Global Crossing's $47 bn plan to acquire US West, the Denver-based Baby Bell, will result in its having to move its domicile from Bermuda to the US, according to Newsweek's Wall Street editor, Allan Sloan.
Global Crossing was set up to build international fibre-optic links, but with a 1998 turnover of $424 its takeover of US West will have to be implemented in reverse, giving US West shareholders more than 50% of the combined company; and this makes the deal taxable. Second, Global Crossing wants to continue with US West cash dividend policies, but shipping cash to Bermuda for this would incur 30% tax, costing $1.8 bn a year.
The companies themselves reportedly
say that with a high proportion of their trading in high-tax areas
such as the US, it makes sense to be based there.
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