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Taxes fuel Pfizer-Allergan merger

Monday, November 23, 2015 - 01:26

Pfizer's $160 billion marriage with Allergan will give it fast growing drugs like Botox and a much lower tax rate. Fred Katayama reports.

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Pfizer's $160 billion purchase of Allergan gives it a lineup of fast growing drugs and a lower tax rate. The maker of Lipitor and Viagra gets access to the anti-wrinkle drug Botox and the eye medication Restasis. The biggest healthcare marriage ever will create the world's largest drug maker with sales of more than $60 billion. In addition to getting faster sales growth, Pfizer will be able to take advantage of much lower tax rates by moving the combined company's legal headquarters to Ireland where Allergan is based. The combined company expects to pay an effective rate of 17 to 18 percent, much lower than Pfizer's current 25 percent. But such so-called inversion deals have come under attack from politicians in an election year. Experts say moves by the Treasury Department to clamp down on such deals won't prevent Pfizer from shifting its tax base. Russell Investments chief market strategist Stephen Wood: SOUNDBITE: STEPHEN WOOD, CHIEF MARKET STRATEGIST, RUSSELL INVESTMENTS (ENGLISH) SPEAKING: "Inversions, a lot of these deals may be more a function for regulatory and tax policy than they may be of anything else. One would expect that as long as there are regulatory arbitrage opportunities, companies will explore them." Shares of Allergan gave back some of their huge 21 percent gain this year. Pfizer's shares also fell. The new company will bear the Pfizer name, and the deal is expected to close in the second half of next year.

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Taxes fuel Pfizer-Allergan merger

Monday, November 23, 2015 - 01:26