Allergan’s actually been domiciled outside of the United States – for the sake of avoiding taxes – for some time now but the issue was thrust back into the spotlight after the $160 billion Pfizer deal was announced last month. The merger would also give Pfizer access to tens of billions of dollars that are outside the borders of the United States, allowing for more buybacks, dividend payments, and business development. The corporate tax in the US of 35% is among the highest in the world while in Ireland it is just 12.5%. Anderson expects a 7 percent reduction in Pfizer’s tax rate. With this, Pfizer emerged as the largest pharmaceutical corporation in the world once again with a valuation of $320 billion surpassing industry leader Johnson & Johnson valued at $284 billion.
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Allergan, best known for its anti-wrinkle treatment Botox, also makes Alzheimer’s drug Namenda and dry-eye medication Restasis. After the transaction, Pfizer shareholders are expected to own about 56 percent of the combined company, with the remaining 44 percent owned by Allergan shareholders.
With presidential nominee campaigns in motion, both GOP and Democratic front-runners took their jabs at Pfizer, though for different reasons.
US President Barack Obama has called such inversion deals “unpatriotic” and has tried to crack down on the practice, and democratic presidential candidate Hillary Clinton has pledged to establish measures to prevent such deals.
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. She asked Washington to ensure that large companies are required to pay their share of taxes as well. As part of the process, Pharmtech reports that Pfizer will move its principal executive offices to Ireland in order to lower its tax bill. The deal will see Allergan as the parent company, although a subsidiary of Allergan will merge with Pfizer and the parent company will then be renamed Pfizer plc.
“Pfizer is a big employer here and presumably we would want it to continue to be, even if it does go through an inversion”.
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It will also reignite debate in the pharmaceutical industry over the role of research and development, with Allergan chief executive Brent Saunders, a prolific deal maker and a sceptic of in-house drug discovery, joining the combined company. Many other companies have conducted similar deals in the past, termed as inversion.
