After Medtronic, who else will skirt US taxes?
This game can and will go on and on as other 'American' companies become buyout candidates because of the ridiculous US corporate tax code.
Even though Covidien is ostensibly in Mansfield, Mass., its principal executive office is listed as 20 Lower Hatch Street, in the fine city of Dublin, Ireland. While I have been recommending Covidien ever since the breakup of Tyco (TYC), in part because of a series of terrific patient-monitoring and blood-flow devices, it appears that the Lower Hatch Street address in Dublin was the main reason it got a bid from Medtronic. Why not? As long as 20 percent of the new shares go to the acquired company, a huge amount of taxes are saved and overseas cash can be deployed in a much more tax-efficient manner, given the high U.S. corporate tax rate.
So let's figure out, using that pattern, what's going to happen next.
Not too far down the road from Covidien is Eaton (ETN), a terrific electronics company that's known for fantastic products in lighting, the electric grid, aerospace and trucking. Yep, you may have thought Eaton was the corporate pride of Cleveland, Ohio, not unlike the Cleveland Browns, Cavaliers or the tribe itself. Wrong! Eaton is at Fitzwilliam Hall, Fitzwilliam Place, Dublin 2, Ireland. I stayed at the Four Seasons in Dublin once. Had I timed it better, I could have gone to Eaton's annual meeting, which gets held there.
Covidien is a function of a spin-off from Tyco, not unlike TE Connectivity (TEL), the old AMP. You know AMP, don't you? It's the proud Pennsylvania connector company that was purchased by Tyco for $11 billion back in 2003, during the heyday of convicted felon Dennis Kozlowski. Did you know that TE Connectivity is actually on Rheinstreasse 20, CH 8200, in Schafhausen, Switzerland?
I can't think of a better place for Washington, D.C.-based Danaher (DHR) to relocate to, can you? The fit is pretty darned perfect, too, given all of that instrumentation that Danaher has.
Or would it be better if it bought Pentair (PNR)? That's another Schafhausen company that also has a U.S. presence in Minneapolis, Minn. That fluids-control business of Pentair's is a difference-maker, although it doesn't make as big a difference as the tax domicile does.
The old joke about Chicago Bridge & Iron (CBI) is that it doesn't make bridges or iron and isn't in Chicago. You might have thought it was in Houston, Texas, at One CB&I Plaza. Looks like the punchline of that old joke is wrong, too, because CBI is in The Hague, Netherlands. How convenient is that for a company such as Fluor (FLR)? It is ostensibly right down the road, in Irvine, Texas, and could certainly pick up this competitor.
This game can and will go on and on. Tyco, now a fire-and-prevention company, would fit well into the stable of Honeywell or DuPont fire-and-safety divisions, and Tyco is in Neuhausen, Switzerland.
How about Alkermes (ALKS)? This is the terrific drug company that is working on a ton of amazing treatments for mental illnesses, and it happens to be on Burlington Road in Dublin, unless you are counting the Waltham, Mass., facility. There are lots of U.S. companies that could save a boatload giving 20% of a combined entity to that $6 billion company.
And please don't forget those fabulous Geneva- and London-based oil services companies Weatherford (WFT) and Ensco (ESV). Do you think it matters that Weatherford is named after Weatherford, Texas, where the company was founded, or that its operational office is in Houston? Do you think it matters that Ensco is a Dallas company that has said it will put "a large number" of people in London?
Yep, we could go on and on. All I can say is that every one of these "real" American companies is now a candidate to be bought because of the ridiculous U.S. tax code and the seriousness of avoiding taxes. If Pfizer (PFE) had wanted AstraZeneca (AZN), and if Medtronic has gotten Covidien, you can bet any one of these companies could be next.
I know it's silly, but there is some truly non-silly money to be made going virtual globe-trotting while never having to leave home, except to pick up the mail.
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that's actually a nice list of potential targets cramer came up with. and the premise of avoiding usa taxes could be motivation along with the decent products these companies all make.
meanwhile, we're finding out at my current place, that the costs of an operation in Europe are far higher than usa. so even if/when everyone buys out Europe corporations, they will still send the manufacturing to china for cost cutting
This is more proof our leaders are selling us down the river.
Yup it's good for our investments in the med-device world and MDT....
But I surely hate to see American companies doing this...Where does it stop...??
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Everyone except the American worker.
what part of 'making money ' is it that you don't understand.
same as drug wars. it isn't the drug lords that are the problem its the demand in the states that is the problem.
companies like taxes, they don't like the crazy spending that makes those taxes high and out of sight.
look to your reps to fix this issue. good luck.
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