New York City-based Pfizer and Dublin-based Allergan inked a definitive agreement to merge for a total enterprise value of about $160 billion.
According to The Wall Street Journal coverage, the merged companies would be the world's biggest drugmaker and would be the largest inversion ever. Inversion deals help American companies to move abroad for lower corporate tax rates.
Under the Pfizer-Allergan deal, Allergan shareholders will receive 11.3 shares of the combined company for each of their current Allergan shares. Pfizer shareholders will receive one share of the new company for each of their current Pfizer shares, or have the option to receive cash instead of stock. Following completion of the transaction, the companies expect former Pfizer stockholders to hold 56 percent of the company and Allergan shareholders to have 44 percent of the company.
Allergan will be the parent company of the combined group, but the parent company will be renamed Pfizer.
The companies expect to close the deal in the second half of 2016. Beginning in 2018, they estimate the combined operating cash flow to exceed $25 billion.
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