|Sen. Dick Durbin (D-IL)|
Many a U.S. drugmaker has pounced on an opportunity to pick up a foreign company, haul overseas and reap the tax rewards. But while rumors this summer said Illinois-based Hospira ($HSP) would be jumping on the tax-inversion bandwagon, its deal isn't moving quite so quickly.
The Lake Forest company's talks to buy the medical nutrition unit of French company Danone for about $5 billion have stalled, Reuters' sources say. For now, discussions have been placed on hold, and it's unclear whether there's any life left in the proposed deal.
It's also unclear what the holdup is, but as the news service notes, political pressure may have something to do with it. When Hospira's interest in Danone first surfaced back in July, Dick Durbin, a senior senator from the company's home state, wrote CEO F. Michael Ball that Hospira shouldn't "turn its back on American taxpayers and consumers by taking advantage of a tax loophole called 'inversion.'"
It wouldn't be the first time government pushback got in the way of a tax-related takeover. Walgreen recently caved to political pressure, calling off plans to move abroad in its buyout of European rival Alliance Boots. And AstraZeneca ($AZN) reportedly hired a pair of U.S. lobbyists earlier this year to help thwart Pfizer's ($PFE) bid for the British drugmaker.
But any potential deal with Hospira--or another U.S. company--doesn't have to revolve around an inversion, Reuters' sources claim. "All options are still open. Price, structure and bidder--those are uncertain," one person said.
Some analysts, on the other hand, say the transaction never made too much sense in the first place. As opposed to Hospira, which makes injectable drugs, the Danone unit makes products like feeding tubes and edibles for people with special nutritional needs. And when Abbott Laboratories ($ABT) spun Hospira off in 2004, it kept a sizable and profitable medical nutrition business for itself, the news service notes.
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