UPDATE: Allergan and Pfizer have mutually agreed to end their merger agreement, according to a statement from Allergan. Pfizer has agreed to pay Allergan $150 million in reimbursement for expenses associated with the transaction. Dublin-based Allergan reiterates in the statement its growth opportunities, highlighting over 70 mid-to-late stage projects in development.

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The U.S. Treasury Department's new anti-inversion regulations may throw a deep wrinkle into the proposed Pfizer-AGN merger.

The AGN-Pfizer deal is not the only merger that may be jeopardized by the new Treasury regulation, which seeks to negate the benefits of inversions. An inversion occurs when a U.S.-based company (Pfizer) merges with a foreign company (Ireland-based Allergan) and moves its headquarters abroad to receive a lower tax rate.

Pfizer Inc. and Allergan plc  are “conducting a review of the U.S. Department of Treasury's actions. Prior to completing the review, we won't speculate on any potential impact,” according to a joint statement.

U.S. President Barack Obama came out strong against inversions and other strategies employed by U.S. companies employ to avoid paying taxes. "I want to be clear. While the Treasury Department's actions will make it more difficult... to exploit this particular corporate inversions loophole, only Congress can close it for good," Obama said in a speech.

The Pfizer-AGN deal received anti-trust approval in the Ukraine and Taiwan last week, but support from larger countries was pending.

The Street, for its part, appears to be playing taps for the proposed merger. “By how the stocks are trading, the market thinks the deal is almost dead,” Les Funtleyder, healthcare portfolio manager at E Squared Asset Management in New York, says in an interview with Reuters.

"The deal is dead," said TheStreet's Jim Cramer on CNBC's Squawk on the Street. Allergan shares fell more than  20 percent after the Treasury inversion rule was announced. Stay tuned.