The much talked-about Pfizer/Allergan megamerger has officially been terminated. The companies made the decision to scrap their $152 billion agreement following the US Treasury Department’s proposed regulations aimed at reducing the advantages of such an international merger.

Pfizer has agreed to reimburse Allergan for $150 million in expenses associated with the planned merger. As a condition of the deal, both parties agreed that should one company decide to back out of their agreement, they would be required to pay up to $400 million in expenses.

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

Late Monday, the US Treasury Department proposed several new rules limiting incentives for companies to commit tax inversion. The first rule would change the way in which foreign companies are able to lend money to US-based subsidiaries, preventing the companies from claiming the interest it pays on the loans, thereby lowering their tax bill.

The second proposed rule would address the way foreign companies are evaluated based on size. Under this rule, Allergan would own too small a share in the merged company to receive the tax benefits.

“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,” said Allergan CEO, Brent Saunders. “Allergan is focused on delivering growth from an efficient operating structure while also being committed to investing in R&D through our Open Science model.”

As one of Pfizer’s main motivators for the merger with Allergan – and the subsequent move to Ireland – was tax savings, the Treasury Department’s announcement has had a significant impact on the deal. Pfizer and Allergan first announced their intention to merge in November of 2015.

“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, consistent with our original timeframe for the decision prior to the announcement of the potential Allergan transaction,” said Read. “As always, we remain committed to enhancing shareholder value.”