Pfizer in merger talks with Botox maker Allergan

By Anuradha Verma

  • 30 Oct 2015
Other | Credit: Reuters

US drugmaker Pfizer Inc is in preliminary talks with Dublin-based Allergan plc, best known for making anti-wrinkle treatment Botox, in what could be the biggest deal in the pharmaceutical industry.

The two companies said that no agreement has been reached on a deal and refused to talk about the possible terms of any transaction.

The deal, if it goes through, could be the biggest merger or acquisition transaction this year. It could also create a pharmaceutical giant with a combined market value of $330 billion.

The largest acquisition in the pharmaceutical sector thus far is Pfizer's $116 billion acquisition of Warner-Lambert in 2000.

The deal, if it happens, is likely to face close scrutiny given the tax implications. Allergan is based in Ireland, which bestows so-called tax inversion benefits to US companies when they buy a foreign rival to move their legal home to the lower-tax jurisdiction.

US corporate tax rates, among the highest in the world, have forced many American companies to pursue deals that help them reduce their tax liability.

Allergan has already been involved in two big M&A deals this year. In June, drugmaker Actavis plc completed the $70.5 billion acquisition of Allergan. Actavis then renamed itself Allergan. In July, Allergan agreed to sell its generics business to Israel's Teva Pharmaceutical Industries for $40.5-billion.