Huge Merger in a Year of Big Mergers in Healthcare

Making money

Allergan and Pfizer are expected to announce a merger today, the joining is valued at more than $150 billion and will create the world’s biggest drugmaker.

The makers of Viagra (Pfizer) and Botox (Allergan) are combining operations and will now be based out of Allergan’s headquarters in tax friendly Ireland, as Allergen is the one buying Pfizer even though its the smaller company.  This strategy is expected to save Pfizer billions in US taxes.  Pfizer was previously based in New York. According to Bloomberg, the deal is unprecedented on many levels. It’s the largest acquisition so far this year. It’s the largest ever in the pharmaceutical world, eclipsing Pfizer’s purchase of Warner-Lambert Co. in 2000 for $116 billion. And if the new company is able to establish itself abroad for a lower tax rate, a controversial process called an inversion, it will be the largest such move in history.

Year of Big Mergers in Healthcare Industry

Thanks to pressure form Obamacare and a week global economy, its been a record setting year for mergers and acquisitions. According to HealthCare Finance there have nearly one hundred already in 2016. Here are a few more recent ones of note:

  • In one of many hospitals and care center deals, last week Care New England and Southcoast Health signed a letter of intent to merge and create an eight-hospital affiliation and a new parent organization overseeing both health systems.
  • GE Healthcare has acquired advisory firm The Camden Group, adding its more than 2,000 health organization customers to its consulting business in the United States and solidifying its position in the health sector.
  • Two health plans in Michigan, HealthPlus of Michigan and Health Alliance Plan, said recently they plan to merge, forming one of the largest plans in the state while bailing out the struggling HealthPlus business.
  • Healthcare services company MedAssets will be sold to Pamplona Capital Management in a $2.7 billion deal that will boost its revenue cycle business and result in its group purchasing organization being sold off, the companies announced.
  • In October Walgreens announced it will buy Rite Aid in a deal worth $17.2 billion.
  • Aetna and Humana shareholders recently ratified Aetna’s $37 billion acquisition of Humana.
  • Universal Health Services, one of the largest for-profit hospital operators in the United States, has purchased the Foundations Recovery Network for $350 million, adding a stable of addiction facilities to its portfolio. According to the company, the deal brings 322 beds through four residential treatment centers and eight outpatient centers.
  • Acadia Healthcare Co. said it wrapped up three acquisitions of behavioral health centers in the United Kingdom on Sept. 4. With the deal closing, Acadia adds six inpatient facilities in the overseas country, run by Partnerships in Care, the company’s U.K. subsidiary. According to Acadia, its U.K. business now manages 52 facilities, which generate a combined $35 million in annual revenue
  • DaVita Kidney Care said on August 31 it has formed a joint venture with a hospital chain in China specializing in kidney care as the global provider of dialysis services continues to expand its reach. According to DaVita, the partnership is with the Shunjing Renal Hospital located in China’s Shandong province. It is the only private hospital in the province approved to offer dialysis. They aren’t the only one, several firms announced new partnerships with China this year.
  • Physician staffing company TeamHealth will acquire IPC Healthcare, an acute hospitalist and post-acute care provider, for $1.6 billion in cash, the companies announced this August. The companies said the deal will make them better able to improve their post-acute care services and create better value of care for their partner hospitals and clinicians, which in the age of value-based reimbursements will improve bottom lines for all involved.

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