Pfizer And Allergan To Merge, Creating World's Largest Drug Company

Pharmaceutical giant Pfizer has merged with Botox maker Allergan for a deal of $160 billion, one of the biggest takeovers in health care industry and the biggest too in a tax-saving strategy.

Such moves called: "tax inversions", became tougher under new rules from the US Treasury Department enacted last week.

Analysts say that with the Pfizer-Allergan merger, Pfizer could cut its annual tax rate from 25 percent in the United States to between 17 and 18 percent in Ireland.

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.

Clinton noted: "This proposed merger and so-called inversions by other companies will leave USA taxpayers holding the bag".

The new company will be led by Ian Read, Pfizer's Scotland CEO, with Allergan CEO Brent Saunders as his deputy.

The agreement will nearly certainly face some intense scrutiny from the US and European regulators, noted USA Today.

The companies' boards of directors reportedly approved the deal Sunday, according to the Wall Street Journal.

Pfizer manufactures iconic drugs such as Viagra and Lipitor, which helps to lower cholesterol, even as Allergan makes Botox, which is a global sought-after medication. The US has the highest tax rates at 35%, and it seems that this is what Pfizer has been trying to evade. And also, it places the business directly in a presidential election argument over efforts by US firms to get lower tax prices using mergers to relocate their headquarters overseas.

He stated that Ireland wouldn't be greeting the news of the Pfizer-Allergan deal with any form of glee.

"We can rail all we want about how unpatriotic it is and how angry we are that Pfizer is selling to another company and they're going to move outside of America", Rubio said.

The US Treasury, concerned about losing billions of dollars in tax revenue, has been taking steps to limit the benefits of increasingly popular tax inversion deals, but it admitted last week that it would take legislation from Congress to stop such manoeuvres.

BTIG analyst Tim Chiang weighed in today with a cautious stance on the "Mega Inversion" deal between Pfizer Inc.

The deal comes among a flurry of consolidation in the pharmaceutical industry in recent years, as companies look to gain scale to give them better pricing power and to acquire drugs in development in hopes of locating the next blockbuster treatment. That includes work on cures for Alzheimer's disease, Parkinson's, cancer and other difficult-to-treat illnesses.

The combined company will be known as Pfizer Plc, whose value will soar above that of its rivals. However, Rosenthal doesn't believe the Pfizer-Allergan merger will run afoul of current tax law.

Investors didn't much like the deal. Current Allergan shareholders will own 44 percent of the combined company while Pfizer shareholders will own 56 percent.

Saunders said the combination would provide access to about 70 additional worldwide markets for Allergan products.

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