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Allergan Puts Medicis on the Defensive

Inamed (IMDC) said Wednesday it will consider a buyout bid from Allergan (AGN - Get Report) that exceeds an earlier offer for the cosmetic-products company Medicis Pharmaceutical (MRX).

By deciding to review the unsolicited offer from Allergan, Inamed's board extends the less-than-smooth takeover process that started in March when Medicis made its bid for Santa Barbara, Calif., company.

Along the way, the Medicis-Inamed deal has been stalled because the Federal Trade Commission asked for more information in May about potential antitrust issues. Recently, one of Inamed's largest shareholders complained that the price offered by Medicis, based in Scottsdale, Ariz., was inadequate.

The Allergan offer is worth $84 a share, or $3.2 billion. The Medicis proposal was worth $75 a share, or $2.8 billion, at first, but that was before the competing bid was announced. After Allergan made its intentions known, Medicis' shares sank, dropping the value of its offer to the equivalent of about $68 a share. Allergan's offer is for $84 in cash, or 0.8498 of a share for each Inamed share. The Medicis bid is $30 in cash plus 1.4205 of its shares for each share of Inamed.

Inamed said the Allergan proposal "is reasonably likely" to trigger a provision in its agreement with Medicis that requires Inamed's board to consider a "superior proposal."

"Your stockholders will have the opportunity to realize greater long-term value as a result of the truly unique attributes of an Allergan-Inamed combination," said a Nov. 14 letter from David E. I. Pyott, chairman and CEO of Allergan, to Nicholas L. Teti, chairman and CEO of Inamed.

Strategic Maneuver

Inamed has gained most of its recent headlines for its efforts to convince the Food and Drug Administration to approve silicone gel breast implants in cosmetic surgery, but many analysts say the key to Allergan's bid is the target company's skin-care products. They say Allergan is trying to ensure the strength of its skin-treatment business, which includes Botox, by seeing that Medicis doesn't take over Inamed. Allergan's other main business is eye-care products.
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