US law makers gearing up for a real scrap with dealmakers!

It’s rare that both M&A deal making and issues around corporate structures make it into the broader global media and subsequently into the psyche of the general public. However this week has seen both of these issues brought firmly to the forefront of people’s minds with the leaking of the “Panama papers”, where a number of high profile individuals across the spectrums of government, entertainment, business and sport have been linked to offshore companies in Panama. There is also the subsequent announcement that the US Department of Justice has successfully stopped the USD 160bn Pfizer/Allegan deal and is contesting the USD 38bn Haliburton/Baker Hughes deal, along with the Canadian Pacific Railway asking for a “declaratory order” from the US government over its attempted USD 28.3bn takeover of Norfolk Southern. Whilst I am sure that these issues are not related, the timing of all of this does look from an outsider’s perspective like the two situations may be linked.

There have been rumblings for some time from both US political parties about so-called “tax inversion” deals, and threats from numerous potential US presidential candidates that they would address this if they were elected. Well it would appear that President Obama, in one of his last acts as President, has got there first! Whilst there seems to be no instantaneous fall-out from the Panama Papers other than negative publicity, this will surely harden the resolve of the Governments in the G8 to enforce further global transparency around corporate structures. This in turn, along with changes to the tax inversion rules, will surely present short term challenges to dealmakers in terms of the tax efficient structuring of deals, but M&A professionals are creative souls and as one door closes other invariably open.