Valeant Pharmaceuticals ($VRX) CEO J. Michael Pearson and the company's largest shareholder, Bill Ackman, have been trying to propel Allergan's ($AGN) board toward deal negotiations ever since their first unsolicited bid back in April. Now, they've decided they've waited long enough.
Just a few days after sweetening its original $47-billion-dollar bid for the second time, the duo said it's going hostile, with Ackman's Pershing Square Capital Management--Allergan's largest shareholder with 9.7%--calling for a meeting to replace a majority or more of the company's directors, Reuters reports.
"We believe the market has spoken, and that shareholders see substantial value in Valeant's revised proposal," Pershing said a filing with the Securities and Exchange Commission, adding, "to date, the board has refused to engage with Valeant in any way regarding a merger with Valeant."
The move follows a Friday offer that upped Valeant's terms from $49.4 billion to about $52.7 billion. The latest bid comprised $72 cash and 0.83 shares of Valeant stock per Allergan share, with shareholders able to elect cash and/or stock.
All shareholders except Pershing Square, that is. As Ackman said in a statement Friday, he called Pearson with an offer to forgo the cash and accept Valeant shares instead. Ackman's move--worth $600 million in value, he said--allowed Valeant to raise its cash offer to Allergan's other investors.
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| Bill Ackman |
"We believe that our gesture to the other
It wasn't Ackman's first attempt to bring about discussions between the two companies. In mid-May, Pershing Square penned a letter to Allergan shareholders, saying it would ask for a nonbinding vote to nudge Allergan toward the bargaining table--a course of action Ackman has now dropped, Reuters says.
But the Botox-maker's leaders have so far shown no sign that they're interested. Instead, Allergan swallowed a poison pill to prevent Ackman from building his stake and has openly criticized Valeant's M&A-dependent business model. Reports have listed Valeant's disinterest in R&D funding as a major turnoff for the specialty drugmaker.
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| Valeant CEO J. Michael Pearson |
Takeover artist Pearson, however, remains unfazed. "We strongly believe that applying Valeant's operating philosophy, strategy, and financial discipline to a broader set of durable assets will continue to create substantial returns for shareholders over the short, intermediate, and long term," he said in a statement. "We are very committed to getting this deal done."
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