A few weeks ago, we highlighted what was suspected to be high level discussions about a merger between drug making giant Pfizer and Allergan. The proposed merger would lead to the world’s largest drug maker, and would the merger would be valued at nearly $160 billion dollars. Additionally, the move would likely be the added piece to set a record for corporate transactions with a total of $3.7 trillion in total values.
Fast forward to the week of Thanksgiving, and what was initially hyperbole has now become reality. The deal easily becomes the largest deal ever in the health care industry. There are certainly benefits on both sides. According to a story reported by the International Business Times, Allergan investors are slated to receive just over 11 shares of new company stock for each share they currently own. Pfizer stockholders will receive one share for each share that they own.
However, Pfizer gains the opportunity for significant tax breaks as its corporate headquarters moves to Ireland from the United States. So the company may not be subject to the highest corporate tax bracket. Ireland’s tax scheme is ostensibly more friendly at 12.5 percent of corporate profits. The U.S has the highest corporate tax scheme of any industrialized nation.
In the meantime, the deal must be approved by federal regulators. This inversion deal will undoubtedly draw a great deal of attention and criticism from politicians and tax pundits alike.
Ultimately, the Pfizer Allergan deal exemplifies the growing trend of mergers and acquisitions that is not expected to end soon. If you have questions about how a corporate transaction should be structured, the attorneys of Shulman Bastian Friedman & Bui LLP can help.