Valeant Pharma: Thoughts on improved merger offer for AGN - FBR Capital
FBR Capital notes VRX shares are their Top Pick in biopharma. While they believe the stock is undervalued even if the proposed merger with Allergan is not consummated, their pro forma valuation of the combined cos suggests a fair value of $220/share. Yesterday, Valeant increased the cash component of the offer by $10 to $58.30 while maintaining the stock component, 0.83 VRX shares, both per share of AGN stock. The sale of certain assets likely necessary for anti-competitive reasons clearly signals confidence, to them, on the part of mgmt that the transaction will occur. They suspect that optimism may have been buoyed, in part, by the initiation of a shareholder referendum by Pershing Square to have the Allergan BOD replaced.