AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) has allies in the fight against a takeover by Pfizer Inc. (NYSE:PFE), according to Bloomberg. Lawmakers in both the U.S. and the U.K. have vowed to come up with a way to keep the takeover from happening.
U.S. senators propose legislation
Under a proposal being brought by U.S. Senators Carl Levin and Ron Wyden, it would become more difficult for U.S. companies to change their legal addresses to overseas ones so that they could avoid paying taxes in the U.S. That would directly impact Pfizer Inc. (NYSE:PFE)’s proposal because the drug maker has said it would relocate its headquarters to the U.K. if the deal closes.
On Thursday, Gov. Martin O’Malley of Maryland and Gov. Jack Markell of Delaware both said they were worried Pfizer Inc. (NYSE:PFE) would slash jobs in their states. They expressed their concerns in a letter to the company’s CEO, Ian Read. The Democratic governors said Pfizer has not reassured them that it would keep the jobs currently located in their states where they are now. The two lawmakers note that Pfizer has a history of shutting down research facilities in the U.S., like those in Illinois and Michigan, which it shuttered after closing on past acquisitions.
Officials investigate Pfizer’s bid
AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) has already rejected Pfizer Inc. (NYSE:PFE)’s offer, although Pfizer said it wouldn’t give up on it anytime soon. Read is expected to speak in front of two different parliamentary committees in the U.K. next week.
U.S. officials may begin investigating Pfizer Inc. (NYSE:PFE)’s bid, according to Bloomberg. The company plans to change its legal address to the U.K. so that it can enjoy the country’s lower tax rate while keeping its actual headquarters in the U.S. At least 18 other companies have already either done this or are thinking about doing it.
U.S. seeks to erase overseas tax benefits
Sen. Ron Wyden is also working on a proposal that would raise requirements regarding the amount of stock owned by foreign partners when they reincorporate overseas. He said he wants to see foreign partners be required to hold at least 20% of the stock of U.S. companies reincorporating in their countries. However, he said he could raise that to at least 50%, which would send a clear signal to major companies that they “won’t profit from abandoning the U.S.,” said Wyden.
He wants that proposal to go into effect retroactive to May 8. If he gets his way, it would prevent Pfizer Inc. (NYSE:PFE) from getting the tax benefits it seeks by changing its address to the U.K. The drug maker wants current Pfizer shareholders to own more than 50% of the merged company.