Pfizer, Allergan drug merger talks raise tax hackles in U.S.
By Bill Berkrot and Ransdell Pierson
(Reuters) - Pfizer Inc, the No. 1 U.S. drugmaker, and Botox maker Allergan Plc said they were in friendly talks to create a pharmaceutical colossus but the prospect that the company would seek to avoid U.S. taxes sounded political alarm bells.
Both New York-based Pfizer and Dublin-based Allergan said no agreement has been reached and declined to discuss any terms of the deal, which would potentially set up Pfizer to take advantage of Ireland's lower tax rates.
Allergan shares rose 6 percent to $304.38 in U.S. trading, while Pfizer closed off 1.9 percent at $34.77.
Pfizer is already facing political pushback at home that is only likely to intensify with the U.S. presidential campaign underway, as candidates take aim at high prescription drug prices and companies looking to avoid paying U.S. taxes.
A spokesman for Democratic front-runner Hillary Clinton said the candidate had not seen details of the proposed merger, but is against tax inversion maneuvers, in which U.S. companies relocate overseas to take advantage of lower tax rates.
"Clinton is committed to cracking down on so-called 'inversions,' where a company chooses to leave the U.S. on paper to game the tax system, and believes we should reform our tax code to encourage investment in the U.S., rather than shipping earnings and jobs overseas," Clinton spokesman Ian Sams said.
Democratic U.S. Senator Charles Schumer of New York said in a statement: "The continued pursuit of inversions, mergers and foreign acquisitions of major U.S. companies for purely tax purposes shows there is a lot more work to be done to stop them."
From the right, developer and Republican presidential candidate Donald Trump said the deal was a reminder that the U.S. tax code needed an overhaul. Continued...