Pfizer Near Allergan Buyout Deal But Will Fed Allow It?

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Pfizer Near Allergan Buyout Deal But Will Fed Allow It?

November 19, 2015 by sjwilliamspa

Pfizer Near Allergan Buyout Deal But Will Fed Allow It?

Reporter: Stephen J. Williams, Ph.D.

Pfizer Inc. is in advanced talks to buy Allergan Plc for as much as $380 per share, according to people familiar with the matter, valuing the Botox maker at as high as $150 billion — if the U.S. government doesn’t get in the way of the drug industry’s largest-ever deal.

See Bloomberg’s QuickTake: Tax Inversion

There has been 51 US company tax-inversion based relocations since 1982 with the rate picking up in the last 3 years (from Bloomberg Data). Many of these inversions in recent years have involved large pharma companies.

The companies aim to announce an agreement as soon as Monday, the people said, asking not to be identified because the discussions are private. The price being discussed is $370 to $380 per share, two of the people said. However, the U.S. Treasury Department’s letter on tax inversion deals, released on Wednesday, could delay the final agreement and change the terms of any transaction, another person said.

Pfizer shares sank 1.5 percent to $32.80 and Allergan fell 1.4 percent to $306.37 at 9:57 a.m. in New York on speculation that the deal could be hampered by the Treasury’s letter, which said the department is reviewing ways to address overseas acquisitions and plans to issue guidance later this week.

Pfizer has tried but hadn’t succeeded, in the past, to complete a merger, supposedly for a tax inversion. The latest attempt was the failed attempt to buyout British based AstraZeneca in 2014 for $117 billion. When Pfizer makes a buyout employees of Pfizer and the purchased company generally acknowledge that layoffs will ensue (from FiercePharma UPDATED: Pfizer’s post-megamerger cost-cutting record? 51,500 jobs in 7 years).