This pharmaceutical marriage is not to be done. The American giant Pfizer abandoned the $160 billion merger maxi-project with Allergan. The decision came after the US Treasury Department has introduced new limits for the so-called tax inversion, or an aggregation aimed at moving the headquarters to countries with more favorable tax treatment. If accomplished, the merger would have been one of the largest ever in the corporate market.
Yesterday the Wall Street Journal had reported that the Treasury's move, although expected, had been more aggressive than expected: “It will be a significant impediment, it practically takes away all the advantages of the reversal. The measures attack literally all the benefits that one could have, systematically eliminate them,” said Robert Willens, tax analyst.
The new rules, which constitute the US administration's third crackdown on deals of this type, make it more difficult for companies to move their tax headquarters outside the United States and thus account for profits in lower-tax countries, thus avoiding to pay higher rates to the US taxman.
Yesterday a Wall Street Pfizer stock gained 2%, while Allergan tumbled 15%.
