JOHNSON Controls today agreed to acquire Tyco International, creating a merged entity with revenues of more than $32bn (£22.4bn) that will be based in the low-tax haven Ireland.

New York Stock Exchange-listed Johnson Controls is an American company that makes heating systems, car batteries and energy-efficiency measures for buildings, while Tyco produces fire protection and security systems.

By taking over Tyco, which is headquartered in Cork, Ireland, Johnson Controls will be able to slash its tax bill by around $150m a year, the companies said.

The merger will create savings of at least $500 million in the first three years, they added.

Under the terms of the deal, Johnson Controls shareholders will own approximately 56 per cent of the combined company and receive $3.9bn in cash. Current Tyco shareholders will own the remaining 44 per cent.

The combined business will be renamed Johnson Controls, will be headed up by Johnson Controls’ chief executive Alex Molinaroli and will be listed on the New York Stock Exchange, although it will be domiciled in Ireland.

The primary operational headquarters in North America for the combined company will remain in Milwaukee, where Johnson Controls is based.

The deal is expected to be completed by the end of the financial year 2016, subject to regulatory approvals and approval by both companies’ shareholders.

Centerview Partners and Barclays are acting as financial advisors for Johnson Controls while Lazard and Goldman Sachs are advising Tyco.

Shares in both companies have plunged over the past year, as the business solutions sector has been heavily affected by the slowdown of growth in China.

The takeover is likely to reignite the political controversy around tax inversion deals in the US, with presidential frontrunners Hilary Clinton and Donald Trump vowing to clamp down on the practice.

A number of US pharmaceuticals giants have looked at redomiciling to shrink their tax bill. Pfizer acquired Ireland-based Allergan in a $160bn deal last November, after a failed approach for Britain’s AstraZeneca.