Allergan says no to Valeant…which comes back with a better offer
Wednesday, May 14 2014 | 00 h 00 min | News
The Board of Directors at Allergan, the manufacturer of Restasis eye drops, formally rejected the unsolicited takeover bid from Quebec-based Valeant Pharmaceuticals.
Allergan says that the $52-billion offer in cash and stock undervalues the company and does not reflect its potential for growth. The Board has targeted a 20% to 25% increase in its earnings per share and expects a strong increase in revenue in 2015.
In a letter sent to his counterpart at Valeant, the CEO of Allergan also questioned how Valeant would achieve the level of cost cuts it is proposing without harming the long-term viability of Allergan. Valeant estimates that the acquisition will generate $3.3 billion in operating cost savings as a result of synergies.
Far from giving up, Valeant quickly responded, stating that the offer would be increased. The details are to be announced May 28. Furthermore, Pershing Square Capital Management, Valeant’s partner in this purchase offer, hopes to obtain the complete list of Allergan’s shareholders. Valeant would like to organize a “referendum” to determine whether shareholders want to see the two companies negotiate the merger. Valeant could even ask for a special meeting to be held to replace some or all of Allergan’s Board members.