According to a joint statement issued by the two companies, the transaction value was based on the closing price of AbbVie's common stock of $78.45 on Monday.
The transaction is expected to be completed by early 2020, subject to regulatory clearance and Allergan's shareholders' approvals.
Allergan is known globally as the manufacturer of Botox cosmetic which is a prescription medicine that is injected into the muscles to temporarily improve looks of moderate to severe forehead lines, crow's feet lines and frown lines between the eyebrows in adults.
"Under the terms of the transaction agreement, Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each Allergan Share that they hold, for a total consideration of $188.24 per Allergan share. The transaction represents a 45 per cent premium to the closing price of Allergan's shares on June 24, 2019," the statement said.
Accordingly, the combined company will consist of several franchises with leadership positions across immunology, hematologic oncology, medical aesthetics, neuroscience, women's health, eye care and virology.
"This transaction achieves unique and complementary strategic objectives for both organisations. Combining Allergan's diversified on-market product portfolio with AbbVie's growth platform and deep expertise in R&D, commercial strength and international footprint will create a leading biopharmaceutical company with approximately $48 billion in combined 2019 revenue," the statement said.
"This combination also enhances AbbVie's ability for robust investment in its industry-leading pipeline of innovative therapies throughout the next decade and enables AbbVie to deliver on its mission to better serve patients," it added.
As per the statement, the financial benefits of the deal include immediate 10 per cent earnings-per-share accretion over the first full year of the combination with peak accretion of greater than 20 per cent.
"The transaction will generate annual pre-tax synergies and other cost reductions of at least $2 billion in year three, with a return on invested capital to exceed AbbVie's cost of capital within the first full year," the statement added.
( With inputs from IANS )