(Adds Allergan comment)
By Rod Nickel
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, a measure of existing
operations' performance, stemmed from unsustainable price
increases, not sales volume. Allergan also said Bausch,
Valeant's biggest acquisition, appeared to be losing market
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 organic revenue
growth of 12 percent in the second quarter from a year earlier.
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.
But an Allergan spokesperson said Valeant was trying to
"cherry-pick" data without providing enough information to fully
evaluate Bausch + Lomb's performance.
"We believe that if Valeant really wants to provide the
financial community with a more accurate picture of Bausch +
Lomb's performance, Valeant will disclose more data points to
the market than just organic growth that has once again been
redefined and broadened," the spokesperson said, adding that
Allergan was concerned that Valeant might take extreme steps to
show growth at any cost.
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.
Shares of Valeant, which will report the rest of its
second-quarter results on July 31, were up 0.2 percent at
C$130.98 in Toronto during afternoon trading. Allergan rose 1
percent to $167.40 in New York.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Lisa