Valeant Pharmaceuticals Inc. says it is willing to raise its bid for Allergan Inc. to $200 or perhaps more per share, which would be an improvement of about $21 compared to its previous offer.
Valeant had previously offered $72 in cash plus 0.83 of a Valeant share, which based on Friday’s closing stock price would have been $179. Allergan has rejected several approaches from the Canadian drugmaker.
For months Allergan has been turning down all approaches and offers made by Valeant. Allergan’s board has advised its shareholders to reject any offer from Valeant, saying it exists thanks to acquisitions and has virtually no research and development, which it believes is unsustainable over the long term.
Last week, Valeant posted surprisingly strong 3rd quarter figures, which now places it in a better position to fortify its Allergan bid.
In a letter to Allergan’s Board of Directors, Valeant does not specify what the cash and stock mix would be in the new offer. However, it suggests that part of the improved bid is due to a greater valuation of its own shares.
Mr. Pearson wants the Allergan board to come to the table before December’s shareholder meeting.
Chairman and CEO of Valeant, Michael Pearson wrote in the letter:
“To be clear, Valeant is prepared to improve its offer and provide value to your shareholders of at least $200 a share. We are confident that an increase in our stock price, and in consideration, will provide that value. No other potential acquirer of Allergan has the operational and tax synergies that we have, and no other potential acquirer of Allergan can provide the value that we can.”
“Since we made our offer many of your long only shareholders, including your largest shareholder other than Pershing Square, have sold down or out. A number of your remaining large long only shareholders publicly expressed their concerns regarding actions you had been contemplating, and we understand that a number have privately expressed those concerns as well. Both ISS and Glass Lewis have been highly critical of the Board.”
Mr. Pearson accuses Allergan’s management of frivolous litigation, baseless attacks and “horse-choking” bylaws. He urged the Board to take control of this process and come to the table.
He said he had extended an olive branch to Allergan’s directors, which was rejected on the same day. He adds that they have refused every Valeant offer to meet and answer questions they may have regarding the offer.
Allergan today acknowledged receipt of Valeant’s letter. In a statement, the company wrote:
“We believe Valeant’s letter today is simply a tactic to distract investors from Allergan’s outstanding third quarter results. Valeant’s letter does not indicate an increased exchange offer price nor does it disclose the mix of consideration — instead, Valeant goes to great lengths to defend its own stock price and to disparage Allergan, including making what we believe to be disparaging remarks about Allergan and its stock price.”
Allergan says Wall Street analysts have recognized its potential as a standalone company.