Valeant Pharmaceuticals has teamed up with activist investor Bill Ackman to make a bid for Botox maker Allergan that could be worth about USD 40 billion.
Valeant said yesterday that it intends to propose a merger with Allergan using a combination of Valeant stock and cash. The transaction size has not been disclosed, but Valeant expects the cash portion of the deal to be at least USD 15 billion.
In a separate filing, Ackman's Pershing Square Capital Management said it owns a 9.7 per cent stake in Allergan worth USD 4.1 billion. Ackman's stake would make an Allergan deal worth around USD 40 billion.
Valeant Pharmaceuticals International Inc. Is one of Canada's largest pharmaceutical companies, with revenue of USD 5.8 billion last year. The company, headquartered in Laval, Quebec, has pursued an aggressive acquisition strategy. It's racked up more than 50 transactions since 2008.
Last August it completed an USD 8.7 billion acquisition of Bausch + Lomb, giving it a major stake in the market for contact lenses, eye drugs and eye surgical devices. Before that the company's largest deals included a USD 1.65 billion tie-up with Biovail Corp. In 2010 and its USD 2.6 billion acquisition of dermatology products maker Medicis Pharma in December 2012.
Allergan, which is based in Irvine, California, has long been one of the star performers in the specialty pharmaceutical sector. Specialty pharmaceutical is an industry term that differentiates smaller drugmakers from much bigger companies that sell a wide array of drugs, such as Pfizer and Merck.
Allergan reported revenue of USD 6.3 billion last year, up 12 per cent from 2012. The company's growth has been driven by expanding use of its blockbuster product, Botox, combined with a broad offering of eye care drugs, skin care formulas and breast implants.
Last year Botox sales rose 12 per cent to nearly USD 2 billion. First introduced in 1989, the injectable drug is most famous for its ability to smooth wrinkle lines on aging foreheads. But over the years Allergan has racked up more than a half-dozen other approved uses for Botox, including treatment for neck spasms, eye muscle disorders and migraine headaches.
Allergan's stock jumped USD 28, or 20 per cent, to USD 170 in after-hours trading.
