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Pfizer halts merger plans after US changes tax rules

By Ed Carty and Ben Woods

US drugmaker Pfizer has confirmed the biggest pharmaceutical deal in history has been pulled after the US unveiled new measures to stop tax avoidance.

Pfizer abandoned the $160bn (£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 chief executive, 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%.

Northern Ireland - which currently shares the UK's tax rate of 20% - is set to introduce a 12.5% rate in April 2018. Allergan has headquarters in Dublin but manages most of its operations from New Jersey in the US.

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