Cantillon: big deal for Allergan and Pfizer advisers

Barack Obama sees something of the night in corporate inversions, in which US giants move headquarters to places such as Ireland for tax reasons.

As the US president introduced new laws to stamp out inversions, he angrily decried the practice as “one of the most insidious loopholes” in the tax playbook. The intervention from the White House was enough to bring an abrupt stop to Pfizer’s $160 billion (€140 billion) takeover of Dublin-registered Allergan. This was the was biggest inversion to date, a matter of considerable contention in Washington and a source of yet more international criticism of Ireland’s corporate tax regime. Within three days, Pfizer must pay Allergan $150 million to reimburse it for costs, fees and expenses incurred in the failed deal.

Quite what all of this means for the well-remunerated advisers to both camps can only be guessed at. It’s a racing certainty, however, that a considerable body of work is now at a halt. The incomplete transaction, in motion well before Pfizer and Allergan went public last November, has already put very many hours on the meter in the legal and accounting worlds. The bigger such deals come – and this was the whopper of whoppers –the more work there is on the advisory side. The greater the fees too – no small thing.

That this particular inversion drew abundant ire in American politics is clear. But it must have the exact opposite effect in the offices of McCann FitzGerald*, legal adviser to Pfizer’s Irish operation, and at Arthur Cox, which fulfils the same function for Allergan. The same goes for KPMG in Dublin, which audits Pfizer in Ireland, and for PwC, auditor to Allergan.

The big question now is whether Mr Obama’s crackdown prevents any other inversions that might already be in prospect and glinting in the eyes, no doubt, of advisers in Dublin. It goes without saying, though, that Ireland could do without negative inversion publicity.

*A&L Goodbody was advising Pfizer on the Allergan deal.