United States pharmaceutical company Pfizer has announced plans to join up with Irish-based company Allergan in a deal worth $US160 billion ($A222 billion).
The deal, reported to be the be the third biggest merger in corporate history, will create the world’s biggest drug company, bringing together Pfizer which makes erectile dysfunction product Viagra and cholesterol treatment product Lipitor with Allergan which makes Botox.
“The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world,” Pfizer chief executive Ian Read said in a statement.
To get the deal up, Pfizer is doing what is known as an “inversion” where it move its tax address from the United States to Ireland, at least on paper, in order to by Dublin-based Allergan. Legally speaking for tax purposes, the much-smaller Allergen will be buying Pfizer. The company will be run by Pfizer’s CEO, and executive management will stay in New York. It will have extensive operations across the United States, Just one hitch: it won’t be paying tax as a US company.
The deal has been slammed by US politicians including Democrat front runner Hillary Clinton.
“For too long, powerful corporations have exploited loopholes that allow them to hide earnings abroad to lower their taxes. Now Pfizer is trying to reduce its tax bill even further,” Ms Clinton said in a statement. “This proposed merger, and so-called ‘inversions’ by other companies, will leave US taxpayers holding the bag.”
Republican front runner Donald Trump told Business Insider the deal was “disgusting”.
But Mr Read is calling on Washington to support the deal.
According to Mr Read, it would give the company access cash, that would otherwise be trapped overseas, to discover new drugs.
“I cannot comprehend why it’s not being applauded by the political class, or why anyone would want to frustrate this transaction,’’ Mr Read told the Financial Times. “It’s a great deal for the US given that it frees up our ability to invest in American science.”