By buying Ireland-based Allergan, Pfizer could avoid higher U.S. rates says The Edge Group
Oct 29, 2015
By Samantha Masunaga, senior reporter, Los Angeles Times: News of preliminary merger talks between drugmakers Allergan and Pfizer Inc. has reignited concerns about U.S. companies moving headquarters overseas to avoid higher corporate tax rates.
Allergan cautioned Thursday that there was “no certainty” that the “friendly” discussions would lead to a transaction. But many analysts believe that the deal could be the largest so-called tax inversion ever, which would enable New York City-based Pfizer to escape higher rates in the U.S. by buying a foreign company and reincorporating abroad.
There’s precedent for Pfizer’s potential motivations. Last year, the company made an unsuccessful bid for British drugmaker AstraZeneca in hopes of achieving a lower corporate tax rate overseas, said Jonathan Morgan, head of research at the Edge Consulting Group, an equities research firm specializing in mergers and acquisitions. The deal could be so high…