Pfizer to Buy Allergan in Record-Breaking $160 Billion Deal

Pfizer Inc. announced Monday that it will be buying Allergan Plc. in an agreement that is worth $160 billion or $363.63 per share. The record-breaking deal will reduce Pfizer's U.S. tax bill once it moves to Allergan's headquarters in Dublin, Ireland.

Pfizer becomes the latest company to carry out a corporate inversion deal, a practice that has been denounced by President Barack Obama, who called it unpatriotic. By moving overseas, the company will be paying about 17 to 18 percent in corporate taxes in 2017, Pfizer's Chief Financial Officer Frank D'Amelio calculated. Allergan would have had to pay 15 percent and Pfizer would have had to pay 25 percent in corporate taxes this year.

"Given the price tag we're seeing them pay for Allergan, I think it's tough to justify without the tax benefits. There's a bit of strategic overlap; there would be some accretion and it adds to Pfizer's growth, but it really is that tax benefit at the end of the day that Pfizer's been very vocally pushing for," Vamil Divan, an analyst at Credit Suisse, explained to CNBC's "Squawk Box."

The deal will create the world's largest drug making company, Pfizer Plc, with yearly revenue at around $64 billion.

In order for Pfizer to reincorporate outside of the U.S. and to avoid potential issues, the deal was created with smaller company Allergan buying Pfizer. Allergan shareholders will get 11.3 shares of Pfizer Plc per share and Pfizer shareholders will receive one share per share they own. Pfizer shareholders will own 56 percent of the new company.

The merger will increase access for Allergan products. The most popular product that the company makes is Botox. It will also increase earnings per share by an estimated 10 percent, not including special product, in 2019.

The company will still be run by Pfizer's Chief Executive Officer Ian Read. Allergen's CEO, Brent Saunders, will be the president and chief operating officer.

"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 pursuit of business development opportunities on a more competitive footing within our industry," Read said.

This deal comes after Pfizer failed at buying the Britain-based drug maker, AstraZeneca Plc. Pfizer had bid $118 billion but was opposed by the company's management as well as several British politicians.

The merger will be completed in the second half of next year.