Two of the country’s biggest employers are to merge after drugs giants Pfizer struck a record-breaking $160bn deal to buy Allergan that will cut its global tax bill by moving its headquarters to Ireland.
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The $155-$160 billion merger between drug makers Pfizer and Allergan is an nearly 30% premium over their consolidated share prices, and will create the world’s largest drugmaker as well as a pharma advertising powerhouse.
The merger is expected to close in the latter half of 2016, and the combined company is projected to have annual sales of about $64 billion.
The merger is subject to approval from regulators in the U.S., European Union and elsewhere.
Clinton claims that the merger of Pfizer and Allergan will “leave USA taxpayers holding the bag” as the massive new firm sets up headquarters in Ireland in order to avoid paying US taxes. Pfizer has its presence in India and Allergan, even less, and is really known for its ophthalmology products.
Their combined medicine chest would put Pfizer staples such as impotence treatment Viagra, cholesterol fighter Lipitor and nerve pain treatment Lyrica alongside Allergan’s Botox wrinkle treatment, Alzheimer’s drug Namenda and dry-eye medication Restasis.
2015: Pfizer buys Allergan for $146.5 billion (pending).
Despite the “reverse” nature of the deal, Ian Read, Pfizer’s Scottish-born boss, will head the combined company with Brent Saunders, his counterpart at Allergan, becoming chief operating officer.
Although the rebranding will be called Pfizer Plc, legally, the company’s combination will be under Allergan Plc.
BTIG analyst Tim Chiang weighed in today with a cautious stance on the “Mega Inversion” deal between Pfizer Inc.
Republican Chair of the Senate finance committee Orrin Hatch expressed, “This (deal) only further underscores the arcane, anti-competitive nature of the U.S. tax code”.
The board will have 15 members, with 11 from Pfizer and four from Allergan.
The deal terms mean 11.3 shares in the combined company for each Allergan share – worth about £240 each.
The deal comes at a shaky time for tax inversions in the U.S. Less than a week ago the Obama administration pointed a renewed attack on corporate tax inversions.
Unsurprisingly, the USA government is none too pleased with the takeover bid and Pfizer’s decision to move its corporate infrastructure to Ireland, presumably due to the US’ corporate tax rate of 35pc being undercut by Ireland’s 12.5pc rate.
The deal could be a precursor to Pfizer’s eventually being split in two.
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It could end up being the world’s second-largest merger, following British telecom company Vodafone’s purchase of Germany’s Mannesmann for $239 billion, including debt, in 1999.
