| NEW YORK, June 16
NEW YORK, June 16 Morgan Stanley, an
adviser to Valeant Pharmaceuticals International Inc in
its $53 billion hostile bid for Allergan Inc, initially
tried to get hired by Allergan and in its pitch called the
unsolicited bidder a "house of cards", according to Allergan.
The Botox maker released email exchanges with Morgan Stanley
bankers on Monday, which reveal the bankers were pitching for a
defense assignment from Allergan, offering advice as to how the
company could successfully defend the unwanted suitor.
"Executives from Morgan Stanley, the investment bank
understood to have recently been retained by Valeant, have sent
emails directly to Allergan's management team that suggest they
share the concerns of Allergan...," the company said in a
In a May 13 email to Allergan Chief Executive David Pyott
and Chief Financial Officer Jeff Edwards, Morgan Stanley's
global head of M&A Robert Kindler said the company could be more
aggressive in going after Valeant's business model and the value
of its stock.
David Horn, a managing director at Morgan Stanley's
healthcare group, followed up with an email to Edwards on May
"Part of what Rob (Kindler) is suggesting (to Allergan) is
to allow him to use his significant relationships with media and
analysts to provide a clear and detailed articulation of why
Valeant is a house of cards and your investors should not want
to take their stock," Horn said.
Representatives of Morgan Stanley did not immediately
respond to requests for comment, while Allergan declined to
comment. Valeant could not be immediately reached for comment.
Valeant and its ally Pershing Square Capital Management -
Allergan's biggest shareholder - have offered to buy Allergan
for $53 billion in cash and shares. Allergan has rejected the
offer and refused to negotiate, leading Pershing to move toward
replacing most of Allergan's board at a special meeting.
However, Valeant's Toronto-listed stock has fallen in recent
weeks, with Allergan stepping up its attack on the rival's
business model. Shares of Valeant have fallen nearly 7 percent
in the last five days, while the S&P 500 has remained flat.
Allergan has argued that Valeant shuns research and
development and relies solely on acquisitions to drive growth, a
model which it calls unsustainable. Allergan has compared
Valeant to Tyco, the scandal-plagued company which built itself
up through acquisitions and then collapsed.
Valeant has defended itself, with Ackman arguing that the
company's business model is more similar to Warren Buffett's
Berkshire Hathaway Inc than to Tyco.
Allergan is working with Goldman Sachs Group and Bank
of America Merrill Lynch and legal advisers Latham &
Watkins, Richards, Layton & Finger and Wachtell, Lipton, Rosen &
Valeant, which has been working with Barclays Plc
and RBC Capital Markets for the past few months, has
recently added Morgan Stanley as a financial adviser, people
familiar with the matter said.
(Editing by Sofina Mirza-Reid)