Pfizer Terminates $160 Bln Merger Deal With Allergan

(RTTNews) - Drug maker Pfizer Inc. (PFE) said Wednesday that its $160 billion merger deal with botox maker Allergan plc (AGN) has been terminated by mutual agreement of the two companies. The decision comes after new rules were announced recently by the U.S. Treasury to curb corporate tax inversions.

Pfizer and Allergan concluded that the actions announced by the U.S. Department of Treasury on April 4, 2016, qualified as an "Adverse Tax Law Change" under the merger agreement.

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.

The new rules by the Treasury Department are aimed at preventing inversion deals - under which a U.S. company changes its legal domicile to a foreign country with a lower taxation environment, often through a merger.

The new rules will remove the proposed tax benefits that Pfizer had hoped to enjoy following its merger with Ireland-based Allergan.

In connection with the termination of the merger deal, Pfizer will pay $150 million to Allergan for reimbursement of expenses associated with the transaction.

Pfizer said it will remain focused on continuing to enhance the value of its established businesses. The company noted that its most recent product launches, including Prevnar 13 in Adults, Ibrance, Eliquis and Xeljanz, have been well-received in the market.

Further, the company believes its late stage pipeline has several attractive commercial opportunities with high potential across several therapeutic areas.

Pfizer plans to report its first-quarter 2016 financial results on May 3, 2016.

In a separate statement, Allergan reiterated its compelling standalone growth profile and strategy following the termination of the merger deal with Pfizer.

Allergan said it is positioned to drive strong, sustainable growth powered by franchises, new potential blockbuster product launches and its pipeline that has 70 mid-to-late stage programs including 14 expected approvals and 16 regulatory submissions in 2016 alone.

Allergan plans to report its first-quarter earnings in its normal timelines by May 10, where it will also provide an update on its plans to simplify the company's operations following the pending divestiture of its generic business to Teva Pharmaceuticals Industries Ltd (TEVA).

PFE closed Tuesday's trading at $31.36. In Wednesday's pre-market activity, the stock is up $0.42 or 1.34 percent to $31.78.

AGN closed Tuesday's trading at $236.55. In pre-market trades, the stock is down $5.65 or 2.39 percent to $230.90.