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It's Official: Allergan, Pfizer To Combine In Biggest Ever Tax-Inversion, Defy Jack Lew
As was extensively reported over the weekend, the Pfizer-Allergan tax-inverting, reverse-merger (in which the far smaller Allergan would end up "buying" Pfizer, courtesy of fungible debt which doesn't care where it ends up as long as there are cash flows) would be announced this morning, and sure enough, moments ago the long-awaited press release finally hit.
Here are the details:
Pfizer and Allergan to Combine
- 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 EPS 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
And the full press release:
Pfizer Inc. (PFE) and Allergan plc (AGN) today announced that their boards of directors have unanimously approved, and the companies have entered into, a definitive merger agreement under which Pfizer, a global innovative biopharmaceutical company, will combine with Allergan, a global pharmaceutical company and a leader in a new industry model – Growth Pharma, in a stock transaction currently valued at $363.63 per Allergan share, for a total enterprise value of approximately $160 billion, based on the closing price of Pfizer common stock of $32.18 on November 20, 2015. The transaction represents more than a 30 percent premium based on Pfizer’s and Allergan’s unaffected share prices as of October 28, 2015. Allergan shareholders will receive 11.3 shares of the combined company for each of their Allergan shares, and Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares.
“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,” stated Ian Read, Chairman and Chief Executive Officer, Pfizer. “Allergan’s businesses align with and enhance Pfizer’s businesses, creating best-in-class, sustainable, innovative and established businesses that are poised for growth. Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry.”
“The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better,” said Brent Saunders, Chief Executive Officer, Allergan. “This bold action is the next chapter in the successful transformation of Allergan allowing us to operate with greater resources at a much bigger scale. Joining forces with Pfizer matches our leading products in seven high growth therapeutic areas and our robust R&D pipeline with Pfizer’s leading innovative and established businesses, vast global footprint and strength in discovery and development research to create a new biopharma leader.”
Under the terms of the proposed transaction, the businesses of Pfizer and Allergan will be combined under Allergan plc, which will be renamed “Pfizer plc.” The companies expect that shares of the combined company will be listed on the New York Stock Exchange and trade under the “PFE” ticker. Upon the closing of the transaction, the combined company is expected to maintain Allergan’s Irish legal domicile. Pfizer plc will have its global operational headquarters in New York and its principal executive offices in Ireland.
Pfizer’s innovative businesses will be significantly enhanced by the addition of a growing revenue stream from Allergan’s durable and innovative flagship brands in desirable therapeutic areas such as Aesthetics and Dermatology, Eye Care, Gastrointestinal, Neuroscience and Urology. The combined company will benefit from a broader innovative portfolio of leading medicines in key categories and a platform for sustainable growth with diversified payer groups. With the addition of Allergan, Pfizer will enhance its R&D capabilities in both new molecular entities and product line extensions. A combined pipeline of more than 100 mid-to-late stage programs in development and greater resources to invest in R&D and manufacturing is expected to sustain the growth of the innovative business over the long term. Through product approvals, launches and inline performance the combined company aspires to be a leader in growth.
The combination of Pfizer and Allergan will significantly increase the scale of Pfizer’s established business, and their complementary capabilities will maximize the combined established portfolio. The addition of Allergan’s Women’s Health and Anti-Infectives portfolio will add depth to Pfizer’s established business, and Pfizer will expand the reach of Allergan’s established portfolio using its existing commercial capabilities, infrastructure and global scale. In addition, Allergan brings topical formulation, manufacturing and its Anda distribution capabilities to the combined company.
As a result of the combination with Allergan and subsequent integration of the two companies, Pfizer now expects to make a decision about a potential separation of the combined company’s innovative and established businesses by no later than the end of 2018.
