Tax Row Over Pfizer’s Tie-Up With Botox Firm

The deal values Allergan shares at $363.63 each, about 16% more than their closing price of $312.46 on Friday. Such mergers enable USA companies like Pfizer, bound by America’s relatively high taxes, to save billions of dollars by shifting to low-tax nations such as Ireland. The companies expect that shares of the combined entity will be listed on the New York Stock Exchange.

Pfizer Inc. Chairman and CEO Ian Read will serve in the same roles with the combined company while Allergan Plc. leader Brent Saunders will become president and chief operating officer.

For its part, Pfizer defended the merger as “a great deal for America”, and not just about the tax benefits it would receive by relocating to Ireland. The company’s executive offices will move over to Ireland in what is being pegged as a tax-saving inversion deal, explained the source.

Clinton also said that she would propose specific steps in the coming weeks to prevent corporate inversions, “which take advantage of loopholes that litter our tax code, distort incentives for investment and disadvantage small businesses and domestic firms that can not game the global tax system”.

Pfizer will buy Allergan, the maker of products like Botox, for $160 billion.

Pfizer and Allergan will be combined under Allergan PLC, which will be renamed Pfizer PLC.

It could end up being the world’s second-largest merger following British telecom company Vodafone’s purchase of Germany’s Mannesmann for $172 billion, including debt, in 1999.

The deal caps a merger spree throughout the USA health care industry this year, which already has seen a record $448 billion in announced deals, according to Dealogic, which tracks the market.

By acquiring Allergan, Pfizer would not only save on its overall tax rate, but it would also be better able to use earnings from its global operations for additional acquisitions or other activities. Pfizer tried a similar strategy a year ago, but its bid to buy U.K.-based AstraZeneca for $119 billion was unsuccessful. In a press release, Pfizer said the combined company would generate more than $2 billion in savings over the first three years and would enjoy a tax rate of 17 to 18 percent – far less than Pfizer’s current corporate tax rate of 25 percent.

Mr Sanders called on Mr Obama to intervene, saying the merger would be a “disaster” for USA consumers paying high prescription drug costs.

For the deal to go forward, the companies will have to receive approval from antitrust regulators around the world.

Allergan itself has been recently transformed, created through an acquisition by Actavis that kept the Allergan name.