As Tuesday wore on, skepticism gave way regarding success for the hostile try by Valeant Pharmaceuticals International Inc., with help from the hedge fund Pershing Square Capital Management L.P., to take over Allergan Inc. in a deal valued at about $45 billion. But the merger is by no means a deal.

"While Valeant has been a prolific acquirer in the specialty pharma sector – consummating nearly 25 acquisitions within the last four years – teaming up with an activist investment manager is an unprecedented twist," noted Jefferies analyst David Steinberg in a research report, referring to Pershing CEO William Ackman. Steinberg did not expect the deal to sit well with Allergan, though "in our analysis there are significant financial benefits."

Laval, Quebec-based Valeant's offer to the board of Allergan, of Irvine, Calif., outlines a deal whereby each Allergan share would be traded for $48.30 in cash and 0.83 shares of Valeant common stock. Allergan's closing price Monday (NYSE:AGN) was $133.92 and Valeant (NASDAQ:VRX) ended the day at $122.05, so the offer amounts to a sizeable premium over what Valeant termed Allergan's "unaffected" stock price earlier this month – before Pershing began buying up shares – of $116.63.

Tuesday saw Allergan's stock rise, closing at $163.65, up $21.65, or 15.3 percent, and Valeant finishing at $135.41, up $9.40.

"Allergan shareholders will not only benefit from the premium, which when I checked was about 40 percent, based upon where they are trading now vs. the unaffected price," said Valeant CEO Michael Pearson during a news conference regarding the takeover attempt. "As the certainty of this transaction increases, both sets of shareholders will benefit from that continued appreciation."

The arrangement, if it can be pulled off, would create $2.7 billion in annual operating cost synergies, with 80 percent achieved in the first six months, Valeant said. Allergan shareholders would own 43 percent of the combined company, and could choose a mix of cash and shares.

Pershing, already Allergan's largest shareholder with a 9.7 percent stake, will take its share entirely as stock, in order to stay a long-term holder. "A lot of the price increase in Allergan shares over the last 10 days has been aggressive buying by Pershing to get the last 5 percent," Pearson said, adding that Allergan "fits very much what we have been looking for and what we are looking for, both in terms of the durability of the assets and the required internal rates of return that we need," and will reinforce Valeant's key therapeutic areas, including ophthalmology, dermatology, aesthetic medicine and over-the-counter consumer health care products.

"If you look at our portfolio, 85 percent of our sales are durable," Pearson said. "They're not going to go away. They're not dependent on a patent. They're true brands. It's the most underappreciated aspect of our business." He cited Neotensil, a non-invasive treatment for bags under the eyes, which Valeant sells to doctors for $250 and they sell to patients for $500.

Ari Kellen, Valeant's company group chairman, said that in Allergan's phase III portfolio "the majority [of projects] are line extensions and lower-risk programs, which are consistent with our strategy," and could be developed more efficiently in a combined firm. He estimated that about 80 percent of Allergan's revenue was sourced externally, and 50 percent of it started coming before 1998. "Based on project-by-project estimates, which we calculated working together with third-party external consultants, bringing Allergan's line extensions and lower-risk development products to market would have cost approximately $2 billion under Valeant's lean operating model," Kellen said. "Over this time, Allergan spent approximately $9.5 billion including on high-risk programs."

Allergan released a statement Tuesday acknowledging only receipt of the offer. Opinions varied on how investors in the firm might take the news of the Valeant/Pershing effort. Analysts pointed out that Allergan has options, such as buying a good-fit company such as Dublin-based Shire plc or Jazz Pharmaceuticals plc, also of Dublin, or a major asset to bring about a tax inversion.

Or Allergan might put in place a "poison pill" shareholder rights plan that could water down Pershing's ownership and thwart the deal. A third, remote possibility is competitive bidding by other suitors. There's been interest by big pharma firms in Allergan in the past, when the company's market cap was lower, but most of those likely are out of the running.

Leerink Partners LLC analyst Seamus Fernandez wrote in a research report that it was "difficult to see either a successful white knight emerge or to see a successful Allergan defense," though he pointed out that Valeant – or any of the other prospects that might want Allergan – would have to deal with antitrust concerns. Pearson disagreed. "There's no antitrust uncertainty," he said during a news conference regarding the takeover attempt. "We've actually already begun working with the Federal Trade Commission. We know exactly what we have to do to get this transaction done."