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Allergan Extends Losses As Pfizer Scraps Merger Over Inversion Rules

Pfizer ( PFE ) and Allergan ( AGN ) confirmedWednesday morning that they are ending their $160 billion merger agreement after the U.S. Treasury unveiled new rules to curb tax inversion deals Monday. Ireland-based Allergan slid 1.9% in pre-market trading on the stock market today . Shares plunged 14.8% Tuesday to 236.55, hitting the lowest levels since late 2014, amid concerns that the new rules imperiled the deal. Pfizer rose 1.2% before the open after gaining 2.1% to 31.36 on Tuesday. “Pfizer Inc. today announced that the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies,” the drug giant said in a statement . “The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.” U.S. companies have a strong incentive to redomicile overseas to reduce their exposure to America’s unusually high corporate tax rates and global reach. Pfizer’s board reported voted to scrap the deal given that there would no longer be tax benefits. The new rules appeared to single out the Pfizer-Allergan deal, though the companies were not named specifically. The Treasury targeted “serial inverters” and Allergan has a history of inversion deals. Allergan is run from New Jersey, but has its official headquarters in Dublin. Pfizer will pay $150 million in merger-related expenses. Pfizer CEO Ian Reed said the drug giant may go ahead with a corporate split: “We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016” The Obama administration has become more aggressive going after big mergers. The Justice Department is expected to sue to block the Halliburton ( HAL )– Baker Hughes ( BHI ) deal, perhaps as early as this week. Baker Hughes shares fell 5.1% on Tuesday while Halliburton climbed 1.2%. Meanwhile, the FTC is in the midst of a court battle seeking to block Staples ( SPLS ) from buying office supplies rival Office Depot ( ODP ).

Tesla Stock Hits 7-Month High With Model 3 Demand, Model X Delays

Loading the player… Going into Wednesday trading, Tesla Motors ( TSLA ) stock sat at its highest since September, ahead of a first-week Model 3 reservations update expected from CEO Elon Musk later in the day. He said Saturday that the $1,000 refundable preorder deposits for the $35,000 car reached 276,000 — far above analysts’ expectations and Tesla’s own. Will give an update tonight for the 3 day total, then last one on Wed for the full week. All efforts focused on accelerating the ramp. — Elon Musk (@elonmusk) April 2, 2016 Tesla Motors Stock Analysis Tesla stock rose more than 3% in each of the three trading days following Thursday’s unveiling of the electric Model 3, a mass-market vehicle expected to compete with gas-powered cars like BMW’s 3 Series and similarly priced ones from Volkswagen ’s ( VLKAY ) Audi, Daimler ’s ( DDAIF ) Mercedes-Benz and Toyota ’s ( TM ) Lexus, as well as electrics like General Motors ‘ ( GM ) Chevrolet Bolt. The stock is building the right side of a very long, deep base. But Tesla currently only gets a 51 Composite Rating out of a possible 99 from IBD. The CR factors in its earnings and loss history, stock moves and more. Can Tesla Build Model 3 After Model X Miss? This week, Tesla missed its Q1 car unit sales expectations. So, can Tesla build all those Model 3s in light of its difficulty getting out just shy of 15,000 cars last quarter? The company said Monday that “severe Model X supplier parts shortages” of just a few parts were due partly to its own “hubris in adding far too much new technology to the Model X in version 1.” So many preorders of the $35,000 Model 3 so soon can create a big production backlog. The Model 3 is due out starting in late 2017. CEO Musk says he’s rethinking production planning. Tesla Analysts Forecast Production Pacific Crest Securities analyst Brad Erickson predicts Tesla “can deliver 370,000 vehicles” in 2020, Stifel’s James Albertine sees 200,000, and Tesla has predicted half a million. On how many Model 3 reservations will turn into sales, Erickson sees “huge optimism, but modest lack of conviction of actual purchase,” given that the deposits are fully refundable and only $1,000 each. Erickson is keeping his Tesla stock rating at sector weight. He says, “we need more comfort with the upside scenarios … before becoming more constructive on the stock.” Analysts polled by Thomson Reuters are on average only mildly positive on Tesla stock, with a lot of future expectations already built into the price. Of 21 analysts polled, nine call Tesla a buy or strong buy, five a hold, and seven an underperform. Related : Tesla Stock Shrugs Off Parts Shortage; Model 3 Reservations Pass 276,000 This Is What It’s Like To Ride In A Tesla Model 3  

Pfizer, Allergan To Kill Merger Wednesday Over New Tax Inversion Rules

Pfizer ( PFE ) and Allergan ( AGN ) will announce Wednesday morning that they are mutually ending their $160 billion merger agreement after the U.S. Treasury unveiled new rules to curb tax inversion deals Monday, according to widespread reports. Ireland-based Allergan stock closed down 14.8% to 236.55 on the stock market today amid concerns that the new rules imperiled the deal. Pfizer rose 2.1% to 31.36. U.S. companies have a strong incentive to redomicile overseas to reduce their exposure to America’s unusually high corporate tax rates and global reach. Pfizer did not want to alter the terms of the deal given there would no longer be tax benefits. The deal had a $3.5 billion breakup fee, but it drops to $400 million if they are adverse changes.