Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s CFO Howard Schiller and J. Michael Pearson, Chairman and CEO answer awkward questions about Morgan Stanley (NYSE:MS) and on special meeting.

See Morgan Stanley Called Valeant “House of Cards” When Pitching Allergan

Valeant Pharmaceuticals Intl Inc Conference Call to Correct Recent Misrepresentations

EVENT DATE/TIME: JUNE 17, 2014 / 12:00PM GMT

valeant pharmaceuticals

Unidentified Participant – – Analyst

So the first question is Mr. Ackman, Pershing Square’s, sent the letter sued to Delaware Courts on the shareholder rights issue to make sure that it’s not triggered. How confident are you that that is going to be successful, that’s first question.

Number two is I know you’re hosting this call trying to win the narrative of what Allergan, Inc. (NYSE:AGN) has been saying. There have been recent press about Morgan Stanley (NYSE:MS) and some of the comments and some of these e-mails in relation to that. This is coming out nearly on a daily basis and there’s been speculation that you’ve actually hired Morgan Stanley. So can you maybe talk about that aspect of what all this means and how do you win this narrative?

And that leads me to my third question which is Mr. Ackman and you guys have stated you’ve talked to many shareholders of Allergan, Inc. (NYSE:AGN), larger shareholders as well as yours obviously. They believe that this transaction makes sense. Do you have their support?

And obviously 25% is required on their side to call the special meeting. Can you maybe disclose quantitatively how much or what percentage range that you have that support right now to get other shareholders that are maybe on the fence or not knowing that aspect, putting some of this noise behind us and focusing on the special meeting and get this deal closer to the finish line?

Howard Schiller – Valeant Pharmaceuticals Intl Inc (VRX) – CFO

So firstly, regarding the lawsuit that Pershing brought. I’m sure you’ll appreciate the fact that given that there’s a lawsuit, there’s only so much that we can say. But I think that we’re confident that Delaware law would not allow a poison pill to frustrate the right of shareholders to call a special meeting and hence exercise their right to vote. I think its given the stakes that are involved that Pershing was looking for this confirmation.

And maybe I’ll take the third and Mike you can talk about the second question. In terms of disclosing what percent, I don’t think we’re in a position to disclose the percent. We tell you clearly a very, very large percentage of their shares have traded since on April 22 and even the night before in the after market when the leak occurred, well north of 50%.

And so a very significant percentage of the shares are in the hands of hedge funds and arbitrageurs, all of whom are event driven, all of whom have bought in at a very high price and well above what they believe the standalone value is, hence are interested a transaction occurring. Plus based on our discussions with a number of their traditional institutional shareholders, I believe — we believe strongly that the support is there and hence our confidence in the process.

J. Michael Pearson – Valeant Pharmaceuticals Intl Inc (VRX) – Chairman & CEO

In terms of Morgan Stanley (NYSE:MS), look whenever a deal like this is announced, every investment bank in the world wants to be part of it. They want the lead, what’s it called, the lead table credit, they want — this is a big deal. They want to be involved and they make pitches. They make pitches to both sides to try and get involved. And investment banks are motivated primarily by one thing and that’s making money. And I think most people understand that.

And it’s interesting Goldman Sachs Group Inc (NYSE:GS) who we’ve worked with for years ended up on the Allergan, Inc. (NYSE:AGN) side and that was fine. A year ago, they lead the equity offering. They provided us bridge loans, they’ve been involved in much of our financing. And interestingly, they spent lots and lots of time ratifying our business model, they stood behind it and obviously said our currency was quite strong in terms of our stock price, yet they’re serving Allergan, so these things happen.

In terms of Rob Kindler, Rob’s a very savvy guy and has been involved with many, many successful hostile takeovers and he’s a part of our team. He’s giving us excellent advice and he will be an important part of winning this deal from our standpoint. So I don’t think it’s unusual that you see investment banks trying to get hired by both sides of the transaction. And then once they get hired, they work the hardest they can to get the deal done. So in my mind, that was a little bit of noise and we’re happy to have Rob as part of our team.

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Wayne Cooperman – Cobalt Capital – Analyst

Do you guys have anything in writing or in agreement with Bill Ackman or is — he basically said he would take the deal and take all stock, but what’s the extent of your agreement with him?

J. Michael Pearson – Valeant Pharmaceuticals Intl Inc (VRX) – Chairman & CEO

So there was in terms of the initial agreement with Bill Ackman, there was a publicly disclosed document that you can get access to in terms of our agreement. And then the most recent deal, there was an amendment to that agreement, and is that public also, yes and that’s also public. So both those documents are available to everyone.

Wayne Cooperman – Cobalt Capital – Analyst

I mean is he giving you granted you guys voting control over his shares or any economic control?

J. Michael Pearson – Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) – Chairman & CEO

No, no. He has committed to vote for this deal, so I guess from that standpoint, there’s commitment and that’s part of the early document.

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David Buck – Buckingham Research – Analyst

A couple of quick questions, first if we look at the Bausch & Lomb business, which was one of the highlights on May 28, and Mike can you talk a little bit about how we’re going to be tracking the goal towards that $3.4 billion in 2014 sales? Is there any thought of giving more disclosure on Bausch & Lomb either all-in or the various pieces of that?

Secondly, if we look at the clearing price that Bill Ackman had talked about of $180, obviously with Valeant shares falling the offer to Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) — sorry, to Allergan, Inc. (NYSE:AGN) shareholders is below that. And what options do you have on the table maybe for Mike or Howard, if you continue to see weakness in the share price? Is there anything that you’re looking to do to adjust the offer to reflect that lower compensation to Allergan shareholders?

J. Michael Pearson – Valeant Pharmaceuticals International Inc – Chairman & CEO

In terms of the disclosure on B&L, we do view B&L as an excellent template for what we will do with Allergan, Inc. (NYSE:AGN), once we get this deal done. So I don’t think

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