Pfizer and Allergan to MERGE in $160 Billion Inversion

Pfizer and Allergan on Monday morning announced they would merge in a massive, $160 billion deal that will create the world's largest drugmaker, producing treatments as varied as Lipitor and Botox.

The deal is structured as a reverse-merger, with smaller Dublin-based Allergan buying U.S.-based Pfizer, and it is likely to renew concern in the United States over "inversions," where U.S. companies are bought by or merge with foreign firms in order to reduce U.S. corporate tax burdens. Just days ago, the U.S. Treasury Department issued rules seeking to crack down on these types of deals, which President Obama has labeled "unpatriotic."

In a call with analysts, Pfizer chief executive Ian Read said that Pfizer appreciates the attention to inversions from politicians, presidential candidates, and Treasury but decided to proceed.

In a release, the company 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.

The combined company, which will be called Pfizer plc, will bring together a huge U.S. pharmaceutical company best known for iconic drugs like the cholesterol-fighting Lipitor and erectile dysfunction medication Viagra with Allergan, which is best known for making wrinkle-smoothing Botox.

Allergan will buy Pfizer, then Allergan plc will rename itself Pfizer plc, and the company will maintain its global headquarters in New York, but its key executive offices in Ireland, the statement said.

"Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry," Pfizer chief executive Ian Read said in a statement.

Source: Washington Post