US pharmaceutical giant Pfizer has announced it is abandoning plans for a US $160 billion ($212 billion) merger with Botox maker Allergan, citing new US rules cracking down on tie ups aimed at saving on taxes.
The deal with the Irish-based firm would have created the world’s largest pharmaceutical company.
Pfizer said in a statement that the two companies “terminated by mutual agreement” plans to merge.
“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” company chairman and CEO Ian Read said.
Pfizer also agreed to pay Allergan US$150 million to reimburse its expenses linked to the planned merger.
The decision to call off the merger came after the US Treasury Department announced new rules to discourage mergers between US and foreign businesses designed to sharply lower the US company’s tax bill.
The New York-based pharmaceutical giant said it remains on track to report its 2016 first quarter earnings on May 3.
For all of 2015, Pfizer reported earnings of US$7.7 billion, down 15.2 per cent from 2014. Revenues dipped 1.5 per cent to US$48.9 billion.
Allergan CEO Brent Saunders said in a separate statement that while he is “disappointed” that the merger will not proceed, his company is nevertheless “poised to deliver strong, sustainable growth built on a set of powerful attributes”.