LA Times: Good looking M&A? The Edge sees An Allergan-Pfizer deal could be biggest merger this year
Oct 30, 2015
By senior reporters, James F. Peltz and Samantha Masunaga, Los Angeles Times: Drug giant Pfizer Inc. and Botox maker Allergan confirmed Thursday that they’re in early talks to merge in a blockbuster deal that, if completed, would cap a remarkable consolidation wave roiling the U.S. healthcare industry.
A deal between the companies — with an expected price tag well above Allergan’s current stock market valuation of about $120 billion — would be the largest corporate merger this year. It also 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. A Pfizer-Allergan deal would fuel critics’ concerns that consumers would pay even more for drugs as competition declines among manufacturers, insurers and retailers.
“Drug prices are out of control, and allowing a merger like this is like giving Jesse James a much bigger gun,” said David Balto, an antitrust lawyer and former policy director at the Federal Trade Commission. Pfizer Chief Executive Ian Read has said Pfizer is at a competitive disadvantage because of its U.S. tax burden, and the company already made one failed attempt at a tax inversion when it tried to buy British drugmaker AstraZeneca last year.
Allergan had an effective tax rate of 4.8% last year compared with 25.5% for Pfizer, Jonathan Morgan, head of research at the Edge Consulting Group, said in a note to clients Thursday. But Pfizer and Allergan could face a political backlash. Some presidential candidates, including Democratic candidate Hillary Rodham Clinton, have said they would try to curtail tax inversions. Pfizer would gain more than…