Report: AZ-White House phone calls set off DC's tax-inversion backlash
- The Wall Street Journal's Damian Paletta reports that two Wall Street investors with ties to the Clinton and Obama administrations asked the White House to crack down on tax-inversion mergers on behalf of British-Swedish pharma giant AstraZeneca this past spring.
- AZ was combating a hostile takeover bid by U.S.-based Pfizer at the time. The bid featured a proposed inversion that was meant to sweeten the pot and put more pressure on AZ.
- The two investors who contacted the Obama administration were Morgan Stanley's Thomas Nides and Evercore Partners' Roger Altman. The administration has ramped up its anti-inversion rhetoric since then and promised significant regulatory action in the near future.
President Obama wasn't mincing any words when he slammed tax-inversion mergers as an "unpatriotic tax loophole" in July -- and the revelation of the previously undisclosed phone calls provides some insight into what convinced the White House to ramp up the rhetoric.
According to the Wall Street Journal, AZ spokespeople said that engaging "with Washington stakeholders in the appropriate way as we would do with governments and policy makers in the countries in which we operate" was always intended to be part of its strategy to ward off Pfizer's takeover bid.
The U.S. Treasury Department is expected to unveil regulations and proposals aimed at slashing the benefits associated with tax-inversion mergers, which have become increasingly popular among biotech and pharma firms, as soon as this month.