AbbVie is facing the expiration of patent protection for Humira, which brought in a staggering $20 billion in sales last year.
Industry analysts had been anticipating a move by AbbVie to offset the introduction of generics to an extremely valuable pipeline for the company.
"We are unsurprised by the timing and the target of the deal given (AbbVie's) Humira patent cliff," wrote Citi analyst Andrew Baum.
Shares of Allergan Plc, based in Dublin, Ireland, soared 31.2 per cent in premarket trading Tuesday.
AbbVie shareholders will own 83 per cent of the specialty drug company combination after the deal's completion, while Allergan shareholders will have a 17 per cent stake.
Gonzalez will remain chairman and CEO at AbbVie. Two members of Allergan's board, including chairman and CEO Brent Saunders, will join AbbVie's board once the deal closes.
Regulators and Allergan shareholders still have to approve the deal. Shares of AbbVie Inc., based in North Chicago, Illinois, declined 8 per cent before the market opened.