Shire says that it expects its purchase of Baxalta to go ahead despite new US laws designed to curb ‘tax inversion’ deals.

Today Pfizer and Allergan confirmed that their $160 million merger deal has been terminated due to the tax benefits of the agreement being scuppered by the rule change. By moving its legal domicile from the US to Ireland, where Allergan is based, Pfizer would have been able to escape US taxes on $128 billion of profits stored overseas.

Ireland-based Shire announced it would be purchasing Baxter's biopharma spin-off Baxalta for $32 billion in January. As this is another case of a US firm and an Irish firm merging, some had speculated that the deal may also be at risk, but Shire has insisted this is not the case.

“The combination of Shire and Baxalta is based on a strong strategic rationale to create the leading global biotechnology company focused on rare diseases,” it said in a statement. “The company currently expects to complete its proposed combination by mid-2016 as previously announced.”

According to the firms, the marriage will create the number one rare diseases platform in revenue and pipeline depth, which is predicted to generate annual sales of more than $20 billion by 2020.