Pfizer drops merger plans with Botox maker Allergan

Pfizer abandoned the $160 billion (£113bn) deal to merge with Irish rival Allergan, the maker of Botox, following a clampdown by the US Treasury on so-called inversion deals.

In a statement to the stock exchange, the New York-based company said the deal was pulled by mutual consent.

It will pay Allergan $150m (£106m) to cover expenses run up during negotiations on the deal.

Ian Read, Pfizer chairman and CEO, said: “Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies.

“We remain focused on continuing to enhance the value of our innovative and established businesses.”

Pfizer said the two companies regarded the clampdown on inversions by President Barack Obama as “adverse tax law change”.

The tie-up would have been the largest inversion deal in corporate history, a tax-saving manoeuvre in which a US company reorganises in another country with a lower corporate tax rate.

The US corporate tax rate of 35% is one of the highest in the world, and compares with Ireland’s rate of 12.5%.

Allergan - which has its headquarters in Dublin but with much of its operations managed out of New Jersey in the US - said the US Treasury’s reforms will not have any material impact on the tax rates it pays.

Brent Saunders, chief executive and president, said: “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.”