Allergan Won’t Seek Further Foothold in Ireland, CEO Pyott Says

Allergan Inc. Chief Executive Officer David Pyott said he probably won’t follow other drugmakers in making an acquisition in Ireland as a way to lower the company’s corporate taxes.

The Irvine, California-based maker of the Botox wrinkle treatment, has a manufacturing plant in Ireland, which already is adding some tax advantages, Pyott said. Additionally, acquisition opportunities in that country are dwindling in the wake of moves by other companies, he said.

Investors have been pressuring Pyott to seek such a deal, according to David Maris, senior research analyst at BMO Capital Markets Corp. It follows acquisitions last year of Irish drugmaker Elan by Perrigo Co., the largest U.S. maker of generic over-the-counter medicines, and Dublin-based Warner Chilcott Plc last year by Actavis Plc, which relocated to Ireland through the deal.

“This is the latest fashion in financial engineering, until the roof comes off and someone changes the rules,” Pyott said in an interview at the JPMorgan Chase & Co health-care conference in San Francisco. “I am not swayed by that.”

Allergan is open to more acquisitions and is looking for companies with experimental products that have growth potential, including new specialty areas, according to Pyott.

“We always want to buy technology,” he said.

It is “extremely likely” that Allergan will make an acquisition this year, Maris said. He sees the potential for Allergan to be interested in European allergy companies, such as Horsholm, Denmark-based ALK-Abello A/S or French drugmaker Stallergenes SA, as both companies are not in a crowded market. Allergan also may want to go into central nervous system areas like addiction, Maris wrote in a note to clients.

Not Imperative

While Maris said he doesn’t see a deal in Ireland as “imperative” for Allergan, some shareholders “really want them to do it,” he said.

“People are focusing on the pop,” Maris said in a telephone interview. “A lot of investors right now are looking for ways to get a stock higher in the short term because they have seen lots of these deals happen, and the stock has risen 20 percent, 30 percent, 40 percent or more.”

Companies based in Ireland have attracted suitors seeking to move their headquarters there due to the 12.5 percent corporate tax rate versus the 35 percent in the U.S.

Allergan is already paying less than the average U.S. corporate tax because by having intellectual property and manufacturing in Ireland, he said.

Actavis Plc announced the acquisition of Warner Chilcott for $7.8 billion on May 20 and completed the deal on October 1. Perrigo announced the acquisition of Elan for $6.2 billion on July 29 and completed the transaction in December.

Now, Pyott said, “there is almost nothing left to buy.”