Pharmaceutical giant Pfizer has decided to stop the merger with Allergan, giving up on the biggest transaction in the history of pharmaceuticals, valued at around 160 billion dollars. As a consequence, Pfizer needs to pay damages of 400 million dollars for breaking the deal.
Allergan is driven in New Jersey but legally based in Dublin. Last year Allergan aimed to strike a deal with Pfizer through which the New York company would have received access to a foreign address. The decision to stop the merger is a victory for President Barack Obama, whose administration proposed on Monday tougher rules for tax inversion deals. The rules are designed to prevent mergers such as Pfizer and Allergan’s. In an inversion, a US company changes its “address” to a tax haven and pays much lower taxes. Under the merger Pfizer – Allergan, the headquarters of the new company were to be set in Ireland, where Allergan is domiciled.
Pfizer, with a capital of about 219 billion dollars, is the largest drugs producer in the United States. The company attempted previously to close deals with UK’s companies AstraZeneca and GlaxoSmithKline, as well as Canada’s Valeant, but they also failed.