Although the pharmaceuticals industry faced a sharp downturn at the beginning of 2016, that hasn't stopped merger and acquisition (M&A) activity in the sector. In January alone, biotech M&A deals accounted for $56 billion, more than double the value of acquisitions made the year previous.
But there's one merger on the table now that would dwarf all others, Pfizer's (PFE) combining with Allergan (AGN) . Even before the deal is finalized, Allergan looks like a tasty pharma play. The company just announced the launch of a new blockbuster product, and the company looks primed to rebound after a dip over the past seven months in its stock price.
In November, Pfizer and Allergan announced their reverse buyout merger valued at over $160 billion. Reverse mergers allow U.S. companies to move abroad to take advantage of lower taxes.
Allergan will technically be the acquiring entity, although it is considerably smaller than Pfizer. The new company will be based in Allergan's Dublin headquarters. Under Irish tax law, the company will face an affective tax rate of 17-18%, compared with the 25% Pfizer currently pays in U.S. taxes. The new company created from the deal would enjoy annual revenues of more than $60 billion.
In addition, the deal will create a pharma powerhouse with such household-name products as Botox and Viagra in its portfolio.