Tyco CEO: Tax deals put focus on US system

Tax inversions like that announced by Tyco and Johnson Controls in January will always attract criticism but also serve to focus attention on the US tax system, according to Tyco’s chief executive.

The $16.5bn (€15.04bn) merger of fire and security specialists, Tyco and the US building efficiency firm will deliver $150m of tax savings each year and $500m in costs over the first three years.

The so-called tax inversion, which will see the newly combined entity domiciled in Ireland with its global headquarters in Cork, drew strong criticism in the US with presidential hopefuls such as Democratic candidate Bernie Sanders calling it a disaster for US taxpayers.

His rival for the democratic nomination Hillary Clinton also vouched to put an end to tax inversions and block deals such as the Tyco and Johnson Controls merger if elected to the White House.

Speaking to the Irish Examiner, Tyco chief executive George R Oliver said he considered the deal a “merger of equals” and claimed it put the focus on the US tax system.

“What I would say [is] there’s always going to be criticism but it really brings to focus the tax structure in the US.

"We have been domiciled in Ireland or Switzerland and that has been very effective for us in being able to reinvest and being able to create value for our shareholders so I think it brings attention in the US to the tax structure,” Mr Oliver said.

It’s not the first time inversions have concentrated attention on the US where companies face a 35% rate of corporation tax after tougher rules were introduced by the US Treasury in September 2014 and again last November in response to similar deals.

Those moves aimed to stem the flow of inversions but appear to have had little effect so far.

Mr Oliver also said the company is interested in expanding through acquisitions and said its Irish tax domicile offers further scope for growth too.

Tyco Ireland general manager Donal Sullivan said it was too early to know how the merger would affect its global headquarters in Cork but said it would certainly work out positively for its Irish operations.

“Unquestionably, it’s positive but it’s still early days.

"We’re six or seven months away from the merger completing so it’s really too early to have definite plans on the table.

"That’s all going to get worked out over the next little while and once the merger completes and we become one company then really those doors start to open as to what you can practically do.

“What you’ll see is the amount of research and development that we do here is likely to expand because we just now have a much greater product portfolio and a lot more things that we have to combine together on software platforms that our teams do here,” Mr Sullivan said.

He said the management teams of both companies were “very encouraged” by what they’ve seen in Cork and the talent that’s being attracted to work for Tyco.

Speaking at the official opening of the One Albert Quay office development of which Tyco is the anchor tenant, Mr Sullivan said as part of its lease agreement the company has the option to take up additional office space to accommodate more workers should it need to.

Tyco employs about 260 staff in Cork and is continuing to hire as part of a 600-person recruitment drive.

John Cleary JCD speaking at the opening of TYCO 1 Albert Quay@CBA_cork @corkcitycouncil @NiamhcMurphy pic.twitter.com/dCZbLQXGiQ

— CBA Cork (@CBA_cork) March 7, 2016