Valeant and Pershing Capital Management, the hedge fund run by activist investor William Ackman, last month offered $48.30 in cash and 0.83 shares of Valeant common stock for each Allergan share.
Yesterday Allergan’s board rebuffed the offer, saying that it significantly undervalues the company and is too rich in Valeant stock. Today Valeant chairman & CEO J. Michael Pearson, in an open letter to Allergan’s shareholders, said Valeant plans to host a webcast May 28 to explain the rationale behind its takeover bid.
"I have had the pleasure of meeting many of you over the last two weeks and, as you have heard from us, we remain resolute in consummating a merger with Allergan. Based on your feedback, at our May 28th webcast, we plan to improve our offer for the company – to demonstrate our commitment to getting this deal done. We are prepared to pay a full and fair price, but, consistent with our track record, we will remain financially disciplined," Pearson wrote. "We are excited about the value creation opportunity for all shareholders from the enormous strategic and financial synergies that result from this transaction. We will not stop our pursuit of this combination until we hear directly from Allergan shareholders that you prefer Allergan’s "stay the course plan" to a combination with Valeant. I ask that all of you continue to provide us with your feedback."
In an email to MassDevice.com, an Allergan spokesman reiterated that Valeant and Pershing undervalue Allergan’s worth.
"This is obviously a self-serving exercise by Pershing Square to further Valeant’s attempt to acquire Allergan. This is purportedly being done for the benefit of Allergan shareholders. In fact, this is nothing more than an attempt by co-bidders Pershing Square and Valeant to transfer the value inherent in Allergan to Pershing Square and Valeant at a price that substantially undervalues Allergan. Rather than use the mechanism approved by the Allergan shareholders to call a special meeting, they are dictating their own process," the spokesman wrote.
Shortly after Valeant and Pershing made the offer last month, Allergan swallowed a poison pill designed to insulate it from a takeover. Days later major Allergan shareholder Polen Capital Management said the company could do better. Last week Pershing defended the bid, with Ackman urging Allergan’s board to concede to a meeting to explore the offer.