Report: Pfizer-Allergan agreement expected in $150B deal to create pharmaceutical giant

NEW YORK, N.Y. – Pfizer Inc. and Allergan PLC are on the cusp of reaching a $150 billion deal that would create the world’s largest drugmaker by sales, The Wall Street Journal reported Sunday, citing unnamed people familiar with the matter.

According to the newspaper, terms of the deal include 11.3 Pfizer shares for every Allergan share, along with a small cash component. The boards of each company were expected to approve the agreement Sunday and it could be announced Monday.

Pfizer and Allergan representatives declined to comment.

If a deal is reached, it would be the biggest ever merger in health care and the largest “inversion” ever — that’s a tax-saving manoeuvr in which a U.S. company reincorporates in a country with a lower corporate tax rate. Inversions have become a hot political topic, raising the ire of lawmakers in Washington and public interest groups.

Botox maker Allergan is based in Ireland but runs much of its operations out of Parsippany, New Jersey.

To help secure that lower tax rate, the deal will be technically structured as a reverse merger, with Allergan buying New York-based Pfizer, according to the newspaper’s report.

Pfizer, the maker of Viagra and Lipitor, has been dealing with tough competition from generics and pressure from investors to stimulate growth. Generic competition is expected to cut Pfizer’s sales by $28 billion from 2010 through next year. It’s done three sizeable deals since 2000 to boost revenue.

Buying Allergan would add its brand-name medicines for eye conditions, infections and heart disease to Pfizer’s extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions. It would also allow Pfizer, the world’s second-biggest drugmaker by revenue, to surpass Switzerland’s Novartis AG and regain the industry’s top spot.