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Allergan Could Buy These Drug Companies if the Pfizer Merger Is Scuttled


Allergan CEO Brent Saunders

Allergan (AGN - Get Report) CEO Brent Saunders, the drug industry's biggest and best dealmaker, might be back in the game.

The proposed $150 billion merger of Allergan and Pfizer (PFE - Get Report) could be scuttled by new U.S. Treasury rules unveiled Monday night aimed at preventing tax-avoiding inversion deals. The companies will certainly fight to close their deal but Allergan shares fell 22% soon after the Treasury news broke Monday night, indicating investors aren't so sure.

If Allergan-Pfizer is off, Saunders could start shopping again for biotech and smaller pharma companies to fuel Allergan's growth, just like he did before the Pfizer deal. He'd have plenty of cash to fund new acquisitions, assuming the $40 billion sale of Allergan's generics business to Teva closes later this year. On top of that cash pile, Allergan could receive a breakup fee from Pfizer of $400 million, minimum. The breakup fee could rise to as much as $3.5 billion, depending on how the merger is terminated.

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