Salix Pharmaceuticals, a US maker of drugs for gastrointestinal diseases, is to merge with Dublin-based Cosmo Technologies, in a deal aimed at lowering its US tax bill.

Under the deal, Salix will become a subsidiary of Cosmo, which will change its name to Salix Pharmaceuticals Plc.

The deal is the latest in a line of transactions by US companies aiming to gain an overseas address as a way of mitigating its tax rate. Last month Medtronic agreed to acquire Dublin-based Covidien, while AbbVie is currently bidding to purchase Dublin-based Shire Plc to execute a similar tax-inversion deal.

According to Salix, the merger “enhances Salix’s position as a leader in developing and marketing products in the US to treat gastrointestinal disease and disorders”. It also “establishes a tax efficient corporate structure and increases Salix’s competitive positioning for future M&A and product licensing efforts”. The company said the transaction will be “modestly accretive” to Salix’s earnings per share in 2016 and increasingly accretive thereafter.

Carolyn Logan, president and CEO of Salix said that combining with Cosmo Tech "makes tremendous strategic and financial sense for us as it further strengthens and consolidates our position as a leader in acquiring, developing and marketing products to treat gastrointestinal disease and disorders".

“The new corporate structure greatly enhances our ability to compete for licensing deals and acquisitions, and improves the economics of future business development opportunities for Salix.”

Cosmo, the parent company of Cosmo Tech, is a publicly-traded, specialty pharmaceutical company headquartered in Lainate, Italy. Cosmo’s proprietary clinical development pipeline specifically addresses innovative treatments for the gastro-intestinal tract such as inflammatory bowel disease, colon infections and diagnostics for the colon. Cosmo is the inventor and developer of Lialda® and Uceris.

A&L Goodbody advised Salix and Byrne Wallace advised Cosmo on the transaction.