Viagra-maker Pfizer halts $160bn ‘tax dodge’ merger with Botox giant

Viagra-maker Pfizer has called off its $160 billion deal with Botox-maker Allergan, in a major victory to U.S. president Barack Obama’s drive to stop tax-dodging corporate mergers. The decision, which would have created the world’s biggest drug company and seen Pfizer slash its tax bill by up to £1bn a year by redomiciling to Ireland where Allergan is registered, came a day after the U.S. Treasury unveiled new rules on so-called “inversions”. While these new rules did not name Pfizer and Allergan, one of their provisions targeted a specific feature of their merger; Allergan’s previous history as a major acquirer of other companies.

While the Treasury Department’s actions will make it more difficult… to exploit this particular corporate inversions loophole, only Congress can close it for good.

U.S. President Barack Obama

Pfizer and Allergan formally announced the end of their deal on Wednesday. With the deal behind it, Pfizer said it would decide this year about whether to split off its hundreds of generic medicines into a separate business. It had put off making that decision until 2019 after announcing its deal with Allergan last November. Pfizer will have to pay Allergan $150 million for its expenses as a result of terminating the deal. On Tuesday, President Obama called global tax avoidance a “huge problem” and urged Congress to take action to stop U.S. companies from tax-avoiding corporate “inversions”, which lower companies tax bills by redomiciling overseas.

Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies

Pfizer chairman and CEO Ian Read

Pfizer