Valeant Initiates Tender Offer For Allergan

Earlier today, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) announced its exchange offer involving a mix of cash for the common stock of Allergan, Inc. (NYSE:AGN).

The offer is scheduled to expire on August 15, 2014.

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Valeant’s hostile offer

As reported earlier, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) has officially indicated it’s going hostile on Allergan, Inc. (NYSE:AGN). In its presentation on Monday, Valeant said it was correcting ‘recent misrepresentations’ and refuting ‘misleading assertions made by Allergan, Inc. and others’.

As part of its four step process towards a merger with Allegan, Valeant launched its first step through today’s exchange offer. Allergan has so far rejected Valeant’s overtures at every turn, refusing to enter direct talks with Valeant or Pershing Square over the merger proposal.

The low-down on the exchange offer

As part of the exchange offer unveiled by Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX), Allergan shareholders can exchange each of their Allergan shares for $72.00 in cash and 0.83 Valeant common shares, or an amount of cash, or a number of Valeant common shares, in each case subject to proration.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s offer requires the tender of a majority Allergan’s outstanding shares and the removal of Allergan’s anti-takeover measures, as well as regulatory approvals. Valeant is also seeking a special meeting of Allergan’s shareholders to be held by the end of 2014, though one could be called as early as August.

Pershing Square Capital Management LP will seek to remove the majority of Allergan, Inc. (NYSE:AGN)’s board members at the special meeting. This would then facilitate the suitors to remove a so-called ‘poison-pill’ provision enacted by Allergan that prevents shareholders from acting on the tender offer.

While announcing today’s tender offer, Valeant also indicated it remains willing to provide shareholders with a contingent value right related to DARP in sales if Allergan engages in negotiations to work out the exact terms.