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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