(Bloomberg) The biggest deal in drug industry history is dead.

Pfizer Inc. and Allergan Plc terminated their $160 billion merger on Wednesday after the U.S. government proposed regulations to crack down on corporate tax inversions, stymieing New York-based Pfizer’s long effort to get out from under the highest corporate tax rate in the developed world.

Both companies are now left looking for their next move—another deal, in Allergan’s case.

“While this was not Plan A, we were prepared for this,” Allergan Chief Executive Officer Brent Saunders said Wednesday in an interview on Bloomberg TV. “We’re going to go and look to find assets that complement and increase our growth profile.”

Pfizer, meanwhile, said it will decide whether to pursue a potential split of the company by no later than the end of this year. The split would probably involve two parts: one focused on new drug development, the other on selling older medications.

“The fact that the company is talking about the original split-up decision timeline of late 2016 almost seems to suggest they have given up on inversion,” Timothy Anderson, an analyst at Sanford C. Bernstein & Co., said of Pfizer’s decision.

Treasury Rules
Both companies blamed the U.S. Treasury Department proposal for killing the deal, and Pfizer said in a statement Wednesday that it will pay Allergan $150 million in reimbursement for expenses associated with the failed transaction.

While the White House was pleased to see mergers fail that were driven by a desire to lower a company’s U.S. tax bill, the regulations weren’t just about Pfizer and Allergan, according to Josh Earnest, a spokesman for President Barack Obama. The Treasury rules weren’t “focused on one particular” company, but on a “loophole,” Earnest told reporters at daily briefing on Wednesday.

The termination represents a victory for Obama, whose administration proposed tougher-than-expected new rules aimed at making inversions like the Pfizer-Allergan deal harder to achieve. In an inversion, a U.S. company shifts its tax address overseas, often through a merger.

Saunders said it wouldn’t have been in the best interests of his shareholders or Pfizer’s to fight the new rules.

Long, Expensive Fight
“It would have been a long, protracted, expensive fight,” he said during the interview. “Perhaps we could have won, but that’s not a fair position to put our shareholders in, particularly when our stand-alone prospects, our growth prospects, our pipeline is so strong.”

Asked about whether he might be interested in buying Valeant Pharmaceuticals International Inc.’s eye-care unit, Bausch & Lomb, Saunders demurred, though he did call it a premier asset. He declined to comment directly on what companies he might look at next.

It’s not clear if Pfizer and Allergan would have fared any better under a new administration. Democratic presidential candidates Hillary Clinton and Bernie Sanders both praised the deal’s failure.

“Glad to hear Pfizer is calling off the merger,” Clinton said Wednesday on Twitter. “We need to close the loopholes that let corporations escape paying their taxes.”

Sanders echoed her comments. “Pfizer’s merger was a transparent attempt to dodge U.S. taxes,” he said on Twitter. “I applaud President Obama for taking decisive action.”

Inversions Dead
With the Treasury rule, tax inversions—dozens of which were performed by U.S. companies seeking to escape the country’s 35 percent corporate tax rate—appear to be largely over. That’s a blow to Pfizer, which has $80 billion in profits trapped overseas that it can’t bring back the U.S. without paying additional taxes, according to the company’s 2015 annual report.

“Inversions are dead,” said John Schroer, sector head of health care at Allianz Global Investors. Earnest, the White House spokesman, said Tuesday that the administration hoped its new proposals would stop the transactions.

Allergan, which is run from New Jersey but has a legal domicile in Dublin, agreed last year to merge with Pfizer in a deal that would have given the U.S.-based company an Irish address and a lower tax rate.

Pfizer shares rose 4.9 percent to $32.90 at 2:26 p.m. in New York, while Allergan gained 3.2 percent to $244.20. Pfizer still plans to report first-quarter earnings on May 3.

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