Pfizer takes over Allergan in $160bn deal

The combined company, which will be called Pfizer plc, will bring together a huge US pharmaceutical company best known for iconic drugs like the cholesterol-fighting Lipitor and erectile dysfunction medication Viagra with Allergan, which is best known for making wrinkle-smoothing Botox.

The $160-billion stock deal will push the combined companies, to be called Pfizer Plc and based in Ireland, past Switzerland’s Novartis to the top of the drug industry, based on annual sales of about $60 billion.

Allergan’s corporate headquarters is in Dublin, Ireland, and merging with the firm would significantly lower Pfizer’s corporate tax bill.

The merger is subject to approval from regulators in the U.S., European Union and elsewhere. According to reports from CNBC, US president Barack Obama has previously described those using tax inversions as seeking to “game the system”. The Treasury Department has taken steps, including several announced last week, to try to hamper inversions.

The deal is anticipated to be closed during the second half of 2016 and it will produce a combined company that has an operating cash flow of over $25 billion by 2018. The two companies claim to be pursuing the merger in order to pioneer new developments in the health care realm. The merger also comes as many big advertisers rethink their marketing budgets, slashing the number of agencies they work with and putting pressure on agency fees.

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. The companies expect that shares of the combined entity will be listed on the New York Stock Exchange.

The transaction is contingent in part on the completion of Allergan’s pending divestiture of its generics business to Teva Pharmaceuticals, which is expected to be completed in the first quarter.

Asked if the deal was created to avoid taxes, Pfizer CEO Ian Read said only that company executives’ obligation is to shareholders and patients.

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

The merger is by far the third largest deal in history, sending the value of global transactions announced in 2015 to over $4.20 trillion.

“Recent mergers in the pharmaceutical and healthcare industries will reduce competition, reduce choice, and raise prices for American consumers”.

Pfizer anticipates the transaction will deliver more than United States dollars 2 billion in operational synergies over the first three years after closing of the transaction.