martes, 3 de noviembre de 2015

Taxes es el racional de un Mega merger Pfizer & Allergan?

Pfizer, the world’s largest drug company, which was founded in Brooklyn in 1849, is for the second time contemplating a merger that would allow it to move its headquarters out of the U.S. and avoid U.S. taxes. 

Pfizer and Botox-maker Allergan, itself created in $67 billion merger last year, confirmed this morning that they are in early merger discussions. The discussions are friendly, but could fall apart. 

A Pfizer-Allergan combo is so obvious that I wrote about it in my January cover profile of Allergan CEO Brent Saunders, who has been responsible for a string of gigantic pharma deals in a span of just a few years. Buying Allergan would bolster both Pfizer’s business of selling new, innovative drugs and its second business of selling older medicines that still generate significant sales. It would allow Pfizer to split those two businesses apart, as the company has said it may do, but with greater scale and better growth. Chris Schott at J.P. Morgan wrote in a note to investors this morning that he expects Allergan’s sales to grow 9% a year from 2016 to 2020, compared to a growth rate of 2% for Pfizer as a whole. 

But Allergan’s sweetest asset is likely the similar to the one that led Pfizer Chief Executive Ian Read to bid for London’s AstraZeneca in 2014. 
Thanks to its merger with Actavis last year, Allergan now has its corporate headquarters in Dublin, Ireland. For Pfizer, which has billions of dollars in cash locked up overseas, that’s appealing. 

When I interviewed him this summer, Read was clear that he thought the Astra deal had been a good idea, despite criticism that such mega-mergers are generally hurt a company’s ability to invent new medicines. The reason? Taxes
Yet, the fact that the US presidential elections are just around the corner and political scrutiny into affairs of drug-makers is becoming part of election campaigns, makes many wonder if the timing of the deal is right. Credit Suisse analyst Vamil Divan said in a recent research note that while the two companies are unlikely to face anti-trust issues, “we assume political rhetoric around inversions may flare up again now.” Last year, Pfizer had faced much political backlash at home, when it aggressively tried to acquire London-based AstraZeneca plc. (ADR) for $118 billion.

And sure enough, the critique of Pfizer’s new inversion attempts began soon after the reports emerged. US Senator Charles Schumer said in a statement: “The continued pursuit of inversions, mergers and foreign acquisitions of major US companies for purely tax purposes shows there is a lot more work to be done to stop them. It will take legislation to effectively combat this disturbing trend." Billionaire investor Carl Icahn said loss of America’s tenth-biggest company to tax inversion will cut hundreds of thousands of jobs in the country. 

Here’s How Pfizer Inc Can Avoid Backlash On Allergan Deal

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