Israeli Pharmaceuticals giant Teva has acquired the generics unit of Irish company Allergan for $40.5 billion (£26 billion).
This easily beats the previous largest deal involving an Israeli company when Teva bought Barr Pharmaceuticals in 2008 for $9 billion (£5.7 billion).
The deal consolidates Teva's position as the world's largest company making generics (cheaply produced imitation drugs after branded patents expire), and catapults it into the top 10 of global pharmaceutical manufacturers.
Teva CEO Erez Vigodman said: "We're connecting the world's two best generic companies and creating value from synergy. It is very strategic for Teva. Our sector is undergoing processes of change that do not permit us to stay in one place; we have to move."
The markets greeted the move with enormous enthusiasm. Teva's shares surged 16.4 per cent on Wall Street following the news.