Alexion Pharmaceuticals (ALXN - Get Report) is up 21% to $162.11 Thursday, not because of another "beat and raise" quarter, but because the company is moving operations to Ireland so that it can avoid higher U.S. corporate taxes.
In 2014, Alexion's corporate tax rate will be 11-12%, much lower than the mid-20% tax rate expected by investors and analysts. And Alexion's tax rate will remain low forever now that "technical operations" are domiciled in Ireland. Alexion said Thursday that its tax rate will rise to 13-14% in 2015 and 16-18% in 2016 and beyond. -- still well below what the company would pay in the U.S.
Alexion is just the latest drug company to pursue the strategy of " inversion" -- the relocation of corporate headquarters or business operations from the U.S. to more tax-friendly countries like Ireland. Many companies invert by acquiring Irish-based businesses. Alexion is doing something different. It acquired a factory in Ireland where its drugs are packaged into vials. By establishing this factory in Ireland, Alexion was then able to transfer "technical operations" and key patents on its main drug Soliris from the U.S. and Switzerland to its Irish affiliate.
And with that move, Alexion avoids paying higher U.S. corporate taxes. Wall Street cheers.
On a call with investors this morning, Alexion CEO Leonard Bell insisted the company's decision to "realign its corporate structure" was done to better serve patients. Bell was reading from a script, no doubt crafted by his lawyers and spin doctors because the company knows running away to Ireland to shaft Uncle Sam may make good business sense, but looks lousy from a public relations perspective.
On the call, Bell didn't say if he'd be leaving his tony home in Connecticut, where Alexion is officially headquartered, to live in a garret above his new Irish vialing plant.
Somehow, I doubt it. Alexion's taxes are the only thing really moving.
10/14/15 - 11:47 AM EDT
05/19/15 - 04:42 PM EDT
05/19/15 - 12:48 PM EDT
05/18/15 - 08:06 AM EDT
05/05/15 - 02:43 PM EDT
02/05/16 - 21:00 PM EST
02/05/16 - 21:00 PM EST
02/05/16 - 08:53 AM EST
02/04/16 - 19:39 PM EST
02/04/16 - 14:07 PM EST
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
Trifecta Stocks analyzes over 4,000 equities weekly to find the elite 1% of stocks that pass rigorous quantitative, fundamental and technical tests.
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
Chris Versace, using sophisticated stock screening and fundamental research, identifies potentially explosive small and mid-cap stocks.
Master swing trader Alan Farley uses his sophisticated software screens to review thousands of stocks each day for you, to find just the handful that meet his demanding criteria.