Valeant Pumps Cash Into Allergan Takeover Bid

Valeant Pharmaceuticals International Inc increased the cash it’s offering in its unsolicited attempt to acquire Allergan Inc, the maker of the Botox drug. The raised bid fell below expectations, and shares of both companies dropped.

The Canadian drugmaker’s flavored proposal on Wednesday, which values the US rival at $49.44 billion, also made provision for a contingent right that might be worth an extra $7.6 billion.

“I was actually surprised (Valeant) didn’t go higher. Clearly they are going to continue to be aggressive, making a full-court press to get this done,” analyst David Amsellem of Piper Jaffray is quoted by Reuters as saying.

Valeant’s stock listed in New York plummeted 1% by midday to $128.66. Allergan shares plunged 4.1% to $158.29.

On Wednesday, Valeant proposed to buy Allergan for $58.30 per share, pushing its price up by $10 from its previous offer of $48.30. The stock part of the overture is still 0.83 of a Valeant share for every single Allergan share.

Based on Tuesday’s closing price, the overture puts the value of Allergan at $166 for every share. The offer is higher than the April 22 bid of $153 by 8.6%, when the Canadian manufacture of drugs made its first move.

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Allergan is famous for production of Botox, a therapy that’s injected into muscles to remove wrinkles and treat a number of complications.

An investor survey last week showed that Allergan shareholders expected a takeover price of $180-$200 per share.

Allergan said it will take a fresh look at the new overture.

Valeant Chief Executive Michael Pearson said, “Allergan shareholders want this deal to occur, but they want a higher price and the optionality on Darpin.” He said he believed the offer took care of such concerns.

But Allergan co-founder has asked the drugmaker’s board to reject the overture, according to LA Times.

A merger between Allergan and Valeant would form one of the biggest pharmaceuticals in the world.

To contact the reporter of the story: Yashu Gola at yashu@forexminute.com

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