J&J CEO Alex Gorsky says tax law won’t change M&A strategy

The brand-new tax law won’t change Johnson & Johnson’s approach to mergers in addition to acquisitions, CEO Alex Gorsky said.

Gorsky reiterated what he in addition to several additional companies’ executives have already said, which can be the windfall won’t make them lose their discipline. However, a string of biotech deals have already been announced This kind of year, in addition to more could be coming.

“Regarding tax reform, what we said by the very beginning can be which one of the major reasons in addition to lowering the rate can be just frankly the flexibility which the idea provides us in addition to we think the idea actually helps make us more competitive, particularly on an international level, if we happen to be in a competitive situation with additional companies, because currently we have greater flexibility on how we can access which cash,” Gorsky said Tuesday on a call with analysts.

J&J reported a one-time effect of $13.6 billion to its fourth-quarter earnings associated with the recent adjustments. However, the brand-new tax code will lower J&J’s effective tax rate in addition to allow the health-care products company to repatriate its $16 billion in overseas cash at a less expensive rate.

Wall Street has speculated J&J could use the cash to make more deals, though the brand-new Brunswick, brand-new Jersey-based company completed a $30 billion acquisition of Swiss biotech company Actelion last summer.

J&J will immediately bring back about $12 billion in addition to use the idea to fund U.S. operations, Chief Financial Officer Dominic Caruso said on the call. which will make the idea possible for J&J to stop borrowing for U.S. ventures in addition to pay down debt.

“We are pleased by the final passage of the U.S. tax cuts in addition to jobs act,” Caruso said. “brand-new legislation to modernize the U.S. tax code for business, which we believe will further jump start the economy, fueling jobs in addition to investment in addition to level the playing field between U.S. in addition to foreign headquarter companies.”

J&J expects its effective tax rate to fall between 16.5 in addition to 18 percent This kind of year thanks to the brand-new code. J&J’s adjusted full-year tax rate was 17.2 percent for 2017. Caruso said the number was below the company’s previous forecasts because of more research in addition to development investments inside the U.S. in addition to could have otherwise been between 19 in addition to 19.5 percent.

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