Allergan, Inc. (NYSE:AGN) Close to $65 Billion Buyout by Actavis Plc (NYSE:ACT)

Allergan (AGN)

Botox maker Allergan, Inc. (NYSE:AGN) is close to completing a deal with Actavis Plc (NYSE:ACT) in a buy-out transaction amounting to about $65.5 billion. A report by Reuters, citing unnamed sources, indicates that Actavis puts Allergan shares at the range of $215 – $220, and the final price is likely to be on the higher end of the range.

With the support of activist investor William Ackman’s Pershing Square, Allergan’s biggest shareholder, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has been advancing to acquire Allergan, Inc. (NYSE:AGN) since April of this year. The offer at $53 billion was rejected by Allergan as inadequate. A letter dated October 27 this year from Valeant’s Chairman and CEO J. Michael Pearson urged Allergan’s board of director’s to “take control of process”, saying that Valeant is ready to improve its offer to at least $200 for Valeant’s share. Bloomberg, citing an anonymous source, reports that Valeant is willing to pay as much as $210 for Allergan’s shares, but it would leave the company in debt, which its managers want to avoid.

Allergan (AGN)A response from Allergan said that its board would consider an additional offer from Valeant, but it noted that the offer that has been proposed so far has significantly undervalued the botox manufacturer. Another contention from Allergan opposing Valeant’s takeover is on the issue of research funding. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is planning to cut off research spending, and Allergan’s executives are worried that it will result in mass layoffs of its existing employees, with the numbers of retrenchment estimated to reach from a hundred to thousands.

In a report by Reuters, University of Michigan Ross School of Business professor Erick Gordon opined that Actavis Plc (NYSE:ACT) is the likely winner in the bid for Allergan, Inc. (NYSE:AGN), saying further that  Allergan shareholders should thank Ackmann because they may be receiving more for their shares than they would have thought possible six months earlier.

Allergan, Inc. (NYSE:AGN) shares are up 1.2% at $198.65 for a market value of $59.2 billion, while Actavis Plc (NYSE:ACT) is up 0.89% at $243.77 and a market value of $64.6 billion as of November 14 trade closing.

This article has been written by Nonito Guntan.

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