Perrigo, the largest maker of store brand over-the-counter drugs, said it will buy Elan for $8.6 billion in a deal that will move the headquarters of the Michigan-based company to the more attractive tax environment of Ireland.

The agreement ends the protracted battle Royalty Pharma waged to acquire Elan and follows the Irish biotechnology company’s announcement in June that it was putting itself up for sale. In the end, the deal gives Elan shareholders $1 per share more than Royalty Pharma’s bid would have provided, including Royalty’s offer of $2.50 per share in contingent value rights.

The transaction values each Elan share at $16.50 based on the closing price of Perrigo shares on July 26, 2013. That represents a premium of approximately 10.5 percent compared to the closing price of Elan ADRs on July 26, 2013, the last trading day prior to the announcement.

Under the terms of the agreement, Elan shareholders will get $6.25 a share in cash and 0.07636 shares in the post-merger company for each share of Elan they hold. Excluding Elan’s cash on hand, the deal is worth $6.7 billion.

For Perrigo, the deal will generate operational and tax savings of $150 million a year. The company also says it will provide it with a platform for international expansion. The deal is expected to be accretive to Perrigo’s adjusted earnings per share in 2014.

Elan’s key asset is the multiple sclerosis drug Tysabri, marketed by Biogen Idec. Elan receives a 12 percent royalty on global net sales of the drug. The royalty will jump to 18 percent starting May 1, 2014 on sales up to $2 billion and 25 percent on annual sales above that amount.

The boards of directors of Perrigo and Elan unanimously approved the transaction, which is expected to close by the end of calendar year 2013. The combined company will be led by Perrigo’s current leadership team.

Following the close, Perrigo shareholders are expected to own 71 percent of the combined company while Elan shareholders are expected to own 29 percent.