Allergan agrees to $66 billion Actavis offer; Valeant walks

Mon Nov 17, 2014 4:29pm EST
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By Caroline Humer

(Reuters) - Botox maker Allergan Inc on Monday accepted a $66 billion takeover bid from Actavis Plc, ending a seven-month hostile pursuit by activist investor William Ackman and Valeant Pharmaceuticals International Inc.

    Dublin-based Actavis offered $219 per share in cash and stock, amounting to billions more than Canada's Valeant was prepared to pay. Valeant said it would walk away from its Allergan campaign shortly after the deal was announced. Ackman was not available for comment.

The deal marks a surprise win for Allergan, which had fought the Valeant-Pershing alliance in court and among shareholders in one of the healthcare sector's most complex takeover efforts.

Allergan shares rose 5.3 percent to close at $209.20. Actavis gained 1.7 percent to $247.94.

Allergan had argued that the Valeant cash-and-stock offer, most recently worth about $54 billion, would hurt its shareholders, given the Canadian drugmaker's history of cutting research and development spending at companies it acquires.

Besides the higher price tag, the Actavis deal came with only $400 million in R&D cuts for Allergan, far less than the $900 million decrease that Valeant had proposed, the companies said on a conference call with investors.

Actavis’ approach may help the two companies integrate their operations and ensure some of Allergan's promising experimental eye treatments for macular degeneration and glaucoma remain in the pipeline.

"If these bets turn out well, Actavis will be seen as a better call," said Morningstar analyst Michael Waterhouse.   Continued...

A sample of Botox is seen at the Long Island Plastic Surgical Group at the Americana Manhasset luxury shopping destination in Manhasset, New York September 30, 2010.   REUTERS/Shannon Stapleton