Exclusive: Pfizer leaning toward abandoning deal with Allergan - source

Tue Apr 5, 2016 2:10pm EDT
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By Pamela Barbaglia

(Reuters) - Drugmaker Pfizer Inc (PFE.N: Quote) is leaning toward abandoning its $160 billion agreement to buy Allergan Plc (AGN.N: Quote) in light of the U.S. Treasury's new measures to curb such tax evading deals, a source familiar with the situation said on Tuesday.

The discussions between the two companies and their lawyers are set to continue for the remainder of Tuesday and no final decision has been made, the source said, speaking on condition of anonymity.

However, Pfizer is not willing to change the terms of its deal with Allergan which, under the new tax rules, would no longer benefit from the move to Ireland, the source said.

Pfizer and Allergan declined to comment.

The U.S. Treasury Department took new steps on Monday to curb tax-driven corporate inversions whereby companies seek to slash their tax bills by redomiciling overseas, though their core operations and management usually remain in the United States even as they claim a new tax home.

Pfizer is concerned U.S. President Barack Obama's administration could change the rules again to thwart a deal.

The source said the company's lawyers have presented alternative ways for the two companies to salvage the inversion but there was little appetite for it.

"Pfizer is aware that the Treasury will keep ruling against any solution it can come up with," he said.   Continued...

A company logo is seen at a Pfizer office in Dublin, Ireland November 24, 2015. REUTERS/Cathal McNaughton