Pfizer announced termination of proposed combination with Allergan
The decision to scrap the 160 billion US dollar agreement was driven by the actions announced by the US Treasury to curb corporate inversions.
Global pharmaceutical companies Pfizer Inc and Allergan Plc on 6 April 2016 jointly announced termination of proposed combination of the two companies.
The decision to scrap the 160 billion US dollar agreement was driven by the actions announced by the US Department of Treasury.
The US Treasury rules, announced on 4 April 2016, were aimed at curbing such corporate deals called inversions.
What is meant by corporate inversion?
• Corporate inversion is one of the many strategies companies employ to reduce their tax burden.
• One way that a company can re-incorporate abroad is by having a foreign company buy its current operations. Assets are then owned by the foreign company, and the old incorporation is dissolved.
• In the above instance, New York-based Pfizer and Ireland-based Allergan, in November 2015, agreed upon a proposed combination deal worth 160 billion US dollars.
• The merger would have allowed Pfizer to cut its tax bill by an estimated 1 billion US dollars annually by domiciling in Ireland, where tax rates are lower compared to the USA.
About Pfizer Inc.
• It is an American multinational pharmaceutical corporation headquartered in New York City.
• It is among the world's largest pharmaceutical companies.
• It was founded in 1849 by cousins Charles Pfizer and Charles F. Erhart in New York City as a manufacturer of fine chemicals.
• It develops and produces medicines and vaccines for a wide range of medical disciplines, including immunology, oncology, cardiology, diabetology/endocrinology, and neurology.
• Its products include the blockbuster drug Lipitor, used to lower LDL blood cholesterol; Lyrica, Diflucan, Zithromax (azithromycin), an antibiotic; Viagra (sildenafil, for erectile dysfunction); and Celebrex/Celebra (celecoxib), an anti-inflammatory drug.
Now get latest Current Affairs on mobile, Download # 1 Current Affairs App