Canada-based Valeant Pharmaceuticals and US-based Pershing Square Capital Management have disclosed details of their offer to purchase Botox-maker Allergan for more than $45bn.
Valeant is proposing to combine with Allergan for $48.30 in cash and 0.83 shares of Valeant stock for each Allergan share.
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Pershing Square, which is largest stockholder of Allergan, has agreed to take only stock in the transaction and plans to continue as a long-term shareholder of the combined company.
If successful, the acquisitions will bring together two mid-sized pharmaceutical companies with expertise in eye care, dermatology and cosmetic drug businesses.
Valeant chairman and CEO Michael Pearson said the deal could provide the company with leading positions in ophthalmology, dermatology, aesthetics, dental and the emerging markets.
"Together, we can capitalise on the inherent strengths and complementary portfolios of our two companies, while achieving significant synergies by applying Valeant’s unique operating model to a combined set of assets," Pearson said.
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By GlobalData"While the Allergan CEO and board of directors made it clear, both privately and publicly, that they were unwilling to enter discussions with us about creating a value-enhancing combination, we are hopeful that our proposal for this extremely compelling combination will enable us to engage in productive discussions."
The newly formed company is expected to invest over $300m annually on R&D in Phase III programmes, current and future line extensions, and lifecycle management programmes.
The new company will continue to fund both companies’ late stage development programmes, including those in dry eye, diabetic macular edema, glaucoma, migraine, eye whitening, psoriasis, and other dermatology areas.
Pershing Square CEO William Ackman said the combination of Valeant and Allergan represents a strategic and value-creating transaction.
"I strongly urge the Allergan board of directors to carefully examine the proposed transaction and enter into negotiations with Valeant so that a merger can be consummated promptly," Ackman said.
"We will be electing all-stock consideration in the transaction so that we can remain a long-term holder of the combined company."
The proposed merger agreement that Valeant proposed to Allergan will be filed with the Securities and Exchange Commission.
For Valeant, Barclays and RBC Capital Markets are acting as financial advisors in this transaction. Sullivan & Cromwell, Skadden, Arps, Slate, Meagher & Flom, and Osler, Hoskin & Harcourt are providing legal advice to the company.
For Pershing Square, legal advice is offered by Kirkland & Ellis and Davies Ward Phillips & Vineberg.
Image: Allergan headquarters in Irvine, California, US. Photo: courtesy of File Upload Bot (Magnus Manske).
