Pfizer’s $160B Allergan buy sparks cry for tax-inversion crack down

Pfizer (NYSE:PFE) said today it will buy Botox maker Allergan (NYSE: AGN) for approximately $160 billion and slash its tax bill in the largest-ever tax inversion to date.

To avoid restrictions, smaller, Dublin-based Allergan is buying Pfizer, though the combined company will still be known as Pfizer and will still be led by Pfizer CEO Ian Read.

The move has sparked sharp responses in the U.S. political sphere, with Democratic presidential front-runner Hillary Clinton saying the U.S. could not “delay in cracking down on inversions that erode our tax base,” in a press release.

Clinton promised to propose measures to prevent the increasingly common and controversial practice, and called on regulators to take tougher action.

Democratic presidential candidate Senator Bernie Sanders joined the fray, saying he called upon the Obama administration to stop the deal, saying it would “allow another major American corporation to hide its profits overseas.”

“The Pfizer-Allergan merger would be a disaster for American consumers who already pay the highest prices in the world for prescription drugs,” Sanders said in a statement.

In July, President Barack Obama called such inversion deals “unpatriotic”, arguing that the move is “gaming the system.”

The White House declined to comment on the deal in specific, but spokesman Josh Earnest said today the Treasury Department has tried to discourage the moves with administrative actions, and the White House urged Congress to take legislative action to prevent such deals.

Allergan shares today have drooped approximately 3% in mid-day trading, trading at $303.04 as of 3:01 p.m. EST, as investors learned the merger would bring lower cost-savings than hoped for.

Pfizer estimated its tax rate at 25% for this year, compared to 15% for Allergan. Pfizer CFO Frank D’Amelio said he expects a combined tax rate of 17 or 18% by 2017.

Read attempted a previous $118 inversion with Britain-based AstraZeneca, but failed as it ran into stiff opposition from the company’s management and U.K. politicians.

The deal puts Allergan shares at $363.63 each, and will put Pfizer shareholders in control of 56% of the combined company Allergan share holders will receive approximately 11.3 shares in the combined company for each share they hold.

Material from Reuters was used in this report.

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