Valeant's hostile bid for Allergan hits hurdles

Pharmaceutical giant Valeant’s move to create a second-step merger with Botox-maker Allergan has hit hurdles, as Allergan’s CFO resigns at the same time the company is said to be seeking out an alternative buyer.

A Wall Street Journal yesterday article alleged that Allergen is currently in talks with Salix Pharmaceuticals and at least one other company are currently in talks to strike up an alternative deal to the hostile Valeant bid.

According to the report, there is no certainty of how advanced the Salix talks are, but it did state that a takeover deal with the company or the alternative buyer could be brokered by as early as next month.

Investment world reacts to buy-out rumours

Upon hearing the news shares in both Valeant and Allergan fell, while fierce trading in Salix shares pushed share prices up by 10%.

This news came the day after Allergan CFO Jeff Edwards announced he was stepping down from his position with immediate effect, citing that he wanted to spend more time with his family.

Edwards has been replaces by Allergan veteran Jim Hindman, who is currently senior vice president for treasury, risk and investor relations.

Valeant has also released rebuttals to a list of allegations made by Allergan in an August 5th press release that criticized the company’s business strategy and made a number of allegations that questions the proposed merger.

The rebuttals included Valeant providing evidence of the healthy performance of its newly acquired Bausch + Lomb business, as well as further clarification of its dermatology portfolio and evidence of strong sales for its facial injectable products business.

The Valeant offer 

In a long-running saga, Valeant said it was aiming to buy a controlling stake in Botox-maker Allergan back in June, when it offered shareholders a combination of cash and Valeant shares.

Valeant’s strategy is part of a hostile takeover bid estimated to be worth $53bn, which will allow the pharmaceutical giant and its financial partner Pershing Square Capital Management to take over the lucrative business.

At the end of May, Valeant made a bid for the company that was rejected, but two weeks later the company has decided to approach the situation with what it terms as an ‘exchange offer for the common stock of Allergan’

This offer to Allergan shareholders includes a combination of cash and Valeant shares.