Pfizer-Allergan's Tie-Up Isn't the Only Inversion in Town

Is Pfizer-Allergan the End of Tax Inversion Deals?

The U.S. Treasury’s new rules to prevent companies from buying overseas businesses to reduce taxes have spelled the end of the biggest deal announced in 2015. While the demise of Pfizer Inc. and Allergan Plc’s $160 billion merger might be the most dramatic result, it isn’t the only transaction that could be affected.

Below is a list of companies who are working on corporate inversion deals or who have carried out inversions in the past. The proposed rules target serial inversions and won't necessarily affect these transactions.

garbage
Photographer: Getty Images

Progressive Waste-Waste Connections

Texas-based Waste Connections Inc. agreed to buy fellow garbage-hauling company Progressive Waste Solutions Ltd. in January, and announced plans to move its tax domicile to Canada. The new company would have an effective tax rate of about 27 percent, down from the 40 percent rate that Waste Connections pays now, it said in a statement at the time.

The proposed regulations would have an impact of less than 3 percent of the new company’s adjusted free cash flow, which is expected to be more than $625 million, the companies said in a joint statement Tuesday.

“The two companies remain committed to the strategic merger.”

Waste Connections shares fell as much as 7.2 percent. Progressive Waste dropped 9.3 percent.

Coal Processing Inside The Energy Resources LLC Coal Handling And Preparation Plant
Photographer: Brent Lewin/Bloomberg

Terex-Konecranes

Terex Corp., a U.S. crane and construction-machinery maker, agreed to combine with Finnish competitor Konecranes Oyj last year to create a group with a combined $10 billion in sales, incorporated in Finland.

While the companies described the transaction as a merger of equals, Terex stockholders would own 60 percent of the combined business. Since then, China’s Zoomlion Heavy Industry Science & Technology Co. has made a counteroffer for Terex. Still, with the U.S. closely scrutinizing deals that put American technology into Chinese hands, that deal would have its own regulatory hurdles.

Terex shares closed 2.3 percent down in New York.

Workers at a Johnson Controls Plant work on the seat assembly line in Beijing, China, Tuesday, June 22, 2004.
Photographer: Ricky Wong/Bloomberg

Johnson Controls-Tyco

Auto-parts maker Johnson Controls Inc.’s planned merger with Ireland-based Tyco International Plc was targeted by Hillary Clinton’s campaign ads. Clinton called the plan to move Johnson Controls’s address to tax-friendly Cork “an outrage.”

Tyco itself got a foreign tax address in the late 1990s through an inversion, as part of a takeover of the security company ADT, which was incorporated in Bermuda. Tax inversions seem to be one of the few things the presidential candidates can agree on, with Bernie Sanders, Donald Trump and Clinton all targeting the practice in their campaigns.

Tyco shares declined 3 percent in New York. Johnson Controls fell 2.2 percent.

The Mylan Laboratories Inc. headquarters in Canonsburg, Pennsylvania.
Photographer: Jason Cohn/Bloomberg

Mylan-Meda

Drugmaker Mylan NV said Tuesday it’s “comfortable moving forward” with a $7.2 billion deal to buy Sweden’s Meda AB, in response to concerns about the impact of Treasury rules.

Mylan moved its headquarters from Pittsburgh to the Netherlands in 2015 after buying Abbott Laboratories’ generic drug business in overseas markets like Europe. In February this year, the company agreed to buy Meda.

Mylan shares fell 2.8 percent in Nasdaq trading while Meda declined 1 percent in Stockholm.

Bank-Analyst Ranks May Thin on EU Research Rules, Deloitte Says
Photographer: Akos Stiller/Bloomberg

IHS-Markit

IHS Inc., which provides data analysis, agreed to buy London-based Markit Ltd. for about $5.5 billion last month with plans to relocate to the U.K. The Englewood, Colorado-based company and Markit said in a regulatory filing Tuesday that they don’t expect the merger to be subject to the new rules.

“Based on our preliminary review at this time, we also believe that the other U.S. Treasury rule changes will not impact the combined company’s adjusted effective tax rate guidance of a low to mid-twenties percentage range.”

IHS shares declined 2.6 percent in New York Stock Exchange trading while Markit declined 2.6 percent.

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