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| Thomas Nides |
AstraZeneca didn't just fan the flames of U.K. political opposition to fend off Pfizer's $117 billion takeover attempt earlier this year. The British drugmaker also took its lobbying to Washington.
As The Wall Street Journal reports, AstraZeneca ($AZN) hired two Wall Street insiders close to the White House to step in as the Pfizer siege was underway. Morgan Stanley's Thomas Nides and Evercore Partners' Roger Altman were the chosen two. Their target: the tax-inversion strategy key to Pfizer's buyout plans.
Pfizer ($PFE) bowed out in late May, and since then, D.C. officials have taken up their swords against tax inversion deals, which allow U.S. companies to dramatically cut their taxes by "moving" their headquarters to a friendlier jurisdiction. Buying AstraZeneca would have allowed Pfizer to jump the Atlantic, tax-wise, and save several billion in the process.
For obvious reasons, U.S. officials aren't crazy about the idea. And with many more companies than Pfizer looking to pull off the same tax trick--including AbbVie ($ABBV), which is paying $54 billion for the Irish drugmaker Shire ($SHPG) partly for that reason--President Obama and his administration have scolded the dealmakers as un-American. As the Journal reports, Treasury Secretary Jacob Lew called on Congress to take action, and now Treasury is weighing action itself.
Meanwhile, AbbVie has hired K Street lobbyists Nixon Peabody and Lincoln Policy Group to help keep its Shire merger on track in the face of inversion opposition. Under the two companies' buyout agreement. AbbVie can't walk away if U.S. tax laws change, and the deal requires AbbVie to pay up to $1.6 billion to Shire if their merger doesn't go through. So, AbbVie has some powerful motivation to fight off a retroactive inversion ban.
And on the other side of the coin, Allergan ($AGN) is twisting arms in Washington in another attempt to fend off Canada-based Valeant Pharmaceuticals ($VRX), which plans an inversion as part of its hostile takeover of the California drugmaker.
As for Pfizer and AstraZeneca, U.K. takeover rules now allow AstraZeneca to invite its would-be buyer to the table. They also would let Pfizer make a one-off, private offer. In November, Pfizer can come back full-tilt with a public bid. Investors appear to be betting that another Pfizer offer will materialize. AstraZeneca? CEO Pascal Soriot said earlier this week that he's none too concerned about another fight. We'll see what he says in a couple of months.
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- see the InTheCapital item
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