Salix merging with Cosmo Technologies in tax inversion deal

Salix (SLXP) is merging with Italian drug developer Cosmo Pharma's Cosmo Technologies unit in a deal that will allow Salix to be domiciled in Ireland, and reap the associated tax benefits. Salix shareholders will own slightly less than 80% of the combined company, and Cosmo shareholders slightly more than 20%.

Salix declares the merger eliminates its Uceris royalties and milestone payments, and also "provides substantial opportunities with rifamycin MMX for conditions of the colon."

The merger is expected to close in Q4. Salix expects it'll be "modestly accretive" to EPS in 2016, and "increasingly accretive" afterwards. It's the latest in a string of tax inversion deals announced by U.S. healthcare companies.

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Comments (5)
  • Patent News
    , contributor
    Comments (1475) | Send Message
    inversions should be banned! if you make profits in the US, you must pay taxes in the US, SIMPLE!
    8 Jul 2014, 07:02 PM Reply Like
  • Marketing Maniac
    , contributor
    Comments (2) | Send Message
    I as I understand it they still pay taxes on income earned here. Now they won't pay taxes on income earned outside the USA. Good move for Salix. Still a major target to get bought out by a bigger player!
    8 Jul 2014, 09:13 PM Reply Like
  • Joe from the Beach
    , contributor
    Comments (546) | Send Message
    The deal appears somewhat complicated and therefore difficult to analyze. Smart not to sell into confusion and wait for an SA contributor to give an in depth reading.


    As to taxation, in normal times Congress would be screaming to close the Irish loophole. Today the Republicans put government action in the deep freeze. Its party first and maybe country next.
    9 Jul 2014, 09:05 AM Reply Like
  • taxman100
    , contributor
    Comments (644) | Send Message
    There is a reason the income tax was unconstitutional prior to the 16th Admendment. Most of the bloated explosion of government can be traced to creating way to raise an unlimited amount of revenue, which has led to the situation where the majority of "residents" of this country are either on the government teat, or administer the government teat for others.


    Just like today, it was sold as a way of sticking it to evil rich guys, and has evolved into where Big Brother now has the right to review every penny you earn, or spend, to make sure they get their share.


    CT, RI, PA, FL, UT and VA never did ratify the admendment.
    9 Jul 2014, 12:26 PM Reply Like
  • gsgazette
    , contributor
    Comments (2) | Send Message
    I have been a Santarus investor and am in SALX now. Has been one of my best investments. I listened to the company's conference call on their website and am even more convinced about the quality of their future earnings which seem to be enhanced by this merger. This is a buying opportunity with the stock down around 6 points today. I think some analyst considers this move to be a negative for a potential buyout so the stock is down. Wait a few weeks and they will be upgrading and praising it to the skies -- inversion or not.
    9 Jul 2014, 01:38 PM Reply Like
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