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 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 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 Von Ahn)