(Adds analyst comments on exchange offer, Allergan possible
interest in Shire))
By Rod Nickel
June 18 Valeant Pharmaceuticals Inc
said on Wednesday it began an exchange offer for Botox maker
Allergan Inc, taking its hostile $50.8 billion bid
directly to shareholders.
Laval, Quebec-based Valeant, which said on Tuesday it would
launch the offer this week, said Allergan shareholders can
choose to trade each share for $72 in cash and 0.83 Valeant
share, or all cash or all stock.
California-based Allergan said its board would review the
exchange offer from Valeant. It previously rejected on June 10
Valeant's bid, which contained the same major terms.
Valeant is backed by Bill Ackman's Pershing Square Capital
Management, which is Allergan's biggest shareholder with a 9.7
Taking a step toward resolving the battle is positive for
Valeant, given the toll it has taken on the company's shares and
its potential missed opportunities while focused on Allergan,
said BMO analyst Alex Afaei, in a note.
But analyst John Boris of SunTrust Robinson Humphrey said
Allergan's best defense against the hostile bid may be a good
offense. In a note, Boris said he believes Allergan will make an
"imminent" bid for Ireland's Shire PLC, a deal that he
said would be more attractive than Valeant's proposal.
Such an acquisition would give Allergan shareholders sales
diversification, sustainable organic growth and other benefits
and spare them the risk of holding Valeant shares, he said.
Allergan shares rose 1.1 percent in afternoon trading in New
York to $162.26, while Valeant fell 0.6 percent to $118.20.
Valeant stock has closed lower in 10 of the previous 11
Shire stock gained 3.4 percent in London.
Valeant's offer will expire on Aug. 15, unless extended.
(Reporting by Rod Nickel in Winnipeg, Manitoba; additional
reporting by Ransdell Pierson in New York; Editing by Jeffrey
Benkoe, Andrew Hay and Jonathan Oatis)