AZ stock has fallen over 3.5% just today. This deal is over.
http://blogs.marketwatch.com/health...ocate-after-merger-deal-draws-lawmakers-fire/
Pfizer’s plan to buy London-based drug maker AstraZeneca and consolidate its headquarters in the U.K. to avoid higher U.S. tax rates is drawing fire from federal lawmakers, who are devising legislation to try and stop it.
It’s a long shot, though, that Sens. Carl Levin of Michigan and Ron Wyden of Oregon, both Democrats, will be able to devise a quick fix to prevent the move that will pass both houses of Congress. The corporate practice, known as “inversion,” was dubbed a “loophole” by Levin, who said allowing it would threaten federal tax receipts.
“Companies that exploit this loophole benefit from the protections and services the federal government provides, including patent protection, research and development tax credits, national security and more; they shouldn’t be allowed to shift their tax burden onto others,” Levin said in a prepared statement issued late Thursday.
Wyden told reporters that inversions represent a “hollowing out” of the tax base. He said he’s looking to take immediate steps to prevent the move.
Bloomberg quoted Sen. Rob Portman, a Republican from Ohio, as saying he was open to Wyden’s ideas but worried about the prospect of driving more jobs overseas. The news agency also quoted Sen. Orrin Hatch, Republican of Utah, as saying he agreed that inversions were a “big problem” but he does not agree with Wyden so far on a potential solution.
Pfizer PFE -0.60% , however, is not the first to make such a move, though it is the most notable. It’s offering to buy AstraZeneca AZN -3.10% for $106 billion, or $84 a share. AstraZeneca thus far has resisted Pfizer’s overture.
But there have been several other instances in recent years. Drug maker Actavis ACT -0.78% went from putting an “Inc.” after its name to a “PLC” once it domiciled in Dublin, Ireland after acquiring Warner Chilcott for $5 billion in 2013. Another drug maker, Perrigo, PRGO +0.99% did the same last year after buying Irish biotech Elan for $8.6 billion.
The issue could surface again next year after drug retailer Walgreen Co. WAG -0.78% decides whether to exercise an option to buy the remainder of Alliance Boots, a European drug store chain with roots in Switzerland and the U.K. Walgreen now owns 45% of the company.
Prospects for Levin and Wyden of passing some legislation to curb the problem, however, may be remote as Republicans are calling for an overhaul of the tax code. The two lawmakers say they are looking to pass a bill quickly that could thwart Pfizer’s plans.
