The world's largest drug manufacturer Pfizer is to buy competitor Wyeth in a deal worth $US68 billion.
It will be one of the biggest takeovers in nearly a decade and the most important one since the outbreak of the financial crisis.
The boards of directors of the US rivals have approved the merger.
The acquisition will be financed through a combination of cash, debt and stock, and a consortium of banks has agreed to provide a total of $US22.5 billion to finance it.
The deal appears to be the biggest takeover in the pharmaceutical sector since Pfizer acquired Warner-Lambert Co for $US93.4 billion in 2000.
The combined company will be number one in terms of biopharmaceutical revenues in the United States with a market share of about 12%.
It will hold about 10% of the market in Europe, 7% in Asia with the exception of Japan, and 6% in Latin America.
Participants said the new company will have more resources to invest in research and development than any other biopharmaceutical company and access to all leading scientific technology platforms, including vaccines, small and large molecules, nutritionals and consumer products.
However its share price on Wall Street tumbled 10.3% to $15.65 on worries over what benefits, if any, the company may reap from the acquisition, which had been rumoured since last week.
Pfizer, founded in 1849, employs about 81,900 people in more than 150 countries around the world.
