The heat in the Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) unsolicited takeover offer for Allergan, Inc. (NYSE:AGN) is getting hotter, with Allergan advising their investors to reject Valeant’s “grossly inadequate” offer. Valeant fired back this morning in a press release refuting Allergan’s “misleading assertions.”

valeant pharmaceuticals

Allergan, Inc. (NYSE:AGN)’s board said the Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) offer should be rejected because it undervalues the company and creates significant risks and uncertainties for Allergan shareholders. Allergan had previously attacked Valeant’s $52.7 billion offer largely based on the price of Valeant shares, which it said was inflated, as reported in ValueWalk. Allergan also had issues with Valeant’s business model, which reduces medical research and development as well as other management costs while leverages sales and marketing efficiencies.

Valeant retaliates against Allergan’s presentation

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) struck back this morning, refuting over 25 points that Allergan, Inc. (NYSE:AGN) used in presentations to persuade its shareholders to reject Valeant.  Among them, Valeant answered the charge it “lacks clinical and regulatory experience” by noting they have over 1,000 R&D employees with an average of over 12 years’ experience.  Addressing the issue of high turnover of senior management and on the board of directors, Valeant shot back that with its rapid growth management turnover should be expected.

“Allergan’s rejection of Valeant’s proposal is based on beliefs and assumptions about our business that are not supported by the facts. We are confident that Allergan’s stockholders support our offer, which even at Valeant’s current stock price provides an almost 50% premium to where Allergan’s stock was trading on an unaffected basis,” said Valeant spokesperson Laura Little. “We are moving forward with our exchange offer and remain committed to this value-creating transaction.”

Allergan, Inc. (NYSE:AGN) is offering $72 in cash and 0.83 Valeant shares.  It is the Valeant share price that wasn’t fully addressed in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s refutation of Allergan’s claims. For instance, Allergan said as of June 20 the implied value of the deal is $173.20 per share which is “substantially lower” than the initial $179.25 Valeant offer on May 30.

Valeant’s offer for Allergan

The Valeant offer requires the exchange of Allergan’s shares and the removal of Allergan’s antitakeover measures, as well as regulatory approvals, a Wall Street Journal report noted. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s deal for Allergan, Inc. (NYSE:AGN) is set to expire on August 15. The firm is pushing a special meeting of Allergan’s shareholders to be held before the close of 2014 were the majority of Allergan’s board members could be removed.

Some have viewed the takeover battle as a test of the value of research and development, Allergan’s strong suit, against relentless cost cutting that reduces the company’s long term success in favor of short term stock performance.  For its part, Valeant has said Allergan is a free spending group that presents opportunities to reduce costs to improve the profit outlook.