Valeant Pharmaceuticals continues to eye up Allergan

Valeant Pharmaceuticals is preparing to take its bid for Allergan direct to shareholders after its latest $53 billion offer was rejected by the maker of Botox.

The Canadian-based company said Allergan’s refusal to enter talks left it with no option but to go hostile in the battle for control of its US rival. Allergan had earlier said that Valeant’s bid “substantially undervalues” the company and “creates significant risks and uncertainties” for shareholders.

It was the third offer to be rejected by Allergan’s board since Valeant launched its pursuit in April and both sides appeared to be gearing up for a long takeover battle.

Feuding intensified yesterday when David Pyott, Allergan's chief executive, said Valeant's latest cash-and- share offer involved too much risk because of the Canadian group's "opaque" financial accounts and "unsustainable" business model.

‘Anaemic growth’

“They have anaemic growth and their model involves acquiring companies and starving them to death,” he told the Financial Times.

Valeant accused Allergan of making “inaccurate and misleading statements”.

Bill Ackman, the activist investor who owns nearly 10 per cent of Allergan and who is backing Valeant's bid, last week said he planned to call a shareholder meeting with the aim of replacing a majority of the board.

But Mr Pyott said he was confident he had the backing of shareholders in resisting the May 30th offer, which involved a sweetened cash component of $72 a share, as well as 0.83 Valeant shares for each Allergan share owned.

The takeover battle has become a proxy for debate over how pharmaceuticals companies should seek to generate growth. – Copyright The Financial Times Limited 2014