Generic drugmaker Mylan said it would buy Abbott Laboratories' specialty and branded generics business in developed markets outside the United States in an all-stock transaction valued at about $5.3 billion.
Mylan's shares were up 7 percent in premarket trade after the announcement of the deal that gives it access to Abbott's key products such as gastroenterology drug Creon, pain drug Brufen and influenza vaccine Influvac.
The deal has also been structured to help Mylan reduce its tax bill by moving its tax address outside the United States, a practice known as tax inversion that has become popular among healthcare companies.
Under the deal, Abbott will transfer the assets to a new public company organized in the Netherlands, after which Mylan will merge with a wholly owned unit of the new company.
Abbott will receive 105 million shares of the combined company, giving it about 21 percent ownership stake.
Read MoreShire says ready to recommend higher AbbVie offer
Reuters had reported on Friday that Mylan was in advanced talks to buy a multi-billion dollar portfolio of established products from Abbott.
The deal gives Mylan a portfolio of more than 100 specialty and branded generic pharmaceutical products in five major therapeutic areas including cardio/metabolic and gastrointestinal.
Mylan expects the deal to add about $1.9 billion in annual revenue.
Read More Pharma M&A is back—Can it cure the sector's ills?
Abbott's non-U.S. specialty and branded generics business has a strong presence in Europe, Japan, Canada, Australia and New Zealand.
Mylan's shares closed at $50.20 on the Nasdaq on Friday. Abbott's shares closed at $41.30.
—By Reuters