The tie-up – the third biggest corporate deal of all time – will create the world’s biggest drug maker by sales, with U.S. firm Pfizer effectively swallowing up Allergan (NYSE: AGN – news) for $160bn (£106bn).
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Pfizer, Inc. (NYSE:PFE) CEO Ian Read called on Washington to back its $160 billion acquisition of Ireland-based pharmaceutical company Allergan, Inc.as lawmakers go against its attempt to cut its tax bill by moving overseas.
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.
Hillary Clinton, the front-runner for the Democratic presidential nomination, blasted Pfizer for using legal loopholes to avoid paying its “fair share” of USA income taxes in a deal she said “will leave US taxpayers holding the bag”.
Pfizer’s chief financial officer, Frank D’Amelio, said he expected a combined tax rate of 17pc to 18pc by 2017, down from 25pc for Pfizer a year ago.
The U.S. Treasury, concerned about losing billions of dollars in tax revenue, has been taking steps to limit the benefits of increasingly popular tax inversion deals, but it admitted last week that it would take legislation from Congress to stop such maneuvers.
Allergan investors will receive 11.3 shares of the new company for each Allergan share for a total, now valued at $505.77 per share, more than a 30 per cent premium prior to news reports of the tie-up talks.
The plan calls for the current directors at Allergan, including Paul Bisaro and Saunders, to join the 11 member board of Pfizer. USA efforts to curb the practice have so far proven ineffectual.
The companies expect the deal will be completed by the second half of 2016, but antitrust regulators around the world will have to approve it.
Drugmaker Pfizer announced Monday that will acquire Allergan, the original maker of the Lap Band since sold, for more than $150 billion, dwarfing the biggest medtech corporate inversion the nation saw in 2014. Its global operating headquarters would be in NY, and its principal executive offices would be in Ireland. It is important to point towards the fact that the company has done three sizeable deals since 2000 to boost revenues.
“The combination of Allergan and Pfizer is a strategic, value-enhancing transaction that brings two bio-pharma powerhouses to change lives for the better”, Allergan chief executive Brent Saunders said in the joint statement.
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Trump has been particularly critical of U.S. companies that shift their operations oversees. Pfizer shareholders would receive one share in the combined company for each share they hold, but they have the option to take up to $12 billion in cash for some or all of their shares instead.
