Valeant increases proposal for Allergan merger by about 21% per share

Richard L. Lindstrom, MD

Valeant is making it clear that they are serious about their effort to acquire Allergan, and Allergan is so far making it equally clear that they believe it is in their company’s, shareholders’ and customers’ best interests that they stay as an independent public company. Although there is room for debate, it is my impression that Valeant has managed the acquisition of Bausch + Lomb from Warburg Pincus quite well. As a customer of and consultant for Bausch + Lomb, I am impressed with the progress being made in a company that is critically important to ophthalmology. Allergan is also critically important to ophthalmology, and to our dermatology and aesthetic/plastic surgeon colleagues, as well. The outcome of this proposed acquisition is therefore important to all in these three fields. The global market right now is very favorable for merger and acquisition activity, with a strong stock market and low interest rates. Still, it is a bold move on Valeant’s part to attempt another major acquisition so soon after the Bausch + Lomb deal. The reasoning is clear as the synergies between the two companies are apparent to even the casual observer. Both Valeant and Allergan have significant resources, strong boards and savvy leadership, so it will be a very interesting process to observe as this plays out in the press and behind closed doors. In the end, the shareholders will decide, but this is a serious offer by a company that has proven they can complete a similar-sized acquisition and manage it.

John A. Hovanesian, MD, FACS

Valeant’s proposed acquisition of Allergan is worrisome for many clinicians. While Valeant has a proven track record of commercializing products with Bausch + Lomb, their de-emphasis of research and development is troubling for the future of ophthalmic innovation. Allergan, a company with a long and trusted track record as an innovator in ophthalmology and a substantial investor in its own research and development, would change forever if the same type of approach were taken.  And this is just the strategy Valeant has proposed to investors--improved profits through cost cutting and a reduction of work force. While shareholder value may improve in the short term, the long-term outlook of pipeline products will be compromised, and this is not likely to benefit our specialty. Clearly, many in our industry share this concern. We clinicians have little say in what will happen in this proposed merger but it will certainly affect our care for patients.