Johnson Johnson announced that it had entered into a merger agreement with Alza Corporation, a research based pharmaceutical company and a leader in drug delivery technologies In a nontaxable reorganization, Alza shareholders were offered a fixed exchange ratio of 0 49 shares of Johnson Johnson common stock for each share of Alza stock Alza had approximately 295 million shares outstanding at the time of the announcement The boards of directors of both companies approved the merger What tax issues might have been important to the two companies and to the two shareholder groups

Question: Johnson & Johnson announced that it had entered into a merger agreement with Alza Corporation, a research-based pharmaceutical company and a leader in drug delivery

Johnson & Johnson announced that it had entered into a merger agreement with Alza Corporation, a research-based pharmaceutical company and a leader in drug delivery technologies. In a nontaxable reorganization, Alza shareholders were offered a fixed exchange ratio of 0.49 shares of Johnson & Johnson for each share of Alza stock. Alza had approximately 295 million shares outstanding at the time of the announcement. The boards of directors of both companies approved the merger. What tax issues might have been important to the two companies and to the two shareholder groups?

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