As analysts and investors had expected, Pfizer and Allergan have terminated their record $160 billion merger by mutual agreement just days after the Obama administration introduced new rules meant to limit the ability of American companies to shift their home overseas simply to lower their tax bills, wrote the New York Times.

The deal, announced in November, would have been the largest transaction of its kind, a so-called inversion that allows an American company to shed its U.S. corporate citizenship in order to move income beyond the reach of American tax authorities. Allergan has its tax domicile in Ireland.

Allergan's CEO, Brent Saunders, said in a statement that his company is "disappointed that the Pfizer transaction" won't happen, adding that "Allergan is poised to deliver strong, sustainable growth,” wrote the Chicago Tribune.

“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” Ian Read, the Pfizer chairman and chief executive, said in a news release. “We remain focused on continuing to enhance the value of our innovative and established businesses.”

The latest rule changes by the Treasury Department are intended to discourage such transactions by targeting “serial inverters,” foreign companies that bulked up by buying American ones for tax advantages. The new rules seek to restrict such transactions by disregarding the value of the American businesses acquired over the last three years.

The new rules would also attack another technique used by multinational companies to reduce their taxes, known as earnings stripping. The tactic involves an American subsidiary borrowing from its overseas parent company. It allows the U.S. business to deduct interest payments from its earnings. Since it is an intercompany loan, the cost is not reflected on financial statements.