Drug maker AbbVie (ABBV) is set purchase Botox maker Allergan for a cash and stock transaction that has a value of approximately $63 billion. The sale is based on Allergan’s Monday stock price of $78.45.

Chief Executive Richard Gonzalez will lead the newly combined company, remaining in his position and also as chairman through 2023, according to the companies. Allergan will also now be positioned as a U.S. company.

Allergan’s Brent Saunders will join AbbVie’s board of directors following the completion of the transaction as well as one other Allergen member.

The acquisition by AbbVie will help to diversify its portfolio as it faces stronger competition for its Humira drug, which is used for the treatment of arthritis and produced $2 billion in revenue for the company in 2018, CNBC reported.

"This is a transformational transaction for both companies and achieves unique and complementary strategic objectives," said Gonzalez said. "The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders.

“With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie's business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future."

Through the acquisition, Allergan shareholders will receive 0.8660 of AbbVie shares and $120.30 in cash for each Allergan share that they currently hold. The transaction, according to the companies, represents a 45 percent premium on the closing price of Allergan shares on Monday. AbbVie shareholders are expected to own approximately 83 percent of the company on a fully diluted basis while Allergan shareholders will own 17 percent of the company on the same basis.

AbbVie expects to receive a pre-tax synergy through the purchase as well as cost reductions of at least $2 billion a year. The companies intend to reduce costs through shared research, overlapping R&D resources, and the optimization of their early stage portfolio. The companies also plan to reduce redundancies in manufacturing and the supply chain, while leveraging procurement spending.

AbbVie also anticipates a debt reduction of $15 to $18 billion by the end of 2021 based on significant cash flow generated. The transaction is expected to close by early 2020. The company will be headquartered in Delaware and operate as AbbVie Inc. Its principal executive offices will be located in Illinois.

"With 2019 annual combined revenue of approximately $48 billion, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone," Saunders said.

"Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie's strong growth platform and create substantial value for shareholders of both companies,” he added.

Shares of AbbVie were down 15.21 percent as of 12:20 p.m. ET on Tuesday.