Allergan Urges Shareholders Not To Tender Shares To Valeant Exchange Offer

(RTTNews) - Botox maker Allergan Inc. (AGN) on Monday urged its shareholders not to tender their shares to Canadian drug maker Valeant Pharmaceuticals International Inc.'s (VRX, VRX.TO) unsolicited exchange offer.

Allergan noted that Valeant's exchange offer is "grossly inadequate, substantially undervalues the company, creates significant risks and uncertainties for Allergan stockholders, and is not in the best interests of the company and its stockholders".

Last Wednesday, Valeant launched a tender offer for the shares of Allergan, taking its $53 billion offer directly to shareholders after being repeatedly rebuffed by the Botox maker.

Allergan noted that under the tender offer, Allergan stockholders will get 0.83 shares of Valeant stock and $72.00 in cash for every Allergan share held by them, or subject to proration, an amount of cash or a number of Valeant common shares with the implied value set forth in the tender offer.

According to Allergan, the implied value of the exchange offer is $173.20 per share, based on the closing price of Valeant's stock on June 20, 2014. The company noted that this is substantially lower than the initial $179.25 per share implied value of Valeant's re-revised proposal of May 30, which included a contingent value right that is not included in the exchange offer.

"The urgency of the Exchange Offer disadvantages Allergan's stockholders and evidences Valeant's desperation to acquire Allergan to mask its continued weak organic growth," Allergan said.

In April, Valeant along with billionaire investor William Ackman's hedge fund Pershing Square Capital Management L.P. submitted an unsolicited bid to acquire Allergan in a cash and stock deal that valued Allergan at $46 billion. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.

However, Allergan's board rejected the offer, stating that it created huge risks for its stockholders and was not in the best interests of the company. In late May, Valeant sweetened its takeover bid for Allergan for the second time in a week, to about $53 billion. Allergan again rejected the offer in early June.

Meanwhile, Pershing Square called for a special meeting of Allergan shareholders as it seeks to remove six members from the current board of the company. Ackman is seeking support from other Allergan shareholders to oust six directors from Allergan's board and smoothen the process to consummate Pershing Square's joint takeover bid with Valeant.

However, Allergan said Monday that its promising outlook should create significant near-term and long-term value for stockholders.

The company reiterated that it expects to increase adjusted earnings per share by 20 to 25 percent and continue to generate double-digit revenue growth in 2015. The company also expects to generate double-digit sales growth and produce adjusted earnings per share compounded annual growth of 20 percent over the next five years.

Further, Allergan expects to generate about $14 billion in additional free cash flow over the next five years.

AGN is currently trading at $165.56, up $0.24 or 0.15 percent on a volume of 116,064 shares.