I’ve written many times before (that’s one example — just search “repatriation” in the search box in the bottom WordPress toolbar, for many more), about using unsecured euro denominated debt as part of a multi-step process to allow the return of capital to the US, at pretty attractive tax rates. If that is what is underway here, it will take a tick (or a tock) — to get the rest of the structure together. But I don’t think this is purely a play to capture the historically low coupon rate available in the EU.
Officially, in the so-called red herring SEC filing, it is for general corporate purposes, but I’d point out that even lower coupons prevail here, state-side, at the moment. No I think Merck’s Mr. Davis is thinking about a future repatriation, as he layers in this € 1 billion in debt, across the pond:
. . . .Based on Oct. 21, 2016, closing exchange rates the EUR 1.0 billion equates to approximately $1.087 billion. The notes include:
EUR 500 million of 0.500% notes due Nov. 2024EUR 500 million of 1.375% notes due Nov. 2036
Merck intends to use the net proceeds from the offering for general corporate purposes, including without limitation repayment of outstanding commercial paper borrowings and other indebtedness with upcoming maturities. The offering is expected to close on Nov. 2, 2016, subject to customary closing conditions. BNP Paribas, Citigroup Global Markets Limited, and Merrill Lynch International are acting as the active joint book-running managers for the offering. . . .
And now you know. But with my Cubbies playing as well as anyone could hope, tonight — I’ll sign off here — to enjoy Game 2’s back half. . . with a huge grin, and g’night, one and all. . . . The Cubs will come home all even — it is theirs, now.