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Pfizer and Allergan 'close to £100 billion mega-merge deal'

Pfizer and Irish-based Allergan are on the brink of a deal worth nearly £100 billion that will create the world's largest drug maker by sales, it is reported.

According to the Wall Street Journal , citing sources familiar with the matter, terms of the 150 billion-dollar (£99bn) merger include 11.3 Pfizer shares for every Allergan share, along with a small cash component.

The boards of each company were expected to approve the agreement, which could be announced today.

Pfizer and Allergan representatives declined to comment.

If a deal is reached, it would be the biggest merger in health care and the largest "inversion" - a tax-saving manoeuvre in which a US company reincorporates in a country with a lower corporate tax rate.

Inversions have become a hot political topic, raising the wrath of politicians in Washington and public interest groups.

Botox maker Allergan is based in Ireland but runs much of its operations out of Parsippany, New Jersey.

To help secure that lower tax rate, the deal will be technically structured as a reverse merger, with Allergan buying New York-based Pfizer, according to the newspaper.

Pfizer, the maker of Viagra and Lipitor, has been dealing with tough competition from generics and pressure from investors to stimulate growth. Generic competition is expected to cut Pfizer's sales by 28 billion dollars (£18.5bn) from 2010 through next year. It has made three sizeable deals since 2000 to boost revenue.

Buying Allergan would add its brand-name medicines for eye conditions, infections and heart disease to Pfizer's extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions. It would also allow Pfizer, the world's second-biggest drug maker by revenue, to surpass Switzerland's Novartis and regain the industry's top spot.

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