Pfizer shares surge 8% post $160 billion deal with Allergen

With these two big pharmaceutical companies merging together, so are their intellectual properties to discover and produce more drugs that could be more effective to fight against sicknesses.

And another one has flown the coop from the U.S.to the Emerald Isle – Ireland – that boasts a less onerous corporate tax burden.

On Monday, the White House declined to comment on Pfizer’s acquisition of Allergan, but said USA lawmakers should take legislative steps to prevent deals where companies lower their taxes by reincorporating overseas. CEO Ian Read says the deal will help put the company “on a more competitive footing”. The deal caps a remarkable consolidation wave roiling the US health care industry and creates the world’s biggest drugmaker by sales. Last year Pfizer made a bid to takeover rival AstraZeneca, but the United Kingdom drugs firm rejected the bid.

The new company will take New York-based Pfizer’s name but will be headquartered in Dublin, Ireland, the current home of Allergan.

Earlier, in a regulatory filing to the US Securities Exchange of Commission (SEC), both the entities jointly said Allergan shareholders will receive 11.3 shares of the combined firm for each of their shares and Pfizer stockholders will receive one share of the combined company for each of their shares. Pfizer shareholders are expected to hold 56 percent of the merged company, with Allergan shareholders the remaining 44 percent.

While Pfizer investors will own a majority of the company, the deal is technically structured as a “reverse merger”, designating smaller Allergan the parent of the combined group.

President Obama has called tax inversions unpatriotic and has tried to crack down on the practice.

Speaking exclusively to The Irish Times, Mr Read said there was no reason the deal should damage Ireland’s relationship with the USA where the country has previously been compared to the Wild West on corporate taxation issues. It is important to point towards the fact that the company has done three sizeable deals since 2000 to boost revenues.

Under the terms of the all-share deal, Pfizer would essentially pay $363.63 for each Allergan share, representing a more than 30 percent premium to Allergan’s share price in late October before news emerged that they were in talks. All 11 of Pfizer’s directors will serve on the board of the combined business, along with four Allergan directors.

The merger will delay by two years a decision whether to split itself into two.

Inversions have always been attacked by some politicians as a tax dodge, and Hillary Rodham Clinton and Bernie Sanders, the leading Democratic presidential contenders, criticized the deal.