Pfizer and Allergan scrap $160 bln ‘inversion’ deal
NEW YORK - Reuters
AP photoU.S. drug maker Pfizer Inc and Ireland-based Allergan Plc formally announced the scrapping of their $160 billion merger on April 6, in a big win for President Barack Obama who has been pushing to curb tax-slashing “inversion” deals.
The announcement followed the unveiling of new U.S. Treasury rules on April 4 aimed at curbing such deals. The merger would have allowed New York-based Pfizer to cut its tax bill by re-domiciling to Ireland, where tax rates are lower.
A source familiar with the matter told Reuters on April 5 that the deal would be terminated.
Pfizer said on April 6 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.