New US laws look set to halt Allergan/Pfizer merger

Neill O’Neill

SHARES in Allergan continue to slide as it is reported that their $160 billion merger with pharmaceutical giant Pfizer will be called off owing to new US laws aimed at preventing any deal that would have moved the biggest drug company in the US to Ireland to lower its taxes. The Obama administration have stated that their move was not aimed specifically at this merger, but earlier this week President Obama called corporate inversions, in which a US company buys a foreign rival and adopts its lower-tax rate, one of the ‘most insidious tax loopholes out there’. If the deal had gone through, Pfizer were set to make considerable savings on their tax bill, given Ireland’s much lower rate of corporate tax than that in the USA. The termination of the deal is expected to be announced in coming days according to sources.
Last November, exactly a year after being bought for $66 billion by Actavis, it was announced that Allergan was to be merged with Pfizer in a record-breaking deal for the pharma industry. The deal valued Allergan at around $160 billion. If the deal had gone through as expected, it would have created the largest pharmaceutical company in the world, with a market capitalisation of around $321 billion and would have seen Allergan come under the Pfizer brand. Allergan has a large manufacturing facility in Westport employing in excess of 1,000 people. In recent months employment has continued to grow at the Westport facility, where a several hundred million euro investment in the last number of years will see a new biologics plant come on line in the near future. Further employment is expected to e created when this happens.
It has believed that Pfizer will have to pay Allergan a break-up fee for calling off the deal, which it has been reported could amount to around $400 million.

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