When Medtronic Inc., a Minneapolis-based provider of medical technology solutions and services, announced it was merging with Covidien plc, a medical supplies provider, the company focused on the various synergies the merger would offer the marketplace, such as the expansion of its product portfolio into new markets, a broader array of complementary therapies and solutions, and the ability to help more patients throughout the world.
Medtronic’s CEO, Omar Ishrak, also emphasized that “the medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs.” All that being said, the main reason for the merger has a lot more to do with where Covidien is based: Ireland, a country that taxes corporate profits at 12.5%, substantially less than the typical U.S. corporate rate of 35%. Medtronic plans to change its name to Medtronic plc and will shift its corporate headquarters to Ireland.
Covidien certainly understands Medtronic's motivation, as Covidien itself (formerly a U.S.-based spinoff from Tyco Healthcare) engineered a tax inversion deal for itself back in 2009, when it moved to Ireland for the same reason.
2014 IW US 500 rank: 77
Chiquita Brands sounds as American as banana cream pie, but in fact the Charlotte-based fresh food giant recently acquired Fyffes, a Dublin, Ireland-based provider of bananas, pineapples and other tropical fruit. Upon completion of the acquisition, the merged company will be known as ChiquitaFyffes plc, and will be based in Dublin, while continuing to retain a sizable presence in Charlotte.
2014 IW US 500 rank: 287
Applied Materials Inc., founded in 1967, is a prototypical Silicon Valley manufacturer, a maker of components that go into the production of semiconductors, flat-panel displays, solar cells. In September 2013, the company announced plans to acquire Tokyo Electron Ltd., a Japanese competitor founded in 1963 that makes similar products, for roughly $29 billion. The combined company (which has not yet been renamed, pending the deal being finalized) will have dual headquarters in both Santa Clara, Calif., and Tokyo, Japan; have a dual listing on both the NASDAQ and the Tokyo Stock Exchange; and of course, will be incorporated in The Netherlands. Because, presumably, no culture is more closely associated with high-tech than the Dutch.
2014 IW US 500 rank: 144
When Michigan-based pharmaceutical manufacturer Perrigo Company made its pitch to shareholders in 2013 about why its $8.6 billion merger offer with Irish biotech company Elan was a good idea, it cut straight to the chase: a more favorable tax climate in Ireland would save the company $150 million annually. Now known as Perrigo Company plc and based in Dublin, Ireland, the company recently posted record quarterly revenue.
2014 IW US 500 rank: 264
This one is a little complicated, as it involves a kind of reverse-inversion play on the part of Montreal-based Valeant Pharmaceuticals International Inc., which has made an unfriendly takeover offer for Irvine, Calif.-based Allergan Inc., a $6.3 billion manufacturer of eyecare and skincare products. Up until 2010, Valeant was itself as U.S. company, based in Aliso Viejo, Calif., but a merger with Canadian pharmaceutical company Biovail gave Valeant an opening to remain headquartered in North America while enjoying Canada’s lower corporate tax rate. Valeant, which is now Canada’s largest pharmaceutical company, is attempting now to acquire Allergan, with the goal, as a recent Bloomberg report put it, of keeping Allergan’s overseas profits out of the reach of the IRS. As of this writing, however, Allergan’s board of directors have rejected Valeant’s overtures.
2014 IW US 500 rank: 172
Parsippany, N.J., used to be the home of Actavis Inc., a maker of generic pharmaceuticals, but that changed in 2013 when the company merged with Warner Chilcott, a Dublin, Ireland-based manufacturer of branded pharmaceuticals, and moved its headquarters to Dublin to enjoy the tax invesion benefits of Ireland’s lower corporate tax rate. The new company, Actavis plc, continues to pursue and invert other U.S. companies, having just completed a $28 billion acquisition of New York-based Forest Laboratories and a $1.1. billion takeover of Morrisville, N.C.-based Furiex Pharmaceuticals.
2013 IW US 500 rank: 176
Eaton Corp., a manufacturer of power management products, called the United States home for 101 years, headquartered for most of that century-plus in Cleveland, Ohio, but that all changed in 2012 when Eaton merged with Dublin, Ireland-based electrical equipment supplier Cooper Industries plc. As a result of that $13 billion acquisition, the renamed Eaton Corp. plc shifted (for tax purposes, at least) its headquarters to Dublin, though operations are still managed out of Cleveland.
2012 US IW 500 rank: 72
2013 IW 1000 rank: 290
Valeant’s roots date back to a merger of several companies—ICN Pharmaceuticals, ICN Biomedicals, SPI Pharmaceuticals and Viratek, Inc. —into one entity, a pharmaceutical manufacturer known as ICN Pharmaceuticals Inc., based originally in Costa Mesa, Calif. In 2010, however, Valeant (which had since moved south a few miles to Aliso Viejo, Calif.) acquired Biovail, a Toronto-based pharmaceutical manufacturer, and in the process became a Canadian company. Today, Valeant remains an aggressive acquisitor of other pharmaceutical companies, with its latest target being Allergan.
2013 IW 1000 rank: 959
Seeing the tax inversion benefits other U.S. pharmaceutical companies are enjoying by shifting their corporate earnings to other countries, New York-based Pfizer Inc. made a blockbuster $120 billion offer to acquire U.K.-based AstraZeneca plc. The deal, had it gone through, would have made the combined company the largest drug company in the world. AstraZeneca’s board, however, turned down the deal, though it wouldn’t be surprising to see Pfizer try again, with perhaps another target in mind, as Pfizer made it clear that the tax inversion benefits were too plentiful to ignore.
2014 IW US 500 rank: 25
AbbVie Inc., a company created in 2011 as a research-based spinoff of pharmaceutical manufacturer Abbott Laboratories, succeeded where Pfizer Inc. failed. Like Pfizer, AbbVie set its sights on acquiring an Irish pharmaceutical firm Shire plc in a tax inversion deal. Although Shire initially rejected AbbVie’s offer of $46 billion, AbbVie didn’t give up on the idea and Shire eventually accepted a sweetened offer of $54 billion..
2014 IW US 500 rank: 65