Five months after Pfizer and Allergan announced they would combine households to create the world’s largest drug company, the betrothed say the wedding is being called off.
Pfizer announced Wednesday that the $160 billion merger plan with Allergan has been terminated through mutual agreement.
As part of the termination, Pfizer will pay Allergan $150 million for reimbursement of expenses associated with the transition.
The companies say the decision to drop their merger big was driven recent changes to the Treasury Department and Internal Revenue Service that aim to discourage companies from pursuing inversion deals.
Under an inversion deal, like that of Pfizer and Allergan, an American company can shed its United States corporate citizenship in order to move income beyond the reach of United States tax authorities.
The Pfizer/Allergan merger would have allowed New York-based Pfizer to cut its tax bill by an estimated $1 billion annually by domiciling in Ireland, where Allergan has its tax domicile.
Pfizer is the world’s second-largest drug-maker (behind Johnson & Johnson), perhaps best known for such drugs as Lipitor, Zoloft, and of course Viagra. Meanwhile, you may remember Allergan from such products as Botox, Juvederm, and the never-ending drug commercials for Restasis.
“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” Ian Read, Chairman and Chief Executive Officer, Pfizer, said in a statement. “We remain focused on continuing to enhance the value of our innovative and established businesses.
According to the companies’ now-defunct deal, Pfizer would have become a part of Allergan, but the combined company would then rename itself Pfizer after the deal is done
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