Financial Highlights
Pfizer anticipates the transaction will deliver more than $2 billion in operational synergies over the first three years after closing. Pfizer anticipates that the combined company will have a pro forma Adjusted Effective Tax Rate1 of approximately 17%-18% by the first full year after the closing of the transaction. The transaction is expected to be neutral to Pfizer’s Adjusted Diluted EPS1 in 2017, modestly accretive beginning in calendar year 2018, more than 10% accretive in 2019 with high-teens percentage accretion in 2020. These expectations include the impact of expected share repurchases following the transaction. The combined company is expected to generate annual operating cash flow in excess of $25 billion beginning in 2018.
The transaction is not expected to have an impact on Pfizer’s existing dividend level on a per share basis. It is expected that the combined company will use its combined cash flow to continue to support an attractive dividend policy, targeting a payout ratio of approximately 50% of Adjusted Diluted EPS.1
Independent of the transaction and consistent with 2015, Pfizer anticipates executing an approximately $5 billion accelerated share repurchase program in the first half of 2016. Pfizer has approximately $5.4 billion remaining under its previously announced repurchase authorization.
Transaction Details
The completion of the transaction, which is expected in the second half of 2016, is subject to certain conditions, including receipt of regulatory approval in certain jurisdictions, including the United States and European Union, the receipt of necessary approvals from both Pfizer and Allergan shareholders, and the completion of Allergan’s pending divestiture of its generics business to Teva Pharmaceuticals Ltd., which Allergan expects will close in the first quarter of 2016.
Pursuant to the terms of the merger agreement, the Allergan parent company will be the parent company of the combined group. A wholly owned subsidiary of Allergan will be merged with and into Pfizer, and subject to receipt of shareholder approval, the Allergan parent company will be renamed “Pfizer plc” after the closing of the transaction. Immediately prior to the merger, Allergan will effect an 11.3-for-one share split so that each Allergan shareholder will receive 11.3 shares of the combined company for each of their Allergan shares, and the Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares. Pfizer’s U.S. stockholders will recognize a taxable gain, but not a loss, for U.S. federal income tax purposes. The transaction is expected to be tax-free for U.S. federal income tax purposes to Allergan shareholders.
Pfizer stockholders will have the opportunity to elect to receive cash instead of stock of the combined company for some or all of their Pfizer shares, provided that the aggregate amount of cash to be paid in the merger will not be less than $6 billion or greater than $12 billion. In the event that the aggregate cash to be paid in the merger would otherwise be less than $6 billion or greater than $12 billion, then the stock and cash elections will be subject to proration.
Following the transaction, and assuming that all $12 billion of cash is paid in the merger, it is expected that former Pfizer stockholders will hold approximately 56% of the combined company and Allergan shareholders will own approximately 44% of the combined company on a fully diluted basis.
Governance and Leadership
Pfizer plc’s board is expected to have 15 directors, consisting of all of Pfizer’s 11 current directors and 4 current directors of Allergan. The directors from Allergan will be Paul Bisaro, Allergan’s current Executive Chairman, Brent Saunders, Allergan’s current Chief Executive Officer (CEO), and two other directors from Allergan to be selected at a later date. Ian Read, Pfizer’s Chairman and CEO, will serve as Chairman and CEO of the combined company. Brent Saunders will serve as President and Chief Operating Officer of the combined company. He will be responsible for the oversight of all Pfizer and Allergan’s combined commercial businesses, manufacturing and strategy functions.
Guggenheim Securities, Goldman, Sachs & Co., Centerview Partners and Moelis & Company are serving as Pfizer’s financial advisors for the transaction, with Wachtell, Lipton, Rosen & Katz, Skadden, Arps, Slate, Meagher & Flom LLP and A & L Goodbody acting as its legal advisors.
J.P. Morgan and Morgan Stanley are serving as Allergan’s financial advisors for the transaction with Cleary Gottlieb Steen & Hamilton LLP, Latham & Watkins LLP and Arthur Cox acting as its legal advisors.
