Drug maker Pfizer and the Ireland-based Allergan confirmed reports Monday that they were merging, creating the world's largest pharmaceutical company with an estimated value of $160 billion.

The move would allow the new combined company's corporate headquarters to be placed abroad and therefore avoid paying U.S. corporate taxes, making it the largest-ever example of a "corporate inversion."

"The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world," stated Ian Read, Pfizer's chairman and chief executive officer. "Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry."

The deal is expected to be completed in first quarter of 2016 and will allow Pfizer to reduce its corporate tax rate from 25 percent to 17 or 18 percent. The global operational headquarters will be in New York, but its executive offices, and therefore its legal domicile for tax purposes, will be in Ireland.

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