Pfizer to Acquire Kythera Parent Allergan

Shares of Pfizer Ltd ended almost 3 per cent higher today after its parent company Pfizer Inc announced to acquire Dublin-based drug maker Allergan in a Dollars 160 billion deal, the biggest buyout in the healthcare sector.

But the move will also see the drugs giant relocate its headquarters from the United States to Ireland, and thus benefit substantially from a lower corporate tax rate – an example of a so-called inversion deal which are becoming increasingly unpopular with politicians across the Pond.

Ian Read, the CEO of Pfizer (NYSE:PFE), said in a statement that this merger with Allergan, Pfizer (NYSE:PFE) will have acquired more financial flexibility which would ensure it locating and developing new drugs for patients for better recovery, and at the same time, it would be able to provide huge returns to shareholders.

Last year, Pfizer unsuccessfully tried to buy British drugmaker AstraZeneca Plc in a roughly US$118 billion deal that would have involved an inversion.

The White House declined to comment on Pfizer’s deal, but a spokesman told reporters in a briefing that Congress should take action to prevent more such transactions.

Clinton has also said she would pursue tax reform, and said she will unveil details about ways to manage corporate tax inversions soon.

Allergan chief executive Brent Saunders said the deal brought together “two biopharma powerhouses”. While Noonan said Allergan and Pfizer were plainly merging for “tax advantages’, the government does not have a problem with the deal as both companies have “substantial” operations in Ireland, he said”. Pfizer plc will have its global operational headquarters in NY and its principal executive offices in Ireland. That move, which could sell off Pfizer’s lower-margin unit of products facing generic competition, was expected by late 2016.

Pharmaceutical companies Pfizer and Allergan have announced a record-breaking $155bn (£100bn) deal that looks sure to prompt an global row over corporate tax avoidance. Pfizer and Allergan will be incorporated under Allergan PLC, which will be renamed Pfizer PLC.

To be sure, companies often target advertising when it comes to cost savings, so the combination may not spark more ad spending.

Mark Marmur, a spokesman for Actavis, which owns Allergan, said: “We don’t have any statement on potential impact to New Jersey as it is very early”.

Pfizer stock owners will hold an approximately 56 percent stake in the combined company, while Allergan shareholders will own 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. Pfizer’s effective tax rate past year was 25.5 percent, a regulatory filing shows.

The merged company’s board is expected to have 15 directors, consisting of all of Pfizer’s 11 current directors and four current directors of Allergan. The deal is subject to approval by antitrust regulators throughout the world.