Pfizer has received a lot of pushback over its proposed deal to buy Allergan for $152 billion. The merger itself is not the problem, but what the company plans to do after the merger is complete. Pfizer has revealed plans to move its corporate headquarters to Ireland in order to reduce its tax bill in the United States in a move called a corporate inversion. The merger was announced on Monday.
Corporate inversions happen when an American company buys a company in a country with lower corporate taxes to reduce its tax obligation. It has sparked a fierce debate over whether deals like this are ultimately good for the United States.
The merger between Allergan and Pfizer would be the biggest merger in the last 15 years. Pfizer, founded by German immigrants in Brooklyn in 1849, is currently the largest drug maker in the nation. Pfizer would be the biggest American company to shed its American citizenship to lower its taxes.
Lawmakers in Washington are not happy with the plan and some are seeking to derail it. Democratic presidential candidate Hillary Rodham Clinton remarked, “We cannot delay in cracking down on inversions that erode our tax base.” Republican presidential candidate Donald J. Trump released a statement saying: “The fact that Pfizer is leaving our country with a tremendous loss of jobs is disgusting.”
The chief executive of Pfizer Ian C. Read has been making phone calls to Washington lawmakers and Obama administration officials seeking support for the deal. Read said that the corporate inversion would actually be good for the United States by giving the company more cash to add jobs and invest in the United States. The two companies and their advisers are betting that the Treasury Department and Congress will not be able to change the rules fast enough to block the deal.