Valeant raises offer for botox maker Allergan to $49.4bn

Increased bid falls short of expectations and stock in both companies falls

A drop of Allergan Inc Botox is seen on the tip of a needle. Valeant’s new offer included a contingent value right that could be worth an extra $7.6 billion. Photograph: Bloomberg

A drop of Allergan Inc Botox is seen on the tip of a needle. Valeant’s new offer included a contingent value right that could be worth an extra $7.6 billion. Photograph: Bloomberg

Wed, May 28, 2014, 20:07

The battle for Botox-maker Allergan took a new twist yesterday when Canadian drugs firm Valeant sold off its skin fillers business, giving it the firepower to raise its offer to nearly $50 billion (€37bn).

Valeant raised $1.4 billion (€1bn) by selling the North American rights to a range of cosmetic and medical skin fillers to Nestlé, the Swiss firm famous for Nescafe and Kit Kats, and immediately put the money into its offer for Allergan, raising its bid to $49.4 billion.

Valeant’s new offer included a contingent value right that could be worth an extra $7.6 billion, but the increased bid fell short of expectations and stock in both companies fell.

“I was actually surprised [Valeant] didn’t go higher,” said David Amsellem, an analyst at Piper Jaffray. “Clearly they are going to continue to be aggressive, making a full-court press to get this done.”

Allergan had rejected the previous surprise $47 billion offer from Valeant and activist investor Bill Ackman in April.

The latest move comes a day after Allergan went on the offensive and sought to discredit Valeant by raising questions about its business model and the true value of its stock.

The Canadian drugmaker, known for skincare products and generic drugs, raised the cash component of its offer for Allergan by $10 to $58.30 a share. The stock component remained 0.83 of a Valeant share for each Allergan share. This values Allergan at $166.16 a share, up from $153 a share.

This is still less than the $180-$200 a share investors are looking for, according to Reuters.

However the new offer includes a contingent value right – a right to receive additional benefit – worth up to $25 per share related to the sales of Darpin, Allergan’s experimental eye drug that is seen as a potential competitor to Regeneron Pharmaceuticals’s successful medicine Eylea.

“Allergan shareholders want this deal to occur, but they want a higher price and the optionality on Darpin,” Valeant chief executive Michael Pearson said in a New York meeting with shareholders of the two companies. “We think the offer we made this morning addresses both of those concerns.”

Allergan, which employs 800 people at an eye-products plant in Westport, Co Mayo, said it would consider the new proposal. – (Reuters/Guardian news Service 2014)