Pfizer and Allergan have mutually agreed to terminate their merger agreement. The companies had spent time conducting a review of the U.S. Department of Treasury’s recent announcements on tax law changes.
The decision to break up the merger was driven by the actions announced by the U.S. Department of Treasury on April 4, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.
The deal, previously valued at $160 billion, would have allowed Pfizer to avoid U.S. taxes on a large portion of profits stored overseas. Allergan is Ireland-based and the merger would move the companies legal domicile out of the U.S.
Though the original agreement called for a $400 million breakup fee, it’s likely the fee will be less based on the circumstances.