Pfizer and Allergan on Wednesday terminated their $160 billion merger after changes in U.S. tax regulations dealt a death blow to the deal.Pfizer will pay Allergan a $400 million break fee as per the merger agreement, sources told CNBC.Pfizer stock was up slightly in Wednesday’s premarket after closing up just over 2 percent at $31.36 on hopes that the company would dump the merger or renegotiate more favorable terms.Allergan shares were down 1 percent in premarket trading after falling 14.7 percent on Tuesday to $236.55 each.”While we are disappointed that the Pfizer transaction will no longer move forward, Allergan is poised to deliver strong, sustainable growth built on a set of powerful attributes,” CEO and President Brent Saunders said in a statement. “Leading therapeutic franchises with strong brands across seven therapeutic areas provide the foundation for continued strong growth in 2016 and beyond.”New regulations issued Monday by the U.S. Treasury will prevent so-called inversion deals — under which a U.S. company moves its base to a country with a more favorable taxation environment — removing the tax benefits New York-based Pfizer had hoped to gain from the deal with Ireland’s Allergan.

Source: Pfizer, Allergan will mutually terminate merger over inversion rule changes, sources say