The targeted $160 billion merger between Pfizer and Allergan has run afoul of new anti-inversion legislation proposed by the US Treasury, as had been predicted by most deal watchers.

The companies announced on Apr. 6 that they were backing away from the plans. Under the terms of a walk-away agreement, Pfizer will pay Allergan $150 million as well as reimbursing expenses.

If successful, the merger would have constituted the biggest inversion deal ever. It also would have been the global pharmaceutical industry’s largest-ever merger.

As part of the plan, Pifzer was to move its official corporate headquarters to Allergan’s home base of Dublin, Ireland, while still being run from the US. In this way it had hoped to save $1 billion in taxes annually.

Ireland’s corporation tax rate is only 12.5% compared with 35% in the US. The UK recently lowered its rate to 20%.

Commenting on the breakdown, Pfizer CEO Ian Read said: Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies.

The company is still reeling from its unsuccessful hostile takeover attempt of British-Swedish drugmaker AstraZeneca two years ago, a deal which also faced sharp political opposition. Since then, it has been under pressure to make some kind of move. Read said Pfizer will decide by the end of this year whether to split into an “established” business producing older drugs, and an “innovative” business, focusing on newer products.

Allergan CEO Brent Saunders said that while the company is “disappointed” that the merger has collapsed, it is “poised to deliver additional growth opportunities from its attractive financial profile and balanced sheet,” which he said will be padded by around $40.5 billion from the impending sale of its Actavis generics business to Teva.

The Teva deal is still expected to close this June 2016, Saunders said, dismissing speculation that the new regulations could also lead this deal to unravel. He added that the company may pursue other stock-based acquisitions as early as this autumn.

Allergan is the result of several inversion-style mergers, the latest being its $70.5 billion takeover – while still known as Actavis – of Botox manufacturer Allergan. The freshly merged company took over the name of the acquired business.

The breakdown of the Pfizer-Allergan inversion transaction was welcomed by US president Barack Obama as well as the two Democratic presidential candidates, former Secretary of State Hillary Clinton and Vermont Senator Bernie Sanders.

At a news conference in the wake of the Treasury’s announcement, Obama said the new rules were aimed at preening “one of the most insidious tax loopholes out there” and would make wealthy corporations shoulder their share of the tax burden.

Analysts said the Pfizer-Allergan backdown could deter other tax inversions planned by less powerful players.