Tags: Drugmaker | Salix | Tax | Inversion

Drugmaker Salix Becomes Latest US Firm to do Tax Inversion Deal

Tuesday, 08 July 2014 08:00 PM

Salix Pharmaceuticals Ltd., a maker of drugs for gastrointestinal diseases, said Tuesday it will merge with a rival based in Ireland and place its headquarters there in a transaction aimed at lowering its U.S. tax bill.

Salix, of Raleigh, North Carolina, will join with Dublin-based Cosmo Technologies Limited, a unit of Lainate, Italy-based Cosmo Pharmaceuticals SpA. With the deal, Salix becomes a subsidiary of Cosmo, which will change its name to Salix Pharmaceuticals Plc, the companies said in a statement.

Salix shareholders will receive one share of the new company for each current share and will own about 80 percent of the combined company when the deal concludes in the fourth quarter. The transaction is the latest move by a U.S. company to seek lower taxes, coming as AbbVie Inc. has bid to purchase Dublin-based Shire Plc to execute such a tax-inversion deal.

“The new corporate structure greatly enhances our ability to compete for licensing deals and acquisitions, and improves the economics of future business development opportunities for Salix,” Carolyn Logan, the specialty drugmaker’s chief executive officer, said in a statement.

The shares of Salix, whose executives will continue to lead the new company, fell 5.3 percent to $130 in extended trading at 6:47 p.m. New York time after the deal was announced. Cosmo gained 3.9 percent to 166.2 Swiss francs at the close of trading.

Cosmo also specializes in gastrointestinal drugs and has three products on the market with six in clinical development, according to the statement.

Earlier this year. New York-based Pfizer Inc.’s $117 billion bid for London-based AstraZeneca Plc was rejected in a tax-inversion push, while Medtronic Inc., a medical device maker based in Minneapolis, said June 15 it would buy Covidien Plc and take the legal residence of the Dublin-based company.

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Salix Pharmaceuticals, a North Carolina maker of drugs for gastrointestinal diseases, said Tuesday it will merge with a rival based in Ireland and place its headquarters there in a transaction aimed at lowering its U.S. tax bill.
Drugmaker, Salix, Tax, Inversion
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2014-00-08
Tuesday, 08 July 2014 08:00 PM
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