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The newly merged company will be call Pfuckem...
or PFERAGAN (pronounce fuck her again) referencing Viagra. Pink slips to follow.
Why blame the companies?
Everyone should blame congress if you want these companies to pay taxes.
FATCA for all?
I personally think the issue isn't with them not paying taxes but rather the fact that the taxes collected, regardless of the source, is pissed away on bullshit.
Sure, make these companies pay tax on what they earn wherever they earn it but at the same time, spend the tax dollars on shit that's truly necessary. Then everyone would pay a lot less.
In other news 78'K allerphixzer workers are fired following successful merger shares rally $700 SDR,s on the news
Booyah Biitchez!
Jack and the DOJ are too busy FATCA'ing the little peeples, chasing foreign FIFO officials, handing guns to drug lords, and investigating police departments to be bothered with Multi-Billion dollar tax evasions.
Go west Pilgrim.....way past California to the promised land.....it's called Ireland.
I guess that would actually be east....but you get the idea.
Anyone up for a Canadian Burger King Whopper? I'm buying.
"defy" yeah right.. Look ole Jack up in 10 years or so-he'll be on the board
To be named Allergizer
Time to box companies like this out of our market... We can provide the same products with our own labor and without them, they dont want access to this market, they dont need access to this market. They dont deserve to participate. These companies are scum. Lets do what China does and just copy their products for FREE. WHY DO WE NEED OR WANT THEM? FUCKING TRAITOR SCUM! People better retaliate... while they still can. I dont and wont use any of their harmful products.
I would suggest to you that perhaps a better line of thinking is that the status quo of corporate taxation scheme is the problem and not simply just corporations voting with their feet. I too will vote with my wallet and not purchase any of their products - but not because I believe that they are a "traitor". Instead of being a statist shill, perhaps you should write your CONgress critter to change the tax laws; I wish you good luck with that. Perhaps you could ask to change the laws to forbid these corporations who after relocating, are receiving Federal tax breaks for research. Perhaps the law should be changes for them not to receive Medicare money for their products. I suggest that the current laws ENABLE these fat cats to keep using the system and fucking us over and over by corporations AND the DC overlords. Perhaps this is a system of government marked by centralization of authority under a dictator, stringent socioeconomic controls, suppression of the opposition through terror and censorship, and typically a policy of belligerent nationalism and racism. But enough about the TPP and the benefits of taxation (Obamacare, unending wars <and unending missing money>, unending deficit spending, the FED, IRS/NSA/DEA snooping).
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
Judge Learned Hand, Judge, U.S. Court of Appeals
I agree and I do fight. At the same time we dont have to afford them the same protections..such as patent and copyright laws if they flip. We owe them no loyalty either and if everyone wants to go third world well than lets do it right... NO PATENT OR COPYRIGHT PROTECTION...
"We can provide the same products"
How's that again? You can produce pharma grade medicine in your backyard? Oh, you want to be a thief and feel justified because they used the rules that the clowns YOU voted for to structure their affairs to minimize taxes?
Good luck on making your own medicines. I see from your avatar that you are a hemp fan. Maybe smoking it will cure your cancer.. or at least you won't care that you have it. Good luck with that.
Real Americans can do anything. All's we need is their patents if America wants shit cheap lets give them really cheap why use half measures?
If I have their patent and good trade relations with China.. We'll get it done!
My neighbor the local meth maker can make anything he told me. I asked about viagra he told me you don't need that shit. Just buy my crack from me, give it to a couple of girls daily for a week. The next week ask them to give you bl@w, bingo.
I think the cost of my monthy botox injections is going to be going up.
Having a frozen marionette face doesn't come cheap my friend.
socialized medicine for all...the result is larger and larger mergers as co's try to gain size to off set .gov mandates and reimbursements..for us consumers quality of service becomes much less important to these mega corps, the ability to influence breauocrats becomes primary ala the wall st -sec revolver story- right mr robbin rubin? has worked well for banks NO?
