A $160 billion merger between Pfizer and Allergan lay in tatters Wednesday and left experts contemplating whether more deals could be hit by new tax rules issued by the U.S. Treasury.
The deal, which would have allowed New York-based Pfizer to cut its tax bill by redomiciling to Ireland, has now been formally ended.
Fresh rules issued Monday make it tougher for target companies to pass on their overseas registered address and in turn, beneficial tax rates.
Pfizer said Wednesday it had agreed to pay Allergan $150 million for reimbursement of expenses associated with the deal.
Coca-Cola could be the next big company to drop a merger plan, according to research firm Dealogic. Last year, three of Coca-Cola's European bottlers agreed to a billion-dollar merger which it said would create the region's largest distributor of Coke products.
The U.S.-based Coca-Cola Company was the owner of the German bottler that was involved in that deal. Despite approval by U.S. and European regulators the deal is yet to be fully completed.
Dealogic identified the merger as an outstanding tax inversion deal initiated by a U.S. firm. A spokesperson for Coca-Cola Enterprises told CNBC via email that it is reviewing the U.S. Treasury Department's notice and would not speculate on any potential impact until the review is completed.
"We continue to focus on ensuring a successful close of the CCEP (Coca-Cola European Partners) transaction by the end of the second quarter of this year," the spokesperson said.
Christopher Kummer of the Institute for Mergers, Acquisitions and Alliances said recent scandals, such as the Panama Papers revelation last weekend, will mean tax regulations are set to get tougher.
"All in all, taxation may make transactions more costly in the future which will decrease the deal activity. This year, M&A (merger and acquisition) activity has already begun to slow down.
"Taxation could become a factor to actually put an end to a very young M&A wave that we experienced for far after 2008," Kummer told CNBC by email.
The new rules are seen as a victory for President Barack Obama who calls 'tax inversions' an injustice to the U.S. tax system.
"I'm very pleased that the Treasury Department has taken new action to prevent more corporations from taking advantage of one of the most insidious tax loopholes out there — fleeing the country just to get out of paying their taxes," Obama said Tuesday.