The specialty pharmaceutical company Valeant Pharmaceuticals International Inc. has made an approximate $45.7 billion unsolicited bid for specialty pharmaceutical company Allergan, Inc.. Allergan has acknowledged the bid, but says it plans to take no action at this time.

Valeant submitted a merger proposal to the board of directors of Allergan under which each Allergan share would be exchanged for $48.30 in cash and 0.83 shares of Valeant common stock, based on the fully diluted number of Allergan shares outstanding.  Shareholders will be able to elect a mix of cash and shares, subject to proration. Allergan shareholders will own 43% of the combined company. Pershing Square, Allergan’s largest shareholder would hold  a 9.7% stake, which it  says will agree to elect only stock consideration in the transaction and with the intent to remain a long-term shareholder of the combined company.

“This proposal represents an undeniable opportunity to create extraordinary value for both Allergan and Valeant shareholders by establishing an unrivaled platform with leading positions in ophthalmology, dermatology, aesthetics, dental and the emerging markets” said J. Michael Pearson , chairman and chief executive officer of Valeant, in a press statement. “Together, we can capitalize 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. 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.”

In a statement, Allergan said: “The Allergan Board of Directors, in consultation with its financial and legal advisors, will carefully review and consider the Proposal and pursue the course of action that it believes is in the best interests of the Company’s stockholders. The Company’s stockholders do not need to take any action at this time.”

Valeant said that the transaction, if it accepted and completed, would create more than $2.7 billion in annual operating cost synergies, with 80% achieved in the first six months with the remaining 20% in the following 12 months.  

The proposed merger agreement that Valeant delivered to Allergan will be filed with the Securities and Exchange Commission.

Source: Allergan and Valeant Pharmaceuticals International