Two planned mega-mergers came to an end Wednesday following steps from the federal government to prevent deals that may threaten market competition.
Pfizer (PFE, Financial) and Allergan (AGN, Financial) will end its $160 billion merger, which would have been the largest health care deal, after the Treasury Department proposed new rules to deter against tax inversions, or corporations pursuing mergers for a lower tax rate abroad. Pfizer will pay Allergan $150 million to reimburse expenses for the deal.
Allergan CEO Brent Saunders said in a Bloomberg TV interview that the company will move forward to look for another possible deal. Saunders did not give a specific answer when asked if Allergan would look to buy the Bausch & Lomb segment from embattled Valeant (VRX, Financial), but said it was a “premier asset.”
Pfizer, on the other hand, must consider whether it should split up the business, according to the press release where CEO Ian Read said the company will make a decision by the end of the year.
Prior to the Allergan deal, Pfizer had attempted to acquire AstraZeneca in 2014, which it abandoned in part due to opposition over potential layoffs in Britian.
Allergan’s stock was up 3.87% as of Wednesday afternoon following the news, while Pfizer traded up by 3.56%. Barrow, Hanley, Mewhinney & Strauss is the largest guru shareholder of Pfizer with more than 53 million shares, or 0.87% of shares outstanding. The Vanguard Health Care Fund (Trades, Portfolio) is Allergan’s largest guru shareholder with a 2.78% stake.
In the oilfield services industry, the Justice Department has filed a lawsuit to stop Halliburton (HAL, Financial) from acquiring Baker Hughes (BHI, Financial). The deal would have created an oilfield services giant larger than industry leader Schlumberger (SLB, Financial). Attorney General Loretta Lynch said in a statement that the department was committed to enforcing antitrust laws.
“The proposed deal between Halliburton and Baker Hughes would eliminate vital competition, skew energy markets and harm American consumers,” she said.
Halliburton is a $31.24 billion market cap company whose stock rose about 5% Wednesday morning after the news. Jeff Ubben (Trades, Portfolio) holds the largest stake among the gurus at 1.92%. Baker Hughes’ shares traded up by about 4%.
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