Pfizer ‘scraps $160bn Allergan deal’

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US drugs giant Pfizer is reported to have scrapped a deal to buy Ireland’s Allergan amid plans to change tax laws.

The decision comes two days after the US Treasury announced fresh plans to prevent deals known as “inversions”, where a US firm merges with a company in a country with a lower tax rate.

The Pfizer-Allergan deal, valued at $160bn (£113bn), would have been the biggest example of an “inversion”.

Dublin-based Allergan has been in talks with Pfizer since late last year.

Reuters news agency reported that Pfizer and Allergan would announce later on Wednesday that the deal had been abandoned.

Pfizer will have to pay Botox-maker Allergan up to $400m for its expenses as a result of terminating the deal. That had been worked into their merger agreement during the negotiation process.

‘Fair share’

Under the proposed acquisition, Pfizer would have moved its headquarters to Dublin, where the tax bill would have been lower than in the US.

The corporation tax rate in the Republic of Ireland is 12.5%, compared with 35% in the US.

On Tuesday, US President Obama weighed in on the inversion trend, saying “these companies get all the rewards of being an American company without fulfilling their responsibility to pay their fair share of taxes”.

In 2014, American fast-food chain Burger King bought Canadian coffee and doughnut chain, Tim Hortons. The merged group moved to Ontario, Canada where the corporate tax rate is at 26.5%.

Analysts had said that Pfizer needed to look at acquisitions to help grow its business and revenue.

Pfizer made an offer to buy UK drugs group AstraZeneca in 2014. But Astra rejected the offer, arguing it undervalued the company.

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