Valeant Pharmaceuticals International Inc. told U.S. lawmakers on Thursday that it doesn't consider tax savings when the company — one of the industry's most acquisitive — is making deals.
"Valeant does not take into account tax synergies in either identifying or pricing potential acquisition targets," Howard Schiller, Valeant's former chief financial officer, said to the Senate Permanent Subcommittee on Investigations. Schiller now serves on Valeant's board.
Yet the company's past public comments tell a different story. In calls with investors and in a letter to one acquisition target, Valeant executives touted the company's tax advantages for acquisitions, most recently during a $50 billion- plus attempt to buy Allergan Inc.
"No other potential acquirer of Allergan has the operational and tax synergies that we have," Valeant Chief Executive Officer Mike Pearson said in an October 2014 letter to Allergan, announcing plans to raise its bid to $200 a share and urging Allergan to take the offer.
"While we often realize tax synergies from acquisitions, we do not take into account tax synergies when pricing deals," said Laurie Little, a Valeant spokeswoman. "Our target IRRs assume local statutory tax rates."
New Leadership
The U.S. Senate Permanent Subcommittee on Investigations held its first hearing under new leadership on Thursday with a dive into the U.S. corporate tax code. Congress has been considering an overhaul of the code, prompted in part by U.S. companies shifting their legal addresses abroad to take advantage of lower corporate tax rates.
Senator Claire McCaskill, a Missouri Democrat, read Schiller a quote from Pearson, talking about how the company reduced its tax rate to 3.1 percent and was trying to go lower.
"Do you understand how that infuriates Americans?" she said.
Schiller said the company's tax rate is now about 4 percent
