Tax Headache? Take Two Aspirin and Buy an Irish Biotech for $8.6 Billion

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--After fending off a series of hostile takeover attempts, Irish biotech company Elan Corporation (NYSE:ELN) (Dublin, Ireland) accepted the Perrigo Company's (NASDAQ:PRGO) (Allegan, Michigan) $8.6 billion offer. Elan's home base helped seal the deal. By becoming an "Irish" company, over-the-counter (OTC) king Perrigo could slash its tax liabilities in half, with an estimated annual savings of more than $150 million, thanks to Ireland's 12.5% corporate tax rate, as opposed to the current U.S. rate of 30%.

To take advantage of the tax break, Perrigo's company headquarters will move from Michigan to Ireland, although shares in the new company are expected to continue to be traded on the New York and Tel Aviv stock exchanges. Perrigo has had a Tel Aviv listing since it acquired Israeli-based Agis in 2005. Earlier this year, Ireland's tax system made the headlines thanks to the U.S. Senate questioning Apple attributing two-thirds of its $34 billion in 2011 profits to companies registered in Cork, Ireland.

However, taxes alone were not the only reason for Perrigo's offer. The Elan buy will help enrich the company's bottom line, thanks to its blockbuster multiple sclerosis drug, Tysabri. Elan, which co-developed the drug, earns 12% royalties on Tysabri's global sales, which reached $1.6 billion in 2012 and are expected to grow rapidly, as the drug is sold into new countries and prescribed to treat other diseases.

Perrigo is not limiting its expansion to just overseas, as the company is making some large capital investments on the domestic front. There are projects in active planning totaling more than $200 million planned for the company's native Michigan facilities.

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