Biotech Values

[DewDiligence]

Re: “Tax inversion” in M&A transactions

Someone on SI asked: Why don’t more US companies try to re-domicile in a low-tax country, as various drug/biotech’s have already done and PFE is now trying to do by acquiring AZN?

The answer is that, under the current tax code, US companies can re-domicile for tax purposes only by merging in a transaction where at least 20% of the shares of the merged company come from the company originally residing in the new domicile. (Obama wants to raise the 20% threshold to 50%.)

The days when US companies such as Tyco re-domiciled to a tax haven (Bermuda in this instance) just because they wanted to are over.