WRAPUP 3-New U.S. tax rules chill 'inversion' deal-making; shares dive

Tue Sep 23, 2014 6:26pm EDT
 
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* U.S. moves against tax-avoidance 'inversion' deals

* Burger King-Tim Horton deal to proceed

* Action may deter Pfizer from returning to bid for AstraZeneca (Adds Kies, Scalia comments, background, closing share prices)

By Kevin Drawbaugh and Soyoung Kim

WASHINGTON/NEW YORK, Sept 23 (Reuters) - Tough new U.S. government rules on corporate "inversion" deals, aimed at making the tax-avoidance transactions less desirable, undermined share prices in nearly a dozen companies on both sides of the Atlantic on Tuesday.

Analysts and tax lawyers were studying the damage to deals currently in the works and the outlook for future such deals, in which U.S. companies escape high taxes at home by shifting their domiciles abroad.

Although the new rules will make some deals costlier and others more difficult, fast-food chain Burger King Worldwide Inc said it will proceed with its $11.5 billion transaction with Canada's Tim Hortons Inc.

"This deal has always been driven by long-term growth and not by tax benefits," the two companies said in a statement.

Corporate deal-makers were surprised by harsher-than-expected changes to the inversions rulebook unveiled by the Treasury Department late on Monday. Inversions have surged this year and caused concern in Washington about the threat they pose to the U.S. corporate income tax base.   Continued...