Aesthetic devices giant Allergan (NYSE:AGN) roundly rejected the latest unsolicited acquisition offer from Valeant Pharmaceuticals and activist investor William Ackman, saying the increased $53.3 billion bid still undervalues the company.
Allergan’s board of directors unanimously voted to reject the proposal, as most analysts and observers had expected. The company has been swatting back Valeant’s attempts for weeks, starting with the initial $47 billion bid made in April. Valeant has twice sweetened the pot and attempted to take its offer directly to shareholders in a vote aimed at unseating Allergan’s directors.
After "thorough consideration," Allergan decided not to take Valeant up on its latest offer, adding that the company doesn’t think the proposal even merits discussion between the companies. Allergan is choosing instead to execute its own growth plan, relying on "continued innovation and marketing excellence" to generate double-digit increases in revenues and $14 billion in additional free cash flow over the next 5 years.
"Allergan Board is confident that Allergan will create significantly more value for stockholders than Valeant’s proposal," the company added.
Wall Street analysts have largely backed Allergan’s resistance to Valeant’s advances. Experts at BMO Capital Markets have agreed that the increased $53 billion offer "substantially undervalues Allergan."
Analysts at UBS added today that Allergan leadership can be trusted to do what’s best for the company’s shareholders.
"We believe that Allergan’s management will act in shareholder’s best interest – Even though some investors may be concerned that management rejected the offer without any discussion with Valeant, we reiterate that this team has a history of acting in the best interest of its shareholders," UBS analysts wrote in a note to investors today. "As such, we remain confident that Allergan has either identified strategic options that it is confident will drive enhanced shareholder value or will be willing to negotiate with Valeant."