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Let shareholders decide on takeover, Valeant CEO tells Allergan

J. Michael Pearson, Chairman of the board and Chief Executive Officer of Valeant Pharmaceuticals International Inc., gestures during their annual general meeting in Laval, Quebec on May 20, 2014.


Valeant Pharmaceuticals International Inc. chief executive Michael Pearson says takeover target Allergan Inc. should be keen to hold a shareholder vote on the proposed deal rather than trying to delay it.

Botox-maker Allergan has rejected Valeant's $54-billion (U.S.) offer, claiming among other things that it is better off as a stand-alone company, but Mr. Pearson said on a conference call Tuesday the company's attempts to delay a shareholder vote doesn't follow from that assertion.

"If Allergan was as confident as they claim to be they should be happy to have a shareholder vote right away," Mr. Pearson said on a conference call Tuesday.

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Valeant said on Tuesday it plans to launch an exchange offer for Allergan this week, a move that would allow it to take its offer directly to shareholders.

Pershing Square Capital Management LP, Allergan's largest shareholder, is Valeant's partner in the takeover attempt. Valeant said on Tuesday that Pershing Square, headed by activist shareholder Bill Ackman, intends to mail proxy materials as early as this month calling for a special meeting later this year to unseat most of Allergan's board.

Mr. Pearson also said on the call that "hostile is not our preferred approach" but that he believes Allergan shareholders will ultimately vote yes on the proposed transaction.

"This deal was so strategically and financially compelling that it really makes sense."

He added that Valeant's latest revised offer of $72 in cash and 0.83 of a Valeant share for each Allergan share is its last.

"I don't think there is any need to adjust the offer," he said.

Allergan refuses to sit down and discuss the bid with Valeant and says Valeant is nothing more than a serial acquirer that slashes R&D and produces "opaque" financial reporting.

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Laval, Que.-based Valeant says a tie-up with Allergan would produce major cost savings without hurting the latter's R&D and sales and marketing activities.

Mr. Pearson told industry analysts on Tuesday he does not agree with the view that the drawn-out battle over Allergan is taking its toll on Valeant's share price.

"Our overall track record in terms of value creation is quite good" despite the short-term volatility the stock is experiencing during the takeover fight, he said.

In the past 30 days, Allergan shares are up 1.3 per cent, while Valeant stock has fallen 8.1 per cent, BMO Nesbitt Burns analyst David Maris said in a research note Monday.

Some observers say Valeant's flagging share price indicates that investor enthusiasm for the takeover is cooling.

"We continue to believe that Allergan has the upper hand in the hostile bid process and this will continue to be seen over time," said Mr. Maris.

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"We recognize there are technical reasons as to why the stock price is under pressure," Valeant chief financial officer Howard Schiller said on Tuesday.

"It's not unexpected and we're going to work through it."

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More


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