Activist investor William Ackman of Pershing Square Capital and Valeant Pharmaceuticals International are teaming up to pursue a takeover of Allergan. Allergan shares rose 13 percent on the news.
Valeant, in a filing with the Securities and Exchange Commission, said it expected to offer a mix of stock and about $15 billion in cash for the Botox maker.
Barclays and RBC are lined up to finance the cash portion. Sources told CNBC the deal's total value would be slightly more than $45 billion.
Allergan declined to comment. Click here to see what Allergan's shares are doing now.
Dow Jones first reported the news Monday afternoon.
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Pershing Square, which declined to comment, holds a nearly 10 percent stake in Allergan. The pharma company is best-known for its cosmetology blockbuster Botox.
The SEC filing indicated that Ackman and Valeant agreed in late February to pursue Allergan. Ackman also agreed to hold at least $1.5 billion worth of Valeant shares for one year after the closing of an Allergan merger.
Valeant has been a serial acquirer, recently gobbling up eye care company Bausch + Lomb for $8.7 billion. Earlier last year it bought Obagi Medical Products, a maker of skin-care products. Those are two areas in which Allergan overlaps; the company has a big presence in both ophthalmology and dermatology.
Its acquisition strategy has served it well: Valeant's shares are up 67 percent in the last 12 months, topping performances from even high-flying biotechs like Gilead Sciences and Biogen Idec. Allergan is up 25 percent in that time.
Valeant Chief Executive Officer Mike Pearson has called research and development a risky business, preferring to build the company through acquisitions and partnerships and often cutting jobs and research spending after doing deals.
A former consultant at McKinsey, Pearson has said it is his goal to become one of the world's five biggest drugmakers by 2016, meaning the company would need to reach a market value of $150 billion. Its market cap as of close of trading Monday was about $41 billion.
—With reporting by CNBC's David Faber, Scott Wapner and Meg Tirrell