Pfizer Inc. and Allergan Plc have announced their plans to combine as a company, creating a historic deal of $160 billion in the process. Together the two pharmaceutical agents will create a drug-making giant named Pfizer Plc.
The deal marks one of the largest pharmaceutical deals known and will see the larger of the two firms, Pfizer, exchanging 11.3 shares for each Allergan share. This is because at $363.63 per share, Pfizer’s shares are valued 27% higher than Allergan’s, according to their prices in October.
Once the deal officially takes place, current Pfizer investors will be able to choose if they want to bow out of their investment with cash rather than take on stocks in the combined company. It’s expected that the company will have to pay up to $12b to facilitate this.
Pfizer said it would start a $5b accelerated share buyback program in the first half of 2016. Subject to approval, the deal will be finalised at the end of 2016. Pfizer expects adjusted earnings to start in 2018 with a profit boost of 10% the following year.
In terms of logistics, the current Pfizer chief executive officer, Ian Read, will remain in his role in the new company. There is also a place for the current Allergan CEO, Brent Saunders, who will act as president and chief operating officer.
As of yet no redundancies have been announced with the board members of each company expected to remain and combine.
The company will situate their operational headquarters in Pfizer’s New York base but the deal is laid out in a way that appears Allergen is purchasing Pfizer so that the company can be officially headquartered in Dublin.
This latest acquisition follows Pfizer’s purchase of Hospira Inc., earlier this year. That transaction came in at significantly less at around $17b.
Products Pfizer is known for producing include Viagra, Lyrica, pain medication, and the Prevnar pneumococcal vaccine. Allergan produces Botox and Namenda, an Alzheimer’s drug.