Pfizer Reportedly Decides To Terminate Merger With Allergan

(RTTNews) - Pfizer Inc. (PFE) decided to terminate its $160 billion merger with Allergan (AGN), according to reports citing people familiar with the matter. Pfizer will need to pay a $400 million fee to Allergan for expenses relating to the deal.

Allergan, which is run from New Jersey but has a legal domicile in Dublin, last year agreed to merge with Pfizer in a deal that would have given New York-based Pfizer a foreign address and a lower tax rate.

CNBC reported earlier that the two companies would mutually end their planned merger.

On Monday, the U.S. Department of the Treasury and the Internal Revenue Service or IRS issued temporary and proposed regulations to further reduce the benefits of and limit the number of corporate tax inversions, including by addressing earnings stripping. By undertaking an inversion transaction, companies move their tax residence overseas to avoid U.S. taxes without making significant changes in their business operations. After an inversion, many of these companies continue to take advantage of the benefits of being based in the United States, while shifting a greater tax burden to other businesses and American families, the Treasury department said.