Under the terms of the agreement, which is structured as an all-stock deal, each Mylan share would be converted into one share of the new company.

Pfizer shareholders would own 57% of the combined new company and Mylan shareholders would own 43%, Mylan said.

The new company, which will be renamed and rebranded after the deal closes, will be led by Mylan's Chairman Robert Coury, who will serve as executive chairman of the new company.

Michael Goettler, group president of Upjohn, will be the chief executive officer and Heather Bresch, Mylan's CEO, will retire after the deal closes.

As part of the deal, Pfizer will separate its Upjohn unit in a tax-free spinoff and will simultaneously combine with Mylan.

Upjohn will issue $12 billion of debt at or prior to separation. After the deal closes, the new company will have about $24.5 billion of total debt outstanding.

Separately, Pfizer on Monday reported a 30% rise in quarterly profit, helped by demand for its branded treatments such as Ibrance, Eliquis and Xeljanz.