In an attempt to try and establish a controlling stake in Botox-maker Allergan, Valeant Pharmaceuticals has offered shareholders a combination of cash and Valeant shares.
Valeant’s strategy is part of a hostile takeover bid estimated to be worth $53bn, which will allow the pharmaceutical giant and its financial partner Pershing Square Capital Management to take over the lucrative business.
At the end of May, Valeant made a bid for the company that was rejected, but two weeks later the company has decided to approach the situation with what it terms as an ‘exchange offer for the common stock of Allergan’.
Aiming to win Allergan shareholders with a strong offer
"We believe Allergan's stockholders should have the opportunity to express their views and we are confident that Allergan's stockholders will support this combination," said J. Michael Pearson, chairman and chief executive officer.
"This offer, together with Pershing Square's ongoing efforts to call a special meeting of Allergan stockholders, is part of Valeant's clear path to complete a transaction with Allergan."
When the offer was announced last week, Valeant said that Allergan stockholders would be able to exchange each of their shares for $72.00 in cash and 0.83 Valeant common shares, or an amount of Valeant shares or cash in proration.
Deadline is August 15th, then voting on board of directors
The deadline for the offer is August 15th, 2014, and subsequent offers after the initial offering will be calculated according to an averaging period that has been specified by Valeant.
If the buyback is successful, Valeant says it intends to complete a second-step merger by buying up the remaining necessary shares in Allergan.
This will also give way to proxies being mailed out to Allergan shareholding, setting in motion a meeting that would see a vote on the company’s board of directors