Drug giant Pfizer aims to buy Botox-maker Allergan in $160bn deal

By Simon Pitman

- Last updated on GMT

Drug giant Pfizer aims to buy Botox-maker Allergan in $160bn deal

Related tags Pfizer

US pharmaceuticals player Pfizer has agreed to buy Botox-maker Allergan for an estimated $160bn in a deal that will create the largest drug-maker in the world.

Both companies also have a number of activities in the cosmetics and personal care world. And although Pfizer’s main focus is in healthcare it also holds a number of personal care brands in its portfolio, including ChapStick and Preparation H.

US-based Pfizer is also the maker of leading drugs such as erectile dysfunction treatment Viagra and the cholesterol lowering treatment Lipitor.

Botox leads Allergan business

Allergan is best known for its wrinkle smoothening cosmetic injection treatment Botox, a neurotoxic protein which helped push the company’s turnover in the first quarter of 2015 was $4.2 billion. Approximately 30% of those revenues are derived from Botox.

The two businesses are predicted to have a combined turnover of $25 billion by 2018, if the deal meets with all the relevant approval from the authorities.

The deal is to be structured as a reverse merger, which means that the smaller Ireland-based Allergan business will actually buy up Pfizer, putting Pfizer in a position where it could benefit from a lower corporate tax rate in the United States.

Will a reverse merger cut it?

Although this type of deal has been garnering media attention in recent months, Pfizer CEO Ian Read said that the company had given careful consideration to the political risks, but had decided to go ahead with the transaction anyway.

Last week the US government stepped up its attacks on corporate tax inversion M&A deals, mooting restrictions on such activities in an effort to boost U.S. tax revenues.

Experts believe that because of the reverse merger nature of the transaction it is expected to go through heightened regulatory scrutiny before it can close in the second-half of 2016.

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