$160B deal to combine Pfizer and Allergan raises outcry

Pfizer and Allergan on Monday morning announced they would merge in a massive, $160 billion deal that will create the world’s largest drugmaker, producing treatments as varied as Lipitor and Botox.

And the merger is actually good for the U.S., Read contends-despite the loss in tax dollars and a $2 billion cost-cutting target that means layoffs are on the way.

British journalist and author Simon Jenkins has said that Pfizer’s decision to move its headquarters to Ireland, as part of its $160bn merger deal with Allergan, is a text book example of the kind of corporate tax avoidance which should be made “illegal”. He said he expects a tax rate of about 18 percent after the deal, which compares to Pfizer’s current rate of 25 percent.

That logic didn’t stop the U.S. Treasury Department from last week rolling out new rules to tighten the reins on inversions for the second time in about a year. “Allergan’s businesses align with and enhance Pfizer’s businesses, creating best-in-class, sustainable, innovative, and established businesses that are poised for growth”.

“This merger would be a disaster for Americans who already pay the highest prices in the world for prescription drugs”, Sanders posted on Twitter after the news of Pfizer’s move emerged.

It also reignites debate in the pharmaceutical industry over the role of research and development, with Allergan Chief Executive Brent Saunders, a prolific dealmaker and a skeptic of in-house drug discovery, joining the combined company in a position to influence its strategy.

When this transaction is completed towards the end of 2016, these companies have both said that the Irish legal domicile of Allergan will be retained.

According to The Hill, Clinton’s camp will unveil in the coming weeks “specific steps” to avoid transactions that “take advantage of loopholes” in the USA tax system.

Plans call for four current directors of Allergan, including Saunders and Executive Chairman Paul Bisaro, to join Pfizer’s 11-member board, the companies said in a joint release.

The combination will essentially be Pfizer “but with a lower tax rate”, wrote Bernstein analyst Dr. Tim Anderson.

Speaking to reporters in Brussels yesterday, Mr Noonan, noting that both companies have large operations here, said the mega deal would not put Ireland’s tax regime into a bad light. Following the sale, the combined company will be named Pfizer PLC and continue to trade on the New York Stock Exchange.

Allergan shareholders will get 11.3 shares of the new company for each of their shares.

The deal could be a precursor to Pfizer’s eventually being split in two.

Clinton noted, “This proposed merger, and so-called inversions by other companies, will leave United States taxpayers holding the bag”.