Fed up with Allergan obstinance, Valeant CEO says he'd hike bid past $200 a share

Valeant CEO J. Michael Pearson

Valeant ($VRX) CEO J. Michael Pearson is apparently sick of Allergan's ($AGN) mantra that his hostile bid "grossly undervalues" the company. While the bid is a good one, he contended in a Monday letter to the Botox-maker, Valeant will hike it further if it needs to--past $200 a share, in fact--and it's time for Allergan's board to come around.

The Canadian pharma "is prepared to improve its offer and provide value to your shareholders of at least $200 a share," Pearson wrote to Allergan's directors, and it's confident that an increase in its own stock price--which it believes "is trading at artificially low levels"--will provide that value. With that in mind, it's time for management to "do what is right for Allergan shareholders and come to the table."

"Management has shown its true colors through 'horse-choking' bylaws, baseless attacks and frivolous litigation," he wrote, before reminding Allergan's board members that a special shareholder meeting--at which investors will have the opportunity to oust them in favor of a slate put forth by Valeant partner Bill Ackman--is quickly approaching. "December 18 is not far away," he said.

While some industry-watchers have suggested $200 a share might be somewhat of a magic number for Allergan, the company hasn't done anything to suggest that could be the case--if the acquirer in question is Valeant. Repeatedly, it's refused to negotiate, attempted to put up legal barriers and looked elsewhere for M&A prospects that could thwart the deal.

The way Ackman sees it, Allergan has even gone so far as to knowingly spread false statements about Valeant to depress the company's shares and value of its offer. Earlier this month, he brought a lawsuit arguing as much, and recently unsealed documents suggest Allergan execs, along with their advisers from Bank of America and Merrill Lynch, did appear to talk through efforts to push down Valeant's stock, The New York Times reports--though there's no "smoking gun" that proves Ackman's claims.

But a raised bid may help dissuade white knights that could be waiting in the wings--like Actavis ($ACT), which has reportedly bid for Allergan once already. Leerink Partners analysts Jason Gerberry and Seamus Fernandez wrote in an investor note a few weeks back that Actavis had "a favorable chance of winning" if it came out with an offer of $200 a share, with the duo skeptical that Valeant would get into a bidding war.

As they were clear to note, however, an Actavis combo would make a "less compelling cost-cutting story," and with that, Pearson agrees.

"No other potential acquirer of Allergan has the operational and tax synergies that we have, and no other potential acquirer of Allergan can provide the value that we can," he wrote.

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