NEW YORK (BLOOMBERG) - Pfizer Inc. is in advanced talks to buy Botox maker Allergan for close to US$150 billion (S$212.8 billion), according to people familiar with the matter.
The companies are aiming to announce a deal as soon as Monday (Nov 23), the people said, asking not to be identified because the discussions are private. The price being discussed is US$370 to US$380 per share, two of the people said.
A deal at US$380 per share would value the company at almost US$150 billion and be the biggest healthcare deal ever, as well as the largest acquisition this year.
However, the US Treasury Department's letter on tax inversion deals, released on Wednesday, could delay the final agreement and change the terms of any transaction, another person said.
Representatives for Allergan and Pfizer declined to comment.
Pharma and biotech mergers this year have already surpassed last year's record of US$220 billion in deals, according to data compiled by Bloomberg. Not including a Pfizer-Allergan merger, the drug industry has struck 638 deals worth US$221 billion, the data show.
Allergan shares dropped in late trading after the Treasury's letter, which said it is reviewing ways to address overseas acquisitions and plans to issue guidance later this week.
The transaction would strengthen Pfizer's brand-name drug business and could pave the way for an eventual split in two. It will also allow the US drugmaker to transfer its headquarters to Ireland to take advantage of lower business tax rates in the country, a transaction known as an inversion.
The Treasury "cannot block an inversion outright", Mr Umer Raffat, an analyst at Evercore ISI, wrote in a note to clients on Wednesday. "Treasury's upcoming guidance is aimed at reducing economic benefits of inverting." It isn't clear yet what measures the Treasury is considering or what actions it has the authority to take, he said.
The companies were moving towards a plan to make Allergan's Brent Saunders chief executive officer of the combined firm, people with knowledge of the matter said on Nov 11.
The purchase would also keep Pfizer on track if it decides to go forward with a split into two companies, an option that chief executive officer Ian Read has raised as a possibility. One business would focus on older, soon-to-be-generic drugs, while the other would develop and market new brand-name products.
Allergan's portfolio, which includes top-selling brands like the anti-wrinkle injection Botox and the Alzheimer's drug Namenda, would help beef up Pfizer's brand-name drug business before splitting it off.
To date, the largest deal in the drug industry was Pfizer's US$116 billion purchase of Warner-Lambert in 2000, the Bloomberg-compiled data show.
Allergan has more than 70 projects in mid- to late-stage development, according to a Nov 4 conference call. It has acquired a number of companies as it expands its branded-drugs business after agreeing to sell its generics arm to Israeli rival Teva Pharmaceutical Industries for about US$40.5 billion. The company has topped earnings estimates for the past eight quarters, positioning it as an attractive addition to Pfizer's portfolio.
Pfizer has been looking for its next big hit after patents expired for its cholesterol drug Lipitor and arthritis drug Celebrex. The company, which reported US$49.6 billion in revenue last year, raised its profit forecast for 2015 in September.