What happens when the share price of a particular company jumps by $15? There is an increase in the overall value of the company and this happens to be the latest strategy employed by Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Pershing to persuade Allergan Inc (NYSE:AGN) to give its nod to the merger.
April, 2014, was the month when Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Pershing joined hands to take over Allergan Inc (NYSE:AGN) but unfortunately for them, the road to acquisition has been far from smooth. To begin with, Allergan Inc (NYSE:AGN) has always been opposed to the takeover and has been doing everything in its power to stop the merger from materializing. But credit goes to Valeant and Pershing for persisting with the takeover, the latest twist to the drama being their offer to augment the price per share of Allergan by a substantial margin.
One of the options which Allergan Inc (NYSE:AGN) has been considering to prevent the take-over by Valeant Pharmaceuticals Intl Inc (NYSE:VRX) from happening entails looking for another company for building a strategic partnership. On their part, Valeant and Pershing have responded to this by offering to increase the value per share of Allergan by $15, thus poising it at $191 levels on Dow Jones. Given that Allergan shares closed at $186.20, the new levels as suggested by the two companies would amount to an increase of 2.5%.
Acquiring Allergan Inc (NYSE:AGN) at this new value would mean paying $56 billion for Valeant-Pershing, thus rendering it to be the largest take-over bid since it would surpass the $54 billion which AbbVie Inc had to pay for acquiring Shire PLC. The difference in cost as compared to the previous offer would work out to be $4.5 billion, although the amount would be finalized once Pershing Share has let known the price that it expects in return for its 9.7% stake in Allergan.
Grapevine has it that this offer to raise the stake by $15 per share was going to be announced by Valeant-Pershing combination on 20th October, 2014, but then the date was advanced in view of Allergan Inc (NYSE:AGN)’s efforts to make a deal with another drug manufacturer named Actavis. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has also let it be known that it is expecting a positive and healthy quarterly report and this, it hopes, would re-assure Allergan about the sustainability of its business model.
Another intention underlying this announcement is stated as an attempt by Valeant-Pershing to influence investors to vote in favor of the acquisition before 30th October, 2014, so that the present Allergan Inc (NYSE:AGN) board of directors can then be ousted and the path to acquisition is clear.
This article has been written by Vinita Basu.