US: Pfizer and Allergan $160 billion merger collapses

The Dublin-based Botox-maker Allergan announced early Wednesday it would abandon its mega-merger with US pharmaceutical giant Pfizer after new government regulations made the tax advantage of the cross-Atlantic deal more difficult to achieve.

The move is a huge victory for the Obama administration in its campaign against inversions, in which US-based companies buy or merge with smaller foreign firms and move their headquarters overseas to lower their tax bills. The Treasury Department released new regulations Monday to stem the tide of such inversions, and Pfizer and Allergan spent two days scrambling to determine whether their merger still made financial sense.

The merger, the largest proposed inversion in history, was expected to lower the pharmaceutical giant’s tax rate significantly, from about 24 percent to 17 percent, and save the company about $35 billion in taxes. But the rules announced late Monday would have made those savings harder to obtain.

In separate press releases, the companies called it a mutual decision, and Pfizer said it agreed to pay Allergan a $150 million breakup fee.

Full content: NYTimes

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