Posted on 10/29/2015 9:58:10 AM PDT by SeekAndFind
The drug giants Pfizer and Allergan are in talks to merge.
If successful, the deal could be the largest this year. Allergan has a market value of about $113 billion.
It could also offer Pfizer something the US company has been after for a while -- a way to slash its tax bill.
It could do so with a so-called tax inversion, a legal move in which a US company merges with a foreign-domiciled company to shift its address to a country with a lower tax rate.
In this case it would have Pfizer moving its tax domicile — not necessarily its management headquarters — to Ireland, where Allergan is based.
Allergan and Pfizer on Wednesday said only that they were in "preliminary friendly discussions." They noted that there was no certainty they would reach a deal, and they declined to comment on potential terms.
For a deal to become an inversion, it has to be structured in a specific way — primarily the acquirer has to pay for part of the deal with its stock.
Buyers in inversions typically take pains to explain that avoiding taxes isn't their only -- or even primary --rationale for a deal, but it's no secret that Pfizer has been looking for an inversion target.
Pfizer CEO Ian Read has repeatedly said tax is a competitive challenge for US companies.
(Excerpt) Read more at businessinsider.com ...
Americans don’t realize that the US has some of the highest corporate tax rates in the world. We are not the “freest” economy in the world by a long shot anymore. We are now experiencing the problems that highly regulated, highly taxed countries have. One answer would be to create a more rational and lower rate tax system. Another answer is to demonize companies and to try to force them to stay, like South American socialist economies did in the 1970s. We all know how that worked out.
“Pfizer CEO Ian Read has repeatedly said tax is a competitive challenge for US companies.”
Hmmmmmmmmmmmm Ian Read....sounds a tad Irish to me. Perhaps there’s a bit of homesickness involved.
Given that the US market is one of the few in the developed world that doesn’t dictate drug prices to drug companies, the Federal government could probably force drug companies to either set stateside prices at European levels or pay American taxes.
Very interesting. Thanks for posting. Trump talked about this during his Iowa rally 2 days ago.
https://www.youtube.com/watch?v=zAbPS3UulGQ
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