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Reports: Anobit deal worth $390M; Apple holds $54B offshore

updated 04:30 pm EST, Thu January 12, 2012

Offshore cash growing dramatically,

Apple's buyout of Anobit was worth about $390 million, according to Bloomberg sources said to be familiar with the acquisition. Negotiations reportedly continued for about two weeks after December 20th, when the deal was originally claimed to have been forged. Two anonymous Anobit shareholders specifically say that an agreement was signed on January 6th.

A Seeking Alpha blogger meanwhile notes that based on its most recent 10K filings, most of the company's $82 billion in cash and investments -- $54 billion -- is held outside of the US. The offshore portion is furthermore said to be growing exponentially, thanks to weaker overseas taxes, as well as growing foreign markets. The major barrier to rebalancing this is said to be a 35 percent US corporate tax that would make repatriating the cash extremely costly.

Apple is one of a number of American corporations that have been lobbying for a tax break that would let them return cash to the US at much less expense. Seeking Alpha suggests that the repatriation tax is an obstacle to any major US acquisitions, or stock buybacks and dividends; the company could, in theory, become a mainly overseas business. At the same time, critics have charged that too much of a tax break could deprive a cash-strapped US government of needed income.






by MacNN Staff

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Comments

  1. prl99

    Joined: Dec 1969

    +5

    tax break nonsense

    "... too much of a tax break could deprive a cash-strapped US government of needed income. ..." The US Treasury isn't getting any of it now so how could giving Apple, and others, a tax break do anything other that actually put money into the US Treasury? Apple buys parts from non-US suppliers so there's no real real to bring that money back on-shore, except for public opinion sake.

  1. facebook_Donald

    Via Facebook

    Joined: Jan 2012

    -7

    Really?

    So prl99, what you're saying is that because Apple has been unpatriotic and dodging taxes, it would be better to forget this completely and just get a little from them.

    So if someone robs you of a million dollars, you'd be happy if they kept $999,000 and returned $1,000 to you with no punishment for their theft?

    Further, you say, "there's no real real [sic. Should be: "reason"] to bring that money back on-shore, except for public opinion sake." Really? The millions they're dodging in paying their fair share of taxes would help pay for schools and libraries and for the defense of the country. It would pay for rebuilding crumbling bridges and roads and help cover health care costs and provide heating assistance for the poor who can't afford heat in the winter. Paying taxes isn't about "public opinion," it's about supporting the country and people who helped them earn that money in the first place. It's about patriotism and supporting the idea that companies make more money with a strong middle class.

  1. prl99

    Joined: Dec 1969

    +6

    unpatriotic?

    Apple sells a ton of products to non-US customers. How is keeping that money off-shore being unpatriotic? Your comment, "the country and people who helped them earn that money in the first place" is exactly what I'm saying. Apple is supporting people in areas who buy and make Apple products, they're just not Americans. Why are you saying that's unpatriotic? As for dodging taxes, there are a whole lot of "patriotic" Americans who dodge taxes. Why don't you go yell at them. Do you pay all your taxes or do you fudge on what you owe?

  1. henryblackman

    Joined: Dec 1969

    +9

    No Clue

    Facebook_Donald - I'm afraid you're analogy is simply not even close to being correct. Apple's cash outside the USA has been generated outside of the USA, so keeping it outside of the USA is not un-patriotic. Frankly, 'patriotism' is a rather outdated, and close-minded view. Apple is not an American company, it is a global company. Apple's desire to bring the money back to the USA is very 'patriotic' but the US government wants to tax them, this, of course, would be in addition to Apple being taxed in the country where they made the profit. Why should they be taxed twice, when they would be, in fact, bringing billions of dollars to the US economy at a time when it performing so poorly.

    In reality, your view that Apple is dodging taxes is just wrong. In reality, it would be a case of foreign customers paying for the US education system, unfair health care system, heating assistance etc. As someone who is clearly not American, I find this crass in the extreme.

  1. LenE

    Joined: Dec 1969

    +6

    @facebook_Donald

    Quick business, law, and economics lesson.

    Apple is not being unpatriotic for not repatriating that money. They are following the laws as written, and are not under any legal obligation to bring the money back to the US. On the contrary, they are obligated to their shareholders (disclosure, I am one) to maximize the company value for the capital that they employ. They are doing this by not repatriating this money, which would require paying a punitive tax rate.

    Additionally, while rebuilding roads and schools, etc. is seen politically as a better use for that money, the reality is that it would make no difference. We already "borrow" far more money than the taxes of all of the non-repatriated funds combined would bring in. We would be much better served in greatly reducing our deficit spending

    Since those expatriat funds at Apple and other multi-nationals are currently growing exponentially, the US would be far better served by not collecting taxes on those funds to let them grow. They should take time to determine a fair and much less punitive rate. Forcing manditory tax collection at the current rate will push quite a few companies to expatriate themselves, thus killing the potential golden geese.

  1. LenE

    Joined: Dec 1969

    +4

    One more thing

    The value of that cash shows up in the value of Apple stock. When an investor cashes out a position in Apple (or Google, etc.) that individual investor pays taxes on the capital gain of the share of the company that they sold. Traders, who do not hold positions long, pay high tax rates on this gain. Investors that hold their shares long enough pay the lower capital gains tax rate.

    My point here is that the existence of the cash, regardless of its repatriation, creates tax revenue beyond the 35% that the government wants to take. If Apple repatriated this money, and paid the current tax, shares of AAPL would drop about $100 overnight, due to the loss of the held cash value and the ensuing sell triggers for automated traders. This singular event would convert many capital gains into capital losses, which become tax credits. There are other rippling effects because many traders are lemmings and AAPL has overweight importance on the tech sector and stock market in general, given their current top spot.

  1. ctt61

    Joined: Dec 1969

    +1

    comment title

    The money apple made oversea is already been tax once by foreign country. Why should they bring back to be tax again.
    Do you as an individual want to be taxed twice on everything that you earn. I bet that you do not.

  1. chas_m

    Moderator

    Joined: Dec 1969

    +1

    LenE

    You make excellent points that have really made me re-consider my position, but I don't see the tax rate as being especially "punative" anymore than I see the tax rate *I* pay as "punative." Even though you are correct in saying Apple made the money overseas and thus has no legal obligation to bring it to the US, Apple benefits enormously from being a US company in terms of security, infrastructure, talent pool and many other less-obvious benefits. To my mind, that means they "owe" the gov't a bit more than just taxes on their US income alone.

    In my view there's plenty of room between the 35 percent the government wants and the 5 percent Apple (and the others in the consortium) want as a "bribe/incentive" to bring the money to the US. Besides, there is NO company that's EVER going to actually pay that rate, that's why they have accountants and deductions and whatnot. Apple's current tax rate (in the US) is about 24 percent, and that's probably a good figure for what they should be taxed to repatriate the money IMO.

    If the companies in the consortium were to offer to sign a legally-binding contract agreeing that the repatriated money would ONLY be used for job creation in the US (ZERO percent for dividends or executive bonuses or other "rich-get-richer-only" schemes), THEN I think you'd find the government VERY ready to give them a good discount ...

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