Thursday 22 March 2018

Valeant increases cash portion to bring Allergan bid to $53bn

The first quarter of 2014 is the first time since 2007 that there has been such high volumes in the IPO markets across most of Europe
The first quarter of 2014 is the first time since 2007 that there has been such high volumes in the IPO markets across most of Europe

Sonali Basak and Beth Jinks

Canada-based Valeant Pharmaceuticals, – which employs hundreds of people in Waterford at the city's Bausch and Lomb plant, raised its unsolicited offer for US-based Allergan, which employs hundreds of people in Westport.

The company offered $53.3bn (€39.1bn), increasing the cash portion of the bid in an effort to win the backing of the company and its investors.

Holders of Allergan shares, which makes the Botox anti-wrinkle treatment in Westport, would get $72 (€52.81) a share in cash – up from $58.30 (€42.76) – and four fifths of a Valeant share under the sweetened offer. The cash-and-stock portion of the bid values Allergan at about $53.3bn (€39.1bn).

Investor Bill Ackman's hedge fund, which is using its 9.7pc Allergan stake to push the deal, agreed to continue to forgo the cash portion of the offer.

Pershing Square last week sweetened the incentive for other shareholders by agreeing to a lower value basis for its stake – which the hedge fund calculated as a discount of $20.75 (€15.22) a share.

Pershing Square met with most of Allergan's biggest shareholders who indicated the deal could get done at a valuation of $180 (€132) a share, a source told Bloomberg. Pershing said it would give up part of its potential gain if Valeant chief executive Mike Pearson raised the offer for other shareholders, according to the person, who asked not to be identified because the discussions were private.

Allergan said the board of directors will consider the new proposal once it is received. Allergan advised shareholders to take no action at this time.

The offer includes a contingent value right of as much as $25 (€18.34) a share based on the performance of an experimental eye drug from Allergan.


The deal would be Valeant's largest, adding to Valeant's aim to join the ranks of the world's five biggest drugmakers by the end of 2016. Analysts had expected Allergan investors would respond to a deal that was closer to $185-$190 per share.

"I have no idea how they're going to explain" Valeant's action, said David Maris, an analyst with BMO Capital Markets in New York. "It's a big credibility issue."

Valeant's revised bid was made just two days after raising its offer for the first time. "Valeant's CEO said he wouldn't negotiate again against himself – Allergan hadn't even had a chance to respond," Mr Maris said. He says the deal is still "substantially undervalued".

Irish Independent

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