The unlikely teaming up of Valeant and Allergan's single largest shareholder, will see Allergan's shareholders getting $48.30 in cash and and 0.83 percent in Valeant stock for each share they own, according to a Valeant statement today. Ackman-run Pershing Square Capital Management will support the offer.
“We firmly believe that combining Valeant and Allergan would create an unrivaled platform for growth and value creation in health care, and we look forward to finalizing and announcing the terms of our proposal shortly,” Valeant said in an email statement.
If the deal goes through it will see the creation of a behemoth in the skin- and eye-care segment, with both companies having a stock market capitalization of more than $40 billion.
Valeant, which owns brands such as Baush & Lomb, has been looking to acquire Allergan for some time and was approached by Ackman to partner on the deal. According to people close to the matter, the deal will likely be a hostile takeover.
Allergan has said that its board is unaware of any offer or proposal received by Valeant and Pershing Square and that it has had no discussions with with of the two regarding a merger offer.
Valeant hasn't settled on how much stock it would commit to an offer but expects to use about $15 billion in cash at this point, according to the SEC filing. The pharmaceutical company has until May 2 to make an offer in conjunction with Ackman.
Valeant is looking to expand beyond generic drugs and into areas such as opthalmology, dermatology and dentistry, where it has a small presence. Allergan provides an interesting acquisition for the Canadian buyer, as Allergan's sales are projected to grow to $10.2 billion in 2020 from $6.3 billion last year.
[Wall Street Journal]