Allergan board rebuffs latest Valeant offer (Update)

June 10, 2014 by Tom Murphy

Allergan's board has unanimously rejected the latest takeover bid from Valeant Pharmaceuticals, and the Botox maker said the offer isn't even worth talking about.

Allergan said Tuesday that the May 30 offer valued at about $53 billion from the Canadian drugmaker and activist investor Bill Ackman's Pershing Square Capital Management still substantially undervalues Allergan Inc. and creates too much risk for its shareholders because a portion of the offer involves Valeant stock.

"The Allergan (board) must seriously consider the many questions around the sustainability of Valeant's business model as they directly impact the total future consideration for our stockholders," Allergan Chairman and CEO David Pyott said in a letter to his Valeant counterpart, Michael Pearson.

Allergan has said that Valeant's growth is unsustainable because it depends too much on acquisitions. It also said Tuesday that it believes Valeant's "anemic growth" is driven mostly by price increases. Allergan also has raised concerns about cuts that might be made to research and development funding if Valeant were to take over.

Valeant representatives did not respond Tuesday morning to requests from The Associated Press seeking comment. The company has said Allergan's analysis of its business was full of errors.

Allergan also said Tuesday that the deal doesn't offer enough value to warrant discussions between the companies, something Pearson had requested. The Irvine, California, company has said repeatedly that it opposes a deal with Valeant, which first went public with an offer in April.

Pyott said in his letter Tuesday that Allergan expects double-digit sales growth on its own and about $14 billion in additional free cash flow over the next five years.

"This provides Allergan with financial flexibility, and the Allergan (board) is confident that Allergan will create significantly more value for stockholders than Valeant's proposal," he wrote.

The latest bid offered to trade each Allergan share for $72 in cash, a portion of Valeant Pharmaceuticals International Inc. stock and a contingent value right based on future sales. It totaled $179.25 per share based on the closing price of Valeant stock the day before it made the offer and not counting the contingent value right.

That's close to the $180-per-share level that some analysts said Valeant's bid would have to reach to grab the interest of Allergan shareholders.

But Valeant had said the offer was contingent on Allergan engaging in a prompt, good-faith negotiation of a merger agreement.

That bid represented an increase from an offer Valeant and Pershing Square made a few days before that involved $58.30 in cash, the stock portion and the contingent value right.

Ackman's Pershing Square holds a 9.7 percent stake in Allergan. He has said he will move to replace most of Allergan's board of directors as part of the battle for control of the company.

Shares of Allergan, which also makes the dry-eye treatment Restasis, climbed 30 cents to $164.42 in late-morning trading. Meanwhile, U.S. traded shares of Valeant slipped 75 cents to $125.88 while the Standard & Poor's 500 index also dipped slightly.

Explore further: Canada's Valeant again ups bid for Botox maker

Related Stories

Canada's Valeant again ups bid for Botox maker

May 31, 2014
Canadian pharmaceutical firm Valeant on Friday upped for the second time in a week its hostile bid for Allergan, the US maker of Botox, to $53.5 billion.

Valeant Pharma plans improved offer for Allergan

May 13, 2014
Valeant Pharmaceuticals will not easily accept rejection in its bid to acquire Botox maker Allergan for nearly $46 billion.

Allergan board turns down Valeant takeover offer (Update)

May 12, 2014
Botox maker Allergan formally rejected on Monday a takeover bid from Valeant Pharmaceuticals, saying that the unsolicited offer worth nearly $46 billion undervalues the company and poses a significant risk to its growth prospects.

Valeant, Ackman make $45.6B Allergan bid

April 22, 2014
Valeant Pharmaceuticals and activist investor Bill Ackman have unveiled details of their offer to buy Botox maker Allergan, proposing a cash-and-stock deal that could be worth about $45.6 billion.

Valeant raises cash-stock offer for Allergan (Update)

May 28, 2014
Valeant Pharmaceuticals has pumped more cash into its bid for Botox maker Allergan, and it also defended its business model on Wednesday, a day after its reluctant acquisition target aired more concerns about a deal.

Botox maker Allergan draws bid from Valeant (Update)

April 21, 2014
Valeant Pharmaceuticals is teaming up with activist investor Bill Ackman in a bid for Botox maker Allergan that could be worth about $40 billion.

Recommended for you

Exploring the potential of human echolocation

June 25, 2017
People who are visually impaired will often use a cane to feel out their surroundings. With training and practice, people can learn to use the pitch, loudness and timbre of echoes from the cane or other sounds to navigate ...

Team eradicates hepatitis C in 10 patients following lifesaving transplants from infected donors

April 30, 2017
Ten patients at Penn Medicine have been cured of the Hepatitis C virus (HCV) following lifesaving kidney transplants from deceased donors who were infected with the disease. The findings point to new strategies for increasing ...

'bench to bedside to bench': Scientists call for closer basic-clinical collaborations

March 24, 2017
In the era of genome sequencing, it's time to update the old "bench-to-bedside" shorthand for how basic research discoveries inform clinical practice, researchers from The Jackson Laboratory (JAX), National Human Genome Research ...

The ethics of tracking athletes' biometric data

January 18, 2017
(Medical Xpress)—Whether it is a FitBit or a heart rate monitor, biometric technologies have become household devices. Professional sports leagues use some of the most technologically advanced biodata tracking systems to ...

Financial ties between researchers and drug industry linked to positive trial results

January 18, 2017
Financial ties between researchers and companies that make the drugs they are studying are independently associated with positive trial results, suggesting bias in the evidence base, concludes a study published by The BMJ ...

Best of Last Year – The top Medical Xpress articles of 2016

December 23, 2016
(Medical Xpress)—It was a big year for research involving overall health issues, starting with a team led by researchers at the UNC School of Medicine and the National Institutes of Health who unearthed more evidence that ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.