Under the terms of the agreement, Allergan stockholders would receive 11.3 shares of the new company in exchange for their shares, which were valued at $363.63 each.
Advertisement
A month ago, Allergan, which is based in Ireland and has a sizable operation in Irvine, Calif., said it was approached by New York-based Pfizer but cautioned that there was “no certainty” that the “friendly” discussions would lead to a merger. “At the time we close the transaction, we will have over 40,000 employees across 25 states”.
Pfizer is known for drugs such as Viagra and Lipitor, while Allergan’s best-known product is Botox.
Pfizer (NYSE:PFE) executives who back the idea of inversions said that there is a need to move overseas in order to sustain a strong competition against global rivals because they are being restricted by the U.S. tax code.
The deal is structured as Allergan buying Pfizer, but Pfizer would keep control. Pfizer shareholders are expected to hold 56 percent of the merged company with Allergan shareholders the remaining 44 percent.
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.
The biggest deal in the history of pharmaceutical is here and Pfizer Inc. will become Pfizer plc. Last week pharmaceutical powerhouse Pfizer announced a 0 billion merger with Allergan, reported Healthcare Finance News. “That will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry”.
American politicians from both sides of the political divide rounded on Tuesday on Pfizer’s $155 billion takeover of Ireland’s Allergan to create the world’s largest drugs company. President Barack Obama has called inversions unpatriotic and is pushing to crack down on deals, with limited success.
In afternoon trade, shares of Pfizer had dropped 2.5 per cent to $43.65 and Allergan had fallen 2.8 per cent to $422.34. This is going to help them cut the tax bill from the U.S. by shifting their headquarters to Ireland.
Still, Read told CNBC’s “Squawk on the Street” he’ll try to complete the deal regardless of the tax benefits.
The deal is the latest in a series of mergers and acquisitions in the sector, as pharmaceuticals companies struggle to cope with patents on a number of major drugs expiring.
Advertisement
The maneuver is a variation on the conventional inversion, in which a USA firm buys a smaller foreign competitor in a lower-tax nation and shifts the merged company’s headquarters there.
