Summary: With the acquisition of Allergan and their headquarters to be located outside the United States, Pfizer will escape paying millions in taxes.
Allergan Plc will become part of Pfizer Inc in a $160 billion deal. By buying the Botox maker headquartered in Ireland, Pfizer will be avoiding a massive U.S. tax bill. The announcement is making waves as more companies are moving to place their headquarters outside the U.S. to lower tax bills.
Politicians are jumping to prevent the sale, stating it “would allow another major American corporation to hide its profits overseas.” Hillary Clinton has promised measures that would prevent companies from doing this if she is made president. Bernie Sanders is calling for President Obama to stop the deal for happening declaring, “Congress also must pass real tax reform that demands that profitable corporations pay their fair share of taxes.”
The official transaction has been set-up as Allergan purchasing Pfizer but will be known as Pfizer Plc with the current CEO of Pfizer, Ian Read, leading the combined company. The shares for both companies fell over two percent with the announcement of the deal to create the world’s largest drug maker. The deal will create lower cost savings than expected, resulting in Pfizer to decide later if they will sell off parts of the company that are facing competition from generic brands.
Pfizer has stated the merger will allow them to access tens of billions of dollars in oversea accounts, giving them more for share buybacks, business development, and dividend payments. Their annual sales as a combined company will be around $64 billion.
This is Pfizer’s second attempt at purchasing a drug company located outside the U.S. They first tried to buy Britain’s AstraZeneca Plc for $118 billion but the company’s management and UK politicians opposed the acquisition.
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