Viagra maker Pfizer Inc and Botox manufacturer Allergan on Wednesday said they have terminated their proposed record $160 billion merger following crackdown by the US government over tax avoidance deals. In separate statements, Pfizer and Allergan said they have terminated their merger agreement by "mutual agreement of the companies".
The development comes after the US Treasury on Monday made 'tax inversion deals' financially less appealing. Under the 'tax inversion deals' companies could relocate their headquarters to countries with a lower tax rate. "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," Pfizer said in a statement.
Under the deal announced in November last year, New York-based Pfizer would have been allowed to shift base to Ireland for tax purposes. Upon closing of the transaction the combined company was expected to maintain Allergan's Irish legal domicile, although its shares were to be listed on the New York Stock Exchange. Commenting on the development, Allergan CEO and President Brent Saunders said: "While we are disappointed that the Pfizer transaction will no longer move forward, Allergan is poised to deliver strong, sustainable growth built on a set of powerful attributes."