I'm not even supposed to be here today
Greetings from the home office, which will soon be abandoned for a morning of bouncy houses and a matinee about dinosaurs. Then, I'd imagine, more food. No regular column given the paucity of news (and readers -- seriously, my condolences if you're in the office right now), but here's something of interest that I posted late Wednesday...
• Tax time: When Pfizer Inc. completes its merger with Botox maker Allergan in the second half of next year, most of its shareholders will be hit with a capital gains tax bill from the IRS. This will include senior Pfizer executives like chairman and CEO Ian Read, who holds common shares currently valued at around $8.3 million.
Many companies have been known to reimburse top execs and board members for merger-related tax expenses, but Pfizer spokeswoman Joan Campion tells Fortune that it has no intention of doing so.
For Read, that could mean an extra tax bill of approximately $1.95 million–based on a 20% long-term capital gain rate, plus a 3.8% surcharge for top earners. He would not, however, be required to pay merger-related taxes on his stock options or other restricted compensation. For context, Read’s base salary for fiscal 2014 was $1.825 million, and his total compensation was valued at more than $17 million.
Read and other executives also will avoid paying a 15% excise tax charged to senior executives and board members of a company that is expatriating via a tax inversion, even though Pfizer will relocate its corporate headquarters to Ireland (where Allergan is formally domiciled, despite being actually run by its executives out of Parisppany, New Jersey). This is because the Pfizer-Allergan deal, despite the tax shifting, isn’t technically an inversion. Current Pfizer shareholders will only hold a 56% stake in the combined company, compared to the 60% threshold required for the excise tax (and other tax inversion rules) to kick in.
In general, all Pfizer shareholders who hold their stock in a taxable account–i.e., not in an IRA or 401(k)–will be required to pay capital gains taxes after the merger occurs. This would not be true for the relatively few folks who report losses, although such losses would not be deductible.
• Have a great weekend. Go Pats!
THE BIG DEAL
• American Capital Ltd. (Nasdaq: ACAS) said that it has hired Goldman Sachs and Credit Suisse to explore strategic options, including a possible sale of the entire company. The Bethesda, Md.-based private equity and asset management firm has a market cap just north of $4 billion. www.americancapital.com
VENTURE CAPITAL DEALS
• Vector Watch, a Bucharest-based developer of a low-power operating system for wearables, has raised $5 million in VC funding. GECAD Group led the round, and was joined by Catalyst Romania. www.vectorwatch.com
PRIVATE EQUITY DEALS
• General Atlantic and Warburg Pincus have agreed to acquire a 49% stake in Network International, a Dubai-based payments processing business focused on the Middle East and Africa, from The Abraaj Group. No financial terms were disclosed. Emirates NBD will continue to own a 51% stake in the company. www.network.ae
• Sigma Pensions, a Nigeria-based pension fund administrator, has raised $62 million in private equity funding from Actis. www.act.is
• Vista Equity Partners has agreed to acquire and merge MarketLive Inc. (Petaluma, Calif.) and Shopatron (San Luis Obispo, Calif.), both providers of retail industry software. No financial terms were disclosed. MarketLive has raised over $20 million in VC funding from firms like Sequoia Capital, Icon Ventures, Globespan Capital Partners and Sigma Partners. Shopatron raised around $6 million from Rivenrock Capital and Kern Whelan Capital. Read more.
• Z Capital has entered into exclusive talks to acquire Affinity Gaming, a Nevada casino operator, following its $15 per share takeover offer (the firm’s fifth bid in two years). Read past coverage.
IPOs
•Therapure Biopharma Inc., an Ontario-based biologics therapeutics company backed by Catalyst Capital Group, is prepping a C$100 million IPO, according to Bloomberg. Read more.
EXITS
• Francisco Partners has agreed to sell Healthand Holding Inc., a Minnesota-based provider of electronic health records and clinical information management solutions to hospitals, to Computer Programs and Systems Inc. (Nasdaq: CPSI) for approximately $250 million. www.healthland.com
• Reprocell (Jasdaq: 4978) has acquired Biopta, a Glasgow-based company that uses functional human tissue to predict drug activity prior to clinical trials. No financial terms were disclosed. Biopta shareholders include Braveheart Investment Group, E-Synergy, LINC Scotland and The Scottish Investment Bank. www.reprocell.com
OTHER DEALS
• EMC (NYSE: EMC) reportedly is changing up its plans to merge the cloud assets of VMware with those of its Virtustream unit, as part of EMC’s planned $67 billion takeover by Dell Inc. Read more.
• KDC Solar LLC, a Bedminster, N.J.-based solar energy company backed by Diamond Castle Holdings, has secured $100 million in debt financing from Highbridge Principal Strategies LLC. Proceeds will be used to refinance a construction facility from Prudential Capital Group. www.kdcsolar.com
• Merck KGaA is considering the sale of its allergy unit (Allergopharma), which could be valued at around €600 million, according to Bloomberg. Read more.
FIRMS & FUNDS
•No firm or fund news this morning.
MOVING IN, UP, ON & OUT
• James Quella, a former senior managing director with The Blackstone Group, has joined the board of directors at Lionbridge Technologies Inc. (Nasdaq: LIOX). www.lionbridge.com
• Tanguy Serra, a former vice president with TPG Capital, has been promoted from COO to president of SolarCity Corp. (Nasdaq: SCTY). www.solarcity.com
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