Boosts $53.8 Billion Allergan Bid As Ackman Opts For
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[May 31, 2014]
By Rod Nickel, Ransdell Pierson and Caroline Humer
(Reuters) - Valeant Pharmaceuticals International Inc
said on Friday it would boost its takeover bid for
Botox-maker Allergan Inc for the second time this week,
contingent on the two sides negotiating.
Laval, Quebec-based Valeant said it would pay $72 in cash - up from
$58.30 on Wednesday - and 0.83 share of Valeant stock for each
Allergan share. The revised, unsolicited offer was triggered by
Pershing Square, the hedge fund controlled by Bill Ackman that is
Allergan's biggest shareholder, agreeing to take only stock in
Valeant for its Allergan shares.
The offer is worth $53.8 billion, up from Wednesday's $49.9 billion
Allergan shares closed 5.7 percent higher at $167.46 while Valeant
shares ended 1.5 percent higher at $131.21.
BMO analyst David Maris said the revised offer will fall short,
adding it seemed "odd and erratic" that Valeant would raise the bid
two days after its chief executive, Mike Pearson, promised not to
negotiate against himself.
"It makes investors scratch their heads when a new bid comes in
before the ink is dry on the previous one," Maris said.
But analyst Ronny Gal of Bernstein Research said the offer increases
pressure on Allergan to take action to raise the company's value and
also to negotiate with Valeant.
"The offer now appears credible," he said. "We do not think this is
a 'done deal' by a long shot, but obviously the likelihood of
success is higher now."
Allergan said in a statement that it plans to consider Valeant's
latest proposal once it receives it. It is best known for its Botox
medicine, which is injected into muscles to smooth wrinkles. Ackman
said he called Pearson on Friday morning and offered to take stock
for his Allergan shares if Pearson increased the cash offer to other
shareholders. "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.
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The deal value is based on Allergan's 303.5 million diluted shares
outstanding as of March 31, 2014, and Ackmanís holding of 28,878,638
shares. Along with cash and shares, it also includes the possibility
of additional payments worth up to $7.6 billion related to future
sales of an experimental eye drug.
Valeant on Wednesday raised the cash component of its bid for
Allergan, but the offer disappointed and both stocks dropped.
Buying Allergan would push Valeant closer to its goal of becoming a
top-five pharmaceutical company by market cap before the end of
2016, although Pearson also mused on Wednesday about potentially
breaking up the company.
Allergan has criticized the sustainability of Valeant's rapid growth
through acquisitions, which included contact lens maker Bausch +
Lomb last year.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Ransdell Pierson and
Caroline Humer in New York; editing by Marguerita Choy, Matthew
Lewis and Prudence Crowther)
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