American pharmaceutical giant Pfizer has announced that it has agreed to buy Botox-maker Allergan for an alleged $160 billion. The move creates history as the deal is the biggest that the pharmaceutical industry has ever seen.

Following the deal, shares in Pfizer closed down 2.7% in New York at $31.32, while Allergan fell 3.4% to $301.70.

The merged company will be called as Pfizer Plc, where Allergan shareholders will receive 11.3 shares for each of their shares, while Pfizer shareholders will receive one share for each of their shares.

Pfizer chief Ian Read will take over as Chairman and CEO of Pfizer Plc, while Allergan boss Brent Saunders is expected to take over as President and COO. Read said: “The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and more therapies to more people around the world.”

Apart from the fact that Pfizer Plc will become the world’s biggest drug maker by sales, Pfizer’s takeover of Allergan will allow the company to escape relatively high US corporate tax rates, as the drugs giant is expected to move base to Allergan headquarters in Dublin.

This means that Pfizer Plc’s profits would be subject to corporation tax of 12.5% as a result of retaining Irish domicile, which is much lower than the corporation tax that Pfizer currently pays in the US, which comes up to 35%.

As a result, there has been much political backlash against the deal. For instance, Democratic presidential candidate Hillary Clinton said that deals such as these would “leave US taxpayers holding the bag”. However, her Republican counterpart Donald Trump blamed US politicians for Pfizer leaving the US by saying: “Our politicians should be ashamed.”

The Global Panorama