Shares in Allergan PLC rose about 9% in morning trading after the drug maker and potential partner Pfizer Inc. confirmed the two companies were discussing a merger.
Allergan maintains a hub for its eye-care and aesthetics business lines in Irvine; the parent company is based in Dublin, Ireland, for tax purposes and operates out of New Jersey. Pfizer is in New York City.
Allergan’s market cap climbed to about $124 billion this morning after word of the talks broke late Wednesday night. Pfizer shares were flat to a $219 billion market cap.
The link-up would be the largest corporate takeover this year.
News reports said Pfizer approached Allergan to take advantage of tax advantages that come from being based in Ireland and for Allergan’s patent-protected drugs. Pfizer had previously approached Actavis PLC—the precursor company to Allergan which purchased the Irvine drug maker this year for more than $72 billion and took its name.
Pfizer also considered buying AstraZeneca PLC for tax purposes, the reports said; that company is based in London.
Pfizer reported lower third quarter revenue Tuesday; Allergan is set to report quarterly results Nov. 4; its most-recent report showed 10% growth.
Pfizer has been losing patent protection on several top-selling products including Viagra and anti-cholesterol drug Lipitor.
Allergan agreed to sell its generic drug business earlier this year for $40 billion.