Pfizer and Allergan Terminate Merger Agreement

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The companies announced that they have mutually decided to terminate the planned merger after the US Department of Treasury and the IRS issue temporary and proposed regulations on tax inversion.

Pfizer and Allergan announced on April 6, 2016 that their planned merger agreement has been mutually terminated. Pfizer will pay Allergan $150 million for reimbursement of expenses associated with the transaction.

The termination of the merger is a result of the US Department of Treasury and the Internal Revenue Service’s (IRS) April 4, 2016 announcement issuing temporary and proposed regulations to limit the “benefits of and limit the number of corporate tax inversions.” The Treasury said it will focus on companies that have engaged in a number of acquisitions in a series, and it plans to limit foreign companies benefits in inversion.

The Pfizer and Allergan merger termination was driven by the Treasury announcement, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement, Pfizer said in a press announcement. According to Forbes, after the Treasury’s announcement, shares in Allergan fell 22% to $217, while Pfizer shares rose to $31.62.

“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,” Pfizer CEO Ian Read said in a statement. “As always, we remain committed to enhancing shareholder value.”


Pfizer and Allergan announced the planned $160 billion merger in November 2015, which would have been biggest deal in the pharmaceutical industry’s history. The merger of the companies would have moved Pfizer’s principle executive offices to Ireland and cut Pfizer’s tax rate from 25% to 18%.

Source: Pfizer, Allergan