New York residents may be interested to learn how Walgreens recently decided against a lucrative business move. After facing pressure from activists and lawmakers, the company chose not to move its headquarters from the United States to Switzerland. The move overseas would have saved Walgreens an estimated $4 billion on its U.S. tax bill over the next five years.
Walgreens would have an opportunity to benefit from a tax inversion after completing its acquisition of the European drugstore chain Alliance Boots. Because Alliance Boots is already headquartered in Switzerland, the $16 billion dollar acquisition would give Walgreens a chance to move all of its operations to the lower-tax country.
On Aug. 4, U.S. and British media outlets announced that the potential move by Walgreens was called off. In after-hours trading that day, shares of the company had gone down by about 4 percent. Several other U.S. companies this year have instead chosen to complete a tax inversion, taking advantage of what President Obama has referred to as an ‘unpatriotic loophole.” Companies that have lowered their corporate tax bill by moving overseas include AbbVie, Mylan and Medtronic.
Although not all mergers and acquisitions will offer the potential for a tax loophole, they may still provide a business owner with the opportunity for increased profits and growth. Before making an important merger or acquisition, many business owners decide to consult a business and commercial law attorney. An attorney might be able to help the company through the various stages of a merger or acquisition to ensure that the transaction is structured to reach the desired outcome.
Source: USA Today, “Reports: Walgreens won’t tap lucrative tax loophole“, Aamer Madhani, August 05, 2014