Pfizer-Allergan merger deal advances

The US biggest drug company, Pfizer is currently in intense talks regarding a possible merger with a Dublin-based drug company, Allergen. Through the structuring merger, Pfizer which is bigger compared to Allergen is expected to buy the company instead of the other way round.

According to people familiar with the source, The Wall Street Journal reported that Allergan's shareholder would receive lots of benefit through the acquisition. It is expected that all of them will receive a premium and possibility of owning around 40 to 50 percent of stakes in the combined company.

Based on a report by CNBC, Pfizer is currently planning to buy each share in Allergan for a total cost of $370 to a maximum of $380 per shares. This means the deal could be worth around $150 billion if it went through.

According to the news, this means that most of the acquisition deal will be in stocks and only a small portion of them will be in cash form. Based on current negotiation, it will take around seven to ten days before both sides will reach an agreement.

However, Bloomberg reported that both companies may announce the agreement as soon as next Monday.

The merger talks have been under intense criticize from both the politician and public alike. This is because the merger is view as a way for Pfizer to avoid from paying higher tax by taking advantage of the tax inversion loophole through the acquisition.

This is confirmed as through the information regarding the merger, Allergan is said to be the acquiring entity instead of Pfizer.

The US Treasury is currently reviewing the tax inversion requirement to crack down on any possibility of more companies trying to escape the tax. The treasury is also planning to speed up the process to ensure that Pfizer will not be able to do so.

In a letter sent to four US senior lawmakers by the secretary of the US Treasury, Jack Lew revealed its plan to "issue additional targeted guidance to deter and reduce further the economic benefits of corporate inversions."

The US representative working with the House tax committee also commented that there are "American companies, including Pfizer, that continue to pursue inversions makes clear that additional steps are needed to stop this trend."

Currently, the US Treasury had already taken a serious crackdown to tighten the law regarding tax inversion. This includes lowering the tax benefit obtained by the companies and also making it harder for a company to make a new deal regarding a possible move of the company to other countries.