WASHINGTON, Aug 5 (Reuters) - U.S. retailer Walgreen Co on Tuesday appeared to back away from a plan to reincorporate abroad to reduce its U.S. taxes, while politicians again urged the White House to curb deals that shift tax domiciles.
Walgreen, which operates the largest U.S. chain of pharmacies, will buy the 55 percent it does not already own of European drugstore chain Alliance Boots, but it will not move its tax domicile overseas, Sky News reported.
A Walgreen spokeswoman said she had not seen the Sky News report and was unable to comment.
Citing sources, the UK-based news outlet said that Chicago area-based Walgreen would proceed, as expected, with its acquisition of the remaining shares of Switzerland’s Alliance Boots in a deal valued at about $8.4 billion (5 billion pounds).
Walgreen had been under pressure from some of its investors to do an “inversion” deal with Alliance Boots, under which the U.S. company would relocate its tax domicile to Switzerland or Britain to cut its tax bill.
Shares in Walgreen ended regular trading on Tuesday at $69.12, down 4.4 percent.
A spokeswoman for Alliance Boots declined to comment.
Separately, three prominent Democratic senators on Tuesday urged President Barack Obama to use his executive authority to reduce or eliminate tax breaks for companies that shift their headquarters overseas in tax-driven inversion.
Nine inversion deals have been agreed to this year by U.S. companies ranging from banana distributor Chiquita Brands International Inc to drugmaker AbbVie Inc and more are being considered. The transactions are occurring a record pace since the first inversion was done three decades ago.
Senator Richard Durbin, the second-ranking Senate Democrat, along with Senators Jack Reed and Elizabeth Warren, said immediate action was needed to stem these transactions.
“Although we will continue to work toward a legislative solution to the problem, we urge you to use your authority to reduce or eliminate tax breaks associated with inversions,” the senators wrote in a letter to the president.
Inversions are still rare, but they are becoming more common. Of the roughly 50 inversion deals done since 1983, about 40 percent have been completed just since 2009 and more are being finalized, with many others said to be in the planning stages.
An inversion is a deal in which a U.S. corporation buys or sets up a foreign company, then moves its tax domicile into that foreign company and its home country, while leaving core business operations in the United States. Doing such a deal ends U.S. taxation of the company’s foreign profits and makes it easier for the company to take other tax-cutting steps.
Inversion deals are legal, and company executives who arrange them say they are only trying to minimize the amount of taxes the company pays, as investors expect them to do. (Additional reporting by Esha Vaish and Ramkumar Iyer in Bangalore; Editing by Steve Orlofsky)