Allergan questions viability, experience of would-be buyer Valeant

Valeant Offers to Buy Allergan With Pershing’s Support
Irvine-based Allergan is the maker of Botox.
(Patrick T. Fallon / Bloomberg)

A day before would-be buyer Valeant Pharmaceuticals is set to unveil a second, unsolicited takeover bid, its acquisition target, Allergan Inc., sought to discredit the company by filing a presentation with regulators questioning the viability of Valeant’s business strategy. 

Valeant Pharmaceuticals International Inc., the Canadian company, recently teamed up with activist investor Bill Ackman in an attempt to take over Allergan, the Irvine company whose best-selling product is Botox, the popular wrinkle treatment. 

It offered to pay $46 billion in cash and stock last month for Allergan, but the Botox maker rejected the offer earlier this month, criticizing it for being too low. In rejecting the offer, Allergan also defended itself against suggestions by Valeant and Ackman that it spent too much on research and development and that the company could be more profitable if it cut expenses.

Allergan’s presentation, filed Tuesday with the U.S. Securities and Exchange Commission, is the latest salvo in the hostile takeover. It has already adopted a “poison pill” defense in an attempt to ward off a takeover. Allergan’s co-founder also urged the company’s board of directors to reject the bid.   


In its presentation, Allergan said Valeant’s sales growth has been primarily driven by “unsustainable” price increases and that the company lacked the experience in “managing complex global businesses.”

Allergan said the slide show presentation was compiled by outside financial consultants and forensic accountants using publicly available data.

The Irvine company also questioned Valeant’s intentions to reduce research and development expenses, arguing it would negatively affect future growth.

A Valeant spokeswoman in a statement said Allergan’s assertions are inaccurate and plans to defend itself in a presentation Wednesday.


“Valeant’s business leaders will provide further clarity on our historic, current and future operating performance... at our event tomorrow,” said Valeant spokeswoman Laurie Little in an emailed statement.

In its presentation, Allergan also said that two companies that Valeant has acquired in recent years -- Bausch & Lomb and Medicis --  have lost market share. 

Allergan shares were down $2.38, or 1.43%, Tuesday to $164.54. Valeant shares were down $4.21, or 3.15%, to $129.25. 

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