Pfizer to buy Allergan in $226b deal

A woman passes by the Pfizer World Headquarters building in the Manhattan borough of New York, on Nov 23, 2015.
A woman passes by the Pfizer World Headquarters building in the Manhattan borough of New York, on Nov 23, 2015. PHOTO: REUTERS

NEW YORK • Pfizer, the maker of Viagra and Lipitor, has struck a deal to buy Botox-maker Allergan in a transaction valued at about US$160 billion (S$226 billion), creating the world's biggest drugmaker.

New York-based Pfizer and Allergan, headquartered in Ireland, said yesterday that Pfizer would offer 11.3 of its own shares for each Allergan share.

Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares.

The offer - the biggest in the healthcare sector - values Allergan's shares at US$363.63 each, compared with the stock's close of US$312.46 last Friday.

The transaction is structured so that Dublin-based Allergan is technically buying its much larger partner, a move that may make it easier for the company to locate its tax address in a lower-cost country.

The agreement also facilitates the widely discussed potential for Pfizer to reconfigure itself by splitting the newly enlarged company into two: one focused on new drug development, the other on selling older medications.

Pfizer chief executive officer Ian Read will head the new company, with Allergan CEO Brent Saunders in a high position, sources said.

Pfizer makes medications, including pain drug Lyrica and the Prevnar pneumococcal vaccine; and Allergan produces Botox and the Alzheimer's drug Namenda.

Together, barring any divestitures, the companies would form the biggest pharmaceutical company by annual sales, with about US$60 billion.

The deal is unprecedented on many levels.

It is the largest acquisition so far this year.

It is the largest in the pharmaceutical world, eclipsing Pfizer's purchase of Warner-Lambert in 2000 for US$116 billion.

And if the new company is able to establish itself abroad for a lower tax rate, a controversial process called an inversion, it will be the largest such move in history.

Pfizer earlier this year bought Hospira, the maker of generic drugs often administered in hospitals, in a transaction valued at about US$17 billion.

Allergan itself has been recently transformed, created through an acquisition by Actavis that kept the Allergan name.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on November 24, 2015, with the headline 'Pfizer to buy Allergan in $226b deal'. Print Edition | Subscribe