Pfizer’s reported decision to pull out of its planned $150 billion merger with Allergan comes in the wake of fierce criticism over the deal’s tax implications. Both Democratic and Republican presidential candidates, as well as President Obama, slammed the takeover, which would have allowed Pfizer to pay lower tax rates and get access to billions of dollars in cash it keeps offshore by moving its headquarters to Ireland, where Allergan is based, reports the Wall Street Journal.
Such tax-inversion deals have become common in recent years, but critics say the deals are un-American and Obama has called the practice one of the “most insidious tax loopholes out there.” The Treasury Department has proposed some tough new rules to crack down on these loopholes, which prompted Pfizer to pull out of the deal, says the WSJ. The changes would have reduced the tax savings advantages of such inversions. Now that Pfizer’s board has voted to withdraw its offer, the company is expected to pay fees of up to $400 million to Allergan to cover expenses the Irish company incurred preparing for the takeover.