Boston, MA 08/07/2014 (wallstreetpr) – Walgreen Company (NYSE:WAG) on August 6, 2014 announced about its plan for shelling out approximately $15.3 billion for acquisition of Alliance Boots’ portion that it does not own yet. However, Walgreen said that it will not be using this deal for corporate inversion.
The shares of company sunk to the lowest in around 7 years time period, after this news. The decision of not undertaking tax inversion came after other pharma companies like AbbVie Inc (NYSE:ABBV) and Pfizer Inc. (NYSE:PFE) have already attempted or are struck in deals for the same by establishment of tax headquarters outside the U.S.
Goldman Sachs Group Inc (NYSE:GS) and Lazard Ltd (NYSE:LAZ) are Walgreen’s advisors in the transaction.
Tax Inversion Activities and Political Pressure
Walgreen Company (NYSE:WAG), which earlier considered inversion, has come under the political force to curtail tax-saving through this activity. The company therefore announced that it will be headquartered in Deerfield, Illinois only. Walgreen, which earlier held 45% stake in Alliance Boots, will pay around $5.29 billion cash along with $10 billion in Walgreen stock for rest of the Boots’ portion.
Lawmakers from both the major political parties in the U.S. are looking for ways to curtail departures of corporate for tax inversions. To add further, the U.S. Treasury Department also added that it was looking into matter whether it was authorized to curtail inversions or not. Comprehensive tax reforms are under lens of Congress to be passed.
The Hot Button Topic- Tax Inversion
ISI Group LLC analyst, Ross Muken, in this context, said that tax inversion is the new talk of the corporate world in recent weeks.
The U.S. Tax Rate
The U.S., at 35% has the most expensive corporate tax price in entire developed world. Also, it is one of those few countries which push a company from paying the same price on entire global income that it brought home.
