After weeks of talks, Pfizer and Allergan are set to approve a blockbuster merger deal worth $150 billion.
The companies’ boards of directors are reportedly expected to approve the deal Sunday, with details probably announced Monday, according to the Wall Street Journal. If completed, it would cap a remarkable consolidation wave roiling the U.S. healthcare industry and create the world’s biggest drug maker by sales.
A deal between Pfizer and Botox maker Allergan would be the largest corporate merger this year. As of Friday’s close, Pfizer had a market cap of $199 billion; Allergan was at $123 billion.
A Pfizer-Allergan deal is likely to fuel critics’ concerns that consumers would pay even more for drugs as competition declines among manufacturers, insurers and retailers. And it would place the firms squarely in a presidential election debate over efforts by U.S. companies to obtain lower tax rates by using mergers to move their headquarters abroad.
The final terms of the deal include 11.3 Pfizer shares for every Allergan share, the Journal, citing unnamed sources, said. The deal also contains a small cash component, the paper reported.
It said Pfizer Chief Executive Ian Read would lead the combined company and that Allergan CEO Brent Saunders would be second-in-command.
A month ago, Allergan, which is based in Ireland and has a sizable operation in Irvine, said it was approached by New York-based Pfizer but cautioned that there was “no certainty” that the “friendly” discussions would lead to a merger. Pfizer confirmed the talks.
A deal would cap a merger spree throughout the U.S. healthcare industry this year, which already has seen a record $448 billion in announced deals, according to Dealogic, which tracks the market.
Healthcare companies of all stripes are joining forces to reposition themselves as various market and government forces, notably the Affordable Care Act, have complicated the growth outlook for the firms’ revenues and profits.
For instance, two of the nation’s three largest drugstore chains, Walgreens and Rite Aid, announced a $9.4-billion merger in October. In July, Anthem reached a $54-billion deal to buy rival Cigna to create the largest U.S. health insurance company.
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