Kevin Dowd April 07, 2016
Recent years have seen a spate of so-called corporate inversions, when an American company merges with a foreign business and moves its headquarters overseas in order to reduce tax payments. The largest by far was the agreed-upon $160 billion merger between pharma giants Pfizer (NYSE: PFE) and Allergan (NYSE: AGN). In November, the two companies announced plans to merge, with Pfizer relocating its legal residence to Ireland and saving $2 billion on its U.S. tax bill in the process.
But the merger was terminated this morning due to new rules imposed earlier this week by the U.S. Treasury Department designed to curb corporate inversions and the earnings stripping that comes with such transactions. On Tuesday, President Barack Obama spoke out against corporate inversions, describing them as “insidious.”
Pfizer will reportedly pay Allergan a breakup fee of $150 million.
Curious for more information about corporate inversions, including some of the largest such deals of the past few years? We’ve got you covered.