Pfizer to buy Allergan in $160 billion deal

They include prior big deals involving Saunders, such as the $70.5 billion acquisition of Allergan by Actavis, which then took the Allergan name, and an agreement to sell that company’s huge portfolio of generic drugs to Teva Pharmaceutical Industries for $40.5 billion.

Talks between the companies have been going on for a few weeks and over the weekend, it surfaced that a $150bn deal was expected to be signed this week. “This proposed merger, and so-called inversions by other companies, will leave U.S. taxpayers holding the bag”. By establishing the new company’s headquarters in Dublin, the new company’s tax rate will be about 17% to 18%.

Under the terms of Monday’s deal, Allergan shareholders will hold 44 percent of the combined company at completion, while Pfizer will have 56 percent.

Sen. Charles Schumer, D-N.Y., a member of the Senate Finance Committee, called Pfizer’s move “truly disturbing”, given how the company has benefited from federally funded research and infrastructure.

The deal would involve Pfizer paying with 11.3 of its shares for each Allergan share, the people said.

“The deal simply doesn’t overlap with the new rules”, said Seamus Fernandez, director of equity research at Leerink Partners.

Pfizer is known for providing drugs such as Lyrica, Enbrel and Viagra. These kinds of mergers, called inversions, are costing the U.S. Treasury billions of dollars a year in lost tax revenue.

The companies said the combined entity was expected to maintain Allergan’s Irish legal domicile.

“Allergan’s businesses align with and enhance Pfizer’s businesses, creating best-in-class, sustainable, innovative and established businesses that are poised for growth”, Read said.

The boards of pharma giants Pfizer and Allergan have given the thumbs up to a merger worth $160 billion.

Key Republicans say the only way to adequately address inversions is to overhaul the tax code, making it more attractive for businesses to locate in the U.S. It will also enable Pfizer to capitalise on Allergan’s “open science, open development philosophy”, led by Saunders.

Now, the Ireland-based Allergan is merging with Pfizer.

Pfizer plc will have its global operational headquarters in NY and its principal executive offices in Ireland. A more conservative take is that they speak to the need to improve the US corporate tax climate.

President Obama has said that he would support a 28% corporate tax rate, down 7 percentage points from the current rate as well as a 19% tax on foreign income instead of the full 35% tax rate. If those transactions close, that will make Pfizer’s move the second deal this year to cross the $100 billion mark – a milestone previously hit by only four mergers. He and other politicians said Congress needs to reform tax laws, such as by lowering corporate rates, to prevent more inversions.

It’s the largest ever in the pharmaceutical world, eclipsing Pfizer’s purchase of Warner- Lambert Co.in 2000 for US$116 billion.