Pfizer, Allergan Merge in $160b Deal
Pharmaceutical giants Pfizer and Allergan have agreed to a $160 billion merger, the biggest corporate deal yet driven by a “controversial tax-saving strategy,” said Kevin McCoy in USA Today. Pfizer, the maker of Viagra and Lipitor, will move its headquarters from the U.S. to Ireland, where Botox maker Allergan is based, cutting the company’s overall tax rate to as little as 12.5 percent. The merger comes as the Obama administration moves to crack down on so-called tax inversions, though the Pfizer deal has been carefully crafted to comply with new Treasury Department rules on the maneuvers. If approved, the deal will create the world’s biggest drug company.
Pfizer’s multibillion-dollar “opus of financial engineering” could be more trouble than it’s worth, said Robert Cyran in The New York Times. Merging with Allergan will achieve hefty tax savings over the next decade, but not much more than the $30 billion premium Pfizer has agreed to pay Allergan shareholders. What’s more, “big drug mergers in the past have not always panned out.” Firing redundant workers means savings, but “slamming together two drug giants often creates discord in the laboratory.” And while Pfizer has technically followed the Treasury’s inversion rules, “taking on the government so directly is a risky tactic in such a heavily regulated sector.”
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