Sunday 25 September 2016

Pfizer races to beat US crackdown with Irish tax move

Greg Roumeliotis and Kevin Drawbaugh

Published 20/11/2015 | 02:30

Pfizer is negotiating a price of $370 to $380 for each Allergan share. Photo: bloomberg
Pfizer is negotiating a price of $370 to $380 for each Allergan share. Photo: bloomberg

Pfizer's talks to acquire Allergan in a $150bn deal that would see the US drug giant redomicile in Ireland accelerated yesterday, as the US Treasury prepared to clamp down further on such tax inversions.

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Pfizer is negotiating a price of $370 to $380 for each Allergan share, a person familiar with the discussions said, asking not to be identified because the talks are confidential.

Allergan shares ended trading yesterday at $310.8 per share.

While negotiations have made progress in recent days, an agreement is not imminent and its timing remains uncertain following the Treasury's disclosure that it would seek to tighten the rules on inversions, the source added.

Inversions typically involve a US multinational buying a smaller foreign competitor and relocating to its home country, if only on paper, to escape US taxation. Ireland is a common destination. Management usually stays in the United States. "Later this week, we intend to issue additional targeted guidance to deter and reduce further the economic benefits of corporate inversions," according to a letter from the Treasury seen by Reuters.

Pfizer was not named in the letter, which was signed by Treasury Secretary Jack Lew and addressed to four senior lawmakers: US Senators Ron Wyden and Orrin Hatch, and Representatives Kevin Brady and Sander Levin. All four serve on the Senate and House tax committees.

"We have no further comment beyond what is in the letter, at this time," a Treasury spokesman said.

Pfizer and Allergan also declined to comment.

Mr Levin said in a statement: "The fact that American companies, including Pfizer, continue to pursue inversions makes clear that additional steps are needed to stop this trend."

He urged Congress to "get off the sidelines and take action to change the law to stop these tax-motivated inversions."

For months tax experts have speculated about what could come next from Treasury.

Apart from tax considerations, a deal would give Pfizer access to Allergan's dominance in the aesthetics and ophthalmology markets. (Reuters)

Irish Independent

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