Perspective from Richard L. Lindstrom, MD
Perspective from John A. Hovanesian, MD, FACS
May 28, 2014
3 min read
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Valeant increases proposal for Allergan merger by about 21% per share

Perspective from Richard L. Lindstrom, MD
Perspective from John A. Hovanesian, MD, FACS
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Valeant Pharmaceuticals has increased its April 22 proposal to acquire Allergan, the company announced in a press release.

The revised proposal increases Valeant’s cash consideration by $10 per share, or about 21%, to $58.30.

The proposal maintains 0.83 of a Valeant share and also adds contingent value right for DARPin of up to $25 per share in value. Valeant is committed to investing up to $400 million in the development of DARPin and retaining current Allergan employees responsible for the product’s development, the release said.

The offer includes 40% of DARPin net sales after recoupment of the development investment.

“We strongly believe that applying Valeant’s operating philosophy, strategy and financial discipline to a broader set of durable assets will create substantial long-term returns for Allergan shareholders over the short, intermediate and long term, and exceed returns available to Allergan shareholders through alternative options, including a standalone alternative,” J. Michael Pearson, chairman and CEO of Valeant, said in a letter to David Pyott, chairman and CEO of Allergan. “As importantly, we believe the combined companies can better serve the patient and medical communities with a more complete offering of products and continued innovation in ophthalmology, dermatology, aesthetics, neurology and emerging markets.”

Allergan recently submitted documents to the U.S. Securities and Exchange Commission expressing concern about the integrity and viability of Valeant’s business model.

“It appears based on Allergan’s recent public statements that you have a fundamental misunderstanding of our business model and its performance,” Pearson said in the letter. “Our discussions with Allergan’s shareholders, many of whom are also our shareholders, have continued to express enthusiasm about our potential business combination. We are confident they will view this offer — which delivers them greater upfront cash proceeds, the opportunity to continue to participate in the substantial cost and strategic synergies as a 43% shareholder of the combined company, and a [contingent value rights] with significant upside based on the success of DARPin — as one that merits your immediate engagement with us.”

Allergan confirmed in a press release that it received the offer and that its board of directors will review the revised proposal.