We now know exactly how much Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) is proposing to pay for Allergan, Inc. (NYSE:AGN). On Monday we reported that Valeant had teamed up with activist investor Bill Ackman in an attempt to talk Allergan into the improved deal.
Details on Valeant’s offer
The Wall Street Journal (via MarketWatch) reports that Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) has proposed paying $48.30 in cash, plus .83 shares of Valeant for Allergan, Inc. (NYSE:AGN). Based on Monday’s closing prices, that placed a value of $45.6 billion or $152.88 per share on Allergan. As of this writing, shares are already above that, trading at just under $164 a share. However, since Valeant’s share price is also up, that also increases the value placed on Allergan.
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Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) said the offer is a substantial premium to Allergan, Inc. (NYSE:AGN)’s share price on April 10, which was $116.63. That was also the day before Bill Ackman’s firm Pershing Square Capital Management surpassed 5% ownership in Allergan and started rapidly accumulating more shares.
At this point, Pershing’s stake in Allergan is 9.7%. Sources reportedly told MarketWatch that the stake is worth around $4 billion, which is Ackman’s largest investment ever.
Options for Allergan
If Allergan, Inc. (NYSE:AGN) accepts the offer from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX), the result would be a massive company in both the eye care and skin care industries. Each of the two companies’ market capitalizations are more than $40 billion. In fact, with Allergan’s significant increase in share price today, its market cap is even higher than that of Valeant—nearly $49 billion, compared to Valeant’s market cap of almost $44 billion.
Sources told The Wall Street Journal that Bausch & Lomb brand owner Laval has been trying to talk Allergan, Inc. (NYSE:AGN) into a deal for some time. They also said the acquisition attempt would probably be a hostile one.
Allergan to consider offers
Late on Monday, Allergan, Inc. (NYSE:AGN) said it would consider any offer Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) or Pershing Square sent. The company also stated that it hadn’t been discussing anything with either firm in connection with a merger offer.
The WSJ notes that Bill Ackman’s teaming up with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) is rare because activists don’t usually speak with a potential buyer before they invest in a company. In most cases, they buy stakes in a company and then push for change.