Perrigo Stock Up As Appeal Date For Irish Tax Bill Nears
Zacks Investment Research | Dec 26, 2018 08:47PM ET
Shares of Perrigo Company plc (NYSE:PRGO) rallied 11.5% on Dec 26 as the deadline to appeal against the tax bill of $1.9 billion from Ireland government approaches. Investors’ sentiment was positive and they expect Perrigo to remain committed to its statement about filing an appeal with the Irish revenue department.
Last week, Perrigo received a notice from the Irish government which held Elan Pharma, a subsidiary of Perrigo, liable to pay the said tax amount related to its sale of Tysabri intellectual property and related assets to Biogen (NASDAQ:BIIB) in 2013. Elan was eligible to receive an upfront payment and future contingent payments from Biogen, which were recognized as trading income, attracting a tax rate of 12.5%.
However, the Irish revenue department stated in the notice that the sale related to Tysabri should be considered as chargeable gains subject to a higher tax rate of 33%. This led to a massive tax bill for Perrigo.
The company’s stock had plunged nearly 30% last week, following the announcement of the tax bill notice in a SEC filing.
Perrigo’s shares are down 53.3% so far this year compared with the industry ’s decline of 11.5%.
In its SEC filing, the company stated that it is on track to file an appeal and expects the proceedings to continue over a period of a few years before completion. Moreover, per the filing, no payment related to tax bill is required until all proceedings are complete.
Perrigo strongly disagreed with the assessment by the Irish revenue department, which neither provided a detailed clarification nor furnished additional documents in support of the bill.
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