Pfizer Inc. (NYSE:PFE) and Allergan PLC (NYSE:AGN) are expected to announce a $150 billion on Monday, according to numerous media outlets, including The Wall Street Journal.
The deal received approval from the boards of the directors of both companies on Sunday. The merger would create the world’s biggest drug maker. Under the terms of the agreement expected to be announced today, Pfizer will pay 11.3 of shares for each Allergan share. There will also be a cash component, below 10% of the total value.
The combined entity will be led by Ian Read, who chief executive officer (CEO) of Pfizer. On the other hands, Allergan’s CEO Brent Saunders will be given an important position to oversee the operations and the integration, according to the people familiar with the matter. They wanted not to be disclosed.
Together, both companies generate over $60 billion in annual revenue. While Merck & Co, which is the second largest drug maker in the United States, collects around $40 billion revenue every year.
The deal is likely to face criticism from the U.S. politicians, and the U.S. Treasury Department may derail this inversion deal, which will see New York based Pfizer moving its headquarters to Ireland, where Allergen is registered.
This relocation will allow the company to save millions of dollars in tax, as Ireland has corporate tax rate of 12.5%, compared to 35% in the U.S.
Many people, including presidential candidate Donald Trump, have raised their voices against the highest U.S. corporate tax rate, and asking for changes in this current rate to keep companies from moving to foreign countries, according to a news report by Bloomberg. Billionaire investor Carl Icahn has said that he will be putting “$150 million into a new super-PAC that would push politicians for changes to the way U.S. corporations are taxed on their earnings abroad.”
Image Source: Flickr