Pfizer Inc. (NYSE: PFE) and Allergan Plc (NYSE: AGN) agreed to combine in a record $160 billion deal, creating a drugmaking behemoth called Pfizer plc with products from Viagra to Botox and a low-cost tax base.

Pfizer will exchange 11.3 shares for each Allergan share, valuing the smaller drugmaker at $363.63 a share, according to a statement Monday. That’s a premium of about 27 percent above Allergan’s stock price on Oct. 28, before news of the companies’ discussions became public. Pfizer investors will be able to opt for cash instead of stock in the combined company in exchange for their shares, with as much as $12 billion to be paid out.

Pharmaceutical deals have been picking up in the middle-market. Cipla Ltd. (NSE: CIPLA) is adding InvaGen Pharmaceuticals and Exelan Pharmaceuticals; McKesson Corp. (NYSE: MCK) is buying UDG Healthcare’s pharmacy unit;  and Roche Holding AG (VTX: ROG) is purchasing Adheron Thereapeutics.

The transaction is structured so that Dublin-based Allergan is technically buying its much larger partner, a move that makes it easier for the company to locate its tax address in Ireland for tax purposes, though the drugmaker’s operational headquarters will be in New York. Pfizer Chief Executive Officer Ian Read will be chairman and CEO of the new company, with Allergan CEO Brent Saunders as president and chief operating officer, overseeing sales, manufacturing and strategy.

The deal will begin adding to Pfizer’s adjusted earnings starting in 2018 and will be boost profit by 10 percent the following year, the companies said. Pfizer’s 11 board members will join four from Allergan, including Saunders and Executive Chairman Paul Bisaro.

Pfizer dropped 1.7 percent to $31.65 in early trading, while Allergan fell 2.1 percent to $306.05. Pfizer said it will start a $5 billion accelerated share buyback program in the first half of 2016. The deal is expected to be completed by the end of next year.

Pfizer, based in New York, makes medications including Viagra, pain drug Lyrica and the Prevnar pneumococcal vaccine, and Allergan produces Botox and the Alzheimer’s drug Namenda. Together, barring any divestitures, the companies will be the biggest pharmaceutical company by annual sales, with about $60 billion.

The deal will be unprecedented on many levels. It’s the largest acquisition so far this year. It’s the largest ever in the pharmaceutical world, eclipsing Pfizer’s purchase of Warner- Lambert Co. in 2000 for $116 billion. And if the new company is able to establish itself abroad for a lower tax rate, a controversial process called an inversion, it will be the largest such move in history.

The U.S. Treasury Department has increasingly targeted such strategies, most recently announcing new guidance on how it will value assets owned by U.S. companies that undertake inversions. The U.S. has the highest tax rate for businesses in the world, at 35 percent, and is one of the only countries to tax corporate profits wherever they are earned. Previous moves by the U.S. Treasury have derailed other proposed inversions, including AbbVie Inc.’s plan to buy Ireland’s Shire Plc for an estimated $52 billion. Pfizer and Allergan’s deal appears structured to avoid the tax inversion rules.

Read has already reached out to lawmakers in both houses of Congress, including Senate Majority Leader Mitch McConnell, and is calling the White House Monday, according to a person with knowledge of the matter. His pitch is that that the deal will help the companies invest in more innovative drugs and that Pfizer Plc would have 40,000 U.S. employees at the close of the transaction.

An agreement may also facilitate the widely discussed potential for Pfizer to reconfigure itself by splitting the newly enlarged company into two: one focused on new drug development, the other on selling older medications. Pfizer said Monday it will decide on a potential separation by the end of 2018.

Pfizer earlier this year bought Hospira Inc., the maker of generic drugs often administered in hospitals, in a transaction valued at about $17 billion. The deal bolstered Pfizer’s established-drugs business, which combines strong cash flow and slow growth.

Allergan itself has been recently transformed, created through an acquisition by Actavis Plc that kept the Allergan name. The company agreed to sell its generics business to Israel’s Teva Pharmaceutical Industries Ltd. for about $40.5 billion and has been on a buying binge of its own. It now has more than 70 compounds in mid-to late-stage development.

If the transaction gets regulatory approval, it will be a vindication for Pfizer CEO Read. A 62-year-old who was born in Scotland, he has been open about his pursuit of a lower tax rate even after a foiled attempt to acquire London-based AstraZeneca Plc last year.

Read, who has led Pfizer for almost five years, has said the U.S. corporate tax rate makes it tougher for American companies to compete. Presidential candidates including Donald Trump have called for changes in corporate tax rates to keep U.S. companies from moving. Carl Icahn, the billionaire investor known for picking fights with corporate executives, has said he will put $150 million into a new super-PAC that would push politicians for changes to the way U.S. corporations are taxed on their earnings abroad.

For Saunders, 45, the merger is the culmination of a rapid- fire series of multibillion-dollar deals that took him from obscurity to become one of the industry’s most powerful people. Saunders had joined Actavis after it acquired Forest Laboratories Inc. in 2014.

In a prominent position at the combined company, Saunders would be a favorite to succeed Read eventually.

“Honestly, I go into one of these deals, big or small, not focused on my future but on trying to build the best future for the company,” Saunders said in an interview last month. “Once that’s set, I look at what I can do and how I can add value.”

Guggenheim Securities, Goldman Sachs Group Inc., Centerview Partners and Moelis & Co. were Pfizer’s financial advisers, with Wachtell, Lipton, Rosen & Katz; Skadden, Arps, Slate, Meagher & Flom LLP and A & L Goodbody providing legal counsel.

JPMorgan Chase & Co. and Morgan Stanley were Allergan’s financial advisers, while Cleary Gottlieb Steen & Hamilton LLP, Latham & Watkins LLP and Arthur Cox were legal advisers.

--With assistance from Megan Murphy.