Valeant to Announce an Allergan Exchange Offer

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Valeant to Announce an Allergan Exchange Offer

Valeant Pharmaceuticals Inc announced on Tuesday it will make an exchange offer for Allergan Inc sometime this week, laid down groundwork to finally take its unsolicited overture directly to investors.

Maker of Botox drug Allergan has dismissed Valeant’s bid involving both cash and shares. However, Valeant chief executive Mike Pearson said he didn’t find it reasonable to sweeten the bid for a third time. Valeant shares have decreased in value for 10 sessions in a row through Monday, cutting valuation of its Allergan offer to around $50 billion from $53 billion on May 30, Reuters reported.

Pearson said Valeant did not desire a hostile approach and that the offer was financially and strategically attractive as to make perfect sense. He added the company’s stock was artificially reduced in value, after being at the receiving end of criticism from Allergan and some analysts for weeks.

Valeant shares added 0.2% to exchange at $118 on the New York Stock Exchange earlier in trading. Allergan went up 0.5% to trade at $160.12.

Valeant organized a webcast to address Allergan’s latest rebuke and specify how it plans to proceed with its perceived hostile takeover bid, which may run into 2015.

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Allergan spokeswoman Bonnie Jacobs said in a statement that the company believed it was capable of adding more value to shareholders than offered by Valeant. She added that Valeant’s overture significantly undervalues Allergan, exposes shareholders to risk, and created uncertainties.

According to the Globe and Mail, Pearson said that if Allergan was confident about its position is it suggests, its board would be willing to organize a shareholder vote immediately. Pershing Square Capital Management, the biggest Allergan’s shareholder, is partnering with Valeant in the takeover bid.

Valeant announced on Tuesday that Pershing Square, which is controlled by Bill Ackman, plans to initiate the process of calling for a special meeting meeting to replace most of Allergan’s board later this year.

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