Bulletin: Perrigo Co. PLC Irish Tax Assessment Is Long Dated, With The Final Amount Uncertain; No Immediate Credit Impact

NEW YORK (S&P Global Ratings) Dec. 21, 2018--Ireland-headquartered Perrigo Co. PLC announced that the Irish Office of the Revenue Commissioners assessed the company a €1,636 ($1,864) million liability related to its subsidiary Perrigo Pharma International's (formally Elan Pharma) 2013 sale of Tysabri to Biogen Idec. Perrigo is appealing the assessment with the Irish Tax Appeals Commission. The point of contention is whether the sale of the Tysabri asset is related to Elan Pharma's "trade," and thus whether gains should be taxed as ordinary income (Perrigo's position) or as a capital gain, which has a much higher rate. This introduces material uncertainty to Perrigo's future credit metrics, as the amount represents more than 1.5x last-12-months EBITDA. If Perrigo were required to

...NEW YORK (S&P Global Ratings) Dec. 21, 2018--Ireland-headquartered Perrigo Co. PLC announced that the Irish Office of the Revenue Commissioners assessed the company a 1,636 ($1,864) million liability related to its subsidiary Perrigo Pharma International's (formally Elan Pharma) 2013 sale of Tysabri to Biogen Idec. Perrigo is appealing the assessment with the Irish Tax Appeals Commission. The point of contention is whether the sale of the Tysabri asset is related to Elan Pharma's "trade," and thus whether gains should be taxed as ordinary income (Perrigo's position) or as a capital gain, which has a much higher rate. This introduces material uncertainty to Perrigo's future credit metrics, as the amount represents more than 1.5x last-12-months EBITDA. If Perrigo were required to pay this full amount in the near term, the rating would be pressured. That said, we expect that any cash outflow is at least several years away and could be settled for substantially less than the full amount. We...

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