Under terms of the deal, the companies will exchange 11.3 Pfizer shares for every Allergan share.
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The $155 billion agreement to combine Pfizer Inc. with Allergan PLC would create a drug behemoth so big that Pfizer is already thinking of breaking it up.
So news that Pfizer could move its New York-based headquarters to Ireland following a deal to buy Allergan causes a bit of uncertainty for Mayor Strazdas. As of now, the White House has not commented on the deal, but President Obama has called tax inversion deals unpatriotic and has tried to crack down on the practice.
Soon after Sanders sent out his statement condemning the inversion, Hillary Clinton said that the merger would “leave USA taxpayers holding the bag”, and she called on Congress to ensure those big corporations “pay their fair share”.
Pfizer shareholders would have control of 56% of the combined company.
Pfizer plans to move its tax address from the United States to Ireland, if only on paper, by buying and merging into Allergan, a smaller, Dublin-based competitor.
Executives wouldn’t discuss any layoffs, but they are considered inevitable, given that the companies predict annual savings of about $2 billion within three years of closing the deal.
“We cannot continue to allow Pfizer and other corporations to pretend that they are American while reaping the benefits this country has to offer, yet claiming to be another nationality when the tax bill comes”, she said.
Bloomberg, which has a good explainer on inversions here, has described it as U.S. companies effectively “renouncing their citizenship”, although they typically do retain operational headquarters in America.
The deal, which was announced Monday, brings together a diverse stable of drugs, from Pfizer’s cancer medicines and vaccines, to Allergan’s skin-care treatments and eye drugs.
Brent Saunders, Allergan chief executive, added, “This bold action is the next chapter in the successful transformation of Allergan, allowing us to operate with greater resources at a much bigger scale”. Still, though, the changes “do not seem to materially impact” the Pfizer-Allergan hook-up, Bernstein analyst Tim Anderson wrote in a recent note to clients.
The board of the new company is expected to have 15 directors – all of Pfizer’s eleven current directors and four current directors of Allergan.
Shares of Pfizer were down 3.3 percent, while Allergan fell 2.4 percent.
It could end up being the world’s second-largest merger following British telecom company Vodafone’s purchase of Germany’s Mannesmann for $172 billion, including debt, in 1999.
It is an example of so-called “tax inversion”, a controversial type of financial engineering than has become increasingly common in big pharma of late.
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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.
