UPDATE 3-Valeant to sweeten Allergan bid, Ackman turns up heat

Tue May 13, 2014 2:56pm EDT
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(Recasts with Pershing Square calling non-binding shareholder vote)

By Rod Nickel and Caroline Humer

May 13 (Reuters) - Valeant Pharmaceuticals International Inc said on Tuesday it will sweeten its unsolicited $47 billion offer for drugmaker Allergan Inc, and activist shareholder Pershing Square Capital Management said it would ask for a non-binding vote to pressure Allergan to the negotiating table.

The moves by Valeant and Allergan's biggest shareholder, Pershing, which is led by Bill Ackman, come a day after California-based Allergan rejected Valeant's current offer and criticized its business model, which is based on a steady pace of acquisitions.

Canada's Valeant said it would change its cash and stock offer during a May 28 webcast in which it will discuss details of its plans for Allergan's business. Valeant said it remained committed to getting the deal done, but would remain "financially disciplined."

"We will not stop our pursuit of this combination until we hear directly from Allergan shareholders that you prefer Allergan's 'stay the course plan' to a combination with Valeant," Valeant Chief Executive Michael Pearson said on Tuesday in a letter to shareholders.

In documents filed with the Securities and Exchange Commission, Pershing Square, which owns a nearly 10 percent stake in Allergan, said it would ask shareholders to attend a meeting and vote on compelling the board to engage in discussions with Valeant. The vote on an undisclosed date would be non-binding, and the meeting is not called according to Allergan's bylaws.

Allergan, which makes the popular anti-wrinkle treatment Botox, slammed the move as "a self-serving exercise by Pershing Square to further Valeant's attempt to acquire Allergan" at an undervalued price.

"It's pretty creative (but) I suspect it will have no effect," said Erik Gordon, professor at the University of Michigan's Ross School of Business of Pershing's move. "What makes the change is when the big holders say (to the board or management), 'hey why don't you at least come and talk to this guy?' This is like takeover theater."   Continued...