The merger frenzy in healthcare continues. In a deal that highlights tax inversion techniques, Pfizer and Allergan have announced a $160 billion merger. This deal creates the worlds largest drugmaker with high-profile products such as Botox, Lipitor and Viagra.
The deal will also add pressure to members of Congress to address corporate tax policies that firms' global earnings according to Jim Puzzanghera of the Los Angeles Times. Allergan is the smaller company but will technically be making the purchase which will allow the company to be headquartered in Dublin, Ireland where Allergan is already based.
Pfizer’s effective tax rate last year was about 27%, according to a regulatory filing. The deal will make the combined company's tax rate at around 17% to 18%. Many members have Congress have called these inversion techniques unpatriotic, but Pfizer's CEO stated that the deal will
“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."
After completion of the deal, which must be approved by U.S. and European regulators, Pfizer shareholders would own 56% of the combined company.
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