Allergan again shuts down Valeant hostile takeover attempt

June 12, 2014

Despite Valeant Pharmaceuticals International upping its unsolicited takeover proposal for Allergan twice, Allergan has again rejected the offer, claiming it highly undervalued the company.

 

Irvine, CA-Despite Valeant Pharmaceuticals International upping its unsolicited takeover proposal for Allergan twice, Allergan has again rejected the offer, claiming it highly undervalued the company.

"Valeant's revised proposal substantially undervalues Allergan, creates significant risks and uncertainties for Allergan's stockholders, and does not reflect the company's financial strength, future revenue and earnings growth, or industry-leading research and development," said David E.I. Pyott, Allergan's board chairman and chief executive officer, in a prepared statement. "Allergan has a track record of generating consistently robust results and value for its stockholders, and we continue to have strong momentum in our business.

“We do not believe Valeant's proposal reflects Allergan's growth prospects, nor does it offer sufficient or certain value to warrant discussions between Allergan and Valeant,” he continued. “The Allergan Board has serious concerns about the large stock component of (the) proposal, and the recent presentations by both (Valeant) and Pershing Square did nothing to address the issues we previously raised.”

Nevertheless, Valeant is not taking the continued rejection lightly.

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The company-which had revised its original proposal for the second time earlier this month to acquire all of Allergan’s outstanding shares for a combination of 0.83 Valeant common shares, $72 in cash per share of Allergan common stock, and a contingent value right related to DARPin sales-said it will now take its latest offer directly to Allergan’s shareholders, Reutersreported.

“Rather than discussing the benefits of the proposed combination with Valeant, Allergan’s board continues to throw out inaccurate and misleading statements about Valeant and is recycling the same unsupported arguments about Valeant that have already been addressed, leaving us no choice but to take our offer directly to shareholders,” Valeant said in a prepared statement Tuesday.

MORE: Allergan responds to board shake-up attempt by Valeant, Pershing Square

Further, Bill Ackman-who manages Pershing Square Capital Management, Allergan’s largest shareholder (9.7%), and supporter of the Valeant proposal-told CNBC this week that Allergan shareholders have told him what it will take to strike a deal.

“(They said) look, Bill, if you can get us $180 a share, we’re going to sign onto this transaction, because we believe it makes sense,” Ackman said. “Make it easy for us, get us the price.”

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In the meantime, Allergan has retained Goldman, Sachs & Co. and BofA Merrill Lynch as financial advisors, and Latham & Watkins, Richards, Layton & Finger, P.A. and Wachtell, Lipton, Rosen & Katz are serving as legal counsel.

 

Further reading:

Valeant proposal unanimously rejected by Allergan board

Valeant unveils Allergan merger proposal

Allergan customers praise rejection of Valeant proposal

Valeant CEO responds to Allergan’s merger rejection