Pfizer to buy Allergan in $160bn deal

Pfizer Inc on Monday said it would buy Botox maker Allergan Plc in a record-breaking deal worth $160 billion to cut its U.S. tax bill by moving its headquarters to Ireland.

The acquisition will create the world’s largest drugmaker, with combined annual revenue of about $64 billion. It is also the biggest-ever tax inversion deal, an increasingly popular and controversial maneuver aimed at helping U.S. companies lower their taxes by reincorporating overseas.

U.S. President Barack Obama has called inversions unpatriotic and has tried to crack down on the practice. To avoid potential restrictions, the transaction was technically structured as smaller Dublin-based Allergan buying Pfizer, although the combined company will be known as Pfizer Plc and continue to be led by Chief Executive Officer Ian Read, Reuters reports.

The merger will delay by two years, the Lipitor and Viagra maker’s decision on whether to split itself into two. That decision, which could sell off Pfizer’s lower margin unit of products facing generic competition, was expected by late 2016.

The deal enhances offerings from both Pfizer’s faster-growing branded products business, with additions like Botox, and its established products unit. Still, investors had been hoping Pfizer would sell off the lower-margin business in 2017, a move now put off by the time required to integrate Allergan, Pfizer said.

Allergan CEO, Brent Saunders, will become president and chief operating officer of the combined company, with oversight of all commercial businesses.

Read, who has long sought to slash Pfizer’s U.S. tax rate, said in a statement that the deal would help put the company “on a more competitive footing.”

The company was expected to pay about 25 percent in corporate taxes this year, compared with about 15 percent for Allergan. Pfizer Chief Financial Officer Frank D’Amelio said he expected a combined tax rate of 17 percent to 18 percent by 2017.