Each Allergan share would be exchanged for USD 48.30 in cash and 0.83 shares of Valeant Pharmaceuticals International Inc common stock. Shareholders can choose a mix of cash and stock.
Allergan Inc stockholders would own 43 percent of the combined company.
Ackman's Pershing Square Capital Management LP Allergan's biggest stockholder at 9.7 percent has agreed to take only stock in the transaction and plans to continue as a long-term shareholder of the combined company.
"Allergan CEO David Pyott and the company's board have made it clear that they don't want to have talks about a potential combination," said Valeant Chairman and CEO J Michael Pearson.
He added that he's hoping that the offer being put on the table will enable the two sides "to engage in productive discussions."
Allergan said in a statement that if it received an offer that its board along with financial and legal advisers would evaluate it.
Quebec-based Valeant said yesterday that it anticipates the proposed Allergan deal resulting in more than USD 2.7 billion in annual cost savings.
Allergan reported revenue of USD 6.3 billion last year. The company's growth has been driven by expanding use of its popular product, Botox, combined with a broad offering of eye care drugs, skin care formulas and breast implants.