News Feature | June 25, 2014

Allergan Turns Down Valeant's Merger Offer

By Lori Clapper

After reviewing Valeant’s takeover proposal last week, Allergan today announced it has deemed the offer “grossly inadequate,” leading the botox maker’s board to turn down the bid in a unanimous vote.

In a company press release, Allergan leadership stated they believed Valeant's business model created substantial risks and uncertainties for Allergan's stockholders, citing that Valeant's anemic organic growth is driven by unsustainable price increases and that Valeant’s R&D pipeline paled in comparison to Allergan’s.

"The board strongly recommends that Allergan stockholders reject Valeant's exchange offer and prevent Valeant from taking control of Allergan at a price that does not appropriately reflect the underlying value of Allergan's assets, operations and prospects, including our industry-leading position and projected growth opportunities,” David E.I. Pyott, Allergan's Chairman of the Board CEO, said. “Allergan has a track record of consistently acting in the best interests of its stockholders, and the Board continues to be confident that Allergan will create significantly more value than Valeant's proposal."

According to Valeant’s merger offer, Allergan stockholders would exchange each share of common stock of the Company for 0.83 shares of Valeant common stock and $72.00 in cash, or another amount of cash/number of shares set forth in the exchange offer. Allergan noted that the “implied value of the Exchange Offer is $173.20 per share, based on the closing price of Valeant's stock on June 20, 2014, which is substantially lower than the initial $179.25 per share implied value of Valeant's May 30, 2014 re-revised proposal, which also included a contingent value right that is not included in the Exchange Offer.”

Allergan’s rejection of Valeant’s proposal is based on beliefs and assumptions about our business that are not supported by the facts,” Laurie W. Little, head of investor relations for Valeant, said in New York Times report.

In response, Valeant posted a presentation to tell its side of the story, stating that Allergan’s claims were based on IMS’s U.S. prescription data and included products that they don’t own and disregarded other products. Valeant added that Allergan’s conclusions are both “inaccurate and based on a fraction of our overall business.”