Well, that was quick.
Executives at ISTA Pharmaceuticals ($ISTA) have mulled over Valeant Pharmaceutical's ($VRX) $327 million unsolicited initial bid for the company, and found it lacking. (Valeant made its offer public late last week.)
Vincente Anido, ISTA'S president and CEO, didn't mince words in a letter to Valeant CEO Michael Pearson, terming the offer "grossly inadequate," according to the story in Dow Jones Newswires. This comes after Pearson said his company would increase its offer price if it could conduct due diligence first. Ouch.
Dow Jones speculates that the refusal could lead to a potential takeover battle. And some analysts think Valeant will either boost its bid or be shut out by a rival willing to spend more. Valeant sells neurology, dermatology and branded generic drugs. Canada's ISTA makes prescription eye care treatments.
Valeant has been on a buying spree in recent months as it seeks to expand. But not every offer it has made has been a successful one. The company agreed to buy Australia's iNova Pharmaceuticals for $624 million, for example. But Valeant failed in its $5.7 billion bid for Cephalon ($CEPH) when Teva Pharmaceuticals ($TEVA) swooped in with a higher offer.
In ISTA's case, Valeant offered $6.50 per share, 67% higher than its $3.89 closing price last Thursday, but nearly half of its 52-week high of $11.39 set in April, Dow Jones notes.
ISTA has faced a plunging stock price in recent months as it faces generic-drug competition, and Pearson said in his initial offer that his was "a compelling opportunity" for shareholders in light of this. But Anido, in his response, (and perhaps not surprisingly) said the Valeant bid "significantly undervalues" ISTA. In his letter, he acknowledged stock market pressure but also noted the company's successes, such as strong market share growth for its anti-itching eye drop Bepreve (bepotastine).
Chances are, this isn't over yet.