Valeant in $45bn bid for Botox-maker Allergan

Valeant Pharmaceuticals, backed by activist shareholder William Ackman, Tuesday offered to acquire Botox-maker Allergan for more than $45 billion. Valeant, proposing a combination of stock and cash to buy Allergan, said the acquisition would enable huge cost savings and create a leader in opthalmology, dermatology, aesthetics and other growing health fields. "Together we can capitalize on the inherent strengths and complementary portfolios of our two companies, while achieving significant synergies by applying Valeant's unique operating model to a combined set of assets," Valeant chief executive J. Michael Pearson said in a letter to Allergan chief executive David Pyott. The offer comes less than 24 hours after Valeant and Ackman disclosed that they established a joint venture to bid for Allergan. Ackman disclosed that his Pershing Square investment group had acquired 28.9 million shares of Allergan, or 9.7 percent of the company. Allergan said Monday it would evaluate any offer, but at the time had not held any discussions with either Valeant or Pershing Square on the matter. However, Pearson's letter alluded to resistance from Allergan to a deal. "While the Allergan CEO and board of directors made it clear, both privately and publicly, that they would be unwilling to enter discussions with us about creating a value-enhancing combination, we are hopeful that our proposal for this extremely compelling combination will enable us to engage in productive discussions," Pearson wrote. Under the proposal, Valeant would offer for each Allergan share $48.30 in cash plus 0.83 shares of Valeant. The proposal is a "substantial" premium to Allergan's valuation, Pearson wrote. Pershing Square has agreed to take only stock and to remain a long-term shareholder, Valeant said. "The combination of Valeant and Allergan represents the most strategic and value-creating transaction I have ever analyzed," Ackman said in the Valeant statement. "I strongly urge the Allergan Board of Directors to carefully examine the proposed transaction and enter into negotiations with Valeant so that a merger can be consummated promptly." Founded in 1948, Allergan is best known for marketing the anti-ageing medication Botox, which is injected into muscles. Valeant has completed more than a dozen acquisitions over the last 18 months in a speedy growth campaign. The company's biggest deal by far was an $8.7 billion purchase of US eye-health company Bausch & Lomb. Allergan shares jumped 6.0 percent Monday to $142 and were up another 14 percent to $162.16 in opening trade Tuesday. Valeant shares rose 4.0 percent to $131.01.