By Anna Prior
Allergan Inc. said its board has rejected the latest takeover
bid from Valeant Pharmaceuticals International Inc. and William
Ackman's Pershing Square Capital Management L.P., adding the offer
substantially undervalues the Botox maker.
Allergan said the deal creates significant risks and
uncertainties and isn't in the best interests of the company or its
stockholders. Representatives for Valeant and Pershing weren't
immediately available for comment.
Valeant boosted its takeover bid for Allergan late last month,
offering about $52.7 billion in cash and stock, partly thanks to
Mr. Ackman's agreement to take a price cut on his own stake.
Since Valeant's bid for Allergan was first disclosed in April,
the companies have been engaged in a public war of words.
Allergan Chief Executive David E.I. Pyott on Tuesday said
Valeant's proposal doesn't reflect Allergan's growth prospects, nor
does it offer sufficient value to warrant discussions between the
companies.
In a letter to Valeant CEO Michael Pearson, Mr. Pyott reiterated
the board's "serious concerns" about the large stock component of
the proposal and said that the recent presentations by both Valeant
and Pershing Square did nothing to address the issues that Allergan
raised.
Among the risks cited by Allergan was what the company described
as Valeant's "unsustainable business model," which relies on serial
acquisitions and cost reductions, as opposed to top-line revenue
growth.
Allergan also called Valeant's synergy targets unrealistic,
saying it was confident those targets would destroy Allergan's
long-term value.
For its part, Valeant has criticized Allergan's management for
spending too freely, particularly on research and development.
Valeant, which has promised that it would cut the combined
company's R&D spending by 69%, spends little on science,
instead focusing on buying established drugs and treatments and
selling them through its international network.
Earlier this month, Pershing Square filed to call a special
meeting of Allergan shareholders in an effort to unseat six of its
board members.
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