October 8, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Rumors continue to fly concerning Valeant Pharmaceuticals’ potential takeover bid for Allergan . Now an unnamed source says Valeant has plans to raise its takeover offer close to a December shareholder meeting. The source claims the increase could be almost $15 per share. This would bring the offer to more than $191 per share, or almost $60 billion in cash and stock.
The saga concerning Valeant, Allergan and New York hedge fund Pershing Square Capital Management began in March, when Pershing Square bought up over-the-counter call options, becoming Allergan’s largest shareholder. A month later Valeant and Pershing Square announced a joint bid, which resulted in a 15% stock increase, resulting in Pershing profiting by $1 billion.
In return, Allergan, best known for BOTOX, responded with a lawsuit, resulting in the Security and Exchange Commission (SEC) investigating the case for possible insider trading.
Valeant, headquartered in Laval, Quebec, has a reputation for acquiring companies, having bought more than 100 smaller companies since 2008.
In a counterpoint to the bid, Allergan made its own bid for Salix Pharmaceuticals, Ltd. as a way to fend off the Valeant takeover. Earlier in the year Salix had announced it would merge with Italy-based Cosmo Pharmaceuticals. Valeant’s original bid for Allergan was $53 billion. Allergan shareholders indicated that price was too low. Pershing Square’s William Ackman has asked for a special meeting for Allergan shareholders with the plans of adding six new board members, which might push through the deal. In a press release, Allergan said, “Allergan has already scheduled the Special Meeting for December 18, 2014. As such, the delivery of additional requests for the Special Meeting by Pershing Square is not a meaningful development. The lawsuit in California is seeking an order barring Valeant, Pershing Square, Mr. Ackman, and entities affiliated with them from voting shares that Allergan believes were acquired in violation of the federal securities laws, including insider trading.”
Further complicating matters, Actavis PLC in September made a takeover bid for Allergan, which was rejected. The New York Times reports that Valeant and Pershing Square are skeptical that this deal would happen. They believe a deal with Valeant would be more beneficial to Allergan. But it’s possible that this most recent bid is a last-ditch effort to make the Valeant bid look more appealing to Allergan shareholders, especially given hints that Valeant will be reporting a strong third quarter.
