Pfizer, Allergen Deal at Risk Over New Tax Rules

The video discusses the impact of Treasury's new rules on the Pfizer-Allergan deal, focusing on ownership structure and tax benefits. It explains earnings stripping and inversion strategies, and the implications of breakup fees if the deal fails. The potential for rule rollback with a new Congress and historical examples like the AbbVie-Shire deal are explored. Finally, it considers Allergan's future as an independent company, highlighting its financial stability and growth prospects.

What is the effect of the Treasury's new rules on Allergan's ownership in the pro forma company?

• It completely eliminates Allergan's ownership

• It has no effect on Allergan's ownership

• It reduces Allergan's ownership to 25%

• It increases Allergan's ownership to 50%

Which tax benefit might still be available to Pfizer after the new rules?

• Lowering the tax rate to 12.5%

• None of the above

• Hopscotch loans

• Earnings stripping

Under what condition would a $400 million breakup fee apply?

• If the deal is completed successfully

• If Allergan's shareholders reject the deal

• If Pfizer decides to pursue another merger

• If the deal is canceled due to a change in law

What was the breakup fee paid by AbbVie to Shire?

• $400 million

• $33.75 billion

• $1.6 billion

• $3.5 billion

What is Allergan's financial position after selling its generics unit?

• It has enough cash to pursue other deals

• It is struggling financially

• It is planning to file for bankruptcy

• It is dependent on Pfizer for survival