Valeant sweetens offer for Allergan again

Staff Writer
Columbus CEO

Valeant Pharmaceuticals International has sweetened its offer to buy Botox maker Allergan for the second time this week.

The Canadian drugmaker said Friday it will now offer $72 and a portion of its stock for each Allergan share. That's up from an offer of $58.30 and a portion of stock per share that Valeant extended on Wednesday.

The latest bid could be worth more than $53 billion, based on Thursday's closing price for U.S.-traded shares of Valeant. But it's contingent on Allergan engaging in a prompt, good-faith negotiation of a merger agreement, Valeant said.

Shares in Allergan, based in Irvine, California, jumped nearly 6 percent Friday, while Valeant shares added 1.5 percent.

Earlier this month, Allergan rejected an offer of nearly $46 billion, saying it undervalued the company. On Wednesday, Valeant increased its initial bid, throwing in a contingent value right worth up to $25 per share, based on future sales of a potential eye treatment.

As part of Friday's offer, Pershing Square Capital Management, Allergan's largest shareholder, agreed to receive no cash if the deal goes through. That amounts to forfeiting up to $600 million in value to other Allergan shareholders, said Bill Ackman, Pershing Square's chief executive.

"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," said J. Michael Pearson, Valeant's chairman and chief executive.

In a statement, Allergan said its board of directors would carefully review the latest buyout offer.

Wells Fargo Securities senior analyst Larry Biegelsen estimates that Valeant's latest bid amounts to about $182 per share for virtually all Allergan shareholders. That should make it hard for Allergan's board to ignore, Biegelsen wrote in a research note Friday.

While it is unclear if Allergan's board will view the new offer as sufficient, Biegelsen said he believes the offer "is at least sufficient to get (Allergan) to the negotiation table."

Allergan, which also makes the dry eye treatment Restasis, has said repeatedly that it opposes a deal with Valeant, which it sees as having uncertain long-term growth prospects and a business model that creates a risk for Allergan shareholders. It also contends that Valeant has limited experience with "large, global scale products" and would cut research and development costs too much.

Valeant has said that Allergan's analysis of its business is full of errors, adding that its operating model would speed up growth for Allergan products, especially in developing markets.

Allergan shares ended regular trading Friday up $8.96 to $167.46.

U.S.-traded shares of Valeant rose $1.99 to $131.21.