By Business & Finance 
US pharmaceutical giant Pfizer has announced it will not progress with its proposed $160bn merger with Irish-based drugs manufacturer Allergan.
Pfizer’s board is reported to have voted to halt the merger after the US Treasury unveiled new rules to curb tax-evading corporate inversions. US president Barack Obama called the transactions “one of the most insidious loopholes out there”.
Pfizer may have to pay Allergan up to $400m for its expenses as a result of terminating the deal, according to their merger agreement.
Pfizer shares ended trading in New York last night up 2%, while Allergan shares closed down 14.8% to their lowest level since October 2014.
The merger deal originally announced in November would have seen its tax rate drop to about 17 to 18% after the deal, from around 25%, represented more than $1bn in annual savings.
Allergan is the creation of four merged firms grown through inversions over the past three years.
The rules also limited the opportunity for earnings stripping that allow inverting companies to stuff US subsidiaries with the debt of the enlarged merged entity that would have reduced taxable.
