Pfizer and Allergan to Merge

The boards of directors of Pfizer and Allergan have unanimously approved a definitive merger agreement under which Pfizer will combine with Allergan.

PRESS RELEASE

NEW YORK & DUBLIN--(BUSINESS WIRE)--Nov. 23, 2015--

Pfizer Inc.

(NYSE:PFE) and

Allergan plc

(NYSE:AGN) today announced that their boards of directors have unanimously approved, and the companies have entered into, a definitive merger agreement under which Pfizer, a global innovative biopharmaceutical company, will combine with

Allergan

, a global pharmaceutical company and a leader in a new industry model - Growth Pharma, in a stock transaction currently valued at

$363.63

per

Allergan

share, for a total enterprise value of approximately

$160 billion

, based on the closing price of Pfizer common stock of

$32.18

on

November 20, 2015

. The transaction represents more than a 30 percent premium based on Pfizer's and Allergan's unaffected share prices as of

October 28, 2015

.

Allergan

shareholders will receive 11.3 shares of the combined company for each of their

Allergan

shares, and Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares.

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"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 therapies to more people around the world," stated

Ian Read

, Chairman and Chief Executive Officer, Pfizer. "Allergan's businesses align with and enhance Pfizer's businesses, creating best-in-class, sustainable, innovative and established businesses that are poised for growth. Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in

the United States

, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry."

"The combination of

Allergan

and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better," said

Brent Saunders

, Chief Executive Officer,

Allergan

. "This bold action is the next chapter in the successful transformation of

Allergan

allowing us to operate with greater resources at a much bigger scale. Joining forces with Pfizer matches our leading products in seven high growth therapeutic areas and our robust R&D pipeline with Pfizer's leading innovative and established businesses, vast global footprint and strength in discovery and development research to create a new biopharma leader."

Under the terms of the proposed transaction, the businesses of Pfizer and

Allergan

will be combined under

Allergan plc

, which will be renamed "Pfizer plc." The companies expect that shares of the combined company will be listed on the

New York Stock Exchange

and trade under the "PFE" ticker. Upon the closing of the transaction, the combined company is expected to maintain Allergan's Irish legal domicile.

Pfizer plc

will have its global operational headquarters in

New York

and its principal executive offices in

Ireland

.

Pfizer's innovative businesses will be significantly enhanced by the addition of a growing revenue stream from Allergan's durable and innovative flagship brands in desirable therapeutic areas such as Aesthetics and Dermatology, Eye Care, Gastrointestinal, Neuroscience and Urology. The combined company will benefit from a broader innovative portfolio of leading medicines in key categories and a platform for sustainable growth with diversified payer groups. With the addition of

Allergan

, Pfizer will enhance its R&D capabilities in both new molecular entities and product line extensions. A combined pipeline of more than 100 mid-to-late stage programs in development and greater resources to invest in R&D and manufacturing is expected to sustain the growth of the innovative business over the long term. Through product approvals, launches and inline performance the combined company aspires to be a leader in growth.

The combination of Pfizer and

Allergan

will significantly increase the scale of Pfizer's established business, and their complementary capabilities will maximize the combined established portfolio. The addition of Allergan's Women's Health and Anti-Infectives portfolio will add depth to Pfizer's established business, and Pfizer will expand the reach of Allergan's established portfolio using its existing commercial capabilities, infrastructure and global scale. In addition,

Allergan

brings topical formulation, manufacturing and its Anda distribution capabilities to the combined company.

As a result of the combination with

Allergan

and subsequent integration of the two companies, Pfizer now expects to make a decision about a potential separation of the combined company's innovative and established businesses by no later than the end of 2018.

