The merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies. The decision was driven by the actions from the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement, according to a press release. The merger would have allowed Pfizer to cut its tax bill by an estimated $1 billion annually.
According to a Reuters article, "the decision to call off the deal came in part because Pfizer was concerned that any tweaks to salvage its deal with Allergan might have provoked new rules by the Treasury."
“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” said Ian Read, chairman and CEO, Pfizer. “We remain focused on continuing to enhance the value of our innovative and established businesses."
He continued, “We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016, consistent with our original timeframe for the decision prior to the announcement of the potential Allergan transaction. As always, we remain committed to enhancing shareholder value.”
"While we are disappointed that the Pfizer transaction will no longer move forward, Allergan is poised to deliver strong, sustainable growth built on a set of powerful attributes," said Brent Saunders, CEO and president. "Leading therapeutic franchises with strong brands across seven therapeutic areas provide the foundation for continued strong growth in 2016 and beyond."
In connection with the termination of the merger agreement, Pfizer has agreed to pay Allergan $150 million for reimbursement of expenses associated with the transaction.