Read, who has long sought to slash Pfizer’s USA tax rate, said the deal would help put the company on “on a more competitive footing” with overseas-based rivals.
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The transaction, which requires shareholder and regulatory approval, is expected to close in the second half of 2016, but could face stiff opposition from lawmakers in the United States. That compares with the 26 deals valued at $5.54 billion involving USA drug and medical companies moving to the U.K.in 2014, and the seven deals valued at $46.9 billion that brought them to Ireland.
Together, barring any divestitures, the companies would form the biggest pharmaceutical company by annual sales, with about US$60 billion.
The new company will take New York-based Pfizer’s name but will be headquartered in Dublin, Ireland, the current home of Allergan.
More than 50 similar deals have been done over three decades by well-known companies such as Medtronic Plc (Xetra: 2M6.DE – news), Fruit of the Loom and Ingersoll-Rand Plc.
Pfizer and Allergan produce a few of the world’s best known drugs.
The US Democratic presidential candidates were quick to bash the massive pharmaceutical deal made today between Pfizer Inc and Allergan, proving that debates about drugs aren’t just limited to illegal ones during this campaign season.
For 166-year-old Pfizer, Allergan would be the fourth huge acquisition over the last 15 years – one for each of the last 4 CEOs – following purchases of Warner-Lambert, Pharmacia and Wyeth. But the latest rules amounted to tweaks of existing law and will not impede the Pfizer-Allergan transaction, tax experts said. In an interview with The Wall Street Journal’s Viewpoints series last month he said high taxes are holding Pfizer back in the race to develop new drugs with research and development.
Pfizer’s talks with Allergan come more than a year after the US firm abandoned a bid to acquire AstraZeneca (AZN.L) and move its tax headquarters to Britain.
The deal terms are rumoured to be 11.3 Pfizer shares for each Allergan share – worth about £240 each, along with a small cash consideration.
The deal is to be structured as a “reverse merger” with Allergan taking over Pfizer, which should prevent the Obama administration from scuppering it. The transaction represents more than 30 per cent premium based on Pfizer’s and Allergan’s unaffected share prices as of October 28, 2015, it further said.
Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares.
“Through this combination, Pfizer will have greater financial flexibility”, said Read. As an Irish-domiciled company, it will have less costly access to those funds.
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With a market value in excess of £200bn, the combined company, dubbed “Pfizergan” would surpass Johnson & Johnson as the world’s largest healthcare group.
