Valeant Pharmaceuticals International Inc. has made an unsolicited bid to acquire Allergan Inc. in a deal valued at about $47 billion.

Valeant Pharmaceuticals International, Allergan, unsolicited bid, merger proposal, Pershing Square Capital Management, J. Michael Pearson, William Ackman, David Pyott, pharmaceutical company

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Valeant makes $47 billion bid for Allergan

April 22nd, 2014

LAVAL, Quebec – Valeant Pharmaceuticals International Inc. has made an unsolicited bid to acquire Allergan Inc. in a deal valued at about $47 billion.

Valeant said hedge fund Pershing Square Capital Management is a co-proponent of the merger proposal, which was made in a letter to Allergan chairman and chief executive officer David Pyott and the company's board on Tuesday. Pershing Square, led by CEO William Ackman, is Allergan's largest shareholder, with a 9.7% stake in the pharmaceutical company.

"This proposal represents an undeniable opportunity to create extraordinary value for both Allergan and Valeant shareholders by establishing an unrivaled platform with leading positions in ophthalmology, dermatology, aesthetics, dental and the emerging markets," Valeant chairman and CEO J. Michael Pearson said in a statement. "Together, we can capitalize on the inherent strengths and complementary portfolios of our two companies, while achieving significant synergies by applying Valeant's unique operating model to a combined set of assets.

"While the Allergan CEO and board of directors made it clear, both privately and publicly, that they were unwilling to enter discussions with us about creating a value-enhancing combination, we are hopeful that our proposal for this extremely compelling combination will enable us to engage in productive discussions," Pearson added.

Irvine, Calif.-based Allergan on Monday said that it became aware of public filings made by Valeant and Pershing Square regarding a merger proposal by Valeant, and that it has had no discussions with Valeant or Pershing Square about the matter.

Allergan on Tuesday confirmed that it has received an unsolicited merger bid from Valeant.

"The Allergan board of directors, in consultation with its financial and legal advisors, will carefully review and consider the proposal and pursue the course of action that it believes is in the best interests of the company's stockholders. The company's stockholders do not need to take any action at this time," Allergan said in a statement.

Under the proposal, each Allergan share would be exchanged for $48.30 in cash and 0.83 shares of Valeant common stock, based on the fully diluted number of Allergan shares outstanding. Shareholders will be able to elect a mix of cash and shares, subject to proration. Valeant said the bid represents "a substantial premium" based on Allergan's share price of $116.63 on April 10, the day before Pershing Square exceeded the 5% Schedule 13D ownership level and began a rapid accumulation program.

With the agreement, Allergan shareholders would own 43% of the combined company, according to Valeant. Pershing Square has agreed to elect only stock consideration in the transaction and aims to remain a key long-term shareholder of the merged company.

"The combination of Valeant and Allergan represents the most strategic and value-creating transaction I have ever analyzed," Ackman stated. "I strongly urge the Allergan board of directors to carefully examine the proposed transaction and enter into negotiations with Valeant so that a merger can be consummated promptly."