July 18 Valeant Pharmaceuticals Inc moved on Friday to blunt a key criticism by takeover target Allergan Inc of its Bausch + Lomb business by releasing data showing strong sales growth.
Allergan, which is trying to fend off a $51 billion hostile bid from Valeant, has warned its investors about the sustainability of the Laval, Quebec-based company's acquisition-based business model.
Allergan, which makes Botox anti-wrinkle injections, has said much of Valeant's organic growth stemmed from unsustainable price increases, not sales volume, and that Bausch, its biggest acquisition, appeared to be losing market share.
In a presentation that Valeant said it would take to Allergan investors, the company said Bausch + Lomb, which is known for its contact lenses, had recorded 12 percent growth in organic revenue in the second quarter from a year earlier. Organic growth is growth from existing operations.
More than 90 percent of that increase was due to a rise in sales volume, it said.
"Bausch + Lomb continues to benefit from Valeant's decentralized operating model," Chief Executive Officer Mike Pearson said in a statement. "The results at Bausch + Lomb further validate our business model, which Allergan has no credibility in attacking."
Valeant bought Bausch last year for $8.7 billion.
The Bausch results are in line with what Valeant said it expected to produce, but investors were skeptical of that forecast, said Morningstar analyst David Krempa.
"So it was positive to see (Valeant) deliver," he said.
Valeant's presentation also urges Allergan shareholders to support holding a special meeting to oust most of the company's directors, who have refused to negotiate a takeover.
An Allergan spokeswoman did not immediately comment.
Shares of Valeant, which will report the rest of its second-quarter results on July 31, rose 1.3 percent to C$132.46 in Toronto during morning trading. Allergan was up 1.3 percent at $167.91 in New York. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Lisa Von Ahn)