Tuesday, September 30th13.2°C
23366
22934

Valeant raises cash portion of Allergan offer; bid values company at US$54.1B

MONTREAL - Valeant Pharmaceuticals International Inc. has sweetened its offer for Botox maker Allergan Inc. (NYSE:AGN) for the second time in less than a week.

The company said Friday it will pay US$72 in cash and 0.83 of a Valeant share for each Allergan share under the offer, which is contingent on "good faith negotiations" of a merger agreement.

The offer now values Allergan's shares at about US$180.90 per share and the company at US$54.1 billion.

Valeant chairman and chief executive Michael Pearson said the revised offer "provides enormous value" to shareholders of both companies.

"We strongly believe that applying Valeant's operating philosophy, strategy and financial discipline to a broader set of durable assets will continue to create substantial returns for shareholders over the short, intermediate and long term," Pearson said in a statement.

"We are very committed to getting this deal done and are now modifying our offer with the assistance of Pershing Square to increase the economics for all Allergan shareholders."

Valeant (TSX:VRZ) (NYSE:VRX) will discuss its latest offer during a conference call Monday.

In addition to raising its offer earlier this week, the company has also offered to pay up to about US$25 per share contingent on the success of Allergan's eye drug Darpin, a treatment for a cause of blindness in the elderly, that is under development.

Under the bid, Allergan's largest shareholder, Bill Ackman's Pershing Square Capital Management, has agreed to accept less for its Allergan shares than other shareholders to help the deal get done.

"We believe that our gesture to the other Allergan owners makes an extraordinarily strong statement about our belief in the long-term value of this highly strategic business combination," Ackman said in a statement.

"We are delighted that Valeant has agreed to step up for the benefit of all Allergan shareholders. We look forward to the Allergan board immediately entering into negotiations with Valeant and finalizing this transaction."

Pershing Square, which holds a 9.7 per cent stake, has agreed to forgo any cash and receive 1.22659 Valeant shares for each Allergan share.

Analysts were disappointed earlier this week when Valeant improved its offer for the first time by just $10 per share to $58.30 and 0.83 of a Valeant share. Some have suggested that the company will have to offer as much as US$200 per share if it wants Allergan because of the company's strong outlook.

David Buck of The Buckingham Research Group said the revised bid will likely prompt Allergan to the negotiating table.

"We still could see a rejection; however, the increased bid increases some pressure on Allergan to negotiate," he wrote in a report.

Buck said the offer is at the low end of the US$180-US$200 range that analysts said might be needed to secure a deal.

Valeant first made its offer for Allergan in April, with the backing of Ackman and Pershing Square.

Just two days, the Quebec-based company said it wouldn't "bid against itself" by boosting its offer until Allergan came to the negotiating table.

The cash component is now 49 per cent higher than the original US$48.30, while the stock portion remains unchanged.

However Allergan has fought back against the takeover attempt and been harshly critical of Valeant's record and of its plan to find saving if the bid is successful.

The company raised questions about Valeant's ability to cut US$2.7 billion of expenses without disrupting the business.

In a statement Friday, Allergan acknowledged it was aware that a revised offer had been made but that it had not yet received the "re-revised proposal," which it said would be carefully reviewed and considered and that it would "pursue the course of action that the board believes is in the best interests of the company and all of its stockholders."

However, the Allergan statement again pointed to its May 27 investor presentation when it "noted a number of important issues regarding the sustainability of Valeant’s business model and stock value that Allergan believes are highly relevant considerations for Allergan’s stockholders."

Allergan shares closed down 51 cents at US$157.99 in New York, but then shot up $10.59 or 6.71 per cent to US$168.58 in after-hours trading. Valeant stock closed up $1.99 at US$131.21 on the New York Stock Exchange, then added another nine cents after hours to $131.30. The issue had closed up $2.23 at C$142.34 in Toronto.

Follow @RossMarowits on Twitter

Note to readers: This is a corrected story: An earlier version said Allergan shares closed up in New York

The Canadian Press


Read more Business News

23423


Recent Trending




Today's Market
S&P TSX14989.72+12.80
S&P CDNX906.80-5.96
DJIA17078.797.57
Nasdaq4500.311-5.542
S&P 5001975.98-1.82
CDN Dollar0.8929-0.0029
Gold1208.90-9.90
Oil89.81-2.97
Lumber333.70+4.80
Natural Gas4.126-0.028

 
Okanagan Companies
Pacific Safety0.13-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.25+0.02
Cantex0.07-0.02
Anavex Life Sciences0.1825-0.0025
Metalex Ventures0.0550.00
Russel Metals34.68+0.19
Copper Mountain Mining2.43-0.09
Colorado Resources0.165+0.015
ReliaBrand Inc0.0157-0.0043
Sunrise Resources Ltd0.065+0.045
Mission Ready Services0.32-0.02

 



23437

FEATURED Property
2023895Immaculate Home in popular Rose Valley new Mar Jok and Rose Valley schools!
$419,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Power-save your way to a down payment

Part 2 of 2 to read Part 1, click here. 5. Dial down your vacations. New York is out. Maybe Buffalo. For West coast, maybe Seattle instead of Hawaii. Use sites like Airbnb (aribnb.ca) to find ch...


A wildly successful manufacturer

Niche food producer “Sweets from the Earth” thrives using innovation, uniqueness and an unwavering focus on quality. A neighbour’s stew turned Ilana Kadonoff off meat at the age of s...


Finding the smart money

Recently I had the privilege of working alongside André Voskuil, a local guru in the world of Alternative Financing. André has quite the reputation in the world of direct investments as ...

_








Member of BC Press Council


22755