Israeli shares plunge on Perrigo's shock Irish tax assessment
Drug maker Perrigo's Irish tax bill helped push Israel's main stock index to its biggest decrease in more than seven years yesterday.
Tel Aviv's main TA-35 Index of leading Israeli shares fell as much as 5.3pc, the biggest session decline since 2011 on a closing basis. Perrigo's share price fall of 30pc was the biggest single contributor to the decline.
The sell-off in Tel Aviv follows a slump in Perrigo's shares in New York on Friday, when they declined by the most since 1994 after the company confirmed the Revenue Commissioners in Ireland had hit the firm with an unexpected $1.8bn (€1.6bn) tax assessment.
The bill relates back to tax paid on a sale by Irish pharmaceutical company Elan of intellectual property behind a drug called Tysabri. Perrigo later bought Elan.
Perrigo has said it is disputing the Revenue bill. Ireland is its main tax base.
Revenue has determined the proceeds of Elan's Tysabri sale should have been taxed at 33pc as capital gains. Elan said proceeds of the sale were trading income and subject to 12.5pc corporation tax.
Perrigo said it would appeal the tax bill. "No payment of any amount related to this assessment is required to be made, if at all, until all applicable proceedings have been completed," the company said.
In a statement, Perrigo confirmed it had been told about the assessment on November 29, although it did not alert investors until last week.
The company said it did not believe the Irish tax decision would have an impact on its financial position at the end of the financial year.
(Additional reporting Bloomberg)