Monsanto mulled moving headquarters overseas, report says

Could another big American company be looking for a new home?

Creve Coeur, Mo.-based Monsanto Co. may be giving it some thought. Sort of.

According to a report Monday by Bloomberg News, the agriculture giant recently considered a multibillion-dollar play for Switzerland-based Syngenta AG in an effort to slash its U.S. tax obligations.

Monsanto isn’t commenting on the report — other than to say: “We are not in discussions on this particular matter.”

As to whether there were earlier discussions — now tabled, according to Bloomberg — the company is staying quiet.

According to the wire service, Monsanto mulled a takeover of its $34 billion seed and herbicide rival, in part, to move its legal headquarters to Switzerland. It’s a move known as corporate inversion, and it has the power to shield money held overseas from Uncle Sam’s tax collectors.

The strategy has been gaining popularity in recent months as more large U.S. corporations seek to sidestep a 35 percent corporate tax rate that’s one of the highest in the world. And unlike most nations, the tax covers all income, regardless of where in the world it came from.

“These kinds of things are almost a tax dodge,” said Keith Womer, a professor of logistics and operations management at the University of Missouri-St. Louis. “The whole idea is to avoid paying corporate income tax.”

The same strategy led Minneapolis-based Medtronic to pursue a $43 billion deal for Covidien, a company managed from Massachusetts, but technically based in Ireland. If Medtronic, which makes medical devices, moves its headquarters overseas, it could free up some $14 billion held outside this nation’s borders.

Other recent examples, according to Bloomberg, include a now-abandoned attempt by drugmaker Pfizer to buy Britain’s AstraZeneca and the still-active courtship between Chicago-based pharmaceutical firm AbbVie and Ireland’s Shire.

The spike in interest in these corporate inversions is creating more than a little heartburn in Washington, where legislators and policymakers are fretting over a loss of corporate income.

There has been talk of new laws to make it harder for companies to make the move, including one that would treat companies as domestic if they have 25 percent of their employees or assets in this country.

But any such change has little chance of happening with a sharply divided Congress, said Greg Geisler, an associate professor of accounting at UM-St. Louis.

Geisler and others say we should be looking at reform, but in a way that will lower the tax burden for companies that can find lower rates elsewhere.

“Then you won’t have these perverse incentives to get out of the U.S.,” Geisler said.

For now, there is sure to be continued speculation about what Monsanto will do. While the push for Syngenta fell apart in May, some observers say talks could be restarted, according to the Bloomberg report.

And that raises questions about what such a deal could mean for the company’s U.S. operations.

To be sure, there would be some loss of jobs, though it’s not as if Monsanto would pick up its Creve Coeur operation and move it to Switzerland.

But some jobs would have to go, said Richard Frankel, an accounting professor at Washington University.

“If you move your headquarters, you really have to move your headquarters,” Frankel said.