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.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Valeant Pharma (NYSE:VRX)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Valeant Pharma Charts.
Valeant Pharma (NYSE:VRX)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Valeant Pharma Charts.