Valeant Pharmaceuticals said on Monday that it was willing to raise its offer for the Botox maker Allergan, and once again invited the company to negotiate a friendly deal.
But Valeant stopped short of announcing a new mix of cash and stock, instead saying it was “prepared to improve its offer and provide value to your shareholders of at least $200 a share.” That would be an increase of roughly 20 percent from Valeant’s current offer, but is also contingent on Valeant’s stock price rising.
The overture, made in a letter from Valeant’s chief executive, J. Michael Pearson, to the Allergan board, was released as Allergan reported strong third-quarter earnings.
At Allergan, total product net sales increased more than 17 percent, to $1.7 billion, and earnings per share improved, according to Allergan’s preferred accounting methods.
In the letter from Valeant, Mr. Pearson argued that Allergan’s stock was trading at artificially high levels because of the ongoing takeover attempt by Valeant and its partner in the effort, the hedge fund Pershing Square Capital Management.
And Mr. Pearson said that Valeant’s own stock was artificially depressed for the same reason. Mr. Pearson noted that Allergan’s own adviser, Goldman Sachs, endorsed Valeant’s stock earlier this year.
Because of Valeant’s depressed share price, the company declined to propose a new mix of cash and stock. But a person briefed on the process said Valeant and Pershing Square would be willing to offer additional cash, and more stock, as part of a revised offer.
The letter represents a change in tone from Mr. Pearson. Until now, he has let Pershing Square’s chief executive, William A. Ackman, lob most of the attacks at Allergan’s board.
On Monday, Mr. Pearson communicated his frustration with Allergan’s continued refusal to engage in deal talks.
“One month ago I extended an olive branch, which was summarily rejected the same day,” Mr. Pearson wrote. “You have refused all of our offers to meet and answer any questions you may have about Valeant or about our offer. Instead, you have allowed management to continue making baseless attacks.”
Allergan replied on Monday that it would consider a new formal offer from Valeant if one were presented, but that it believed the offers made to date had been inadequate.
“We believe Valeant’s letter today is simply a tactic to distract investors from Allergan’s outstanding third quarter results,” Allergan said in a statement. “Valeant’s letter does not indicate an increased exchange offer price nor does it disclose the mix of consideration — instead, Valeant goes to great lengths to defend its own stock price and to disparage Allergan, including making what we believe to be disparaging remarks about Allergan and its stock price.”
Valeant and Pershing Square are hoping that Allergan shareholders replace a majority of the board at a special meeting, scheduled for Dec. 18, if Allergan does not strike another deal to complicate matters before then.
With that in mind, Valeant’s letter appeared intended for Allergan’s shareholders as much as for the board.
“To be clear, Valeant is prepared to improve its offer and provide value to your shareholders of at least $200 a share,” Mr. Pearson wrote. “We are confident that an increase in our stock price, and in consideration, will provide that value. No other potential acquirer of Allergan has the operational and tax synergies that we have, and no other potential acquirer of Allergan can provide the value that we can.”
Bill Ackman and His Hedge Fund, Betting Big
Whether fighting a corporate takeover war or buying a top-of-the-world apartment, the chief of Pershing Square Capital Management doesn’t hold back.
After Big Bet, Hedge Fund Pulls the Levers of Power
The activist hedge fund manager William A. Ackman bet a billion dollars on the collapse of the nutritional supplement company Herbalife, then launched an extraordinary campaign to hasten that development.