Pfizer and Allergan terminate merger
6 Apr 2016
Pfizer’s $160 billion (£105bn) merger with Irish pharmaceuticals developer Allergan has been terminated.
The deal, announced in November last year, was designed to create a combined pharmaceutical company with the strength to research, develop and deliver more medicines, said Pfizer chief executive officer Ian Read.
Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies
Pfizer CEO Ian Read
However, plans to scrap the deal came after the US Treasury announced new laws designed to “limit inversions”, which the companies said qualified as an “adverse tax law change under the merger agreement”.
When the merger was first announced many suggested it was little more than a 'reverse merger' – wherein Pfizer would pay less tax by joining forces with a company outside of the US.
In statement released last year, Read said the merger would give Pfizer greater financial flexibility.
Speaking today, Read said: “Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies.
“We also maintain the financial strength and flexibility to pursue attractive business development and other shareholder friendly capital allocation opportunities.”
As part of the termination, Pfizer has agreed to pay Allergan $150 million (£106m) for reimbursement of expenses associated with the transaction.
“While we are disappointed that the Pfizer transaction will no longer move forward, Allergan is poised to deliver strong, sustainable growth built on a set of powerful attributes,” said Allergan chief executive officer Brent Saunders.
