Valeant, Pershing prepare to go hostile in Allergan bid

Mon Jun 2, 2014 2:23pm EDT
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By Rod Nickel and Ransdell Pierson

(Reuters) - Valeant Pharmaceuticals Inc (VRX.TO: Quote) on Monday prepared to take its $53.8 billion takeover bid for Allergan Inc (AGN.N: Quote) directly to the Botox maker's shareholders in a battle that could last late into the year.

The fight escalated when Valeant ally Pershing Square, a hedge fund that owns 9.7 percent of Allergan, called for a meeting to replace the company's board.

Pershing Square Chief Executive Officer Bill Ackman, in a conference call with Valeant CEO Mike Pearson, told investors he had requested a special meeting that could take place as early as Aug. 7. Allergan could also delay the meeting, where Pershing intends to replace a majority or more of the company's directors, to as late as November, Ackman said.

Pearson said Valeant expected in two to three weeks to file an exchange offer, a means of taking the bid to Allergan shareholders, with the U.S. Securities and Exchange Commission. He also urged Allergan to negotiate with Valeant.

"We will be patient," Pearson said. "We will get this deal done."

Allergan, whose Botox medicine is injected into muscles to smooth wrinkles, said it would consider Valeant's latest offer. Laval, Quebec-based Valeant said on Friday that it would pay $72 in cash and 0.83 share of its stock for each Allergan share, increasing its offer for the second time last week.

Valeant is also offering possible additional payments related to future sales of an experimental eye drug that Allergan owns.

In a statement, Allergan urged shareholders not to act on the bid until its board makes a recommendation.   Continued...

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