Valeant ups offer for Allergan as target publishes attack on its business model

Canadian drugmaker Valeant Pharmaceuticals International (TSX: VRX) has today upped its offer for USA-based Allergan (NYSE: AGN) by 21%, raising the cash consideration by $10 per share to $58.30.

The increase follows the publication of Allergan’s concerns over Valeant’s business model. In a presentation yesterday, Allergan questioned the company’s organic growth and the status of two former Valeant acquisitions, Bausch & Lomb and Medicis. Questioning its organic growth, it said: “The pro-forma revenue growth from Valeant's SEC filings paints a picture far different from what is communicated to investors. Valeant's pro-forma revenue growth including acquisitions for fiscal year 2013 was -0.5%. In the first quarter of 2014, the growth rate declined to -1.4%.”

In addition, Allergan said the Medicis business is losing market share and increasing prices at “an unsustainable pace,” adding: “Since Valeant acquired Medicis, Allergan has rapidly accelerated its capture of market share. Over this same timeframe, Valeant increased prices for Medicis' six largest products by a significant and, we believe, unsustainable amount.” It even went so far as to raise doubts about Valeant’s management team, citing three board members who recently resigned over "potential conflicts" - one of whom withdrew after a tenure of less than a year.