(Bloomberg) -- Pfizer Inc. is in advanced talks tobuy Allergan Plc for as much as $380 per share, according to peoplefamiliar with the matter, valuing the Botox maker at as high as$150 billion--if the U.S. government doesn’t get in the way of thedrug industry’s largest-ever deal.

The companies aim to announce an agreement as soon as Monday,the people said, asking not to be identified because thediscussions are private.

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The price being discussed is $370 to $380 per share, two of thepeople said.

However, the U.S. Treasury Department’s letter ontax inversion deals, released onWednesday, could delay the final agreement and change the terms ofany transaction, another person said.

Pfizer shares sank 1.5 percent to $32.80 and Allergan fell 1.4percent to $306.37 at 9:57 a.m. in New York on speculation that thedeal could be hampered by the Treasury’s letter, which said thedepartment is reviewing ways to address overseas acquisitions andplans to issue guidance later this week.

There have been a flurry of pharma and biotech mergers thisyear, already surpassing last year’s record of $220 billion indeals, according to data compiled by Bloomberg.

Buying Allergan, which has its legal domicile in Dublin, couldlet New York-based Pfizer relocate outside the U.S. for taxpurposes, a transaction known as an inversion.

“We struggle to see what the Treasury can do to specificallycurb” a combination of the two companies, Citigroup Inc. analystssaid in a note Wednesday. Still, the “political noise” that wouldsurround Pfizer’s relocation “constitutes the most material hurdleto consummation of a transaction of this nature.”

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Chances of the deal going through hinge more on “what priceAllergan’s willing to take and also, we don’t know if there’spressure from the White House in the background," Umer Raffat, ananalyst at Evercore ISI, said by phone.

The Treasury Department doesn’t have power to block aninversion, but it could reduce the economic benefits of such adeal, he said.

A deal at $380 per share would be the largest acquisition thisyear in any industry and would surpass Pfizer’s $116 billionpurchase of Warner-Lambert Co. in 2000 as the biggest- evertransaction between drug companies, the Bloomberg-compiled datashow.

Representatives for Allergan and Pfizer declined to comment.

Overseas deals

The transaction would strengthen Pfizer’s brand-name drugbusiness and could pave the way for an eventual split in two.Allergan’s market value of $122 billion could also allow the U.S.drugmaker to transfer its headquarters to Ireland.

The move requires a large foreign target in order to clear U.S.tax rules, and was one of the reasons Pfizer sought to acquireAstraZeneca Plc last year, before eventually withdrawing itsproposal.

The Treasury Department is reviewing ways to address theseoverseas acquisitions and plans to issue guidance later this weekto reduce the economic benefits of tax inversions, Secretary JackLew said in the letter Wednesday to Senator Ron Wyden, the OregonDemocrat who’s the ranking member on the Finance Committee.

The Treasury Department has attempted to deal with inversionsbefore, issuing a notice in September 2014 to make it harder forU.S. companies to borrow against their foreign cash to financeinversions.

The Treasury proposal last year impacted a handful of pendingdeals, but not all of them.

By September 2014, Burger King Worldwide Inc., Medtronic Inc.and Mylan Inc. were all in the process of inverting -- and alleventually completed those deals. Others fell apart -- AbbVie Inc.dropped a $52 billion purchase of Shire Plc, in what would havebeen the largest tax inversion to date, blaming the proposedTreasury rules.

Allergan CEO

Details of the Treasury Department’s latest plans for inversionsaren’t known. The department may be considering reducing thethreshold of how much interest on inter-company debt isconsidered tax-deductible, said Evercore ISI’s Raffat.

The Treasury’s guidance could affect deals even if the proposedchanges are beyond its authority, Evercore ISI analyst Terry Hainessaid in a note to clients on Wednesday. The department “neverhas to go final with the rules to get what it wants, which isstopping more inversions,” Haines wrote.

The companies were moving toward a plan to make Allergan’s BrentSaunders chief executive officer of the combined firm, people withknowledge of the matter said on Nov. 11.

The purchase would also keep Pfizer on track if it decides to goforward with a split into two companies, an option that ChiefExecutive Officer Ian Read has raised as a possibility. Onebusiness would focus on older, soon-to-be-generic drugs, while theother would develop and market new brand-name products.

Brand-name drugs

Allergan’s portfolio, which includes top-selling brands like theanti-wrinkle injection Botox and the Alzheimer’s drug Namenda,would help beef up Pfizer’s brand-name drug business beforesplitting it off.

Pfizer earlier this year bought Hospira Inc. in a transactionvalued at about $17 billion. The acquisition of Hospira, whichmakes generic injectable drugs and devices to deliver them, wasintended to bolster Pfizer’s established drugs business, whichincludes off-patent medicine with slow growth and strong cashflow.

Allergan is itself the result of an acquisition earlier thisyear. It was purchased by Actavis Plc, which took on the Allerganname. Pfizer looked at Actavis as a potential acquisition, peoplefamiliar with the matter said last year.

Allergan has more than 70 projects in mid- to late-stagedevelopment, according to a Nov. 4 conference call. It hasacquired a number of companies as it expands its branded-drugsbusiness after agreeing to sell its generics arm to Israeli rivalTeva Pharmaceutical Industries Ltd. for about $40.5 billion.

The company has topped earnings estimates for the past eightquarters, positioning it as an attractive addition to Pfizer’sportfolio.

Pfizer has been looking for its next big hit after patentsexpired for its cholesterol drug Lipitor and arthritis drugCelebrex. The company, which reported $49.6 billion in revenue lastyear, in September raised its profit forecast for 2015.

--With assistance from Melissa Mittelman, Jeffrey McCracken,Caroline Chen and Matthew Campbell.

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