Seeking Alpha

Valeant: Improved offer for Allergan will not be all in cash

  • Valeant (VRX) says that any improved bid for Allergan (AGN) "will not be an all cash deal."
  • Valeant intends to sweeten its $45.7B cash-and-stock offer based on feedback that the Canadian company hopes to receive during a meeting with stockholders from both companies on May 28.
  • At the meeting, Valeant also plans to respond to Allergan assertions that Valeant's model is not sustainable, that Bausch & Lomb is not growing, that the company slashes R&D and is not committed to innovation, and that it will be impossible to generate $2.7B of synergies without affecting sales growth. (PR)
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Comments (3)
  • Charles A. Smith
    , contributor
    Comments (1148) | Send Message
     
    "To address recent speculation, we want to make clear that the improved offer will not be an all cash deal."

     

    1. Pressure from AGN shareholders for significantly more cash is intense.
    2. VRX can't AFFORD an all-cash deal.
    20 May 2014, 08:55 AM Reply Like
  • Charles A. Smith
    , contributor
    Comments (1148) | Send Message
     
    "Allergan shares set to rise after next Valeant offer, says Bernstein.
    Bernstein expects Valeant's (VRX) next offer for Allergan (AGN) to be "credible," causing Allergan's stock to rise "at the very least." The firm believes that Allergan and Valeant are currently trading at levels that suggest that there is little chance that a deal will occur, and Bernstein thinks this is an incorrect view of the situation. The firm expects Valeant's next bid to be in the range of $190 per share, and it believes that the next logical step would be for Valeant to offer $190 per share in cash. It keeps an Outperform rating on Allergan."

     

    Don't know what Ronny Gal @ Bernstein is thinking. VRX just SAID the next offer will NOT be all cash.
    20 May 2014, 10:00 AM Reply Like
  • Charles A. Smith
    , contributor
    Comments (1148) | Send Message
     
    From today's NYT:

     

    "But Allergan on Tuesday said that the offer from Valeant and Pershing Square substantially undervalues Allergan, regardless of the consideration mix, and that it would continue to try and stay independent."

     

    Notice that Pyott said the deal undervalues AGN "regardless of the...mix", so he's basically stating the obvious, that the current deal is a non-starter. But he's also saying the current offer is too low EVEN IF IT WERE ALL CASH. There is no way VRX can get to a $180 or $190 all cash deal without blowing themselves up.
    27 May 2014, 10:07 AM Reply Like
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