The board of directors of Allergan Inc. has rejected Valeant Pharmaceuticals International Inc.'s unsolicited, $47 billion bid to buy the company.


Allergan, Valeant Pharmaceuticals, acquisition proposal, Pershing Square, poison pill, David Pyott, Michael Pearson












































































































































































































































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Allergan gives thumbs-down to Valeant takeover bid

May 12th, 2014

IRVINE, Calif. – The board of directors of Allergan Inc. has rejected Valeant Pharmaceuticals International Inc.'s unsolicited, $47 billion bid to buy the company.

Allergan said Monday that its board voted unanimously against the Valeant acquisition proposal after a comprehensive review determined that the bid "substantially undervalues Allergan, creates significant risks and uncertainties for the stockholders of Allergan, and is not in the best interests of the company and its stockholders."

A day after Valeant's April 22 bid, made with hedge fund Pershing Square Capital Management, Allergan enacted a one-year shareholder rights plan, or "poison pill," and declared a dividend distribution of one preferred share purchase right on each outstanding share of the company's common stock.

"After careful review and consideration, our board of directors has unanimously determined that Valeant's unsolicited proposal substantially undervalues Allergan and does not reflect the value of the company's leading market positions, sales and marketing foundation, industry-leading research and development efforts, as well as future revenue and earnings growth," Allergan chairman and chief executive officer David Pyott said in a statement on Monday. "Allergan has a long history of producing consistent growth and delivering solid results through a combination of innovation, execution and discipline. We are confident in our ability to extend our track record, enthusiastic about the opportunities before us, and believe Allergan is well-positioned to deliver compelling value to our stockholders.

"Furthermore, the board has determined that Valeant's proposal creates significant risks and uncertainties for Allergan's stockholders and believes that the Valeant business model is not sustainable," he added.

Allergan announced that it expects to boost earnings per share by 20% to 25% and continue to generate double-digit sales growth in 2015 as well as produce double-digit revenue growth and earnings-per-share compounded annual growth of 20% over the next five years.

"In addition to substantially undervaluing our company, your proposal includes a large stock component, which we believe is a risk for Allergan stockholders due to the uncertainty surrounding Valeant's long-term growth prospects and business model," Pyott and Allergan's board stated in its rejection letter to Valeant chairman and CEO Michael Pearson. "Valeant's strategy runs counter to Allergan's customer-focused approach. In particular, we question how Valeant would achieve the level of cost cuts it is proposing without harming the long-term viability and growth trajectory of our business. For those reasons and others, we do not believe that the Valeant business model is sustainable."

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