Biotech Values

[DewDiligence]

Here’s a citation indicating that the risk of a tax hit is genuine if the spun-off company is acquired immediately (or close in time) to the divestiture:

http://www.google.com/url?sa=t&rct=j&q=spin%20off%20acquisition%20tax&source=web&cd=2&ved=0CCMQFjAB&url=http%3A%2F%2Fwww.sutherland.com%2Ffiles%2FPublication%2F81586399-b1d3-4733-9ed6-373926382e45%2FPresentation%2FPublicationAttachment%2F5a79c22e-ad1e-4df8-af76-f8223ef16559%2FTAX355.PDF&ei=jQmjTru_Dobw0gHzru33BA&usg=AFQjCNFhAR03LkF0GNpUVXCzjeC7X1etTA&cad=rja (page 4)

The satisfaction of one or more of the Section 355 requirements can sometimes be affected by transactions or other events that occur after the spin-off. Total acquisitions of Distributing or Controlled by unrelated parties typically carry the greatest risk in this regard, especially if the acquisition occurs soon or relatively soon after the spin.

…The analysis as to the impact of post-spin developments is largely fact-intensive and tends to focus on two main inquiries: (i) How soon after the spin-off did such developments occur? and (ii) Were such developments planned or otherwise contemplated at the time of the spin-off?