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Valeant unveiled its offer for California biotech firm Allergan, best known for its Botox product line, in late April.

Ryan Remiorz/The Canadian Press

Valeant Pharmaceuticals International Inc. will defend its business model and reveal a sweetened offer for Allergan Inc. next week, although it has made it clear the new bid won't be all in cash.

Valeant has scheduled a meeting in New York for May 28, where it said it will "respond to assertions Allergan has made that the Valeant model is not sustainable," along with other allegations from the target company that Valeant has slashed research and development at its earlier acquisitions, that it is not committed to innovation, and that the $2.7-billion in projected cost cuts at Allergan will damage the company's growth.

The same day, Valeant will announce an improvement to its current bid, which consists of $48.30 in cash, plus .83 of a Valeant share, for each Allergan share.

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While there has been some concern that Allergan shareholders will want more cash and less exposure to Valeant stock, Valeant said in a statement Tuesday that "we want to make clear that the improved offer will not be an all-cash deal."

Valeant unveiled its offer for the California biotech firm, best known for its Botox product line, in late April. It is making the bid with the assistance of hedge fund manager Bill Ackman, whose Pershing Square Capital Management LP has accumulated almost 10 per cent of Allergan shares.

The battle between the two companies has become increasingly heated. Last week Allergan's board formally rejected the offer, saying it undervalues the company. Allergan also raised questions about Valeant's growth prospects and business model, which chief executive officer David Pyott said involves "cutting and slashing."

Then in a letter to Allergan's lead director on Monday, Mr. Ackman accused Mr. Pyott of having a "disabling conflict of interest" because he will "lose his leadership role at the company and likely his job" if Valeant succeeds in its bid. Mr. Pyott shouldn't be representing Allergan in the consideration of the deal, Mr. Ackman said.

Allergan rejected that view, and on Tuesday, said it has received 500 letters from physicians, patient advocacy groups and medical associations saying they want the company to remain independent.

Valeant is clearly feeling the pressure to defend its business model publicly. The session next week will "provide transparency into Valeant's historic, current, and future operating performance and to refute Allergan's allegations through a thoughtful and fact-based presentation," the company said.

Valeant CEO Michael Pearson told his company's annual meeting Tuesday that the merger will eliminate inefficiencies at Allergan, while accelerating its growth. The company has managed to maintain or accelerate revenue growth at almost all the companies it has acquired, he insisted.

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He said that at next week's presentation Valeant will bring in executives from around the world to explain how the company works.

"We think their shareholders are convinced this is a good transaction and we have met with many, if not most of their shareholders privately and they have all told us they want this deal to be done," Mr. Pearson said after the meeting. "In terms of the currency, most of their shareholders would prefer to get more equity and less cash. They believe that the combination will not only create short term value in terms of the premium, but that longer term, it will continue to perform."

With files from Reuters

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