New Tax Rules Can Discourage $55 billion AbbVie And Shire Pharma Merger
The$55 billion merger deal of Chicago-based AbbVie with Shire, its U. K. rival could be the first victim of the new rules set by the Obama Administration to clean-up inversion deals.
Of late several big companies have been involved in merger deals that could help them reduce their corporate tax in the US. But the administration has introduced new guidelines under which these deals become less lucrative for the US companies.
The new rules from the treasury target loopholes which also include one tactic through which U. S. earnings could be moved abroad by giving a loan to its foreign parent company. This is also a method of avoiding taxes. Under the newly introduced regulations, such loans will be considered as U. S. property and will be taxable under many situations.
For AbbVie the merger may not seem to be as glorified as it was earlier. The board of the company will meet on October 20 to scrutinize the probable financial impacts which the new set of regulations can have on the deal.
The board of directors will also be reconsidering its proposal to the shareholders regarding the merger with Shire.
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