Tax

Salix Calls Off Tax Inversion Deal

The Treasury Department's recent anti-inversion measures claim their first victim — Salix Pharmaceuticals' plan to merge with Italy-based Cosmo.
Iris DorbianOctober 3, 2014
Salix Calls Off Tax Inversion Deal

As it continues to battle threats from ISIS and the Ebola virus, the White House might have one reason to rejoice today. Salix Pharmaceuticals has pulled the plug on its plans to relocate its tax base to Italy via a merger with Cosmo Pharmaceuticals, reports Reuters.

cancelledThe Raleigh, N.C.-based company cites a “changed political environment” as a reason for cancelling its tax inversion deal.

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The newswire notes that Salix scotching its plans comes less than two weeks after the U.S. Treasury Department unveiled measures that would make it difficult for U.S. companies to reincorporate their tax domiciles abroad.

Since announcing its deal with Cosmo’s Irish subsidiary last July, Salix has reportedly been pressured by the firm’s top shareholders. They would prefer Salix sell itself to a larger pharmaceutical firm, Reuters previously reported.

Recently, botox maker Allergan, which has been fending off Valeant Pharmaceuticals’ hostile takeover bid, has been eyeing Salix for possible acquisition, sources tell the newswire.

However, talks stalled due to Allergan shareholders’ opposition to a “defensive acquisition.”

The Treasury Department’s anti-tax inversion measures could halt other pending deals, such as Medtronic’s proposed acquisition of Dublin-based Covidien for $42.9 billion.

Investors seem to be reacting positively to the news. At 3:30 pm Eastern time on Friday, shares of Salix were up more than 3 points.

Source: Reuters: Salix calls off inversion deal amid U.S. government crackdown