Pfizer regains pole position by acquiring Allergan in a $160B deal.

Pfizer and Allergan are joining in the biggest buyout of the year, a $160 billion stock deal that will create the world's largest drugmaker. The deal is the latest and the largest to be aimed at helping an American company lower its taxes by reincorporating overseas, a practice known as a corporate inversion. The transaction would be structured as a so-called reverse merger, in which Allergan, the smaller of the two companies, would technically be the buyer.

Pfizer will keep its global operational headquarters in New York but   its legal domicile and principal executive offices in Ireland.  Legacy Pfizer expected to lead the combined company which will be called Pfizer Plc, which would have more than $63 billion in combined sales and a product portfolio that includes Viagra, Celebrex, Botox , Juvéderm and  about 110,000 employees worldwide.

Under the terms of the all-share deal, Pfizer would essentially pay $363.63 for each Allergan share .  Allergan shareholders would receive 11.3 shares of Pfizer for each share of Allergan they hold. Pfizer shareholders would receive one share in the combined company for each share they hold, but have the option to take up to $12 billion in cash for some or all of their shares instead.

Pfizer Inc. Chairman and CEO Ian Read will serve in the same roles with the combined company while Allergan Plc. leader Brent Saunders will become president and chief operating officer. The combined company’s board would consist of 15 directors, with Pfizer’s 11 current directors and 4 directors from Allergan.

After the transaction, Pfizer shareholders are expected to own about 56 percent of the combined company, with the remaining 44 percent owned by Allergan shareholders The combined entity expected to achieve more than $2 billion in annual cost savings over the first three years after the deal closes.

Pfizer said that it expected the combined company’s adjusted tax rate to be between 17 percent and 18 percent by the first year after the deal is finalized. Last year, Pfizer’s tax rate was about 26.5 percent, and it is expected to be about 25 percent this year. By comparison, Allergan reported a tax rate of just 4.8 percent for 2014 and is expected to have a tax rate this year of about 15 percent.

Pfizer, based in New York, has engaged in several large deals in recent years, buying Wyeth in a $68 billion  deal and  Hospira, a maker of generic treatments, for about $17 billion this year.

Allergan was created through several mergers since 2012 that included the drug makers Forest Laboratories, Actavis and Warner Chilcott.

The deal would enable Pfizer to surpass  Novartis AG  and regain the industry's top spot.