Could Pfizer-Allergen Merge Stop Just When Its About To Reach The Finish Line?

Pfizer is not getting the easy way out with it acquisition of Allergen still pending more reviews and criticism of the US Treasury

The merge with an Irish based Botox Company, Allergen Plc. Of Pfizer have been making headlines from criticism sympathy and much more gaining the attention of democratic and the government of the United States. The medicinal giant company hoped to avoid huge tax bills via this merge as its address would change to Ireland instead. This process is known as inversion, the US Treasury will not let this happen as easily as the drug maker had hoped and has released new policies and rules. This change would stop US based businesses do not attempt to avoid taxes.

Pfizer Inc. received this unfortunate news on Monday from the US Treasury which might damage the plans of its merge with Allergen worth $160 billion. This even lead to Allergen stock falling by as much as 22%, but the drug makers shares rose by 3% according to Reuters. This ‘supposedly’ inversion merge between the two companies would have moved the US Company’s address to Ireland putting it at an advantage in terms of smaller tax bills to as much as 12.5% instead of US’s 35%.

The pharmaceutical company is now the notice it has received from the US Treasury without making any assumptions of its own. It should not be concluded that the government of the United States has anything against these companies but it should also be taken into consideration that it is only making attempts to protect its own rights and stopping other companies from taking advantage of any loopholes in order to save it treasury.

Many US based companies have been doing this which the government has closely been observing and taking action against. Businesses are from the US and operate there but merge with another foreign company and get their home address changed avoiding taxes of the United States. Republicans such as Hillary Clinton and Donald Trump are against such actions of companies and have discussed this at their campaigns. The Treasury has even disclosed a statement that says foreign organizations will now be imposed with a three year limitation so that acquisitions and inversion deals can be avoided.

No speculations can be made at this point of what Pfizer’s next move is going to be after this update but there is lesser chance that it will back out from the merge now. It says that inversion was never its main motive of the takeover. Allergen will continue to sell its generics division to Teva according to Davis as it will get the company money. Both these parties involved in the merge can end the deal if they wish to, however the party ending the deal is going to have to pay the other an amount of $400 million, this is what the agreement states.