The world is getting a new No. 1 drug company and the US is losing a giant: Pfizer and Allergan agreed to merge Monday in a deal worth an estimated $160 billion, reports Reuters. Pfizer makes blockbusters such as Viagra and Lipitor, while Allergan makes Botox. The deal will result in a company called Pfizer PLC that would be the world's largest in terms of sales, reports the Wall Street Journal. What's unusual about the deal, as well as bad news for the US Treasury: Ireland-based Allergan is technically buying the much bigger New York-based Pfizer in a tax maneuver known as an inversion. Under this scenario, a US company technically moves abroad to take advantage of a lower corporate tax rate, explains the AP.
This would be one of the biggest inversions ever, "moving one of the top names in corporate America to a foreign country," notes the Journal, which also uses the term "reverse merger" to describe the deal. The US has been trying to end the practice without success for years. Pfizer CEO Ian Read will be CEO of the new company, while Allergan's Brent Saunders will take on a different management role, according to Reuters. The news service calls it the biggest deal ever in the health care industry. It calls for 11.3 Pfizer shares to be exchanged for every Allergan share.