Valeant Again Boosts Bid for Allergan
Valeant Has Hinted At Possibility of Hostile Offer
Valeant Pharmaceuticals International Inc. VRX +1.42% again boosted its takeover bid for botox maker Allergan Inc., AGN +6.77% now offering about $53.3 billion in cash and stock, subject to prompt good-faith discussions on a merger agreement.
The revised offer comes two days after Valeant's last bid, which valued Allergan at $49.4 billion. At that time, Valeant Chairman and CEO J. Michael Pearson also hinted at a possible increased offer -- but not until Allergan officials agreed to sit down and negotiate.
The new bid values Allergan at about $179.25 a share and includes the possibility of an additional $25 a share, depending on the future revenue of Allergan's developmental eye-treatment.
Allergan shares had declined in response to Wednesday's raised bid, as analysts were mixed on whether the bump was high enough. The stock climbed in response to the latest offer Friday, but still traded well below the offer price at about $166 a share.
Mr. Pearson has also raised the possibility of a hostile tender offer for Allergan shares or a fight over the company's board. He maintained that Valeant would prefer friendly negotiations and reiterated he wouldn't "overpay" for the deal or offer all-cash.
Valeant has on its side activist investor William Ackman, whose Pershing Square Capital Management LP owns about 9.7% of Allergan and could launch a proxy fight to change Allergan's board.
Pershing Square on Friday said it would take all stock for its position and received $20.75 a share less in overall consideration than the rest of Allergan's shareholders
Earlier this week, Valeant sold the rights to some of its skin-care products in an attempt to smooth the antitrust review process if its takeover bid is successful.
Since Valeant's bid for Allergan was first disclosed in April, the companies have been engaged in a public war of words, with Valeant accusing Allergan's management of spending too freely on research and development and on sales and marketing. Valeant has promised that it would cut the combined company's R&D spending by 69%, to $400 million a year from about $1.3 billion.
Allergan, meanwhile, has warned shareholders that Valeant's cost-cutting would threaten future sales growth for products such as Botox, which is being studied in several new medical indications including depression and juvenile cerebral palsy.
Allergan also has questioned the stability of Valeant's stock price and business model, going so far as to have forensic accountants conduct a review of Valeant's long-term sustainability.