Pfizer Inc.(NYSE:PFE) is negotiate to takeover Allergan PLC(NYSE:AGN) for range between $370 to $380 per share. This takeover priced at $380 per share which valued Allergan at nearly $150 billion. It is the biggest health care acquisition ever, and the largest one this year.
Pfizer has been complaining that the U.S. tax system hobbles its ability to compete globally. The company told investors that the global tax rate in 2014 is 25.5%. Pfizer could have limit that rate to 7.5% if it reported its foreign earnings, such as most U.S. corporations do. The pharmaceutical giant believe this acquisition could put the combined company address outside the U.S. legally.
“It gives a distorted picture of how much tax they’re paying,” said Marty Sullivan, chief economist at Tax Analysts, the nonprofit publisher of Tax Notes. “Their tax situation is one of the most advantageous of any major U.S. corporation.”
Joan Campion, a spokeswoman for Pfizer, said the company complies with rules and regulations. “Our aim is to level the playing field with foreign competitors and to have more resources to accomplish our purpose of bringing more innovative therapies to patients,” she said. “We are focused on continually improving the way we do business while maintaining the highest standards of compliance.”
Pfizer is preparing to announce an agreement of merger with Allergan as soon as next Monday, but the new action of government may delay the final agreement. The U.S. Treasury Department will release new “targeted guidance” which designed to reduce the tax incentives available to U.S. companies that move their tax addresses overseas.
Treasury Secretary Jack Lew reported lawmakers of the coming announcement in a letter on Wednesday, which didn’t provide details on its intentions. “Later this week, we intend to issue additional targeted guidance to deter and reduce further the economic benefits of corporate inversions,” wrote Mr. Lew, who renewed his call for anti-inversion legislation.
Government wants Congress to prevent national companies from inverting by buying smaller foreign firms. “Unless and until Congress acts,” Mr. Lew wrote, “creative accountants and lawyers will continue to find new ways for companies to move their tax residences overseas and avoid paying taxes here at home.”
Rep. Sander Levin, the top Democrat on the House Ways and Means Committee, said he stand by Treasury’s new action. “The fact that American companies, including Pfizer, continue to pursue inversions makes clear that additional steps are needed to stop this trend,” he said in a statement.