Pfizer, Allergan close to $150 billion merger deal

US pharmaceutical giant Pfizer is merging with Dublin-based Allergan, a $160 billion stock deal that will create the world’s largest drug maker.

The transaction is the biggest merger announced this year and has been approved by the boards of both companies.

Buying Allergan would add its brand-name medicines for eye conditions, infections and heart disease to Pfizer’s extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions.

Pfizer and Allergan representatives declined to comment.

Pfizer Inc. (NYSE:PFE) and Allergan PLC (NYSE:AGN) are expected to announce a $150 billion on Monday, according to numerous media outlets, including The Wall Street Journal. That company would have its legal domicile and principal executive offices in Ireland.

According to a source close to the deal, Pfizer wanted to beat implementation of new US Treasury measures which will make it more hard for US companies to escape taxes via a merger which moves their tax home overseas, a mechanism called a “tax inversion”.

No one actually disputes that the USA treats corporate foreign profits differently from most countries, including all of the large industrial nations. When the deal is done, the combined company will rename itself Pfizer and it will be considered an Irish company because Allergan is based in Ireland. But some say that the deal looks more like avoidance to pay United States taxes through inversion.

Pfizer shareholders are expected to hold 56% of the merged company, with Allergan shareholders the remaining 44%. As per it, the smaller of the two firms, which is Pfizer, will become the purchaser. The US has the highest tax rates at 35%, and it seems that this is what Pfizer has been trying to evade.

It said it would continue with its planned $5 billion share buyback in the first half of 2016. It would also allow Pfizer, the world’s second-biggest drugmaker by revenue, to surpass Switzerland’s Novartis AG and regain the industry’s top spot.