NEW YORK, Oct. 29 (UPI) — Pharmaceutical companies Pfizer Inc. and Allergan PLC are in discussions to possibly merge — a move that could see Pfizer break up into two companies.
Pfizer recently approached Allergan about a deal but the process is in early stages and may not lead to an agreement, The Wall Street Journal reported. Pfizer is only interested in a friendly acquisition.
Allergan, which confirmed the talks, currently has a market capitalization of nearly $113 billion. One of the biggest obstacles in merger negotiations could be setting a price.
Pfizer, based in New York, could split and move some operations to Dublin, where Allergan is headquartered, to lower its corporate tax rate. The move, called tax inversion, requires a large foreign target for a company to circumvent U.S. tax rules.
If Pfizer succeeds, it would be the largest tax inversion move by a U.S. company seeking to avoid the United States’ 35 percent corporate tax rate.
“There are very few deals in the market — so Pfizer is trying to fill this need for a deal, and once this behemoth is created, then it will probably carve its business out into specialty pharma and generic pharma,” Jayant Singh, director of the health-care practice at Frost & Sullivan in New Delhi, India, told Bloomberg.
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