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Allergan, Pfizer Rise After Scrapping Merger Over Inversion Rules

Pfizer ( PFE ) and Allergan ( AGN ) confirmed Wednesday that they are ending their $160 billion merger agreement after the U.S. Treasury unveiled new rules to curb tax inversion deals Monday. Ireland-based Allergan rose 3.6% after initially selling off in pre-market trading on the stock market today . CEO Brenton Saunders told CNBC that Allergan has a bright future as a standalone firm. Allergan plunged 14.8% Tuesday to 236.55, hitting the lowest levels since late 2014, amid concerns that the new rules imperiled the deal. Pfizer rose 3.8% after gaining 2.1% to 31.36 on Tuesday. “Pfizer Inc. today announced that the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies,” the drug giant said in a statement . “The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.” U.S. companies have a strong incentive to redomicile overseas to reduce their exposure to America’s unusually high corporate tax rates and global reach. Pfizer’s board reported voted to scrap the deal given that there would no longer be tax benefits. Saunders said the new rules blindsided Allergan, and felt that they unfairly targeted his compnay, though it was not named specifically. The Treasury set restrictions on”serial inverters” — and Allergan has a history of inversion deals. Allergan is run from New Jersey, but has its official headquarters in Dublin. Pfizer will pay $150 million in merger-related expenses. Pfizer CEO Ian Reed said in a statement the drug giant may go ahead with a corporate split: “We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016” The Obama administration has become more aggressive going after big mergers. The Justice Department is suing to block the merger of  Halliburton ( HAL )– Baker Hughes ( BHI ), which said they’ll fight the DOJ’s action.  But Baker Hughes shares rebounded 8.9% Wednesday after sliding 5.1% on Tuesday on reports that the DOJ would take action. Halliburton popped 7% intraday  after climbing 0.2% Tuesday. Meanwhile, the FTC is in the midst of a court battle seeking to block Staples ( SPLS ) from buying office supplies rival Office Depot ( ODP ).

Allergan Extends Losses As Pfizer Scraps Merger Over Inversion Rules

Pfizer ( PFE ) and Allergan ( AGN ) confirmedWednesday morning that they are ending their $160 billion merger agreement after the U.S. Treasury unveiled new rules to curb tax inversion deals Monday. Ireland-based Allergan slid 1.9% in pre-market trading on the stock market today . Shares plunged 14.8% Tuesday to 236.55, hitting the lowest levels since late 2014, amid concerns that the new rules imperiled the deal. Pfizer rose 1.2% before the open after gaining 2.1% to 31.36 on Tuesday. “Pfizer Inc. today announced that the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies,” the drug giant said in a statement . “The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.” U.S. companies have a strong incentive to redomicile overseas to reduce their exposure to America’s unusually high corporate tax rates and global reach. Pfizer’s board reported voted to scrap the deal given that there would no longer be tax benefits. The new rules appeared to single out the Pfizer-Allergan deal, though the companies were not named specifically. The Treasury targeted “serial inverters” and Allergan has a history of inversion deals. Allergan is run from New Jersey, but has its official headquarters in Dublin. Pfizer will pay $150 million in merger-related expenses. Pfizer CEO Ian Reed said the drug giant may go ahead with a corporate split: “We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016” The Obama administration has become more aggressive going after big mergers. The Justice Department is expected to sue to block the Halliburton ( HAL )– Baker Hughes ( BHI ) deal, perhaps as early as this week. Baker Hughes shares fell 5.1% on Tuesday while Halliburton climbed 1.2%. Meanwhile, the FTC is in the midst of a court battle seeking to block Staples ( SPLS ) from buying office supplies rival Office Depot ( ODP ).