Allergan makes case against Valeant takeover ahead of higher bid

Reuters
J. Michael Pearson, Chairman of the board and Chief Executive Officer of Valeant Pharmaceuticals International Inc., waits for the start of their annual general meeting in Laval, Quebec May 20, 2014. REUTERS/Christinne Muschi

(Reuters) - Allergan Inc on Tuesday built its case with investors for rejecting a $47 billion takeover offer from Valeant Pharmaceuticals International, , saying the Canadian drugmaker has overstated the possible savings from the deal. The move comes one day before Valeant will hold a webcast in which it has said it will raise its offer for Allergan. In slides posted to its website, the botox maker laid out its argument for rejecting Valeant's offer and said that the research and development and tax structure savings would not materialize. Valeant and activist investor Bill Ackman made an offer to buy Allergan on April 22, which Allergan spurned. Alvarez & Marsal and FTI Consulting, two third-party consultants, reviewed Allergan's analysis and confirmed key components, Allergan said. The offer was $153 per share at the time of the bid. Investors are looking for a price of $180 to $200 per share, according to an investor survey last week. Allergan said Valeant's low organic sales growth was driven by price increases, that its acquired companies experienced market share erosion and that Valeant lacked transparency in its financial reporting. "Valeant's business leaders will provide further clarity on our historic, current and future operating performance and address Allergan's inaccurate assertions about our business model at our event tomorrow," Valeant spokeswoman Laurie Little said when asked to comment on Allergan's presentation. Wells Fargo analyst Lawrence Biegelsen said in a research note that if Allergan rejects Valeant's new bid, it expects Allergan to then announce new steps to increase its financial performance. That could include a strategic acquisition, a large share buyback program or cost cutting. Allergan shares were off 1.6 percent at $164.33 while Valeant fell 3 percent to $129.54, both on the New York Stock Exchange. (Reporting by Caroline Humer in New York; Additional reporting by Rod Nickel in Winnipeg; Editing by Bernadette Baum and Lisa Shumaker)