Pfizer, the monster pharmaceutical maker well-known for Viagra, Celebrex, and Enbrel, just won’t take no for an answer! It has tried to buy Astra-Zeneca two times and has been rejected. Pfizer revised their offer just Saturday in another attempt to bring the two companies together.
Mergers make sense when they fill in gaps in product lines or allow for cost-cutting or brand extensions. What analysts believe is driving this purchase has more to do with taxes than other benefits — although some of these benefits do exist. Apparently Pfizer has a lot of cash from sales overseas and doesn’t want to have it taxed at the U.S. Rate, so instead, Pfizer wants to purchase a foreign-owned company with that cash.
Pfizer will then combine the two drugmakers in a new company based in the United Kingdom and will redomicile in the U.K. The goal is to avoid high corporate U.S. tax rates. Pfizer would not be the first or the last. Apple bases much of its international operations in Ireland, and has been able to save billions of dollars in taxes in recent years.
While the PR people at Pfizer may be talking up the revenue gained from Astra-Zeneca or the replacement of revenue once patents expire, those are just the talking points. It’s all about redomiciling and avoiding high U.S. corporate tax rates where possible. Oh, and by the way, the two companies have brands that will see increased market penetration and support from the new holding company.