The US drug firm cited an “adverse tax law change” announced by the US Department of Treasury on Monday as the driver for the decision. It also said it will pay Allergan $150m “for reimbursement of expenses associated with the transaction.”
The proposed merger would have allowed Pfizer to register in Ireland and cut its tax bill. Experts had speculated the US drug manufacturer might have managed to bring its tax rate to below 7.5%.
However, on Monday new US measures were introduced that make it harder for companies to move their tax address and profits overseas.
Pfizer also said it would decide about whether to split off its generic medicines unit as a separate business this year.