Shire PLC's unsolicited proposal to obtain biotechnology firm Baxalta Inc. initially excluded any cash, in an attempt to maintain the tax-free status of Baxalta's recent spinoff from Baxter International Inc
The Wall Street Journal reported that Shire would return cash to Baxalta investors by launching a share buyback program "promptly after" the close of the deal. Shire’s bid has been rejected by Baxalta and the deal may be revised so that cash would be given to shareholders sooner than the buyback plan allows. The article explained that there are few well-known examples of a company being bought soon after a spinoff, so this issue is "not clear- cut." A dividend payment might not raise the same issue and the device test won't prevent people from paying dividends.
White & Case Partner Bill Dantzler said the law has gray areas. "There aren't clear bright lines as to what is a device and what is not," he said. "Every day that passes, probably helps the tax analysis."