The merged firm will be the world’s biggest drug maker by sales. Boards of the companies were expected approve the agreement on Sunday and it will be announced on Monday.
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It is not a new company, but a deal between Pfizer Inc. and Allergan PLC worth $150 million.
4 Pfizer (NYSE:PFE) will pay 11.3 shares per Allergan (NYSE:AGN) share in a $160 bil takeover, the 2nd largest M&A ever. If the deal finalizes then it would be biggest ever merger in the health care.
“The deal is also the biggest [tax] inversion deal”. This means the profits of the new company would be subject to corporation tax of 12.5%, much lower than the 35% Pfizer is now subject to in the US. But instead of being based in the U.S., the heart of medical innovation, the new company will headquarter in Ireland. And the companies have structured the deal-with the smaller Allergan technically buying Pfizer-in order to shield it from an inversion crackdown.
Together, both companies generate over $60 billion in annual revenue.
Pfizer, the maker of Viagra and Lipitor, has been dealing with tough competition from generics and pressure from investors to stimulate growth.
The deal is likely to face criticism from the U.S. politicians, and the U.S. Treasury Department may derail this inversion deal, which will see NY based Pfizer moving its headquarters to Ireland, where Allergen is registered.
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Hillary Clinton, the front-runner for the Democratic presidential nomination, blasted Pfizer for using legal loopholes to avoid paying its “fair share” of U.S. income taxes in a deal she said “will leave United States of America taxpayers holding the bag”. This act has been done by many other businesses as well.
