Merger mania slowed but certainly didn't disappear in 2016
This year may not have been quite as manic for mergers and acquisitions as the record-breaking 2015, but 2016 has nevertheless been notable for several big-name deals.
At one point it looked like this year would see the biggest deal in the history of the industry finalised, after the 2015 Pfizer and Allergan agreement to combine for $160 billion. By merging under the Ireland-based company, Pfizer would have been able to escape US taxes on $128 billion of profits stored overseas.
But in April, the US government cracked down on such 'tax inversion' deals by changing the law to limit the benefits of 'serial inverter' companies that have acquired multiple US firms over a short period of time. This affected Allergan, which has been enlarged by a series of deals culminating in a takeover of US-based Actavis last year.
As such, the two companies swiftly announced they would terminate the deal, with Pfizer paying Allergan a $150 million break-up fee. Allergan CEO Brent Saunders expressed frustration at the situation, saying: "For the rules to be changed after the game has started to be played is a bit un-American, but that's the situation we're in."
But Pfizer was not out of the M&A game for long – in August, the company scooped up sought-after US biopharma Medivation for $14 billion. Sanofi had previously offered $9.3 billion to buy the company in an attempt to secure access to its prostate cancer drug Xtandi and further bulk up its oncology offering, but had been rejected several times by Medivation's board. AstraZeneca, Celgene, Gilead and Merck were all also reported to be interested in buying the company.
Meanwhile, Allergan saw its generics business snapped up by Teva in a deal worth over $40 billion, which Teva said would make it a top 10 global pharma firm. Last year the Israeli company had spent months attempting to acquire Mylan. To clear the deal with regulators, Teva agreed to divest 79 of its generic drugs in the US and the majority of Allergan's generics business in the EU.
In other deals, Sanofi agreed a $25 billion asset swap with Boehringer Ingelheim in June, exchanging its animal health business for Boehringer's consumer healthcare enterprise, and in January, Shire acquired Baxalta – which had only just been spun-out from Baxter – for around $32 billion. The stated aim of Shire's acquisition was to create "the global leader in rare diseases". According to the firms, the marriage will create the number one rare diseases platform in revenue and pipeline depth, which is predicted to generate annual sales of more than $20 billion by 2020.