Valeant Pharmaceuticals International Inc raised its unsolicited offer for Allergan Inc a second time, to about US$53.3 billion, increasing the cash portion of the bid in an effort to win the backing of the company and its investors.
Holders of Allergan, the maker of the Botox anti-wrinkle treatment, would get US$72 a share in cash — up from US$58.30 — and 0.83 of a Valeant share under the sweetened offer, Laval, Quebec-based Valeant said yesterday in a statement. The cash-and-stock portion of the bid, US$179.25 a share using Valeant’s closing price on Thursday, valued Irvine, California-based Allergan at about US$53.3 billion based on 297.6 million shares outstanding, according to data compiled by Bloomberg.
Pershing Square Capital Management LP, Bill Ackman’s hedge fund, which is using its 9.7 percent Allergan stake to push the deal, agreed to continue to forgo the cash portion of the offer. Pershing Square yesterday sweetened the incentive for other shareholders by agreeing to a lower value basis for its stake — which the hedge fund calculated as a discount amounting to US$20.75 a share.
Pershing Square met on Thursday with most of Allergan’s biggest shareholders, who indicated the deal could get done at a valuation of US$180 a share, a person familiar with the deal said.
Pershing said it would give up part of its potential gain if Valeant chief executive officer Mike Pearson increased the offer for other shareholders, according to the person, who asked not to be identified because the discussions were private.
Allergan acknowledged Valeant’s proposal in a statement yesterday and said the board of directors will consider the new proposal once it is received. Allergan advised shareholders to take no action at this time.
The deal would be Valeant’s largest, adding to Pearson’s aim to join the ranks of the world’s five biggest drugmakers by the end of 2016.
Analysts had expected Allergan investors would respond to a deal that was closer to US$185 to US$190 per share. Allergan had said Valeant’s first offer on April 22 was “substantially undervalued” and urged shareholders to take no action on the second bid.
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