360° Coverage : Investors Not Impressed With Valeant's New Bid For Allergan

1 Updates

Investors Not Impressed With Valeant's New Bid For Allergan

May 28 2014, 11:06am CDT | by

For two weeks, Valeant Pharmaceuticals has been promising to bolster its hostile bid for Allergan to win the widely watched takeover battle. But investors do not seem to be impressed with Valeant’s...

Filed under: news

 
 
 

21 weeks ago

Investors Not Impressed With Valeant's New Bid For Allergan

May 28 2014, 11:06am CDT | by

For two weeks, Valeant Pharmaceuticals has been promising to bolster its hostile bid for Allergan to win the widely watched takeover battle. But investors do not seem to be impressed with Valeant’s enhanced $49 billion offer for the maker of Botox.

Valeant increased on Wednesday morning the cash that the company is offering Allergan shareholders by $10 per share to $58.30. Valeant continued to offer the same 0.83 of a Valeant share and added a contingent value right sweetener around Allergan’s experimental vision-loss drug that Valeant claims could result in payments to Allergan shareholders worth as much as $25 a share.

In the tax-driven deals that companies like Valeant have pursued aggressively in recent years, shares of both the acquirer and seller have tended to increase when the deals are announced. Investors, however, sold shares of both Valeant and Allergan on Wednesday. In morning trading, shares of Valeant fell by 2.2% and shares of Allergan dropped by 4.4% to $157.77. Wall Street analysts from Credit Suisse and Wells Fargo said that the new Valeant offer could not be good enough. “We hoped for something more imaginative, like substantially altering the share of cash and stock Valeant will use or a more substantial increase in the value offer,” wrote Aaron “Ronny” Gal, an analyst at Bernstein Research. “The Valeant offer is rather disappointing. It does not really alter the fundamental value of the offer.”

Like a hedge fund manager promoting a short position, Allergan came out swinging against Valeant Pharmaceuticals on Tuesday, questioning whether Valeant’s low tax rate was sustainable and raising other issues surrounding Valeant’s debt-fueled acquisition strategy and accounting. The point was to undermine the appeal to Allergan shareholders of Valeant’s stock, which Valeant is using as currency for its proposed deal. Allergan’s board said on Wednesday that it will review the new Valeant proposal, but Allergan’s board and its CEO, David Pyott, have made it pretty clear they want to keep Allergan an independent company.

During a long presentation on Wednesday to promote his new offer, Valeant CEO Michael Pearson said many of Allergan’s assertion against his acquisition-driven business model were incorrect. “It was a little insulting to be called a Tyco but I guess time will tell,” Pearson said. “This industry the R&D productivity has been very very low, so how all companies grow in this industry is through making really good acquisitions and growing those acquisitions after they make them.”

Pearson, who is working with hedge fund billionaire William Ackman in this takeover effort, said he fully expects Valeant will be successful in its attempt to purchase Botox-maker Allergan. In a sign that he means business, Valeant also announced on Wednesday that it will sell several injectable treatments for facial wrinkles to Nestle for $1.4 billion. At the same time, Pearson was careful to say that he would not be putting together an all-cash deal for Allergan or bid against himself. “We are not going to keep offering against ourselves,” Pearson said. “We are still willing to sit down with management and the board to negotiate a deal, but we are not going to continue increasing our offering until we have that chance to sit down.”

 
Update
1

8 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a ne ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Fat food items that one should eat
London, Oct 28 (IANS) Whether we're trying to lose weight or just avoid gaining it, many of us think steering clear of dietary fat is the first step. Contrary to common belief that fat is not good for body, one's body requires certain kind of fat for growth, development and glwoing skin.
 
 
New app to help you water your lawn
Washington, Oct 28 (IANS) If you find watering your lawn a bit troublesome, here is an app to make your task easier.
 
 
Strict social hosts help curb underage drinking
New York, Oct 28 (IANS) Teenagers are less likely to drink at parties when they live in communities with particularly strong social host laws, finds a US-based study.
 
 
Windowless plane to take off soon
London, Oct 28 (IANS) Imagine flying in a plane sans windows! Your imagination may soon become a reality with a British company working on such a plane.
 
 
 

Latest from the Network

Snoring masks don't kill sex life: Study
New York, Oct 28 (IANS) A common therapy to tackle obstructive sleep apnea (OSA) does not become a hindrance between the sheets, says a study, allaying fears of OSA patients who believe the therapy interferes with sex...
Read more on Celebrity Balla
 
Nine alive buried in China landslide
Beijing, Oct 28 (IANS) Nine people were buried alive Tuesday by a rain-triggered landslide in southwest China's Yunnan province, authorities said. The disaster struck Xiaoxin village in Dongchuan district of...
Read more on Politics Balla
 
Skin allergy makes Fox miss 'Teenage...' premiere
Beijing, Oct 28 (IANS) Actress Megan Fox was forced to skip the premiere of her film "Teenage Mutant Ninja Turtles" here after she developed skin allergy. On Sunday morning, the actress joined producers for a press...
Read more on Celebrity Balla
 
Advanced hearing aids distort music more
New York, Oct 28 (IANS) The more advanced an hearing aid is today, the worse experience it would offer to music lovers who use such aids, says a study. Less sophisticated hearing aids might actually be more compatible...
Read more on Business Balla
 
Hair disorder could signal dental decay
Washington, Oct 28 (IANS) If you are experiencing hair fall problems, your teeth may require extra care as researchers have found that hair disorder could increase risk of dental decay. Keratins, proteins associated...
Read more on Business Balla
 
Three Red Cross workers cleared of Ebola in New Zealand
Wellington, Oct 28 (IANS) Three New Zealand Red Cross healthcare workers have been cleared of possible Ebola infection after being put on "self-monitoring" since returning from working in Ebola-affected countries in...
Read more on Business Balla
 
Hugh Jackman has third session of skin cancer treatment
Los Angeles, Oct 28 (IANS) Actor Hugh Jackman has been treated for his third basal cell carcinoma in 12 months. The actor had a basal cell carcinoma removed in November 2013 as well as in May this year. The actor's...
Read more on Celebrity Balla
 
MIT survey reveals sexual assault on campus
New York, Oct 28 (IANS) Nearly 17 percent of female and five percent of male undergraduate students at the Massachusetts Institute of Technology (MIT) have revealed that they were sexually assaulted on the campus, said...
Read more on Politics Balla
 
Flashlight apps stealing your data?
New York, Oct 28 (IANS) Do you use a flashlight app on your smartphone? Security experts warn that free flashlight apps are secretly recording sensitive information from your phone. According to a US-based security...
Read more on Politics Balla
 
People flee as lava reaches Hawaiian village
Honolulu, Oct 28 (IANS) Many residents of a Hawaiian village have fled their homes, threatended by the flow of lava from Kilauea Volcano, a media report said Tuesday. People at Pahoa are running away as the lava from...
Read more on Politics Balla