Perrigo Plunges as Brexit Pushes Tax Man to Come Calling

(Bloomberg) -- Perrigo Co. shares fell as much as 27 percent, the biggest drop since 1994, after Irish tax authorities hit the generic drugmaker with an unexpected $1.8 billion tax assessment.

The assessment is among the largest in the nation’s history and the company plans to fight it. It’s not immediately clear how this will play out for Perrigo but “given the tax authority makes the rules, it seems reasonable to think they may have the upper hand in this argument,” Wells Fargo health-care analyst David Maris wrote in a note to clients.

Maris and other analysts initially asked why it took so long for Perrigo to loop in investors when the assessment came at the end of November. Perrigo declined to comment to Bloomberg, but pointed to a company statement which said “Irish Revenue very recently communicated to Perrigo that no further information would be provided to clarify the basis of its assessment and that, as a matter of procedure, Perrigo was to move forward with filing its appeal.”

Perrigo also stated that the tax matter would not result in any material effect on the company’s financial position, operation results or cash flows as of Dec. 31. Wells Fargo lowered their 12-month price target on market perform-rated Perrigo to a Wall Street low of $46 from $64 on the possibility of a new tax charge.

Perrigo is among a number of pharmaceutical and technology companies such as Apple, Allergan and Endo International that moved headquarters or assets overseas in a bid to save big on tax bills. Brexit may be leading European regulators to turn its focus from the U. K. and lean harder on tax collections from other member countries like Ireland and the Netherlands, said Andrew Silverman a Bloomberg Intelligence analyst who focuses on tax policy.

See also: Pharma With Ties Abroad Sink as Perrigo Rout, Brexit Raise Fears

--With assistance from Peter Flanagan.

To contact the reporter on this story: Cristin Flanagan in New York at cflanagan1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Dave Liedtka

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