Pfizer is literally torn apart from failing to merge with Allergen and might just split its business now.
Things did not go according to Pfizer’s yearlong plans of acquiring the Ireland based Botox maker, Allergen Plc. This happened after the US Treasury notified it of the change in its rules and policies to stop tax inversions in the United States. The medicinal company will continue to pay the US 25% of corporate taxes and has plans to split up by the end of this year.
Pfizer Inc. might literally break up after it was denied of an inversion through a $160 billion merger with Allergen that would have changed its home address to Ireland instead. Ian Read has indicated that now the drug maker has plans of splitting itself up and selling off the lower margin unit of its older products that are facing tough generic competition in the market. This change is expected to be witnessed by the end of this year only.
The pharmaceutical company has apparently not taken this blow as well as people had hoped and is definitely not happy about walking away from the merger it had planning for a year, on Wednesday. It is blaming the US Treasury for this change of plans; if it had happened, this merger would have been the biggest healthcare takeover. The Treasury defended itself by saying that it was not targeting any company in specific but the CEO of Allergen disagrees.
The CEO of Allergen went as far as to say that the US did this just to stop this deal and has clearly been successful in doing so. Pfizer now is paying the Botox maker with $150 million, which was mentioned in the agreement – the party that decides to break up will have to pay this amount. Now the drug making organization might be split into two separate companies, which its management had been planning.
Both these parties involved in the merger might not be happy with this development expect the government of the United States, including the presidential candidates and a lawmakers. Hillary Clinton tweeted that she was glad the deal was off the table and suggested that any loopholes in the law that promote such deals from happening should be closed.
Pfizer will be splitting; one of the companies focuses on development of new drugs while the other focuses on selling the company’s older drug and medication. The Pharma giant’s new plans of splitting itself indicate that it has given up on acquisitions and is now concentrating on itself alone. Thus, the government no longer has to worry about inversion from this organization for now.
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