Drugmakers Pfizer Inc. and Allergan Plc are scrambling to determine whether to proceed with their plan to merge and move Pfizer’s address – but not its operations or headquarters – to lower-tax Ireland. They are taking another look after the U.S. Treasury Department issued new rules to make such “tax inversion” deals less profitable.
Both companies were mum Tuesday on what they’ll do, other than to swat swirling rumors that they’re leaning toward dropping the inversion.
But analysts and tax experts are debating whether the new, unexpectedly aggressive tax law changes issued late Monday will kill the deal.
Most are saying the new rules likely will – and that the changes and their timing are squarely aimed at preventing New York-based Pfizer, the biggest drugmaker based in the U.S., from completing its proposed $160 billion Allergan acquisition and inversion in the second half of the year.
“The Obama administration isn’t just sending a message to Pfizer, it’s sending a message to all U.S. companies contemplating inversions, and that message is ‘Don’t,” said analyst Steve Brozak, president of WBB Securities LLC.