Politicians slam tax-avoiding Pfizer-Allergan deal

Republican front-runner Donald Trump, who has called for a corporate tax overhaul, called the deal “disgusting” in a statement, saying “our politicians should be ashamed”. The Treasury Department has taken steps, including several announced last week, to try to make inversions more hard.

Some commentary has suggested the State’s tax receipts could receive a multi-million euro boost as a result of Pfizer’s global profits being channelled through Ireland but UCC economics lecturer Seamus Coffey believes the deal will have little impact here.

Allergan shareholders will receive 11.3 shares of the combined company – Pfizer PLC – for each Allergan share, while current Pfizer shareholders will receive one share of the new company for each share they own.

“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”, said Brent Saunders, Chief Executive of Allergan, in a statement. The bottom line is that the driving force behind this merger is the greedy and counterproductive USA tax code. It’s also a savvy business move – Ireland’s corporate tax rate is 12.5 percent, whereas the US would levy 35 percent. There’s a wrinkle to this deal between the makers of Viagra and Botox: It’s being facilitated by a controversial tax trick known as an inversion, which lets American companies move their headquarters overseas, avoiding the IRS while keeping executives stateside.

The merger, once completed, will see Pfizer relocate to Dublin and the company’s tax bill shrink considerably.

Corporate mergers and acquisitions this year are on pace to break the record of $4.6 trillion set in 2007, according to Dealogic, which tracks the market. In the case of healthcare, some have said that as the number of players in each sector shrinks, consumers will have fewer choices and prices will rise.