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Allergan Now Trades Cheaper Than Its Standalone Value

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Allergan, Inc. NYSE:AGN, Pfizer, Inc. NYSE:PFE - Allergan Now Trades Cheaper Than Its Standalone Value

Shibani Malhotra of Nomura thinks Allergan plc Ordinary Shares AGN 17.04% is compelling, despite treasury notice that threatens the company's $160 billion merger with Pfizer Inc. PFE 0.76%.

Allergan shares fell as much as 20 percent amid fears that the U.S. Treasury Department and the IRS have revamped their efforts to limit domestic companies from doing so-called "tax inversion" deals. The stock traded at $231, down 16.7 percent late Tuesday morning.

A joint statement from Pfizer and Allergan said, "We are conducting a review of the U.S. Department of Treasury's actions announced today. Prior to completing the review, we won't speculate on any potential impact."

Related Link: Betting On The Pfizer-Allergan Merger? You Now Have A 35% Arbitrage Opportunity After New Treasury Fears

In a note, Malhotra said, "Most important, we believe that the current stock price does not reflect the stand alone value of Allergan and we view AGN shares as compelling even absent a deal with Pfizer."

However, the analyst said, "While our previous research suggests that "earnings...