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Allergan eyeing Actavis buyout

Published on 13/11/14 at 11:32am
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Allergan is attempting to block a recent Valeant hostile takeover bid by seeking the rumoured alternative merger deal with Actavis, according to media reports.

The two companies apparently disagree on the value of the deal though, with Actavis offering $200 per share but Allergan wanting more than $210 per share – a total gap of around $3 billion. Talks are currently focussed on reducing this gap, according to Reuters.

Actavis was first rumoured as a potential merger for botox maker Allergan after the latter company rejected the latest, $54 billion takeover bid from Valeant – although the Canadian firm has now said that it is prepared to raise its offer to $200 per share.

This was the latest of several bids from Valeant over the year.

“Valeant’s revised proposal substantially undervalues Allergan, creates significant risks and uncertainties for Allergan’s stockholders and does not reflect the company’s financial strength, future revenue and earnings growth or industry-leading R&D,” the firm’s chief executive David Pyott said of the $54 billion bid.

Allergan’s board claims that Valeant's strategy of slashing costs after acquiring business would damage the value it has built and threaten the future of a number of promising pipeline projects.

Fighting back

The talks between Allergan and Actavis are just one of several ways the company is trying to fend off Valeant.

Earlier this month Allergan attempted to block shareholder Pershing Square, who is a key supporter of Valeant’s bid, from voting at a meeting next month. However, a judge ruled that they would still be allowed to use their block vote in an attempt to replace several of Allergan's directors with candidates who will support the merger.

The company has also posted an open letter from eye surgeons on its website expressing fears that the takeover would decrease R&D funding and negatively impact its practices – many of which are centered on eye care. Other clinicians were invited to sign.

Valeant itself has also been trying to court healthcare professionals in another of Allergan’s major franchises – cosmetic care. The firm says it had met with 45 influential cosmetic surgeons and dermatologists who use Allergan’s Botox to try and win them over.

The company reportedly paid for the clinicians’ flights, hotels and meals and agreed to pay consulting fees of up to $30,000.

Speaking to the Wall Street Journal, several of these doctors even said that they had indeed been won over by Valeant’s Allergan plans.

George Underwood

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