Pharmaceutical giant Pfizer Inc has held early talks with Botox-maker Allergan Plc to discuss what could be the biggest takeover deal this year, the Wall Street Journal and Financial Times reported.
The merger talks are in early stages, and may not yield an agreement, while other details are unclear, according to reports.
A bid for Allergan, which has a market value of $113 billion, would be Pfizer’s second-recent attempt to acquire a big rival, following its unsuccessful courtship last year of Anglo-Swedish pharma group AstraZeneca Plc.
Combining Allergan and Pfizer, which is worth $219 billion, would create the world’s largest healthcare group with a market value of around $330 billion, ahead of Johnson & Johnson ($278 billion).
A Pfizer spokesperson said it “does not comment on market rumour and speculation”. Allergan also declined to comment.
A takeover of Allergan could offer Pfizer advantages given that the Botox-maker is based in lower-tax Dublin.
“When you’re the size of Pfizer, an acquisition like this may be the only choice you have in order to be able to move the needle for sequential growth...so the question now becomes, if not this, what, and if not now, when?” WBB Securities’ analyst Stephen Brozak said.
Pfizer, the largest US drugmaker, has also been suggested as a possible acquirer of GlaxoSmithKline Plc and Shire.
Allergan would give Pfizer, whose revenues are expected to slide 3.3% this year, a boost in top-line growth. Allergan’s revenue is seen rising 39% this year, according to analyst estimates.
Bernstein analyst Tim Anderson said Allergan was a good fit and Pfizer might feel now was the right time to do a deal, given a recent market correction that has made Allergan look cheap.