Pfizer says the window is still open for US companies to use transatlantic deals to lower their tax rates despite President Barack Obama’s threat to rein in the practice.
Ian Read, chief executive, said the heated rhetoric against so-called “tax inversions” was political theatre ahead of the November midterm elections and predicted there would be no legislation to block such deals in the near term.
He made clear that Pfizer is still open to a potential tax-saving acquisition in Europe four months after admitting defeat in its £69.4bn pursuit of the UK’s AstraZeneca.
But he said Pfizer would not be “held hostage” over price – a comment that analysts interpreted as a signal the company might look elsewhere for a deal after being rebuffed by AstraZeneca.
Thirteen inversion deals worth $178bn have been announced since the start of 2013, according to Dealogic, involving US companies using an overseas acquisition to move their tax home offshore.
Mr Obama has branded these companies “corporate deserters” and Democrats on Capitol Hill have been working on legislation to halt the practice.
But in an account of a meeting with Mr Read, Tim Anderson, analyst at Bernstein, said Pfizer “does not see the window shutting from a legislative point of view” because of a lack of support for action from Republicans.
Mr Anderson said Mr Read had dismissed as “ridiculous” a claim by Jack Lew, US Treasury secretary, last week that inversions threatened to undermine efforts to cut the budget deficit.
The Treasury’s estimate of $20bn in lost revenues from inversions would make little difference to the $6tn deficit, Mr Anderson quoted Mr Read as saying.
Pfizer appeared to be placing a “high priority” on finding an inversion deal that would allow it to shelter overseas revenues from the 35 per cent US corporate tax rate – one of the highest in the developed world – according to Mr Anderson.
Pfizer “feels that to be competitive with ex-US companies it needs to have easier access to trapped offshore cash, and it believes that the ‘inversion window’ is still open”, he added.
His comments will stir speculation about a possible renewed bid for AstraZeneca but Mr Anderson said Mr Read sounded cool on the idea.
“Management did seem to suggest that it could be looking elsewhere . . . saying that it did not need to be ‘held hostage’, and suggesting that [AstraZeneca] does not have a highly unique, must-have collection of pipeline products.”
Analysts and bankers have identified Actavis, the Ireland-based generic drugmaker, as the most likely alternative target. Mr Anderson said Pfizer “seems open” to a deal with a generics manufacturer to bolster its own portfolio of off-patent medicines ahead of a possible future break-up of the group.
