AstraZeneca rejects Pfizer’s take-it-or-leave-it offer
Ben Hirschler of Reutersreported that Britain’s AstraZeneca PLC on Monday rejected a sweetened and “final” offer from Pfizer Inc., undermining the US drugmaker's plan for a merger to create the world's biggest pharmaceuticals group.
The rebuff came nine hours after Pfizer said on Sunday it had raised its takeover offer to 55 pounds a share, or around 70 billion pounds ($118 billion) in total, and would walk away if AstraZeneca did not accept it.
Pfizer wants to create the world's largest drugs firm, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. The plan has met entrenched opposition from AstraZeneca, as well as politicians and scientists who fear cuts to jobs and research.
“Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimization,” AstraZeneca Chairman Leif Johansson said, according to the article.
In the absence of further discussions or an extension of the deadline for making a firm offer under British takeover rules, Pfizer's proposal will expire at noon ET on May 26. After that, it would have to wait six months before making another bid.
Credit Suisse plea looms as US said to reassure banks
Credit Suisse Group AG reached a deal to plead guilty as early as Monday to resolve claims it helped Americans evade taxes and will pay about $2.5 billion to the US Justice Department and regulators, said a person familiar with the matter, requesting anonymity because the details aren’t public, David Voreacos and Hugh Son of Bloombergreported today.
Switzerland’s second-largest bank would be the first bank in more than a decade to admit to a crime in the United States. CEO Brady Dougan and Chairman Urs Rohner may step down, Swiss newspaper SonntagsZeitung reported on May 17, without saying how it got the information.
Voreacos and Son noted that Credit Suisse will be allowed to continue operating in the United States, according to two people familiar with the matter. In their outreach ahead of the expected guilty plea, regulators reassured some of the largest US financial firms that the current situation wouldn’t become a repeat of the crisis that followed the 2008 collapse of Lehman Brothers Holdings Inc., the person briefed on the conversations said.
The biggest challenge facing Credit Suisse could be that some of its own clients, such as pension funds, have internal requirements that prohibit them from doing business with an entity that has pleaded guilty to a crime, one person said. Customer flight could hurt the bank’s credit ratings, boosting the firm’s borrowing costs. Representatives of two of the largest US banks said the firms intend to continue their trading and banking relationships with Credit Suisse, according to the article.
[Forbes tax and litigation contributor Robert W. Wood also wrote today about the pending Credit Suisse guilty plea.]
Reid wants a no-surprises Senate
Alexander Bolton of The Hillwrote on May 17 that Senate Majority Leader Harry Reid (D-NV) wants to decide what Senate floor amendments Republicans can offer to guard against “gotcha” votes that could cost Democrats their majority.
Republicans complain the change is a departure from the traditions of the Senate, once dubbed the greatest deliberative body in the world, for the majority party to pick what members of the minority may debate and discuss.
Case in point: the Senate tax extenders bill that Republicans struck down at the end of last week. GOP senators generally support reviving the tax breaks, but they undercut the measure on Thursday in an intensifying spat with Reid over floor procedure and the blocking of amendments, such as an Affordable Care Act medical device tax.
But now, Reid may bring the package of tax cuts back to the Senate floor if GOP lawmakers first vet the amendments they want to offer to the bill with Senate Finance Committee Chairman Ron Wyden (D-OR), Bolton noted. Reid said if Wyden can work out a deal with Republicans on amendments, he’ll move the bill again. Otherwise the bipartisan measure is likely dead until after the election.
Bolton wrote that Reid does not want to vote on a proposal to repeal the medical device tax, even though the proposal has strong support in the Democratic caucus. That could put him and his colleagues on the slippery slope of reviewing all the tax increases in Obamacare.
Harry kills again
In an op-ed on May 18, the Wall Street Journal recapped the amendments gamesmanship going on in the Senate between Reid and Republicans regarding the tax extenders bill.
“With amendments barred, Republicans united to prevent the tax bill from getting the 60 votes needed to move to the floor. Mr. Reid then did his crazy Harry routine and blamed the GOP for being ‘the guardian of gridlock,’ but that turns the story upside down. If Republicans repeatedly roll over and let Mr. Reid pass the bills he wants without amendments, they will abandon their rights as a minority to force a debate on their priorities or alternatives to Mr. Reid's agenda,” the Wall Street Journal wrote.
