Boston, MA 04/23/2014 (wallstreetpr) – Allergan, Inc. (NYSE:AGN) has taken the route of poison pill in order to defend itself against the hostile bid of its larger rival Valeant Pharmaceuticals International Inc (NYSE:VRX). Reportedly, Valeant has taken the support of activist investor William Ackman to acquire the company for a $46 billion bid.
Poison Pill
Allergan, Inc. (NYSE:AGN) revealed its plans late Tuesday, barring any unapproved investor to acquire more than 10% of the share in its stock. It said that, in the event of hike of stake to 10% by an investor, the other shareholders will get the right to buy its stock at a discounted price. The defense strategy, officially called as a shareholder rights plan, comes to protecting the company from the recent Ackman’s disclosure of 9.7% stake in it. Moreover, the step will block Valeant from taking its hostile bid directly to shareholders through a tender offer.
Averts Valeant AndAckman Plans
The whole development came on the heels of Valeant’s plans that were made public yesterday about the unsolicited takeover offer for Allergan. Valeant, a skin, eye and other drug maker, valued the company at approximately $152.89 a share and made a cash-and-stock offer. As per the plan, it offered to pay $48.30 in cash and $0.83 shares of its common shares. Valeant is strongly pursuing the merger as it claims of at least $2.7 billion savings in cost on an annual basis post merger. However, analysts think that a huge cost cutting measure could harm Allergan’s business. The traders are expecting Valeant to further boost the offered price of the offer.
In the meanwhile, Allergan, Inc. (NYSE:AGN) representatives denied its step as a measure to stop the proposed takeover of the company, but said it to be taken in the best interest of its stakeholders. It said that the move will help it to provide more time to evaluate and decide on any proposal.
