Allergan and Pfizer set to merge in stock deal worth $A208 billion

The deal, the largest ever in the health-care sector, is considered likely to draw political ire in a United States presidential election year because Pfizer would re-domicile to Ireland, where Allergan is registered, in a so-called ‘inversion’ that would slash its corporate tax rate, Reuters reports.
It will also reignite debate in the pharmaceutical industry over the role of research and development, with Allergan chief executive Brent Saunders, a prolific deal-maker and a skeptic of in-house drug discovery, joining the combined company in a position to influence its strategy.
The New York Times reports: “Perhaps most important, it would be the biggest transaction aimed at helping an American company shed its United States corporate citizenship in an effort to lower its tax bill, in this case by billions of dollars.”
The Guardian reports: “? it is the largest healthcare merger in history, in defiance of the US government’s efforts to crack down on deals that it believes are thinly-disguised forms of tax avoidance.”
The deal will involve Pfizer paying with 11.3 of its shares for each Allergan share. There will also be a small cash component, accounting for less than 10 per cent of the value of the deal.
Pfizer’s chief executive Ian Read, 62, will be chief executive officer of the combined company, with Allergan’s CEO Brent Saunders, 45, serving in a very senior role focused on operations and the integration.
Mr Saunders will also have a seat on the combined company’s board.
The sources asked not to be identified because the terms of the deal are not yet public. Pfizer and Allergan declined to comment.
The deal would create a pharmaceutical colossus with annual sales of more than $60 billion, putting the merged group well ahead of No. 2 US drugmaker Merck & Co, which has annual sales of about $40 billion.
Widely used Pfizer drugs such as Lipitor, Viagra and nerve-pain treatment Lyrica would be brought together with Allergan’s Namenda mory loss treatment, Restasis dry eye medication and other leading eye-care brands.
It would be the biggest merger of the year, topping beer maker Anheuser-Busch InBev’s proposed $107 billion takeover of SABMiller Plc. And it would realise Mr Read’s long-time ambition of an inversion deal that would get Pfizer out from under the 35 per cent US corporate tax rate, among the world’s highest. The tax rate in Ireland is 12.5 percent.
Pfizer’s talks with Allergan come more than a year after the US firm abandoned a bid to acquire AstraZeneca and move its tax headquarters to Britain.