Valeant boosts $53.8 billion Allergan bid as Ackman opts for stock

Fri May 30, 2014 9:55pm EDT
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By Rod Nickel, Ransdell Pierson and Caroline Humer

(Reuters) - Valeant Pharmaceuticals International Inc said on Friday it would boost its takeover bid for Botox-maker Allergan Inc for the second time this week, contingent on the two sides negotiating.

Laval, Quebec-based Valeant said it would pay $72 in cash - up from $58.30 on Wednesday - and 0.83 share of Valeant stock for each Allergan share. The revised, unsolicited offer was triggered by Pershing Square, the hedge fund controlled by Bill Ackman that is Allergan's biggest shareholder, agreeing to take only stock in Valeant for its Allergan shares.

The offer is worth $53.8 billion, up from Wednesday's $49.9 billion bid.

Allergan shares closed 5.7 percent higher at $167.46 while Valeant shares ended 1.5 percent higher at $131.21.

BMO analyst David Maris said the revised offer will fall short, adding it seemed "odd and erratic" that Valeant would raise the bid two days after its chief executive, Mike Pearson, promised not to negotiate against himself.

"It makes investors scratch their heads when a new bid comes in before the ink is dry on the previous one," Maris said.

But analyst Ronny Gal of Bernstein Research said the offer increases pressure on Allergan to take action to raise the company's value and also to negotiate with Valeant.

"The offer now appears credible," he said. "We do not think this is a 'done deal' by a long shot, but obviously the likelihood of success is higher now."   Continued...

The head offices of Valeant Pharmaceuticals International Inc. are seen in Laval, Quebec May 20, 2014.  REUTERS/Christinne Muschi