knight and bought Allergan, taking the
company's name.
Allergan in July agreed to sell its generics business to
Israel's Teva Pharmaceutical Industries Ltd. for more than $40
billion.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Dana Mattioli at dana.mattioli@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 23, 2015 07:35 ET (12:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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