Biotech Values

[DewDiligence]

Not coincidence that AGN bidders are exclusively foreign companies, says blogger:

http://blogs.wsj.com/moneybeat/2014/10/08/dealpolitik-allergan-battle-may-showcase-unintended-consequences-of-inversion-rules

The takeover battle over Botox-maker Allergan Inc. may end up the poster child for why last month’s Treasury move to stymie the tax inversion game will have unintended consequences and may not achieve its objectives.

A tax inversion is a transaction in which a U.S. company acquires a foreign company and restructures so that both companies are subsidiaries of a foreign parent. Foreign parents generally don’t have to pay U.S. corporate tax on earnings generated from non-U.S. subsidiaries. So an inversion can save a U.S. company a lot of U.S. corporate tax, and the Treasury Department wants to stop that.

But the problem is foreign companies have all those benefits already. And the Treasury action only applies to inversions which take place on or after Sept. 22. The result: All foreign companies—including those that completed their inversions before that date—will continue to be able to acquire U.S. incorporated multinationals and achieve the tax savings.

That line in the sand gives a huge advantage to foreign companies trying to do deals, advantages we’re now seeing in the Allergan situation.