I'm OK with them running to the Emerald Isle for lower taxes. But they should also take their entire headquarters and move there too. Enjoy living on that desolate rock! Fuckin people hate to pay taxes here, but they sure do love the infrastructure, security and stability that those taxes provide. Go live in Ireland you fucking drug peddling crumbs!
Now they get access to all that infrastructure with out the hassle of taxes and make us pay for it all... Isnt it great! Change will come soon.... So they can take from our economy without returning anything to it... GREAT IDEA! Just what the doctor ordered... Its time to start fighting... Im sure they will have no less control over our government.
So they can take from our economy without returning anything to it
AND....their employees can work more than 29.5 hr/wk.
That's freakin brilliant!
Why do they limit hours...? to avoid paying benefits out because they dont make enough? So they can TAKE more? We need to get rid of this scum anyway... They are Traitors to this country... They dont belong here anymore. They are scum. They will have no less control over your government. They want to RAPE this country.. Like all the others. By only requiring certain participants contribute.... the whole system falls apart.. Get ready ignorance rules!
IF ANYONE THINKS THIS IS GOOD? IVE GOT NEWS FOR YOU, ITS THE BEGINNING OF THE END. WE DONT NEED THESE TYPES LET THEM GO AND BOX THEM OUT!
Yeah.....like we've boxed out China.
We could very easily... and things would be better.. Life is what you make it. We would be much better off if we did.
Get on that....let us know how it works out for you.
It used to work way better than it does now, before "Free" Trade. Before Free Trade people actually had jobs with benefits.. IMAGINE IT? I cant imagine people used to actually work? CAN YOU?
Put down the bong....and you'll see why your simplistic thinking won't work.
And having companies do this will help? Are you fucking brain dead? Simple is good, thats why we should eliminate patents. My bong is a lot cheaper than their monopoly on prescriptions drug prices and even more effective....with a much better mortality rate than their pills.
FYI: I dont use a bong anymore I use a vaporizer.. Its better.
Moving out of America hasn't hurt Burger King one bit.
What you don't realize...is no one has to do what you want.
and we dont have to do everything they want either....
What an unpleasant response.
Jack Lew and his queer Boss are "Traitors to this country" . They set up the conditions that facilitate this kind of shit.
They are scum and it happened on our watch.
Desolate rock? What are you smoking dude?
http://www.from-ireland.net/cms/wp-content/uploads/2013/03/wicklow-view.jpg
http://www.hillwalktours.com/hiking-ireland/images/stories/Wicklow_Way_H...
http://www.mykidstime.com/wp-content/uploads/2013/05/powerscourt-waterfa...
http://www.bestwestern.ie/images/stories/travel_images/Ireland-Killarney...
http://www.killarneynationalpark.ie/Wildlife/Stag%20in%20view%20of%20Tor...
http://www.killarneyoutfitters.com/photos/park_page.jpg
http://www.killarneyhotels.ie/files/images/xml/killarneyhotels-killarney...
http://www.activeme.ie/wp-content/uploads/2015/08/Top-Cycling-Routes-in-...
http://d5qsyj6vaeh11.cloudfront.net/images/destinations/important%20plac...
http://www.sleepzone.ie/uploads/images/FullLengthImages/Connemara/Medium...
http://www.visitconnemara.com/wp-content/uploads/2013/05/Connemara_Smoke...
Ireland is a lot of things, good and bad like anywhere else, but a desolate rock isn't one of them!
I'm sure you meant to include this...
http://2.bp.blogspot.com/-tOcI-EKnpQk/UOcogMCm3LI/AAAAAAAAAiE/24ni-o5RH28/s1600/Hot+Irish+Girl+picture.jpg
Ireland has had a population exodus for 150 out of the last 155 years. There must be a reason for that and it's not only the potato famine of 1850.
Summering in the Hamptons.
Summering on the Isle of Man.
