Valeant adds cash and a CVR to its Allergan bid, but will that $50M-plus be enough?

As promised, Valeant ($VRX) has raised its original $47 billion offer for Allergan ($AGN). And as expected, that offer comprises more cash than the original. Whether it'll be enough to win over the California company? That remains to be seen.

The Canadian pharma Wednesday morning upped its bid for the Botox maker to about $49.4 billion, or $166.26 a share, with a contingent value right worth as much as $25 a share if an eye drug candidate hits sales goals. The sweetened bid includes $58.30 per share in cash--$10 more than the bid Allergan's board rejected, Bloomberg reports.

"Over the past several weeks, we have met with, and listened carefully to the views of, a number of Allergan shareholders," Valeant CEO J. Michael Pearson wrote in a letter to Allergan chief David Pyott. "Our revised offer is based on specific feedback we received in our discussions."

But the new offer may not be enough to sway them. A JPMorgan survey of 123 buyside investors this month found that 60% of respondents believed Valeant needed to make a bid somewhere in the $181-$200 range to get the deal done, Reuters reported Tuesday. Some analysts, too, had mixed feelings on Valeant's second offer.

"[Valeant's] new offer is better, but may not be compelling enough given [Allergan's] strong standalone outlook," Credit Suisse analysts wrote in an investor note. "Given that the majority of the offer would still be in [Valeant] stock, how one values [Valeant] stock goes a long way to determining the true value of the deal."

Valeant did its best to brighten investors' outlook on that stock Wednesday morning with a Web presentation, addressing Allergan directors' barbs that its business model was "unsustainable." Valeant's measly spending on R&D has reportedly worried the Irvine-based company's lab-focused leaders. Pearson responded that Valeant would "drive R&D decisions on value of output, not on target spending levels."

- read Pearson's letter
- see the presentation slides (PDF)
- get Bloomberg's take

Special Reports: Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb | The most influential people in biopharma today - J. Michael Pearson - Valeant | 20 Highest-Paid Biopharma CEOs of 2012 - David Pyott - Allergan

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