has announced a merger with Allergan. The two companies will form the world's largest healthcare company.
Announced in the US last night, Pfizer's US$160 billion takeover of the BOTOX-maker will create a company with annual revenues of around US$60 billion.
Pfizer said, as a result of the merger and subsequent integration of the two companies, it now expects to make a decision about a potential separation of the combined company’s innovative and established businesses by no later than the end of 2018.
It will also see the iconic New York-based company redomicile its corporate headquarters to Ireland in a move designed to take advantage of that country's lower corporate tax arrangements.
Pfizer has made previous unsuccessful attempts to relocate its headquarters to lower taxing jurisdictions. Last year, it abandoned a bid to acquire UK-based AstraZeneca and some recent reports suggested another UK company, GSK, rebuffed an approach.
Current Pfizer CEO Ian Read will lead the combined entity. Allergan CEO Brent Saunders will join Pfizer as its President and COO. Its Board will have 15 directors, consisting of all of Pfizer’s 11 current directors and 4 current directors of Allergan.
Completion of the deal is expected in the second half of 2016, subject to regulatory approvals. It is understood that Pfizer will pay Allergan a significant break-up fee is the merger is not completed.
According to the companies, the transaction represents more than a 30 per cent premium based on Pfizer’s and Allergan’s unaffected share prices as of 28 October.
"Allergan shareholders will receive 11.3 shares of the combined company for each of their Allergan shares, and Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares," said Pfizer in a statement.
Following the transaction, it is expected that former Pfizer stockholders will hold approximately 56 per cent of the combined company and Allergan shareholders will own approximately 44 per cent of the combined company on a fully diluted basis.
The deal makes the end of a busy 2015 for both companies. Pfizer recently completed the acquisition of Hospira, while Allergan is the merged entity of Actavis and the former Allergan.
“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,” said Ian Read. “Allergan’s businesses align with and enhance Pfizer’s businesses, creating best-in-class, sustainable, innovative and established businesses that are poised for growth. 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.”
“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. “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. Joining forces with Pfizer matches our leading products in seven high growth therapeutic areas and our robust R&D pipeline with Pfizer’s leading innovative and established businesses, vast global footprint and strength in discovery and development research to create a new biopharma leader.”