ALLEGAN COUNTY, Mich. — Perrigo will no longer be headquartered in Allegan, after a deal to buy Dublin-based Elan is finalized, according to a company representatives.
“That makes it huge, when a company acquires another company that`s almost its same size,” Gregg Dimkoff, a finance professor with Grand Valley State University said.
Dimkoff was surprised to hear about Perrigo’s latest business deal. The company is known as the United States’ largest manufacturer of generic drugs. It’s already expanding in Allegan and Holland.
Perrigo is now paying 8.6 billion dollars to buy the Dublin-based company. At the same time, Perrigo is moving its headquarters from Allegan to Dublin.
“This is a pure tax move on the part of Perrigo`s board, to save money in taxes. That`s where the savings will come from,” Dimkoff said.
John Hendrickson, an executive with Perrigo, said the acquisition helps the company’s goal of international growth. He said the lower income tax rate is a financial incentive.
“By combining the companies, doing these things, between the operating expenses and the tax side, we believe there’s about 150 million dollars of benefit in the first year, to this combined new entity,” Hendrickson said.
He said Ireland has an income tax rate of 12.5%, compared to the roughly 30% income tax rate the company pays here in the United States.
“The question is, ‘Would it be a disincentive to not investing here in the US versus… things are cheaper in Ireland?’ My direct answer is, ‘No.’ I think the tax structures of different countries can put you at a good advantage or disadvantage of competing,” Hendrickson said.
Elan is also collecting some major royalties from a multiple sclerosis drug called Tysabri, which it sold to a competitor. Those royalties are something that Perrigo will soon take over with the acquisition of Elan.
Hendrickson said Perrigo will still be required to pay state and local taxes. Nothing will change on that front. Also, he said no positions are relocating, and local jobs won’t be unaffected.
Before the deal is finalized, shareholders and government officials from both countries will have to approve the deal. Hendrickson said the company hopes to have it all finalized in the next three to four months.
