|
The
announcement followed the unveiling of new U.S. Treasury rules
on Monday aimed at curbing such deals. The merger would have
allowed New York-based Pfizer to cut its tax bill by
redomiciling to Ireland, where tax rates are lower.
A source familiar with the matter told Reuters on Tuesday that
the deal would be terminated.
Pfizer said on Wednesday it would pay Allergan $150 million as
reimbursement of expenses related to the deal.
Allergan said it would report first-quarter results by May 10,
when it would also update on its plans to simplify its
operations after the close of its $40.5 billion deal to sell its
generic drug business to Israel's Teva Pharmaceutical
Industries. The deal is expected to close by June.
While the new Treasury rules did not name Pfizer and Allergan,
one of the provisions targeted a specific feature of their
merger - Allergan's previous history as a major acquirer of
other companies.
The collapse of what would have been the biggest-ever inversion
deal allows Obama to claim a major victory in his last year in
office.
Obama on Tuesday called global tax avoidance a "huge problem"
and urged Congress to take action to stop U.S. companies from
tax-avoiding deals.
Pfizer was concerned that any tweaks to salvage its deal with
Allergan might have provoked new rules by the Treasury, the
source had told Reuters.
This is not the first time that a tightening of U.S. inversion
rules has caused a merger to unravel.
U.S. drugmaker AbbVie Inc abandoned its $55 billion takeover of
Ireland-domiciled peer Shire Plc in 2014 after the Obama
administration cracked down on inversions. AbbVie had to pay
Shire a $1.6 billion break-up fee.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Ted Kerr)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
