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Pfizer, Allergan considering a merger

US drug maker Pfizer and Ireland-based Allergan announced a possible merger. Though Pfizer’s market cap is twice more than Allergan’s cap, merger scheme represents acquisition of Pfizer by Allergan. According to this scheme, merger is aimed at tax optimization, which is beneficial to Pfizer. Allergan is tax resident of Ireland and pays tax of 4.8%, while Pfizer is a US tax resident and pays a 25.5% tax. Carl Icahn’s fears of US companies fleeing to foreign shores in search of tax savings are coming true.