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As the globalization of US multinationals proceeds at an ever-faster pace, tax planning opportunities can sometimes be overlooked. Capital restructuring is one such opportunity. Eli Fink and Eric Overman, Deloitte & Touche, New York examine the potential tax savings

Zeneca is to acquire a US fungicide business owned by Japanese chemicals company Ishihara Sangyo Kaisha. Zeneca will acquire ISK Biosciences and the international distribution rights outside Asia-Pacific. The deal is valued at $500 million. Davis Polk & Wardwell in New York is acting for Zeneca, with advice from tax partner Mario Verdolini and assistant Avrohom Gelber. KPMG is also advising.

Société Générale has acquired Hambros Banking Group from Hambro in a deal worth £300 million ($483 million). The banking group includes Hambros bank and its subsidiaries and associates, together with shareholdings in certain other companies. Société Générale was advised by tax partner Francis Sandison at Freshfields in London. Norton Rose acted for Hambro. Tax advice came from partner Louise Higginbottom and assistants Dominic Stuttaford, Nick Stretch and Mark Middleditch.

The Spanish government is to privatize Aceralia, the leading steel group in Spain. The value of the transaction is Pta123 billion ($816 million), but this will increase to Pta137 billion on excercise of the over-allotment option.

The US natural gas utility KN Energy is to acquire gas pipeline company Midcon Corporation from Occidental Petroleum. The deal is worth $3.49 billion. KN has already spent $1.5 billion on acquisitions since 1989. The transaction will provide KN with more than 41,600 kilometres of pipeline in 15 US states, and boost annual revenue to $4.7 billion.

MascoTech is set to merge with TriMas Corporation, a manufacturer of industrial products. The transaction is valued at approximately $900 million. MascoTech already owns 37% of TriMas. The merged organization will have a combined sales volume of $1.6 billion.

On December 5 1997, Russian president Boris Yeltsin convinced the Duma to accept the 1998 budget at the first of three readings. Nevertheless, the decrepit taxation and budgetary system continues to hinder potential economic growth. Tax collection in Russia remained poor in 1997. David John, tax partner at Price Waterhouse in Moscow, says tax collection this year represented 52% of the budget. Government expenditure in 1997 represented 18.3% of GDP, while tax revenue was just 10.8%. The promise of radical revenue collection methods has failed to disguise a deteriorating system.

The first budget statement delivered on December 3 1997 by the new minister for finance, Charlie McCreevy, was also the first budget to be delivered before the start of the financial year. The minister used the opportunity presented by very high economic growth rates, and the resulting tax buoyancy, to make a number of significant tax changes. The minister has confirmed that with effect from January 1 2006, the standard corporation tax rate applicable to the trading profits of non-manufacturing companies (including financial services companies operating in the Dublin docks area whose 10% tax rate expires on that date) will be 12.5%. A higher rate of 25% will apply to the non-trading income of those companies. Manufacturing companies will continue to benefit from the lower 10% manufacturing tax rate until it expires at the end of 2010.

Reed Elsevier is to dispose of its consumer magazine group IPC in a deal worth £860 million ($1.38 billion). The purchasing MBO group is financed by Cinven, with debt underwritten by Goldman Sachs. Freshfields acted for Reed Elsevier, with tax advice from partner Colin Hargreaves and manager Isabel de May.

US bank First American has made a successful $2.7 billion stock bid to acquire Deposit Guaranty. Wachtell, Lipton, Rosen & Katz in New York is acting for First American. Tax partner Adam Chinn is dealing with tax issues raised by the bid.