Updated on April 6 at 7:33 a.m. ET
Pfizer has called off its proposed $160 billion merger with Allergan, a deal that would have moved the biggest American drug maker to Ireland to reduce the company’s taxes. The decision, which came Wednesday morning, followed rules this week announced by the U.S. Treasury Department that targeted such deals, which are known as inversions.
“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” Ian Read, Pfizer’s chairman and CEO, said in a statement. “We remain focused on continuing to enhance the value of our innovative and established businesses.”
He added that Pfizer planned to make a decision on whether to split its
“innovative and established businesses” by no later than the end of this year.
Pfizer will pay Allergan $150 million for reimbursement of expenses associated with the now-cancelled merger.
News of the merger was first announced last November. Under the deal, New York-based Pfizer would merge with Dublin, Ireland-based Allergan, and move the U.S. drugmaker’s headquarters to Ireland, but keep its business in the United States. This transaction would have effectively lowered Pfizer’s U.S. tax bill. The entire process is known as a corporate inversion—though this particular merger was technically not one because it was structured to make it look like the smaller Dublin-based drug maker was buying Pfizer.