Walgreen Is Said to Consider Inversion-Free Merger

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from The New York Times,

The Walgreen Company is said to be near a deal to take over the British pharmacy retailer Alliance Boots, but through a plan to do so without moving its corporate headquarters abroad.

The American retailer is closing in on a deal to buy the 55 percent of Alliance Boots that it does not already own, a person briefed on the matter said Tuesday. But the transaction, which could be announced as soon as Wednesday, will not include a move to relocate Walgreen’s corporate citizenship to a lower-tax country.

Such a move, known as an inversion, has been increasingly under political scrutiny. And it would have required a renegotiation of an existing deal agreement with Alliance Boots, something the British retailer was unwilling to accommodate, this person said.

In recent months, a number of pharmaceutical companies like AbbVie and Mylan have announced inversion deals that would allow them to move their headquarters to countries with lower corporate tax rates, like the Netherlands and Ireland. These inversions take advantage of clauses within the United States tax code that allow corporations, under certain circumstances, to merge with a foreign counterpart and relocate their headquarters.

Such companies escape tax rules that require American corporations to pay taxes on profits earned elsewhere, making it easier for them to bring cash from overseas into the country. They would still pay taxes on profits earned in the United States.

Shares in Walgreen fell more than 4 percent on Tuesday afternoon after Sky News of Britain reported that the company would not be undertaking an inversion.

Inversions, however, have drawn the ire of the White House and lawmakers in Washington, who have described the tactic as unpatriotic tax-dodging and akin to renouncing one’s citizenship. Treasury Secretary Jacob J. Lew said on Tuesday that the Obama administration was considering ways to halt the practice without requiring new legislation.

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