(CN) - Pfizer and Allergan announced a planned $160 billion merger Monday that that immediately drew the ire of two presidential candidates on the campaign trail.
Under the terms of the deal, Pfizer, one of the world's largest pharmaceutical companies, will be purchased by Ireland's Allergan.
Pfizer owns the blockbuster drugs Lipitor, Viagra, and Celebrex. Allergan is best known as the maker of Botox.
The transaction is structured so that Allergan will technically be the buyer of the significantly larger Pfizer. But at the end of the day, Pfizer shareholders will own more than 55 percent of the combined company.
Pfizer hopes this strategy will allow it to avoid newly strengthened rules against corporate inversions that the Obama administration implemented after Burger King purchased Tim Hortons and moved its headquarters to Canada to benefit from lower tax rates.
Allergan is headquartered in Dublin, Ireland - although much of its business takes place in New Jersey - so the deal's structure will bypass Treasury rules that apply to American companies that buy foreign companies.
Pfizer's tax rate will be approximately 25 percent this year, whereas Allergan will be taxed at about 15 percent.
Pfizer and Allergan called the deal a "combination" in a joint press release.
"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," Pfizer CEO Ian Read said in a statement.
Allergan CEO Brent Saunders used similar language, saying, "The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better."
Pfizer and Allergan will be merged under the name Allergan plc, which will then be renamed Pfizer plc. It will maintain Allergan's Irish legal headquarters, and will be listed on the New York Stock Exchange under the "PFE" ticker.
The deal represents more than a 30 percent premium based on Pfizer's and Allergan's share prices as of October 28, 2015. Allergan shareholders will receive 11.3 shares of the combined company for each of their Allergan shares, and Pfizer stockholders will receive one share of the combined company for each of their Pfizer shares.
Treasury Secretary Lew has been urging Congress to enact anti-inversion legislation since last year, noting that that avenue is "the only way to rein in" the inversions. President Obama has called such deals "unpatriotic," but Republicans have resisted implementing legislation to discourage them.
That sentiment was echoed by Democratic presidential candidates on the hustings Monday.
Bernie Sanders condemned the proposed merger, describing it, in a statement, as "a disaster for American consumers who already pay the highest prices in the world for prescription drugs."
Sanders called on President Barack Obama to intercede.
"The Obama administration has the authority to stop this merger, and it should exercise this authority," he said.
Former Secretary of State Hillary Rodham Clinton, meanwhile, said the proposal will leave "U.S. taxpayers holding the bag," and said she plans to propose steps to prevent inversions.
The Treasury's new rules have deterred some companies from pursuing inversion, most notably AbbVie, which cancelled its planned $54 billion takeover of the Irish drugmaker Shire.
The Pfizer-Allergan deal comes at the end of a year of mega-mergers, including the merger of Anheuseu-Busch InBev and SABMiller, and Time-Warner Cable's sale to Charter Communications.
Pfizer said in its statement that it will evaluate "a potential separation of the combined company's innovative and established businesses by no later than the end of 2018."
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