Pfizer seals $160bn Allergan deal to create drugs giant

Pfizer and Allergan will join in a $160 billion deal to create the world’s largest drug maker.

United States drugs giant Pfizer has sealed a deal to buy Botox-maker Allergan for $160bn (£106bn) in what is the biggest pharmaceuticals deal in history.

An inversion is a tax saving manoeuvre in which a U.S. company reincorporates in a country with a lower corporate tax rate. The US corporate tax rate of 35 percent is among the world’s highest, and compares with Ireland’s rate of 12.5 percent.

Soon after Sanders sent out his statement condemning the inversion, Hillary Clinton said that the merger would “leave US taxpayers holding the bag”, and she called on Congress to ensure those big corporations “pay their fair share”. Shareholders of both companies need to approve of the merger too.

John Colley, a professor at Warwick Business School in Britain, predicted even bigger deals as “industry players become concerned about being left behind in the race for scale”.

Pfizer says the merger will significantly enhance its innovative businesses through a growing revenue stream from Allergan’s “durable and innovative flagship brands”, as well as enhance its R&D capabilities in both new molecular entities and product-line extensions. The companies expect that shares of the combined company will be listed on the New York Stock Exchange. In October 2014, Chicago-based AbbVie and Dublin-based Shire Pharmaceuticals called off a $54 billion inversion deal after the Treasury issued new rules.

Read would be chief executive of the combined company, while Brent Saunders, the Allergan chief executive, would serve as president and chief operating officer.

In July, Anthem reached a $54 billion deal to buy rival Cigna to create the largest US health insurance company.

Read said lowering Pfizer’s taxes wasn’t the only motivation.

The deal is yet to be approved by U.S. regulators, but Mr Read expressed confidence the deal would pass muster.

According to the merger agreement, Allergan parent company will be the parent company of the combined group.

The combined company will have its global operational headquarters in NY and its principal executive offices in Ireland.

The companies say the merger, due for completion in the second half of next year, will deliver more than two billion dollars in cost savings over the first three years. USA efforts to curb the practice have so far proven ineffectual.

This deal gives a value of $ 363.63 to each share of Allergan which is around 16% higher than their current price of $ 312.46 as of closing on Friday.