The Strategist

Viagra Plus Botox: Pfizer Is in Talks to Merge with Allergan


10/29/2015 - 15:24



Pharmaceutical companies Pfizer and Allergan are in talks about a possible merger. If the deal is agreed, its volume could reach $ 300 billion - it will be the largest merger this year, and the world's largest pharmaceutical company, formed as a result.



Tim.Reckmann
Tim.Reckmann
As newspaper Financial Times writes, the American pharmaceutical company Pfizer, which in 2014 tried unsuccessfully to acquire AstraZeneca's for $ 118 billion, has left its attempts and start merger talks with another European company - Allergan. FT sources noted that the negotiations are still at a very early stage. Capitalization of Pfizer, the second-largest US pharmaceutical company and developer of the drug Viagra, accounts for $ 218 billion, and Allergan, the manufacturer of the drug Botox, can boast $ 113 billion. If the two companies team up, their total capitalization will be greater than that of the current world leader Johnson & Johnson .

With purchase of Allergan, registered in Ireland, Pfizer will get an opportunity to pay taxes at a much lower rate, if re-registered in the country with lower tax (so-called tax inversion). Note that last year, Allergan paid 4.8% tax was, and Pfizer - 25,5%. During a conference call this week, CEO of the American company Ian Reid said that he is obligated to reduce the tax rates for investors and employees. Since many pharmaceutical companies have conducted tax inversion, Pfizer has become increasingly difficult to compete with them. "Pfizer employees wish to see our company strong and successful in the future. It affects their work and career ... company need a competitive tax rate to be successful in future. Therefore, this issue is very important for us", - said Mr. Reid. In addition, the purchase may accelerate Pfizer’s growth, which has revenues increased in the second quarter by 6% to $ 12.1 billion. Allergan’s net revenue was $ 5.8 billion in the second quarter.

source: ft.com




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