Friday, October 31st11.1°C
21625

Valeant has no plans to boost offer for Allergan to offset lower share price

MONTREAL - Valeant Pharmaceuticals (TSX, NYSE:VRX) says it sees no need to raise its offer again for Allergan, even though the Botox maker's refusal to negotiate has hurt the Quebec company's share price and reduced the value of its bid.

Chief executive Michael Pearson said Tuesday that he expects Valeant's share price will recover as it takes its offer directly to Allergan shareholders and bidding partner Bill Ackman of Pershing Square Capital Management pushes for a special meeting to vote on the removal of some Allergan directors.

"It's artificially depressed now but if we stay the course, if we have a path to getting this deal completed which we do and as time marches on, I don't think that's going to be an issue at all," he said during a conference call to address once more what it considers are misconceptions about the company.

Valeant has offered US$72 cash plus 0.83 of a Valeant share for each share of Allergan (NYSE:AGN). At Tuesday's closing price of US$118.87, up $1.12, that would value Allergan's shares at $170.66, making the offer worth some US$50.78 billion based on Allergan's 297.56 million shares outstanding. That's down from more than US$180 per share when the company boosted its offer May 30.

Allergan stock closed up $1.16 at US$160.53 on Tuesday.

Pearson told analysts his company's shares have been hurt by the "noise" coming from Allergan, which has repeatedly questioned the sustainability of Valeant's business model and its financial results.

Valeant increased the cash component of its offer, hoping Allergan's board would agree to negotiate. But Pearson said he suspected from Valeant's initial bid that the transaction would ultimately have to go directly to Allergan's shareholders.

"It is clear Allergan's management and our board will never sit down and act in the interest of their shareholders," he said, adding Valeant believes the vote would overwhelmingly support the takeover.

"We have a clear path to get this vote. And we are both determined and patient. Time is on our side."

California-based Allergan (NYSE:AGN) has repeatedly spurned Valeant's offers as underpriced and risky.

Valeant (TSX:VRX) said proxies seeking support for its bid could be mailed in "the near-term," but Allergan will likely try to delay the vote as long as possible.

Pershing Square Capital, which controls 9.7 per cent of Allergan's shares can call for a special meeting to remove directors once it has support from 25 per cent of shareholders. If directors are removed their replacements could be elected about two months later, setting the stage for negotiations.

Pearson questioned why Allergan wouldn't push for an early vote if it was so confident of having its shareholders' support.

"The fact that they're doing everything possible to delay this shows that they are not optimistic in terms of getting to the actual shareholder vote, so I'm sure there will be lots of noise but at the end of the day we are very, very confident that the shareholders will vote in the favour of this deal and we'll be very, very patient because our business is performing extremely well."

He said more than 50 per cent of Allergan's shares have been traded since news of Valeant's bid surfaced April 21. A significant number are owned by hedge funds and arbitrators who bought at a high price and are interested in a transaction.

Valeant's shares gained $3.57, or three per cent, at US$121.32 on the New York Stock Exchange. They were up to $130.83 in Toronto. Allergan's shares gained $2.77, or 1.7 per cent, at US$162.14 in New York.

Follow @RossMarowits on Twitter

The Canadian Press


Read more Business News

23028


Recent Trending




Today's Market
S&P TSX14589.25+130.56
S&P CDNX764.34-7.31
DJIA17352.60157.18
Nasdaq4620.672+54.534
S&P 5002012.40+17.75
CDN Dollar0.8870-0.0064
Gold1169.80-28.7999
Oil79.86-1.04
Lumber325.10+1.50
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.12+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.19+0.04
Cantex0.045-0.015
Anavex Life Sciences0.18+0.0089
Metalex Ventures0.03-0.005
Russel Metals32.77+0.55
Copper Mountain Mining2.035+0.065
Colorado Resources0.125-0.015
ReliaBrand Inc0.014+0.002
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.39+0.015

 



22970

FEATURED Property
2107501Brand New West Coast Modern style home in Lower Mission
$939,000
more details
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


22771