Pfizer proposes a marriage and a move to Britain, easing taxes
Pfizer, the maker of best-selling drugs like Lipitor and Viagra and a symbol of business prowess in the United States for more than a century, no longer wants to be an American company.
On Monday, Pfizer proposed a $99 billion acquisition of its British rival AstraZeneca that would allow it to reincorporate in Britain. Doing so would allow Pfizer to escape the U.S. corporate tax rate and tap into a mountain of cash trapped overseas, saving it billions of dollars each year and making the company more competitive with other global drugmakers.
A deal — which would be the biggest in the drug industry in more than a decade — may ultimately not be done. AstraZeneca said Monday that it had rebuffed Pfizer, after first turning down the company in January. Nonetheless, the pursuit by Pfizer, founded in a redbrick building in Brooklyn, N.Y., in 1849, has made it clear that the company wishes to effectively renounce its U.S. citizenship.
Pfizer points out that it would retain its corporate headquarters here and remain listed on the New York Stock Exchange. It also says that the main rationale for the deal is broadening its portfolio of drugs, and saving money through combined operations with AstraZeneca.
Still, a deal would allow it to follow dozens of other large U.S. companies that have reincorporated abroad through acquiring foreign businesses. They have been drawn to countries like Ireland and the Netherlands that have lower corporate rates, as well as by the ability to spend their overseas cash without being highly taxed.
At least 50 U.S. companies have done mergers that allowed them to reincorporate in another country — nearly half of those deals have taken place in the past two years.
But Pfizer is now the largest and best-known of them to try to expatriate. There are several benefits of being effectively a British company. Pfizer pays an effective tax rate of 27 percent. Though it did not specify what the new rate might be, the British corporate tax rate is 21 percent and will soon fall to 20 percent.
Analysts at Barclays estimated that for each percentage point less Pfizer paid in taxes, it would save about $200 million a year by reincorporating. People briefed on Pfizer’s discussions said that figure could be substantially higher. That means that Pfizer would be saving at least $1 billion a year in taxes alone.
—David Gelles and Michael J. De La Merced,
The New York Times
British publicist convicted of indecent assaults
LONDON — Max Clifford, Britain’s best-known celebrity publicist, was found guilty Monday of eight charges of indecent assault, including offenses dating back decades against women as young as 15.
Clifford, 71, who had denied the allegations, became the first high-profile person to be convicted after a police investigation set off by revelations that Jimmy Savile, a BBC television presenter who died in 2011, had been a serial sex offender.
Clifford, whose celebrity clients over the years have included Muhammad Ali and O.J. Simpson, forged close relationships with several of Britain’s tabloid newspapers and was behind many big celebrity exposés.
He had been charged with 11 counts of indecent assault but the jury cleared him on two charges and was unable to reach a verdict on another.
Clifford is to be sentenced Friday. More than a dozen people have been arrested as part of the police inquiry known as Operation Yewtree.
—Stephen Castle, The New York Times
Obama administration begins search for new contractors to run health care site
WASHINGTON — The Obama administration has begun a wide-ranging search for companies to run the online federal health insurance exchange, seeking new talent to prevent a repeat of problems that immobilized the website last fall.
In laying out specifications for the project, the administration also provided insight into the next phase of development of the insurance marketplace, which is expected to handle a significant increase in enrollment over the next several years.
Federal officials said Monday that they intended to hold a new competition before awarding a contract and that they were particularly interested in responses from small businesses owned by women, disabled veterans and “socially and economically disadvantaged individuals,” including blacks and Hispanic Americans.
Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said the move was a prelude to “the expected recompetition” of the contract for operation of the federal exchange.
“We must perform market research in order to determine if there are any small businesses that could perform this work,” Albright said. The focus on smaller companies may reflect the administration’s displeasure with how the project was managed by large government contractors like CGI Federal, the U.S. subsidiary of the CGI Group of Montreal, which had much of the responsibility for HealthCare.gov. Administration officials blamed the company for many of the problems that prevented people from enrolling online last fall, and in January they brought in another company, Accenture, as the “lead contractor.”
The administration is now looking for companies to take over the project when Accenture’s contract expires in January 2015. Joanne Veto, a spokeswoman for Accenture, said the government’s effort did not reflect on the company’s performance.
In documents distributed to federal contractors, the administration makes clear that it wants to find a vendor that can overhaul the website under “aggressive time constraints.” The new contractor is supposed to make “continuous improvements” in the federal website, expanding its capacity and reducing error rates and response times.
—Robert Pear, The New York Times