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.
NEW YORK & DUBLIN--(BUSINESS WIRE)--Nov. 23, 2015--
(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
, a global pharmaceutical company and a leader in a new industry model - Growth Pharma, in a stock transaction currently valued at
share, for a total enterprise value of approximately
, based on the closing price of Pfizer common stock of
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
shareholders will receive 11.3 shares of the combined company for each of their
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
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
, 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
and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better," said
, Chief Executive Officer,
. "This bold action is the next chapter in the successful transformation of
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
will be combined under
, 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.
will have its global operational headquarters in
and its principal executive offices in
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
, 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
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,
brings topical formulation, manufacturing and its Anda distribution capabilities to the combined company.
As a result of the combination with
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.
Pfizer anticipates the transaction will deliver more than
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
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
accelerated share repurchase program in the first half of 2016. Pfizer has approximately
remaining under its previously announced repurchase authorization.
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
shareholders, and the completion of Allergan's pending divestiture of its generics business to
Teva Pharmaceuticals Ltd.
expects will close in the first quarter of 2016.
Pursuant to the terms of the merger agreement, the
parent company will be the parent company of the combined group. A wholly owned subsidiary of
will be merged with and into Pfizer, and subject to receipt of shareholder approval, the
parent company will be renamed "Pfizer plc" after the closing of the transaction. Immediately prior to themerger,
will effect an 11.3-for-one share split so that each
shareholder will receive 11.3 shares of the combined company for each of their
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
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
or greater than
. In the event that the aggregate cash to be paid in the merger would otherwise be less than
or greater than
, then the stock and cash elections will be subject to proration.
Following the transaction, and assuming that all
of cash is paid in the merger, it is expected that former Pfizer stockholders will hold approximately 56% of the combined company and
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
. The directors from
, Allergan's current Executive Chairman,
, Allergan's current Chief Executive Officer (CEO), and two other directors from
to be selected at a later date.
, Pfizer's Chairman and CEO, will serve as Chairman and CEO of the combined company.
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.
Goldman, Sachs & Co.
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
are serving as Allergan's financial advisors for the transaction with
Cleary Gottlieb Steen & Hamilton LLP
Latham & Watkins LLP
acting as its legal advisors.