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New York Business Journal: Pfizer’s Dublin Plans are Dubious Amid New Regs and Allergan’s Nosedive

The deal currently doubles as a ploy for Pfizer (NYSE: PFE) to not only buy Allergan (NYSE: AGN), but switch its headquarters to Dublin to lower its tax rate. Such a move would help it avoid a $35 billion tax bill, according to a recent report by Americans for Tax Fairness.

This piece appeared in the New York Business Journal.


Not so fast, Pfizer Inc.

Plans for the $160 billion union between the New York-based drug company andAllergan PLC are at stake now that the US Treasury Department plans to crack down on tax inversions. Investors, meanwhile, are spooked.

Allergan did not fair well in after hours trading on Monday. And its stock continues to take a hit today: at mid-day, the Ireland-based pharma company iwas down more than 16 percent to $231.54 on the news that new regulations have been unveiled to hamper the plans Pfizer cooked up once the acquisition wrapped up.

The deal currently doubles as a ploy for Pfizer (NYSE: PFE) to not only buy Allergan (NYSE: AGN), but switch its headquarters to Dublin to lower its tax rate. Such a move would help it avoid a $35 billion tax bill, according to a recentreport by Americans for Tax Fairness.

Naturally the U.S. government hasn’t warmed up to that trend, which saw companies such as Burger King ditch Miami to head over to Canada. Other tax dodgers include Medtronic, Horizon Pharma, Endo International and Jazz Pharmaceuticals. ( For a more complete list, click here.)

Late Monday, the Treasury introduced a regulation that would negate the tax benefits of Pfizer’s purchase. Pfizer quickly followed up with a prepared statement: “We are conducting a review of the U.S. Department of Treasury’s actions announced today. Prior to completing the review, we won’t speculate on any potential impact.”

Pfizer’s and Allergan’s merger, announced late last year, would create the world’s biggest drug company. Not long ago, Allergan combined with Actavis to create one of the world’s top 10 pharmaceutical companies by revenue.

Meanwhile, investors are concerned. Aside from the Treasury’s decision, Allergan has also been closely linked to fellow drugmaker Valeant Pharmaceuticals. In recent years, both companies have relied on an aggressive M&A strategy to build out their respective businesses, but creating substantial amounts of debt in the process.

Valeant also switched its headquarters to Canada after an M&A deal with Biovail in 2010.