Johnson Controls, a US maker of car batteries and heating and ventilation equipment, has agreed to acquire Ireland-based peer Tyco International in a $16.5 billion deal that will lower its tax bill, the companies said.

By moving its headquarters to Cork, Johnson Controls would become the latest major US company to carry out a so-called tax-inversion after drug giant Pfizer structured such a deal with Allergan last November.

The merger will combine Johnson Controls' commercial buildings business with Tyco's fire security offerings.

It will accelerate Johnson Controls' transformation following its decision to spin off its automotive parts unit.

Milwaukee-based Johnson Controls, which has a market value of $23 billion, makes heating and ventilation systems and car batteries, while Cork -based Tyco, valued at $13 billion, specialises in fire protection systems.

The merger will create savings of at least $500m in the first three years, the companies said.

The companies expect to save an additional $150m a year through tax synergies.

"The move would be consistent with Johnson Control's strategy of transforming from an auto supplier into a multi-industry leader," UBS analyst Colin Langan said in a client note.

Tyco was ahead of many big US industrial companies in seeking tax relief by moving its legal residence offshore.

The company moved its headquarters to Bermuda from Exeter, New Hampshire in 2007, then to Switzerland in 2009, and to Cork in 2014.

Tyco said in 2014 that its move to Cork was tax-neutral and that it occurred because of Swiss laws capping executive pay and tighter immigration rules.

News of the deal was enough to stir controversy among politicians in a US presidential election year. 

"I have a detailed and targeted plan to immediately put a stop to inversions and invest in the US, block deals like Johnson Controls and Tyco, and place an 'exit tax' on corporations that leave the country to lower their tax bill," Democratic Presidential candidate Hillary Clinton said in a statement. 

"It is outrageous when large multinational corporations game the tax code and shelter money overseas to avoid paying their fair share, including through manoeuvres like inversions," she added.

Vermont Senator Bernie Sanders, Clinton's opponent for the Democratic Presidential nomination, also criticised the deal, calling it a disaster for American taxpayers.