- The Federal Trade Commission has asked Pfizer and Allergan for more information on their proposed $160 billion reverse merger in a so-called "second request," the companies said on Wednesday.
- Both companies continue to expect the deal to close in the second half of 2016, but it still requires regulatory okay from both the U.S. and the E.U. The FTC request had been expected.
- The proposed merger would create the world's largest drugmaker and relocate Pfizer's tax base to Ireland. Allergan is technically buying Pfizer in what is known as a reverse merger, although Pfizer shareholders will own 56% of the combined company.
Agreed to back in November 2015, the $160 billion merger has been the subject of criticism as the U.S. government attempts to crack down on corporate "inversions." Under these types of mergers, companies shift their headquarters abroad to achieve a lower corporate tax rate. Horizon, Endo, and Valeant are all recent examples of pharmaceuticals companies which changed their corporate residence to lower their tax bill.
Pfizer and Allergan's deal is bound to receive considerable scrutiny from both the FTC and E.U. regulators. Their merger is also dependent on Allergan successfully divesting its generics portfolio to Teva. That $40.5 billion deal passed muster in the E.U. after Teva agreed to a number of offsetting divestitures. But it has hit a snag in the U.S. and an FTC decision won't likely come until June.
Additionally, the deal is subject to a waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The companies pledged to continue working with the FTC on its review.