Biotech Values

[DewDiligence]

Re: PFE’s tax bombshell

For many individual investors, there’s any even bigger issue with the proposed PFE/AZN merger than the ones raised by Matt Herper in the write-up you posted: because the new company would be incorporated in the UK, the merger would be a taxable event for PFE shareholders. From PFE’s PR today (scan past the bulleted points on the rationale for the deal):

http://finance.yahoo.com/news/pfizer-confirms-prior-discussions-astrazeneca-060800085.html

The completion of a possible transaction is subject to the approval of Pfizer’s shareholders and is expected to be a taxable event to Pfizer’s shareholders.

If the proposed deal is consummated, for income-tax purposes PFE shareholders would be deemed to have sold their PFE shares and bought shares of the new company rather than swapping shares in a tax-free manner as is typical in stock mergers.