By Michael Calia
Valeant Pharmaceuticals International Inc. hinted at the
prospect of a higher takeover offer for Botox maker Allergan Inc.,
which raised its guidance for the year on Monday, as both companies
angle for shareholder support ahead of a key deadline.
Both companies hope to encourage hedge funds and other so-called
event-driven investors to buy more Allergan stock before Thursday,
the date when shareholder ownership counts for determining who
votes at a December board election.
Valeant and partner Pershing Square Capital Management want to
oust a majority of Allergan's board then to pave the way for merger
talks that Allergan has rebuffed for more than six months.
Allergan has deemed Valeant's bid, worth about $53 billion in
cash and stock, as too low and has repeatedly criticized Valeant's
business model.
Valeant said Monday that it is prepared to raise its offer yet
again to value Allergan at least $200 a share while urging the
company to negotiate.
Valeant has argued its own shares are trading at low levels and
suggested an increase in its share price would help support a
higher bid.
"Allergan would not be trading anywhere near where it is absent
our offer, and our offer, even at Valeant's current stock price,
represents a very substantial premium," Valeant Chief Executive J.
Michael Pearson wrote in a letter to Allergan, noting Allergan's
shares were trading at $117 before Valeant's approach.
A representative from Allergan wasn't immediately available to
comment on the prospect of a higher bid.
The Wall Street Journal had previously reported Valeant and
Pershing were preparing to increase their bid by $15 a share,
valuing the company at about $191 a share, or more than $56 billion
overall.
In Monday's letter, Valeant pointed to its own
better-than-expected results this month, which it said demonstrated
the "true strength" of the business while raising its outlook for
the year.
Allergan, too, has issued positive long-term guidance. On
Monday, the company again raised its earnings outlook for the year,
this time to $6.27 to $6.30 a share, after raising it to $6.20 to
$6.25 a share earlier this month.
For the current quarter, Allergan said it expects earnings of
$1.80 to $1.83 a share. Analysts had been projecting $1.74 a
share.
Overall, for the most recent period, Allergan posted a profit of
$312.5 million, or $1.03 a share, up from $299.8 million, or $1 a
share, a year earlier. Excluding items, Allergan posted earnings of
$1.78 a share, up from $1.23 a year earlier.
Earlier this month, Allergan had projected $1.76 to $1.78 a
share in earnings for the period. It had initially projected $1.44
to $1.47 a share.
Revenue rose 17% to $1.82 billion, above the $1.78 billion
projected by analysts surveyed by Thomson Reuters.
Net product sales rose 17% to $1.79 billion.
Specialty-pharmaceutical sales improved 14% to $1.52 billion. Botox
sales rose 15% to $560.1 million.
Write to Michael Calia at michael.calia@wsj.com
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