Just weeks after the collapse of Pfizer's controversial deal to buy fellow drugmaker Allergan and move its headquarters to Ireland, company executives faced sharp criticism from shareholders at their annual meeting.
The record $160 billion deal was structured as an inversion, in which an American multinational company moves its headquarters on paper — but little else — to another country with lower tax rates. Rules issued by the U.S. Treasury Department on April 5 eliminated most of the Allergan deal's financial incentives and forced New York-based Pfizer and Dublin, Ireland-based Allergan to drop their deal the next day.
One shareholder accused Pfizer of offering too much for Allergan, given its stock plunge after the deal was scrapped. He asked Pfizer CEO Ian Read who was protecting the interests of shareholders.
Read responded that Pfizer's board and outside advisors at two investment banks all supported the offer price, and executives believed the acquisition would be good for Pfizer.
"I believe the transaction would have produced substantial gains for shareholders," Read said.
He told another shareholder asking about the scrapped deal that Pfizer would have been able to market Allergan's drugs internationally, which would have boosted their sales because Allergan mostly sells its medicines in the U.S.
Another shareholder asked whether Pfizer would try to do another inversion deal.
"I'm very pleased that the Allergan merger failed (and) that our company will remain all-American," the man said.
Read said Pfizer instead will decide by year's end whether to separate its business that sells its older drugs, mostly in developing countries — a strategy some analysts and investors have long urged as a way to accelerate growth. Read said the Allergan deal would have made Pfizer more competitive against big European drugmakers that pay lower corporate tax rates, and it would have enabled Pfizer to invest more in the U.S.
"We will redouble our efforts to try to get (U.S.) tax reform," he added.
With the Treasury Department's new inversion rules specifically meant to block the Allergan deal, he added, "the U.S. is no longer a country of laws" and companies won't know what to expect as they plan future business deals.
Other speakers at the meeting urged Pfizer to do more to help patients afford its medicines, including in poor countries.
One shareholder complained about Pfizer's stock price, which has long been well below that of its major rivals.
"Pfizer shares have not gone basically anywhere over the years," the man said.
Read countered that "total stock return over the last five years" — the length of his tenure — has beaten that of the Standard & Poor's 500 index and its drug index.
Meanwhile, preliminary vote totals on company proposals showed more than 90 per cent of shares were voted to approve the company's auditor, new one-year terms for board members and the compensation packages of Pfizer's top executives. All four shareholder proposals failed to pass.
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Linda A. Johnson, The Associated Press