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Breakingviews: Elan deal's tax zeal

Monday, Jul 29, 2013 - 03:14

July 29 - Jeffrey Goldfarb talks to Rob Cyran about the dangers of Perrigo's seemingly tax-motivated $8.6 billion acquisition of Irish biotech Elan.

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Looks as though the big long saga of a -- that the Irish drug makers finally coming to an end it's got a a fire. Finally we weren't sure if they were a buyer or seller but they've. They've finally got to deal looks like depending where you wanna start you can go back ten years for the -- -- -- can start closer to we're gonna do so content. Earlier this year what happened is royalty -- came out and made it for a lot of the hostile hostile hostile media. And according to go on folks it's because royalty didn't wanna competitor because what -- does it buys the interest and other drugs. And royalties that now that's not that's not sure roller gays are buying up along because all along is at this point it's like it it did it take cash out and got a lot of cash in on royalty rates for the strapped. And they own an Irish -- their corporate and Ireland that's the big. That's the big attraction what is her daughter's company Pargo comes along is ready to pay almost nine billion dollars for the what do what do they see it -- it's kind of a strange deal on the surface because -- go what it is they make it over the counter remedies that if you go to lake CDS -- -- you know when these your local pharmacy. -- buy aspirin and the company that makes it a and I -- they have not are real natural fitness is not because it's not it's not an audience but it. There is there rationale apparently is they say okay so we're basically -- tenuous but we're gonna expand overseas if we -- an Irish company we can -- -- -- in Ireland and by the way to -- twelve point 5% tax rate which is. Could have we're lower than what they're paying out exactly -- is kind of -- risky proposition for a tough underlie a big deal like that's given. The climate around taxes yet he saw there is a big curve -- and UK over Starbucks playing tax over here there's the question GE not paying taxes. So it. Analog jurisdictions you're -- people say okay wait -- -- these companies doing their they've just making all these profits but they're not paying anything -- taxes. And here you're getting company makes. -- basically basically makes. Aspirin. And somehow targeted and it and agree that their tax rate -- I got the shell company that they're gonna kind of layer themselves over basically and it's it's not as if he's come to gain illegal they're just didn't. Maneuvering around kind of loopholes in the law and the fear is that ultimately that tax authorities are gonna catch up to it I don't know what it ultimately means -- mean if if Ireland will be forced to kind of charge higher rates or what yeah whether or in Ireland leave Detroit of course charged higher rates because you have a heart beat you -- there and turn out to be for all you know be done to raise those. Are the US Wilson will make it harder for companies to engage in this kind of jurisdiction chopping. We don't know that and at that point is that if you're doing any point six billion dollar deal a lot of it's it's a lot of risk to do is just. Basically protect -- morning at least the current shareholders are a little bit concern about wood off it's exactly this reason but the shares are the guys went about 7%. It could be -- -- -- Perry go at the stock went up a lot over the past year and so parents it's it's a stock and cash deals that could be Cheryl is just saying. We even management thinks the stocks have been overvalued because they're buying up you know he's the shell compound it's a -- -- using some stock and it exactly or are that could be attacks -- let's get our we will leave it there will be back with more breaking news tomorrow.

Breakingviews: Elan deal's tax zeal

Monday, Jul 29, 2013 - 03:14

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