Shares of Perrigo Company plc [NYSE: PRGO] skyrocketed 13% during the pre-market trading session of Friday. The strong performance of the firm has highlighted the positive reactions of the investors after the firm disclosed that it has finally resolved the Notice of Amended Assessment (NoA) matter with the Irish Office of the Revenue Commissioners.
PRGO revealed that its decision to resolve the tax dispute is the best decision of the firm and also in the best interest of the shareholders of the firm as this settlement has removed the major obstacles which have stopped the firm from pursuing its growth strategies. After resolving the tax matter, PRGO is still believing that its tax position was accurate and would in due course was approved by Tax Appeals Commission.
Settlement of Irish Tax Matter
Perrigo and Irish Revenue have decided to resolve the tax dispute on a few of the conditions. Per the conditions, Perrigo has decided to offer €297 million as full and final payment of all obligations resulting from the sale of the Tysabri patients and taxable in periods FY13 to FY21. As per the terms of the settlement, Irish Revenue will provide credit for various taxes already paid and for various unused R&D credits to PRGO, all of which will be practical against the €297 million figure, such that the total cash payment that Perrigo will be offered to Irish Revenue as part of this settlement will be €266.1 million.
Furthermore, as per the settlement no penalties will be applicable, and no interest is due. The parties reached an arrangementthat Irish Revenue will take no further legal action in relation to the NoA or any Tysabri-related income or transactions. Moreover, the parties endorse applying an alternative basis of taxation than the corresponding positions taken by Irish Revenue in the NoA and by Elan Pharma in its tax returns.
Irish Revenue has written confirmation of the acceptance of the settlement terms. Perrigo anticipates finalizing a formal compensation contract with Irish Revenue in the coming days. Perrigo will pay €266.1 million to Revenue within seven days after the parties finalize the compensation contract. The firm is anticipating funding this adjustment through cash on hand.