{"id":24769,"date":"2014-05-09T07:14:19","date_gmt":"2014-05-09T06:14:19","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=24769"},"modified":"2014-05-09T07:15:48","modified_gmt":"2014-05-09T06:15:48","slug":"tax-driven-deals-are-made-in-hell-as-publicis-omnicom-proves","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2014\/05\/09\/tax-driven-deals-are-made-in-hell-as-publicis-omnicom-proves\/","title":{"rendered":"Tax driven deals are made in hell, as Publicis-Omnicom proves"},"content":{"rendered":"

As the FT notes this morning<\/a> the Publicis-Omnicom merger has failed. The French-US deal always looked to be tax driven. As the CEO of US partner Omnicom told the FT<\/p>\n

the company had accumulated \u201can awful lot of cash\u201d.<\/span><\/p><\/blockquote>\n

No doubt that was, like so much US\u00a0<\/span>corporate\u00a0cash, offshore. But there was more to the tax aspects of this deal than that. The plan was for a deal that was, the FT noted:<\/span><\/div>\n
\n
structured so neither company nor its shareholders would incur tax, but the groups faced challenges receiving approval from tax authorities in France, the Netherlands and the UK.<\/span><\/div>\n

As recently as April, the companies said there was no reason to believe that the deal structure could not be achieved.<\/p><\/blockquote>\n

Rumours began a while ago that suggested that this was not true and that the expected $80m in annual tax savings the merger had hoped for might not be delivered. From then on the deal seemed on the rocks.<\/p>\n

There are lessons in this. As I have said before, tax cannot drive commercial logic. The US corporate tax system is corrosive<\/a>, as I have also argued, as a result. And here a deal has floundered because a merger driven by tax greed, not commercial necessity or even imperative, has come unstuck.<\/p>\n

I hope the markets take note. All those consider the Pfizer deal should smell the coffee.<\/p>\n

It would be better still if the US did and took action to reform its tax system.<\/p>\n","protected":false},"excerpt":{"rendered":"

As the FT notes this morning the Publicis-Omnicom merger has failed. The French-US deal always looked to be tax driven. As the CEO of US
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