Pfizer agrees $160bn merger

Pfizer chief executive officer Ian Read said the deal will create a combined pharmaceutical company with the strength to research, develop and deliver more medicines.

Through this combination, Pfizer will have greater financial flexibility

Pfizer CEO 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,” Read said.

The merger, which has been widely anticipated for weeks, will make Pfizer/Allergan the world’s largest drugs manufacturer. It is also being considered the third largest merger in history.

The deal is expected to close during the second half of 2016 and will see Allergan shareholders receive 11.3 shares in the combined company, while Pfizer stockholders will receive like for like shares.

Some commentators, however, have suggested the merger is little more than an attempt at tax inversion.

According to some national publications, the deal is more of a ’reverse merger’ with the smaller Allergan buying Pfizer. That would effectively allow Pfizer to set-up headquarters in Dublin, Ireland – escaping the need to pay US corporate taxes in excess of £128bn.

In statement released this morning, Read said that “through this combination, Pfizer will have greater financial flexibility”.

”[It] 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,” Read added.

Pharmaceuticals mergers have come thick and fast this year, including Teva’s purchase of Allergan’s generics business for $40.5bn, while Pfizer, who had its £69bn bid to acquire AstraZeneca rejected by the company’s board in May last year, was successful in the acquisition of Hospira for $16bn earlier this year.