Pfizer (PFE) And Allergan (AGN) Enter A Definitive Merger Agreement

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Pfizer (NYSE: PFE) Allergan Plc (NYSE: AGN)This morning, Pfizer and Allergan announced that they have entered into a definitive merger agreement. Today, we’ll discuss the details of the agreement and what we can expect to see from the combined company moving forward.

PFE & AGN Enter Definitive Merger Agreement

As mentioned above, PFE and AGN announced early this morning that they have entered into a definitive merger agreement. Under the agreement, Pfizer and Allergan will become one and the same. According to the agreement, the merger will happen through an all-stock transaction that puts a value on Allergan shares in the amount of $363.63. This represents a premium of more than 30% and brings the acquisition value to a total of $160 billion. When the acquisition is complete, Allergan shareholders will receive a total of 11.3 shares of the combined company per owned share while Pfizer shareholders will received 1 share of the combined company per owned share. Here are statements made by the CEOs of each company during the announcement:

The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better… This bold action is the next chapter in the successful transformation of Allergan 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 business, vast global footprint and strength in discovery and development research to create a new biopharma leader.” – Brent Saunders, AGN CEO.

The Proposed combination of Pfizer and Allergan 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… 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 persuit of business development opportunities on a more competitive footing within our industry.” – Ian Read, PFE CEO.

How The News Affected The Market

Both PFE and AGN are down slightly in pre-market trading today. Currently (9:15), PFE is trading at $31.46 after a loss of 2.24% while AGN is trading at $308.39 after a loss of 1.30%.

What We Can Expect To See Moving Forward

Moving forward, I’m expecting to see overwhelmingly positive news out of the combined PFE and AGN. The new company will possess the strength in innovation that Pfizer has shown throughout its history while maintaining the high-growth biotech leadership that we’ve seen from Allergan. All in all, I believe this is a great move that’s likely to lead to incredible profits for the new combined company and its shareholders.

What Do You Think?

Where do you think PFE and AGN are headed moving forward? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

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