Trump, Clinton lash out at Pfizer over Allergan deal agreement

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.

The companies estimated the merger would increase earnings per share by 10 percent, excluding special items, in 2019 and add by a high-teens percentage rate in 2020.

LONDON-WASHINGTON – US-based Pfizer announced on Monday a $160bn merger with Ireland-based Allergan to create the world’s biggest pharmaceutical group and shift to a lower-tax jurisdiction, despite US government policies discouraging such deals.

Despite attempts by Congress and the Treasury Department to thwart the practice, about 50 USA companies have inverted in the past decade, and more are considering it, according to the nonpartisan Congressional Research Service.

A box of Pfizer drug Viagra and a bottle of Allergan product Botox are seen in a combination of file photos.

Corporations have defended tax inversions in the past by saying it would give them access to foreign profits that they can now put to use – in America – Medtronic has been one such organization. The Pfizer-Allergan deal is undoubtedly guilty of some form of these tactics.

Pfizer anticipates the transaction will deliver more than United States dollars 2 billion in operational synergies over the first three years after closing of the transaction.

Read has said his company is at a competitive disadvantage by having its tax domicile in the USA, and his pitch is that that the deal will help the companies invest in more innovative drugs. The US has the highest tax rates at 35%, and it seems that this is what Pfizer has been trying to evade.

The deal is likely to close in the second half of 2016 and will be the biggest such deal in the healthcare sector ever.

“We’ve assessed the legal, regulatory and political landscape and are moving forward with our strategy to combine these two great companies for the benefit of the patients and to bring value to shareholders”, Read said on a Monday conference call.

Although the rebranding will be called Pfizer Plc, legally, the company’s combination will be under Allergan Plc.

Gordon says to truly crack down on inversions, Congress would need to reform the tax code.

“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 latest rules would not impede the Pfizer-Allergan transaction, analysts said. Pfizer Chief Financial Officer Frank D’Amelio said he expected a combined tax rate of 17 percent to 18 percent by 2017.