Sunday, November 22, 2015

Pfizer and Allergan to Merge

Wall Street Journal: Pfizer, Allergan Agree on Historic Merger Deal
By Jonathan D. Rockoff and Dana Mattioli
November 22, 2015

Article reviewed by Ayan Martin
It was announced that Pfizer and Allergan will merge, creating one of the largest mergers in 2015. It will also bring a large pharmaceutical company, Pfizer, overseas. This is not a typical merger, it's an inversion. The smaller, Dublin based company, Allergan, is purchasing Pfizer. Both companies are powerhouses that create medications and perform research on various diseases. 

The main reason for this purchase/inversion is the fact that Pfizer will be reducing it's U.S. corporate tax rate from 25% to lower than 20%. Pfizer's Chief Executive, Ian Read, has been trying to lower the companies tax rate for some time. The company initially tried to merge with British based AstraZeneca, but when that didn't work out it didn't stop Mr. Read and Pfizer's goal of trying to go abroad to lower their taxes. 

This article closely relates to Chapter 6. Mergers weren't fully mentioned, but ways on entering foreign markets like joint ventures were. The merger with Allergan will give Pfizer a more successful entrance into a foreign market.

1 comment:

  1. Interesting article. I wonder if this would have taken place if the US corporate tax rate was lower.