Advanced Medical Optics Inc. has offered to buy larger eye-care company Bausch & Lomb Inc. for $4.23 billion, topping a rival offer of $3.67 billion from private equity firm Warburg Pincus, the two companies said on Thursday.

Advanced Medical's offer is valued at $75 a share, of which $45 is in cash and $30 in stock, the companies said. That offer compares with a $65 a share offer made by Warburg Pincus in May. Bausch & Lomb's takeover agreement from Warburg Pincus allowed it to solicit other bids for 50 days.

It's hard to find a way to argue that $75 isn't superior to $65, said Jeff Johnson, an analyst at Robert Baird.

Bausch & Lomb said its board plans to deem the new offer as likely to lead to a superior deal than its existing pact with Warburg Pincus, but there were no assurances it will result in a deal.

Advanced Medical makes laser-vision correction tools, contact-lens cleaning solutions and other products. It aims to acquire Bausch & Lomb to fill in gaps in its product line -- such as contact lenses and eye glasses -- and gain greater international exposure in areas such as Latin America and Asia.

Advanced Medical, which has a market capitalization of about $2.1 billion, is trying to buy a larger rival with a market capitalization of $3.7 billion.

One day after Advanced Medical first expressed its interest in Bausch & Lomb in May, it announced it was recalling and halting shipments of its Complete MoisturePlus contact lens solutions after data showed a higher risk of eye infections among its users. Advanced Medical last month warned of a loss in 2007 due to the impact of the recall.

As a result, the talk of its proposed offer for Bausch & Lomb receded.

Advanced Medical previously said the Warburg Pincus offer undervalued Bausch & Lomb, and said it would consider an offer of its own.

The Warburg Pincus bid had only offered a 5.7 percent premium to the closing price of Bausch & Lomb shares on May 15, the day before the deal was announced. Leading up to that deal, however, the stock had risen about 25 percent since mid-March on rumors the company would be acquired.

Advanced Medical said its cash and stock offer was valued at $4.3 billion, more than the $3.67 billion all cash offered by rival bidder private equity firm Warburg Pincus.

Sources previously told Reuters that Advanced Medical may consider adding a private equity partner to help it fund the offer. Advanced Medical, however, is proceeding with the bid without any buyout partners, sources said.

A bid by Advanced Medical would likely face a tougher regulatory review since the two companies have some overlapping businesses, analysts said. That could prolong the closing of the deal.

It's a stretch to imagine them being able to fund this deal without issuing stock and taking on significant dilution, said one arbitrageur who declined to be named.

Add antitrust risk and uncertain deal timing and $75 starts to look a bit lower. It will depend on how much cash is in the offer and how it is being financed, said the trader, who specializing in takeover stocks.

Hedge fund SAC Capital Advisors said it had acquired a 5.5-percent stake in Bausch & Lomb and it believed the shares, many of which were bought from May 1 to July 3, were undervalued.

SAC Capital said it may engage in discussions with Bausch & Lomb's management and other shareholders about the operations and management of the eye-care company.

(Reporting by Edward Tobin in New York, Jessica Hall in Philadelphia and Toni Clarke in Boston, Sue Zeidler in Los Angeles)