Shire Says Proposed Merger With Baxalta On Track To Close In Mid-2016

(RTTNews) - Shire plc (SHP.L, SHPG) said it acknowledged the US Treasury notice published on April 4, 2016, and anticipates the Baxalta transaction will proceed as originally announced on January 11, 2016.

The combination of Shire and Baxalta is based on a strong strategic rationale to create the leading global biotechnology company focused on rare diseases. The company currently expects to complete its proposed combination by mid-2016 as previously announced, Shire said.

On April 4, the U.S. Department of the Treasury and the Internal Revenue Service or IRS issued temporary and proposed regulations to further reduce the benefits of and limit the number of corporate tax inversions, including by addressing earnings stripping. By undertaking an inversion transaction, companies move their tax residence overseas to avoid U.S. taxes without making significant changes in their business operations. After an inversion, many of these companies continue to take advantage of the benefits of being based in the United States, while shifting a greater tax burden to other businesses and American families, the Treasury department said.

The Treasury noted that it is taking action to limit inversions by disregarding foreign parent stock attributable to recent inversions or acquisitions of U.S. companies. This will prevent a foreign company that acquires multiple American companies in stock-based transactions from using the resulting increase in size to avoid the current inversion thresholds for a subsequent U.S. acquisition.

On Wednesday, Drug maker Pfizer Inc. (PFE) said that its $160 billion merger deal with botox maker Allergan plc (AGN) has been terminated by mutual agreement of the two companies. The decision comes after new rules were announced recently by the U.S. Treasury to curb corporate tax inversions.