Allergan Board of Directors Rejects Unsolicited Exchange Offer from Valeant
Allergan, announced that its Board of Directors, after consultation with its independent financial and legal advisors, unanimously determined that Valeant Pharmaceuticals International, Inc.’s unsolicited exchange offer to acquire all outstanding common shares of Allergan is grossly inadequate, substantially undervalues the Company, creates significant risks and uncertainties for Allergan stockholders, and is not in the best interests of the Company and its stockholders. Accordingly, the Board strongly recommends that Allergan stockholders not tender any Allergan shares to Valeant.
Pursuant to the Valeant exchange offer, Allergan stockholders would exchange each share of common stock of the Company for 0.83 shares of Valeant common stock and $72.00 in cash, or subject to proration, an amount of cash or a number of Valeant common shares with the implied value set forth in the exchange offer (the “Exchange Offer”). The Company noted that the implied value of the Exchange Offer is $173.20 per share, based on the closing price of Valeant’s stock on June 20, 2014, which is substantially lower than the initial $179.25 per share implied value of Valeant’s May 30, 2014 re-revised proposal, which also included a contingent value right that is not included in the Exchange Offer.
“Our Board is unanimous in its determination that Valeant’s unsolicited exchange offer is grossly inadequate, substantially undervalues Allergan, and is not in the best interests of Allergan and its stockholders," said David E.I. Pyott, Allergan's Chairman of the Board and Chief Executive Officer. “The Board strongly recommends that Allergan stockholders reject Valeant’s exchange offer and prevent Valeant from taking control of Allergan at a price that does not appropriately reflect the underlying value of Allergan’s assets, operations and prospects, including our industry-leading position and projected growth opportunities. Allergan has a track record of consistently acting in the best interests of its stockholders and the Board continues to be confident that Allergan will create significantly more value than Valeant’s proposal.”
In reaching its determination to reject the Exchange Offer, the Allergan Board noted, among other considerations:
•The Exchange Offer is grossly inadequate and substantially undervalues Allergan’s industry-leading position, financial performance, strong balance sheet, exceptional management and growth prospects. ◦Allergan has a longstanding track record of innovation and operational excellence that has created strong and sustainable stockholder value over a substantial period of time.
◾IRVINE, Calif.--(BUSINESS WIRE)--Jun 23, 2014--Allergan has routinely delivered compelling results, achieving compound annual increases in revenue and non-GAAP diluted earnings per share of approximately 15.7% and 18.4%, respectively, since 1998.
◾Allergan has created significant value for its stockholders over the last five years, generating a 256% price return compared to a 113% price return in the S&P 500.
◦Its belief that Allergan’s promising outlook should create significant near-term and long-term value for stockholders. ◾As previously announced, given the strength in its business, Allergan expects to: ◾Increase non-GAAP diluted earnings per share by 20 to 25 percent and continue to generate double-digit revenue growth in 2015.
◾Produce double-digit sales growth and produce non-GAAP diluted earnings per share compounded annual growth of 20 percent over the next five years.
◾Generate approximately $14 billion in additional free cash flow over the next five years.
◾The Company will provide an update to its stockholders on near-term value-driving events on or around the time of Allergan’s second quarter 2014 earnings announcement.
◦Allergan’s future prospects are driven by a robust pipeline of new products and services arising from a longstanding and successful dedication to research and development. ◾Allergan has a track record of exceeding its guidance every year for the past 15 years, including through numerous business cycles.
◾The Board believes Allergan’s ongoing commitment to extensive and efficient investment in research and development will create substantial value for stockholders and customers.
◦Allergan has a strong balance sheet and ample leverage capacity.
•Its belief that Valeant’s business model creates significant risks and uncertainties for Allergan’s stockholders. ◦Valeant’s acquisition-based revenue growth is unsustainable.
◦Valeant’s anemic organic growth is driven by unsustainable price increases.
◦Valeant’s projected synergies claims are aggressive, and Valeant’s lack of investment would put Allergan’s core business at risk under Valeant’s ownership.
◦Valeant discloses far less in its financial statements than Allergan and its industry peers.
◦Valeant’s R&D capabilities pale when compared to Allergan’s track record of innovation and value creation.
•The urgency of the Exchange Offer disadvantages Allergan’s stockholders and evidences Valeant’s desperation to acquire Allergan to mask its continued weak organic growth.
•Valeant and Pershing Square have used highly questionable tactics in an attempt to facilitate a series of grossly inadequate proposals.
•On June 21, 2014, each of Goldman, Sachs & Co. and BofA Merrill Lynch rendered an oral opinion to the Allergan Board that, as of that date and based upon and subject to the factors and assumptions set forth in its written opinion, the consideration proposed to be paid to the Allergan stockholders (other than Offeror and Pershing Square and any of their respective affiliates) of Shares pursuant to the Offer was inadequate from a financial point of view to such holders. The full texts of the written opinions of each of Goldman, Sachs & Co. and BofA Merrill Lynch, each dated June 21, 2014, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with each such opinion, is attached to Allergan’s 14D-9 filing as Annexes B and C, respectively. Goldman, Sachs & Co. and BofA Merrill Lynch each provided its opinion for the information and assistance of the Allergan Board in connection with its consideration of the exchange offer. The opinions of Goldman, Sachs & Co. and BofA Merrill Lynch are not recommendations as to whether or not any holder of Allergan’s shares should tender such shares in connection with the exchange offer or any other matter.
Allergan has made the Board’s position on the Exchange Offer available to stockholders in a solicitation/recommendation statement on Schedule 14D-9, which has been filed with the Securities and Exchange Commission (“SEC”) and published on Allergan’s website at www.allergan.com.
Goldman, Sachs & Co. and BofA Merrill Lynch are serving as financial advisors to the Company and Latham & Watkins, Richards, Layton & Finger, P.A. and Wachtell, Lipton, Rosen & Katz are serving as legal counsel to the Company.