The op-ed continued: “If a tax policy is sound, it ought to be made permanent. Forcing these to be renewed every year enhances Congress's political discretion while creating more economic uncertainty. Annual renewal also reduces the pressure from the business community for a larger reform that lowers the corporate tax rate in return for fewer tax preferences.”
Congress needs to come up with a way to pay for ‘tax extenders’ bill
The Washington Post editorial board also wrote this past weekend how it hopes the two parties in the Senate can “resolve this kerfuffle” and pass the tax extenders bill.
“The impasse is causing great upset among the various special interests – from wind-energy companies to stock-car racing – that live off its provisions. A delayed extenders bill endangers broader corporate provisions as well, such as the widely used and economically defensible research and development tax credit,” the editorial stated.
“Still, we’re not all that concerned. The best that can be said for the Senate bill is that its sponsor, Senator Ron Wyden (D-OR), swears it’s the last such smorgasbord of his finance chairmanship and, therefore, the prelude to tax reform. Maybe. What’s certain is that Mr. Wyden was unable to sell his colleagues on a way to pay for the bill, so its entire cost would add to the federal deficit. This is fiscal irresponsibility, pure and simple.”
No more foreign auditors?
In his China Accounting Blog, Paul Gillis noted that Chinese regulators are cracking down on Hong Kong firms coming into China to do audits.
“Now the mainland affiliate will have to supply the staff for the audit. I believe that was already the case in most Big Four audits. But the rule, if implemented, will highlight the principal auditor issue that I raised on Alibaba last week,” he wrote. “Based on Alibaba’s risk disclosures, it appears that the PwC was using mainland staff for a significant part of the audit. This proposed rule will simply make sure they do that, and will likely mean that PwC Zhong Tian instead of PwC Hong Kong signs the audit report.”
Gary M. Scopes receives AICPA Medal of Honor
Gary Scopes, CAE, was presented the American Institute of CPAs (AICPA) Medal of Honor – which recognizes an individual who is not a CPA whose work has had a significant impact on the profession – during the spring meeting of the AICPA Governing Council in Scottsdale, Arizona, on May 18. The Medal of Honor is the highest AICPA award for a non-CPA.
While serving as a state CPA society CEO, Scopes established two of the CPA profession's most significant programs, according to an AICPA release. First, he developed the original CPA Key Person advocacy program. At his urging the program was replicated on the national level by the AICPA and in all state CPA societies. It continues to stand today as one of the most effective legislative programs the profession utilizes in educating Congress on issues of importance to the profession. For the second significant program he co-authored the first Joint Ethics Enforcement Procedures Manual, still used today by both state CPA societies and the AICPA.
“Gary has significantly contributed to the strength and growth of the accounting profession at the state, national, and international levels,” said AICPA Chairman Bill Balhoff, CPA/CFF, CGMA. “For more than 40 years, he advanced the profession by sharing his knowledge, skills, and abilities, most notably in professional ethics, government relations, and international relations. His long-lasting contributions are felt by virtually all.”
Diane Cornwell receives AICPA Public Service Award
Also this past weekend, the AICPA gave Diane Cornwell its Public Service Award for Individuals, which honors members of the AICPA who have made significant contributions to their communities.
In a release, the AICPA noted that one of the distinguishing features of Cornwell’s career as a public servant is the emphasis on activities that led to betterment of her community. She presently serves as board chair of SOZO International Inc. in Louisville, Kentucky, where she works to provide a sustainable future for at-risk people around the globe with a current emphasis on the people of Afghanistan.
She is also the treasurer of IWFKentucky, the Music Booster treasurer for Christian Academy of Louisville, and serves on the audit committee of Southeast Christian Church. Cornwell is a prior board chair of the Center for Women and Families and Women 4 Women, both of Louisville. Cornwell is a former member of the AICPA’s tax executive committee and served on several Kentucky Society of Certified Public Accountants (KYCPA) committees, as well as on the KYCPA board.
“The many strong candidates for the Public Service Award make it difficult to select the person most deserving of this award. We are fortunate that so many CPAs dedicate significant amounts of their time to their communities,” said James Curry, CPA, chair of the AICPA’s awards committee, who presented the award. “In comparison to the unwavering breadth of achievement of all of our members, Diane’s tireless work puts her on the top.”
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