Answer for you, tough guy: If it's not the Brits, then it's the bankers. Ireland has been royally fucked for centuries.
Makes perfect sense when you think about it. The top pusher man is never domiciled in his most lucrative market. Shit, Nino Brown didn't live in The Carter!
If we copy their products like China does..... we can get our meds even cheaper because now we dont need them? See how this works? We dont need copy rights or patents anymore! FUCK EM! Everything will be CHEAP! WHAT A BUNCH OF SORRY FUCKING IDIOTS.
I say we start stripping our patent and copy right laws... These guys want CHEAP lets show them what CHEAP and Lawless is! They wouldnt exist. They want to keep the laws that work for them and not us.
While we are giving everything away, maybe we could give their patents away? IF ITS ALL ABOUT CHEAP.. LETS MAKE IT FUCKING CHEAP? NO? COME ON PUSSIES? DOESNT WORK FOR U?
Any company that inverts is a Traitor to this country. Any company that inverts from the US should be stripped of its copyrights and patents. Fair is Fair.
Some day there will be only one ... like Taco Bell after it won the fast food wars.
Medicare to revise perscription drug prohibitions in 3...2...
Now watch congress finally do what they should have done eons ago, raise capital gains taxes and lower payroll. Those on payroll are more likly to spend the excess than the people getting capital gains, which would be a boost to the economy.
AllPfiz
I have a couple of empty Coke bottles. I can make a pair of Jack Lew glasses.
Capitalism... right? Free markets....RIGHT!!??
Right, time to end patents and copyrights.
You should try reading the US constitution, which is a pretty remarkable document for something written nearly 250 years ago, regardless of your nation of origin. Here's what it had to say about patents and copyrights:
Article 1, Section 8, Clause 8:
"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
It said "limited times", which used to be the author/inventor's life and 17 years. Now, thanks to our crony fascist system (it ain't capitalism when you can't lose), these "limited times" have been extended many times so that Disney can continue to control Mickey Mouse, Snow White, and everything else that Walt dreamed up, and Eisner shat upon.
Every "US" company that reports profits made on products sold overseas iin a tax haven outside of america shouldn't be allowed to call themselves american. Companies like Apple and Walmart and many other multinationals shouldn't be complaining about the high US dollar to congress when their main beef is that the money they store overseas to avoid US taxes is losing value. I'm not complaining about their right to minimize taxes but when their strategy backfires, fuck them. Welcome to what is effectively a free market, if anyone remembers what they are.
The Politicians will never pass any legislation to interfere with their ability to become millionaires from the "Donors" who support them....
What Trump says!
Just combine all of these fucking international corporations and let them exist where the taxes are zero and rename them Fuck You PLC.
Memo to Jack Lew - when the government talks about banning to taxing or regulating something (like tax inversions or AR-15s) - it only MAKES people do or buy even faster!
Just today's example of combining more control into fewer hands, as per the 1889 book The Great Red Dragon premise that their goal is "to own the earth in fee-simple." And folks wonder why markets are so manipulated. Sigh.
Awesome! It's good to see someone avoiding the plunder of their resources which would otherwise be used to pay for the creation of more terrorists by murdering their wives and children and paying to keep people poor and dependent.
A drug company finally does the moral thing. Who'd of thought.
Hey Allergen folks, better dust off your resumes and bone up on your interview skills, you'll all be toast inside a couple of years.
Merck did this a few years ago... oh wait, I'm sorry, Schering-Plough did this reverse merger thing a few years ago, D/B/A as Merck, etc. Same play here. Most of the Schering folks were let go within a few years. Probably a few thousand left, but not nearly the 30,000 that were employed as of 2009.
The Tax Free Tour, documentary on how the big 4 accounting firms in the US set them up..so which one will be handling this one?
http://ducknetweb.blogspot.com/2013/08/the-tax-free-tour-documentary-on-how.html
You have to be on drugs to dream this merger up...