Pfizer takes over Allergan in $160bn deal

Deal makes Ireland home to the largest pharmaceutical company in the world

Drug giant Pfizer has announced a $160 billion (€150.5bn) takeover of Dublin-headquartered Allergan in a deal that will make Ireland home to the world's largest pharmaceutical company.

The all-share transaction will see Pfizer issue 11.3 shares in the enlarged company for each share held by Allergan investors. That values each Allergan share at $363.63.

Pfizer shareholders will receive one share in the new company for each share they own. The Pfizer investors will have the option to take some or all of their benefit in cash.

Share trade in US

“The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines,” said Pfizer chairman and chief executive

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Ian Read

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Under the terms of the deal, the business of both companies – which between them employ more than 4,700 people in Ireland – will be merged under Allergan plc in Dublin. It will then be renamed Pfizer plc.

Shares of the combined companies will trade in the US under Pfizer’s existing PFE ticker.

The takeover, expected to be completed in the second half of next year, is likely to draw criticism in the US where it is seen as little more than an effort to avoid paying US corporate tax.

Mr Read and Brent Saunders, the Allergan boss who will become chief operating officer of the combined group, said the question of tax and access to cash was just one of the factors driving the acquisition.

Mr Read said the deal would give Pfizer greater financial flexibility to develop new drugs, return capital to shareholders and continue to invest in the US market “while also enabling our pursuit of business-development opportunities on a more competitive footing within our industry”.

Mr Saunders said the transaction would give access to 70 new markets for Allergan products, and vastly increased presence in another 30.

Speaking exclusively to The Irish Times, Mr Read said there was no reason the deal should damage Ireland's relationship with the US where the country has previously been compared to the Wild West on corporate taxation issues.

“We have 5,000 employees together in Ireland. This is not a postbox. We have a substantial presence in Ireland.”

Mr Saunders said: “Ireland is incredibly important to us on a go-forward basis. We are very committed to expanding our capabilities in Ireland and it will be our domicile.

“Our history in Ireland for both companies is rich, the relationship we have with our employees there is incredible and the talent base is . . . a strong asset.”

The two men expect to deliver savings of up to $2 billion following completion of the deal, assuming it is approved by both sets of shareholders.

“You are going to have the fourth largest country in the world domiciled in Ireland,” said Mr Read. “I think it is great for Ireland and it is great for research and it is good thing for the US as well.

The Pfizer boss, a long-time critic of US tax policy, added: “I don’t think Ireland should be in any way ashamed of the set of capabilities it has that are attracting businesses to Ireland.”

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times