International Tax & Transactions Case Studies

Acquisition of US listed company

PwC mergers and acquisitions team recently assisted an Australian private equity house with the acquisition of a listed US company, which was the first transaction of this kind to occur in Australia. Our role involved performing the tax due diligence, structuring the transaction, planning a post-deal restructure, and assisting with the implementation of the restructure.

PwC assisted the client with both the financial and tax aspects of the transaction, including advising on both the Australian and US tax issues. Given that the target was a listed company, a detailed due diligence process was performed as minimal warranties and indemnities could be obtained from the existing shareholders. The transaction structure was designed to comply with US law as well as to facilitate the proposed post-acquisition restructuring of the target.

Following our client's acquisition of the target, a comprehensive restructure took place to provide the group with a more efficient structure (from both a tax and commercial perspective), and to enable appropriate exit mechanisms for a future sale or Initial Public Offering (IPO). The restructure was implemented in a tax efficient manner taking into account Australian Federal and State tax consequences and US tax consequences. PwC subsequently worked with the client to implement the restructure in accordance with the plan and ensuring that the appropriate tax and commercial tax outcomes were achieved.

Due Diligence leads to Tax Indemnity and Improved Deal Terms

PwC were appointed to perform a tax due diligence exercise on an Australian company being targeted for acquisition by our client. In the course of our work for our client, an Australian company, PwC identified that the target company was in the midst of a long-running dispute with the ATO. The potential liability was significant - approximately 25% of the value of the company.

As a result of our investigations, our client was able to obtain a broad tax indemnity from the vendor in respect of the dispute as well as several other identified tax issues, allowing our client to continue with the acquisition. The deal was then held up at the last moment by tax issues on the vendor's side, which required them to restructure the proposed deal. PwC were able to advise the client of the tax savings to the vendor under the revised deal, providing our client with a stronger bargaining position over the final deal terms.

Restructure of Complex Family Group Investment Structure

PwC were approached to assist two families with an interlocking cross-border investment structure to simplify the structure and separate the familial interests, following the sale of the underlying investment. In doing so, we had to consider the outcomes for the various family members resident in the United States and Australia, with the aim of minimising the tax impact of the restructure.

Working closely with representatives of the families, PwC was able to design a restructure proposal that met the goals of simplifying the structure and splitting out the different families' interests. In consultation with our colleagues in several other jurisdictions, PwC was able to implement several ideas to significantly reduce the amount of tax payable on the underlying gain, the effective tax rate to the families, and the tax costs associated with the restructure.