Crain's Chicago Business - Durbin to Hospira: Don't Make a Move
News Article
By Joe Cahill
Perhaps emboldened by Walgreen Co.'s decision to stay put, U.S. Sen. Richard Durbin today urged another local company to forget about moving its headquarters abroad to save on taxes.
This time, Mr. Durbin's target is Lake Forest-based Hospira Inc., a maker of injectable drugs and infusion therapy products that was spun off by Abbott Laboratories in 2004. According to news reports, Hospira is in talks to acquire the medical nutrition unit of French consumer products maker Danone in a deal structured as a "corporate inversion" that would shift its headquarters overseas.
Illinois' senior senator, who has emerged as a leading foe of inversions in recent months, held up a stop sign today.
"I strongly urge you and the board of directors not to move your company's headquarters overseas, since a significant portion of Hospira's revenue comes from U.S. taxpayers and depends on U.S. taxpayer-funded support," Mr. Durbin said in a letter to Hospira CEO Michael Ball.
Mr. Durbin's intervention against a Hospira move comes shortly after his victory in the battle to keep Walgreen Co.'s headquarters in the U.S. Under heavy pressure from investors, Deerfield-based Walgreen considered reincorporating abroad through its planned acquisition of European drug retailer and wholesaler Alliance Boots AB, a move analysts estimated to be worth nearly $800 million annually in tax savings.
But after Mr. Durbin led an organized campaign against the move, including a similar letter to Walgreen CEO Greg Wasson, the company decided not to move. In the letter and his public comments, Mr. Durbin emphasized Walgreen's reliance on revenue from federal health care programs such as Medicare and Medicaid. The implication was that Walgreen's relationship with this key customer could suffer.
As a widely known American consumer brand, Walgreen also had to worry about public reaction to a perceived abandonment of its U.S. citizenship. Mr. Durbin is taking the same tack with Hospira. His letter to Mr. Ball pointedly notes that "your company's injectable drugs and infusion technologies are purchased through taxpayer-supported programs, such as the Veterans Health Administration and Medicare, which have contributed to Hospira's corporate success."
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