After the U.S. Treasury Department
issued new tax-inversion rules Monday, the two companies decided to walk away,
Pfizer said in a statement Wednesday morning.
At $160 billion, it would have been the biggest pharma deal ever. It
would have moved Pfizer's official headquarters to Ireland and created the
world's largest drugmaker. And, before Treasury stepped in, it would have
satisfied Pfizer CEO Ian Read's longtime quest to cut its tax rate with an
overseas move.
Because Treasury's new rules qualified as an "adverse tax law
change" under their merger agreement, Pfizer's break-up penalty is small:
The company agreed to pay Allergan ($AGN) $150 million to reimburse expenses
associated with the transaction, Allergan said in a Wednesday morning
announcement.
Obviously, the deal's collapse is a disappointment on both sides, but
fans of a Pfizer split-up might take consolation in this: The company now plans
to decide by year's end whether to break into two separate businesses.