Capital IQ Weighs In On The Details Of Corporate Inversion Statistics

Corporate inversions have become a buzzword on Wall Street over the past few weeks. On Monday morning, U.S. Treasury Secretary Jack Lew said his administration would seek ways to prevent corporate tax inversions.

Simply put, data from Capital IQ shows that only 1.4 percent of the global M&A deals priced above $1 billion are classified as "corporate inversions".  Inversion have been steadily increasing from 17 between 1994 and 2000 to 35 between 2009 to the present day.

• From 1994-2000, for instance, 17 companies moved their headquarters abroad for tax purposes. Since 2009, however, 35 companies have relocated or intend to relocate to foreign countries through tax inversions.
• Of the 518 worldwide M&A deals announced over the past 12 months with disclosed values greater than $1 billion, only seven, or 1.4%, can be classified as corporate inversions.
• The recent significant increase in inversion deals nonetheless substantiates concerns that they are becoming increasingly popular. In our analysis, we also found that the rising popularity of corporate tax inversions fits with the economic trends of increasing globalization and cross-border M&A activity.
• As U.S. companies must now operate in a more competitive global marketplace, they've had to adjust their business plans to stay competitive.
• On the other hand, our analysis also showed that several U.S. companies that relocated abroad ended up coming back to the U.S. Additionally, U.S. firms often acquire foreign companies from abroad, and these foreign companies benefit from U.S. institutions and systems, suggesting that greater global forces are at work.

YTD accounting for global M&A has reached $2.5 trillion in deal-values with $124 billion oor 5.1 percent of those deals are classified as corporate inversions.  Of that $124 billion, 83 percent consists of two deals

• Medronics acquisition of Covidien and
• AbbView deal for Shire PLC.