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Botox maker to revisit offer from B&L parent

Rochester Business Journal
June 2, 2014

Valeant Pharmaceuticals Inc., parent of Bausch & Lomb Inc., on Friday upped its offer in a hostile bid to acquire the California-based Botox-maker, Allergan Inc.

In a May 27 investor presentation, Allergan, portrayed the unsolicited bid, which then stood at .83 shares of Valeant stock plus $48 in cash for each share of Allergan stock, as woefully undervaluing Allergan’s worth.

After Valeant upped the cash portion of the offer to $72 a share, Allergan said Monday it would revisit the deal, but did not back away from objections it cited in recent investor presentations. 

On Monday, Allergan shares (NYSE: AGN) were trading at $170.57, up $3.11. Valeant (NYSE: VRX) was trading at $132.06, up 85 cents.

Valeant is partnered in the deal with the New York City-based hedge fund, Pershing Square Capital Management L.P.

Strikes against Valeant that Allergan named included Valeant’s lack of adequate research and development investment and questions over the long-term sustainability of Valeant’s acquisition strategy.

In May, Valeant CEO Michael Pearson trumpeted sales growth for Bausch & Lomb. But independent research showed the growth Pearson cited to have been due to unsustainable price increases and that Bausch & Lomb was selling fewer units of three of its key pharmaceuticals, Allergan claimed.

Allergan also questioned points Pearson has cited as Valeant’s strengths, asking whether Valeant could in fact maintain its low tax rate and wondering if its accounting methods are “consistent with others in the industry.”  

Sen. Charles Schumer, D-N.Y, on Friday said he made a direct plea to Pearson to move contact lens manufacturing jobs from Ireland to Rochester.

After he urged Pearson in a phone call to consider relocating Irish contact-lens making jobs to Rochester, Schumer said, he is confident the Valeant CEO would give the suggestion serious consideration.

Schumer’s call came a day after an Irish business-news website, Finfacts Ireland, reported Valeant had threatened to close the Waterford, Ireland, plant unless union workers agreed to give up 200 of the Irish facility’s roughly 1,100 jobs and take pay cuts that would bring their wages in line with what workers at the Rochester Bausch & Lomb plant make.

The Finfacts report quoted Valeant vice president Angelo Conti as stating the Irish plant’s cost basis as “substantially out of line” with other Bausch & Lomb facilities and that given Bausch & Lomb’s “distant fourth position in market share, the status quo is not sustainable.”

Valeant and Irish union negotiators were slated to hold talks, Finfacts said.

Valeant acquired Bausch & Lomb in an $8.7 billion buyout last year. The Quebec company quickly relocated Bausch & Lomb’s headquarters from Rochester to Valeant’s U.S. home-base state of New Jersey.

As of August, Bausch & Lomb employed 1,763 in Rochester.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.
 



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