“But on a note of caution, Paul Heugh, chief executive of Skarbek Associates, said that while “$2bn of savings in the first three years, together with an attractive tax inversion sounds like a compelling reason for a merger, there is no getting away from the fact that less than half of deals fail to attain the objectives stated in the merger announcement”.
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The deal comes some 18 months after the failure of Read’s initial attempt at an inversion, a $118 billion bid to acquire Britain-based AstraZeneca Plc that ran into stiff opposition from that company’s management and United Kingdom politicians.
Pfizer paid $68 billion for Madison-based Wyeth in 2009, and Merck & Co. merged with Schering-Plough the same year in a transaction valued at $41.1 billion.
Read, who has long sought to slash Pfizer’s USA tax rate, said the deal would help put the company on “on a more competitive footing” with overseas-based rivals.
If these figures are to be believed, then Ireland’s coffers are about to be significantly boosted, considering last year’s entire corporate tax revenues were €4.6bn.
Read on to find out more about this deal. The U.S. president, Barack Obama, has called inversions “unpatriotic”, while Clinton and Sanders have both previously criticised the proposed Pfizer deal, as well as high drug prices.
Speaking in Brussels yesterday, Finance Minister Michael Noonan said Ireland was “not pushing for inversions”, the name given to the financial engineering engaged in by multinationals to reduce their tax bill. And he said lowering Pfizer’s taxes wasn’t the only motivation.
Democratic front-runner Hillary Clinton has taken some knocks from Republicans and the pro-Bernie Sanders left for alleged connections to Pfizer, but said Monday she opposes the merger.
“I don’t see much immediate impact, a big time job loss”, he said.
After the sale, the combined company will be renamed Pfizer PLC and continue to trade on the NY Stock Exchange. The company’s shareholders would receive 11.3 shares of the newly combined firm for each of their existing shares.
Up to Friday’s close, Allergan shares had risen 8.8 percent since reports of the deal talks emerged on October 28.
The combined company is expected to generate annual operating cash flow in excess of $25 billion, beginning in 2018 with broadened innovative pipeline of more than 100 combined mid-to-late stage programmes in development.
When this transaction is completed towards the end of 2016, these companies have both said that the Irish legal domicile of Allergan will be retained.
Bipartisan efforts to overhaul the corporate tax code have stalled and legislation is unlikely until after next year’s presidential election.
“Pfizer built their business on the back of our research and development tax incentives, our federally supported medical research, our skilled workforce, and our infrastructure”, said Democratic Representative Rosa DeLauro in a statement.
The Pfizer-Allergan deal is likely to fuel critics’ concerns that consumers would pay even more for drugs as competition declines among manufacturers, insurers and retailers.
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Health care companies of all stripes are joining forces to reposition themselves as various market and government forces, notably the Affordable Care Act, have complicated the growth outlook for the companies’ revenues and profits.
