AstraZeneca boss claims ‘inversion deals aren’t dead’
Pascal Soriot has said that controversial inversion tax deals, branded ‘unpatriotic’ by President Obama, are still taking place despite attempts to curb the practice
AstraZeneca’s chief has said inversion deals used by US companies to escape high taxes at home are not over despite a major clampdown on the practice.
Pascal Soriot, who fought off a £69bn takeover attempt by American rival Pfizer in May, said that while it has become more “complicated” to structure inversion deals, they were still possible.
In an interview with The Sunday Telegraph, he said: “[The US Treasury] hasn’t said it’s impossible. It’s more complicated, but tax inversion deals can happen in the UK if the US tax office guidelines are basically followed or respected.”
Pfizer’s takeover proposals to AstraZeneca involved the US company moving its tax base to the UK to take advantage of the lower tax rate, plans that Mr Soriot criticised as risky at the time.
But since Pfizer was forced to walk away from AstraZeneca in May, Washington has introduced new rules in an effort to curb the practice, which has been branded “unpatriotic” by US President Barack Obama.
The new rules stopped short of an outright ban but doubled the proportion of stock that shareholders in the foreign target had to hold in order to execute a full inversion, from 20pc to 40pc. For inversions that did not pass the new threshold, it imposed a string of tough new tax rules.
The clampdown stopped several inversion deals in their tracks, most prominently the planned £32bn tie-up between Chicago’s AbbVie and London-listed Shire.
Mr Soriot said he was relieved that AstraZeneca did not agree a merger with Pfizer only for a deal to collapse following the introduction of the tightened rules, which he says would have been “distracting and destructive” for the organisation.
Pfizer is now free to make a fresh approach for AstraZeneca, though sources have said the situation is now “dead” and that the US drugmaker is focusing on other opportunities.
AstraZeneca’s current share price, which at around £47 is well below Pfizer’s final £55-per-share offer, also suggests that the City is not expecting a comeback from Pfizer.
Mr Soriot said it was “hard to know” whether Pfizer would return but that he was now focused on carrying out a plan to nearly double sales to $45bn (£29bn) by 2023.
AstraZeneca’s revenues are poised to decline for another two years as two historical bestsellers – cholesterol lowering Crestor and heartburn drug Nexium – lose patent production.
However, the Astra boss said he was “on track” with his goals. He also said he had not ruled out making acquisitions big or small, but that dealmaking was not a priority.
“We would consider a large acquisition but only if it was strategically aligned to what we are trying to do and we thought we could execute,” he said.