Pfizer’s $160-billion buy to create largest drug firm

Pfizer Inc on Monday said it would buy Botox maker Allergan Plc in a record-breaking deal worth $160 billion to cut its US tax bill by moving its headquarters to Ireland.

The acquisition will create the world’s largest drugmaker, with combined annual revenue of about $64 billion. It is also the biggest-ever tax inversion deal, an increasingly popular and controversial manoeuvre aimed at helping US companies lower their taxes by reincorporating overseas.

US President Barack Obama has called inversions unpatriotic and has tried to crack down on the practice. To avoid potential restrictions, the transaction was technically structured as smaller Du-blin-based Allergan buying Pfizer, although the combined company will be known as Pfizer Plc and continue to be led by chief executive officer Ian Read.

The merger will delay by two years the Lipitor and Viagra maker’s decision on whether to split itself into two.

That decision, which could sell off Pfizer’s lower margin unit of products facing generic competition, was expected by late 2016. The deal enhances offerings from both Pfizer’s faster-growing branded products business, with additions like Botox, and its established products unit.

Still, investors had been hoping Pfizer would sell off the lower-margin business in 2017, a move now put off by the time required to integrate Allergan, Pfizer said.

Allergan CEO Brent Saunders will become president and chief operating officer of the combined company with oversight of all commercial businesses.

Read said in a statement that the deal would help put the company on “on a more competitive footing.” The company was expected to pay about 25 per cent in corporate taxes this year, compared with about 15 per cent for Allergan. Pfizer chief financial officer Frank D’Amelio said he expected a combined tax rate of 17 per cent to 18 per cent by 2017.