Pfizer And Allergan Agree To $160 Billion Mega-Merger

Pfizer and Allergan

Pfizer and Allergan have agreed to form the world’s largest pharmaceutical company. The two companies announced their formal merger agreement on Monday.

If the deal receives regulatory approval it would combine Pfizer’s Lyrica, Enbrel, and Viagra products with Allergan’s Botox and Restasis products.

In a bit of good news for customers, drug prices have tended to remain fairly stable after mega-mergers in the pharmaceutical industry. Right now drug companies are even under more scrutiny after Turing purchased a 60-year-old drug and hiked its price by 5000%.

The Pfizer-Allergan merger, worth approximately $160 billion, would be the second-largest of all time,  behind only the 1999 merger of two telecommunications firms.

Pfizer has said for years that it was seeking a foreign company to merge with in order to move its base of operations overseas, while saving millions of dollar on taxes. Allergan is based in Dublin while Pfizer is currently based in New York City.

Pfizer’s last acquisition attempt with British drug maker AstraZeneca failed.

Mergers like Pfizer-Allergan are known as tax inversions. In these type of deals, bigger American companies buy smaller foreign ones and then switch their headquarters (at least on paper) to the location of the smaller company.

20% of the new company’s shareholders must be located overseas in order for the company to claim residency in a new foreign home.d