By Joe Vladeck
Applied Materials, a California-based
manufacturer of equipment for producing semiconductors, recently announced
its acquisition of competitor Tokyo Electron. Following that acquisition the newly-wed companies took an
increasingly popular step: They eloped to the Netherlands. The reason?
Tax savings.
Regulations have made it more difficult for American
companies to reincorporate in infamous tax shelters such as Bermuda. As a
consequence, U.S. companies like Applied Materials are increasingly acquiring
smaller competitors abroad and then using the opportunity to re-incorporate in
foreign jurisdictions. Applied Materials estimates that will reduce its
tax burden by 5 percent, or approximately $100 million annually.
This "inversion" technique is growing in
popularity. Of the 50 corporate "inversions," 20 have occurred in the
past 18 months. Dealbook
has details on the practice.
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