The company said Friday it will pay $72 US in cash and 0.83 of a Valeant share for each Allergan share under the offer, which is contingent on "good faith negotiations" of a merger agreement.
The offer now values Allergan's shares at about $180.90 US per share and the company at $54.1 billion US.
Valeant chairman and chief executive Michael Pearson said the revised offer "provides enormous value" to shareholders of both companies.
"We strongly believe that applying Valeant's operating philosophy, strategy and financial discipline to a broader set of durable assets will continue to create substantial returns for shareholders over the short, intermediate and long term," Pearson said in a statement.
"We are very committed to getting this deal done and are now modifying our offer with the assistance of Pershing Square to increase the economics for all Allergan shareholders."
Valeant will discuss its latest offer during a conference call Monday.
In addition to raising its offer earlier this week, the company has also offered to pay up to about $25 per share contingent on the success of Allergan's eye drug Darpin, a treatment for a cause of blindness in the elderly, that is under development.
Under the bid, Allergan's largest shareholder, Bill Ackman's Pershing Square Capital Management, has agreed to accept less for its Allergan shares than other shareholders to help the deal get done.
"We believe that our gesture to the other Allergan owners makes an extraordinarily strong statement about our belief in the long-term value of this highly strategic business combination," Ackman said in a statement.
"We are delighted that Valeant has agreed to step up for the benefit of all Allergan shareholders. We look forward to the Allergan board immediately entering into negotiations with Valeant and finalizing this transaction."
Pershing Square, which holds a 9.7 per cent stake, has agreed to forgo any cash and receive 1.22659 Valeant shares for each Allergan share.
Analysts were disappointed earlier this week when Valeant improved its offer for the first time by just $10 per share to $58.30 and 0.83 of a Valeant share. Some have suggested that the company will have to offer as much as $200 per share if it wants Allergan because of the company's strong outlook.
Will Allergan negotiate?
David Buck of The Buckingham Research Group said the revised bid will likely prompt Allergan to the negotiating table.
"We still could see a rejection; however, the increased bid increases some pressure on Allergan to negotiate," he wrote in a report.
Buck said the offer is at the low end of the $180-$200 range that analysts said might be needed to secure a deal.
Valeant first made its offer for Allergan in April, with the backing of Ackman and Pershing Square.
Just two days, the Quebec-based company said it wouldn't "bid against itself" by boosting its offer until Allergan came to the negotiating table.
The cash component is now 49 per cent higher than the original $48.30, while the stock portion remains unchanged.
However Allergan has fought back against the takeover attempt and been harshly critical of Valeant's record and of its plan to find saving if the bid is successful.
The company raised questions about Valeant's ability to cut $2.7 billion of expenses without disrupting the business.