Drugmakers Pfizer Inc and Allergan Plc have abandoned their planned US$160 billion merger following new US rules aimed curbing inversions, under which firms move overseas to cut taxes.
The move marks a big win for US President Barack Obama, who has been seeking to restrict tax-evading deals.
A merger with Dublin-based Allergan would have allowed Pfizer to cut its tax bill by an estimated US$1 billion annually by domiciling in Ireland, where tax rates are lower, Reuters noted.
“It really looked like they did a very fine job at constructing a temporary rule to stop this deal and obviously it was successful,” Allergan CEO Brent Saunders said on CNBC television, referring to the US Treasury’s new rules.
With the deal behind it, Pfizer said it would decide this year about whether to split off its hundreds of generic medicines into a separate business.
Pfizer will pay Allergan US$150 million to reimburse expenses related the scrapped deal.
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