Pfizer’s €151bn takeover of Allergan to net Irish Govt serious windfall

24 Nov 2015

The completion of the Pfizer takeover of Allergan for €151bn will benefit the Irish Government greatly, with the deal to see Pfizer bring €620m to the Irish economy in corporate tax.

Having been formally announced yesterday (23 November), the Pfizer deal to buy-out Allergan will make it one of the largest corporate takeovers in history, which will not only benefit the shareholders of Allergan but the Irish Government as well.

According to calculations made by The Irish Times, Pfizer’s total international revenue for 2014 was reported as being $28.5bn with international profits of $5.3bn, resulting in a profit margin of 18.4pc.

When the deal is completed, Pfizer has said, it will move its corporate headquarters to Dublin to take over Allergan’s Irish headquarters, along with Pfizer’s existing Irish manufacturing and research facilities, which will bring the company under Ireland’s corporate tax infrastructure.

With these figures, and based on the current exchange rate between the euro and the dollar, Pfizer would have paid €620m in corporate tax had it fallen under the Irish tax regime last year – significantly less than it would have had to pay under the tax regime in its native US.

Unsurprisingly, the US government is none too pleased with the takeover bid and Pfizer’s decision to move its corporate infrastructure to Ireland, presumably due to the US’ corporate tax rate of 35pc being undercut by Ireland’s 12.5pc rate.

This process, known as corporate inversion, is a common yet controversial process that has seen US companies lessen their tax burden by shifting their corporate infrastructure to Ireland.

If these figures are to be believed, then Ireland’s coffers are about to be significantly boosted, considering last year’s entire corporate tax revenues were €4.6bn.

Pfizer building image via pio3/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic