NEW RULES MAY HALT PFIZER TAX INVERSION

“NEW YORK, April 5 (Reuters) - U.S. drug maker Pfizer Inc's $160 billion agreement to acquire Botox maker Allergan Plc was on the brink of being abandoned on Tuesday, after the U.S. Treasury issued new rules on how tax ‘inversion’ deals can be structured.

“Allergan's shares were hit considerably hard on Tuesday, showing how the rules that were issued on Monday targeted the biggest inversion attempted to date. The federal government has grappled with a wave of recent inversions by U.S. companies seeking to slash their tax bills by redomiciling overseas in merger deals.

“Pfizer is now leaning towards abandoning the deal with Allergan, though no final decision has yet been made, a source familiar with the situation said. Were the deal to be tweaked, Pfizer is concerned U.S. President Barack Obama's administration could change the rules again to thwart a deal, according to the source.

“Pfizer shares ended up 2 percent on hopes the company would walk away or renegotiate the deal in its favor. Allergan shares closed down 14.8 percent to their lowest level since October 2014.

“Obama on Tuesday called global tax avoidance a ‘huge problem’ and urged Congress to take action to stop U.S. companies from tax-avoiding corporate ‘inversions’, which lower companies tax bills by redomiciling overseas.

" ‘While the Treasury Department's actions will make it more difficult... to exploit this particular corporate inversions loophole, only Congress can close it for good,’ Obama said.

“Several U.S. presidential candidates, including Republican Donald Trump and Democrats Hillary Clinton and Bernie Sanders, have seized on the issue in their campaigns.

" ‘We have so many companies leaving, it is disgraceful,’ Trump told reporters as he greeted voters in Waukesha, Wisconsin on Tuesday. Clinton and Sanders both expressed support for Treasury's plan.

“Besides Pfizer-Allergan, other pending inversion deals that have not yet closed include the proposed $16.5 billion merger of Johnson Controls Inc with Ireland-based Tyco International Plc, Waste Connections Inc's $2.67 billion deal with Canada's Progressive Waste Solutions Ltd , and IHS Inc's $13 billion acquisition of London-based Markit Ltd.