BY Fraser Tennant
In a deal believed to be the largest in healthcare history, biopharmaceutical giant Pfizer Inc. has announced that it is to acquire speciality pharmaceutical company Allergan plc – a transaction that will create a new global leader in biopharma business and innovation.
Under the terms of the definitive merger agreement, Pfizer will combine with Allergan in a stock transaction currently valued at $363.63 per Allergan share, for a total enterprise value of approximately $160bn (based on the closing price of Pfizer common stock of $32.18).
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.
“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, chairman and chief executive of Pfizer. “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.”
Under the terms of the transaction, unanimously approved by their boards of directors, the businesses of Pfizer and Allergan will be renamed ‘Pfizer plc'. The new entity’s board is expected to consist of 15 directors and will be led by Mr Read (continuing his previous role) and Brent Saunders (currently Allergan’s chief executive) as president and chief operating officer.
“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 Mr 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.”
Upon closing, the combined company is expected to maintain Allergan’s Irish legal domicile – a move which has seen the US-based Pfizer accused of corporate tax avoidance (i.e., tax inversion) by president Obama, among others.
Nevertheless, subject to certain conditions, including receipt of regulatory approval in certain jurisdictions such as the US and EU, and the receipt of necessary approvals from Pfizer and Allergan shareholders, the transaction is expected to complete in the second half of 2016.