Transcript PPT - National Journal

Pfizer and Allergan’s $155 Billion Merger Would be the
Largest Ever Tax Inversion Deal
• The New York-based Pfizer and Dublin-based Allergan announced a
merger to form Pfizer PLC
• The deal is valued at about $155 billion, making it the second-largest
merger of all time, behind only a 1999 merger of two European
telecommunications firms
• The merger allows Pfizer to move its headquarters to Ireland, where the
corporate tax rate is significantly lower - a move known as a tax inversion
• Pfizer CEO Ian Read has been openly critical of the US corporate tax rate,
referring to it as something that puts American-based companies at a
competitive disadvantage to their overseas rivals
Days before the merger was announced, the Treasury Department released new rules aimed at curbing
inversions, although they are unlikely to deter the deal:
New Treasury Department Rules:
1.
Prevents two companies, one foreign and one domestic, from forming a new corporation that is
headquartered in a third, separate country
2.
Prevents companies from inflating a foreign parent corporation’s size to circumvent existing rules
that prevent mergers with too large of a size differential between companies
3.
Ensures that new parent corporations are official tax residents of the country in which it is located
Sources: Jonathan D. Rockoff, Dana Mattioli, and Lisa Beilfuss, “Pfizer and Allergan to Merge in $155 Billion Inversion Deal,” WSJ, Nov. 23, 2015; Owen Davis, “Corporate Tax Inversions: Treasury Department’s New Rules Won’t
Stop Company Deals Designed to Avoid US Taxes,” IBT , Nov. 20, 2015; Jackie Wattles and Heather Long, “Pfizer and Allergan combine in biggest drug merger ever,” CNNMoney, Nov. 23, 2015