Pfizer has bought Botox-maker Allergan for an estimated $160 billion (£105 billion), which will allow the maker of Viagra and Lipitor to shift its legal base to Ireland, which would reduce its tax rate.
Pfizer’s chief executive Ian Read will be CEO of the combined company, while Allergan CEO Brent Saunders will be chief operating officer.
The companies said the combined company was expected to maintain Allergan’s Irish legal domicile, which is critical as the US corporate tax rate of 35 per cent is huge compared with Ireland’s rate of 12.5 per cent.
Mr 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 therapies to more people around the world.”
The US Treasury has taken steps to clamp down on tax inversion deals as are concerned about losing revenue.
The deal comes after UK-based AstraZeneca last year fought off a controversial takeover attempt by Pfizer, saying its £69bn valuation undervalued the business.
Apart from male libido drug Viagra and cholesterol drug Lipitor, Pfizer’s major drugs include nerve pain treatment Lyrica and Prevnar, a treatment for pneumonia.
Allergan, best known for its anti-wrinkle treatment Botox, also makes makes Alzheimer’s drug Namenda and dry-eye medication Restasis.