The pharmaceutical giants Pfizer and Allergan will combine to form a $160 billion global drug behemoth.

Allergan shareholders will be receiving $363.63 worth of Pfizer stock as payment. Specifically, for each share of Allergan, investors will receive 11.3 shares (based on the Pfizer's Friday closing price of $32.18) of the new combined company.

Importantly, the combined businesses will be renamed Pfizer Plc but legally will be combined under Allergan Plc. This means the combined company will officially be domiciled in Ireland.

"Upon the closing of the transaction, the combined company is expected to maintain Allergan's Irish legal domicile," management said.

This type of deal, also known as a tax inversion, has been embraced by more and more US companies as a way to dodge relatively high US tax rates by moving to low-tax regions like Ireland.

For Pfizer, this means billions of dollars in savings.

"Pfizer anticipates the transaction will deliver more than $2 billion in operational synergies over the first three years after closing," management said. "Pfizer anticipates that the combined company will have a pro forma Adjusted Effective Tax Rate of approximately 17%-18% by the first full year after the closing of the transaction."

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