Viagra-maker Pfizer set for $150bn merger with Botox-manufacturer Allergan as boards of directors meet

Madeline Ratcliffe
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Ireland-based Allergan manufactures Botox (Source: Getty)

What happens when you mix Viagra and Botox? We'll find out soon as the boards of Pfizer and Allergan met today to approve their $150bn (£98.8bn) merger – the healthcare sector's largest ever deal, City A.M. understands.

The talks were reported to have kicked up a gear as the US Treasury moves to clamp down tax inversion, where a US company merges with one based overseas, and shifts its base abroad to reduce the tax bill on its profits.

Pfizer is said to be negotiating an offer of between $370 and $380 per Allergan share, valuing the company at $150bn. Reuters reported that Pfizer will pay 11.3 of its shares for each Allergan share, along with a small cash component, accounting for less than ten per cent of the value of the deal.

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While the transaction will technically be structured as Allergan buying Pfizer, the latter's chief executive, Ian Read, will be chief executive of the combined company, with Allergan CEO Brent Saunders serving as his deputy in an operational role, Reuters added.

Ireland-based Allergan confirmed at the end of last month it was in talks to join forces with its US rival.

Pfizer is currently headquartered in the US, where corporate tax rates are 35 per cent, but could re-locate to Ireland after the Allergan merger, where tax rates are 12.5 per cent.

If the deal goes ahead, the resulting company would be the largest drugs firm in the world with a market capitalisation of $300bn (£196bn). This would put it ahead of rival Johnson & Johnson, which has a value of $277bn.

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