Pfizer will buy Allergan and be headquartered in Ireland, it’s been announced, with a lower company tax rate behind the pharmaceutical merger worth $US 160 billion.
The ABC reports that this is the second-biggest merger in history and the largest this year, pending regulatory approval.
"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 CEO Ian Read said in a statement.
R&D operations will be merged, saving a reported $US 2.8 billion. Pfizer will headquarter its global operations in New York, and main executive offices in Dublin.
The Sydney Morning Herald reports that the reverse takeover is structured as Allergen buying Pfizer, but Pfizer will control the new company, and be headquartered in Dublin, meaning it will pay a 12.5 per cent company tax rate instead of the US rate of 35 per cent.
Every Allergan shareholder would get 11.3 shares in the new company per every share they own. These were valued at $US 363.63 on Friday, with the deal valuing them at 16 per cent more than this. 56 per cent of shares held in the new organisation would belong to shareholders of Pfizer.
The Australian Financial Review called the deal a reminder that Australia needed to do more to be internationally competitive with company tax rates.