UPDATE 4-Valeant injects cash into bid for Botox maker Allergan

Wed May 28, 2014 3:04pm EDT
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(Updates deal value)

By Rod Nickel and Caroline Humer

May 28 (Reuters) - Canada's Valeant Pharmaceuticals International Inc raised the cash component of its unsolicited offer for Botox maker Allergan Inc on Wednesday, but the increased bid fell short of expectations and both stocks dropped.

Valeant's sweetened offer values Allergan at about $49.9 billion, based on 303.5 million shares outstanding. It also includes the possibility of additional payments worth up to $7.6 billion related to the future sales of an experimental eye drug.

"I was actually surprised (Valeant) didn't go higher," said David Amsellem, analyst at Piper Jaffray. "Clearly they are going to continue to be aggressive, making a full-court press to get this done."

Valeant's New York-listed shares dropped 1.7 percent in midafternoon to $127.61, while Allergan stock lost 4.5 percent to $157.67.

Valeant raised its cash component to $58.30 per Allergan share, compared with its previous offer of $48.30. The stock component remains at 0.83 of a Valeant share for each Allergan share.

The new offer valued Allergan at $164.22 per share as of midday Wednesday, about 7 percent higher than the previous bid of $153 as of April 22, when Valeant first made its offer.

Valeant made the initial offer, worth $47 billion, together with activist investor Bill Ackman. Allergan spurned their advance, saying the Canadian company had overstated possible savings. Allergan is best known for its lucrative Botox medicine, which is injected into muscles to smooth wrinkles and used to treat various other ailments.   Continued...