What’s the next inversion deal to fall in the wake of new Treasury rules?

All that paperwork out the window.
All that paperwork out the window.
Image: Reuters/Gleb Garanich
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A couple years ago the hot move in US corporate finance was to merge with a company in a country with a lower tax rate and use their corporate domicile to lower your own tax rate. The so-called “inversion” trade was especially popular among drug companies, but even Burger King got in on the fun, merging with the Canadian coffee-and-donuts staple Tim Hortons.

After a lot of outrage directed at multibillion-dollar entities appearing to skirt their fiscal responsibilities at home, the US government moved this week to keep them from scooting abroad (complete with Instagram snark).

The Treasury announced rules that crack down on the practice, and the biggest casualty so far has been $160 billion tie-up between American firm Pfizer and prospective Irish parent Allergan. But that wasn’t the only big inversion deal waiting in the wings:

 

Tyco  🇮🇪/Johnson Controls 🇺🇸

Size? $16.5 billion

What do they do? Tyco makes security equipment (fire detectors/suppressors, people detectors, etc.). Johnson Controls makes air conditioners, batteries, and car seats.

What now? A Johnson Controls spokesperson declined to comment on the rule change, writing that the company didn’t want to speculate on its effect on a potential merger. Their shares were flat in Wednesday trading.

Meda 🇸🇪/Mylan 🇺🇸

Size? $7.2 billion

What do they do? Meda makes mostly name-brand drugs (including anaphylactic shock-treating EpiPen). Myland makes mostly generics.

What now? A Meda spokesperson said the company is moving forward with the merger as planned. Meda’s shares were flat, but Mylan’s rose about 5% in Wednesday trading.

Markit 🇬🇧/IHS 🇺🇸

Size? $5.5 billion

What do they do? Markit offers financial information. IHS offers consulting information.

What now? IHS said in a statement that the two companies are coming together in a “merger of equals” and don’t have to worry about the rule change. Both firms’ shares were little changed in Wednesday trading.

Progressive Waste Solutions 🇨🇦/Waste Connections  🇺🇸

Size? $2.8 billion

What do they do? Both companies are in the sanitation business: They pick up, transport, and dispose of solid waste.

What now? The companies put out a joint statement saying that their merger will go ahead as planned, but they did advise that the new rules might change cash flows a bit (without getting into specifics). Shares in both firms were flat in Wednesday trading.

Konecranes 🇫🇮/Terex 🇺🇸

Size? $2.5 billion

What do they do? Konecranes mostly makes cranes, and so does Terex, but Terex makes other kinds of equipment as well, like rock crushers and tree chippers.

What now? A Konecranes spokesperson said the company is still reviewing the rule change. If things get too hairy, though, Chinese firm Zoomlion (another construction equipment manufacturer), is on standby and has been really eager to make a non-inversion deal with Terex. Neither company saw much difference in their share prices on Wednesday.

Clarification: An earlier version of this story included Shire’s $32 billion merger with Baxalta on the list of pending tax-inversion deals. The deal technically isn’t a tax inversion because the buyer, Shire, is not a US company. While its top executives work in Lexington, Massachusetts, the company headquarters are in Ireland, which means Shire already is able to take advantage of low Irish tax rates.