As seen in Daily Journal’s “Lawyers Say Effect of Inversion Regulations Will be Limited”
Daily Journal reports that the US Treasury Department and Internal Revenue Service recently issued new regulations designed to curb corporate inversions. These tax-code changes have been enacted in order to make it more difficult for US companies to access cash stored overseas while paying little or no taxes on it.
Many feel that these rules are unlikely to prevent companies considering inversion from pursuing it as an option. According to Kaye Scholer Corporate Partner Nicholas O’Keefe, “for issuers who are keen to do an inversion, they will continue to look to the possibility of doing one.”
O’Keefe noted that the new rules may discourage companies “really on the fence” about inverting, adding that “It can make the decision not to go forward a little easier.” However, he also pointed out that these rules are only one of many factors to consider, and expressed skepticism that the new regulations would have a substantial impact on any pending deals.
“I would be surprised if there were many deals that wouldn’t make sense at all in light of what has come out,” O’Keefe continued, concluding, “Normally, I think the rule of thumb is, ‘Don’t do an inversion unless the merger independently [of the inversion] makes reasonable sense.”
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