Pfizer deal will lower company’s global tax

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.

For context, the Government collected €4.6 billion in corporation tax previous year.

In light of this news, presidential candidate Hillary Clinton said she will propose new legislation to stop us companies from reincorporating internationally to lower their taxes.

Read, who has long sought to slash Pfizer’s USA tax rate, said in a statement that the deal would help put the company on “on a more competitive footing”.

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. The administration has taken steps to clamp down on the practice.

Challenger Martin O’Malley also announced opposition to the deal and tried to earn points for fighting a similar deal as the governor of Maryland.

Pfizer ($PFE) may be amped about its brand-new agreement to tie up with Allergan ($AGN) and move to tax-advantaged Ireland.

The deal comes some 18 months after the failure of Read’s initial attempt at an inversion, a $118 billion bid to acquire Britain-based AstraZeneca Plc that ran into stiff opposition from that company’s management and United Kingdom politicians.

The second biggest merger deal in the history of merger deals was announced overnight in the USA, in what might be the ultimate baby boomer transaction.

“The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better”, said Brent Saunders, Allergan’s chief executive.

It’s not clear how this merger will affect Botox and Viagra prices, but at the very least the merger is a reminder that tax minimisation by corporations, a hot topic domestically right now, is a truly global phenomenon.

“Joining forces with Pfizer matches our leading products in seven high-growth therapeutic areas and our robust R&D pipeline with Pfizer’s leading innovative and established businesses, vast global footprint and strength in discovery and development research to create a new biopharma leader”, he said.

“Pfizer built their business on the back of our research and development tax incentives, our federally supported medical research, our skilled workforce, and our infrastructure”, said Democratic Representative Rosa DeLauro in a statement.

The company had estimated it would pay about 25 percent in corporate taxes this year, compared with about 15 percent for Allergan. Last year, Treasury Secretary Jack Lew issued a number of measures to disincentivize inversions, including a provision that the shareholders of the US-based firm cannot own 60% or more of the new company.

U.S. efforts to limit inversions have so far proven ineffectual.

Pfizer shareholders will receive one share of the combined company for each Pfizer share and will be eligible to receive at least some of their shares in cash.