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Speculation builds over Pfizer return

Pfizer chief execuitve Ian Read has come to the defence of tax inversion deals, prompting speculation it will reapproach AstraZeneca.
October 31, 2014

AstraZeneca's (AZN) share price was on the rise this week, and the drugs giant has Pfizer's (US: PFE) chief executive Ian Read to thank. Following the collapse of AbbVie's (US: ABBV) takeover of specialty pharma group Shire (SHP), Mr Read came to the defence of tax-inversion deals, saying such transactions still offer "meaningful value".

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On the back of Mr Read's comments, shares in AstraZeneca rose more than 1 per cent, as investors wait to see if the US company will try to snap up the Anglo-Swedish drug maker once again. Pfizer's chief did not address a reapproach of AstraZeneca, but he said changes to the US tax system didn't mean tax inversion benefits won't make up part of a merger or takeover.

The possibility of Pfizer re-entering the fray has looked unlikely since AstraZeneca rejected the original £69.4bn approach in May. Now, deals driven by the desire to avoid punitive US corporate taxes have been made more difficult, thanks to recent changes to US tax laws. But Mr Read said he still believed tax inversion deals could "liberate cash flows". He claims the first bid for AstraZeneca failed because the two companies didn't agree on the correct valuation, adding Pfizer would still evaluate future opportunities to repatriate its £70bn cash pile in the most efficient manner.

Pfizer recently reported a bumper third quarter, reporting strong sales of its cancer drugs and growing demand from emerging markets. Earnings per share came in at 42¢ cents, compared with 39¢ this time last year.