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Status of pending tax inversions after two deals unravel

Two “inversion” deals by small U.S. drugmakers have collapsed since the Treasury Department on Sept. 22 announced new rules for the transactions, in which U.S. companies reincorporate abroad to cut their tax bills.

Auxilium Pharmaceuticals Inc on Thursday canceled its agreement to buy Canadian rival QLT Inc and redomicile to Canada. Instead, Auxilium said it will be acquired by Irish-domiciled Endo International.

Citing a “changed political environment,” Salix Pharmaceuticals Ltd last week called off a planned Irish inversion via an acquisition of part of Italy’s Cosmo Pharmaceuticals SpA.

Treasury’s rules, meant to discourage the deals seen as threatening the corporate tax base, raised questions about pending deals. Here is the status, as of Oct. 10, of transactions that were announced before the rules, but are still not complete:

AbbVie Inc. The drugmaker agreed to buy Dublin-based rival Shire Plc and adopt a UK tax residency in a deal expected to close this year. The Wall Street Journal reported Sept. 29 that AbbVie has sought to reassure Shire employees that the deal will proceed.

Applied Materials Inc. The chipmaker has agreed to buy smaller Japanese rival Tokyo Electron Ltd, with the deal closing this year. The new entity, to be known as Eteris, was expected to be incorporated in the Netherlands.

Burger King Worldwide Inc. The company has said it is “moving forward as planned” to acquire Canadian coffee and doughnut seller Tim Hortons Inc and relocate the tax home of the Whopper to Canada.

C&J Energy Services Inc. The oilfield company agreed to redomicile to Bermuda via a deal with Nabors Industries Ltd. Closing was expected by the end of 2014.

Chiquita Brands International Inc. The food group has agreed to combine with Ireland’s Fyffes Plc. EU regulators have cleared it, but juice maker Cutrale and financial concern Safra Group have expressed interest in a joint takeover of Chiquita. Fyffes agreed to raise Chiquita’s share of the merged company to block Cutrale-Safra.

Medtronic Inc. The medical technology company is working to close a deal with Ireland's Covidien Plc by the end of this year or early 2015. Medtronic said last week it will proceed, but will use $16 billion in debt rather than cash held overseas as part of its financing.
Mylan Inc. The drugmaker agreed to buy a piece of Abbott Laboratories' non-U.S. business, with the new company's tax domicile in the Netherlands. Mylan has seen some unusual options activity and the stock has moved on rumors of a possible alternative deal approach.

(Reporting by Kevin Drawbaugh in Washington, Soyoung Kim and Jeffrey Dastin in New York; editing by Lisa Shumaker and Matthew Lewis)