In the latest shake-up in the healthcare industry, pharmaceutical firms Pfizer Inc. and Botox-maker Allergan announced their $160-billion merger, creating the world’s largest drugmaker.
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Pfizer has done three sizeable deals since 2000 to boost revenue, and the Allergan offer comes as generic competition to blockbuster drugs like Lipitor is expected to cut Pfizer’s sales by $28 billion from 2010 through next year.
LONDON-WASHINGTON – US-based Pfizer announced on Monday a $160bn merger with Ireland-based Allergan to create the world’s biggest pharmaceutical group and shift to a lower-tax jurisdiction, despite US government policies discouraging such deals. “While we understand the rationale for an “inversion” deal for Pfizer (and its eventual splitting into two companies), we think the rationale for Allergan is less compelling”.
“This merger would be a disaster for Americans who already pay the highest prices in the world for prescription drugs”, Sanders posted on Twitter after the news of Pfizer’s move emerged. Last year, Pfizer’s effective tax rate was 25.5%, according to a regulatory filing.
“The combination of Allergan and Pfizer is a strategic, value-enhancing transaction that brings two bio-pharma powerhouses to change lives for the better”, Allergan chief executive Brent Saunders said in the joint statement. Following the sale, the combined company will be named Pfizer PLC and continue to trade on the New York Stock Exchange.
In a joint statement released by both Pfizer (NYSE:PFE) and Allergan, the companies declared that the deal entails a premium of 30% which is based on the cost of the unaffected shares of both companies. Pfizer stock owners will hold an approximately 56 percent stake in the combined company, while Allergan shareholders will own the remaining 44 percent.
Critically, the terms of the deal propose that the merged company will maintain Allergan’s Irish domicile.
Pfizer and Allergan will be combined under Allergan PLC, which will be renamed Pfizer PLC.
“Clinton called upon regulators to see if they can take stronger actions to prevent corporations from moving earnings overseas, and she urged Congress to act immediately to make sure the biggest corporations pay their fair share”.
U.S. President Obama has said that the tax inversions are unpatriotic and had attempted to crack down on them through the Treasury Department.
In the past, Pfizer’s mergers have taken a heavy toll on CT, sometimes unfolding over years.
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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.
