Pfizer and Allergan calls of their $160 bn merger deal

Pfizer Inc and Allergan Plc have called off their earlier announced $160 billion merger deal following the US Department of Treasury’s decision to change the tax rule change that will put a curb on deals in which companies move overseas to cut taxes. “The decision was driven by the actions announced by the US Department of Treasury on April 4, 2016, which the companies concluded qualified as an ‘adverse tax law change’ under the merger agreement,” said Pfizer in a press release yesterday.
 
In connection with the termination of the merger agreement, Pfizer has agreed to pay Allergan $150 million for reimbursement of expenses associated with the transaction.
   
Ian Read, chairman and chief executive officer, Pfizer, commented, “Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies. We remain focused on continuing to enhance the value of our innovative and established businesses. We also maintain the financial strength and flexibility to pursue attractive business development and other shareholder friendly capital allocation opportunities.”
 
He added, “We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016, consistent with our original timeframe for the decision prior to the announcement of the potential Allergan transaction. As always, we remain committed to enhancing shareholder value.”