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Monday 24 October 2016

Pfizer/Allergan merger talks: Hillary Clinton objects to Irish base for former to benefit from lower corporation tax

Published 30/10/2015 | 12:13

Clinton added that she would not hesitate to break apart banks that were
Clinton added that she would not hesitate to break apart banks that were "too big to fail"

Democratic front-runner in the upcoming US election Hillary Clinton is against the proposed merger of pharmaceutical giants Pfizer and Allergan that could mean the former benefiting from lower corporation tax rates here.

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"Clinton is committed to cracking down on so-called 'inversions,' where a company chooses to leave the US on paper to game the tax system, and believes we should reform our tax code to encourage investment in the US, rather than shipping earnings and jobs overseas," Clinton spokesman Ian Sams told Reuters.

Allergan is based in Ireland and benefits from our lower 12.5pc corporation tax rate.

Pfizer, the Viagra producer, employs about 4,000 people in eight plants while Botox maker Allergan has over 1,000 people in Westport, Co Mayo.

Pfizer Chief Executive Officer Ian Read earlier Thursday said he was open to any moves that produce the best long-term value for the company.

Speaking at a Wall Street Journal event, Read said he was looking at various growth strategies, including a deal, "if that would add value to shareholders."

"Or we could sit tight or we could do a split. Or we could do a business development deal and then do a split, whatever produces the best long-term value," Read said.

Pfizer is expected to decide by late next year whether to sell or spin off its older off-patent products unit to pare the business down and focus on innovative, patent-protected medicines.

Allergan, the product of a recent merger with generic drugmaker Actavis, is itself in the process of selling a large portfolio of generic medicines to Teva Pharmaceutical Industries Ltd for $40.5 billion. A deal is expected to close in the first quarter of 2016.

A purchase of Allergan, with a market value of more than $113 billion, would be the biggest in Pfizer's long history of huge deals and restore it as the world's largest drugmaker, worth about $330 billion.

Pfizer recently closed a $15 billion purchase of hospital products company Hospira, which is also developing biosimilar versions of leading biotech drugs.

A deal with Allergan could allow Pfizer to take advantage of the far lower 12.5pc corporate tax rate in Ireland, a strategy it pursued with a failed bid for British rival AstraZeneca last year.

"Our tax rate highly disadvantages American multinational high-tech businesses," Read said. "I am fighting with one hand tied behind my back."

He said a tax inversion deal would boost Pfizer's ability to invest in research.

A tax inversion is being discussed, it is understood. The discussions so far have been led by the CEOs and senior executives, sources told Reuters.

In the last 15 years, Pfizer has acquired Warner-Lambert, Pharmacia and Wyeth, leading to many thousands of job cuts, typically referred to as cost-saving synergies.

Apart from tax considerations, the deal would give Pfizer access to Allergan's dominance in the aesthetics field with Botox, and ophthalmology markets, which Morningstar analyst Michael Waterhouse described as "particularly attractive assets."

(Additional reporting Reuters)


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