A Canadian company said it is willing to significantly increase its offer for Botox maker Allergan Inc., the latest chapter in the attempted takeover of the Irvine, Calif., company.
Valeant Pharmaceuticals International Inc. said it would be willing to pay up to $200 a share to acquire Allergan, a 12 percent increase from its current offer.
The news came just before Allergan announced third-quarter earnings that beat expectations.
In a letter to Allergan’s board, Valeant Chief Executive J. Michael Pearson did not offer specifics of an increased offer, but encouraged the company to open negotiations.
“It is past time for the board to take control of this process, do what is right for the Allergan shareholders and come to the table,” Pearson said.
Allergan issued a statement that said the company “would carefully consider” a revised offer from Valeant, should one arrive.
“However, to date, as we have noted repeatedly, Valeant’s offers have been grossly inadequate and significantly undervalued Allergan,” the Botox maker said in a statement.
Allergan’s board has rejected two previous offers from Valeant. The Canadian company’s most recent formal offer, issued in May, would pay $72 in cash and 0.83 of a share of Valeant stock for each share of Allergan stock.
At Friday’s closing price, that offer would amount to $179.18 for each Allergan share, more than $5 a share below Allergan’s closing price Friday.
A $200-a-share price would value Allergan at about $59 billion.
Valeant disclosed its plans shortly before Allergan reported net income of $312.5 million, or $1.03 a share, for the quarter ended Sept. 30. That was up from $300.8 million, or $1 per share, in the same quarter last year.
Valeant’s attempted takeover of Allergan has been one of the hottest topics on Wall Street this year. The Canadian firm has partnered with Bill Ackman’s hedge fund, Pershing Square Capital Management, in the deal.
In the weeks leading up to the offer, Pershing Square acquired nearly 10 percent of Allergan’s stock, making it the company’s largest shareholder.
Allergan later sued Pershing Square, accusing the hedge fund of insider trading because it bought the shares knowing that Valeant was about to make an offer for Allergan. Pershing Square and Valeant defended their partnership and said the hedge fund’s share purchases were legal. The lawsuit is pending.
Valeant has said Allergan spends too heavily on research and development and could thrive under its ownership. In July, Allergan announced that it would cut 1,500 jobs, many of them in Southern California, as part of a cost-cutting effort aimed at increasing profits.
Allergan has scheduled a Dec. 18 shareholder meeting to consider Pershing Square’s proposal to replace several members of Allergan’s board with candidates who would be likely to approve the buyout.
Allergan reported $6.3 billion in revenue last year, about $2 billion of that from Botox and nearly $1 billion from Restasis, a drug used to treat dry eye. The company made $100 million from sales of Latisse, a prescription drug that thickens eyelashes.
On Monday, Allergan shares closed down $1.88, or 1 percent, to $182.33. In after-hours trading, the shares gained 67 cents to $183.