The combined company, which will be called Pfizer plc, will bring together a huge USA pharmaceutical company best known for iconic drugs like the cholesterol-fighting Lipitor and erectile dysfunction medication Viagra with Allergan, which is best known for making wrinkle-smoothing Botox.
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In what would be the biggest inversion ever, New York-based Pfizer could save hundreds of millions in US taxes annually because it would move its tax headquarters to Ireland, where Allergan is based. The corporate tax in the USA of 35% is among the highest in the world while in Ireland it is just 12.5%.
Asian stocks were mixed Tuesday morning after US indexes slipped Monday, dragged down in part by questions over the Pfizer-Allergan merger.
The companies say the merger, due for completion in the second half of next year, will deliver more than two billion dollars in cost savings over the first three years.
A new merger by the pharmaceutical titan Pfizer and its powerful rival, Allergan, has set a record.
The combined business, which will be named Pfizer, will be legally domiciled in Ireland, but will have its global operational headquarters in NY.
Pfizer (NYSE:PFE), which was founded in 1849, stands to save about $21 billion in forthcoming tax bills by flying to Dublin with the merger, joining several brands such as Burger King and Liberty Global that have moved overseas through inversions.
Pfizer and Allergan will be combined under Allergan PLC, which will be renamed Pfizer PLC.
For the deal to go forward, the companies will have to receive approval from antitrust regulators around the world.
“It allows us to continue to sustain an investment of approximately $9 billion mainly spent in the United States”, Pfizer chief executive Ian Read said in an interview with Allergan CEO Brent Saunders and CNBC’s Meg Tirrell, following the Monday announcement.
USA drugs giant Pfizer has sealed a deal to buy Botox-maker Allergan for $160bn (£106bn) in what is the biggest pharmaceuticals deal in history. Allergan, which was itself created by a merger past year, sold a drugs unit last summer, and employs about 1,000 people here. Pfizer has been accused of using legal loopholes to avoid taxes.
Mr Read, who has long sought to slash Pfizer’s U.S. tax rate, said the deal would help put the company “on a more competitive footing”. Current Allergan shareholders will own 44 percent of the combined company, while Pfizer shareholders will own 56 percent.
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Despite attempts by Congress and the Treasury Department to thwart the practice, about 50 USA companies have inverted in the past decade, and more are considering it, according to the nonpartisan Congressional Research Service.
