Michael Noonan: Pfizer's mega deal with Allergan is no threat Ireland's corporate tax rate

Finance Minister Michael Noonan has rejected suggestions that a $160bn (€150.3bn) mega tie-up between US rivals Pfizer and Allergan will throw Ireland’s low corporate tax back into the world’s spotlight.

The deal — the biggest ever for the world’s pharmaceutical industry—is being driven in a large part by Irish tax considerations. A major advantage for New York-based Pfizer is that the deal will allow it to piggy back off Allergan’s Irish tax domicile and slash its US corporation tax bill.

The new pharma behemoth will be 56% owned by Pfizer and will help it tap a lower tax rate here than Pfizer currently pays in the US.

As the race for the White House hots up, such so-called tax inversions have again raised the hackles of US lawmakers. The US Treasury wrote a note to lawmakers last week saying it would soon take measures to suppress future tax inversions.

Both Pfizer, with a large facility in Cork, and Allergan, which makes botox in Westport, are both substantial employers here. Pfizer Global of Cork is the 10th largest exporter in Ireland and employs 4,000 people in facilities in Cork, Dublin and Kildare. Allergan, which was itself created by a merger last year, sold a drugs unit last summer, and employs about 1,000 people here.

Speaking to reporters in Brussels yesterday, Mr Noonan, noting that both companies have large operations here, said the mega deal would not put Ireland’s tax regime into a bad light. “We are not pushing for inversion, the IDA never promotes inversion — it’s a decision by the two companies. Our interest would be to ensure that not only are there no job losses but that extra jobs are created,” he said.

In a telephone briefing to analysts, Pfizer said the deal would generate $2bn in savings over the next two years.

But though not explicitly signalling as much, those synergies may be good news for Ireland because there is relatively little overlap in the products made by Pfizer and Allergan worldwide.

US-based reporters said the deal is sure to draw political ire in a US presidential election year.

It will also reignite debate in the pharmaceutical industry over the role of research and development, with Allergan chief executive Brent Saunders, a prolific deal maker and a sceptic of in-house drug discovery, joining the combined company.

With a little more than five weeks left in 2015, the Pfizer-Allergan deal brings the value of M&A announced this year to $3.42 trillion, compared with the $3.4tn in 2007, according to Bloomberg data.