Allergan, Pfizer Call off Proposed $160 Billion Merger Inversion: Bannockburn-Based Baxalta Planning $32B Deal with Irish Company

Daily Herald (Arlington Heights, IL), April 7, 2016 | Go to article overview

Allergan, Pfizer Call off Proposed $160 Billion Merger Inversion: Bannockburn-Based Baxalta Planning $32B Deal with Irish Company


Byline: Linda A. Johnson Associated Press

Top U.S. drugmaker Pfizer and Irish rival Allergan are charting independent futures after scrapping a record $160 billion deal torpedoed by new Treasury Department rules meant to block American companies from moving their corporate addresses overseas -- on paper -- to avoid U.S. taxes.

The rules issued Monday, aimed at stopping the companies' "tax inversion" deal, wiped out its financial incentives and rationale for Pfizer Inc., though they had no impact on Allergan PLC.

That led Pfizer and Allergan to walk away "by mutual agreement" on Wednesday. Pfizer, which is based in New York, will pay Allergan $150 million as reimbursement for its deal-related expenses.

It was Pfizer's third, and most expensive, failed attempt at an inversion, leaving analysts to speculate Pfizer will drop the strategy for good. The merger would have moved Pfizer's address, but not its operations or headquarters, to Ireland, where it would have paid hundreds of millions of dollars less in annual U.S. corporate taxes.

Tax inversions, in which a big U.S. company buys a smaller one in another country with a lower tax rate, and then moves the combined company's address there on paper, are a hot issue in the presidential race. President Obama on Tuesday called them "one of the most insidious tax loopholes out there," adding that Treasury's new rules are meant to make wealthy corporations shoulder their tax responsibility like working-class Americans.

Pfizer and Allergan regrouped Wednesday and began touting their prospects as solo companies. They are far from being in dire straits as they contemplate their next moves: Both are highly profitable, have multiple lucrative medicine franchises and strong pipelines of experimental drugs, and each have enough cash to quickly do another deal.

Shares of Pfizer rose 4.8 percent to $32.87, while Allergan shares jumped 7.7 percent to $244.20 Wednesday afternoon.

"We can pivot very quickly from combination planning to independent planning," Allergan CEO Brent Saunders told The Associated Press, adding that both companies were prepared for a Treasury move to block their deal but considered it a small risk.

Saunders already is focused on closing Allergan's $40.5 billion deal to sell its generic drug business to Israel's Teva Pharmacueticals Industries Ltd., the world's top generic drugmaker. He expects that to close by the end of June, bringing Allergan about $36 billion after taxes to invest in "opportunities."

Those include mergers and acquisitions, buying rights to experimental drugs, share repurchases and paying down part of Allergan's $40 billion in debt, Saunders told The AP.

Best known for its Botox anti-wrinkle injections and Restasis drops for dry eye disease, Allergan had a profit of $3.7 billion on revenue of $15 billion last year. The company is the result of multiple inversions, and despite its Dublin address operates from offices in Parsippany, New Jersey.

"Allergan will continue to invest in the United States," Saunders said, with a focus on jobs creation, expanding factories and research facilities, and doing research on cures for diseases with huge unmet need.

Nomura analyst Shibani Malhotra wrote that Allergan's share price underestimates its stand-alone value, adding that "Allergan offers some of the best, most durable assets in the sector. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Allergan, Pfizer Call off Proposed $160 Billion Merger Inversion: Bannockburn-Based Baxalta Planning $32B Deal with Irish Company
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.