Valeant Pharmaceuticals said it began an exchange offer for Botox maker Allergan, taking its hostile $50.8 billion bid directly to shareholders.

Quebec-based Valeant, which said on Tuesday it would launch the offer this week, said Allergan shareholders can choose to trade each share for $72 in cash and 0.83 Valeant share, or all cash or all stock.

California-based Allergan said its board would review the exchange offer from Valeant. It previously rejected Valeant’s bid, which contained the same major terms.

Valeant is backed by Bill Ackman’s Pershing Square Capital Management, which is Allergan’s biggest shareholder with a 9.7 per cent stake.

Taking a step toward resolving the battle is positive for Valeant, given the toll it has taken on the company's shares and its potential missed opportunities while focused on Allergan, said BMO analyst Alex Afaei, in a note.

But analyst John Boris of SunTrust Robinson Humphrey said Allergan's best defense against the hostile bid may be a good offense.

In a note, Mr Boris said he believes Allergan will make an “imminent” bid for Ireland’s Shire , a deal that he said would be more attractive than

Valeant’s proposal.

Such an acquisition would give Allergan shareholders sales diversification, sustainable organic growth and other benefits and spare them the risk of holding Valeant shares, he said.

Allergan shares rose 1.1 per cent yesterday in New York to $162.26, while Valeant fell 0.6 per cent to $118.20.

Valeant stock has closed lower in 10 of the previous 11 sessions. Shire stock gained 3.4 per cent in London. Valeant’s offer will expire on August 15th, unless extended.

Reuters