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By Euan Rocha
LAVAL, QUEBEC May 20 Canada's Valeant
Pharmaceuticals International said on Tuesday it will
not make an all-cash bid for drugmaker Allergan Inc as
many had expected last week when the company said it would
improve its cash and stock offer for the Botox maker.
Michael Pearson, chief executive officer of the Canadian
drugmaker, said Allergan shareholders favored Valeant's bid and
preferred Valeant equity over more cash.
"We think their shareholders are convinced this is a good
transaction and we have met with many, if not most of their
shareholders privately and they have all told us they want this
deal to be done," Pearson said on the sidelines of Valeant's
annual meeting in Laval, Quebec.
"In terms of the currency, most of their shareholders would
prefer to get more equity and less cash. They believe that the
combination will not only create short term value in terms of
the premium, but that longer term, it will continue to perform."
Valeant on April 22 offered $48.30 in cash and 0.83 of one
Valeant share for each Allergan share in a massive $47 billion
unsolicited bid with the support of activist investor William
Allergan rejected the offer on May 12, citing the high stock
component and steep cost-cut proposals. It said the offer was
too risky due to uncertainty over long-term growth at Valeant,
whose business model was unsustainable.
Valeant will announce its improved offer May 28 when it
holds a meeting for shareholders of both companies to respond to
"We want to make clear that the improved offer will not be
an all-cash deal," Valeant said in a statement Tuesday.
Pearson said Valeant could not outline its new proposal
earlier, but said a revised bid was best presented May 28 when
addressing both sets of shareholders.
Laval, Quebec-based Valeant aims to become one of the
world's top five drugmakers and has acquired about half a dozen
companies in the last two years. Last year, it bought contact
lens maker Bausch & Lomb Holdings for $8.7 billion, and it
bought Medicis Pharmaceuticals for $2.6 billion in 2012.
Allergan has not budged since rejecting Valeant's bid and
Chief Executive David Pyott urged shareholders to let the
company stand alone.
Ackman, who controls a near 10 percent stake in Allergan as
head of Pershing Square Capital Management, has said Pyott had a
"disabling" conflict of interest as a takeover would likely mean
the loss of his job.
Allergan shares were up 1.4 percent at $162 at midday on the
New York Stock Exchange. Valeant rose 2.6 percent to C$141.21 on
the Toronto Stock Exchange.
(Additional reporting by Esha Dey in Bangalore; Editing by
Savio and Bernadette Baum)