Two large drugmakers, U.S.-based Pfizer and Ireland’s Allergan, joined forces Monday, creating the world’s biggest drug manufacturer.
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The deal is a victory for Mr Read, who in 2014 sought an inversion transaction with AstraZeneca, but was repeatedly rebuffed by the British company, which said Pfizer had undervalued its business.
The deal, the largest ever in the health care sector, is expected to close in second half of next year.
This move allows the company to avoid the higher corporate tax rates in the U.S. President Obama and several congressional leaders have spoken out against inversions, and it has even become a hot topic among presidential candidates. USA efforts to curb the practice have so far proven ineffectual.
Ian Read, the CEO of Pfizer (NYSE:PFE), said in a statement that this merger with Allergan, Pfizer (NYSE:PFE) will have acquired more financial flexibility which would ensure it locating and developing new drugs for patients for better recovery, and at the same time, it would be able to provide huge returns to shareholders.
A month ago, Allergan, which is based in Ireland and has a sizable operation in Irvine, Calif., said it was approached by New York-based Pfizer but cautioned that there was “no certainty” that the “friendly” discussions would lead to a merger.
Out of the 12 analysts polled by TipRanks, 9 rate Pfizer stock a Buy, 2 rate the stock a Hold and 1 recommends a Sell. Researchers have estimated that if left unchecked, inversions will cost the US Treasury almost $20 billion (€18.8 billion) in the next 10 years.
It was not immediately clear how many jobs would be lost as a result of the deal.
British journalist and author Simon Jenkins has said that Pfizer’s decision to move its headquarters to Ireland, as part of its $160bn merger deal with Allergan, is a text book example of the kind of corporate tax avoidance which should be made “illegal”. White House Press Secretary Josh Earnest said Monday that the Treasury Department has tried to crack down on inversions, and managed to make them somewhat more hard, but said Congress needs to act to make more sweeping changes.
The board will have 15 members, with 11 from Pfizer and four from Allergan.
Senator Bernie Sanders, another Democratic hopeful, said the deal would be a disaster for consumers and allow another major USA company to hide its profits overseas.
The completion of the Pfizer takeover of Allergan for €151bn will benefit the Irish Government greatly, with the deal to see Pfizer bring €620m to the Irish economy in corporate tax.
Pfizer investors will get one share of the new company for each of their shares or a portion of payment in cash from $6bn to $12bn. “This proposed merger, and so-called inversions by other companies, will leave USA taxpayers holding the bag”.
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Shares of Pfizer were down 3.3 percent, while Allergan fell 2.4 percent.
