Prolonged Erection Proves Profitable!
IT'S OFFICIAL: Pfizer agrees to a
$160 billion deal to avoid US taxes
By Sam
Ro
The pharmaceutical giants Pfizer and Allergan will combine to form a $160 billion
global drug behemoth.
Allergan shareholders will be receiving
$363.63 worth of Pfizer stock as payment. Specifically, for each share of
Allergan, investors will receive 11.3 shares (based on the Pfizer's Friday
closing price of $32.18) of the new combined company.
Importantly, the combined businesses will be
renamed Pfizer Plc but legally will be combined under Allergan Plc. This means
the combined company will officially be domiciled in Ireland
"Upon the closing of the transaction,
the combined company is expected to maintain Allergan's Irish legal
domicile," management said.
This type of deal, also known as a tax
inversion, has been embraced by more and more US
companies as a way to dodge relatively high US
tax rates by moving to low-tax regions like Ireland
For Pfizer, this means billions of dollars
in savings.
"Pfizer anticipates the transaction
will deliver more than $2 billion in operational synergies over the first three
years after closing," management said. "Pfizer anticipates that the
combined company will have a pro forma Adjusted Effective Tax Rate of
approximately 17%-18% by the first full year after the closing of the
transaction."
"The proposed combination of Pfizer and
Allergan will create a leading global pharmaceutical company with the strength
to research, discover, and deliver more medicines and therapies to more people
around the world," Pfizer CEO Ian Read said. "Allergan's businesses
align with and enhance Pfizer's businesses, creating best-in-class,
sustainable, innovative, and established businesses that are poised for
growth."
The combined company will continue to trade
on the New York Stock Exchange under the ticker PFE.
Here are the bullets summarizing the deal
via Pfizer:
·
Creates a new global biopharmaceutical leader with best-in-class
innovative and established businesses
·
Enhances revenue and earnings growth profile of innovative and
established businesses
·
Broadens innovative pipeline with more than 100 combined
mid-to-late stage programs in development
·
Transaction expected to close in the second half of 2016
·
Expected to be neutral to Pfizer's Adjusted Diluted EPS1 in 2017,
accretive beginning in calendar year 2018 and more than 10% accretive in 2019
with high-teens percentage accretion in 20202
·
Expect combined Operating Cash Flow in excess of $25 Billion
beginning in 2018
·
Increased financial flexibility facilitates continued investment
in the United States
·
Preserves opportunity for a potential future separation of
innovative and established businesses
