Pfizer Nixes Allergan Merger

By Jonathan Springston, Associate Managing Editor, AHC Media

Pharmaceutical giant Pfizer announced Wednesday that it is calling off its proposed $160 billion merger with Allergan, another high-profile pharmaceutical company, days after the Obama administration announced a new tax rule.

Pfizer planned to merge with Allergan so it could shift its tax base to Allergan’s home base in Ireland, which would have led to significant annual tax savings for Pfizer. The U.S. Treasury Department on Monday issued new rules that would make this practice, known as “inversion,” much harder. The Obama administration as well as Democratic and Republican presidential candidates have harshly criticized inversions.

“When companies exploit loopholes like this, it makes it harder to invest in the things that are going to keep America’s economy going strong for future generations,” President Obama said. “It sticks the rest of us with the tab. And it makes hardworking Americans feel like the deck is stacked against them.”

Pfizer Chairman and CEO Ian Read and other corporate executives say current U.S. law makes it too expensive to maintain tax headquarters on American shores.

“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” Read said in a statement. “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.”

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