Magazine
February 1999

Magazine Archive

Deals 1998: a behind the scenes guide - US tax aspects of the BP/Amoco transaction

During 1998 a number of very large cross-border tax-free acquisitions of US public corporations by foreign public corporations were completed. One of the largest was the acquisition of Amoco Corporation, a major US integrated oil company, by British Petroleum.
1999 Tax Reform Approved
1999 BUDGET AMENDMENTS
Astra-Zeneca super deal gets top advisers

Swedish pharmaceutical group Astra is to merge with UK pharmaceutical company Zeneca. The deal will create the largest pharmaceutical group in Europe, with a market capitalization of $70 billion. This is the largest merger ever to be performed in Europe.
Herbert Smith tackles burning issues

British American Tobacco is to acquire Rothmans for $8.6 billion. The new group will have 16% of the world market, and will sell 900 billion cigarettes each year.
Correction
Freshfields and Linklaters power ahead

Electricity utility PacifiCorp of the US has announced an agreed merger with ScottishPower of the UK.
Beiten, Burkhardt are the medicine men

The Frankfurt office of Beiten, Burkhardt, Mittl & Wegner advised Mediclin AG in its takeover of the Hurrie clinics group.
Cravath, Swaine & Moore in magazine deal

New York firm Cravath, Swaine and Moore is advising UK publisher Emap on the acquisition of US magazine publisher Petersen.
euro899 million offering from Fortis

The Fortis banking and insurance group is making an offering of 25 million ordinary shares with expected proceeds of euro899 million.
Sullivan and Cromwell aids communication

New York firm Sullivan & Cromwell is advising SBC Communications in the acquisition of Comcast Corporation's wireless subsidiary.
Lovell White Durrant claims insurance deal

The London office of Lovell White Durrant is representing Australian insurance group AMP in a deal valued at £2.7 billion ($4.3 billion).
Akin, Gump advises Clear Channel

US radio and television company Clear Channel Communications is acquiring Jacor Broadcasting of Colorado. The deal is valued at $4.4 billion.
Skadden, Arps in Silicon Sale

Skadden, Arps, Slate, Meagher and Flom is assisting internet service provider America Online in its acquisition of Netscape.
Linklaters and Freshfields scoop British Aerospace deal

British Aerospace has made an agreed £7.8 billion ($12.48 billion) bid for General Electric's defence group, GEC Marconi. The stock and debt acquisition will create the world's third-largest defence company.
Deals 1998: a behind the scenes guide - Marriott and Sodexho avoid anti-Morris Trust treatment

A potential acquirer is often interested in using its stock to purchase a certain portion of a US target's businesses. In this circumstance, the acquisition commonly employs the so-called "Morris Trust" structure. In such a structure, the target corporation first distributes the stock of a controlled subsidiary (which would typically hold all of the target's "unwanted" businesses) to its shareholders, and then, holding only the desired business, the target corporation is acquired for stock by the acquiring corporation.
Deals 1998: a behind the scenes guide - Sumitomo’s Aurora CLO

The London branch of The Sumitomo Bank, Limited completed its Aurora corporate loan securitization in April 1998. Many corporate loan securitizations (otherwise known as collateralized loan obligations, or CLOs) involve complicated structures.
Deals 1998: a behind the scenes guide - Canada: cross-border acquisitions and exchangeable shares

Specific international agreements and general trends toward global economic consolidation mean that Canadian business is now more than ever an important part of a highly integrated north American – and increasingly globalized – economy. Nevertheless, unlike the situation in the EU, the Canadian income tax system has undergone little if any change to harmonize its application with the tax systems of its major trading partners.
Deals 1998: a behind the scenes guide - Germany: step-up after an acquisition

Amongst other goals, such as deduction of borrowing costs or tax-efficient unwinding, the additional step-up depreciation of the underlying assets is an important factor in any acquisition. The tax savings of such additional depreciation increase the cash flow of the target and, therefore, are essential for financing an acquisition.
Allen & Overy wins Gide partners. Gide cries foul

