Pfizer has sealed a deal to buy Botox-maker Allergan for $160 billion in what is the biggest pharmaceuticals deal in history.
The takeover could allow Pfizer to escape relatively high US corporate tax rates by moving its headquarters to Allergan’s Dublin base.
The merged company will be the world’s biggest drug maker by sales.
Allergan shareholders will receive 11.3 shares in the new company for each of their Allergan shares.
Pfizer shareholders will receive one share for each of their shares in that company.
Pfizer’s shares closed down 2.7% in New York at $31.32, while Allergan fell 3.4% to $301.70.
Hillary Clinton, the Democratic presidential hopeful, said inversion deals like Pfizer’s would “leave US taxpayers holding the bag” and called on Washington to ensure that the biggest companies “pay their fair share”.
Senator Bernie Sanders, another Democratic hopeful, said the deal would be a disaster for consumers and allow another major US company to hide its profits overseas.
Republican presidential candidate Donald Trump described Pfizer’s departure from the US as “disgusting”, adding: “Our politicians should be ashamed.”
The merged business will be called Pfizer Plc. The companies said they expected the deal to be completed in the second half of 2016, subject to regulatory approval in the US and Europe.
Pfizer said it expected the merger to result in savings of $2 billion in the first three years.
The company’s CEO Ian Read will be chief executive and chairman of the merged company, with Allergan boss Brent Saunders becoming president and chief operating officer.
“The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and more therapies to more people around the world,” said Ian Read.
Critically, the terms of the deal propose that the merged company will maintain Allergan’s Irish domicile. This means the profits of the new company would be subject to corporation tax of 12.5% – much lower than the 35% Pfizer pays in the US.
In 2014, Pfizer made an offer to buy AstraZeneca in a move that analysts said was designed to reduce Pfizer’s tax bill. The UK pharmaceutical giant rejected the bid, arguing it undervalued the company.
The deal is the latest in a series of mergers and acquisitions in the sector, as pharmaceuticals companies struggle to cope with patents on a number of major drugs expiring.
Allergan has confirmed it has held preliminary talks about a takeover by pharmaceutical giant Pfizer.
The Dublin-based Botox-maker said no agreement had been reached and there was “no certainty that these discussions will lead to a transaction”.
Allergan shares were up more than 6% on October 29 trading in New York.
Analysts said Pfizer needed to boost profits and may be looking to escape relatively high US corporate tax rates by moving its headquarters to Dublin.
“Allergan today confirmed that it has been approached by Pfizer Inc. and is in preliminary friendly discussions regarding a potential business combination transaction,” the company said in a statement.
“The company will not comment on speculation regarding the terms of a potential transaction.”
The talks were first reported in the media on October 28.
In 2014, Pfizer made an offer to buy another UK drugs group, AstraZeneca, but Astra rejected the offer, arguing it undervalued the company.
Beer giant Anheuser-Busch InBev has announced it had made a takeover move for SABMiller.
The combined value of the world’s two largest brewers is likely to be at least $230 billio based on September 15 share price.
AB InBev’s brands include Budweiser, Stella Artois and Corona, while SABMiller owns Peroni and Grolsch.
If the deal is successful, the merged company would produce one third of the world’s beer.
AB InBev said it had approached SABMiller’s board about a “combination of the two companies”.
However, the company added that there was no certainty the approach would lead to an offer or an agreement.
Earlier, SABMiller said it had been informed that AB InBev was planning to make a bid, but that it had no details as yet.
“No proposal has yet been received and the board of SABMiller has no further details about the terms of any such proposal,” the company said.
Shares in SABMiller jumped 20% on the news to close at 3,614p, while AB InBev’s shares were 6% higher in New York.
Given the size of the deal both parties would be likely to have to sell off parts of their operations to get it past the regulators, and that may mean sacrificing some of their US and Chinese businesses .
The merged company would be likely to move aggressively into faster growing markets.
AB InBev has an eye on the African markets where SAB Miller dominates in 15 countries, and has a presence in a further 21.
A merger would also strengthen its grip on South America and Mexico which are by far its most profitable markets.
This deal has long been anticipated but analysts believe AB InBev was held back from making an offer because of high levels of debt built up through a string of other purchases.
SABMiller has also been trying to do deals. Last year it made an unsuccessful offer for its smaller rival Heineken in a move that was widely seen as an attempt to ward off a bid from AB InBev.
Nokia is to buy France’s Alcatel-Lucent in a €15.6 billion ($17 billion) takeover deal.
Under the all-share deal, Alcatel-Lucent shareholders will own 33.5% of the new combined company, and Nokia shareholders 66.5%.
Both companies said their boards had agreed the takeover and they expected it to go through in the first half of 2016.
The merger will form a European telecoms equipment group worth more than €40 billion.
Nokia CEO Rajeev Suri said the companies’ complementary technologies would give them “the scale to lead in every area in which we choose to compete”.
“I firmly believe that this is the right deal, with the right logic, at the right time,” Rajeev Suri said.
Nokia and Alcatel-Lucent are currently among the weakest players in the telecoms equipment industry. However, the combined company will have a market share of 35%, making it second only to Swedish rival Ericsson, which has 40%, according to Bernstein Research.
The companies expect the merger to cut operating costs by €900 million by 2019, but Nokia said it would not cut jobs beyond what Alcatel had already planned.
“No job cuts” in France was the condition under which the French government said on April 14 that it would back the deal.
Alcatel-Lucent’s shares fell 10% in early trading, with traders attributing the fall to shareholders’ disappointment that the deal did not have a cash element.
However, Nokia’s shares rose almost 5%, despite some analysts saying that the deal could take a long time to pay off.
Oil industry giants, Halliburton and Baker Hughes, are in talks about a possible merger.
Baker Hughes, the industry’s third largest services provider, confirmed press reports, adding that the talks were “preliminary”.
Any deal with Halliburton, the sector’s No 2 behind the far larger Schlumberger, is likely to face competition issues.
The companies provide drilling and logistics services, but have been hit by falling oil prices and higher costs.
The falling crude oil price has made exploration less economical and the big oil and gas producers have been cutting costs. A tie-up would allow the companies to better weather the downturn in the market.
A merged Halliburton-Baker Hughes would create a company worth about $67 billion, employing initially 140,000 people. But its market capitalization would still be half that of market leader Schlumberger.
Analysts said that antitrust authorities in the US, Europe and China would want to investigate the terms of any deal, and that a merged group might need to sell some assets before approval was given.
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