Valeant, Pershing Square To Boost Allergan Offer

Oct 8 2014 | 2:35pm ET

Valeant Pharmaceuticals International is set to increase its Pershing Square Capital Management-backed offer for Botox-maker Allergan Inc.—with the prospect of having to fend off another suitor, in addition to Allergan’s opposition.

Valeant plans to increase its offer by $15 per share, valuing Allergan at about $191 per share or $56 billion. Part of the increase will be covered by Pershing Square taking less than other shareholders for its 9.7% stake; exactly how much less remains subject to negotiations.

Valeant and Pershing Square hope that the increased offer, combined with Valeant’s third-quarter earnings report on Oct. 20, will convince other hedge funds and event-driven investors to buy Allergan shares before the Oct. 30 record date for December’s special meeting. The two hope to oust Valeant’s board to force through their merger at that meeting.

Valeant is expected to post strong results, which could boost its share price, in effect boosting its cash-and-stock offer for Allergan further.

Valeant’s offer has remained at about $53 billion since May. But the planned increase may not be enough, as Actavis plans to once again hold talks with Allergan about a potential acquisition.

While Allergan remains adamantly opposed to the Valeant offer, which it has called grossly inadequate, it is warming to the idea of a tie-up with another company, Reuters reports. The company’s plans to seek an acquisition of its own to stymie Valeant and Pershing Square have run into opposition from shareholders and proxy advisors.

According to Reuters, Allergan would entertain offers in excess of $200 per share.

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