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DEAL MAKER OR DEAL BREAKER: INTERNATIONAL TAX CONSIDERATIONS OF A CROSS-BORDER TRANSACTION

 DEAL MAKER OR DEAL BREAKER: INTERNATIONAL TAX
 CONSIDERATIONS OF A CROSS-BORDER TRANSACTION
 NEW YORK, Dec. 9 /PRNewswire/ -- No two countries are the same when it comes to taxes or corporate law. So understanding the differences is vital for companies planning an international merger or acquisition.
 "Tax advantages are available if you follow a two-fold strategy," said Stan Wiseberg, national director of M&A tax services for KPMG Peat Marwick. "Understand the complex foreign country laws and decide whether you should acquire the assets of the company or its stock."
 KPMG Peat Marwick's newly released book, "Taxation of Cross-Border Mergers and Acquisitions," describes the tax and company laws of 18 major industrial countries and how they relate to mergers and acquisitions. The 300-page book also examines fundamental tax planning strategies for international deals and includes checklists summarizing key points.
 In this first authoritative discussion of the complexities and opportunities involved in international transactions, readers are advised to consider how the transaction will be treated for tax purposes in the target company's country as well as in the acquiring company's country. "Both are major financial issues," warned Wiseberg, "and the tax considerations will often make or break the deal."
 "One of the most interesting developments in international taxation is the harmonization of tax law in the European Community," added John Raedel, national director of international tax services for KPMG Peat Marwick. "We expect that in the brief period before Jan. 1, 1993, and for a time following that, there will be significant interest in cross- border mergers and acquisitions with EC enterprises. However, it will not be limited to EC nations, but rather will include businesses outside of the EC who are considering entering the new single market through a merger or acquisition."
 The book describes the EC Directive that was intended to encourage merger activity by providing tax relief for qualifying transactions. "Companies involved in a merger do not need to be related companies to qualify," explained Raedel.
 Other issues included in the book are:
 -- What qualifies as a merger or acquisition? The terms are used in different ways with varying degrees of precision in different countries.
 -- Is it better to acquire the business through a purchase of stock or assets? The main drawback to an asset purchase for the buyer is that there is the potential to incur tax at two levels -- at the corporate level on the appreciation in value of the assets, and on distribution of the sale proceeds to the shareholders.
 -- How should the acquisition be funded -- through debt, equity, or a hybrid instrument? For tax purposes, a hybrid instrument may be treated as either debt, equity, or a combination of both.
 KPMG Peat Marwick provides accounting, auditing, tax, and management consulting services to leading businesses, governmental and private institutions, and individuals through 135 offices in the United States. It is the U.S. practice of KPMG, which has operations in more than 120 countries and posted 1990 revenues of $5.4 billion.
 -0- 12/9/91
 /CONTACT: Barbara A. Kraft of KPMG Peat Marwick, 201-307-7286/ CO: KPMG Peat Marwick ST: New York IN: FIN SU:


TS-CK -- NY023 -- 0501 12/09/91 11:13 EST
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Date:Dec 9, 1991
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