U.S. pharmaceutical giant Pfizer scrapped its proposed $150 billion takeover of Ireland-based Allergan Wednesday after the federal administration took aim at deals that would move companies overseas to save on taxes, reports Washington Post.
Below are three things to know about the decision not to merge.
1. Late Monday the U.S. Treasury Department issued some 300-pages of new regulations that would make tax inversions less lucrative for companies. Tax inversions occur when U.S.-based companies buy or merge with smaller foreign firms and move their headquarters overseas to lower their tax bill.
2. By moving its headquarters to Ireland, the planned merger would have allowed Pfizer to slash nearly $1 billion annually from its tax bill. In Ireland, New York-based Pfizer would have reduced its tax rate from 24 percent to 17 percent.
3. The two companies said they mutually agreed to kill the transaction, as it no longer made financial sense to move forward. Pfizer said it has agreed to pay Allergan a $150 million breakup fee, reports Washington Post.