French law firm Gide Loyrette Nouel is reeling from the shock of losing six of its partners to UK law firms. Among them was tax partner Siamak Mostafavi, who has become Allen & Overy's first tax partner in Europe.
Brazil risks IMF crisis

Struggling Brazil may lose R$7 billion ($2.7 billion) in tax revenue because of a complicated legislative process. This would result in the country missing budget targets negotiated with the International Monetary Fund.
China taxes development zones

China's finance minister, Xiang Huaicheng, has announced the end of the mainland's development zones, which are the country's main incentive attracting foreign investors.
Letter to the editor

From: Steve Towers Partner, Deloitte Touche Tohmatsu, Melbourne, Australia.
PricewaterhouseCoopers merges in Spain to compete with Garrigues & Andersen

Following in the footsteps of its competitor Arthur Andersen, which in 1997 merged with Spanish law firm J&A Garrigues, PricewaterhouseCoopers has announced a merger with the Madrid office of Spanish law firm Mullerat & Roca. "The system of Garrigues & Andersen is the right way to increase our presence in the legal market," says Antonio Lewis Vañon, head of the legal practice at PricewaterhouseCoopers.
Temporary reprieve from Michigan taxes

The US state of Michigan has granted foreign businesses a brief respite from recent harsh tax changes. But this temporary measure may not be enough to appease Canadian companies who are calling for an exemption from the new rules.
US-UK eye treaty renegotiations

Both the US Treasury Department and the UK Inland Revenue have announced that they will schedule meetings early next year for the purpose of renegotiating the existing income tax treaty, which has been in effect since 1975.
UK releases APA proposals

The UK Inland Revenue has released proposals for an advance pricing agreement (APA) system. The proposals come as part of the general review of transfer pricing which was announced in the March 1998 budget.
News in brief

Australian tax breaks cause controversy, PwC loses ground in Latin America, Japan proposes largest-ever tax reductions, Cartel probe follows PwC Italy merger, Italian government signs tax reform pact, Taxman freezes Pakistan's press, Russia placates regions with tax split deal
Taxfax

Canciello accomplishes all at IRS , Dogs carry Belgrade tax penalty, Happy birthday dear income tax, Taylor finds haven at Deloitte, Pink palace tested for dodgy foundations
Argentina tightens fiscal grip

Argentina's tax reform programme has introduced key changes in VAT, transfer pricing and income tax. But as Jorge San Martín and Hugo N Almoño of Price Waterhouse, Buenos Aires argue, the commitment to neutrality has been weakened
Big five prosper in the gloom

As the world moves towards possible recession, International Tax Review reveals the big five revenue figures for 1998. Rosie Murray-West talks to the global heads of tax and asks them how they prosper in the face of adversity
Choosing the best of the bunch in Japan

Foreign investors in Japan face myriad options in their search for tax-efficient flow-through structures. Dean A Yoost and Richard Elliott of PricewaterhouseCoopers, Tokyo explore the possibilities
Changing world leaves PE standing

The permanent establishment concept is central to the taxation of businesses operating in more than one country. But the structures used have moved on since the original 1963 OECD definition. Oliver Ralph examines the pressing need for a reformulation
Rulings bring US-Mexico opportunities

Decisions in Mexico and the US allow Mexican entities to cut their assets tax base and banks to reduce reporting requirements. By Miguel Valdés, Nicolás José Muñiz, Frederico Aguilar and Jorge García of Ernst & Young in New York and Mexico City
India doubles tax avoidance difficulties

Two recent rulings by India’s Authority for Advance Rulings have done little to clarify interpretation of Double Tax Avoidance Agreements by the courts. Bobby Parikh and Keyur Shah of Arthur Andersen, Mumbai, set out the cases, and discuss the points of contradiction
Hong Kong keeps expats in tax net

The tax issues of structuring inbound and outbound expatriate contracts in Hong Kong centre on the test of location of employment. Ian Love, PricewaterhouseCoopers, Hong Kong sets out the pitfalls and opportunities to be addressed
Brazil Introduces fiscal austerity reform package
Knowledge and Know-How Exchange: Acute Risks for German Subsidiaries of Foreign Multinationals
Report on the budget speech of the Minister for Finance