Pfizer and Allergan- “Failed Merger”

Pfizer, the maker of cholesterol fighter Lipitor, impotence treatment Viagra and fibromyalgia drug Lyrica, agreed to buy Allergan in November. The $148.57 billion deal was the second-largest corporate merger ever in the year 2015.
The merger agreement between Pfizer and Allergan plc (NYSE: AGN) has been terminated by mutual agreement of the companies. The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.
About Pfizer
At Pfizer, we apply science and our global resources to bring therapies to people that extend and significantly improve their lives. We strive to set the standard for quality, safety and value in the discovery, development and manufacture of health care products. Our global portfolio includes medicines and vaccines as well as many of the world’s best-known consumer health care products. Every day, Pfizer colleagues work across developed and emerging markets to advance wellness, prevention, treatments and cures that challenge the most feared diseases of our time. Consistent with our responsibility as one of the world’s premier innovative biopharmaceutical companies, we collaborate with health care providers, governments and local communities to support and expand access to reliable, affordable health care around the world.
Pfizer Inc. and Allergan PLC terminated their planned $150 billion merger after the Obama administration took aim at the deal that would have moved the biggest drug company in the U.S. to Ireland to lower its taxes.
Pfizer will pay Allergan a breakup fee of $150 million. The breakup fee is relatively small, especially given Pfizer’s market value of some $200 billion.
The terminated deal is Pfizer’s second failure at buying an overseas company. In 2014, Pfizer had tried but failed to buy British drug maker AstraZeneca PLC. Afterward, it looked for a new partner, before finally reaching terms with Allergan.
By combining with Ireland-based Allergan, Pfizer could not only cut its tax rate, but also get access to the billions of dollars in revenue it was keeping overseas to avoid paying U.S. taxes on top of the taxes it had already paid in foreign countries.
BY: DEVIKA SHARMA