Allergen Rejects Valeant Offer

Allergen AGN announced that it has rejected Valeant Pharmaceutical International's VRX unsolicited takeover offer. Allergen said, "Valeant's proposal creates significant risks and uncertainties for Allergan's stockholders and believes that the Valeant business model is not sustainable." Valeant's $45 billion offer valued Allergen's shares at $48.30 in cash and $0.83 in Valeant shares. Allergen's rejection came after consultations with Bank of America and Goldman Sachs and was said to be "undervalued" and have unacceptable amount of stock. This leads to the belief that Allergen may be open to another offer given a more attractive offering mix. Allergen continued, "[Your] Proposal includes a large stock component, which we believe is a risk for Allergan stockholders due to the uncertainty surrounding Valeant's long term growth prospects and business model." In particular, Allergen called into question the ability of Valeant to deliver on its cost-cutting proposals without hurting Allergen's long-term viability and growth trajectory. Moreover, Allergen has said that the ineffectiveness of Valeant's model of "cutting and slashing" is evident in its low same-store growth. To nail down the point of future growth, Allergen CEO David Pyott provided guidance for the company during a conference call. Pyott is forecasting 20-25 percent EPS growth, as well as double-digit revenue growth in 2015.