Pharmaceutical giants Pfizer and its most powerful rival, Allergan, has just announced a record-breaking merger. The deal, valued at $160 billion, is currently the largest in health care history, and is expected to create the world's largest drugmaker, according to USA Today.
The agreement between the American and Irish companies utilizes a controversial tax-saving strategy. Known as a tax inversion, mergers such as these allow U.S. companies like Pfizer, which are bound by America's relatively high taxes, to save billions by moving to low-tax regions such as Ireland.
With the merger in effect, Pfizer is set to deliver more than $2 billion in operational synergies within the first three years of the merger. The company also expects to have a pro forma Adjusted Effective Tax Rate of about 17-18 percent by the first full year of the merged company's operations, reports The Business Insider.
Pfizer CEO Ian Read has voiced his optimism about the merger.
"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," he said. "Allergan's businesses align with and enhance Pfizer's businesses, creating best-in-class, sustainable, innovative, and established businesses that are poised for growth."
The combined companies will be rebranded to Pfizer Plc, but legally, the merged company will be combined under Allergan Plc. The merged pharmaceutical behemoth is set to continue trading on the New York Stock Exchange under the ticker PFE.
Pfizer is the maker of iconic drugs like Viagra and Lipitor, a cholesterol-lowering drug, while Allergan makes Botox, one of the world's most sought-after cosmetic medications.
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