Boston, MA 06/05/2014 (wallstreetpr) – Multinational, specialty pharmaceutical company Valeant Pharmaceuticals International Inc (NYSE:VRX) has recently boosted its aggressive unsolicited bid to buy another healthcare company, Allergan, Inc. (NYSE:AGN), subject to the two sides engagement in negotiations to reach an agreement. Will Allergan management and its shareholders agree to Valeant Pharmaceuticals International’s latest overtures?
Sweetened Bid
Valeant Pharmaceuticals International Inc (NYSE:VRX) lifted its open offer for Allergan to $72.00 in cash besides 0.83 Valeant Pharmaceuticals stock. However, the company attached a rider indicating that this deal is applicable only if Allergan engages in negotiation for a merger deal. In effect, the total offer value is lifted to $53.8 billion from $49.9 billion bid presented only a few days earlier. The earlier cash component was $58.30 per Allergan share.
The development followed after Allergan’s shareholder and hedge fund company, Perishing Square, who enjoys a 9.7% stake, agreed to part its stake in favor of Valeant Pharmaceuticals by opting to 100% stock consideration and forego cash component. The hedge fund company’s CEO Bill Ackman said that he was ready to give up $600 million worth in favor of other shareholders in case Valeant Pharmaceuticals was ready to boost its bid to the other shareholders of Allergan. As a result, he will receive $20.75 a share less consideration compared to the other shareholders. This is probably meant to induce other Allergan shareholders to the unsolicited offer.
Valeant’s Interest In Allergan
The reason Valeant Pharmaceuticals International Inc (NYSE:VRX) is more interested in buying Allergan could be that the merger has the potential to take it among the top five pharmaceutical companies by virtue of market capitalization by the turn of the year 2016. Although the likelihood of breaking up the company are also not ruled out. Valeant Pharmaceuticals is criticized for driving its growth through acquisitions rather than its own. Therefore, its interest in Botox manufacturer could very well be understood.
Within a span of three days, Valeant Pharmaceuticals has boosted its bid on Allergan even before being asked to do so. However, this provides further room for lifting the bid price, though the chances of accepting Valeant Pharmaceuticals International Inc (NYSE:VRX)’ bid have increased.
