IRVINE, Calif., Sept. 27, 2014 -- /PRNewswire/ --
Michael Gallagher, Lead Independent Director Allergan, Inc. 2525 Dupont Drive Irvine, CA 92612
We have owned Allergan equity for well over a decade. Our clients' portfolios hold over $1 billion of the company's stock. As their fiduciary, we feel obligated to publicly raise our concerns regarding the value-creation strategy the Board of Directors appears to be pursuing.
You have refused to engage with Valeant, describing their takeover offer as "grossly inadequate." We note, however, that the Board was not compelled by the value available via the repurchase of Allergan stock when it was trading at roughly half the current level through much of the second half of 2013. (As you may be aware, we encouraged management to aggressively buy shares at those prices, which we believed were well below intrinsic business value; no action was taken.) Press reports indicate Allergan has recently been approached by a second bidder, Actavis. Though the company has not commented, we assume you have declined to engage with them as well.
Instead, the Board seems focused on hastily closing a large acquisition. Given the circumstances, this can only mean that the price paid must be dramatically higher than would otherwise be the case, depressing potential returns on invested capital. More disturbingly, this approach appears to be intended to not only preempt shareholder approval, but also eliminate interest from the various bidders for the company. Management has defended this stance by claiming that shareholder feedback has been strongly in favor of an acquisition, preferably to be completed prior to the special meeting on December 18. That a large majority of Allergan shareholders would support such a strategy is hard to fathom, and doesn't reflect our understanding of the situation. If there are investors who feel this way, however, we want to be very clear: we are not among them. Completing an acquisition prior to the special meeting will all but eliminate Allergan's alternatives for creating value. Limiting options is not in shareholders' interests. We strongly urge you to fully engage all available paths, thereby ensuring value maximization.
Please forward this letter to the rest of the Board.
Jeff Van Harte, Chairman/Chief Investment Officer, for Jackson Square Partners
Contact: Kevin Brown, Jackson Square Partners, 415-635-0201
SOURCE Jackson Square Partners