Allergan's board officially responded to Valeant's unsolicited takeover offer of $53 B with a resounding, No! In a letter from Allergan CEO David E.I. Pyott to Valeant CEO J. Michael Pearson, the offer was termed "undervalued". Pyott went on to say that Valeant's business model is flawed and that their propensity to strip acquired companies of their support staff and R&D would substantially reduce Allergan's long-term value. As such, Allergan (and by implication its shareholders) would be better served to remain as a stand alone company.
The language is remarkably similar to that used by AZ in fending off an unwanted Pfizer bid. What isn't similar is that Valeant and renegade investor Bill Ackman will move immediately to a special board meeting at Allergan where it will try to replace most of the board with candidates who favor a buy out. It's a much more aggressive approach. Ackman says hat major Allergan investors say they will gladly sell if Valeant's bid can hit a $180 per share price point.
Posted by Bruce Lehr June 10th 2014.