Financial Highlights

Pfizer anticipates the transaction will deliver more than

$2 billion

in operational synergies over the first three years after closing. Pfizer anticipates that the combined company will have a pro forma Adjusted Effective Tax Rate1 of approximately 17%-18% by the first full year after the closing of the transaction. The transaction is expected to be neutral to Pfizer's Adjusted Diluted EPS1 in 2017, modestly accretive beginning in calendar year 2018, more than 10% accretive in 2019 with high-teens percentage accretion in 2020. These expectations include the impact of expected share repurchases following the transaction. The combined company is expected to generate annual operating cash flow in excess of

$25 billion

beginning in 2018.

The transaction is not expected to have an impact on Pfizer's existing dividend level on a per share basis. It is expected that the combined company will use its combined cash flow to continue to support an attractive dividend policy, targeting a payout ratio of approximately 50% of Adjusted Diluted EPS.1

Independent of the transaction and consistent with 2015, Pfizer anticipates executing an approximately

$5 billion

accelerated share repurchase program in the first half of 2016. Pfizer has approximately

$5.4 billion

remaining under its previously announced repurchase authorization.

Transaction Details

The completion of the transaction, which is expected in the second half of 2016, is subject to certain conditions, including receipt of regulatory approval in certain jurisdictions, including the

United States and European Union

, the receipt of necessary approvals from both Pfizer and

Allergan

shareholders, and the completion of Allergan's pending divestiture of its generics business to

Teva Pharmaceuticals Ltd.

, which

Allergan

expects will close in the first quarter of 2016.

Pursuant to the terms of the merger agreement, the

Allergan

parent company will be the parent company of the combined group. A wholly owned subsidiary of

Allergan

will be merged with and into Pfizer, and subject to receipt of shareholder approval, the

Allergan

parent company will be renamed "Pfizer plc" after the closing of the transaction. Immediately prior to themerger,

Allergan

will effect an 11.3-for-one share split so that each

Allergan

shareholder will receive 11.3 shares of the combined company for each of their

Allergan

shares, and the Pfizerstockholders will receive one share of the combined company for each of their Pfizer shares. Pfizer's U.S. stockholders will recognize a taxable gain, but not a loss, for U.S. federal income tax purposes. The transaction is expected to be tax-free forU.S. federal income tax purposes to

Allergan

shareholders.

Pfizer stockholders will have the opportunity to elect to receive cash instead of stock of the combined company for some or all of their Pfizer shares, provided that the aggregate amount of cash to be paid in the merger will not be less than

$6 billion

or greater than

$12 billion

. In the event that the aggregate cash to be paid in the merger would otherwise be less than

$6 billion

or greater than

$12 billion

, then the stock and cash elections will be subject to proration.

Following the transaction, and assuming that all

$12 billion

of cash is paid in the merger, it is expected that former Pfizer stockholders will hold approximately 56% of the combined company and

Allergan

shareholders will own approximately 44% of the combined company on a fully diluted basis.

Governance and Leadership

Pfizer plc's board is expected to have 15 directors, consisting of all of Pfizer's 11 current directors and 4 current directors of

Allergan

. The directors from

Allergan

will be

Paul Bisaro

, Allergan's current Executive Chairman,

Brent Saunders

, Allergan's current Chief Executive Officer (CEO), and two other directors from

Allergan

to be selected at a later date.

Ian Read

, Pfizer's Chairman and CEO, will serve as Chairman and CEO of the combined company.

Brent Saunders

will serve as President and Chief Operating Officer of the combined company. He will be responsible for the oversight of all Pfizer and Allergan's combined commercial businesses, manufacturing and strategy functions.

Guggenheim Securities

,

Goldman, Sachs & Co.

,

Centerview Partners

and

Moelis & Company

are serving as Pfizer's financial advisors for the transaction, with Wachtell, Lipton, Rosen &

Katz, Skadden, Arps, Slate, Meagher & Flom LLP

and A & L Goodbody acting as its legal advisors.

J.P. Morgan and

Morgan Stanley

are serving as Allergan's financial advisors for the transaction with

Cleary Gottlieb Steen & Hamilton LLP

,

Latham & Watkins LLP

and

Arthur Cox

acting as its legal advisors.