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Valeant proposes to buy Allergan
Valeant Pharmaceuticals has submitted a merger proposal to the board of directors of Allergan.
Under the proposal, each Allergan share would be exchanged for $48.30 in cash and 0.83 shares of Valeant common stock, according to a press release from Valeant. Allergan shareholders would be able to choose a mix of cash and shares and would own 43% of the combined company.
The proposal is based on Allergan’s unaffected stock price of $116.63 on April 10. The next day, Pershing Square Capital Management crossed the 5% ownership level in Allergan and commenced a rapid accumulation program, according to the release.
Pershing Square, Allergan’s largest shareholder with a 9.7% stake, has agreed to only stock consideration in the transaction and plans to remain a long-term shareholder of the combined company, according to the release.
“This proposal represents an undeniable opportunity to create extraordinary value for both Allergan and Valeant shareholders by establishing an unrivaled platform with leading positions in ophthalmology, dermatology, aesthetics, dental and the emerging markets” J. Michael Pearson, chairman and CEO of Valeant, said in the release. “While the Allergan CEO and board of directors made it clear, both privately and publicly, that they were unwilling to enter discussions with us about creating a value-enhancing combination, we are hopeful that our proposal for this extremely compelling combination will enable us to engage in productive discussions.”
Allergan announced in a separate press release that it is aware of the public filings with the U.S. Securities and Exchange Commission and will consider any proposal with the appropriate legal and financial counsel.
Until an official offer is made and the board of directors is able to define its position, Allergan stockholders do not need to take any action, the release said.
Additionally, Allergan said it has had no discussions with Valeant or Pershing Square regarding a merger, noting that the public disclosure materials suggest that they have expressly reserved the right to terminate their business relationship should no such offer be forthcoming.
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