Tax Scrutiny Repels Bidders From Takeovers
The IRS’s scrutiny of tax avoidance in offshore locations has discouraged bidders from taking over reinsurers, potentially reducing the companies’ value, Bloomberg reports.
“Montpelier Re Holdings Ltd. and Platinum Underwriters Holdings Ltd., both based in Bermuda, have each said in recent regulatory filings that potential suitors backed away last year because of risks tied to taxes,” the report notes.
Montpelier, in a May 8 document tied to its deal with Endurance Specialty Holdings Ltd., said that it was approached in August by the another company in the insurance industry about a possible combination.
The suitor, identified in the document as “Party A,” made a preliminary proposal and arranged a meeting between senior managers of the companies. Then, on Sept. 23, the potential partner said that “as a result of proposed changes to tax regulations that had recently been announced, Party A was no longer interested in pursuing a potential transaction with Montpelier,” the document shows.
Click here to read the full report on Bloomberg.
