The deal, which was initially announced Monday afternoon, would be valued at $48.30 in cash and 0.83 shares of Valeant common stock. Valeant said the deal represents a premium to the $116.63 the company traded at on April 10, before activist investor Bill Ackman bought 5% of the company's stock.
Ackman's Pershing Square Capital Management now owns 9.7% of the company in what is one of the asset manager's biggest investments ever.
"This proposal represents an undeniable opportunity to create extraordinary value for both Allergan and Valeant shareholders by establishing an unrivaled platform with leading positions in ophthalmology, dermatology, aesthetics, dental and the emerging markets" said J. Michael Pearson, Valeant's CEO.
"Together, we can capitalize on the inherent strengths and complementary portfolios of our two companies, while achieving significant synergies by applying Valeant's unique operating model to a combined set of assets."
Meanwhile, Ackman said "the combination of Valeant and Allergan represents the most strategic and value-creating transaction I have ever analyzed."
Spokespeople for Allergan didn't immediately comment on the matter. The company said in a statement Monday evening its board intends to evaluate an offer "in consultation with its financial and legal advisors" and then advise shareholders.
Allergan shares soared 19% in pre-market action, while Valeant rallied 7%.