Valeant raises offer for Allergan for 2nd time this week

Doctor administers Botox
Dr. Keith A. Marcus draws Allergan’s Botox into a syringe before administering it to a patient at the offices of Marcus Facial Plastic Surgery in Redondo Beach.
(Patrick T. Fallon / Bloomberg)

For the second time in a week, Canadian drug maker Valeant Pharmaceuticals has raised its offer to acquire Botox maker Allergan Inc.

The revised offer issued Friday lifts the proposed deal’s value to about $53 billion, up from Wednesday’s bid of about $50 billion. Valeant’s original bid last month was for $46 billion, which Allergan called too low.

A spokeswoman for Allergan didn’t respond to a request for comment on the latest bid. On Wednesday, the Irvine company said only that it would “carefully review and consider” that day’s proposal.

Under the terms of the most recent cash-and-stock offer, Valeant Pharmaceuticals International Inc. said it would pay $72 in cash and 0.83 share of Valeant stock for each share of Allergan stock. The cash offer is $23.70 higher than the original bid issued April 22.


Valeant retained a provision from its second offer related to future sales of a medication to treat an eye condition.

The Canadian company would pay Allergan shareholders up to $25 a share based on a sales target of Darpin, a medication in early stages of development. The company said it would invest up to $400 million and retain Allergan employees to develop the drug.

“We believe our revised offer provides enormous value to both Valeant and Allergan shareholders,” said J. Michael Pearson, Valeant’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.”

Some analysts, however, weren’t impressed with Friday’s bid.


David Maris, an analyst with BMO Capital Markets, called the proposal a “strange and unexpected twist” given that Allergan still hasn’t made a decision on Wednesday’s previous offer.

“We think the new bid, while higher, still substantially undervalues Allergan,” Maris wrote in a note to clients.

Shares for both companies closed higher Friday. Valeant shares were up $1.99, or 1.5%, to $131.21. Allergan shares rose $8.96, or 5.7%, to $167.46.

Valeant recently teamed up with activist investor Bill Ackman in an attempt to take over Allergan.

Ackman, through his Pershing Square Capital Management, is Allergan’s largest shareholder with a 9.7% stake.

In an apparent attempt to sweeten the deal, Ackman said he would choose to be paid solely in stock and would receive $20.75 less per share than other Allergan 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. “We look forward to the Allergan board immediately entering into negotiations with Valeant and finalizing this transaction.”

The takeover bid is being carefully watched by Allergan’s 11,600 employees. Analysts have predicted that hundreds or thousands could be out of jobs if the deal goes through and Valeant slashes research and development funding as previously proposed.


The merger, if it goes through, would double the size of Valeant. It would become one of the largest specialty pharmaceutical companies in the world and a giant in the eye care and skin care business.

Allergan’s biggest seller is Botox. It also sells breast implants and a line of ophthalmic drugs, including Restasis, the only prescription drug approved to treat chronic dry eye.

Twitter: @rljourno

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