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Wednesday, November 25, 2015

'The Pfizer–Allergan Merger Is a Disgrace'

John Cassidy (this was in today's links):

The Pfizer–Allergan Merger Is a Disgrace: In an announcement on Monday morning, Pfizer, the big drug company, whose headquarters are on East 42nd Street, in Manhattan, said that it is merging with one of its competitors, Allergan PLC. ...
It is widely acknowledged that the primary impetus for the deal is a financial one. In merging with Allergan, which is based in Dublin, Pfizer intends to move its corporate residency to Ireland, where the corporate tax rate is just 12.5 per cent, compared to thirty-five per cent for a company of its size in the United States. Over the next few years, the merger could save Pfizer billions of dollars in taxes and deprive the U.S. Treasury of the same amount.
Tax-driven deals of this nature are known as “inversions,” and they are becoming increasingly common. ... The Pfizer–Allergan deal will be the biggest inversion yet, and it is nothing short of a disgrace. ...
Read, in his statement explaining the proposal to merge with Allergen, said that it would help put Pfizer “on a more competitive footing within our industry.” This was a reference to the fact that other big pharma companies, such as AstraZeneca, GlaxoSmithKline, and Novartis, are headquartered in countries with lower corporate tax rates...
All things considered, it’s hard to avoid seeing the merger proposal as a cynical move designed to boost Pfizer’s stock price and generate a windfall for the company’s senior managers, who are compensated mainly in equity. ...

    Posted by on Wednesday, November 25, 2015 at 10:33 AM in Economics, Taxes | Permalink  Comments (20)


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