A deal between pharma companies Pfizer and Allergan which would create the world's largest drugs firm is back in the spotlight as it may not go ahead, after the US Treasury ramped up its efforts to curb so-called 'inversion deals'.
Shares in Dublin-based Allergan are down over 15 per cent today, following the Treasury's announcement late last night that it would make it more difficult for companies to invert – when a firm re-incorporates overseas, usually for tax reasons, after making a foreign acquisition.
US company Pfizer, which agreed a $160bn (£113bn) takeover of Allergan last year, is now reportedly leaning towards calling off the deal, according to Reuters.
The US Treasury said on Monday that it would impose a three-year limit on foreign companies stocking up on American assets to avoid ownership requirements for a later inversions deal.
Because Allergan's recent US deals – with Actavis and Forest Laboratories -–fell within the past three years, it would be impacted by the new Treasury rules, which has put the Pfizer deal under pressure.
If the transaction does not go ahead, the party that calls it off will have to pay the other company up to $400m.
A spokesperson for Pfizer declined to comment. City A.M. reached out to Allergan but is yet to receive a response.