NEW YORK/TORONTO Canadian drugmaker Valeant Pharmaceuticals International Inc (VRX.TO) on Thursday urged shareholders of U.S. rival Cephalon Inc CEPH.O to accept its $5.7 billion takeover offer, or see it walk away.
In its strongest push to date, Canada-based Valeant set a deadline for the deal in a letter to Cephalon shareholders, also urging them to replace the U.S. drugmaker's board of directors with a slate proposed by Valeant.
"If we do not receive consents from holders of greater than 50 percent of the outstanding shares of common stock by May 12, 2011, we intend to withdraw our offer and pursue other opportunities," Valeant said in the letter.
Cephalon asked shareholders to support the board and reject Valeant's takeover overtures, which value the company at $73 a share -- or below the current $76 price.
Cephalon said it filed a statement with the U.S. Securities and Exchange Commission urging shareholders to reject Valeant's proposal to replace the Cephalon board.
"Valeant has no duty to act in the best interests of Cephalon's shareholders, but rather for Valeant shareholders and their interests, such as buying Cephalon at the lowest possible price," it said in a statement.
The companies have been locked in a takeover battle since March 29. Mississauga, Ontario-based Valeant stressed from the start that it wants a deal quickly, before Cephalon loses patent protection for its top-selling sleep-disorder drug Provigil in 2012.
The pharmaceuticals industry faces a much-discussed "patent cliff" over the next few years as many big-selling drugs lose exclusivity and revenues fall.
A takeover of Cephalon, with $1.2 billion in cash at the end of 2010, would expand Valeant's drug line-up into cancer and pain therapy, helping it diversify from a specialization in branded generics, dermatology and neurology treatments.
Valeant's stock rose as much as 20 percent after it announced its run at Cephalon. It was at C$49.23 per share on Thursday, 14 percent higher than on March 29.
Valeant said it could still raise its offer modestly if Cephalon elects the new slate of directors and opens its books for review.
It pledged to allow a newly elected board to shop around for other options to maximize shareholder value.
"We expect the nominees to fully discharge their fiduciary obligations and, if the nominees elected constitute a majority of Cephalon's Board, we would be willing to keep our offer open for a reasonable period of time while the new Cephalon Board explores Cephalon's options."
(Editing by Janet Guttsman)