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23 Nov 2015

Pfizer to acquire Allergan for 150 Billion

Acquiring Company: Pfizer
Acquired Company: Allergan
Deal Value: $150 billion (Approx.)

Few facts about the deal

1. The deal will be the largest ever in healthcare sector.
2. Allergan is from Ireland (Dublin) and Pfizer from US (New York). Pfizer would redomicile to Ireland, where Allergan is registered, in a so-called “inversion” that would slash its corporate tax rate. US President Obama called inversions an “unpatriotic tax loophole” that needed to be closed.

The core problem is that, from a purely financial viewpoint, tax inversions make sense for companies like Pfizer. While rarely, if ever, paid in full, the 35 percent statutory corporate tax rate in the United States is higher than in other countries. Most important, the United States taxes the worldwide income of its domestic companies, while many major countries do not. Even though there are ways around that requirement, it is tempting for American companies to move their tax homes elsewhere.
3. Allergan was formed by the $66 billion merger of Allergan, the maker of Botox, with Actavis.
4. Last year onward Pfizer was looking for mega-marger. Pfizer offered nearly 70 billion pound to AstraZeneca. AstraZeneca demanded an offer of more than £74 billion. This deal would have shifted Pfizer’s tax home to Britain.

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