Shire: Baxalta Deal Is Still On
April 06 2016 - 05:20PM
Dow Jones News
Dublin-based Shire PLC said Wednesday that its $32 billion
merger with Baxalta Inc. remained on track even after the U.S.
imposed tough new curbs on companies seeking to benefit from lower
overseas taxes through cross-border deals.
In a news release, Shire said it expected the deal with Baxalta,
based in Bannockburn, Ill., to close in the middle of this year as
previously announced.
Earlier, Pfizer Inc. and Allergan PLC terminated their planned
$150 billion merger after the Obama administration took aim at the
deal that would have moved the biggest drug company in the U.S. to
Ireland to lower its taxes.
Tax-inversion deals have become common in U.S. corporate deal
making and have drawn added attention this presidential-election
season. President Barack Obama on Tuesday called corporate
inversions, in which a U.S. company buys a foreign rival and adopts
its lower-tax jurisdiction, one of the "most insidious tax
loopholes out there."
This week, the Treasury Department imposed new rules that make
it harder for companies to move their tax addresses out of the U.S.
and then shift profits to low-tax countries using a maneuver known
as earnings stripping.
Shire and Baxalta unveiled their deal in January. The two
companies signed off on the deal after overcoming fears the tie-up
could run afoul of U.S. laws that prohibit tax-free spinoffs from
being used as a device to funnel cash to shareholders. Baxalta was
separated from parent Baxter International Inc. in July.
Shire agreed to pay $18 in cash plus 0.1482 of its American
depository shares for each Baxalta share, making it one of the few
ever cash-and-stock deals involving a recent tax-free spinoff.
Shire was a focus of U.S. regulators in 2014, when it proposed a
transaction with AbbVie Inc. Shire and AbbVie had a merger
agreement that would have allowed AbbVie to invert and lower its
tax rate. That deal, among others, prompted the Obama
administration to propose tougher anti-inversion rules in September
2014. The AbbVie-Shire merger never closed and was the biggest
casualty from the administration's earlier actions.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
April 06, 2016 17:05 ET (21:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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