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Pfizer, Allergan Agree On Historic Merger Deal

Pfizer and Allergan announced plans for a $160 billion merger that would create the largest pharmaceutical company in the world. The merger would allow Pfizer to move its tax residence to Ireland, where Allergan is registered, lowering its tax rate from 35% in the US to 12.5% in Ireland. Critics argue that Pfizer is dodging taxes by relocating its headquarters. The deal will be structured as a reverse merger, with Allergan buying Pfizer, to help secure the lower Irish tax rate. The new company will be named Pfizer Plc and Ian Read will remain CEO while Brent Saunders becomes president and COO.

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Stefanel Furtuna
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38 views

Pfizer, Allergan Agree On Historic Merger Deal

Pfizer and Allergan announced plans for a $160 billion merger that would create the largest pharmaceutical company in the world. The merger would allow Pfizer to move its tax residence to Ireland, where Allergan is registered, lowering its tax rate from 35% in the US to 12.5% in Ireland. Critics argue that Pfizer is dodging taxes by relocating its headquarters. The deal will be structured as a reverse merger, with Allergan buying Pfizer, to help secure the lower Irish tax rate. The new company will be named Pfizer Plc and Ian Read will remain CEO while Brent Saunders becomes president and COO.

Uploaded by

Stefanel Furtuna
Copyright
© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
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First Name: Ştefănel-Marius Source: The Wall Street Journal (www.wsj.

com)

Last Name: Furtună Date: 22nd of November, 2015

College: Academia de Studii Economice din București,

Facultatea de Business si Turism, Anul I,

Seria B, Grupa 308

Pfizer, Allergan Agree on Historic Merger Deal


Pfizer and Allergan announced on Monday, their plans to combine in a record $160
billion merge deal that would create the world’s biggest drug maker and move one of the top
names in corporate America to a foreign country.

As The German Finance Minister Wolfgang Schaeuble referred to the deal in a speech to
parliament in Berlin on Tuesday, the reason for Pfizer’s planned combination with Allergan is
“obvious”, the lower tax rate on companies.

Allergan takeover by Pfizer will certainly trigger criticism from political environment
because Pfizer wants to move its tax residence in Ireland , where Allergan it’s registered, to
qualify for a lower tax rate on companies.

This strategy was used for decades by many U.S. companies and Pfizer is just another
big corporation that is flagrantly dodging tax by „relocating” its headquarters in Ireland because
there, the company tax rate is 12.5 percent while in U.S.A. is 35 percent.

To help secure that lower tax rate, the deal will be technically structured as a reverse
merger, with Dublin-based Allergan, which is smaller, buying New York-based Pfizer.

In hooking up with Allergan, Pfizer would lower its tax rate below 20%, analysts
estimate. Allergan, itself the product of a tax-lowering inversion deal, has a roughly 15% tax
rate.

Following the transaction , the new company will be named Pfizer Plc and will become
the world's largest producer of drugs by revenue.

Ian Read, Pfizer’s chief executive officer, will keep its powers in the combined entity,
while Allergan boss, Brent Saunders, will be his right hand, with the titles of president and chief
operating officer.

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