Recently, Pfizer and Allergan announced plans to merge.
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Pfizer and Allergan will join in a $160 billion deal to create the world’s largest drug maker.
Pfizer is known for drugs such as Viagra and Lipitor, while Allergan’s best-known product is Botox.
The deal could allow New York-based Pfizer to move its headquarters to Dublin, where Allergan is based, and avoid high US corporate tax rates.
Pfizer’s acquisition also represents the single largest inversion ever as U.S.-based Pfizer may be able to officially move its headquarters to Allergan’s Irish domicile.
Meanwhile, US politicians condemned Pfizer Inc’s deal with Allergan Plc as a tax dodge on Monday, bringing another round of hand-wringing in Washington over the corporate tax code, though legislative action before 2017 is unlikely.
According to the agreements of the transaction, the Allergan shareholders will receive 11.3 shares of the combined company for each of their Allergan shares, and Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares.
President Barack Obama and Congress have criticised inversions because they mean a loss of corporate tax revenue for the United States government.
The deal terms call for the companies to combine under Allergan plc, which will be renamed Pfizer plc. 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.
Mr Read and Brent Saunders, the Allergan boss who will become chief operating officer of the combined group, said the question of tax and access to cash was just one of the factors driving the acquisition.
Pfizer’s Chief Executive Ian Read, 62, will be CEO of the combined company, with Allergan’s Saunders, 45, serving in a very senior role focused on operations and the integration, the people added.
Senator Ron Wyden, D-Ore., described the deal as an example of why the country needs comprehensive tax reform, noting the Treasury Department’s efforts to halt the “inversion virus” can only go so far. “While we understand the rationale for an “inversion” deal for Pfizer (and its eventual splitting into two companies), we think the rationale for Allergan is less compelling”.
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In July, Anthem reached a $54 billion deal to buy rival Cigna to create the largest USA health insurance company. In New Jersey, the sector’s reputation as the “Medicine Chest to the World” has lost its luster in recent years through mergers, competition from generic drugs and a stagnant pipeline of blockbuster drugs.
