Merger will be a bitter pill to swallow in Washington
Readers may remember that last year the US government announced with much fanfare that it was clamping down on so-called tax inversion deals that allow companies to escape high US taxes by reincorporating abroad.
To what end, you might ask?
The move may have slowed the flow of deals, but it didn't end the practice as decisively as the US Treasury may have hoped.
Washington has recently been promising to do more to tackle the issue, but it hasn't moved quickly enough. The tie-up between Pfizer and the smaller Irish-headquartered Allergan not only creates the world's largest drugmaker, but it also sees one of the world's biggest inversion deals with the new company formed as a result of the merger able to call itself Irish for tax purposes.
Pfizer, as expected, argues the deal isn't just about the tax perks.
Analysts, however, don't agree. Credit Suisse's Vamil Divan said that given the price tag, the deal would be hard to justify without the tax benefits.