Pfizer, Allergan agree to $160B US merger deal

Pfizer and Allergan will join in a $160 billion US deal to create the world's largest drugmaker.

The transaction is valued at $363.63 per Allergan share. Allergan shareholders will receive 11.3 shares of the combined company for each of their shares. Pfizer stockholders get one share of the combined company for each of theirs.

It's the biggest health care deal ever and the largest so-called "inversion" in history, a tax-saving manoeuvre in which a U.S. company reorganizes in a country with a lower corporate tax rate. U.S. efforts to curb the practice have so far proven ineffectual.

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

Pfizer and Allergan will be combined under Allergan PLC, which will be renamed Pfizer PLC.

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

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.