Johnson Controls Inc. has recently agreed to acquire Ireland-based Tyco International Plc in a $16.5 billion deal. Johnson Controls Inc. is a US maker of car batteries and heating and ventilation equipment, and by moving their headquarters to Cork, Ireland, they plan to carry out a tax-inversion.
Their plans created some rumblings among the US presidential hopefuls. As Democratic Presidential candidate Hillary Clinton said in a statement, “I have a detailed and targeted plan to immediately put a stop to inversions and invest in the U.S., block deals like Johnson Controls and Tyco, and place an ‘exit tax’ on corporations that leave the country to lower their tax bill.”
U.S. Senate Finance Committee Chairman Orrin Hatch, a prominent Republican, said “Absent comprehensive tax reform that includes shifting to a territorial tax system with base erosion protections, Congress ought to examine viable bipartisan solutions that will effectively target and combat inversions and not tip the balance to tax-driven foreign acquisitions of U.S. firms.”
The Milwaukee-based Johnson Controls has a market value of $22.5 billion; Tyco has a value of $14.2 billion. The deal will, according to the companies, save at least $500 million in the first three years and they expect to save another $150 million a year through tax synergies.