Allergan Inc. (AGN), the pharmaceutical company that received an unsolicited bid from Canadian drug maker Valeant Pharmaceuticals International Inc., has so far been rebuffed by rival companies it has tried to interest in making a competing offer, said people familiar with the matter.
Allergan reached out to Sanofi and Johnson & Johnson (JNJ) after Valeant made its offer on April 22, said two of the people, who asked not to be identified because the overtures were private. The company also contacted GlaxoSmithKline Plc and Novartis AG, one person said. Sanofi, based in Paris, was uninterested, while New Brunswick, New Jersey-based J&J demurred, citing the difficulty of combining the U.S.’s two largest makers of breast implants, another person said.
Should Allergan’s board decide against selling itself to Valeant, and the company not find a white knight to propose a superior offer, its options narrow. Allergan, which makes the wrinkle treatment Botox, could buy another company to make itself tough to acquire, or make a case to shareholders that they should vote against the deal. The company is looking for alternatives because it isn’t happy with Valeant’s offer, one of the people familiar with the situation said.
Valeant, supported by Allergan’s largest shareholder Pershing Square Capital Management LP, offered to acquire Allergan in a cash-and-stock deal valued at $45.7 billion when it was announced. Allergan’s board will “carefully review and consider” Valeant’s offer, Chief Executive Officer David Pyott said May 7 on a conference call with analysts after the company reported earnings. Pyott said he couldn’t talk about the transaction in detail.
A spokeswoman for Irvine, California-based Allergan said the company continues to review Valeant’s offer. Spokesmen for Glaxo, the U.K.’s biggest drugmaker, Basel, Switzerland-based Novartis and Sanofi declined to comment. A spokeswoman for J&J, the world’s largest maker of health-care products, didn’t respond to a request for comment.
Some of the companies that Allergan has contacted want parts of the company and aren’t interested in buying the entire business, two of the people familiar with the matter said.
Allergan’s diverse operations make it a tough target. The company’s units comprise eye care, neuroscience, dermatology and urologics, meaning most acquirers would be left with health-care divisions they would otherwise not likely get into, one of the people said.
Diversifying runs counter to what many drug companies are doing. The biggest drugmakers are reshuffling units to get rid of ones that don’t make them leaders in a particular market, while smaller players are buying competitors to add size, lest they be swallowed up themselves.
Novartis agreed last month to buy Glaxo’s oncology business for as much as $16 billion, to sell Glaxo its vaccines line for as much as $7.1 billion and to sell its animal health business to Eli Lilly & Co. for $5.4 billion. Bayer AG agreed this month to buy Merck & Co.’s consumer unit for $14.2 billion, solidifying its position near the top of the market for over-the-counter health products.
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