Allergan (NYSE:AGN) and Pfizer (NYSE:PFE) confirmed yesterday they were in preliminary talks on a potential merger - a deal that would create the world's largest drug maker.
In separate statements, both Pfizer and Allergan said no agreement has been reached and refrained from discussing any terms that might lead to such a tie-up.
Allergan shares surged 9% before closing up 6% at US$305.03 in New York, while Pfizer was off almost 1% to $35.11.
The Wall Street Journal had reported on the talks on Wednesday.
Allergan, based in Dublin, and U.S.-based Pfizer disclosed the talks on Thursday under Irish takeover rules.
Allergan also said it remains committed to its $40.5bn deal to sell its generics business to Teva Pharmaceutical Industries Ltd.
A tie-up with Allergan could be a way for New York-based Pfizer to lower its corporate tax rate. Allergan, because it is based in Dublin, has a significantly lower tax rate than companies in the U.S.
Apart from tax considerations, the deal would give Pfizer access to Allergan's dominance in the aesthetics field with Botox, and ophthalmology markets