
Case summary:
On the purchase of Company SE, Company M caught attention from a lot of people. Purchasing Company SE on cash deal bases created a good opinion in the people’s mind on Company M. $8.5 billion was the total amount paid by Company M; those funds were collected from foreign countries. In order to avoid paying of taxes, the company has to not send back its foreign earning to Country U.
Country U firms have collectively $2 trillion in foreign countries that are said to be untaxed profits. The tax rate of Country U is 35%; many companies are doing business throughout the world by keeping the cash unused. For example, Company M has $100 billion cash funds outside Country U; it also includes few low-income tax countries namely Country S, Country I, and Country B.
Shareholders are benefited from not paying the income taxes in Country U; this is due to few financial decisions. The company was not able to address how the Country U tax funds were able to benefit the whole country. At this stage, Country U was revising its tax code; therefore, there may be changes in Country’s U corporate tax.
Characters in case:
Company SE.
Company M.
Country U.
To determine: The reason why the Company M holds so much of cash than paying back to Country U, and the opportunity in holding cash and the potential benefits to shareholders if the cash is returned to Country U.
Introduction:
A shareholder is an individual, institution, or company who owns at least a share in a company stock. They are the owners of the company. They take part in both success and failure of the company. They are also known as stockholders.

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