Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A sample of Botox is seen at the Long Island Plastic Surgical Group at the Americana Manhasset luxury shopping destination in Manhasset, New York September 30, 2010. (© Shannon Stapleton / Reuters)
A sample of Botox is seen at the Long Island Plastic Surgical Group at the Americana Manhasset luxury shopping destination in Manhasset, New York September 30, 2010. (© Shannon Stapleton / Reuters)

Ackman seeks to win over Allergan shareholders to Valeant bid Add to ...

The fight over the future of Botox maker Allergan Inc. is escalating rapidly.

U.S. activist investor Bill Ackman is doing an end run around the company’s board by going directly to Allergan shareholders with a pitch asking them to vote in favour of Valeant Pharmaceuticals International Inc.’s $47-billion (U.S.) unsolicited cash-and-stock offer.

More Related to this Story

Meanwhile, Laval, Que.-based Valeant said on Tuesday it is prepared to sweeten its offer for California-based Allergan. Valeant has scheduled a webcast for May 28 to explain its revised proposal.

Allergan slammed the plan by Mr. Ackman’s Pershing Square Capital Management LP – Valeant’s takeover partner – to get Allergan shareholders to vote on compelling the board to engage in merger talks with Valeant.

“This is obviously a self-serving exercise by Pershing Square to further Valeant’s attempt to acquire Allergan,” the company said in a statement Tuesday.

“In fact, this is nothing more than an attempt by co-bidders Pershing Square and Valeant to transfer the value inherent in Allergan to Pershing Square and Valeant at a price that substantially undervalues Allergan. Rather than use the mechanism approved by the Allergan shareholders to call a special meeting, they are dictating their own process.”

Allergan’s board rejected Valeant’s bid on Monday and argued that Allergan has more value as a stand-alone company.

Allergan chief executive officer David Pyott accused Valeant of using “cut and slash” methods to reduce costs, having poor long-term growth prospects and a business model that depends too much on acquisitions. Valeant contends Allergan has a brighter future joining forces with it and helping squeeze out $2.7-billion in costs through synergies and productivity-boosting measures.

Valeant president and CEO Michael Pearson said on Tuesday that the webcast will help explain to Allergan shareholders why Valeant’s proposal is superior to Allergan’s “go it alone” strategy.

“We are prepared to pay a full and fair price but, consistent with our track record, we will remain financially disciplined,” he said in a letter to Allergan shareholders.

“Based on your feedback … we plan to improve our offer for the company – to demonstrate our commitment to getting this deal done,” he said. We will not stop our pursuit of this combination until we hear directly from Allergan shareholders that you prefer Allergan’s ‘stay the course plan’ to a combination with Valeant.”

BMO Nesbitt Burns equity analyst Alex Arfaei said in a research note Tuesday that he believes “Valeant will present a strong argument on May 28. Investors will pay particular attention to the details that Valeant plans to provide about its operating model, business strategy, and transaction cost synergies.”

He estimates that Valeant can boost the cash component of its offer by 41 per cent to $20.8-billion or $68 a share. The total value of the revised offer would be $54-billion, or $176 a share.

“Valeant in a very bad way really needs Allergan,” said Piper Jaffray & Co. analyst David Amsellem. “It gives them a better balance sheet, real durable assets and a much better ability to continue to do acquisitions.”

Follow us on Twitter: @j2nelson, @globemontreal

 
  • AGN-N
  • VRX-T
  • VRX-N
Live Discussion of AGN on StockTwits
More Discussion on AGN-N
Live Discussion of VRX on StockTwits
More Discussion on VRX-T
Live Discussion of VRX on StockTwits
More Discussion on VRX-N

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories