Drugmaker plans €3.9bn ‘spinversion’

Mylan is buying Abbott Laboratories’ generic-drug business and forming a new company that will be incorporated in the Netherlands, giving the new operation a lower- cost tax base.

Abbott will get 21% of the new organisation, valued at about $5.3bn (€3.9bn). Setting up the company in the Netherlands will drop Mylan’s tax rate below 21% in the first year, subsequently declining to the high teens. The company will be run by Mylan’s current executive team from Pittsburgh.

Since 2010, more than 15 US companies have announced or completed purchases of companies overseas and changed their addresses for tax purposes to gain lower rates, in a strategy known as tax inversion. The Mylan deal is among the first so-called “spinversion”, when a portion of a company is spun off and joined with another company in a transaction that allows the two to relocate in Europe.