Replies to post #89424 on Biotech Values

[DewDiligence]

You’re a world-class Googler! Note that the opinions on the taxability of the NVS-ACL deal for US minority shareholders are given with less than decisive language, even in ACL’s own PR (#msg-45767281):

“In spite of the stock-based consideration, the Novartis merger proposal is likely to be taxable for United States income tax purposes.”

The reason for the indecisiveness is that the distinction between a sale and a reorganization for tax purposes is tricky, and hence it’s not crystal clear how the IRS will rule on this unorthodox deal.

If NVS had bought out Nestlé and the minority shareholders in a single stock-based transaction, the merger would clearly have been non-taxable, but that’s not how it was structured.