- Thomson Reuters
The CEO of the Irish drugmaker Allergan says the US Treasury’s moves to tighten rules regarding so-called tax inversions are “un-American” and hurt the US “on a global scale.”
The US pharmaceutical company Pfizer scrapped its $160 billion merger with Allergan on Wednesday in response to this week’s announcement of new Treasury rules that look to have been designed almost specifically to keep Pfizer from benefiting from the merger.
The new Treasury rules target corporate inversions, in which US companies merge with competitors outside the country as a way to switch to a different country’s lower corporate tax rate.
“This administration and these types of policies hurt America’s ability to compete on a global scale,” Allergan CEO Brent Saunders said Wednesday in an interview with CNBC.
He added that the US was effectively building a wall around itself and that these kinds of measures undermined confidence in the rule of law in the US.
“We built this deal along the regulations – all the notices that were put out by the Treasury – and it was a highly legal construct,” he said.
“We followed the rules that Congress had set [and] for the rules to have changed after the game had started to be played is a bit un-American, but that’s the situation we’re in.”
Asked whether he thought the Treasury had specifically targeted his deal, Saunders said, “It certainly appears that way.”
He said his company was a job creator and the idea that it shifted jobs overseas was “preposterous.”
“This idea that we take and don’t give is simply not true,” he said.
Saunders said Allergan invested in the US in the form of manufacturing, scientists, and research and development.
“Being inverted … allows us to more easily invest in the US than a US company,” he said.
He added that his company paid taxes in the US as well.
“With global companies like us, we look at the world – we look for certainty and rule of law … Do we need to start worrying about that in the greatest country in the world, the United States?” he said.
“I personally am an American and am a patriot,” added Saunders, who was born in Arizona.
The Treasury rules curbing corporate inversions proposed Monday came across as particularly stringent, as The Wall Street Journal noted. One rule disregards transactions less than three years old when determining how big a company is under the US tax code. Under this new rule, The Journal said, Allergan was no longer big enough to be Pfizer’s inversion partner.