Allergan issues statement on Valeant offer, investor JSP voices concerns

Following various reporting and market speculation, including a letter from Allergan investor Jackson Square Partners, Allergan issued a statement from its board of directors reiterating its stance on the offer by Valeant Pharmaceuticals.

“Our conclusion that Valeant’s offer is grossly inadequate and substantially undervalues Allergan remains unchanged,” the company wrote in the statement.

Allergan stated that its growth and strength is evident through the momentum in business growth that began in early 2013; its sales growth in the second quarter of 2014, with the greatest increase in absolute dollar sales during any quarter in its 64-year history; the delivery of sales and earnings per share above expectations; and in the creation of a restructuring plan that will reduce costs by approximately $475 million annually.

The board concluded that the company has a long track record of acting in the best interest of its stockholders, that it would not comment on market rumors or speculation and that the company would remain focused on enhancing stockholder value.

In a press release on prnewswire.com, Jeff Van Harte, chairman and chief investment officer of Jackson Square Partners, one of Allergan’s largest investors, voiced his disappointment in Allergan’s refusal to engage Valeant, and in other alleged moves by the company.

“Though the company has not commented, we assume you have declined to engage with [Actavis] as well,” Van Harte said in the press release, referring to a potential second bidder.

Van Harte stated that Allergan’s board seemed focused on a quick closure of the acquisition of Salix, which he assumed to mean that the price paid must be dramatically higher than would otherwise be the case, thus reducing any potential returns on invested capital.

“More disturbingly, this approach appears to be intended to not only preempt shareholder approval, but also eliminate interest from the various bidders for the company,” Van Harte said in the release.

Van Harte stated that he found it hard to believe a majority of Allergan shareholders would support making such a major acquisition prior to the special meeting to be held on Dec. 18, as it would likely eliminate the company’s value-creating options, according to the release.

“Limiting options is not in shareholders’ interests,” Van Harte said in the release. “We strongly urge you to fully engage all available paths, thereby ensuring value maximization.”