Economy

Valeant plans hostile bid for Allergan

Valeant Pharmaceuticals aims to take its bid for Allergan to the Botox maker's shareholders after Allegan's board unanimously rejected its latest offer of about $53 billion.

Valeant said Tuesday that it looked forward to giving shareholders the opportunity "to speak for themselves" after Allergan Chairman and CEO David Pyott said that the offer wasn't worth discussing in a letter to his Valeant counterpart, Michael Pearson.

Valeant, teamed with activist investor Bill Ackman's Pershing Square Capital Management, went public with its offer to buy Allergan in April and has since upgraded its pitch several times. Allergan has said repeatedly that it opposes a deal. The Irvine, California-based company says the latest bid, from May 30, still substantially undervalues Allergan Inc. and is risky for its shareholders because it includes Valeant stock. Allergan has criticized Valeant's business model. It says the Canadian drugmaker's growth is unsustainable because it depends too much on acquisitions and price increases.

A Valeant spokeswoman said in an email that Allergan "is recycling the same unsupported arguments about Valeant that have already been addressed, leaving us no choice but to take our offer directly to shareholders."

Ackman, whose Pershing Square holds a 9.7 percent stake in Allergan, has said he will move to replace most of Allergan's board of directors as part of the battle for control of the company. Allergan adopted a one-year shareholder rights plan after Valeant announced its bid in April. Under the plan, if any person or group acquires a 10 percent or greater stake in the company, other stock owners would be allowed to acquire additional shares at a discounted rate.

The latest bid offered to trade each Allergan share for $72 in cash, a portion of Valeant Pharmaceuticals International Inc. stock and a contingent value right based on future sales. It totaled $179.25 per share based on the closing price of Valeant stock the day before it made the offer and not counting the contingent value right.

That bid represented an increase from a previous bid that involved $58.30 in cash, the stock portion and the contingent value right. Shares of Allergan fell $1.06 to $163.09 Tuesday while U.S.-traded shares of Valeant dropped $1.08 to $125.55. The Standard & Poor's 500 index was nearly unchanged.

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