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Shares of Allergan (AGN 229.34, -48.21) have had a rough go of it this morning as the stock trades lower by nearly 18.0% after the U.S. Treasury announced new inversion rules.

The Treasury Department said its actions will address earnings stripping and are aimed at curbing inversions that allowed corporations to move their tax residence overseas.

The latest set of actions undertaken by the Treasury will prevent foreign companies that acquire multiple U.S.-based companies in stock-based transactions from using their increase in size to avoid current inversion thresholds.

As for earnings stripping, the Treasury hopes to curb the practice by targeting transactions that generate large interest deductions by increasing the debt held by the related party. In addition, the company will allow the Internal Revenue Service to divide debt instruments into part debt and part equity as opposed to having to choose one over the other.

The increased regulatory focus on inversions has pressured Allergan as investors show concern over the company's planned merger with Pfizer (PFE 31.13, +0.41). It is worth noting that Allergan was already trading at a 20.0% discount to the implied buyout price prior to today's announcement, which has fueled more concerns about the viability of the deal that was expected to be completed in the second half of 2016.

The two companies issued a statement today, saying no comments will be made until both companies review the new rules from the Treasury.