Yet another U.S. drugmaker is joining the growing list that has headed to Ireland to enjoy the tax benefits. The Chicago area-based Horizon Pharma ($HZNP) is doing a reverse merger with Vidara Therapeutics International in a deal that it says speeds its path to profitability. And where is Vidara based? Dublin.
The two announced a deal today that they said is valued at $660 million in which shareholders of Vidara, a privately held and profitable specialty pharmaceutical company, get a 26% share of Horizon Pharma and receive $200 million in cash. The two said they expect full-year 2014 revenues of $250 million to $265 million. Horizon Pharma contributes its rheumatoid arthritis and osteoarthritis treatments, Duex, Vimovo, Rayos, and Lodotra, while Vidara brings to the table its one product, Actimmune, an immune stimulator that had sales of nearly $60 million in 2013.
Vidara acquired Actimmune from InterMune ($ITMN) in 2012 for $55 million and a two-year royalty stream. Actimmune, as you may recall, is the drug that former InterMune CEO Scott Harkonen touted in a misleading press release more than a decade ago, a move that earned him 6 months of house arrest and three years of probation. He appealed the sentence to the U.S. Supreme Court on free-speech grounds, but in December the court declined to hear the case.
The new company will keep the Horizon name but take Vidara's Ireland address and also its "tax efficient corporate structure." That is because Ireland has for years offered a much lower tax base to drugmakers that register assets or build facilities there. Just last year, NJ-based Actavis ($ACT) bought Dublin-based Warner Chilcott ($WCRX) and Allegan, MI-based Perrigo ($PRGO) snapped up Ireland's Elan ($ELN)--and in both cases the companies changed their corporate address, citing the Irish tax system as a motivation.
Pharma is only one of many industries that have beaten a path to Ireland in pursuit of tax advantages. The country has been under growing pressure to change its tax provisions since it was reported that Apple ($AAPL) and other corporate titans had been able to avoid billions of dollars in U.S. taxes by using overseas addresses, including in Ireland. The government last year said it was reviewing the tax loophole but gave few indications of how it might change.
- here's the release