Allergan, the makers of Botox have formally rejected a takeover bid from Valeant Pharmaceuticals, saying that the unsolicited offer worth nearly $46 billion undervalues the company and poses a significant risk to its growth prospects.
Shortly after Canada’s Valeant and activist investor Bill Ackman made their offer public last month, Allergan announced a so-called poison pill plan, a defensive tactic that makes a buyout prohibitively expensive.
Laurie Little, spokesperson for Valeant said that her company was disappointed that Allergan made its decision without “engaging in any substantive discussions”. She added that they remain committed to pursuing this deal.
The proposal offered $48.30 per share to Allergan shareholders plus a portion of shares of Valeant Pharmaceuticals International Inc. this would total 43% of the new combined company.
Allergan said at the beginning of this week that Valeant’s uncertain long-term growth prospects and business model create a risk for Allergan shareholders, especially given the stock component of the offer.
“In particular, we question how Valeant would achieve the level of cost cuts it is proposing without harming the long term viability and growth trajectory of our business,” Pyott said in a letter to his counterpart at Valeant, Michael Pearson.