UPDATE 2-Ackman to Allergan board: Valeant can pay more for company

Fri Nov 7, 2014 2:15pm EST
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By Svea Herbst-Bayliss

BOSTON Nov 7 (Reuters) - Valeant Pharmaceuticals International Inc can pay "substantially" more for Allergan Inc and should get a fair shot at buying it, William Ackman, the Botox maker's biggest shareholder, said on Friday.

Ackman wrote to Allergan's board the day after the company said it was discussing a merger with another company, widely reported to be Actavis, to fend off hostile bidder Valeant.

Ackman, whose hedge fund Pershing Square Capital Management owns nearly 10 percent of Allergan, asked the board to see which suitor comes up with the best offer.

Allergan on Friday said its board would "carefully consider" any higher bid from Valeant and "respond in due course." So far though, the company reiterated that Valeant's sweetened offers have been "grossly inadequate and significantly undervalue Allergan."

Ackman urged the board to run an auction "where neither party is the favored bidder, and both are encouraged to offer maximum value - before any obligation to pay a breakup fee is incurred."

But by starting exclusive negotiations with Actavis, Ackman told the board "you are tipping the scales in Actavis' favor, disadvantaging Valeant and discouraging it from raising its offer."

Valeant shares fell 1.57 percent to $127.07 on Friday amid talk that the company's proposed plan to buy Allergan might collapse. Allergan stock was down 1.6 percent at $194.18.   Continued...