Ackman warns Allergan on offer

Bill Ackman says Allergan risks Valeant reducing its offer price if it fails to accept initial offer

Activist investor Bill Ackman warned Botox maker Allergan Inc. on Monday that it would be unwise to court potential buyers as an alternative to the offer that he and Valeant Pharmaceuticals International Inc. have made for the company.

Last month, Ackman and Valeant offered an estimated $45 billion in cash and stock for Allergan, an Irvine company that makes most of its money from Botox but also sells breast implants and a line of ophthalmic drugs.



A headline in an earlier version of this online article stated that activist investor Bill Ackman had warned Allergan against trying to find a better buyout offer. Ackman warned the company not to wait for other suitors or an offer by him and Valeant Pharmaceuticals International Inc. could drop in value.


Allergan implemented a "poison pill" defense to slow Ackman and Valeant's pursuit of the company, then reportedly pursued other potential buyers. Analysts said Allergan would be leery of Valeant's offer, particularly given its vow to slash Allergan's research-and-development budget, a move that probably would mean the elimination of hundreds, or even thousands, of jobs.

In a letter Monday to Allergan board member Michael R. Gallagher, Ackman said the company should open negotiations with Valeant and pursue a deal that would "best maximize shareholder value."

"It is risky for Allergan to rely on the potential for it to negotiate a transaction with a global pharmaceutical company that is superior to the transaction proposed by Valeant," Ackman said in the letter. "Unless Allergan were to identify such a transaction in the very near future, the odds of such a deal are likely to decrease over time."

Allergan spokeswoman Bonnie Jacobs declined to comment.

Ackman said that Allergan has contacted "alternative potential business combination partners," but has not reached out to Valeant. He said Allergan runs the risk of Valeant reducing its offer price if it fails to accept the initial offer.

"We believe it is in the best interest of Allergan shareholders that it begin discussions with Valeant in the very near future," Ackman said. "Today, Allergan is in a good position to negotiate with Valeant. This may not always be the case."

Allergan shares fell 91 cents Monday to $169. Valeant's stock declined 16 cents to $136.19.

Valeant has offered to pay $48.30 in cash and 0.83 shares of Valeant stock for each share of Allergan stock. At Monday's close, that would amount to $161.34 for each share of Allergan, or $48.3 billion.

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