Pfizer and Allergan’s merger has been scuppered by new US legislation, news agency Reuters is reporting.
Pfizer has decided to terminate the agreement to acquire Allergan, a $160 billion agreement which would have seen the US pharmaceutical manufacturer move to Ireland, where Allergan is registered, and thus reduce its tax obligation.
The decision came after the US Treasury department unveiled new legislation to limit “inversions,” where companies lower their tax bills by redomiciling overseas.
The rules did not specifically mention Pfizer or Allergan, but Reuters says one provision did target a specific feature of this particular merger: Allergan’s history as a major acquirer of other companies.
Earlier this week US president Barack Obama called global tax avoidance a “huge” problem and urged Congress to close this loophole.