It took no time for news of a $160 billion merger between Pfizer and Allergan to spur objections from several presidential candidates.
The deal will allow Pfizer to move its domicile from the US to Ireland, where its tax bill will fall drastically. The politicians see this expatriation as a slap in the face.
The companies seem to be pretty confident of this. They agreed to pay only a tiny breakup fee in the event that a change in laws causes them to part ways.
The termination fee for pulling out of the deal for other reasons would stand between $3bn and $3.5bn, in line with other deals of this size, but the merger agreement allows the companies to walk away for a fraction of that amount “due to an adverse change in the law”.
The Financial Times said there was nervousness that the largest ever “inversion” deal could fall prey to political interference, because it would allow Pfizer to avoid at least $21bn in future US tax bills by moving the combined group to Ireland, where Allergan is based.
A Pfizer spokesman said the company believes that tax reform is important to US competitiveness, a view that CEO Ian Read has repeated since long before the Allergan deal.
Full content: The Financial Times
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