Pfizer, Allergan $160 Billion Merger Killed by U.S. Tax Rules

Pfizer Inc. and Allergan Plc have terminated their $160 billion merger in an abrupt end to the largest-ever health-care deal after the U.S. government cracked down on corporate tax inversions.

The U.S. Treasury Department’s proposed new rules to deter companies from using acquisitions to shift their tax addresses overseas drove the decision, the companies said in an April 6 statement. New York-based Pfizer will pay Allergan $150 million in reimbursement for expenses associated with the failed transaction.

Both companies are now left looking for their next move—another deal, in Allergan’s case.

“While this was not Plan A, we were prepared ...