By Michael Calia
Allergan Inc. and Valeant Pharmaceuticals International Inc.
continued to raise the stakes Monday as their takeover battle
approaches a key deadline.
Allergan boasted of strong sales growth and again raised its
outlook, while Valeant continued to defend its business model and
hinted at another raised buyout bid for Allergan that would
potentially reach at least $200 a share.
The companies' latest salvos come just days before Thursday's
record date for eligibility to vote in Allergan's December board
election. Valeant and Pershing Square Capital Management--a top
Allergan shareholder run by activist investor Bill Ackman--are
seeking to vote out a majority of Allergan's board as the two have
run into repeated buyout resistance from the Botox maker.
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 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.
In response, Allergan said it would consider an increased offer
if Valeant were to make one but added it believes the company's
comments were a tactic to distract investors from its strong
results.
In Monday's letter, Valeant pointed to its own
better-than-expected results and raised outlook this month, which
it said demonstrate the "true strength" of the business.
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.
Allergan, too, has issued positive long-term guidance. The
company on Monday predicted earnings of $6.27 to $6.30 a share,
after raising its outlook to $6.20 to $6.25 a share earlier this
month.
Overall, Allergan posted a profit for the third quarter 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
Subscribe to WSJ: http://online.wsj.com?mod=djnwires