Rob Wilson /
7 April 2016Americas

Pfizer and Allergan terminate proposed merger

Pharmaceutical companies Pfizer and Allergan have terminated a proposed merger.

Pfizer released a statement yesterday, April 6, confirming that the proposed merger has collapsed.

The decision to abort the plan was due to an announcement by the US Department of Treasury on Monday, April 4, which the companies agreed qualified as an “adverse tax law change”, Pfizer said.

The treasury's plans promise to clamp down on deals known as “inversions”, where a US firm merges with a company in a country with a lower tax rate.

As Allergan is based in Ireland Pfizer could have benefited from a lower tax bill if it moved its headquarters there. The corporation tax rate in Ireland is 12.5%, compared with 35% in the US.

Pfizer has agreed to pay $150 million to Allergan for reimbursement of expenses.

Ian Read, chairman and chief executive at Pfizer, said: “Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies.”

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