Wright Medical To Invert To The Netherlands

Medical device companies Wright Medical Group Inc. and Tornier NV have agreed to merge in an all stock USD3.3bn transaction that will involve the transfer of Wright’s tax domicile from the US to the Netherlands.

Wright’s deal with Tornier is one of the few corporate tax inversions that have been announced since the disclosure of non-legislative measures by the US Treasury Department on September 22 to deter companies from such transactions, which are being used by multinationals when merging with an offshore counterpart to move their tax residence abroad and away from the high US corporate tax rate.

While the merger will retain Wright’s US group headquarters in Memphis, Tennessee, the global headquarters of the new group, Wright Medical Group NV, will be located in Amsterdam. Wright shareholders will own approximately 52 percent of the shares of the combined company on a fully diluted basis.

The two companies have not emphasized the tax outcomes arising out of the deal, mentioning instead that “the highly complementary nature of the two businesses will give the combined company significant diversity and scale across a range of geographies and product categories.”

Both companies “agreed that maintaining Tornier’s domicile best supported the growth strategy driving the merger. Over the long term, it is anticipated that this structure will provide the company with more accessible cash flow, enhancing its ability to innovate and grow, [and] creating long-term shareholder value.”