Why Even Valeant’s Sweetened Deal Is Bad for Allergan

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Last week, Valeant Pharmaceuticals (NYSE:VRX) raised its bid for rival drugmaker Allergan Inc. (NYSE:AGN), perhaps best known for being the maker of the injectable skin treatment Botox, in an unusual move that has disappointed most analysts on Wall Street.

Valeant raised its bid for Allergan from $58.30 per share to $72 per share, sweetening the offer by adding a portion of its own stock to the deal. The Wall Street Journal reports that according to Thursday’s closing price, the revised offer could be worth as much as $53 billion.

The news follows a previous meeting with shareholders in which Valeant CEO J. Michael Pearson said, “We’re not going to keep offering against ourselves.” Further, the move marks the second time in three days that Valeant has updated its offer for Allergan; the latter has yet to respond to either approach.

Pearson said Friday that the sweetened offer reflects the fact that Valeant is serious and means business. “We’re putting our money where our mouth is,” he said Friday in a statement, per The New York Times. “There’s no greater validation for this transaction than our willingness to give up $600 million to other shareholders for us to take 100 percent Valeant stock.”