Pfizer And Allergan Decide To Merge In A $160 Billion Deal

Pharmaceutical giant Pfizer recently announced that it planned to acquire Allergan Plc, another well known pharmaceutical enterprise that is known for its Botox products. The acquisition is expected to cost around $160 billion and will result in Pfizer becoming the biggest drug maker in the world.

This move is a strategic move that will require Pfizer to shift its headquarters to Ireland and will result in the company saving millions of dollars in repatriation tax and billions of dollars in annual tax savings as the tax rules in Ireland is very different from that in the United States.

This multi-billion dollar merger has caused a lot of controversy as politicians in the United States have condemned the merger stating that it would result in thousands of job cuts as Pfizer shifts its headquarters and will also significantly reduce the tax revenue generated in the U.S.

There have been a few companies in the recent past who had adopted a strategy of moving their headquarters out of the United States to a country with lower tax laws. President Obama has not been happy with these tax aversion strategies and has labeled such strategies as unpatriotic and has tried to prevent such deals from taking place.

Both Republican and Democratic candidates have voiced their concern over such deals and Hillary Clinton has promised to impose new policies to ensure such deals do not take place. The Pfizer and Allergan deal is expected to be completed during the middle of 2016. Billionaire and leading Republican Presidential candidate Donald Trump who is known for being outspoken stated that the loss of jobs in America caused by such a deal was disgusting.

Pfizer currently employs around 3,000 employees in Ireland and Allergan employs another 2,000 employees. This new re-location of Pfizer headquarters to Ireland is bound to create more employment opportunities but there are no official numbers yet released. Pfizer which currently pays around 25% in tax is expected to bring down its taxes to around 17%.

There is a lot of money at stake with this international deal and there are concerns that there could be diplomatic concerns between the two countries. Ireland’s finance minister Michael Noonan stated that Ireland played no role in trying to entice Pfizer to enter the country. In a statement,

They’re obviously doing it for tax advantages because Allergan have their corporate headquarters in Ireland…but we’re not pushing for an inversion.